Apr 082018
 
 April 8, 2018  Posted by at 9:10 am Finance Tagged with: , , , , , , , , , ,  


Johannes Vermeer The Concert 1663
Stolen from Gardner Museum March 18 1990, the single largest art theft in the world. Never recovered

 

Richest 1% On Target To Own Two-Thirds Of All Wealth By 2030 (G.)
Britain Aims To Resettle Poisoned Russian Ex-Spy In The US (R.)
Facebook Admits To Deleting Messages From People’s Inboxes (Ind.)
Facebook Confirms It Scans What You Send To Others On Its Messenger App (BBG)
US Homeland Security Database Of Journalists, Bloggers, Media Influencers (JT)
China Cannot Use Its Treasury Holdings As Leverage. Here’s Why (EH)
Australia’s Central Bank Frets Over Chinese Shadow Banking (CBN)
China Risks A ‘Minsky Moment’ (Auerback)
No Brexit for a Eurozone Britain? (Varoufakis)
Legalised Cannabis Could Help Solve America’s Opioid Crisis (Ind.)
US Gene-Editing Ruling Delights Plant Scientists (G.)
Hybrid Swarm Of ‘Mega-Pests’ Threatens Crops Worldwide (Ind.)

 

 

At some point it will stop. But it’s just too tempting.

Richest 1% On Target To Own Two-Thirds Of All Wealth By 2030 (G.)

The world’s richest 1% are on course to control as much as two-thirds of the world’s wealth by 2030, according to a shocking analysis that has lead to a cross-party call for action. World leaders are being warned that the continued accumulation of wealth at the top will fuel growing distrust and anger over the coming decade unless action is taken to restore the balance. An alarming projection produced by the House of Commons library suggests that if trends seen since the 2008 financial crash were to continue, then the top 1% will hold 64% of the world’s wealth by 2030. Even taking the financial crash into account, and measuring their assets over a longer period, they would still hold more than half of all wealth.

Since 2008, the wealth of the richest 1% has been growing at an average of 6% a year – much faster than the 3% growth in wealth of the remaining 99% of the world’s population. Should that continue, the top 1% would hold wealth equating to $305tn (£216.5tn) – up from $140tn today. Analysts suggest wealth has become concentrated at the top because of recent income inequality, higher rates of saving among the wealthy, and the accumulation of assets. The wealthy also invested a large amount of equity in businesses, stocks and other financial assets, which have handed them disproportionate benefits.

New polling by Opinium suggests that voters perceive a major problem with the influence exerted by the very wealthy. Asked to select a group that would have the most power in 2030, most (34%) said the super-rich, while 28% opted for national governments. In a sign of falling levels of trust, those surveyed said they feared the consequences of wealth inequality would be rising levels of corruption (41%) or the “super-rich enjoying unfair influence on government policy” (43%).

Read more …

Once they have new identities, nobody can ever ask them a question again.

Britain Aims To Resettle Poisoned Russian Ex-Spy In The US (R.)

Britain is considering offering poisoned Russian ex-spy Sergei Skripal and his daughter Yulia new identities and a fresh life in the United States in an attempt to protect them from further murder attempts, the Sunday Times newspaper reported. It said officials at the MI6 intelligence agency have had discussions with their counterparts in the CIA about resettling the victims poisoned last month in the English city of Salisbury. “They will be offered new identities,” it quoted an unidentified source as saying.

The paper said its sources believed Britain would want to ensure their safety by resettling them in one of the so-called “five eyes” countries, the intelligence-sharing partnership that also includes the United States, Canada, Australia and New Zealand. “The obvious place to resettle them is America because they’re less likely to be killed there and it’s easier to protect them there under a new identity,” it quoted what it called an intelligence source familiar with the negotiations as saying. “There’s a preference for them to be resettled in a five-eyes nation because their case would have huge security implications,” the source added.

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Some are more equal than others.

Facebook Admits To Deleting Messages From People’s Inboxes (Ind.)

Facebook secretly deleted private messages from people’s inboxes that had been sent by CEO Mark Zuckerberg, the company has admitted. Messages disappearing from people’s inboxes was first noted by TechCrunch, who cited three sources whose inboxes had been tampered with. It is not possible for normal Facebook users to delete messages from other people’s inboxes, though Mr Zuckerberg and other executives appear to have had access to the functionality for several years. Facebook said in a statement that the self-destructing feature was added in response to the Sony Pictures hack in 2014 that compromised personal information of Sony employees, as well as copies of unreleased films.

The feature may also have been used to prevent potentially embarrassing messages from resurfacing, such as a 2004 message sent by Mr Zuckerberg that reportedly called users of the social network “dumb fucks” for trusting him with their data. “After Sony Pictures’ emails were hacked in 2014 we made a number of changes to protect our executives’ communications,” Facebook said. “These included limiting the retention period for Mark’s messages in Messenger. We did so in full compliance with our legal obligations to preserve messages.” The messages were also missing when the affected users attempted to recover them using Facebook’s “download your information” tool.

Deleting private messages from people’s inboxes without their consent may potentially go against Facebook’s terms of service, which make no mention of removing content unless it is a violation of the firm’s community standards.

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We spy on you for your own good. Trust us, we know better.

Facebook Confirms It Scans What You Send To Others On Its Messenger App (BBG)

Facebook scans the links and images that people send each other on Facebook Messenger, and reads chats when they’re flagged to moderators, making sure the content abides by the company’s rules. If it doesn’t, it gets blocked or taken down. The company confirmed the practice after an interview published earlier this week with Chief Executive Officer Mark Zuckerberg raised questions about Messenger’s practices and privacy. Zuckerberg told Vox’s Ezra Klein a story about receiving a phone call related to ethnic cleansing in Myanmar. Facebook had detected people trying to send sensational messages through the Messenger app, he said. “In that case, our systems detect what’s going on,” Zuckerberg said. “We stop those messages from going through.”

Some people reacted with concern on Twitter: Was Facebook reading messages more generally? Facebook has been under scrutiny in recent weeks over how it handles users’ private data and the revelation struck a nerve. Messenger doesn’t use the data from the scanned messages for advertising, the company said, but the policy may extend beyond what Messenger users expect. The company told Bloomberg that while Messenger conversations are private, Facebook scans them and uses the same tools to prevent abuse there that it does on the social network more generally. All content must abide by the same “community standards.” People can report posts or messages for violating those standards, which would prompt a review by the company’s “community operations” team.

Automated tools can also do the work. “For example, on Messenger, when you send a photo, our automated systems scan it using photo matching technology to detect known child exploitation imagery or when you send a link, we scan it for malware or viruses,” a Facebook Messenger spokeswoman said in a statement. “Facebook designed these automated tools so we can rapidly stop abusive behavior on our platform.”

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When Facebook looks at everybody’s everything, this should come as no surprise.

US Homeland Security Database Of Journalists, Bloggers, Media Influencers (JT)

The U.S. Department of Homeland Security is looking to create a searchable database of hundreds of thousands of news sources, journalists, bloggers and “media influencers” for the federal government, a move a DHS spokesman called “standard practice.” In a job request posted last week to the Federal Business Opportunities website, the main contracting website used by the federal government, DHS wrote that it is seeking a contractor that is able to monitor up to 290,000 global news sources, track media coverage in up to 100 languages and can “track online, print, broadcast, cable, radio, trade and industry publications, local sources, national/international outlets, traditional news sources, and social media.”

The request also seeks the ability to build lists of journalists “based on beat, location, outlet type/size, and journalist role.” Data to be collected would also include an analysis of each news source’s “sentiment,” as well as geographical spread, top posters, languages, momentum and circulation. The database of “top media influencers” would include “present contact details and any other information that could be relevant, including publications this influencer writes for, and an overview of the previous coverage published by the media influencer.”

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Treasuries are the only thing China can buy with its -dollar- surplus.

China Cannot Use Its Treasury Holdings As Leverage. Here’s Why (EH)

When China builds a trade surplus, it accumulates dollars. And it has to do something with those dollars. That means its purchase of US dollar assets is non-discretionary unless it revalues its currency. Every time there is some kind of dispute between China and the United States, a litany of voices emerges to warn of spiking interest rates. These warnings are wrong-headed. We went through this very same exercise in 2010. And Michael Pettis’s commentary is useful in this context. Let me quote from Michael and explain what it means in today’s context:

“If China runs a current account surplus, it must accumulate net foreign claims by exactly that amount, and the entity against which it accumulates those claims (adjusting for actions by other players within the balance of payments) ultimately must run the corresponding current account deficit. And as long as China ran the largest current account surplus ever recorded as a share of global GDP, and the US the largest current account deficit ever recorded, and especially since China also ran an additional capital account surplus (i.e. other non-PBoC agents ran a net capital inflow), it was almost impossible for the PBoC to do anything but buy US dollar assets. Given the sheer amounts, a substantial portion of these assets had inevitably to be USG bonds.“

The source of acrimony between China and the US is China’s trade surplus with the US. Now, when China builds this surplus, it accumulates dollars. And it has to do something with those dollars. And so, for a large portion of that dollar hoard, the Chinese have decided to store it as Treasury bonds. We don’t have to argue the merits of the Trump trade position here. It’s irrelevant regarding China’s accumulation of Treasury securities or mortgage-backed securities. Note that now it is Germany instead of China that has the largest current account surplus. And the EU has drawn Trump’s ire for this reason.

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“..growing at an average annual rate of approximately 40% since 2009”

Australia’s Central Bank Frets Over Chinese Shadow Banking (CBN)

The Reserve Bank of Australia is concerned that the rapid expansion of China’s shadow banking sector over the past decade poses a threat to financial stability.The RBA estimates that China’s shadow banking sector currently stands at USD$7 trillion, or around 60% of GDP, after growing at an average annual rate of approximately 40% since 2009. This means China’s shadow banking sector is far largely proportionately compared to other emerging economies, and roughly on par with developed nations such as the UK and the US. The RBA points out that shadow banking has brought benefits to the Chinese economy, chief amongst them the provision of more innovative forms of financing to companies otherwise barred from the state-dominated banking system.

Chinese households also benefited by obtaining access to investment products that provide competitive yields, in a highly regulated financial environment that provides few investment options.These benefits have also created problems, however, in the form of surging debt growth beyond the purview of regulatory scrutiny, riskier lending that is still inextricably linked to the Chinese banking system, as well as liquidity and maturity mismatches.These risks have been further exacerbated by the relative inexperience of China’s retail investors, and the perception that many financial instruments such as bank wealth management products enjoy “implicit guarantees. ”Beijing is well aware of the risks associated with exorbitant debt growth via shadow banking activity, launching a crackdown on the sector over a year ago as part of a broader deleveraging campaign.

The recently merged banking and insurance regulator has also flagged a continued focus on local government and state-owned enterprise leverage, alongside concern over the rapid increase in household borrowing.According to RBA analysts, however, Chinese regulators are still struggling to control breakneck credit growth in the economy.“Chinese regulators have been trying to mitigate these risks for some time, but it has been a challenge to design regulations that address these risks and are not easily circumvented,” said RBA officials in the Australian central bank’s March bulletin. In January China posted record growth in lending, which surged to 2.9 trillion yuan (approx. USD$458.5 billion) for a five-fold increase compared to the preceding month.

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What Xi can’t control.

China Risks A ‘Minsky Moment’ (Auerback)

The transformation of China’s economy, both in terms of GDP growth rate and poverty reduction since it started its transition to the market system in the late 1970s, has arguably been the biggest macroeconomic event of the past half-century. The model that has characterized the country’s high output growth rates has followed in the footsteps of the Asian “tigers“: first, its high growth rates of capital accumulation, driven by high investment-output ratios; second, a marked outward orientation through export-led growth policies; and third, the pursuit of industrialization (in particular the production and export of manufacturing goods), a key ingredient for fast growth and development. By almost every metric, China has advanced from economic backwater to the world’s second-largest GDP (and by some measures, is now the largest economy).

But in spite of signs of renewed economic activity in March, the country’s debt build-up has provoked increasing concern amongst Beijing’s policy makers, as it points to an underlying long-term financial fragility, particularly if trade war pressures intensify. Just last October during the Communist Party Plenary, Zhou Xiaochuan, then head of the country’s central bank, warned of a “Minsky moment“: “When there are too many pro-cyclical factors in an economy, cyclical fluctuations will be amplified. If we are too optimistic when things go smoothly, tensions build up, which could lead to a sharp correction, what we call a ‘Minsky Moment’. That’s what we should particularly defend against.”

To elaborate on Zhou’s statement, the economist Hyman Minsky described how once the debt “disease” goes metastatic, there will come a “Minsky moment” (a term originally coined by economist Paul McCulley) when euphoria gives way to concern and then to panic liquidation and credit revulsion. When that dynamic is in full flower, policy makers are powerless to avert it, no matter how much they want to bring the punchbowl back. Governor Zhou’s public warning was no doubt in response to recent rapid increase of debt which, according to Professor L. Randall Wray, “increased from 162% to 260% of GDP between 2008 and 2016,” and remains “a topic of discussion, if not deep concern.”

It may seem odd to warn of a Chinese slowdown, given the recent renewed surge in exports and the corresponding rise in both the manufacturing and non-manufacturing purchasing managing indices (both the manufacturing and service gauges remain above 50, and therefore indicative of robust economic activity). But these gains ought to be viewed against the backdrop of a more hostile external environment for Chinese manufactured goods. Discussing the recently imposed tariffs on steel and aluminum, the New York Times reported that Trump has already provided brief exemptions to “Canada, Mexico, the European Union, Australia, Argentina, Brazil and South Korea” (countries that “account for more than half of the $29 billion in steel sold to the United States in 2017”), which reinforces the idea that it is largely China that remains the major target of Trump’s economic nationalists.

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A nice thought experiment.

No Brexit for a Eurozone Britain? (Varoufakis)

“You can check out any time you like, but you can never leave.” Prior to the 2016 Brexit referendum, I borrowed this line from the Eagles’ 1976 hit “Hotel California” as an argument against Britain exiting the European Union. I told audiences up and down Britain that if they voted to leave the EU, they would end up more entangled with the EU Commission than ever before. As British Prime Minister Theresa May is finding out, disentangling a member state from the EU is an arduous and complex undertaking. But how much harder would Brexit have been had the United Kingdom adopted the euro back in 2000?

For starters, the people of Britain would never have been consulted on whether they wanted to check out of the EU. In a hypothetical eurozone Britain, the very announcement of a referendum on membership would have triggered a bank run. Given Britain’s chronic trade and current-account deficits, an exit from the euro would have necessarily caused a decline in the international value of UK bank deposits. Foreseeing this, depositors would have responded to the announcement of a referendum by immediately withdrawing their euros in cash or by wiring them to Frankfurt, Paris, New York, or elsewhere. And, foreseeing that reaction, no British prime minister, not even David Cameron, would have dared announce a Brexit referendum.

Looking further back, what would the effect of 16 years in the eurozone have been on the relative strength of Leavers and Remainers within the Conservative Party? What would Britain’s economic circumstances have been like prior to 2016 had the euro been the UK’s currency? Would the political pressure to hold the referendum in 2016 have been weaker had Britain shared the same currency as Germany, France, and Greece? As with all counterfactuals, we are treading on thin ice here. Nevertheless, it is not difficult to sketch a plausible economic past for a UK that, hypothetically, entered the eurozone in 2000.

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Time to follow the money on pot.

Legalised Cannabis Could Help Solve America’s Opioid Crisis (Ind.)

Legalised cannabis use may help solve America’s opioid crisis, two scientific studies have suggested. Two separate peer-reviewed studies in the journal JAMA Internal Medicine found significant drops in opioid prescribing in US states that had relaxed their cannabis laws. Both studies appear to offer insights into possible ways to solve a crisis that saw 17,087 people die from prescription opioid overdoes in the US in 2016. The crisis has its origins in soaring prescription rates after a new generation of opioids were marketed in the 1980s and 1990s with inaccurate claims that they could alleviate chronic pain with minimal risk of addiction.

The new research was accompanied by an opinion piece in JAMA Internal Medicine which said both studies produced “results suggesting that cannabis legalisation may play a beneficial role in the opioid crisis”. In the first study, researchers at the University of Georgia, Athens, looked at Medicare Part D prescriptions for people over the age of 65 between 2010 and 2015. It found that prescriptions for all opioids decreased by 2.11 million daily doses per year from an average of 23.08 million daily doses per year when a state instituted any medical cannabis law. When a state opened marijuana dispensaries, opioid prescriptions dropped by 3.7 million daily doses per year.

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Loophole. And a dangerous one.

US Gene-Editing Ruling Delights Plant Scientists (G.)

Researchers in the US have been given the go-ahead to use gene-editing techniques to alter crops and plants. The decision opens the door for scientists to create a new generation of genetically altered crops without serious restriction and paves the way for approvals for similar work in Britain and the rest of Europe. The decision – by the US Department of Agriculture – has delighted scientists who had feared that limitations on the creation and growing of genetically modified crops would also be imposed on crops created using far simpler gene-editing techniques. “I think this decision by American legislators will have all sorts of benefits in the long run,” said Professor Denis Murphy of the University of South Wales.

“This is a win-win situation because agriculture for gene-editing is cheaper, faster, simpler and more precise than the genetic modification of plants, in which a gene is taken from one organism and moved to another.” The European Court of Justice indicated in January that it does not think crops created though gene-editing techniques should be regulated by the rules that govern genetically modified organisms in Europe. “At the same time, Britain’s Acre – the advisory committee on releases into the environment – also seems to be sympathetic to this position,” said Professor Huw Dylan Jones of Aberystwyth University. “It is very encouraging.”

In the wake of hostile green campaigns, Britain imposed severe restrictions on GM crops two decades ago and few have been grown. The prospect that this fate would also befall plants created by the newer and simpler technique of gene-editing worried many researchers who feared a technology at which Britain excels would be banned. These fears are now disappearing, they say. “If we have our own domestic gene-editing industry then scientists trained at our universities will have something to work on here when they qualify,” said Murphy. “At present, our young scientists have to go to work in another country if they want to continue working on the topic.”

Gene-editing could lead to the development of domestic crops particularly suited to Britain, said Dylan Jones. “Loliums and clovers that are good for grazing could be improved to make them more hardy, for example,” he said. “It is very hopeful.” Genetically modified crops are generated through the introduction of foreign DNA sequences. Gene-edited crops are created by editing an organism’s native genome. Gene-editing is more efficient, cheaper, quicker and more precise. By altering the DNA make-up of a gene the characteristics of a cell or an organism can be changed.

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I don’t like calling living creatures ‘pests’, and the tone here is a bit sensational, but the core is resistance against pesticides. We must stop poisoning nature.

Hybrid Swarm Of ‘Mega-Pests’ Threatens Crops Worldwide (Ind.)

A pair of major agricultural pests have combined to produce a “mega-pest” that could threaten crops around the world. Losses from the original pest species, cotton bollworms and corn earworms, already amounts to billions of dollars worth of food. But a hybrid of the two, shows signs of rapidly developing resistance to pesticides and it scientists fear it could cross international boundaries undetected, wiping out all the crops it comes across. Bollworms and earworms are closely related. The bollworm has its origins in Africa, Asia and Europe while the earworm is a native of the Americas. Both are in fact moth caterpillars and they feed on more than 100 plant species including vital crops like corn, cotton, tomato and soybean.

A team of Australian scientists who discovered the hybrid mega-pests think the combination of international species could be creating a new strain with unlimited geographical boundaries. It is impossible to tell which individuals are hybrids just by looking at them, meaning by the time the hybrids have been detected it may be too late. [..] In Australia, a combination of pesticides is currently being employed to manage the nation’s bollworms, but chemical resistance is a major cause for concern. Bollworms are generally better at developing resistance than their earworm cousins, and are immune to the effects of many major insecticides.

However, within the “hybrid swarm” they studied in Brazil the scientists found creatures that were largely earworm in their genetic makeup, but with bollworm DNA coding for pesticide resistance. The scientists warned that the Brazilian case highlighted the threat that new “agriculturally problematic” strains of pest could soon spread throughout the rest of the Americas. “On top of the impact already felt in South America, recent estimates that 65% of the USA’s agricultural output is at risk of being affected by the bollworm demonstrates that this work has the potential to instigate changes to research priorities that will have direct ramifications for the people of America, through the food on their tables and the clothes on their backs,” said Dr Craig Anderson, one of the study’s authors.

Read more …

Apr 152017
 
 April 15, 2017  Posted by at 8:48 am Finance Tagged with: , , , , , , , , , , ,  


Copenhagen 1965

 

US Urges China to Open Trade After Sparing It Manipulator Tag (BBG)
US: China, Germany Must Do More To Cut Trade Surpluses (AFP)
China Shadow Banking Rebounds In March, Household Loans Surge (R.)
Record High US Multi-Family Construction Set To Wreak Havoc On Rents (ZH)
Falling US Retail Sales Cast Doubt On Further Fed Interest Rate Rise (G.)
Leaked NSA Malware Threatens Windows Users Around The World (IC)
Hackers Release Files Indicating NSA Hacked SWIFT, Global Bank Transfers (R.)
The ‘Smoking-Gun’ Quote On The Recent Syrian Gas-Attack (Zuesse)
US Insurers Sue Saudis for $4.2 Billion Over 9/11 (TAM)
Understanding Land Value Taxation (Walker)
Le Pen Ready to Be ‘Crucified’ for France (BBG)
French Prosecutors Seek To Lift Le Pen Immunity Over Expenses Inquiry (AFP)
More Than 2,000 Migrants Rescued In Dramatic Day In Mediterranean (R.)

 

 

Step away from the confrontation and still get what you want. Maybe not that stupid.

US Urges China to Open Trade After Sparing It Manipulator Tag (BBG)

The U.S. stopped short of branding China a currency manipulator, but urged the world’s second-largest economy to let the yuan rise with market forces and embrace more trade. No major trading partner is manipulating its currency for an unfair trade advantage, according to the first foreign-currency report released by the Treasury Department under President Donald Trump on Friday. It kept China, South Korea, Japan, Taiwan, Germany and Switzerland on its foreign-exchange monitoring list. “China currently has an extremely large and persistent bilateral trade surplus with the United States, which underscores the need for further opening of the Chinese economy to American goods and services,” as well as quicker reforms to boost household consumption, according to the Treasury report.

Trump declared on Wednesday that he’ll back away from a campaign promise to name China a currency manipulator, a move that would have created friction between the world’s largest economies as they try to boost trade cooperation and address North Korea’s nuclear threat. Trump, in a Wall Street Journal interview, said China hasn’t manipulated the yuan for months, while accusing nations that he didn’t identify of devaluing their currencies and saying the dollar is getting too strong.

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Germany must increase domestic demand? How? Housing bubble?

US: China, Germany Must Do More To Cut Trade Surpluses (AFP)

Even though China has not moved to keep its currency weak in the past three years, the country “has a long track record of engaging in persistent, large-scale, one-way foreign exchange intervention, doing so for roughly a decade,” the Treasury Department said. That “distortion in the global trading system… imposed significant and long-lasting hardship on American workers and companies.” With a trade surplus in goods with the United States of $347 billion last year, and continued policies that restrict free trade and foreign investment, “Treasury will be scrutinizing China’s trade and currency practices very closely.” The large goods surplus “underscores the need for further opening of the Chinese economy to American goods and services, as well as faster reform to rebalance the Chinese economy toward greater household consumption.” Beijing also will need to prove that the recent stance of not trying to weaken the currency is “a durable policy shift,” even if the renminbi begins to appreciate again.

The Treasury Department said Germany should take steps, notably spending policies, “to encourage stronger domestic demand growth,” something the country’s trading partners and the IMF have been urging for some time. Increased demand “would place upward pressure on the euro… and help reduce its large external imbalances,” increasing domestic consumption, including of imported goods. Those imbalances include its $65 billion goods trade surplus with the United States last year, and what the department calls “the world?s largest current account surplus at close to $300 billion.” The report also called on Japan to do more “to revive domestic demand and combat low inflation while avoiding a return to export-led growth.” This would include more “flexible” government spending policies, and continued reforms to boost the labor market and increase productivity of the Japanese economy.

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“Social financing”. Sure. Sounds good, right? But it‘s all shadows.

China Shadow Banking Rebounds In March, Household Loans Surge (R.)

China’s banks unexpectedly extended less credit in March than in the previous month as the government tries to contain the risks from an explosive build-up in debt and an overheating housing market. But aggregate financing, which includes bank loans as well as off-balance sheet lending, surged in March and was a record in the first quarter, raising doubts about the effectiveness of official efforts so far to clamp down on risks in the financial system. A surge in household lending in March also added to worries about whether authorities will be able to get the frenzied property market under control, even as cities roll out increasingly stringent curbs on home buying.

The central bank has raised interest rates on money market instruments and special short- and mid-term loans several times in recent months, most recently in mid-March, to contain debt risks and discourage speculation, though it is treading cautiously to avoid hurting economic growth. Outstanding bank loans grew at the slowest pace since July 2002 in March at 12.4%, while M2 money supply growth hit a more than 6-month low, reflecting the moderately tighter policy stance by the People’s Bank of China (PBOC). On the surface, the level of March new loans fell, also suggesting authorities are making some headway in weaning borrowers off endless cheap credit and coaxing debt-laden companies to deleverage.

China’s banks made 1.02 trillion yuan ($148.15 billion) in new loans in March, data showed on Friday, down from 1.17 trillion yuan in February and well below the 1.25 trillion yuan that analysts had predicted in a Reuters poll. However, banks still extended the third highest loans on record for a single quarter, totaling 4.22 trillion yuan in January-March. The first quarter is usually the busiest of the year for Chinese banks, when they have a fresh annual quota and look to lock up key clients. Loans to households surged to 797.7 billion yuan in March, according to Reuters calculations using PBOC data, accounting for 78% of all new loans in the month. That was much higher than either January or February and even the 50% of new loans in 2016.

[..] China’s total social financing (TSF), a broad measure of credit and liquidity in the economy, rocketed to 2.12 trillion yuan in March from 1.15 trillion yuan in February. For the first quarter, TSF reached a record 6.93 trillion yuan – roughly equivalent to the size of Mexico’s economy – and well above last year’s first quarter total. For analysts, that suggests a surge in off-balance sheet lending, likely in the less regulated shadow banking system, despite repeated attempts by authorities to target riskier lending in past years. Loans to companies totaled 368.6 billion yuan in March, less than half the amount of household lending, PBOC data showed. That could be an ominous signal for the economy, unless firms were finding other sources of funding.

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Bubble dynamics.

Record High US Multi-Family Construction Set To Wreak Havoc On Rents (ZH)

Softening apartment rents, particularly in the massively over-priced, millennial safe-spaces of New York City and San Francisco, have been a frequent topic of conversation for us over the past several quarters…Now, a new report from Goldman’s Credit Strategy Team, led by Marty Young, helps to highlight some of the key data points that suggest that sinking rent will likely not be just an ephemeral problem. To start, an just like almost any bubble, sinking rents are the symptom of a massive, multi-year supply bubble in multi-family housing units sparked by, among other things, cheap borrowing costs for commercial builders. Per the chart below, multi-family units under construction is now at record highs and have eclipsed the previous bubble peak by nearly 40%.

Rents have already started to rollover but we suspect the correction has only just begun.

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Consumer spending falls = money velocity goes down = deflation.

Falling US Retail Sales Cast Doubt On Further Fed Interest Rate Rise (G.)

Falling retail sales and lower inflation in the US have added to signs that the world’s biggest economy has lost momentum in recent months, casting doubt over how many more times the Federal Reserve will raise interest rates this year. Stronger takings at clothing and electronics stores in March were not enough to offset a continued drop in demand for cars, according to figures from the US government (pdf). As a result, retail sales fell for the second month running. The 0.2% drop was deeper than forecasts in a Reuters poll of economists and followed a bigger than previously reported decline of 0.3% in February. Sales were also hurt by lower demand for building materials in March, chiming with a sharp slowdown in construction hiring as parts of the US were hit by severe snowstorms. Petrol station takings also dipped in March as fuel prices fell.

The few bright spots were a 2.6% rise in takings at electronics and appliance stores and a 1% rise in clothing sales. The drop in fuel prices in March echoed a pattern seen in the UK following a fall in global oil prices last month. Cheaper pump prices were also a key factor in softer US inflation. A measure of prices in the US fell for the first time in more than a year, dipping 0.3% in March, according to figures from the Labor Department. It said falling fuel prices and mobile phone charges drove the decline in the consumer price index (CPI) and were only partially offset by rising food prices. As a result, inflation – or the pace of price changes over a year – eased to 2.4% in March from 2.7% in February. Core inflation, which strips out volatile food and energy prices, eased to 2% from 2.2% in February and was the weakest since November 2015.

The retail sales and inflation data follow news of a sharp slowdown in job creation in the US in March as the poor weather, a government hiring freeze and a faltering retail sector all appeared to put a chill on President Donald Trump’s promise to boost hiring. But the unemployment rate declined to 4.5%, the lowest rate in a decade. The latest indications that the economy slowed in the opening months of the year will give policymakers at the US central bank more to debate as they decide when to next raise interest rates.

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“Hacker Fantastic @hackerfantastic: This is really bad, in about an hour or so any attacker can download simple toolkit to hack into Microsoft based computers around the globe.”

Leaked NSA Malware Threatens Windows Users Around The World (IC)

The ShadowBrokers, an entity previously confirmed by The Intercept to have leaked authentic malware used by the NSA to attack computers around the world, today released another cache of what appears to be extremely potent (and previously unknown) software capable of breaking into systems running Windows. The software could give nearly anyone with sufficient technical knowledge the ability to wreak havoc on millions of Microsoft users. The leak includes a litany of typically codenamed software “implants” with names like ODDJOB, ZIPPYBEER, and ESTEEMAUDIT, capable of breaking into — and in some cases seizing control of — computers running version of the Windows operating system earlier than the most recent Windows 10.

The vulnerable Windows versions ran more than 65% of desktop computers surfing the web last month, according to estimates from the tracking firm Net Market Share. The crown jewel of the implant collection appears to be a program named FUZZBUNCH, which essentially automates the deployment of NSA malware, and would allow a member of agency’s Tailored Access Operations group to more easily infect a target from their desk. According to security researcher and hacker Matthew Hickey, co-founder of Hacker House, the significance of what’s now publicly available, including “zero day” attacks on previously undisclosed vulnerabilities, cannot be overstated:

“I don’t think I have ever seen so much exploits and 0day [exploits] released at one time in my entire life,” he told The Intercept via Twitter DM, “and I have been involved in computer hacking and security for 20 years.” Affected computers will remain vulnerable until Microsoft releases patches for the zero-day vulnerabilities and, more crucially, until their owners then apply those patches. “This is as big as it gets,” Hickey said. “Nation-state attack tools are now in the hands of anyone who cares to download them…it’s literally a cyberweapon for hacking into computers…people will be using these attacks for years to come.”

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Russia and China are close to launching their own competitor to SWIFT. Good timing. This is nuts.

Hackers Release Files Indicating NSA Hacked SWIFT, Global Bank Transfers (R.)

Hackers released documents and files on Friday that cybersecurity experts said indicated the U.S. National Security Agency had accessed the SWIFT interbank messaging system, allowing it to monitor money flows among some Middle Eastern and Latin American banks. The release included computer code that could be adapted by criminals to break into SWIFT servers and monitor messaging activity, said Shane Shook, a cyber security consultant who has helped banks investigate breaches of their SWIFT systems. The documents and files were released by a group calling themselves The Shadow Brokers. Some of the records bear NSA seals, but Reuters could not confirm their authenticity. Also published were many programs for attacking various versions of the Windows operating system, at least some of which still work, researchers said.

In a statement to Reuters, Microsoft, maker of Windows, said it had not been warned by any part of the U.S. government that such files existed or had been stolen. “Other than reporters, no individual or organization has contacted us in relation to the materials released by Shadow Brokers,” the company said. The absence of warning is significant because the NSA knew for months about the Shadow Brokers breach, officials previously told Reuters. Under a White House process established by former President Barack Obama’s staff, companies were usually warned about dangerous flaws. Shook said criminal hackers could use the information released on Friday to hack into banks and steal money in operations mimicking a heist last year of $81 million from the Bangladesh central bank. “The release of these capabilities could enable fraud like we saw at Bangladesh Bank,” Shook said. The SWIFT messaging system is used by banks to transfer trillions of dollars each day.

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“..if those analysts were properly consulted about the claims in the White House document they would have not approved the document going forward.”

The ‘Smoking-Gun’ Quote On The Recent Syrian Gas-Attack (Zuesse)

After detailed decimation of President Trump’s ‘intelligence’ ‘justifying’ his invasion of Syria, the MIT specialist on such intelligence-analysis, Dr. Theodore Postol, concludes:

“I have worked with the intelligence community in the past, and I have grave concerns about the politicization of intelligence that seems to be occurring with more frequency in recent times – but I know that the intelligence community has highly capable analysts in it. And if those analysts were properly consulted about the claims in the White House document they would have not approved the document going forward. I am available to expand on these comments substantially. I have only had a few hours to quickly review the alleged White House intelligence report.

But a quick perusal shows without a lot of analysis that this report cannot be correct, and it also appears that this report was not properly vetted by the intelligence community. This is a very serious matter. President Obama was initially misinformed about supposed intelligence evidence that Syria was the perpetrator of the August 21, 2013 nerve agent attack in Damascus. This is a matter of public record. President Obama stated that his initially false understanding was that the intelligence clearly showed that Syria was the source of the nerve agent attack.

This false information was corrected when the then Director of National Intelligence, James Clapper, interrupted the President while he was in an intelligence briefing. According to President Obama, Mr. Clapper told the President that the intelligence that Syria was the perpetrator of the attack was “not a slamdunk.” The question that needs to be answered by our nation is how was the president initially misled about such a profoundly important intelligence finding?

The U.S. ‘news’media hid from the public Dr. Postol’s disproof of the Obama regime’s still-continuing assertions that the 21 August 2013 sarin attack was from Syria’s government instead of from the ‘moderate rebels’ (jihadists) whom the U.S. supported. Will they hide from the U.S. public his disproof of the U.S. regime’s latest such scam backing the actual perpetrators of a war-crime — will they do now as they did then?

This issue presents a challenge to the U.S. ‘news’ media, to finally show some integrity, some honor, and expose the operations of the gang at the U.S. government’s top, instead of simply continuing to pump that gang’s propaganda. Without the continuing cooperation of America’s ‘news’media, we would not now be heading toward World War III — global nuclear war. What would be the time when these ‘news’media will do their job, instead of do what they’re being paid to do, if that time is not now.

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Even more lobbyists needed?!

US Insurers Sue Saudis for $4.2 Billion Over 9/11 (TAM)

Last year’s Justice Against Sponsors of Terrorism Act (JASTA), a bill which allowed Americans to sue Saudi Arabia in US court over their involvement in 9/11, has yielded another major lawsuit yesterday, a $4.2 billion suit filed by over two dozen US insurers related to losses sustained because of the 2001 attack. The lawsuit is targeting a pair of Saudi banks, and a number of Saudi companies with ties to the bin Laden family, accusing them of various activities in support of al-Qaeda in the years ahead of 9/11, and subsequently having “aided and abetted” the attack. The biggest target is the Saudi National Commercial Bank, which is majority state-owned.

The Saudi government heavily pressured the Obama Administration to block the JASTA last year, threatening to crash the US treasury market if it led to lawsuits, but overwhelming Congressional support still got it passed into law. While there were more than a few lawsuits already filed in the past several weeks related to JASTA, this is by far the biggest, and most previous lawsuits are still in limbo as the court and lawyers try to combine them into various class action groups. Historically, US sovereign immunity laws have prevented suits against the Saudi government related to overseas terrorism. With the release of the Saudi-related portions of the 9/11 Report last year, however, such suits were inevitable, and the federal government could no longer protect the Saudis from litigation.

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Everybody should know this.

Understanding Land Value Taxation (Walker)

Back in the 18th and 19th centuries, economists took a dim view of landowners. Influential theorists like Adam Smith, David Ricardo and John Stuart Mill saw them as a drag on economic activity, primarily because they reduced the value of other people’s economic activity (through rent) without any incentive to make an economic contribution themselves. In the late 1800s, American social theorist and economist Henry George started a movement arguing for a single land value tax (LVT) – on the unimproved value of land – to replace other forms of taxation. It was rooted in the idea that if economic activity (labour, trade etc.) is the source of tax revenues, tax inevitably becomes a drag on the very thing that creates it. And while productive members of society earn money to pay their taxes, landowners are unproductive earners who pay their taxes through land rent, which is paid by people who generate economic activity.

Rent and taxes are a ‘double whammy’ on productive people. While productive members of society earn money to pay their taxes, landowners are unproductive earners who pay their taxes through land rent, which is paid by people who generate economic activity. That means rent – like taxes – is a drag on the economy. But unlike taxes, which can be used to stimulate economic activity through public spending, rent disappears into landlords’ pockets. So apart from the relatively small economic impact from landlords’ spending, their rent takes value out of the economy and delivers little value back to it. Understandably, the Georgists (Henry George’s LVT supporters) are still going strong today.

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The Vichy comment looks odd; why go there? But do remember: French polls are meaningless by now.

Le Pen Ready to Be ‘Crucified’ for France (BBG)

Far-right candidate Marine Le Pen pulled all the stops to stem her slide in the polls, saying she’s willing to be “crucified” for her stance on absolving France for the wartime deportation of Jews, and pledging to protect the country from Islamic fundamentalists. In a wide-ranging interview Friday on France Info radio nine days before the first round of the presidential vote, the 48-year-old anti-immigration candidate expressed disappointment at what she said was U.S. President Donald Trump going back on campaign promises, while focusing mainly on well-worn themes that most strike a chord with her electorate: Islam, immigration, national identity and terrorism.

“I don’t want France to be damaged, to be humiliated, that it be held responsible when it is not responsible,” Le Pen said. “People can crucify me, I will not change my mind, I will always defend France.” The National Front candidate’s lead in the polls has been whittled away over the last few weeks, leaving her struggling to regain momentum. First-round support for both Le Pen and centrist Emmanuel Macron slipped 0.5 points to respectively 23.5% and 22.5%, according to a daily rolling poll by Ifop on Thursday. Le Pen was at 26.5% in mid-March. [..] In the radio interview, Le Pen maintained her contention that France had no responsibility for the 1942 roundup of Jews in and around Paris by French police at the request of the German occupying forces to be sent to concentration camps.

The candidate, who first made that comment on April 9, was reverting to the long-established party line that shuns any hint of repentance. Le Pen said she is “extremely sensitive to the martyrdom of the Jews,” adding that the only issue was “juridical,” whether the Vichy regime was France or not. “I consider that Vichy was not France. French people can commit crimes without France being criminal.” In the interview, Le Pen criticized Trump for changing his mind on the U.S.’s global role after he said on Wednesday that the North Atlantic Treaty Organization was “no longer obsolete” in fighting terrorism. “Undeniably he is in contradiction with the commitments he had made,” Le Pen said. Trump had said in January that NATO was “obsolete.” Among her key proposals is for France to quit the alliance.

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9 days before an election. They’re trying to make her win?!

French Prosecutors Seek To Lift Le Pen Immunity Over Expenses Inquiry (AFP)

French prosecutors have asked the European parliament to lift the immunity of the far-right presidential candidate Marine Le Pen over an expenses scandal, deepening her legal woes on the eve of the election. The move comes just nine days before France heads to the polls for a highly unpredictable vote, with Le Pen – who heads the Eurosceptic Front National (FN) – one of the frontrunners in the 23 April first round. The request was made at the end of last month after Le Pen, who is a member of the European parliament, invoked her parliamentary immunity in refusing to attend questioning by investigating magistrates. The prosecutors also made a similar request regarding another MEP from Le Pen’s party, Marie-Christine Boutonnet, who also avoided questioning.

Le Pen, who has denied misusing parliamentary funds, shrugged off the move. “It’s totally normal procedure, I’m not surprised,” she told France Info radio. The case was triggered by a complaint from the European parliament, which accuses the FN of defrauding it to the tune of about €340,000 (£290,000). The parliament believes the party used funds allotted for parliamentary assistants to pay FN staff for party work in France. In February, it said it would start docking Le Pen’s pay unless she paid the money back. The allegations appear to have had little impact on Le Pen’s campaign, dwarfed by the bigger scandal engulfing her conservative rival François Fillon.

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A day like so many others.

More Than 2,000 Migrants Rescued In Dramatic Day In Mediterranean (R.)

More than 2,000 migrants trying to reach Europe were plucked from the Mediterranean on Friday in a series of dramatic rescues and one person was found dead, officials and witnesses said. An Italian coast guard spokesman said 19 rescue operations by the coast guard or ships operated by non-governmental organizations had saved a total of 2,074 migrants on 16 rubber dinghies and three small wooden boats. The medical charity Medecins Sans Frontieres (MSF) said in a tweet that one teenager was found dead in a rubber boat whose passengers were rescued by its ship Aquarius. “The sea continues to be a graveyard,” MSF said in a Tweet. The coast guard spokesman confirmed that one person had died but gave no details. MSF said two of their ships, Aquarius and Prudence, had rescued about 1,000 people in nine boats.

Desperate refugees struggled to stay afloat after they slid off their rubber boat during a rescue operation by the Phoenix, a ship of the rescue group Migrant Offshore Aid Station (MOAS). Video footage showed rescuers jumping into the water off the coast of Libya to help them. “In 19 years of covering the migration story, I have never experienced anything like today,” said Reuters photographer Darrin Zammit Lupi, who was aboard the Phoenix. In one operation, the Phoenix rescued 134 people, all from sub-Saharan counties, he said. Those rescued by the MOAS and MSF ships were transferred to Italian coast guard ships, which had rescued other migrants, to be taken to Italian ports. According to the International Organisation for Migration, nearly 32,000 migrants have arrived in Europe by sea so far this year. More than 650 have died or are missing.

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