Shale Archives - The Automatic Earth

The World Health Organization (WHO) has commended China’s swift response to a rapidly moving virus gripping the country, but despite a quick-climbing infection tally, the agency is reluctant to classify it a global health threat. “What they are doing is a very, very strong measure and with full commitment,” WHO director-general Tedros Ahanom Ghebreyesus said on Wednesday, referring to Beijing’s shutdown of all public transportation in and out of the city of Wuhan, the viral epicenter. As of 10am local time, all trains, buses, railways and ferries traveling to and from Wuhan have halted operations until further notice in an effort to slow the spread of the virus, with the government calling on the city’s 11 million residents to refrain from leaving without “special reasons.”

Medical personnel were also posted at toll gates and checkpoints along major roadways to screen commuters for the illness. The comments followed an emergency WHO meeting in Geneva on Wednesday, where the health agency mulled whether to declare the novel coronavirus – now dubbed “2019-nCoV” – a worldwide emergency. Still unsure after a day of deliberation, however, WHO will meet again Thursday, with Tedros saying he took the decision “extremely seriously.” China’s National Health Commission (NHC), meanwhile, has provided the latest figures tracking the impact of the dangerous pathogen, with 131 newly confirmed infections bringing the total to 571 across some 25 Chinese provinces.

Seventeen people have died from the illness thus far, all in central China’s Hubei province, with another 95 in critical condition with severe pneumonia-like symptoms. There are also now 393 suspected infections in China – 257 of them registered on Wednesday alone – with 5,897 additional cases of “close contact,” the NHC said.

Couldn’t find any relevant write-ups of Schiff’s marathon, so here’s the text -not sure it covers all 3.28 minutes of it. But who cares? He had nothing new and what he had, he repeated 20+ times. Including the very dead: “The United States aids Ukraine and her people so that they can fight Russia over there, and we don’t have to fight Russia here.”

The Hunter Biden/Burisma story has not been debunked as Schiff repeats ad nauseum, what has been debunked -by Mueller- is Russiagate. But who cares?

Michael Tracey: “Counted at least 57 references to Russia or Putin in today’s impeachment trial which is why it’s a total fallacy to separate this episode from the Russiagate narrative which has dominated US politics for 3+ years. What’s happening now is just its inevitable culmination..”

• Adam Schiff’s Opening Argument At Senate Impeachment Trial (Pol.)

Mr. Chief Justice, Senators, counsel for the President, and my fellow House managers: “When a man unprincipled in private life desperate in his fortune, bold in his temper, possessed of considerable talents, having the advantage of military habits—despotic in his ordinary demeanour—known to have scoffed in private at the principles of liberty—when such a man is seen to mount the hobby horse of popularity—to join in the cry of danger to liberty—to take every opportunity of embarrassing the General Government & bringing it under suspicion—to flatter and fall in with all the non sense of the zealots of the day—It may justly be suspected that his object is to throw things into confusion that he may ‘ride the storm and direct the whirlwind.’”

Those words were written by Alexander Hamilton in a letter to President George Washington, at the height of the Panic of 1792, a financial credit crisis that shook our young nation. Hamilton was responding to sentiments relayed to Washington as he traveled the country, that America, in the face of that crisis, might descend from “a republican form of Government,” plunging instead into “that of a monarchy.” The Framers of our Constitution worried then—as we worry today—that a leader could come to power not to carry out the will of the people that he was elected to represent, but to pursue his own interests. They feared that a president could subvert our democracy by abusing the awesome power of his office for his own personal or political gain. And so they devised a remedy as powerful as the evil it was meant to combat: Impeachment.

Go Tulsi. Someone has to break the DNC, or the Democrats are finished as a party..

• Gabbard Suing Clinton For Defamation Over ‘Russian Asset’ Comments (Hill)

Rep. Tulsi Gabbard (D-Hawaii) is suing Hillary Clinton for defamation over the former secretary of State’s remarks on a podcast characterizing the Democratic presidential candidate as a Russian asset. Gabbard filed the defamation lawsuit Wednesday in the U.S. District Court for the Southern District of New York. Gabbard’s lawyers allege that Clinton’s comments have “smeared” Gabbard’s “political and personal reputation.” “Tulsi Gabbard is a loyal American civil servant who has also dedicated her life to protecting the safety of all Americans,” Gabbard’s lawyer Brian Dunne said in a statement. “Rep. Gabbard’s presidential campaign continues to gain momentum, but she has seen her political and personal reputation smeared and her candidacy intentionally damaged by Clinton’s malicious and demonstrably false remarks.”

Gabbard’s campaign referred all questions on the lawsuit to Dunne. In response to the lawsuit, Clinton spokesman Nick Merrill said “that’s ridiculous.” [..] The lawsuit claims that Clinton is a “cutthroat politician” and “sought retribution” for Gabbard endorsing Clinton’s 2016 Democratic primary opponent, Sen. Bernie Sanders (I-Vt.). Gabbard is now facing Sanders in the crowded 2020 Democratic primary. “Clinton’s false assertions were made in a deliberate attempt to derail Tulsi’s presidential campaign,” it says. Gabbard’s lawyers claim Clinton’s “peddling of this theory” has harmed Gabbard, voters and “American democracy.” “Tulsi brings this lawsuit to ensure that the truth prevails and to ensure this country’s political elites are held accountable for intentionally trying to distort the truth in the midst of a critical Presidential election,” the lawsuit says.

Congresswoman & Presidential candidate @TulsiGabbard on why she’s suing Clinton pic.twitter.com/nm8PWGm0jm

— The Convo Couch (@theconvocouch) January 23, 2020

No. 1 for DNC: dump Biden. He’s roadkill.

• Black South Carolina Elected Official Now Backing Sanders Over Biden (AP)

A South Carolina elected official who endorsed Joe Biden last month is switching her allegiance to Bernie Sanders in the state’s first-in-the-South presidential primary, saying she had viewed the former vice president — whose support in the state is considered deep — as “a compromise choice.” Dalhi Myers told AP on Wednesday that she was making the change in part because she values what she sees as Sanders’ strength in being able to go toe-to-toe with President Donald Trump in the general election. “I looked at that, and I thought, ‘He’s right,’” said Myers, a black woman first elected to the Richland County Council in 2016. “He’s unafraid and he’s unapologetic. … I like the fact that he is willing to fight for a better America — for the least, the fallen, the left behind.”

Sanders, a Vermont senator, frequently calls out what he sees as Trump’s dishonesty, referring on the campaign trail to the president as a “pathological liar.” Biden, whose relationships in South Carolina go back decades, has led polling in the state, particularly among the black voters who make up most of the state’s Democratic primary electorate. Sanders, whose 47-point loss to Hillary Clinton in 2016 in South Carolina blunted the momentum generated in opening primary contests and exposed his weakness with black voters, has focused on strengthening his ties in the state’s black community. In December, Myers, a corporate lawyer in Columbia, was among more than a dozen South Carolina elected officials to endorse Biden, saying at the time in a release from the Biden campaign that he was “the only candidate with the broad and diverse coalition of support we need to win” against Trump in the general election.

No, really. Dump Biden.

• Hunter Biden Ordered To Appear In Court Next Week For Contempt Hearing (ZH)

Hunter Biden has been ordered to stand in front of an Arkansas judge next Tuedsay to explain why he shouldn’t be held in contempt of court for failing to produce a laundry list of financial and personal information in his ongoing child support dispute with stripper Lunden Alexis Roberts. Roberts asked the court on Tuesday to hold Biden in contempt for failing to disclose financial information, contact information, and “a list of all companies he currently owns or in which he has an ownership interest,” as well as “all companies in which he has had an ownership interest in the past five years.” Also sought are a copy of Biden’s 2017 and 2018 tax returns, deeds to properties he owns, and an executed copy of a financial records release Biden has been avoiding filing unless the court allows him to do so under seal.

“The defendant continues to act as though he has no respect for this Court, its orders, the legal process in this state, or the needs of his child for support,” reads the filing, which adds “This is but another example of the defendant’s unnecessary actions to frustrate prompt adjudication of this matter and increase the plaintiff’s litigation costs.” Circuit Court Judge Holly Meyer agreed, ordering Biden to appear in person to explain his failure to produce the requested information which was due in August, 2019. In November, a DNA test revealed Hunter to be the father of the unnamed child with Roberts. In order to determine what Biden can cough up, Roberts has sought extensive financial records for periods which include his time on the board of a Ukrainian energy company while his father was the Obama administration’s point-man on Ukraine.

Still don’t quite get this. Did MbS pose as a Nigerian prince? Will the UN get involved if your phone is hacked? Are the UN and Bezos trying to seek vengeance for Khashoggi in a roundabout way?

• UN Demands US Probe Of Alleged Saudi Hack of Bezos’ Phone (ZH)

Despite the Saudi Embassy’s denial of the “absurd” claims that MbS hacked Jeff Bezos’ phone, United Nations experts have called for an “immediate investigation” by the United States. Independent experts Agnes Callamard, UN Special Rapporteur on summary executions and extrajudicial killings, and David Kaye, UN Special Rapporteur on freedom of expression, said in a statement Wednesday: “The information we have received suggests the possible involvement of the Crown Prince in surveillance of Mr. Bezos, in an effort to influence, if not silence, The Washington Post’s reporting on Saudi Arabia.” “The circumstances and timing of the hacking and surveillance of Bezos also strengthen support for further investigation by U.S. and other relevant authorities of the allegations that the Crown Prince ordered, incited, or, at a minimum, was aware of planning for but failed to stop the mission that fatally targeted Mr. Khashoggi in Istanbul.”

“The alleged hacking of Mr. Bezos’s phone, and those of others, demands immediate investigation by U.S. and other relevant authorities, including investigation of the continuous, multi-year, direct and personal involvement of the Crown Prince in efforts to target perceived opponents.” The U.N. experts reviewed a 2019 digital forensic analysis of Bezos’ iPhone, which they said was made available to them as U.N. Special Rapporteurs. The experts said that records showed that within hours of receipt of a video from the crown Pprince’s WhatsApp account, there was “an anomalous and extreme change in phone behavior” with enormous amounts of data from the phone being transmitted over the following months.

Oh cut it out.

• Boeing CEO Expects To Resume 737 MAX Production Before Mid-Year (R.)

Boeing Chief Executive Dave Calhoun told reporters on Wednesday the U.S. planemaker expects to resume 737 MAX production months before its forecasted mid-year return to service and said it did not plan to suspend or cut its dividend. The company announced a production halt in December, when the global grounding of the fast-selling 737 MAX following two deadly crashes in five months looked set to last into mid-2020 — a timeline pushed back after Boeing endorsed new simulator training for pilots. Calhoun said the company is not considering scrapping the MAX and expects it will continue to fly for a generation.

“I am all in on it and the company is all in on it,” Calhoun said, adding Boeing will not launch a marketing campaign to get customers to get back on 737 MAX planes. The company said on Tuesday it now expects regulators to approve the plane’s return to service in the middle of the year. Calhoun said he did not see recent issues raised about wiring or software as “serious problems.” The production delay threatens to cut U.S. GDP by as much as 0.5 percentage points. President Donald Trump on Wednesday told CNBC Boeing is a “very disappointing company.” United Airlines said Wednesday it does not expect to fly the Boeing 737 MAX this summer.

Subtitle: US Fracking Gushes Bankruptcies, Defaulted Debt, and Worthless Shares

• The Great American Shale Oil & Gas Bust (WS)

Following the sharp re-drop in oil and natural gas prices in late 2018, bankruptcy filings in the US by already weakened exploration and production companies , oilfield services companies, and “midstream” companies (they gather, transport, process, or store oil and natural gas) jumped by 51% in 2019, to 65 filings, according to data compiled by law firm Haynes and Boone. This brought the total of the Great American Shale Oil & Gas Bust since 2015 in these three sectors to 402 bankruptcy filings. The debt involved in these bankruptcies in 2019 doubled from 2018 to $35 billion. This pushed the total debt listed in these bankruptcy filings since 2015 to $207 billion. The chart below shows the cumulative total debt involved in these bankruptcies since 2015.

But this does not include the much larger losses suffered by shareholders that get mostly wiped out in the years before the bankruptcy as the shares descend into worthlessness, and that then may get finished off in bankruptcy court. The banks, which generally had the best collateral, took the smallest losses; bondholders took bigger losses, with unsecured bondholders taking the biggest losses. Some of them lost most of their investment; others got high-and-tight haircuts; others held debt that was converted to equity in the restructured companies, some of which soon became worthless again when the company filed for bankruptcy a second time. The old shareholders took the biggest losses.

The Great American Fracking Bust started in mid-2014, when the price of WTI dropped from over $100 a barrel to below $30 a barrel by early 2016. Then the price began to recover, going over $70 a barrel in September and October 2018. But then it began to re-plunge. By the end of 2018, WTI had dropped to $47 a barrel. [..]

And 2020 is starting out terrible for natural gas producers. The price of natural gas has plunged to $1.90 per million Btu at the moment, a dreadfully low price where no one can make any money. Producers in shale fields that produce mostly gas, such as the Marcellus, are in deeper trouble still, because oil, even at these prices, would be a lot better than just natural gas. Producing areas with constrained takeaway capacity (it takes a lot longer to build pipelines than to ramp up production) are subject to local prices, which can be lower still. In some areas, such as the Permian in Texas and New Mexico, the most prolific oil field in the US, where natural gas is a byproduct of oil production, limited takeaway capacity has caused local prices to collapse, and flaring to surge.

Sent to WIkiLeaks yet?

• Ghislaine Maxwell’s Personal Emails Were Hacked (DM)

Ghislaine Maxwell’s personal emails have been hacked, and damaging information, including the names of individuals linked to Jeffrey Epstein’s sex trafficking case, are at risk of being publicly released. The revelation was made in a letter filed by the British socialite’s lawyers in the defamation case brought against her by Jeffrey Epstein accuser Virginia Guiffre, DailyMail.com has learned. The letter was sent by Maxwell’s attorney, Ty Gee, on December 5 to New York federal court Judge Loretta A. Preska but made public last week. The letter addresses the materials that should remain sealed or redacted in the case. It notes ‘the difficulty and complexity’ of the process as there are more than 8,600 pages, adding that it is ‘difficult-to-overstate importance to the lives of Ms. Maxwell and the non-parties’.

Gee’s letter says that the project ‘could not be accomplished by scanning or speed-reading’ as each page had to be carefully analysed to redact, for example, ‘a surname or an email address’. He refers to details that were released in error in the 2,000 pages that were made public in August by the U.S. Court of Appeals for the Second Circuit. Those filings revealed allegations that Maxwell procured underage girls for Epstein. She has denied those charges. ‘Despite the Second Circuit’s best efforts, it made serious mistakes. For example, it redacted a non-party’s name in one location but not another; so the media immediately gained access to that name,’ Gee wrote.

‘As another example, it redacted Ms. Maxwell’s email address (which linked to her own domain name) in one location but not another; shortly afterward hackers breached the host computer.’ The hack may have implications for Prince Andrew after it was revealed in December that the Duke of York exchanged emails with Maxwell in 2015 about Giuffre. In that email, revealed on Panorama, Maxwell and the British royal discussed Giuffre – despite denials from Prince Andrew that he had never met the then-teenager and that a photo of them together was a fake. ‘Let me know when we can talk. Got some specific questions to ask you about Virginia Roberts,’ Prince Andrew wrote in an email to Maxwell. She replied: ‘Have some info – call me when you have a moment.’

Make that 70.

• TEPCO Estimates It Will Take 44 Years To Decommission Fukushima No. 2 (JT)

Tokyo Electric Power Company Holdings Inc. has outlined plans for the decommissioning of its Fukushima No. 2 nuclear power station, estimating that the process will take 44 years. Tepco presented the outline of decommissioning plans to the town assembly of Tomioka, Fukushima Prefecture, one of the two host towns of the nuclear plant, on Wednesday. According to the outline, the decommissioning process will have four stages, taking 10 years for the first stage, 12 years for the second stage and 11 years each for the third and fourth stages.

Tepco will survey radioactive contamination at the nuclear plant in the first stage, clear equipment around nuclear reactors in the second, remove the reactors in the third and demolish the reactor buildings in the fourth. Meanwhile, the plant operator will transfer a total of 9,532 spent nuclear fuel units at the plant to a fuel reprocessing company by the end of the decommissioning process, and 544 unused fuel units to a processing firm by the start of the third stage.

Like it behooves a major charity. When interviewing such a CEO, always ask what their salaries are.

• Australia Red Cross: $11 Million ‘Administration Cost’ For Bushfire Help (7N)

The Australian Red Cross has admitted it may spend as much as $11 million processing the millions of dollars people from across the globe have donated to its bushfire appeal. However, in the face of public outcry, the charity has been forced to revise an earlier statement that suggested a large proportion of the $95 million raised could be quarantined for future natural disasters. The charity also pledged on Thursday to speed up the rate of its delivery of emergency funds to bushfire ravaged communities. “We’re now paying a million dollars a day and we’re keen to continue to speed that up, we know the assistance is needed now,” Red Cross’s director of emergencies, Noel Clement, told 7 NEWS.

Clement said the charity had already dispensed 700 grants of $10,000 each, totalling $7 million. He conceded however that of the revised total of $115 million donated so far – up from yesterday’s figure of $95 million – as much as $11 million could be spent on administration costs. Such a figure – roughly 10 per cent of total revenue raised – is generally considered to be the uppermost limit of acceptable administrative costs among large charitable organisations.

1980s: 4.5 million. 2019: 29,000.

• Monarch Butterfly Population Critically Low On California Coast – Again (G.)

The western monarch butterfly population wintering along California’s coast remains critically low for the second year in a row, a count by an environmental group released Thursday showed. The count of the orange-and-black insects by the Xerces Society, a not-for-profit environmental organization that focuses on the conservation of invertebrates, recorded about 29,000 butterflies in its annual survey. That’s not much different than last year’s tally, when an all-time low 27,000 monarchs were counted. “We had hoped that the western monarch population would have rebounded at least modestly, but unfortunately it has not,” said Emma Pelton, a monarch conservation expert with the Xerces Society.

By comparison, about 4.5 million monarch butterflies wintered in forested groves along the California coast in the 1980s. Scientists say the butterflies are at critically low levels in the Western US due to the destruction of their milkweed habitat along their migratory route as housing expands into their territory and use of pesticides and herbicides increases. Researchers also have noted the effect of climate change. Along with farming, climate change is one of the main drivers of the monarch’s threatened extinction, disrupting an annual 3,000-mile migration synced to springtime and the blossoming of wildflowers.

Photograph: Mike Blake/Reuters

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Debt Rattle November 30 2019

Nov 302019

November 30, 2019 Posted by Raúl Ilargi Meijer at 10:10 am Finance Tagged with: BBC, Black Friday, censure, Corbyn, Epstein, goat rodeo, impeachment, PBOC, QE, Shale 9 Responses »

Dorothea Lange Hoe culture in the South. Poor white, North Carolina July 1936

• China Shouldn’t Risk West’s Large Monetary Easing Of Last Decade – PBOC (SCMP)

• EU Watchdog Tells Banks To Get A Grip On Costs, Merge Or Close (R.)

• But US “Energy Independence” is More Complicated (WS)

• Black Friday Is Dying (ZH)

• Democrats Have A Better Choice Than Impeachment (CNN)

• Adam Schiff’s Goat Rodeo (Jim Kunstler)

• Telling The Truth Becomes A Crime (RT)

• Jeffrey Epstein Is Dead But His Legal Legacy May Have Years To Run (G.)

• Report On Jeremy Corbyn Inaccurate, Says BBC Trust (BBC)

China supports in different ways.

• China Shouldn’t Risk West’s Large Monetary Easing Of Last Decade – PBOC (SCMP)

The economic problems created by the aggressive monetary policy easing undertaken by Western central banks in response to the global financial crisis a decade ago are a clear warning to China not to go down the same path to combat its current economic slowdown, according to an official from the central bank. China, instead, should use the institutional advantages unique to China to address the country’s economic problems, Zhang Xuechun, deputy director of the People’s Bank of China’s research bureau, said on Friday. The central bank is under continuous domestic pressure to cut its interest rates further and faster to help stabilise economic growth, which is expected to drop below 6 per cent in the fourth quarter this year and fall further next year.

Coming only days ahead of the Central Economic Work Conference, which will set the government’s economic policy priorities for 2020, the comments send the strong signal that the PBOC believes an expansion of fiscal policy and continued economic restructuring, rather than monetary loosening, should play the leading roles in combating the economic slowdown next year. “We must learn the lesson from developed countries that relied heavily on quantitative easing,” said Zhang, citing asset bubbles, the widening of the wealth gap and rising international currency and trade competitions as the negative consequences of those policies. “When we face downward [economic] pressures from shifting to high-quality growth and external uncertainties, monetary policy should not leap forward alone,” Zhang said.

Not looking good. Let’s do another bailout.

• EU Watchdog Tells Banks To Get A Grip On Costs, Merge Or Close (R.)

Banks in the European Union could close branches, merge or leave the market to reverse a “bleak” outlook for profitability, the bloc’s banking watchdog said on Friday. The European Banking Authority’s (EBA) sixth annual dive under the bonnet of top banks found that the average capital ratios for lenders – a key measure of financial health – was 14.4% in June, little changed from the previous year. The percentage of poorly performing loans on bank books has fallen to an average of 3%, down from 3.6% a year earlier, but the return on equity worsened to 7% from 7.2%, still below the average cost of equity, the EBA said. “There are hardly any clear catalysts for an improvement in bank profitability that appear on the horizon,” the EBA said in its report.

“Low profitability limits banks’ capacity to generate capital organically and to fund loan growth as well as to pay dividends.” Only 28% of listed EU banks trade with a price-to-book ratio of more than 1 or where market value exceeds net assets, the EBA said. The equivalent for U.S. banks is 81%. Banks need to streamline operating expenses to lift profitability, such as by merging with a rival or leaving the market if they can’t generate sustainable profits, it said. Deutsche Bank is among European lenders seeking to boost their financial health and this week sold $50 billion in unwanted assets to Goldman Sachs as part of a lengthy restructuring.

Shale distorts.

• But US “Energy Independence” is More Complicated (WS)

US exports of crude oil and petroleum products – this includes gasoline, diesel, jet fuel, naphtha, and many others – exceeded imports in September by 89,000 barrels a day, the EIA reported today, and so the US became a “net exporter” of crude oil and petroleum products for the first time on a monthly basis in the EIA’s data going back to 1973:

The US has exported petroleum products – gasoline, diesel, heating oil, naphtha, propane, etc. – for a long time. This is the business some refineries are in. They buy crude oil from wherever they can get it, including other countries, and sell refined product to customers in the US and other countries. For example, California produces some crude oil and gets some crude oil by tanker from Alaska and some by oil train across the Rockies. But there is no oil pipeline across the Rockies. So refineries in California, including in the San Francisco Bay Area, also import some of their crude oil from other countries, refine it, and then sell gasoline, diesel, and other petroleum products to other countries largely in Latin America.

Texas, the largest oil-producing state in the US, faces a still more complex landscape, with its enormous crude-oil production, its large refinery operations, pipelines connecting oil producers in the state to refineries in other states, and its import and export terminals, via which it both imports and exports various grades of crude oil and all kinds of petroleum products, depending on market conditions and other factors. In other words, some of the crude oil that the US imports is then re-exported as value-added finished petroleum products, such as motor gasoline and diesel. And so imports of crude oil exceed exports of crude oil, given that the US imports some of the crude oil for the purpose of re-exporting it as refined products. But this difference between imports and exports of crude oil has been plunging as well, to 3.4 million barrels per day in September:

[..] US production of crude oil and petroleum products has spiked from 6.8 million barrels per day in 2008 to 17.5 million barrels per day in September, largely due to the ramp-up in shale oil production. Shale wells can also produce large quantities of gases that are counted separately as gas. These production figures here are just crude oil and petroleum products:

In 2019 so far, at least 33 oil and gas drillers in the US have filed for bankruptcy. Since January 2015, over 200 have filed for bankruptcy. Others are now jostling for position at the bankruptcy filing counter.

What are we going to do without consumerism?

• Black Friday Is Dying (ZH)

Black Friday is undergoing a transformative period where consumers are ditching brick-and-mortar stores for online shopping. Reuters noted Friday, that traffic volumes at stores across the country on Thanksgiving eve were soft — and it’s likely the trend will continue through the weekend. Another report via KeyBanc Capital Markets found traffic “somewhat muted at malls” during Thanksgiving and Black Friday. KeyBanc’s analyst Edward Yruma attributed the decline to more online sales. KeyBanc’s note said Gap, Banana Republic, Express and Zara offered 50% discounts, but that still wasn’t enough to attract shoppers. Though traffic was steady at Walmart, Target, and Lululemon.

As of noon, Salesforce.com observed online sales of $7.4 billion on Black Friday, 16% higher than a year ago. “It speaks to the fact that we’re amidst this digital transformation that’s happening for both the consumers and the retailers,” Rob Garf, vice president of industry strategy and insights at Salesforce, told Bloomberg. Some other possible reasons behind the weak turn out could be due retailers already offered an entire month of aggressive sales leading up to Black Friday. There are often limitations of how much a consumer can purchase as credit card rates soar to 25-year highs. The National Retail Federation (NRF) polled consumers earlier this month who said most of their shopping has already been done, many of whom took advantage of the deals leading up to Black Friday.

[..] There’s also evidence that the US economy is rapidly slowing and the US consumer is pulling back on spending as a recession could be nearing. The chart below shows the industrial recession has likely transmitted weakness into the consumer, which could produce a rather weak holiday spending period.

After 1001 reports on impeachment, CNN changes course.

• Democrats Have A Better Choice Than Impeachment (CNN)

The evidence is mounting daily that President Donald Trump may have committed an impeachable offense in withholding aid to Ukraine as he sought an investigation that would aid his reelection campaign. But with our polarized political system and split party control of Congress — many think impeachment is inevitable in the House, but conviction unattainable in the Senate — we need an alternative to impeachment. And luckily we have one. After amassing the testimony and preparing for the articles of impeachment, the House could change course and introduce a resolution for censure of the President. In it, they would recite all the behavior that would go into articles of impeachment.

But instead of Trump’s removal from office as a remedy, it would essentially place the impeachment process in abeyance until the House can determine whether it will be able to hear from additional key witnesses. This is a viable option for many reasons. As the Democrats make their point that the President’s behavior is unacceptable, the Republicans and the President continue to say that this impeachment inquiry is just another desperate attempt by Democrats to get Trump out of the White House after Robert Mueller’s investigation. So far, several key witnesses have refused to come forward to testify, and some, like John Bolton, have gone to federal court to determine if they must comply with congressional subpoenas over and above a White House order not to testify. A federal judge ruled this week that there is no blanket immunity for officials from a congressional subpoena, but the administration is appealing the ruling.

This will take time that the House does not seem willing to wait for. Even more concerning, though, is that after this process runs its course, it will be extremely difficult as a practical matter for the House to go through an impeachment process for anything the President does in the future, at least in the current term. It is unlikely the populace would stand for another round of divisive impeachment proceedings, as an ongoing matter, unless there is an extremely serious and obvious charge. [..] A censure would issue a formal warning: This is unacceptable behavior for a president, but we will not remove you from office this time. However, pending further testimony or should there be any instance of further wrongdoing, the appropriate remedy is removal from office. Ideally, the Senate would also adopt a resolution of censure, though support for Trump and the politics of the upcoming election would suggest that that is highly unlikely.

“..the US Intel Community organized a coup to overthrow the improbable President Trump.”

• Adam Schiff’s Goat Rodeo (Jim Kunstler)

I wonder if some great fatigue of the mind has set in among the class of people who follow the news and especially the tortured antics of Rep. Adam Schiff’s goat rodeo in the House intel Committee the past month. I wonder what the rest of congress is detecting among its constituents back home during this holiday hiatus. I suspect it is that same eerie absence of chatter I noticed, and what it may portend about the nation’s disposition toward reality. The dead white man Arthur Schopenhauer (1788 – 1860) famously observed that “all truth passes through three stages: first, it is ridiculed; second, it is violently opposed; and third, it is accepted as self-evident.”

America has been stuck in stage two lo these thirty-six months since Mr. Trump shocked the system with his electoral victory over She-Whose-Turn-Was-Undoubted, inciting a paroxysm of rage, disbelief, and retribution that has made the Left side of the political transect ridiculous, and repeatedly, ignominiously so, as their fantasies about Russian “collusion” and sequential chimeras dissolve in official proceedings. The astounding failure of Mr. Mueller’s report did nothing to dampen the violent derangement. There was no rethinking whatsoever about the terms-of-engagement in the Left’s war against the populist hobgoblin. The solidarity of delusion remained locked in place, leading to Mr. Schiff’s recent antics over his false “whistleblower” and the enfilade of diplomatic flak-catchers tasked to ward off any truthful inquiry into events in Ukraine.

But then, with the Thanksgiving shut-down, something began to turn. It was signaled especially in the Left’s chief disinformation organ, The New York Times, with a week-long salvo of lame stories aimed at defusing the Horowitz report, forthcoming on December 9. The Times stories were surely based on leaks from individuals cited in the IG’s report, who were given the opportunity to “review” the briefs against them prior to the coming release. The stories gave off an odor of panic and desperation that signaled a crumbling loss of conviction in the three-year narrative assault on the truth — namely, that the US Intel Community organized a coup to overthrow the improbable President Trump.

“If Assange gets extradited to the United States and if he gets punished for exposing the truth, then essentially what’s happening is that telling the truth becomes a crime.”

• Telling The Truth Becomes A Crime (RT)

An array of public figures, among them a retired British ambassador and the UN Special Rapporteur on Torture, again threw their weight behind Julian Assange, predicting the launch of a massive campaign in his support next year. Pundits, public figures and Julian Assange’s supporters flocked to an event called ‘Free the Truth’ in London. The Ruptly video agency filmed the exhibition of posters decrying Assange’s imprisonment, as well as artworks inspired by him. “So many activists are coming together at a time when I feel there’s been a real change in public sentiment,” Craig Murray, a former UK ambassador to Uzbekistan who now campaigns for the renowned publisher, commented.

Despite the lack of coverage or biased coverage in mainstream media, there is now an understanding that Julian is being extradited to the United States for nothing except for publishing the truth. He’s confident that next year “we will see one of the largest campaigns [in support of Assange] of our time.” It’s extremely important to draw attention to the founder of the WikiLeaks website, because “we are about to set a precedent,” warned Nils Melzer, a United Nations Special Rapporteur on Torture. If Assange gets extradited to the United States and if he gets punished for exposing the truth, then essentially what’s happening is that telling the truth becomes a crime.

Years more of Prince Andrew. They’re going to ship him off to Australia or some place.

• Jeffrey Epstein Is Dead But His Legal Legacy May Have Years To Run (G.)

The legal fallout from Jeffrey Epstein’s arrest for sex trafficking and subsequent suicide in jail is likely to go on for years, ensuring that those caught up in the saga – like Prince Andrew – will face scrutiny and negative headlines for years to come. Federal authorities in the US have repeatedly said that the investigation into the sex trafficking case is ongoing, raising the prospect of a lengthy multi-pronged and international inquiry into the wealthy financier’s jet-set lifestyle. There is already one criminal prosecution in relation to Epstein’s death: two Manhattan correctional center guards were indicted for allegedly trying to hide their failure to check on him in his cell the night he killed himself.

About one dozen accusers have also filed lawsuits against the convicted sex offender’s estate, and more litigation is likely, ensuring a multitude of legal cases wending their way through the courts. Finally the whereabouts of Epstein’s alleged procurer, Andrew’s friend and British media heiress Ghislaine Maxwell, remain unknown, sparking a global guessing game about one of the key figures in Epstein’s life. None of this is good news for the Duke of York, whose bumbling BBC Newsnight interview – in which he denied sexual activity with Epstein’s then 17-year-old accuser, Virginia Giuffre – has resulted in chaos for the royal family.

While the disgraced prince has now been removed from public duties, the Epstein affair seems virtually endless for him, both in time and scope, and is likely to make any return to prominence difficult, when at any moment a new wrinkle in the case might spur more bad headlines and tricky legal questions. Those wanting answers are unlikely to get them immediately. The wheels of justice can be grindingly slow, experts told the Guardian. “It’s complicated in knowing when the Epstein cases will come to a close, because we do not yet know all of the cases – both criminal and civil – that could find their way into the courts,” said attorney Robert Gottlieb, who has practiced criminal defense for more than four decades.

Edit reports through cut and paste so people look bad. Only took 4 years to investigate.

• Report On Jeremy Corbyn Inaccurate, Says BBC Trust (BBC)

The BBC broke accuracy and impartiality rules in a News at Six report about Jeremy Corbyn’s view on shoot-to-kill, the BBC’s governing body has said. The item, by BBC political editor Laura Kuenssberg, was shown three days after the Paris attacks in November 2015. A viewer complained that the report misrepresented the Labour leader’s position on the use of lethal force in the event of such an attack in the UK. BBC News director James Harding said he disagreed with the BBC Trust’s ruling. In the News at Six report, Kuenssberg said she had asked Mr Corbyn “if he were the resident here at Number 10 whether or not he would be happy for British officers to pull the trigger in the event of a Paris-style attack”.

He was seen to reply: “I am not happy with a shoot to kill policy in general. I think that is quite dangerous and I think can often be counter-productive.” The actual question Kuenssberg had asked during the interview was: “If you were prime minister, would you be happy to order people – police or military – to shoot to kill on Britain’s streets?” The previous question in the interview, in a section that was not used on the News At Six, he had been asked specifically about his response to a Paris-style attack if he was prime minister and whether he would “order security services onto the street to stop people being killed”. In answer to that question, Mr Corbyn had replied: “Of course you’d bring people onto the streets to prevent and ensure there is safety within our society.”

The BBC Trust said the BBC “was wrong in this case to present an answer Mr Corbyn had given to a question about ‘shoot to kill’ as though it were his answer to a question he had not in fact been asked”.

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Debt Rattle November 24 2019

Nov 242019

November 24, 2019 Posted by Raúl Ilargi Meijer at 9:51 am Finance Tagged with: Assange, ecommerce, Epstein, OPCW, Prince Andrew, Shale, Trump, Ukrainegate, Wikileaks 21 Responses »

Pablo Picasso Portrait de femme (Dora Maar) 1943

• Does Trump Have Bunch Of ‘Losers’ To Thank For Growing Economy? (Charlie Hall)

• Phase 2 of the Great American Shale Oil & Gas Bust (WS)

• Britain’s Carmakers Fear The Wheels Are Coming Off (G.)

• Brick & Mortar Melts Down as Ecommerce Jumps by Most Ever (WS)

• Ukraine, Trump, & Biden – The Real Story Behind “Ukrainegate” (Zuesse)

• Yes, Ukraine Interference In The 2016 Presidential Election (Levine)

• Internal OPCW E-Mail (WikiLeaks)

• New Sexed-Up Dossier Furore: The Leaked Email In Full (DM)

• How The Firm Lost Its Grip (O.)

• Met Faces New Questions Over ‘Trafficked’ Teen In Epstein Case (G.)

• Pilger Blasts ‘Cruel’ Media Coverage Of Julian Assange (RT)

Good friend Charlie Hall on America’s reality. Shale losses keep on coming.

• Does Trump Have Bunch Of ‘Losers’ To Thank For Growing Economy? (Charlie Hall)

U.S. oil production originally peaked in 1970, and gas in 1973, but declined through 2007, when production was revitalized by the process of lateral drilling and “fracking.” This technological miracle allowed us to exploit deposits formerly considered low-grade. Now the United States produces more oil than it ever has, and is, with Saudi Arabia and Russia, one of the top three oil producers in the world. Fracking has also reversed the long decline of U.S. natural gas production, allowing the substitution of gas for coal and a proliferation of cheap plastics. But, curiously, this renaissance of petroleum in the United States has not led to a resurgence of profits in the oil and gas industry.

Quite the opposite, because almost none of the companies that have invested in fracking are turning a profit. Investors in this industry are losing a lot of money, some $83 billion since 2008, according to oil analyst Arthur Berman. This situation means that relatively cheap oil and gas are keeping the U.S. economy strong. But this cheap oil and gas is being partially subsidized by investors who are either losing money or receiving a poor return on investment. In this respect, President Trump has these financial “losers” to thank for a large part of the current health of the U.S. economy. This relation among oil supplies, prices and the political winds is not new and works both ways.

Presidents Gerald Ford and Jimmy Carter were in office during the economically disastrous increase in the price of oil from less than $4 a barrel in 1972 to more than $35 in 1979. Both lost in their reelection bids. In 1980 and 1984, Ronald Reagan ran on a platform of “Let’s make America Great again” and “It’s morning again in America,” which coincided with the decline in oil prices during the 1980s. In the U.K., Margaret Thatcher was floundering in popularity in 1980, but then received most of the credit for the remarkable recovery of the U.K. economy. Was it her conservative management style, or the development of the North Sea oil, which occurred on her watch? Now that the North Sea oil boom is over, the U.K. economy is struggling again.

And there’s more. Chesapeake is but one example.

• Phase 2 of the Great American Shale Oil & Gas Bust (WS)

In 2019 through third quarter, 32 oil and gas drillers have filed for bankruptcy, according to Haynes and Boone. Since the end of September, a gaggle of other oil and gas drillers have filed for bankruptcy, including last Monday, natural gas producer Approach Resources. This pushed the total number of bankruptcy filings of oil and gas drillers since the beginning of 2015 to over 200. Other drillers, such as Chesapeake Energy, are jostling for position at the filing counter. Chesapeake has been burning cash ever since it started fracking. To feed its cash-burn machine, it has borrowed large amounts and has been buckling under its debt for years, selling assets to raise cash and keep drilling for another day.

But its debt is still nearly $10 billion. Its shares [CHK] closed on Friday at 59 cents. On November 5, in an SEC filing, it warned of its own demise unless oil and gas prices surge into the sky asap: “If continued depressed prices persist, combined with the scheduled reductions in the leverage ratio covenant, our ability to comply with the leverage ratio covenant during the next 12 months will be adversely affected which raises substantial doubt about our ability to continue as a going concern.” In early 2016, during Phase 1 of the oil bust — which had started in mid-2014 — Chesapeake had already used the threat of bankruptcy to push its creditors into accepting a debt restructuring. At the time, it was the second largest natural gas producer in the US.

The debt restructuring reduced its debt burden somewhat and pushed maturities out, which then allowed it to borrow new money from new investors with a series of bond sales. This coincided with the Wall Street floodgates reopening to the oil and gas sector, when PE firms, hedge funds, and distressed-debt funds piled billions of dollars into the sector, and many of the oil and gas drillers were able to raise more cash to burn. Chesapeake’s series of bond sales that it then undertook included, in January 2018, $1.25 billion of senior unsecured convertible notes with a coupon of 5.5%, due in September 2026. It issued those bonds at a discount, but by July 2018, a few months before Phase 2 of the oil bust set in, the bonds were trading at 103 cents on the dollar. On Friday, the last trade was at 45 cents on the dollar, giving these bonds a yield of over 21%:

But still fascinated with Musk. Why?

• Britain’s Carmakers Fear The Wheels Are Coming Off (G.)

The Society of Motor Manufacturers and Traders is due to release numbers this week on car, commercial vehicle and engine manufacturing – figures that so far this year have been in reverse. At its last outing, the SMMT said that UK car production had fallen by a “bitterly disappointing” 3.8% during September, adding to a turbulent year-to-date in which political and economic turmoil, softness in key markets and operational changes have been blamed for a 15.6% slump. Unsurprisingly, the SMMT’s boss, Mike Hawes, warned that the industry was most worried about “the continued threat of a no-deal Brexit”, which is said to have caused “international investment to stall” and cost hundreds of millions of pounds, “money that would have better been spent in meeting the technological challenges facing the global industry”.

Hawes’s comments dovetail with a different announcement from earlier this month, when Tesla’s chief executive, Elon Musk, said that the electric carmaker would be building its first major European factory on the outskirts of Berlin. “Brexit made it too risky to put a Gigafactory in the UK,” the entrepreneur said, to the delight of Remain campaigners. “[Boris] Johnson’s super-hard Brexit plan would see new trade barriers with our European partners,” wrote Lib Dem deputy leader Ed Davey in the Financial Times. “This will drive down already stagnant business investment … We must take seriously Mr Musk’s announcement.”

If he could be persuaded to comment on Tesla, Johnson would surely say the uncertainty will disappear as soon as we Get Brexit Done™. But Musk’s decision still seems like a missed opportunity, as he’s previously expressed an admiration for UK manufacturing – and F1 nous in particular. “We have a lot of respect for the British automotive engineering talent,” the billionaire told the Daily Telegraph in 2016. “Just look at Formula One – it amazes me how much British talent there is in that. We are likely to establish a Tesla engineering group in Britain at some point in the future.”

So where will the kids meet now? Online only?

• Brick & Mortar Melts Down as Ecommerce Jumps by Most Ever (WS)

Ecommerce sales in the third quarter 2019 spiked 17.3% from a year ago to $145.7 billion, not seasonally adjusted, according to the Commerce Department. On a seasonally adjusted basis, sales hit $154.5 billion. Ecommerce sales will exceed $600 billion in 2019, double the amount five years ago. In dollar terms, ecommerce sales jumped by $20.4 billion in Q3 compared to a year ago, the biggest dollar-jump in the history of ecommerce:

[..] Ecommerce is wiping out department stores one by one. The long-cherished destination for American shoppers is doomed. Sears is just the latest example of a long list of examples. Others will follow. Sales at brick-and-mortar department stores in Q3 fell 5.7% year-over-year to a new multi-decade low of $33.8 billion (seasonally adjusted). They’ve collapsed by 41% from the peak in Q4 2000 and by 20% from the beginning of the data series in 1992. People who still think that this trend is somehow going to turn around are fooling themselves. This is the brick-and-mortar business Macy’s, Nordstrom, and Sears are in:

An enormous effort by Eric Zuesse. This is just a small sample. Impossible to choose from all the material.

• Ukraine, Trump, & Biden – The Real Story Behind “Ukrainegate” (Zuesse)

Donald Trump has surrounded himself with neoconservatives. There’s not much distance between his policies toward Ukraine versus Barack Obama’s and Joe Biden’s. However, after Trump becomes impeached in the House (if that happens) and the impeachment trial starts in the Republican U.S. Senate, there will then be a perfect opportunity for Trump to embarrass the Democratic Party profoundly by exposing not only Joe Biden but Biden’s boss Obama as having caused the war in Ukraine. In order for him to do that, however, he’d also need to expose the rot of neoconservatism. Nobody in Washington does that, except, perhaps the rebelling Democrat, Tulsi Gabbard, and she’s rejected in the national polls now by the public within her own Party.

Neoconservatism is the uniform foreign-policy ideology of America’s billionaires, both Republican and Democratic, and this is why Washington is virtually 100% neocon. In America, wealth certainly doesn’t trickle down, but ideology apparently does — and that’s not merely neoliberalism but also its international-affairs extension: neoconservatism. Nonetheless, if a Trump re-election ticket were Trump for President, and Gabbard for Vice President, it might be able to beat anything that the Democrats could put up against it, because Trump would then head a ticket which would remain attractive to Republicans and yet draw many independents and even the perhaps 5% of Democrats who like her.

Only Sanders, if he becomes the Democratic nominee (and who is the least-neoconservative member of the U.S. Senate), would attract some of Gabbard’s supporters, but he wouldn’t be getting any money from the 607 people who mainly fund American politics. The 2020 U.S. Presidential contest could just go hog-wild. However, America’s billionaires probably won’t let that happen. Though there are only 607 of therm, they have enormous powers over the Government, far more than do all other Americans put together. The U.S. Supreme Court made it this way, such as by the 1976 Buckley decision, and the 2010 Citizens United decision.

“Back in 2016, no one thought that Trump would win the presidency. So why bother hiding it?”

• Yes, Ukraine Interference In The 2016 Presidential Election (Levine)

Let’s start with a fact: Meddling in the 2016 election by Ukrainian politicians and government agencies happened. The above is true and no amount of denial is going to change that. What’s more: Ukrainian nationals didn’t just meddle on their own, they also worked with Americans — including Ukrainian-American political operatives on the payroll of the Democratic Party. Not only did all this happen, it was written up as fact by establishment papers and outlets as varied as Yahoo, Politico, and the Financial Times in 2016 on the eve of the election. The involvement of Ukrainian pols and officials in all of this has never been secret. It was acknowledged at the time. The principle actors openly talked and bragged about their exploits in the press. And why not? Back in 2016, no one thought that Trump would win the presidency. So why bother hiding it?

One of the best examples of this is the plot to take down Paul Manafort — the sleazy Republican political consultant who had long worked in Ukraine and who headed Donald’s Trump campaign. In 2016, Serhiy Leshchenko, a Ukrainian member of parliament and an anti-corruption activist (who got embroiled in his own corruption scandal), coordinated the release of a handwritten ledger. The document purported to show off-the-book payments made to Manafort from the Party of the Regions — the political arm of the Viktor Yanukovich, the Ukrainian President who had been overthrown in a coup-type revolt by a much more western-friendly political faction. The ledger itself was released by NABU, a Ukrainian government anti-corruption organization set up as result of prodding by the Obama Administration and which was run with the backing and financial support of the FBI.

(As an aside: NABU — which also got embroiled into its own political corruption scandal — also happens to be at the heart of an internal Ukrainian political fight that sucked in ex-Ambassador Marie Yovanovitch. But that’s a different and complicated story. And then there’s the weird angle of the FBI being so closely involved with NABU at a time when this Ukrainian anti-corruption agency decided to involve itself in an American election.) Anyway, Leshchenko — a foreign politician — made clear that his objective at the time was to kill off Trump’s candidacy. That’s a direct admission of meddling. As Oleksiy Kuzmenko has documented so well, Leshchenko repeated this statement in various ways in both English and Ukrainian over and over again.

We’ve known this for a while. The OPCW is a cesspool.

• Internal OPCW E-Mail (WikiLeaks)

Wikileaks today publishes an e-mail, sent by a member of an OPCW fact-finding mission to Syria to his superiors, in which he expresses his gravest concern over intentional bias introduced to a redacted version of the report he co-authored. The Organisation for the Prohibition of Chemical Weapons sent a team of experts to investigate allegations that a chemical attack took place in the Syrian city of Douma on the 7th of April 2018. The author of the e-mail was a member of that team and claims the redacted preliminary version of the report, misrepresents the facts he and his colleagues discovered on the ground. The e-mail is dated 22nd of June. It is addressed to Robert Fairweather, Chief of Cabinet, and forwarded to his deputy Aamir Shouket and members of the fact-finding mission to Douma.

He says this misrepresentation was achieved by selective omission, introducing a bias which undermines the credibility of the report. Further it is claimed that crucial facts, that have remained in the redacted version: “…have morphed into something quite different to what was originally drafted.” This is said to have been done at the behest of the Office of the Director General (a post that was held by Turkish diplomat Ahmet Üzümcü at the time, he has since been replaced by Spaniard Fernando Arias). The attack in question was widely attributed to the Syrian Army, based on reports by rebel forces that were present in Douma at the time, and this assertion was backed up by the United States, British and French governments. These three countries carried out air strikes against Syrian government targets in response, on the 14th of April 2018.

This was before the fact-finding team had gained access to the site in Douma, the mission there was delayed for nearly two weeks by entrenched rebel fighters and subsequent clashes between the rebels and government forces that moved into the area. Upon arrival the team found much of the physical evidence, including the bodies of the deceased, was no longer available. It was alleged that 49 had died and up to 650 had been seriously affected by a weaponized chemical gas released in a specific area of rebel-held Douma on that day in April. Rebels claimed the gas came from cylinders dropped from aircraft, clearly implicating Syrian government forces who had complete air superiority.

The actual email, part of a long article by Peter Hitchens for the Daily Mail of all places.

• New Sexed-Up Dossier Furore: The Leaked Email In Full (DM)

Dear ******,

I wish to express, as a member of the FFM (Fact Finding Mission) team that conducted the investigation into the alleged chemical attack in Douma on 7 April, my gravest concern at the redacted version of the FFM report, which I understand was at the behest of the ODG. (Office of the Director General). After reading this modified report, which incidentally no other team member who deployed into Douma has had the opportunity to do, I was struck by how much it misrepresents the facts. Many of the facts and observations outlined in the full version are inextricably interconnected and, by selectively omitting certain ones, an unintended bias has been introduced into the report, undermining its credibility. In other cases, some crucial facts that have remained in the redacted version have morphed into something quite different to what was initially drafted. If I may, I will outline some specific aspects to the redacted report that are particularly worrisome.

The statement in paragraph 8.3 of the final conclusions ‘The team has sufficient evidence at this time to determine that chlorine, or another reactive chlorine-containing chemical, was likely released from cylinders’, is highly misleading and not supported by the facts. The only evidence available at this moment is that some samples collected at Locations 2 and 4 were in contact with one or more chemicals that contain a reactive chlorine atom. Such chemicals could include molecular chlorine, phosgene, cyanogen chloride, hydrochloric acid, hydrogen chloride or sodium hypochlorite (the major ingredient of household chlorine-based bleach). Purposely singling out chlorine gas as one of the possibilities is disingenuous. It is also worth noting that the term ‘reactive chlorine-containing chemical’ used in the redacted report is, in fact, inaccurate. It actually describes a reactive chemical that contains chlorine which itself (the chlorine) is not necessarily reactive e.g. chlorophenol. The original report uses the more accurate term ‘a chemical containing reactive chlorine’.

Pedophilia will do that. Time to get rid of the lot.

• How The Firm Lost Its Grip (O.)

Future historians may conclude that Prince Andrew’s defining achievement was to gift the nation a new verb. Following a tumultuous week when his car-crash interview shook the House of Windsor so vigorously it seemed its palaces were in danger of losing their crenellations, the Duke of York now finds himself banished from duties. His fate is the 21st-century equivalent of that which befell the difficult minor royals of previous eras who were locked up in asylums, away from the public gaze. “Prince Andrew has been de-royaled, if there is such a word,” said the historian and biographer Robert Lacey, an adviser to the acclaimed Netflix series The Crown.

Photograph: Chris Jackson/Getty Images

“At the risk of sounding melodramatic, I really would compare it to 1936 and the abdication of Edward VIII. What we are talking about is effectively the removal of a member of the royal family as a result of public opinion.” The duke can take some comfort from the knowledge that if he had been around a few hundred years ago, things could have been worse. “One can even compare it to 1649, when Charles I was executed,” Lacey said. “This is a reminder that what was an institution of absolute power now depends ultimately on the consent and approval of the communities it seeks to represent, and Prince Andrew failed in this respect.”

Princess Diana’s bombshell Panorama confession did huge damage to the royal family. Prince Charles’s decision to admit to adultery via a television interview greatly reduced his standing in the eyes of the public. “Andrew is a bit of a plonker, everybody knows that,” said one source close to the palace. “There’s no way he should have been allowed to do that interview. They should have just sent him off to Australia. That would have been a bloody good idea. Out of sight, out of mind.”

They knew about Andrew and kept quiet. Time to get rid of the lot.

• Met Faces New Questions Over ‘Trafficked’ Teen In Epstein Case (G.)

The Victims’ Commissioner is demanding that the Metropolitan Police explain its decision not to pursue a full investigation into claims a teenager was trafficked to the UK to have sex with Prince Andrew. The Observer understands that Dame Vera Baird QC, a former solicitor general and chair of the Board of the Association of Police and Crime Commissioners, has taken a close interest in the allegations, first examined by Scotland Yard in 2015. Baird, who has focused on protecting victims of sexual and domestic abuse throughout her career, is currently observing election purdah and cannot speak to the media. However, prior to the election she made her views known to a victims’ rights campaigner, telling him that she would be requesting a meeting with the Met once purdah was over.

“Before the election was called I spoke at length with the Victims’ Commissioner and we both find it extraordinary that this matter was not proceeded with,” Harry Fletcher said. The Met has said that its investigators reviewed all “available evidence” after receiving a complaint relating to claims that were made in court documents. It was alleged that in 2001 a 17-year-old, now known to be Virginia Roberts, was “forced to have sex with Prince Andrew”, purportedly at the London home of socialite Ghislaine Maxwell, the one-time girlfriend of the late disgraced financier Jeffrey Epstein. His victims are now bringing claims for damages against his estate. It is understood that lawyers for Roberts also independently contacted the force in 2016. But the Met chose not to pursue a full investigation.

“..the right to suck up to power..”

• Pilger Blasts ‘Cruel’ Media Coverage Of Julian Assange (RT)

In a wide-ranging dismantling of mainstream media reporting on Julian Assange, award-winning journalist John Pilger has blasted the Guardian for its coverage of the WikiLeaks founder. Pilger took aim at a Guardian editorial published this week, which made the case for not extraditing the Australian to the US, where he could face 175 years behind bars for possession and dissemination of classified information. The BAFTA award-winning documentary filmmaker has offered his interpretation of what the editorial actually meant “What the Guardian was really saying was this: ‘We are the fourth estate, the bearers of true liberal principles, the guardians of sacred rights. Such as the right to suck up to power. The right to invade countries and the right to smear those who expose our double standards and, if necessary, the right to destroy them,’” he said.

If Julian were to succumb to the cruelty he has endured, week after week, month after month, newspapers like the Guardian would share the responsibility. Pilger is one of the contributors to a new book titled ‘In Defense of Julian Assange,’ and he made the comments at the book’s launch in London on Saturday. Writer and activist Tariq Ali, fashion designer Vivienne Westwood, actress Pamela Anderson, and former diplomat Craig Murray are among the other high-profile names who contributed to the book, which is an essay compilation on the prosecution of Assange and freedom of speech.

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Debt Rattle July 16 2019

Jul 162019

July 16, 2019 Posted by Raúl Ilargi Meijer at 9:51 am Finance Tagged with: Assange, Boeing, CNN, drugs, Epstein, food, Lagarde, recession, Shale, Stress Test, Von der Leyen 6 Responses »

Jack Delano South Water Street freight depot of the Illinois Central Railroad, Chicago 1943

• US “Transportation Recession” Gets Uglier (WS)

• Stress Test a Sham, European Court of Auditors Warns (WS)

• Boeing 737 Max Ordered By Ryanair Undergoes Name Change (G.)

• What Looms Behind (Kunstler)

• Von Der Leyen Faces Crucial Vote In Quest To Lead EU Executive (R.)

• Christine Lagarde Must Confront Berlin To Save The Euro (Varoufakis)

• Epstein’s Accusers Urge US Judge To Keep Him Jailed Until Trial (R.)

• Epstein and the Explosive Crisis of the Deep State (CHS)

• CNN Twists Embassy Surveillance Records To Attack Assange (SP)

• Pathologizing Kids, Pharma Style (CP)

• The True Cost Of Cheap Food Is Health And Climate Crises (G.)

A hidden crisis in plain sight?!

• US “Transportation Recession” Gets Uglier (WS)

Freight shipments in the US across all modes of transportation – truck, rail, air, and barge – fell 5.3% in June compared to June last year, after having fallen 6.0% in May, the seventh month in a row of year-over-year declines, according to the Cass Freight Index for Shipments. This decline, along with other freight indicators, including orders for heavy trucks, now clearly outline the new Transportation Recession – number 2 since the Great Recession – in this very cyclical business. In terms of freight traffic by rail, the Association of American Railroads (AAR) reported that in June overall, volume fell 6.3% from a year ago. The volume of intermodal freight – containers hauled by truck and then transferred to rail, or semi-truck trailers that piggyback on special rail cars – dropped 7.2% in June.

For the first half, overall freight volume by rail was down 3.2%, with all segments in the red, except Petroleum and Petroleum Products, which was up 23%! Intermodal was down 3.3%. The Cass Freight Index, which tracks shipments of consumer and industrial goods but not bulk commodities such as grains, has now fallen below the June 2014 level. June 2014 had set a record in shipments just before Transportation Recession 1 came along. The boom in 2018 broke the 2014 records, and by a big margin. And now the industry is back in its own recession. In the stacked chart below of the Cass Freight Index, the red line denotes 2019 through June, which has now dipped below June 2014 (green line). Note how much of an outlier the boom of 2018 (black line at the top) had been, though it faded sharply at the end of last year:

“Unlike its counterparts in the UK, the US and Japan, the European Banking Authority (EBA) does not itself calculate the impacts on banks of the adverse scenario; it leaves that up to the banks themselves.”

• Stress Test a Sham, European Court of Auditors Warns (WS)

European bank stocks continue to get hammered near multi-decade lows by a slew of problems, including the ECB’s monetary policies, particularly its negative-interest-rate policy (NIRP), festering nonperforming loans, and a well-deserved lack of confidence by investors. This was just exacerbated by a scathing new report from the European Court of Auditors (ECA) highlighting a litany of problems and shortcomings with the European Banking Authority’s latest stress test. Among other things, the test ignored some of the most common factors that cause a bank to fail, excluded many of Europe’s most fragile banks, and used simulations that were a lot more benign than the last financial crisis.

Banking stress tests are supposed to gauge the resilience of a banking system by imposing a hypothetical shock — or “adverse stress scenario” — on a large share of the system’s banks. The problem in Europe is that the European Banking Authority’s stress tests have tended to ignore, rather than identify, many of the worst stress points in the banking system, which is probably why many of the Continent’s worst banking failures, including Bankia BFA, Dexia and Banco Popular, have happened shortly after the banks in question had passed a stress test. Unlike its counterparts in the UK, the US and Japan, the European Banking Authority (EBA) does not itself calculate the impacts on banks of the adverse scenario; it leaves that up to the banks themselves. It does not even corroborate the information provided or conduct on-site inspections.

What a surprise. I would dump the entire 737 name.

• Boeing 737 Max Ordered By Ryanair Undergoes Name Change (G.)

A Boeing 737 Max due to be delivered to Ryanair has had the name Max dropped from the livery, further fuelling speculation that the manufacturer and airlines will seek to rebrand the troubled plane. Photos have emerged of a 737 Max in Ryanair colours outside Boeing’s manufacturing hub, with the designation 737-8200 – instead of 737 Max – on the nose. The 737-8200 is a type name for the aircraft that is used by aviation agencies. The Max aircraft remains grounded worldwide after two crashes in Indonesia and Ethiopia killed a total of 346 people. Boeing has yet to convince regulators that modifications to its software are sufficient to ensure its safety.

Ryanair has 135 of the 737 Max models on order, the first five of which are due for delivery in the autumn, once regulators have declared it safe. The airline’s fleet order is comprised entirely of a larger version of the Max 8, with 197 seats, which it has until now referred to in official Ryanair announcements as the 737 Max 200. Neither Ryanair nor Boeing has commented on nor confirmed the substitution of the 737-8200 for the better known brand Max, as seen on the photographs taken at Renton in Washington, US, and posted on social media by Woodys Aeroimages. In previous photos from the same source, new Ryanair 737 Max 200 planes from Boeing are shown with 737 Max on its nose. It is understood that what is painted on the plane is a matter for the airline rather than the manufacturer. According to sources reported in the Wall Street Journal, the Max plane is unlikely to return to the skies before 2020.

“Shale oil was a neat stunt. Turns out you can produce a helluva lot of it by paying more to pull it out the ground than you get from selling it.”

• What Looms Behind (Kunstler)

Don’t hold your breath waiting for a coherent pre-election debate about the mother-of-all-issues facing this republic, namely, that we can’t afford the living arrangements Americans think of as “normal” anymore. This quandary has stalked us since the millennium turned. It thunders through all the activities of daily life, and the tensions emanating from it are so agonizing and difficult to face that our politics have deflected off into the kind of hysteria spawned by bad dreams. As the great Wendell Berry pointed out years ago, this is about the nation’s home economics: energy and resources in, production out, surplus wealth saved.

America had a brush with reality in 2008 when all the distortions of our home economics came together and whapped the country between the eyes with a two-by-four. Our energy-in was faltering. US oil production had fallen to a new low of under 4 million barrels a day and we were importing around 15 million. We papered over the problem with borrowed money in ever-larger amounts. This dynamic prompted ever riskier work-arounds on Wall Street, especially “innovations” in securitized debt, which invited criminal shenanigans. It blew up badly. Wealth vaporized. Industries collapsed. Homes and jobs were lost. Lives ruined.

The fairy-tale narrative since then is that technology rode to the rescue. The shale oil miracle “solved” the energy-in problem. Sure seems like it. But lots of things aren’t what they seem to be. Shale oil was a neat stunt. Turns out you can produce a helluva lot of it by paying more to pull it out the ground than you get from selling it. You can goose the process nicely by paying for it with borrowed money. And so it has gone. America now produces a new record of over 12 million barrels a day, and most of the companies doing it can’t make a red cent. And since it is increasingly obvious that they won’t ever pay back the money they borrowed before, they are unlikely to get new loans to continue their profitless operations.

Even if she pulls it off, it will be by the slimmest of margins. Pretty ridiculous.

• Von Der Leyen Faces Crucial Vote In Quest To Lead EU Executive (R.)

Germany’s Ursula von der Leyen faces a make-or-break vote on Tuesday in her quest to be the European Commission’s first female leader, and a raft of promises made the previous day may help her win over skeptical European Union socialist and liberal lawmakers. To appease them, von der Leyen pledged more ambitious carbon dioxide emissions targets, a more growth-oriented fiscal policy and taxing big tech companies. She also vowed to create an additional comprehensive European rule-of-law mechanism that includes annual reporting, boost the EU’s border guards earlier than scheduled to deal with the migrant issue, and set a minimum wage for EU workers.

Von der Leyen also suggested scrapping unanimous agreement by all 28 EU countries on climate, energy, social and taxation issues and give Britain more time to negotiate its exit from the bloc. Her pledges came amidst anger among some EU lawmakers over her nomination by EU leaders and their rejection of the “spitzenkandidaten”, the main parliamentary groups’ candidates for the job. Von der Leyen will address the 751-member European Parliament at 0700 GMT, to be followed by a debate and a secret ballot at 1600 GMT. The assembly however is currently four members short which means she needs 374 votes instead of 376.

Draghi gave it all Europe has got.

• Christine Lagarde Must Confront Berlin To Save The Euro (Varoufakis)

Lagarde’s greatest challenge is that she is replacing a man credited with saving the eurozone by means of policies that are no longer fit for purpose. If she departs from Draghi’s script, she will face fierce criticism. And if she does not, the eurozone’s never-ending crisis will spin further out of the ECB’s control. Draghi saved the eurozone by printing trillions of euros to fund the bankrupt banks and to allow Italy, Spain and other stressed states (though not Greece) to roll over their debts. To do this, he needed to skilfully subvert the eurozone’s rules which, in turn, required painstaking work to co-opt Germany’s Angela Merkel in his great clash with both the Bundesbank, Germany’s powerful central bank, and Wolfgang Schäuble, Germany’s finance minister.

While Draghi’s wall of money helped the eurozone perk up, it could not cure its underlying disease and had some pretty nasty side-effects. Stubborn negative interest rates continue to undermine pension funds and insurance companies in Germany and beyond. Rates remain negative because investment is woefully low due to investors’ self-fulfilling pessimism given the prospect of more austerity. This creates deflationary pressures that eat into the savings of the middle class, replace quality jobs with precarious ones and, thus, beget political monsters across Europe.

You’d almost hope he gets out on bail, just to see the reactions.

• Epstein’s Accusers Urge US Judge To Keep Him Jailed Until Trial (R.)

Two women who say they are victims of sexual misconduct by American financier Jeffrey Epstein on Monday urged a U.S. judge to keep him in jail while he awaits trial on charges of sex trafficking dozens of underage girls. “He’s a scary person,” one of the women, Courtney Wild, told U.S. District Judge Richard Berman in federal court in Manhattan. Wild and another accuser, Annie Farmer, spoke at the end of a hearing in which prosecutors argued that Epstein, 66, posed an “extraordinary risk of flight” and danger to the community and must remain in jail. Epstein, who has pleaded not guilty, has asked to be allowed to live under house arrest with armed guard at his expense in his mansion on Manhattan’s Upper East Side, which is valued at $77 million.

The hedge fund manager had a social circle that over the years has included Donald Trump before he became U.S. president, former President Bill Clinton and Britain’s Prince Andrew. Berman said he would probably announce his bail decision on Thursday at 9:30 a.m. EDT (1330 GMT), saying he needed more time to absorb the case. Lawyers for Epstein said their client, who wore dark blue jail scrubs in court, has had an unblemished record since he pleaded guilty more than a decade ago to a state prostitution charge in Florida and agreed to register as a sex offender.

[..] One of Epstein’s lawyers, Martin Weinberg, told Berman on Monday that Epstein needed to be out of jail so he and his lawyers could prepare their defense. In 2016, Berman rejected a similar bail proposal from Turkish-Iranian gold trader Reza Zarrab to let him live in an apartment under the watch of privately funded guards, saying wealthy defendants should not be allowed to “buy their way out of prison by constructing their own private jail.” The judge expressed similar skepticism on Monday, noting that all defendants have the same right to prepare their defense as Epstein. “If that’s the standard, then what are we going to tell all those people who can’t make the $500 or $1,000 bail?” he said.

“..the fatal danger to empires arises not from external foes but from inside the center of power as elite corruption erodes the legitimacy of the state.”

• Epstein and the Explosive Crisis of the Deep State (CHS)

Enter the sordid case of Jeffrey Epstein, suddenly unearthed after a decade of corporate-media/elitist suppression. It’s laughable to see the corporate media’s pathetic attempts to glom onto the case now, after actively suppressing it for decades:Jeffrey Epstein Was a Sex Offender. The Powerful Welcomed Him Anyway. (New York Times) Where was the NYT a decade ago, or five years ago, or even a year ago? Of all the questions that are arising, the signal one is simply: why now? There are many questions, now that the dead-and-buried case has been dug up: where did Epstein get his fortune? Why did he return to the U.S. from abroad, knowing he’d be arrested? Why was the Miami Herald suddenly able to publish numerous articles exposing the scandalous suppression of justice after 11 years of silence?

Years later, victims recount impact of Jeffrey Epstein abuse. Here’s my outsider’s take: the anti-Neocon camp within the Deep State observed the test case of Harvey Weinstein and saw an opportunity to apply what it learned. If we draw circles representing the anti-Neocon camp and the moralists who grasp the state’s legitimacy is hanging by a thread after decades of amoral exploitation and self-aggrandizement by the ruling elites, we would find a large overlap. But even die-hard Neocons are starting to awaken to the danger to their power posed by the moral collapse of the ruling elites. They are finally awakening to the lesson of history, that the fatal danger to empires arises not from external foes but from inside the center of power as elite corruption erodes the legitimacy of the state.

The upstarts in the Deep State have united to declare open war on the degenerates and their enablers, who are everywhere in the Deep State: the media, the intelligence community, and on and on. Since the battle is for the legitimacy of the state, it must be waged at least partially in the open. This is a war for the hearts and minds of the public, whose belief in the legitimacy of the state and its ruling elites underpins the power of the Deep State. If this wasn’t a war over the legitimacy of the state, the housecleaning would have been discrete. Insiders would be shuffled off to a corporate boardroom or do-nothing/fancy title office, or they’d retire, or if necessary, they’d die of a sudden heart attack or in a tragic accident (if only they knew).

Got to keep the Russia-Assange link alive that never existed. CNn got these files, that El Pais wrote about last week, but still calls them “exclusive”.

• CNN Twists Embassy Surveillance Records To Attack Assange (SP)

Spanish newspaper EL PAÍS reported on July 9 that WikiLeaks founder Julian Assange was spied on by a Spanish private defense and security firm called Undercover Global S.L., when he lived in the Ecuador embassy in the United Kingdom. The report was based on “documents, video, and audio material” that was “used in an extortion attempt against Assange by several individuals.” In May, Spanish police arrested journalist José Martín Santos, who had a record of fraud, and a computer programmer for their alleged involvement in an “attempt to make €3 million from the sale of private material.” Reporters for EL PAÍS found the spying on Assange’s legal defense meetings to be most significant.

They were stunned by the fact that Assange felt he had to hold meetings in the women’s bathroom if he wanted to ensure privacy. And they took note of U.C. Global’s “feverish, obsessive vigilance” toward “the guest,” which became more intense after Lenin Moreno was elected president of Ecuador in May 2017. That is not how CNN viewed the same cache of information compiled by the private security company and eventually used to allegedly extort Assange. Although EL PAÍS makes no mention of meddling in the 2016 presidential election in its coverage, CNN approached the material like analysts at the CIA. They voraciously consumed logs hoping the documents would confirm Assange collaborated with Russian intelligence assets to release emails from John Podesta, Hillary Clinton’s campaign chairman. Compare the two reports, as they appeared on the news organization’s websites:

CNN was unable to find concrete proof, and the words “potentially” and “possibility” do heavy lifting for the media organization. “New documents obtained exclusively by CNN reveal that WikiLeaks founder Julian Assange received in-person deliveries, potentially of hacked materials related to the 2016 US election, during a series of suspicious meetings at the Ecuadorian Embassy in London,” the CNN report reads. It adds, “The documents build on the possibility, raised by special counsel Robert Mueller in his report on Russian meddling, that couriers brought hacked files to Assange at the embassy.”

A suicidal species.

• Pathologizing Kids, Pharma Style (CP)

Millions of kids today are on meds for conduct disorders, depression, bipolar disorder, oppositional defiant disorder, mood disorders, obsessive-compulsive disorders, mixed manias, social phobia and, of course, ADHD. But according to data from IMS health in a Wall Street Journal article, just as many kids are being treated for non-psychiatric conditions that were often considered “adult diseases.” In fact, 25 percent of children and 30 percent of adolescents now take at least one prescription for a chronic condition said Medco, a pharmacy benefit manager, making the kid prescription market four times as strong as the adult in 2009. Between 2001 and 2009, high blood pressure meds for kids rose 17 percent, respiratory meds 42 percent, diabetes meds 150 percent and heartburn/GERD meds 147 percent.

In one study, 18.6 million children’s doctor visits for sleep problems, resulted in sleeping med prescriptions 81 percent of the time. One reason for Pharma’s pediatric bonanza is kids have become more sedentary and likely to overeat, like their adult counterparts. Over a third of U.S. kids are overweight and 17 percent are obese — which for a 4-foot-10 inch child would be 143 pounds. Obesity predisposes children to diabetes, hypertension, high cholesterol, sleep apnea, gallbladder disease, osteoarthritis and musculoskeletal disorders. But rather than telling kids to unplug the TV or video games, go outside and don’t come back until dinner, parents and medical professionals enable the deleterious lifestyles with the easy out of a pill.

In fact, the Lipitor, already the world’s top selling medication in adults until it went off patent, was approved for US children in 2008 in a chewable form in Europe. Adults on statins are six times more likely to develop liver dysfunction, acute kidney failure, cataracts and muscle damage, says an article in the British Medical Journal. So, give them to kids? “Plenty of adults down statins regularly and shine off healthy eating because they know a cheeseburger and steak can’t fool a statin,” wrote Michael J. Breus, PhD on the Huffington Post. “Imagine a 10-year-old who loves his fast food and who knows he can get away with it if he pops his pills.”

Food should not be an industry. Food production should be part of everybody’s life, we should know where our food comes from.

• The True Cost Of Cheap Food Is Health And Climate Crises (G.)

The true cost of cheap, unhealthy food is a spiralling public health crisis and environmental destruction, according to a high-level commission. It said the UK’s food and farming system must be radically transformed and become sustainable within 10 years. The commission’s report, which was welcomed by the environment secretary, Michael Gove, concluded that farmers must be enabled to shift from intensive farming to more organic and wildlife friendly production, raising livestock on grass and growing more nuts and pulses. It also said a National Nature Service should be created to give opportunities for young people to work in the countryside and, for example, tackle the climate crisis by planting trees or restoring peatlands.

“Our own health and the health of the land are inextricably intertwined [but] in the last 70 years, this relationship has been broken,” said the report, which was produced by leaders from farming, supermarket and food supply businesses, as well as health and environment groups, and involved conversations with thousands of rural inhabitants. “Time is now running out. The actions that we take in the next 10 years are critical: to recover and regenerate nature and to restore health and wellbeing to both people and planet,” said the commission, which was convened by the RSA, a group focused on pressing social challenges. The commission said most farmers thought they could make big changes in five to 10 years if they got the right backing.

“Farmers are extraordinarily adaptable,” said Sue Pritchard, director of the RSA commission and an organic farmer in Wales. [..] Pritchard said the UK had the third cheapest basket of food in the developed world, but also had the highest food poverty in Europe in terms of people being able to afford a healthy diet. Type 2 diabetes, a diet-related illness, costs the UK £27bn a year, she said. The commission also said agriculture produced more than 10% of the UK’s climate-heating gases and was the biggest destroyer of wildlife; the abundance of key species has fallen 67% since 1970 and 13% of species are now close to extinction. To solve these crises, the commission said “agroecology” practices must be supported – such as organic farming and agroforestry, where trees are combined with crops and livestock such as pigs or egg-laying hens.

Debt Rattle March 11 2019

Mar 112019

March 11, 2019 Posted by Raúl Ilargi Meijer at 10:06 am Finance Tagged with: backstop, Brexit, China, Deutsche, DOJ, FBI, Fed, Ireland, Mueller, Ohr, Powell, Shale, Steele, war simulations 3 Responses »

Jean Metzinger Soldier playing chess 1915

• Brexit Talks ‘Deadlocked’, Says Downing Street (G.)

• Brexit Fallout On UK Finance Intensifies (R.)

• How Central Bankers Blew Up The Global Economy (ABC.au)

• What Fed Chair Powell Said On 60 Minutes (ZH)

• China’s GDP Growth Could Be Half Of Reported Number – Pettis (SCMP)

• Brookings Says China Overstated Size Of Its Economy By 12% (ZH)

• Deutsche Bank Begins Talks Over Merger With Rival Commerzbank (G.)

• Leaked Documents Reveal DOJ Protected Steele After FBI Shunning (KK)

• How US Government and Media Spread Pro-War Propaganda (Greenwald)

• US “Gets Its Ass Handed To It” In World War III Simulations (ZH)

• Why The Shale Boom Left California Behind (Rapier)

• Elderly Americans Are Dying Without Getting To Read Mueller’s Report (NW)

Crunch time starts tomorrow. The backstop is the big issue. EU cannot ‘budge’, because it would mean leaving Ireland out in the cold. It’s called the Irish backstop for a reason.

• Brexit Talks ‘Deadlocked’, Says Downing Street (G.)

Downing Street has described the Brexit talks in Brussels as “deadlocked” after negotiations over the weekend failed to find a breakthrough on the Irish backstop. Theresa May and Jean-Claude Juncker, the European commission president, spoke on the telephone on Sunday evening, but plans for the prime minister to visit the Belgian capital to sign off on any compromise are on hold. The EU refuses to budge on the British proposal for what it believes is an attempt to build a unilateral exit mechanism into the Irish backstop, the arrangement that would keep the UK in a customs union to avoid a hard border on the island of Ireland.

The attorney general, Geoffrey Cox, is unlikely without such a concession to revise his legal opinion, given before the last vote on May’s deal, that the backstop could be in force “indefinitely”. The prime minister pledged in parliament to put her deal to the Commons on Tuesday but she is being urged by senior Conservative MPs to pull the vote if she fails to secure significant concessions from Brussels. Leading Tories have warned Downing Street it could face a second huge defeat similar to the historic 230-vote loss in January if the government goes ahead. They have advised May instead to replace the vote with a motion setting out the sort of Brexit deal that would be acceptable to Tory MPs, in the hope that this would trigger concessions from the EU.

All they have left is finance. Austerity ate the rest.

• Brexit Fallout On UK Finance Intensifies (R.)

More than 275 financial firms are moving a combined $1.2 trillion in assets and funds and thousands of staff from Britain to the European Union in readiness for Brexit at a cost of up to $4 billion, a report from a think tank said on Monday. UK lawmakers are due to vote on Tuesday on an EU divorce settlement. But with less than three weeks to go before Brexit day on March 29, it is still unclear whether the deal will be approved, whether departure from the EU will be delayed, or whether it will happen without agreement. The report by the New Financial think tank, one of the most detailed yet on the impact of Brexit on financial services, said Dublin alone accounted for 100 relocations, ahead of Luxembourg with 60, Paris 41, Frankfurt 40, and Amsterdam 32.

The independent think tank said half of the affected asset management firms, such as Goldman Sachs Investment Management, Morgan Stanley Investment Management and Vanguard, had chosen Dublin, with Luxembourg the next port of call, attracting firms like Schroders, JP Morgan Wealth Management and Aviva Investors. Nearly 90 percent of all firms moving to Frankfurt are banks, while two-thirds of those going to Amsterdam are trading platforms or brokers. Paris is carving out a niche for markets and trading operations of banks and attracting a broad spread of firms.

This still needs to be explained, apparently.

• How Central Bankers Blew Up The Global Economy (ABC.au)

We humans are a social lot. We just love being part of a pack, a member of a team. We crave acceptance, to the point where isolation or banishment ranks among the worst forms of punishment. Even when it comes to the dodgy art of forecasting, everyone seems to cluster around a central position, which kind of defeats the point of forecasting. And so, in July two years ago, when the groundswell of opinion began to shift — that the Reserve Bank would be raising interest rates — arguing otherwise was a fairly lonely position. As time went on, almost everyone shifted position as we dug in here, here and here.

To be fair, most of the highly paid, well-heeled professional market economists were being egged on by the authorities, and particularly the Reserve Bank, which was spinning the line that the next rate move was up. In the past fortnight, however, the pack suddenly has turned on its tail as fears about the global economy and a sudden slowdown in our own growth forced a rethink. The switch to a rate cut has turned into a stampede. Put aside all the complex formula. Forget the high-level macro-economic analysis. There’s a very simple reason the Reserve Bank couldn’t and can’t raise interest rates. There’s too much debt. Australian households are among the world’s most indebted when compared with their income.

And we’ve spent most of it on real estate. What these two graphs show is how the Reserve Bank, effectively, snookered itself. Back in 2012, when debt and housing prices already were elevated, it fired up the east coast housing market, and construction, to take up the employment slack as the mining boom unwound. But it created a monster. As housing went on a tear, the short-term sugar hit turned toxic. Employment took off. But housing became unaffordable to almost everyone under 35. And our household debt levels reached for the stars. The end result? It couldn’t cut rates if it needed. That would add heat to a dangerously inflated housing bubble. And it could never raise rates, because that would kill household spending.

3 Stooges.

Nomi Prins: “Number of times the word “bubble” appeared in the 60 Minutes interview with Fed. Chair Jerome Powell. Zero.”

A central bank can have benefits, but not when it only serves the rich. If we don’t get rid of Fed and ECB, there’ll be very steep prices to pay.

Note: there’s a video at the link, but it started itself so I threw it out.

• What Fed Chair Powell Said On 60 Minutes (ZH)

A decade after Ben Bernanke appeared on “60 Minutes”, vowing that the Fed could easily crush inflation, as it could “raise interest rates in 15 minutes”, of course with the occasional “pause” along the way should the S&P dip by 20% or so, current Fed Chairman Jerome Powell will follow in his footsteps on Sunday night, when surrounded by former Fed Chairs Bernanke and Yellen, he will try to reach beyond the Fed’s traditional audience of markets, journalists and lawmakers to counter the attacks from President Trump, even after the Fed’s paused on raising interest rates, said Sarah Binder, a professor of political science at George Washington University, quoted by MarketWatch.

“He wants to counter the president’s message that policy is all wrong,” Binder said. Binder said she was struck by the still photo of the “60 Minutes” interview that shows Powell alongside his two predecessors Janet Yellen and Ben Bernanke. “This puts a human face on the central bank. It says, ‘we’re the Fed and we’re here to help,’” Binder said. Bernanke also faced criticism when he went on “60 Minutes” in March 2009. The Fed was facing concerted attacks by lawmakers and populist “End the Fed” groups, who considering the record wealth divide in the US created by the central bank, were spot on.

I’m going with Xiang Songzuo: “..China’s GDP growth for 2018 could be 1.67 per cent or even negative..”

• China’s GDP Growth Could Be Half Of Reported Number – Pettis (SCMP)

If China’s bad debts were written down, its economic growth rate would be half the recorded number, a US economist at a prominent Chinese university has warned. In a speech in Shanghai this week, Michael Pettis, professor of finance at Peking University, warned that China’s debt is closely linked to the government’s perceived overstatement of its GDP. The government is accused of perpetuating the existence of “zombie companies”, by granting loss-making companies loans. Banks in turn treat these companies as creditworthy, whereas in reality they should be written off as bad debt, Pettis said. “If you believe there is bad debt that has not been sufficiently written down, you must believe that China’s GDP is overstated, relative to what it would be in any other country. That must be true,” Pettis said.

“If we are able to calculate GDP correctly, it would probably be half of the recorded number.” Pettis is not alone seeing troubles with China’s official growth number. In December, Xiang Songzuo, an outspoken professor from the Renmin University of China, who previously served as chief economist for Agricultural Bank of China, cited unidentified internal reports as saying that said China’s GDP growth for 2018 could be 1.67 per cent or even negative, a far cry from the official figures. Furthermore, a group of four economists published a paper this week arguing that China might have overstated its annual growth rate by 2 percentage points on average from 2008 to 2016. China’s official statistics agency said the country’s economic growth rate was 6.6 per cent in 2018.

The Chinese government said it would try to achieve an economic growth rate between 6.0 to 6.5 per cent in 2019, a moderate slowdown from previous years, but nevertheless a much faster rate compared with other major economies. Pettis is a renowned expert on China’s economy. For decades, he has been commenting on financial affairs in China and was among the early observers of the imbalances in the Chinese economy. He said in his speech on Wednesday that China’s growth will significantly decelerate as the country’s debt level rises.

Brookings is many years late.

• Brookings Says China Overstated Size Of Its Economy By 12% (ZH)

Since China managed to weather the fallout from the financial crisis without registering much of a slowdown in its “official” GDP figures, playing “guess the real growth rate” has become one of the most popular parlor games among the professional economist set. Whereas the stakes are much higher for academics on the mainland (one of whom was censored and threatened by government thugs after speculating that GDP growth on the mainland might be closer to 2%), researchers at American think tanks have freely offered estimates ranging from 2% to 4% (which, admittedly, would still put China well ahead of the US).

But as investors and economists once again cast a wary eye toward China as signs of flagging growth are once again threatening to sink the whole world into a recession, a team of researchers from the Brookings Institute has published a carefully researched paper detailing the exact mechanism by which authorities in Beijing inflate the country’s GDP figures, while estimating that China’s economy is roughly 12% smaller than the official figures would suggest. Brookings published the paper on Thursday, just two days after Party leaders at the annual National Party Congress lowered their economic growth forecast to between 6% and 6.5% of GDP.

Though the paper focused on the period between 2008 and 2016, it’s the latest evidence that China’s economic slowdown has been more severe than believed, and that the growth rate from last year – China’s worst since the early 1990s – might, in reality, be just under 6% (compared with 6.6%). According to Brookings, much of the manipulation in Chinese official government statistics takes place at the local level. In what the FT described as “a legacy of Maoist state planning”, authorities in Beijing hand down growth targets to local officials, who use it to goalseek the official statistics they hand back. “China’s national accounts are based on data collected by local governments. However, since local governments are rewarded for meeting growth and investment targets, they have an incentive to skew local statistics. China’s National Bureau of Statistics (NBS) adjusts the data provided by local governments to calculate GDP at the national level,” the study’s authors said.

Two staggering drunks lean on each other so they can make it to the bar and continue drinking.

• Deutsche Bank Begins Talks Over Merger With Rival Commerzbank (G.)

Deutsche Bank has begun tentative merger talks with rival Commerzbank, which would create Europe’s second biggest bank behind HSBC and fend off unwanted potential bidders such as French giant BNP Paribas. Reports in Germany’s Welt am Sonntag suggest that the banks have come under political pressure to consider a merger and avert a foreign takeover of Commerzbank, much the smaller partner in any deal. Deutsche is regarded as a bank of global importance, but has been plagued by three years of losses, boardroom battles, money laundering issues and its role as the biggest lender to the Trump business empire.

Despite Germany’s industrial dominance in Europe, it has only one bank in the continent’s top 20, and Berlin is understood to be keen to create a larger national champion. The combination of the two banks mean that Deutsche, currently fifth biggest, and Commerzbank, currently 23rd, will become Europe’s second biggest bank and only marginally behind HSBC. Deutsche Bank’s chief executive Christian Sewing was seen to be the main opponent of a merger, but investor pressure – Deutsche’ shares are trading at around €7.68 compared with €32 five years ago – is understood to have forced his hand. The talks are believed to be at a very early stage – “unofficial contacts in a very small group” according to Welt am Sonntag – but are likely to be welcomed by major shareholders.

This is getting too stupid. But who’s going to investigate the DOJ and FBI?

• Leaked Documents Reveal DOJ Protected Steele After FBI Shunning (KK)

Steele was cut off by the FBI for revealing his relationship with the Bureau to the media – but Ohr continued to pass information from Steele to his colleagues, regularly spoke to him via email and phone, and met up with him face-to-face on several occasions. Information watchdog Judicial Watch has released 339-pages of US Department of Justice records, revealing former Associate Deputy Attorney General Bruce Ohr remained in regular contact with ex-MI6 operative Christopher Steele after Steele’s status as a paid confidential informant was terminated by the FBI in November 2016.

“These smoking gun documents show Christopher Steele, a Hillary Clinton operative and anti-Trump foreign national, secretly worked hand-in-glove with the Justice Department on its illicit targeting of President Trump. These documents leave no doubt that for more than a year after the FBI fired Christopher Steele for leaking, and for some 10 months after Donald Trump was sworn in as president, Bruce Ohr continued to act as a go-between for Steele with the FBI and Justice Department. The anti-Trump Russia investigation, now run by Robert Mueller, has been thoroughly compromised by this insider corruption,” said Judicial Watch President Tom Fitton.

Whether an accurate appraisal or not, it’s clear from the assorted communications Ohr was determined to ensure Steele retained access to the Bureau, and this contact remained hidden from public view – for instance, when acting Attorney General Sally Yates was fired by Trump January 2017, Steele feared Ohr would be fired too, and texted him to express his “sympathy and support”. “If you end up out, I really need another contact point/number who is briefed. We can’t allow our guy to be forced to go back home. It would be disastrous all round, though his position right now looks stable. A million thanks,” Steele wrote. In response, Ohr assured the Orbis chief he could “certainly” give him an FBI contact “if it becomes necessary”.

On 6 March that year, Senator Chuck Grassley wrote to then-FBI Director James Comey, seeking clarity on the nature of Steele’s relationship with the FBI. The next day, Steele texted Ohr to say he was “very concerned” by the letter, and its “possible implications for our operations and sources…We need some reassurance…Really fundamental issues at stake here”. Days later, with Comey scheduled to testify before Congress, Steele told Ohr he was “a bit apprehensive” and hoped “important firewalls will hold”. On 24 March, Ohr and Steele discussed their “response” to the testimony, as he understood “an approach from the Senate Intelligence Committee” to Orbis was imminent.

On 26 October, Steele said he’s “very concerned” about documents the FBI intended to turn over to Congress about his work and “relationship with them”. “Can we have a word tomorrow please? Just seen a story in the media about the Bureau handing over docs to Congress…Peoples live may be engangered [sic],” he despaired.

Same as it ever was.

• How US Government and Media Spread Pro-War Propaganda (Greenwald)

[..] on February 23, when the narrative shifted radically in favor of those U.S. officials who want regime change operations in Venezuela. That’s because images were broadcast all over the world of trucks carrying humanitarian aid burning in Colombia on the Venezuela border. U.S. officials who have been agitating for a regime change war in Venezuela – Marco Rubio, John Bolton, Mike Pompeo, the head of USAid Mark Green – used Twitter to spread classic Fake News: they vehemently stated that the trucks were set on fire, on purpose, by President Nicolas Maduro’s forces. [..] on Saturday night, the New York Times published a detailed video and accompanying article proving that this entire story was a lie.

The humanitarian trucks were not set on fire by Maduro’s forces. They were set on fire by anti-Maduro protesters who threw a molotov cocktail that hit one of the trucks. And the NYT’s video traces how the lie spread: from U.S. officials who baselessly announced that Maduro burned them to media outlets that mindlessly repeated the lie. [..] While the NYT’s article and video are perfectly good and necessary journalism, the credit they are implicitly claiming for themselves for exposing this lie is totally undeserved. That’s because independent journalists – the kind who question rather than mindlessly repeat government claims and are therefore mocked and marginalized and kept off mainstream television – used exactly this same evidence on the day of the incident to debunk the lies being told by Rubio, Pompeo, Bolton and CNN.

On February 24, the day the lie spread, Max Blumenthal wrote from Venezuela, on the independent reporting Grayzone site, that “the claim was absurd on its face,” noting that he “personally witnessed tear gas canisters hit every kind of vehicle imaginable in the occupied Palestinian West Bank, and I have never seen a fire like the one that erupted on the Santander bridge.” He compiled substantial evidence strongly suggesting that the trucks were set ablaze by anti-Maduro protesters, including Bloomberg video showing them using Molotov cocktails, to express serious doubts about the mainstream narrative. On Twitter, in response to Marco Rubio’s lie, he wrote: “I did not see any Venezuelan government forces set fire to US aid trucks on the Colombian side of the border. And neither did you. Actually, the evidence so far is pointing in the other direction.”

Is this going to have the neocons clamor for war today, before everyone understands it?

• US “Gets Its Ass Handed To It” In World War III Simulations (ZH)

In simulated World War III scenarios, the U.S. continues to lose against Russia and China, two top war planners warned last week. “In our games, when we fight Russia and China, blue gets its ass handed to it” RAND analyst David Ochmanek said Thursday. RAND’s wargames show how US Armed Forces – colored blue on wargame maps – experience the most substantial losses in one scenario after another and still can’t thwart Russia or China – which predictably is red – from accomplishing their objectives: annihilating Western forces. “We lose a lot of people. We lose a lot of equipment. We usually fail to achieve our objective of preventing aggression by the adversary,” he warned.

In the next military conflict, which some believe may come as soon as the mid-2020s, all five battlefield domains: land, sea, air, space, and cyberspace, will be heavily contested, suggesting the U.S. could have a difficult time in achieving superiority as it has in prior conflicts. The simulated war games showed, the “red” aggressor force often destroys U.S. F-35 Lightning II stealth fighters on the runway, sends several Naval fleets to the depths, destroys US military bases, and through electronic warfare, takes control of critical military communication systems. In short, a gruesome, if simulated, annihilation of some of the most modern of US forces. “In every case I know of,” said Robert Work, a former deputy secretary of defense with years of wargaming experience, “the F-35 rules the sky when it’s in the sky, but it gets killed on the ground in large numbers.”

So, as Russia and China develop fifth-generation fighters and hypersonic missiles, “things that rely on sophisticated base infrastructures like runways and fuel tanks are going to have a hard time,” Ochmanek said. “Things that sail on the surface of the sea are going to have a hard time.” “That’s why the 2020 budget coming out next week retires the carrier USS Truman decades early and cuts two amphibious landing ships, as we’ve reported. It’s also why the Marine Corps is buying the jump-jet version of the F-35, which can take off and land from tiny, ad hoc airstrips, but how well they can maintain a high-tech aircraft in low-tech surroundings is an open question,” said Breaking Defense.

Love Robert, but talking about shale is interesting only when you include industry debt.

• Why The Shale Boom Left California Behind (Rapier)

Many people are unaware about California’s importance in the U.S. oil industry. In fact, 100 years ago California was the top oil producer in the U.S., responsible at one point for nearly 40% of U.S. oil production. California oil production rose throughout most of the 20th century, briefly eclipsing one million barrels per day in the early 1980s. Oil production began to decline there after peaking in 1985. The same pattern took place in many other states, and in fact was the case for the entire U.S., where oil production peaked in 1970, and then declined over the next 35 years. But the shale boom changed the trajectory of U.S. oil production.

Oil production that had fallen for decades reversed direction and began to surge about a decade ago. Almost every state with shale oil resources saw a similar surge in production. Since 2010, U.S. oil production has increased by 131%, with huge gains in oil production in the following states (among others): • North Dakota – up 634% • Colorado – up 508% • New Mexico – up 377% •Texas – up 330% • Oklahoma – up 238%. In fact, only three major oil-producing states have seen a decline in oil production since 2010: California, Louisiana, and Alaska. One of the graphics I created for my presentation shows the stark contrast between oil production in Texas and California as the shale boom unfolded.

During the 1980s and 1990s, oil production in Texas was declining faster than it was in California. Had that trajectory been maintained, Texas oil production may have fallen below California’s in about 2010. Instead, the shale boom has added nearly four million BPD of oil production in Texas. Millions of barrels were added in other states as well, and California began to slide down the ranks of leading oil producers. Just a few years ago California was still in 2nd place, but now it has slipped to 6th, behind Texas, North Dakota, New Mexico, Oklahoma, and Alaska.

“.. And They’re Hot Happy About It”. Not the Onion, but Newsweek.

• Elderly Americans Are Dying Without Getting To Read Mueller’s Report (NW)

As special counsel Robert Mueller’s investigation is reportedly coming to an end, elderly and sick Americans are trying to hold on to their lives so they can read the highly-anticipated report that has been nearly two years in the making. World War II veteran Mitchell Tendler—a man who survived numerous historic milestones, including the Korean War, Vietnam, Watergate and President BIll Clinton’s impeachment—fell sick on Dec. 29, at 93 years old, reported NPR. “I got a call at 11 o’clock. My mom said, ‘Well, Dad’s not feeling well—he really can’t stand,'” Tendler’s son, Walter, recalled. “Within a couple of hours they called 911 and got him into the ER because it wasn’t getting any better.”

Tendler survived two implantable defibrillators throughout his life. But while on his third, he started to fade. After he was provided painkillers by doctors, Tendler voiced his final thoughts. “It just was quiet for a little while,” Walter Tendler told the news outlet, “and then he just sits up in bed halfway and looks at me and he goes, ‘S***, I’m not going to see the Mueller report, am I?’ And that was really the last coherent thing that he said.” Richard Armstrong, a 94-year-old currently in hospice care in New Jersey, related to Tendler’s sentiments. “I know exactly how he feels. I feel the same way. I’ve been diagnosed with pancreatic cancer,” Armstrong told NPR.

“I was hoping to live to see the outcome of what I think it should be—justice. I’ll be surprised and disappointed if it isn’t.” After seeing Tendler’s words—shared on Twitter by Benjamin Wittes, a senior fellow at the Brookings Institution—Kristina Makansi, who lives in Arizona, thought about her mother who passed away at the age of 94 in January. “When I saw that tweet about the Mueller report and the old man on his deathbed, I thought, Oh my gosh, that’s the kind of thing that my mother would say,” she said. “I think she really wanted to see that justice was done… and that the investigation was allowed to proceed without any shenanigans and obstruction.”

Debt Rattle November 26 2018

Nov 262018

November 26, 2018 Posted by Raúl Ilargi Meijer at 10:57 am Finance Tagged with: Brexit, moon landing, NASA, OPEC, Russia, Sea of Azov, Shale, Tesla, Tsipras, Ukraine, Varoufakis 8 Responses »

Vincent van Gogh On the Outskirts of Paris 1887

• Russia Seizes Three Ukrainian Naval Ships In The Black Sea (AP)

• Not Remotely Possible For May’s Brexit Deal To Pass Parliament – UK MP (CNBC)

• UK High Court To Rule If Brexit Vote ‘Void’ As Early As Christmas (Ind.)

• Nineteen Months Of Brexit Wrangling – And That’s Just A Taster (BBC)

• Business Leaders Rally Behind May’s Brexit Deal Amid Fears Of Crashing Out (G.)

• Texas Is About to Create OPEC’s Worst Nightmare (BBG)

• Tesla Was Weeks From Dying Earlier This Year – Elon Musk (MW)

• Former Greek FinMin Varoufakis To Run In European Election – In Germany (R.)

• Give In To The EU, Greek PM Tsipras Counsels Italian Government (K.)

• Russia Space Agency To Check If US Moon Landings Really Happened (Ind.)

I would think Ukraine is trying to provoke things, but western politicians and media all disagree.

• Russia Seizes Three Ukrainian Naval Ships In The Black Sea (AP)

Russia seized three Ukrainian naval ships off the coast of Russia-annexed Crimea on Sunday after opening fire on them and wounding several sailors, a move that risks igniting a dangerous new crisis between the two countries. Russia’s FSB security service said early on Monday its border patrol boats had seized the Ukrainian naval vessels in the Black Sea and used weapons to force them to stop, Russian news agencies reported. The FSB said it had been forced to act because the ships — two small Ukrainian armored artillery vessels and a tug boat — had illegally entered its territorial waters, attempted illegal actions, and ignored warnings to stop while maneuvering dangerously.

“Weapons were used with the aim of forcibly stopping the Ukrainian warships,” the FSB said in a statement circulated to Russian state media. “As a result, all three Ukrainian naval vessels were seized in the Russian Federation’s territorial waters in the Black Sea.” The FSB said three Ukrainian sailors had been wounded in the incident and were getting medical care. Their lives were not in danger, it said. Ukraine denied its ships had done anything wrong, accused Russia of military aggression, and for the international community to mobilize to punish Russia. The United Nations Security Council is due to discuss the developments on Monday at the request of Russia, said Deputy Russian U.N. Ambassador Dmitry Polyanskiy.

Ukrainian President Petro Poroshenko met with his top military and security chiefs. Poroshenko said he would propose that parliament impose martial law. [..] Earlier on Sunday, Russia’s border guard service had accused Ukraine of not informing it in advance of the three ships’ journey, something Kiev denied. Russia said the Ukrainian ships had been maneuvering dangerously and ignoring its instructions with the aim of stirring up tensions. Russian politicians denounced Kiev, saying the incident looked like a calculated bid by Poroshenko to increase his popularity ahead of an election next year. In another sign of rising tensions, Russia’s state-controlled RIA news agency reported on Sunday night that Ukrainian forces had started heavy shelling of residential areas in eastern Ukraine which is controlled by pro-Moscow separatists.

She needs 320+ votes, has 260.

• Not Remotely Possible For May’s Brexit Deal To Pass Parliament – UK MP (CNBC)

It is not “remotely possible” that U.K. Prime Minister Theresa May’s Brexit withdrawal agreement would pass the House of Commons, which is the lower house of Parliament, in a crucial vote that will likely take place in December, a member of Parliament said on Monday. Lawmakers on both sides of the debate over the United Kingdom’s future as part of the European Union are unhappy with the proposals set by May in a 585-page, legally-binding document that lays out the terms of the former’s exit, Sarah Wollaston, who is also a member of the prime minister’s Conservative party, told CNBC’s “Squawk Box.”

“I just don’t think it’s remotely possible that this deal would pass the Commons,” she said, adding that it will likely fall short on the numbers needed to move the agreement forward. “That doesn’t necessarily mean that we would crash out with no deal because, certainly, Parliament, British parliamentarians are very opposed to leaving with no deal at all.” [..] May needs a simple majority of the 650 lawmakers in the House of Commons, but experts have indicated it will be an uphill task for the prime minister. Her Conservative Party holds 315 seats and represents the largest party in the House, but a significant number are against the plan, including some pro-Brexit members. Meanwhile, lawmakers in the opposition have mostly indicated that they will vote against the deal.

Was the vote fraudulent to begin with?

• UK High Court To Rule If Brexit Vote ‘Void’ As Early As Christmas (Ind.)

The High Court will rule as early as Christmas whether Brexit should be declared “void”, in a legal case given a turbo-boost by the criminal investigation into Leave funder Arron Banks. Judges are poised to fast track the potentially explosive challenge, after Theresa May’s refusal to act on the growing evidence of illegality in the 2016 referendum campaign, The Independent can reveal. Lawyers describe that failure as “absolutely extraordinary” – given the National Crime Agency’s (NCA) probe into suspicions of “multiple” criminal offences committed by Mr Banks and the Leave.EU campaign.

Now The Independent understands the case is likely to move to a full hearing and a ruling within weeks of opening on 7 December, with the clock ticking on the UK’s departure from the EU next March. Both its lawyers and a leading academic believe its chances of success have been given a big boost by the unfolding scandal and the government’s refusal to recognise the gravity of what is being exposed. The government is expected to deploy Sir James Eadie QC – the star barrister who led the unsuccessful battle for the government to trigger Article 50 without parliament’s consent – in a sign of the case’s importance.

We haven’t even started.

• Nineteen Months Of Brexit Wrangling – And That’s Just A Taster (BBC)

There was a definite “battle of the tones” at the seal-the-deal Brexit summit with Theresa May. EU leaders were determinedly sombre, while the UK prime minister had to sound upbeat and positive about her country’s Brussels-free future. It shouldn’t be under-estimated. Sunday was a huge day for the EU, signing off on the divorce papers of a departing key member state for the first time in the history of the bloc. In the eyes of many, Brexit counts as an EU failure. At the summit, French President Emmanuel Macron reminded the press of the fragility of European Union. Which is why, time and again, EU leaders in Brussels continue to make so much of the (unusual) show of unity the Brexit process has provoked in EU ranks.

For now, of course, all European eyes turn to the UK to see if the hard-negotiated Brexit deal passes through the House of Commons. If it doesn’t, the President of the European Commission, Jean-Claude Juncker, insists there will be no deal. “This is the deal. This is THE deal,” he told me emphatically, ruling out the possibility of renegotiating the Brexit texts. If he’s true to his word, and parliament votes down the divorce deal, then all 19 months of painful EU-UK negotiations were for naught. And both sides could find themselves staring at the cost and potential chaos of what the EU’s chief Brexit negotiator Michel Barnier calls a non-orderly Brexit. EU leaders are hell-bent on avoiding that.

May sure scared the money.

• Business Leaders Rally Behind May’s Brexit Deal Amid Fears Of Crashing Out (G.)

Business leaders have rallied to support Theresa May’s Brexit deal, even as an independent study showed that the prime minister’s agreement meant the UK stood to lose £100bn a year by 2030 in reduced trade and income. Executives in the City of London warned MPs to vote for the deal negotiated by the prime minister to avoid a no-deal Brexit that would harm the UK economy. TheCityUK, which represents banks and insurers in the Square Mile, said parliament had “a straight choice” between the agreement hammered out in Brussels and a no-deal Brexit, “which offers only higher risk, costs and disruption”.

Miles Celic, the organisation’s boss, said: “The focus must now be on securing the withdrawal agreement and the transition period it brings – which is critical for our industry and many others. There is much still to be negotiated to define the future relationship. The sooner that can get started, the better.” His warning echoed those of industry bodies and small business groups, which have become nervous in recent weeks that No10 would fail to overcome the hurdles towards securing a withdrawal agreement. The Institute of Directors, which has found in polls of its members that they split 50:50 over proposals for a second referendum, said they all objected to an outcome that leaves Britain with no deal.

“The deal the EU approved today provokes a wide range of reactions across the political spectrum, and indeed among business leaders, but the steer from our members is that avoiding no deal must be the main priority,” said Stephen Martin, the director general.

Hmmm. Problem with shale is debt.

• Texas Is About to Create OPEC’s Worst Nightmare (BBG)

OPEC helped create the monster that haunts its sleep. After it flooded the market in 2014, oil prices crashed, forcing surviving U.S. shale producers to get leaner so they could thrive even with lower oil prices. As prices recovered, so did drilling. Now growth is speeding up. In Houston, the U.S. oil capital, shale executives are trying out different superlatives to describe what’s coming. “Tsunami,’’ they call it. A “flooding of Biblical proportions’’ and “onslaught of supply’’ are phrases that get tossed around. Take the hyperbolic industry talk with a pinch of salt, but certainly the American oil industry, particularly in the Permian, has raised a buzz loud enough to keep OPEC awake. “You’ve got an awful lot of production that can come in very economically,’’ said Patricia Yarrington, Chevron’s CFO.

“If you think back four or five years ago, when we didn’t really understand what shale could do, the marginal barrel was priced much higher than what we think the marginal barrel is priced today.’’ That shift makes shale resilient to a price tumble. After touching a four-year high in October, West Texas Intermediate, the U.S. benchmark, has fallen by more than 20 percent. [..] August saw the largest annual increase in U.S. oil production in 98 years, according to government data. The American energy industry added, in crude and other oil liquids, nearly 3 million barrels, roughly the equivalent of what Kuwait pumps, than it did in the same month last year. Total output of 15.9 million barrels a day was more than Russia or Saudi Arabia.

[..] By the end of 2019, total U.S. oil production – including so-called natural gas liquids used in the petrochemical industry – is expected to rise to 17.4 million barrels a day, according to the U.S. Energy Information Administration. At that level, American net imports of petroleum will fall in December 2019 to 320,000 barrels a day, the lowest since 1949, when Harry Truman was in the White House. In the oil-trading community, the expectation is that, perhaps for just a single week, the U.S. will become a net oil exporter, something that hasn’t happened for nearly 75 years.

Now he tells us.

• Tesla Was Weeks From Dying Earlier This Year – Elon Musk (MW)

Tesla Inc. was “bleeding money like crazy” during its Model 3 production ramp-up and almost went under earlier this year, Elon Musk said Sunday. In an interview aired Sunday night on “Axios on HBO,” Tesla’s chief executive said the electric-car company was “within single-digit weeks” of dying. “Essentially, the company was bleeding money like crazy, and if we didn’t solve these problems in a very short period of time, we would die. And it was extremely difficult to solve them,” Musk said. Earlier this year, Musk described “production hell” as Tesla ramped up production to build 5,000 Model 3 sedans a week by the end of June, and said he had been sleeping on the factory floor.

Musk admitted in Sunday’s interview that he had been stretched to the limit. “People should not work this hard,” he said of his stretch working 22-hour days, seven days a week. “This is very painful.” “It hurts my brain and my heart,” Musk said. “It hurts. It is not recommended for anyone. I just did it because if I didn’t do it… there was a good chance Tesla would die.” In late October, Tesla posted a surprise quarterly profit, and earlier this month, Musk said Tesla is not “staring death in the face” anymore, and it will likely be cash-flow positive for all quarters going forward.

Godspeed. Politics? You sure?

• Former Greek FinMin Varoufakis To Run In European Election – In Germany (R.)

Former Greek finance minister Yanis Varoufakis, who was outspoken in his criticism of the austerity policies championed by Berlin at the height of the euro zone’s debt crisis, is to stand in European elections next year – in Germany. The Democracy in Europe Movement 2025 (DiEM25), which he launched in 2016 to “democratize” the continent, picked him on Sunday as a candidate for the elections to the European Parliament in May 2019. “I accept [the nomination] because it epitomizes the new trans-national politics we need in Europe,” he told a news conference in Berlin where his colleagues unfurled a banner with the slogan “European Spring.” “I call on all of you to join us in this pan-European quest for democracy in Europe, democracy in Germany as a condition for prosperity and authentic democracy,” he said.

The motorbike-riding academic-economist, who rose to celebrity status in the euro crisis, once described the austerity measures forced on Greece by creditors as “fiscal waterboarding”. Varoufakis, who frequently clashed with his hardline German counterpart at the time, Wolfgang Schaeuble, said the political center in Germany was under threat because of austerity. “On paper, Germany is drowning in money…but the German people have been victims of the same austerity as the rest of Europe. The result is low levels of investment,” he said. This, he argued, boosted inequality, share prices and house prices. He said his movement wanted to pour cash, raised if necessary via bond issuance, into green policies to tackle climate change.

‘You’d better do today what they’ll do tomorrow..’

• Give In To The EU, Greek PM Tsipras Counsels Italian Government (K.)

Prime Minister Alexis Tsipras has counseled the Italian government to give in to EU demands that it lower its budget deficit, according to newspaper Corriere della Sera. In an analysis piece titled “Tsipras’ advice to Italy: Give in now, then it will be worse,” Federico Fubini writes that Tsipras was sort of apologetic to the Italians for not taking their side in their conflict with the EU Commission. “I can not do anything because I would be the first to arouse suspicion,” Tsipras reportedly said. Rubini adds: “(Tsipras) no doubt remembers that Italy did nothing when he tried desperately to soften the conditions – then draconian – placed by the euro area on Greece.”

“But then Tsipras, mindful of the retreat that he improvised in July 2015 after blocking the bank accounts of the voters to avoid the collapse of the system, has offered advice to Italy. ‘You’d better do today what they’ll do tomorrow,’ he said. ‘If instead you have another idea – he added, perhaps alluding to the euro exit option that he refused – well, then, good luck.’”

Ha!

• Russia Space Agency To Check If US Moon Landings Really Happened (Ind.)

The head of Russia‘s national space agency has proposed a mission to the moon to verify whether the American moon landings really took place. Dmitry Rogozin responded to a question about whether Nasa’s Apollo programme actually put men on the moon back in the 1960s and 1970s during a conversation with the president of Moldova, Igor Dodon. He appeared to be joking, as he smirked and shrugged while answering. But conspiracies surrounding Nasa’s moon missions are common in Russia. In a video of their interaction, posted to his 815,000 Twitter followers, Mr Rogozin says: “We have set this objective to fly and verify whether they’ve been there or not”.

Nasa’s six well-documented official manned missions to the surface of the Moon, beginning with astronauts Neil Armstrong and Buzz Aldrin in July 1969 and continuing with Gene Cernan and Jack Schmitt in December 1972, have been dogged with conspiracy theories. In 2015, a former spokesman for the Russian Investigative Committee called for an investigation into the Nasa moon landings. Vladimir Markin said an enquiry should be launched into the disappearance of original footage from the first moon landing in 1969 and the whereabouts of lunar rock, which was brought back to Earth during several missions.

Debt Rattle February 23 2018

Feb 232018

February 23, 2018 Posted by Raúl Ilargi Meijer at 10:55 am Finance Tagged with: Anbang, Brexit, China, FBI, fuel poverty, Greece, gun control, Novartis, offshore, shadow, Shale, yield, yuan 11 Responses »

Pablo Picasso Rooster 1938

• Art Cashin: Once the 10-Year Yield Hits 3% ‘All Hell’ Could Break Loose (CNBC)

• China Regulators Take Control Of Insurance Giant Anbang (AFP)

• Xi’s Debt Crackdown Goes Into Hyperdrive (BBG)

• BIS Suggests Beijing Is Behind China Shadow Banking Sector (F.)

• China Is Letting The Yuan Crush The Dollar To Appease Trump (CNBC)

• Bond Villain in the World Economy: Latvia’s Offshore Banking Sector (CP)

• Reserve Bank Of Australia Accused Of Causing Ponzi Mortgage Market (AFR)

• US Shale Investors Still Waiting On Payoff From Oil Boom (R.)

• EU Leaders Go to Battle Over Post-Brexit Budget Gap (BBG)

• Irish President Criticises EU Treatment Of Greece (IT)

• Greek MPs Vote To Investigate Top Politicians In Novartis Bribery Claims (G.)

• Greece Is The European Champion In Corporate Taxes (K.)

• The Gun-Control Debate Could Break America (French)

• 50,000 Die In UK ‘Cold Homes Public Health Crisis’ (Ind.)

The cavalry.

• Art Cashin: Once the 10-Year Yield Hits 3% ‘All Hell’ Could Break Loose (CNBC)

It could be a bad day for the markets once the yield on the benchmark 10-year Treasury hits 3%, closely followed trader Art Cashin told CNBC on Thursday. “That 3% level is both a target and a kind of resistance. Everybody knows it’s like touching the third rail,” said Cashin, UBS director of floor operations at the New York Stock Exchange. “The assumption is once they do it, all hell will break loose. So we’ll wait and see.” As of early Thursday, the 10-year yield was slightly lower, around 2.91%, down from Wednesday’s four-year high of 2.95%. Wall Street fears returned Wednesday afternoon after minutes from the Federal Reserve’s latest meeting sent bond yields rising and stocks into a tailspin. The last time the 10-year yield traded above 3% was in January 2014.

“Initially, yields moved down, stocks rallied like crazy,” Cashin recalled about Wednesday, moments after the Fed minutes were released. “Then about eight minutes into that move, stocks looked back and noticed bonds had changed their mind.” The sharp moves seen Wednesday were probably due to “our friends, the long-lost ‘bond vigilantes,'” Cashin told “Squawk on the Street.” The term “bond vigilantes” was coined by market historian Ed Yardeni during the 1980s, referring to traders who sell their holdings in an effort to enforce what they consider fiscal discipline. Selling bonds sends yields higher due to the inverse relationship between bond prices and bond yields. “We’re going to need a couple weeks to see if the bond vigilantes really are back or not,” Cashin said. “Or whether it was simply a fluke. But remembering what bond vigilantes look like, it certainly had fingerprints on them.”

Before it burns down the entire financial sector.

• China Regulators Take Control Of Insurance Giant Anbang (AFP)

China took over Anbang Insurance for a year on Friday and said its former chairman faces prosecution for “economic crimes”, in the government’s most drastic move yet to rein in politically connected companies whose splashy overseas investments have fuelled fears of a financial collapse. The highly unusual commandeering of Anbang signalled deep official concern over the Beijing-based company’s financial situation and comes as the government looks to address spiralling debt in the world’s second-largest economy. The China Insurance Regulatory Commission said Anbang, which has made a series of high-profile foreign acquisitions in recent years, had violated insurance regulations and operated in a way that may “severely” affect its solvency. The announcement also clarified the fate of Anbang’s chairman Wu Xiaohui, who was reported by Chinese media to have been detained last June.

The insurance regulator confirmed Wu was being “prosecuted for economic crimes”, a startling fall from grace for a man who reportedly married a granddaughter of late Chinese leader Deng Xiaoping. A statement by government prosecutors in Shanghai said Wu was suspected of fraudulent fundraising and “infringement of duties”. Acquisitive private companies such as Anbang, HNA, Fosun and Wanda have increasingly loomed in the government’s cross-hairs as it conducts a sweeping crackdown on potential financial risks. The four firms were in the vanguard of an officially-encouraged surge in multi-billion-dollar overseas deals by Chinese firms to snatch up everything from European football clubs to hotel chains and movie studios, and were until recently considered untouchable because of their political connections.

China needs to keep its reserves at home.

• Xi’s Debt Crackdown Goes Into Hyperdrive (BBG)

If you needed confirmation about China’s determination to rein in surging corporate debt, the dramatic government takeover of Anbang Insurance is pretty much it. The unprecedented seizure of a private insurer underscores President Xi Jinping’s policy drive to cut back on the debt-fueled excesses that have accompanied China’s growth miracle. It’s a direct hit to corporate binge spending that authorities want to stem; it energizes a long running anti-corruption campaign; and it demonstrates that short-term economic pain will be tolerated for the longer-term goal of a more sustainable expansion. For the rest of the world, the intervention offers up a useful reminder: When you do business with China, you do business with the Communist Party.

“It’s a new example of the seriousness of Xi Jinping’s government to insert the party and the state at all levels of business,” said Fraser Howie, co-author of the book “Red Capitalism” who has two decades of experience in China’s financial markets. “They have no qualms about coming in over the top and saying ‘we are going to take this over.’” He likened the takeover to the U.S. Federal Reserve, the Financial Industry Regulatory Authority and the Securities and Exchange Commission coming together to restructure a company. [..] The backdrop to the pincer move on Anbang and its founder Wu Xiaohui, who is to be prosecuted for alleged fraud, is a robust economy that’s giving officials the running room to crack down on debt excesses without depressing growth.

Overseas investment by Chinese companies has been strictly curtailed since last year as part of the broader ambition to shift the economy onto a more sustainable footing after years of debt-fueled expansion. Because China is self financed and credit is steered by state-owned lenders to state-controlled or linked companies, authorities have the luxury of intervening at their whim to shuffle money from one section of the economy to another. That’s one of the key reasons why regulators are able to tackle Anbang and other high profile conglomerates without lawyers, shareholder activists or opposition politicians getting in the way.

I don’t believe this is the whole story. Shadow banking in China is so lucrative there’s no way foreigners are not heavily involved.

• BIS Suggests Beijing Is Behind China Shadow Banking Sector (F.)

Concerns about the scale of shadow banking in China have now risen alongside concerns about the ever-rising debt load across the economy. The IMF, for example, has been consistently warning about this issue, along with Western credit ratings agencies. But the biggest hawk on China’s credit risks has for some time been the Bank for International Settlements (BIS), known as the central banker’s bank. The BIS produced a comprehensive assessment of the “shadow banking” sector last week. The report itself is not very surprising, but it does suggest much coverage of the issue adopts a misplaced tone. The most important insight the report generates is simply that the shadow banking sector in China is almost entirely driven by the traditional, state-dominated banks ; the SOE banks, the Joint Stock banks and the City commercial banks, all of which have significant levels of state involvement.

Indeed it was estimated in 2014 that the Chinese banking system was capitalized by only about 12% private capital, the rest linking back to the Chinese state, either centrally or regionally. In other words, although the phrase “shadow banking” is used in China, in Western economies this usually refers to activity that is quite distinct from the state, where private investors knowingly operate outside of the many regulatory safeguards offered by traditional banking. Whereas in China the state is either the key mediator or even the guarantor of the unregulated activity. In other words, the state in China is freely engaging in unregulated activity, precisely in order to avoid the burdens of their own regulations. This is perhaps why “shadow banking” in China is often–and more accurately–referred to as “banking in the shadows” as it is a substitute for traditional banking, but it takes place out of sight.

This may be well understood by banking professionals, but it is an example of the kind of difference of emphasis that leads to misunderstanding in the markets and the press. The impression that China is somehow slowly getting to grips with a poorly regulated sector, or at least announcing its intention to do so, is quite simply at variance with what is actually going on, which is that the state itself is the source of the problem. The “shadow banking” sector in China has expanded enormously, not in spite of the state but because of it. It both applies the regulations in the formal banking sector, and avoids them in the “shadow banking” sector. None of this changes the fact that the overarching problem is China’s rapidly rising overall debt pile, but we shouldn’t be under any illusions over what exactly is hiding in the shadows. More to the point, if the activities of the Chinese state are hiding in the shadows, it is worth considering what exactly they are hiding from?

Short term gains. Halt outflows. But a strong yuan wreaks hovoc on exports.

• China Is Letting The Yuan Crush The Dollar To Appease Trump (CNBC)

The Chinese yuan has appreciated 10% against the dollar since the start of 2017, quelling some criticism that the export giant has been deliberately suppressing its currency to gain economic advantage over its trading partners. This is all going according to China’s plan, experts said. Although the strength of the yuan against the dollar is in part due to the greenback’s weakness, experts said the world’s second-largest economy is also propping up its currency to appease President Donald Trump. China has “reversed the rise” of the dollar against the yuan, and there’s now “meaningful” strength against the greenback, Bilal Hafeez, global head of G-10 foreign-exchange strategy at Nomura, wrote in a recent note. “Part of this was likely a response to the election of President Trump and the need to avoid being labelled a currency manipulator,” Hafeez added.

On the 2016 campaign trail, Trump repeatedly said he would name China a currency manipulator from his first day in office. That has not happened. [..] China will probably continue to manage its currency in the background even if it keeps its value against the dollar relatively high, analysts said. Morgan Stanley analysts said in a note this week that the trade-weighted yuan should remain “largely stable” around current levels as Beijing’s capital control efforts have worked. “If [the yuan] continues to appreciate rapidly, policy-makers may seek to stem the rise in order to maintain stability in the trade-weighted [yuan], which would likely be achieved by verbal communication and a relaxation of some outbound capital restrictions,” Morgan Stanley added.

Beijing is walking a tricky tightrope as the Communist regime seeks to balance political concerns with economic reforms and the demands that come with a market-based system. In the second half of 2015, the Chinese government shocked markets by devaluing the yuan. That spurred capital flight due to concerns over the health of the world’s second-largest economy — which further depressed the Chinese currency. Beijing has been trying to reverse that damage. “I think they ultimately want a weaker currency, they just don’t know how to achieve it. They tried in 2015, it didn’t work, turned into a vicious cycle and they’re kind of stuck right now with always trying to control everything but not knowing how to get a weaker currency through a structural slowdown in a way that does not cause a lot of disturbances to domestic financial markets for instance,” said Jason Daw at Societe Generale.

The Russians did it.

• Bond Villain in the World Economy: Latvia’s Offshore Banking Sector (CP)

If the world economy were a Bond movie, Latvia’s offshore banking economy would be its Bond villain. Presently, this plucky state of 1.8 million people on Russia’s border is leading the world’s financial press with two major scandals. First, there is their long-standing Central Bank Governor, Mr. Ilmars Rimsevics. While Latvia’s population (disproportionally aged, as many of the young have left to find work abroad) only rivals that of Hamburg, but with a much smaller economy, Mr. Rimsevics nonetheless commands a salary bigger than Central Bank heads of most similar sized countries and in 2016 saw the largest%age salary increase of any EU Central bank head. Regardless of his super-sized income, Mr. Rimsevics has been accused of using his post as a sinecure to increase his pay by several multiples. His ‘victims’ being the banks in Latvia that he oversees, of which one, Norvik, the provenance of a Russian oligarch in London, protested.

[..] The other scandal, more serious, but lacking a face and bereft of central casting’s villainous imagery (e.g., oligarchs at the hunting lodge), is that of ABLV. ABLV is the largest Latvian owned bank. Latvia is a small country with lots of ‘banks.’ ABLV is largely a correspondent bank, or a bank holding deposits of foreigners along with providing them with ‘services’ that conceal the identity of their owners. Correspondent banking, euphemistically in the ‘industry’ called “wealth management” and “tax optimization.” [..] Just as Mr. Rimsevics has seemingly been caught with Russian oligarchs, ABLV has been linked to handling money for North Korea’s weapons program. This crossed the line for the United States, which in the main has vacillated between support and tolerance of offshore banking, but who since 9/11 has become wary of its ‘downsides,’ such as terrorists and ‘axis of evil’ states availing themselves of their helpful services.

“Yes RBA, you did inflate housing bubble…”

• Reserve Bank Of Australia Accused Of Causing Ponzi Mortgage Market (AFR)

For years the Reserve Bank of Australia dismissed our warnings that excessively stimulatory interest rate cuts – which bequeathed borrowers with never-before-seen 3.4% mortgage rates that fuelled double-digit house price inflation – had blown a bubble that presented genuine financial stability risks. This manifested via record increases in speculative investor activity, interest-only loans and, more broadly, Australia’s household debt-to-income and house price-to-income ratios, which leapt into unchartered territory (notably above pre-global financial crisis peaks). The RBA narrative was very different. “Our concern was not that developments in household balance sheets posed a risk to the stability of the banking system,” governor Philip Lowe recently explained.

“Rather, it was more that…the day might come, when faced with bad economic news, households feel they have borrowed too much and respond by cutting their spending sharply, damaging the overall economy.” Nothing to see here when it comes to financial stability, if you believe the weasel words. It turns out Lowe was privately “packing his dacks” after unleashing the mother-of-all-booms powered by the cheapest credit in history. After the sudden deceleration in national house price growth – as documented here – from an 11.5% annualised rate in May 2017 to just 1.9% today, the governor revealed to parliamentarians that he’s now “much more comfortable…than I have been in recent years when I have been appearing before this committee, when I was quite worried”. That’s central speak for petrified.

Lowe conceded that “housing prices were rising very, very quickly – much faster than people’s income – and the level of debt was rising much faster than people’s income”. Yet according to the RBA’s interpretation, the 50% explosion in house prices between 2012 and 2018 was propelled not by the 11 interest rate cuts it bestowed on borrowers over the same period, but by a lack of new housing supply. You have to ignore the record building boom to believe this BS.

Pay me Ponzi!

• US Shale Investors Still Waiting On Payoff From Oil Boom (R.)

U.S. oil production has topped 10 million barrels per day, approaching a record set in 1970, but many investors in the companies driving the shale oil revolution are still waiting for their payday. Shale producers have raised and spent billions of dollars to produce more oil and gas, ending decades of declining output and redrawing the global energy trade map. But most U.S. shale producers have failed for years to turn a profit with the increased output, frustrating their financial backers. Wall Street’s patience ran out late last year as investors called for producers to shift more cash to dividends and share buybacks. “‘Give me some cash, please.’ That’s what investors have said,” said Anoop Poddar, a partner at private equity firm Energy Ventures.

And yet such calls for payouts remain a debate in the industry as oil prices have recently creeped up to four-year highs. Investors demanding immediate returns could risk forcing firms to curb expansion that could have a higher long-term payoff if oil prices continue to rise. For now, share prices of shale producers have yet to fully recover from the 2014 oil price collapse, when many investors took losses as hundreds of firms went bankrupt and those that survived struggled. The energy sector has lagged the rally that took the broader stock market to record highs. The S&P 500 Energy Index remains nearly a third off its peak in mid-2014, when oil prices topped $100 a barrel. The broader S&P 500 index is up 39% during the same period.

This year, five of the 15 largest U.S. independent shale firms have started paying or raised quarterly dividends, the documents show. But six of the firms have never offered a dividend or have not restored cuts implemented since the 2014 oil price collapse. Anadarko Petroleum earlier this month added $500 million to an existing buyback program and raised its dividend by 20%, sending its shares up 4.5% the next trading day. Buybacks reduce the number of shares outstanding, boosting the value of stock that remains.

This could turn ugly. Very ugly.

• EU Leaders Go to Battle Over Post-Brexit Budget Gap (BBG)

Hashing out the European Union’s multiannual budget is a political slugfest at the best of times. Throw in Brexit and the contest looks even more bruising. The U.K.’s scheduled withdrawal from the EU next year will leave a 10 billion-euro ($12.3 billion) annual hole in the bloc’s spending program, the main topic when leaders meet on Friday to map out Europe’s 2021-2027 budget. A Bloomberg survey of government positions reveals splits over how to cover the gap, with at least three net contributors – Sweden, the Netherlands and Austria – saying they won’t pay more. While amounting to only 1 percent of EU economic output, the European budget of 140 billion euros a year provides key funds for farmers, poorer regions and researchers in everything from energy to space technologies.

It’s also a barometer of the political mood in European capitals, signaling the risk of fissures as the EU seeks to maintain unity in the Brexit talks, confront new security challenges and curb democratic backsliding in countries such as Poland. “I expect it to be quite a fight,” said Guntram Wolff, director of the Bruegel think tank in Brussels. “The EU budget hole is quite substantial. You actually have a double challenge: you have to cut some spending and increase money for new priority areas.” [..] Britain’s absence from the next multiannual European spending program is conspicuous because the country is the No. 2 net contributor. Germany, which is the largest, and Italy, the fourth biggest, both say they are open to increasing their payments into the financial framework, the survey shows. Portugal and Estonia, both net recipients of funds, are prepared to raise their contributions, while France and Belgium are still undecided.

So what’s he going to do about it?

• Irish President Criticises EU Treatment Of Greece (IT)

Those responsible for mistaken economic policies that have had such a negative effect on the Greek people need to take responsibility for their actions, President Michael D Higgins has said, on the first day of his state visit. “It is a moral test of all actions that the person who initiates an action must take responsibility for its consequences,” Mr Higgins told his Greek counterpart, Prokopis Pavlopoulos. “It is little less than outrageous that the social consequences of decisions that are taken are not in fact understood and offered to people as choices,” Mr Higgins said, in remarks at a bilateral meeting at the presidential mansion.

Referring to the speech made by Emmanuel Macron on his recent state visit to Athens, Mr Higgins said he had to “say something much stronger” than the French president, who, he noted had acknowledged “that great mistakes, with great effect on the Greek people, have been made and that these were mistakes of the European Union”. “Cohesion, social cohesion, social Europe, must be placed on the top of the agenda that we all now share on the future of the union.” This meant that “we cannot continue adjusting out populations to economics models that not only have failed but have not submitted themselves to empirical tests in relation to their social consequences. “If parliaments and the mediating institutions continue to leach influence because they no longer have any power, because influences are coming from those who have no accountability, then we have a crisis.”

Note: the whole thing is based on an FBI report, with probes of Novartis going back to at least 2014.

“..bribery scandal [..] the worst since the creation of the modern Greek state almost 200 years ago..”

• Greek MPs Vote To Investigate Top Politicians In Novartis Bribery Claims (G.)

The Greek parliament is to investigate 10 of the country’s top politicians over in return for patronage that resulted in huge losses for Greece. After a raucous 20-hour debate, MPs voted early on Thursday to form a parliamentary committee tasked solely with investigating two former prime ministers and eight other ministers in connection with the allegations. The governor of the Bank of Greece, Yannis Stournaras; Europe’s migration commissioner, Dimitris Avramopoulos and the country’s former prime minister Antonis Samaras are among those accused of giving Novartis preferential market treatment. “We will not cover up,” Samaras’s successor, Alexis Tsipras, told parliament. “The Greek people must learn who turned pain and illness into a means of enrichment.”

Officials in Tsipras’ leftist-led administration have described the alleged bribery scandal as the worst since the creation of the modern Greek state almost 200 years ago. It has raised fears of political instability at a time when many had hoped the country was finally returning to normality after years of tumult. All 10 of those implicated vehemently rebutted the charges in often angry and emotional speeches during the debate. Stournaras, a former finance minister who helped steer Greece through some of its darkest days of the debt crisis after the country’s near-economic collapse, described the allegations as “disgusting fabrications”. Panagiotis Pikrammenos, who headed a one-month caretaker administration at the height of the crisis in 2012, came close to tears as he described the allegations against him “as lies and unacceptable slander”.

The cross-party committee, made up of 21 MPs, is expected to be established imminently. It will have the power to decide whether accusations of bribery, breach of duty and money-laundering apply, under a strict statute of limitation, to each of the accused. Under Greek law, parliament must investigate politicians for alleged infractions before they can face judicial prosecution. Few question that wrongdoing was committed. A confidential report by prosecutors originally tipped off by US authorities alleged that bribes of as much as €50m (£44m) were paid to politicians between 2006 to 2015 to promote Novartis’s products. More than 4,500 doctors are accused of malpractice as well. [..] With losses of around €4 billion for the country’s health system, the scandal will have played a significant role in Greece’s financial meltdown.

How to make sure an economy won’t recover.

• Greece Is The European Champion In Corporate Taxes (K.)

Corporate taxation in Greece is burdensome and anti-competitive, the Hellenic Federation of Enterprises (SEV) says in a report published on Thursday, stressing that Greek taxes also fail to draw revenues above the average rate of other European countries that as a rule have lower corporate taxation. According to SEV, the real tax load on corporations has increased considerably, with income tax reverting to the 2006 level plus the income on revenues from dividends: Today income tax comes to 29%, the tax on dividends to 15%, the solidarity levy to 10% and social security contributions for board members to 26.7%. This amounts to 81% of profit distribution, SEV said.

The federation’s analysts argue that profit taxation is above the European Union average and definitely higher than neighboring states that are Greece’s direct rivals within the bloc. If one adds board members’ social security contributions, then Greece has the highest corporate taxes by far, being the only country to have increased its tax sum since 2000, at a time when other states have been reducing the burden. SEV goes on to note that the tax rates are the just tip of the iceberg. The report focuses on the overall framework of corporate taxation that does not allow enterprises to grow and improve their competitiveness in international markets.

The federation highlights six specific problems in the corporate tax framework:
– The option of offsetting losses against future profits in Greece is for just five years, against at least 10 years in most EU states;
– Other countries have special incentives through tax exemption on expenditure, which in Greece are particularly limited;
– There is no framework for favorable regulations and incentives for mergers and acquisitions, which would encourage the streamlining and expansion of companies and reduce bad loans;
– There are no incentives such as accelerated amortization for new investments on equipment, which SEV calculates would have been fiscally neutral;
– Greek amortization rates are noncompetitive, particularly concerning investments in machinery and other equipment, forcing Greek firms to amortize their equipment slowly;
– Finally, Greece retains anachronistic levies such as stamp duty.

Ignores the role of social media-induced echo chambers.

• The Gun-Control Debate Could Break America (French)

Last night, the nation witnessed what looked a lot like an extended version of the famous “two minutes hate” from George Orwell’s novel 1984. During a CNN town hall on gun control, a furious crowd of Americans jeered at two conservatives, Marco Rubio and Dana Loesch, who stood in defense of the Second Amendment. They mocked the notion that rape victims might want to arm themselves for protection. There were calls of “murderer.” Rubio was compared to a mass killer. There were wild cheers for the idea of banning every single semiautomatic rifle in America. The discourse was vicious. It was also slanderous. There were millions of Americans who watched all or part of the town hall and came away with a clear message: These people aren’t just angry at what happened in their town, to their friends and family members; they hate me.

They really believe I’m the kind of person who doesn’t care if kids die, and they want to deprive me of the ability to defend myself. The CNN town hall might in other circumstances have been easy to write off as an outlier, a result of the still-raw grief and pain left in the wake of the Parkland shooting. But it was no less vitriolic than the “discourse” online, where progressives who hadn’t lost anyone in the attack were using many of the same words as the angry crowd that confronted Rubio and Loesch. The NRA has blood on its hands, they said. It’s a terrorist organization. Gun-rights supporters — especially those who oppose an assault-weapons ban — are lunatics at best, evil at worst. This progressive rage isn’t fake. It comes from a place of fierce conviction and sincere belief. Unfortunately, so does the angry response from too many conservatives.

[..] Unlike the stupid hysterics over net neutrality, tax policy, or regulatory reform, the gun debate really is — at its heart — about life and death. It’s about different ways of life, different ways of perceiving your role in a nation and a community. Given these immense stakes, extra degrees of charity and empathy are necessary in public discussion and debate. At the moment, what we have instead are extra degrees of anger and contempt. The stakes are high. Emotions are high. Ignorance abounds. Why bother to learn anything new when you know the other side is evil?

Major cold spell on the doorstep.

• 50,000 Die In UK ‘Cold Homes Public Health Crisis’ (Ind.)

Thousands of people are “needlessly” dying each year because they cannot afford to properly heat their homes, new research has revealed. The UK has the second-worst rate of excess winter deaths in Europe, a study by National Energy Action and climate-change charity E3G found. The organisations called for urgent action to end to the devastating but “entirely preventable” tragedy that they say amounts to a “cold homes public health crisis”. The death toll looks set to rise next week as the UK braces for an imminent “polar vortex” predicted to bring harsh frost, snow showers and freezing temperatures. Almost 17,000 people in the UK are estimated to have died in the last five years as a direct result of fuel poverty and a further 36,000 deaths are attributable to conditions relating to living in a cold home, the research found.

The number dying each year is similar to the amount who die from prostate cancer or breast cancer. A total of 168,000 excess winter deaths from all causes have been recorded in the UK over the latest five-year period. Of 30 countries studied, only Ireland has a higher proportion of people dying due to cold weather. The research was published to coincide with Fuel Poverty Awareness Day on Friday which aims to highlight the problems faced by those struggling to keep warm in their homes. It comes just 24 hours after Centrica, which owns British Gas, announced plans to cut 4,000 jobs after a “weak” year in which it made £1.25bn profit. The company’s chief executive, Ian Conn, said the Government’s energy price cap – designed to prevent loyal and vulnerable customers being ripped off – was partly to blame for the layoffs. Pedro Guertler, of E3G, who co-authored the research, said the winter death figures were not only a tragedy but a “national embarrassment”.

Debt Rattle Boxing Day 2017

Dec 262017

December 26, 2017 Posted by Raúl Ilargi Meijer at 11:19 am Finance Tagged with: Abenomics, bitcoin, Coinbase, Greece, Japan, leverage, Moria, plastics, refugees, Shale, UBI, UNHCR 4 Responses »

Edward Hopper Christmas card 1928

• Shale Gas Fuels 40% Increase In Funding For Plastics Production (G.)

• Bitcoin Could Crash Financial Markets Because Of Massive Borrowing (MW)

• Was Coinbase’s Bitcoin Cash Rollout A Designed Hit? (Luongo)

• Japan PM Abe Urges Firms To Raise Wages By 3% Or More (R.)

• Japan’s Household Spending Jumps But BOJ Seen Keeping Stimulus (R.)

• Shanghai Sets Population At 25 Million To Avoid ‘Big City Disease’ (G./R.)

• Europe Banks Brace For Huge Overhaul That Opens The Doors To Their Data (CNBC)

• Scotland United In Curiosity As Councils Trial Universal Basic Income (G.)

• UK Asylum Offices ‘In A Constant State Of Crisis’, Say Whistleblowers (G.)

• ‘Normality’ To Be Restored At Moria By End of January – Greek Minister (K.)

• UNHCR Calls For Migrant Transfers, Blames Greece For Grim Conditions (K.)

It’s up to you to refuse plastics. Nothing else will work.

• Shale Gas Fuels 40% Increase In Funding For Plastics Production (G.)

The global plastic binge which is already causing widespread damage to oceans, habitats and food chains, is set to increase dramatically over the next 10 years after multibillion dollar investments in a new generation of plastics plants in the US. Fossil fuel companies are among those who have plooughed more than $180bn since 2010 into new “cracking” facilities that will produce the raw material for everyday plastics from packaging to bottles, trays and cartons. The new facilities – being built by corporations like Exxon Mobile Chemical and Shell Chemical – will help fuel a 40% rise in plastic production in the next decade, according to experts, exacerbating the plastic pollution crisis that scientist warn already risks “near permanent pollution of the earth.”

“We could be locking in decades of expanded plastics production at precisely the time the world is realising we should use far less of it,” said Carroll Muffett, president of the US Center for International Environmental Law, which has analysed the plastic industry. “Around 99% of the feedstock for plastics is fossil fuels, so we are looking at the same companies, like Exxon and Shell, that have helped create the climate crisis. There is a deep and pervasive relationship between oil and gas companies and plastics.” Greenpeace UK’s senior oceans campaigner Louise Edge said any increase in the amount of plastic ending up in the oceans would have a disastrous impact. “We are already producing more disposable plastic than we can deal with, more in the last decade than in the entire twentieth century, and millions of tonnes of it are ending up in our oceans.”

The huge investment in plastic production has been driven by the shale gas boom in the US. This has resulted in one of the raw materials used to produce plastic resin – natural gas liquids – dropping dramatically in price. The American Chemistry Council says that since 2010 this has led to $186bn dollars being invested in 318 new projects. Almost half of them are already under construction or have been completed. The rest are at the planning stage. “I can summarise [the boom in plastics facilities] in two words,” Kevin Swift, chief economist at the ACC, told the Guardian. “Shale gas.”

For now, crypto is too small to sink anything at all, but a potential future issue is: If derivatives and leverage play such a big role in crypto, how exactly is it different from all other ‘investments’?

• Bitcoin Could Crash Financial Markets Because Of Massive Borrowing (MW)

Bitcoin mania is starting to look like a religion. I say that because both bitcoin and religion involve faith in the unknowable. Some bitcoin investors believe the cryptocurrency, along with the underlying blockchain technology, will be a vital part of a new, decentralized, post-government society. I can’t prove that won’t happen — nor can bitcoin evangelists prove it will. Like life after death, they can only say it’s out there beyond the horizon. If you believe in bitcoin paradise, fine. It’s your business … until your faith puts everyone else at risk. As of this month, bitcoin is doing it. Is bitcoin in a price bubble? I think so. Asset bubbles usually only hurt the buyers who overpay, but that changes when you add leverage to the equation.

Leverage means “buying with borrowed money.” So when you buy something with borrowed money and can’t repay it, the lender loses too. The problem spreads further when lenders themselves are leveraged. For bitcoin mania to infect the entire financial system, like securitized mortgages did in 2008, buyers would have to use leverage. The bad news is that a growing number do just that. In the U.S., we have a Financial Stability Oversight Council to watch for system-wide vulnerabilities. The FSOC issued its 164-page annual report this month. Here’s its plan on bitcoin and other cryptocurrencies: It is desirable for financial regulators to monitor and analyze their effects on financial stability. Sounds like FSOC is on the case — or at least will be on it, someday. Meanwhile, this month commodity regulators allowed two different U.S. exchanges to launch bitcoin futures contracts.

Oddly, instead of griping about slow regulatory approval, futures industry leaders think the government moved too fast. To get why, you need to understand how futures exchanges work. One key difference between a regulated futures exchange and a private bet between two parties is that the exchange absorbs counterparty risk. When you buy, say, gold futures, you don’t have to worry that whoever sold you the contract will disappear and not pay up. If you close your trade at a profit, the exchange clearinghouse guarantees payment. The clearinghouse consists of the exchange’s member brokerage firms. They all pledge their own capital as a backstop to keep the exchange running. So when the Commodity Futures Trading Commission (CFTC) gave exchanges the green light to launch bitcoin futures, member firms collectively said (I’ll paraphrase here): “WTF?”

No matter if crypto surges or collapses in 2018, controversies will be much much bigger than this year. Just getting started.

• Was Coinbase’s Bitcoin Cash Rollout A Designed Hit? (Luongo)

[..] if there is a path to harming Bitcoin and the cryptocurrency market available to the money center banks, then they will always opt for it. I’ve been pretty vocal about the need for having a slow, annoying reserve asset in the cryptocurrency space. I’ve talked about it multiple times (here and here). This doesn’t jibe with Bitcoin Cash proponent and Bitcoin.com CEO Roger Ver’s image of Bitcoin. And that is to Roger’s credit, actually. It’s pretty obvious from a cursory glance at Roger’s Twitter feed that he approaches Bitcoin as a radical libertarian/Austrian Economist would — a purely decentralized, trustless money that can wrest control of the world’s monetary system from rentiers in Government and Banking. Music to my ears. On the other hand is the very shady attitude of Blockstream and the Bitcoin Core group who prevailed in the Segwit 2x fight, which, from Roger Ver’s perspective is actually a mop-up operation, not the decisive battle in the war.

“The reason there is so much hostility from Bitcoin Core towards Bitcoin Cash is because Core knows they have stolen the name but are advocating a completely different system than what was originally described by Satoshi. Bitcoin Cash is Bitcoin” — Roger Ver (@rogerkver) December 19, 2017

The real battle for the soul of Bitcoin happened back in August with the fork that created Bitcoin Cash. Complaining about all of these other forks, to Roger, is like closing the barn door after the horses are gone. By keeping Bitcoin slow and expensive they create the need for new solutions to improve it. Why solve a problem when you can artificially create one and then sell everyone the solution? So, I’m ambivalent about this fight for the soul of Bitcoin, because I want a real digital analogue to Gold which only moves the most important transactions. I don’t want all coins to be all things to all people. But, I also know that with this much money at stake there will be pushback from the ‘powers-that-be.’ The Banks and central banks are staring at an existential threat to their future and are doing what they can to stop it from happening. And that, to them, means gaining control over the Bitcoin blockchain. It also means cutting off the means of entry and exit from the cryptocurrency market for average people.

Unemployment in Japan is almost non-existent, but apparently markets don’t work the way they’re supposed to. Tight labor doesn’t lead to higher wages.

• Japan PM Abe Urges Firms To Raise Wages By 3% Or More (R.)

Japanese Prime Minister Shinzo Abe on Tuesday urged companies to raise wages by 3% or more next year, keeping up pressure on firms to spend their huge cash pile on wages to broaden the benefits of his “Abenomics” stimulus policies.“We must sustain and strengthen Japan’s positive economic cycle next year to achieve our long-standing goal of beating deflation,” Abe said in a speech at a meeting of Japan’s biggest business lobby Keidanren. “For that, I’d like to ask companies to raise wages by 3% or higher next spring,” he said. Wages at big companies have been rising slightly more than 2% each year since 2014, government data shows, and an increase of 3% or more next year would help the Bank of Japan to reach its elusive 2% inflation target.

BOJ Governor Haruhiko Kuroda told the same meeting that companies remain hesitant to raise wages because they had become accustomed to prioritising job security over wage hikes during 15 years of deflation. “With consumers remaining reluctant to accept price rises, many firms are concerned about losing customers if they raise prices,” he said. “It seems so difficult for many firms to take the first step to raise their prices, that they wait and see what other firms are doing.” Sadayuki Sakakibara, chairman of Keidanren, made no reference to wages at his speech at the meeting, focusing instead on the need for Japan to get its fiscal house in order. “We’d like to strongly call on the need to restore fiscal health,” as worries over the sustainability of Japan’s social welfare system could discourage consumers to spend, he said.

“..due mostly to a boost from rising fuel costs that is seen fading in 2018..”

• Japan’s Household Spending Jumps But BOJ Seen Keeping Stimulus (R.)

Japan’s households spent more than expected in November while consumer inflation ticked up and the jobless rate hit a fresh 24-year low, offering the central bank some hope an economic recovery will drive up inflation to its 2% target. But the increase in prices was due mostly to a boost from rising fuel costs that is seen fading in 2018, keeping the Bank of Japan under pressure to maintain its huge monetary support even as other central banks seek an end to crisis-mode policies. Minutes of the BOJ’s October rate review showed that while most central bank policymakers saw no need to ramp up stimulus, they agreed on the need to sustain “powerful” monetary easing for the time being. “There’s a chance inflation may gradually accelerate toward the fiscal year beginning in April,” as a tightening job market pressures companies to raise wages, said Takeshi Minami, chief economist at Norinchukin Research Institute.

“But inflation remains distant from the BOJ’s 2% target, so the central bank will probably maintain its current policy framework.” Spending was driven by broadbased gains, with households loosening the purse strings for items such as refrigerators, washing machines, and sporting goods and services such as eating-out and travel. Data also showed wage earners’ disposable income rose 1.8% in November from a year earlier, suggesting that higher incomes have encouraged consumers to open their wallets. The nationwide core consumer price index (CPI), which includes oil goods but excludes volatile fresh food prices, rose 0.9% in November from a year earlier, government data showed on Tuesday, marking the 11th straight month of gains. The pace of price growth was just ahead of October’s 0.8% and a median market forecast of the same rate.

Illusions of control. China’s no. 1 threat.

• Shanghai Sets Population At 25 Million To Avoid ‘Big City Disease’ (G./R.)

China’s financial hub of Shanghai will limit its population to 25 million people by 2035 as part of a quest to manage “big city disease”, authorities have said. The State Council said on its website late on Monday the goal to control the size of the city was part of Shanghai’s masterplan for 2017-2035, which the government body had approved. “By 2035, the resident population in Shanghai will be controlled at around 25 million and the total amount of land made available for construction will not exceed 3,200 square kilometres,” it said. State media has defined “big city disease” as arising when a megacity becomes plagued with environmental pollution, traffic congestion and a shortage of public services, including education and medical care.

But some experts doubt the feasibility of the plans, with one researcher at a Chinese government thinktank describing the scheme as “unpractical and against the social development trend”. Migrant workers and the city’s poor would suffer the most, predicted Liang Zhongtang last year in an interview with state media, when Shanghai’s target was being drafted. The government set a similar limit for Beijing in September, declaring the city’s population should not exceed 23 million by 2020. Beijing had a population of 21.5 million in 2014. Officials also want to reduce the population of six core districts by 15% compared with 2014 levels. To help achieve this goal authorities said in April some government agencies, state-owned companies and other “non-core” functions of the Chinese capital would be moved to a newly created city about 100 kilometres south of Beijing.

Well, actually, your data, that is.

• Europe Banks Brace For Huge Overhaul That Opens The Doors To Their Data (CNBC)

From current accounts to credit cards, established lenders have access to vast amounts of information that financial technology (fintech) competitors could only dream of. In Europe, that could all be about to change. On January 8, banks operating in the European Union will be forced to open up their customer data to third party firms — that is, when customers give consent. EU lawmakers hope that the introduction of the revised Payment Services Directive (PSD2) will give non-banking firms the chance to compete with banks in the payments business and give consumers more choice over financial products and services. Britain’s Competition and Markets Authority (CMA) has set out similar plans to let customers share their data with other banks and third parties.

With customer consent, U.K. banks will be required to give authorized third-party firms access to current account data. Those regulations form part of a conceptual transition known as “open banking.” Under an open banking framework, proponents say, non-banking firms — from corporations as big as Amazon and IBM to start-ups — would be able create new financial products by utilizing the data of banks. Banks will be required to build application programming interfaces (APIs) — sets of code that give third parties secure access to their back-end data. Those APIs serve as channels for developers to get to the data and build their own products and services around it.

Such information could serve as a tool to understand things such as customers’ spending habits or credit history, and could lead to the creation of new services. “In a world of open banking, the customer can choose a provider in each part of the value chain. And each bank has to participate in the value chain as an earners’ right to be there,” Anne Boden, co-founder and chief executive of U.K. mobile-only bank Starling, told CNBC in an interview earlier this year. [..] Some European lenders are giving early signals as to what a post-PSD2 world will look like. Spain’s BBVA, Denmark’s Saxo Bank, Nordic lender Nordea and Ireland’s Ulster Bank have already published open developer portals ahead of the EU legislation.

UBI experiments that are poorly designed are real threats to the principle.

• Scotland United In Curiosity As Councils Trial Universal Basic Income (G.)

In Scotland, a country wearily familiar with divisions of a constitutional nature, the concept of a basic income is almost unique in enjoying multi-party favour. Across the four areas currently designing basic income pilots – Glasgow, Edinburgh, Fife and North Ayrshire – the projects have variously been championed by Labour, SNP, Green and, in one case, Conservative councillors. Matt Kerr, who has tirelessly lobbied for the idea through Glasgow city council, said: “Reactions to basic income have not split along the usual left/right party lines. Some people to the left of the Labour party think that it undermines the role of trade unions and others take the opposite view. But there should be room for scepticism; you need that to get the right policy.” Advocates are aware such unity of purpose is precious and worth preserving.

“The danger is that this falls into party blocks,” said Kerr. “If people can unite around having a curiosity about [it] then I’m happy with that. But having the first minister on board has done us no harm at all.” Inevitably, Sturgeon’s declared interest has invited criticism from her opponents. A civil service briefing paper on basic income, which expressed concerns that the “conflicting and confusing” policy could be a disincentive to work and costed its national roll-out at £12.3bn a year, was obtained by the Scottish Conservatives through a freedom of information request in October. The party accused her of “pandering to the extreme left of the [independence] movement”. But advocates argue the figures fail to take into account savings the scheme would bring.

The independent thinktank Reform Scotland, which published a briefing earlier this month setting out a suggested basic income of £5,200 for every adult, has calculated that much of the cost could be met through a combination of making work-related benefits obsolete and changes to the tax system, including scrapping the personal allowance and merging national insurance and income tax. [..] Joe Cullinane, the Labour leader of North Ayrshire council, said: “We have high levels of deprivation and high unemployment, so we take the view that the current system is failing us and we need to look at something new to lift people out of poverty. “Basic income has critics and supporters on the left and right, which tells you there are very different ways of shaping it and we need to state at the outset that this is a progressive change, to remove that fear and allow people to have greater control over their lives, to enter the labour market on their own terms.”

“Two whistleblowers claim Home Office departments delay asylum applications for profit..”

• UK Asylum Offices ‘In A Constant State Of Crisis’, Say Whistleblowers (G.)

Staff in the Home Office’s asylum directorate are undertrained, overworked and operating in a “constant state of crisis”, two whistleblowers have claimed, as applicants endure long waits to have their case dealt with due to internal pressures. The Home Office staff have also told the Guardian that asylum case workers are making poor decisions about applications because they are under pressure to focus on more profitable visa applications. Despite a “shocking increase in complaints (from applicants) and MP enquiries questioning delays”, they say caseworkers have been told to brush off all enquires and “just give standard lines” of response when called to account.

A source from the UK Visa and Immigration Unit (UKVI) has alleged that caseworkers have been ordered to kick applications for spousal visas “into the long grass” because they can make more money for the directorate by processing student visas. Spousal visas, also known as settlement visas, cost more than student visas but take much longer to process. The source also claims visa applications are routinely labelled “complex” or ”non-straightforward” by staff – a term which excuses the UKVI from adhering to their standard processing times – it is, the source claimed, “just a euphemism for ‘there’s more profitable stuff we could be doing’”. Paying hundreds of pounds for priority services to try to avoid delays on decisions is a “waste of time”, they warned applicants.

The allegations reflect concerns expressed in a report earlier this year by David Bolt, the Independent Chief Inspector of Borders and Immigration, who said the Home Office is not “in effective control” of its asylum process. [..] Some of the more shocking findings from Bolt’s report included pregnant women being made to wait more than two years for decisions on their immigration applications; an increasing numbers of applicants having their immigration applications registered as “not straightforward” and endlessly delayed; and Home Office employees being “pushed to the limit” by individual targets and threatened with disciplinary action as deadlines approach.

At least one more month of utter despair, with little reason to assume any improvement by then. Mouzalas cannot escape his part of the blame.. That said, he’s not lying when he says “Here in Moria we have a problem with unaccompanied minor refugees. We have asked Europe to take a share of these children. It refuses to do so..”

• ‘Normality’ To Be Restored At Moria By End of January – Greek Minister (K.)

Migration Minister Yiannis Mouzalas said Monday authorities were making huge efforts to improve conditions at the Moria camp on the eastern Aegean island of Lesvos, while accusing European officials of “hypocrisy” for failing to shoulder their share of the burden. Speaking after an unannounced visit at the infamous migrant and refugee processing center, Mouzalas said Greek authorities were hoping to restore “normality” at the facility by the end of January. “It all depends on arrivals,” Mouzalas said. “Today it was good weather and a total of 175 arrivals have been recorded on Lesvos as of this morning,” he said.

Responding to criticism over the scenes of misery and squalor documented by foreign media at Moria last week, the leftist minister said: “Europe must put an end to its hypocrisy.” “Here in Moria we have a problem with unaccompanied minor refugees. We have asked Europe to take a share of these children. It refuses to do so,” Mouzalas said. “It’s very easy to act like a prosecutor. Dealing with the situation in a way that helps refugees and migrants is the hard part. And this is what we are expected to do,” he said. “There is no point in wagging your finger. What you need to do is mobilize the procedures and mechanisms in order to improve conditions and solve problems,” he said.

And the UNHCR is not beyond blame, either. Pointing fingers at others is always easy, but hard to keep up after two whole years.

• UNHCR Calls For Migrant Transfers, Blames Greece For Grim Conditions (K.)

As temperatures drop, the UN refugee agency (UNHCR) once more urged Greek authorities to swiftly transfer thousands of refugees and migrants living in cramped and unsafe island camps to the mainland where better conditions and services are available. “Tension in the reception centers and on the islands has been mounting since the summer when the number of arrivals began rising,” UNHCR spokeswoman Cecile Pouilly told Voice of America. “In some cases, local authorities have opposed efforts to introduce improvements inside the reception centers,” Pouilly was quoted as saying. More than 15,000 people have been transferred to the mainland over the past year.

Meanwhile, speaking to the New Europe news website, the EU’s special envoy on migration, Maarten Verwey, suggested that Greek authorities were to blame for the grim living conditions inside island migrant camps, as recently documented by American news outlet BuzzFeed and Germany’s Deutsche Welle. “The Commission has made the funding available to ensure appropriate accommodation for all. However, the Commission cannot order the creation or expansion of reception capacity, against the opposition of the competent authorities,” Verwey said, according to New Europe.

Debt Rattle July 9 2017

Jul 092017

July 9, 2017 Posted by Raúl Ilargi Meijer at 8:57 am Finance Tagged with: Africa, austerity, boomers, freehold, NATO, poverty, Putin, river, Shale, tabloid, Trump Comments Off

Hieronymus Bosch St. John on Patmos 1489

• The Trump Effect Turns Every Paper Into A Tabloid (G.)

• G20 Launches Plan To Fight Poverty In Africa (AFP)

• The Russian Economy If You Aren’t Wearing NATO Night-Fighting Goggles (Helmer)

• Britain Isn’t Greece, Prime Minister (BBG Ed.)

• Baby Boomers Not Financially Prepared For Retirement (MW)

• UK Homebuyers Desperate To Know Who Really Owns Their Freehold (G.)

• Wall Street Cash Pumps Up Shale Oil Production Even as Prices Sag (WSJ)

• Polluted Indian River Reported Dead Despite ‘Living Entity’ Status (G.)

An inevitable story. And a too-easy trap: the Guardian presumes that it itself escapes this. It doesn’t. Blaming Trump for that is false: he doesn’t write the stories. Every news outlet is responsible for its own journalistic standards. “Trump made me do it” lacks all credibility. And besides, the Guardian, like so many US media, has been trying to put Trump down for a long time. Just like it hammered Jeremy Corbyn as ‘unfit’ and much worse until it did an embarrassing 180. Is Trump right in reacting as agressively as he has and does? Perhaps not, probably not. But is he justified? Perhaps he is. In the end for the media this is about the beam in thine own eye.

• The Trump Effect Turns Every Paper Into A Tabloid (G.)

You can find exactly the same fractured dialogue in Britain, too. What did the surprise of the Brexit vote show? Here’s another tidal wave of articles talking about the non-metropolitan forgotten masses. That, briefly, seemed a national call for understanding and change, one inchoately confirmed in the June election. But see how deafness and disdain soon set in. Let’s blame something – Boris, Rupert Murdoch, Paul Dacre, the BBC – for Brexit. Let’s contemplate the rise of Jeremy Corbyn and press a panic button. The Mail talks about “fake news, the fascist left and the REAL purveyors of hate”. Guardian columnists denounce the “open sewer” of Dacre coverage. Terms like “Tory scum” float from protesters’ posters into the new mass media. Jon Snow, amongst others, gets pasted for his supposed views about modern Conservatism. Irate Leave MPs stomp on the BBC welcome mat.

And every new day seems to bring fresh ingredients. Kensington council seeks to shut journalists out of its crucial meeting. Andrea Leadsom extols a “patriotic” press. There’s a raw edge to the debate now, sharpened after Grenfell Tower by outbreaks of pure and, sometimes, simulated rage. But: “Sit up, though, and look around. You may notice that, amid almost no public outrage whatsoever, we are quite a lot closer than once we were” to losing press freedom, says Hugo Rifkind in the Times. This is politics, and journalism, from the trenches as trust in the media plummets both here and in the US: American trust in the media down to just 38% in the latest Reuters Institute findings, the UK seven points down to 43%. Blame “deep-rooted political polarisation and perceived mainstream media bias”, says Reuters. In short, blame the frenzied state we’re in.

[..] observe how the new nihilism of scum and sewers brings its own narrow benefits. Richard Cohen in the Washington Post arrives clear-eyed. “Circulation is up. Eyeballs are popping. Trump is political pornography – gripping, exciting, lewd, fascinating. He devours adjectives so that, soon, we run out of them. The bizarre becomes ordinary. But he has done his damage. He has normalised contempt for the news media, framing it as a daily tussle between him, the tribune of the people, and us, vile overeducated snobs.”

And Jeet Heer of the New Republic pushes the argument on a notch as he charts the advantage of Trump’s alignment with the likes of the National Enquirer: “The tabloids offer a sordid vision of society, where the mainstream image of celebrities elides their secretly miserable lives (whether because of addiction, ageing, infidelity, or bankruptcy). In this nihilistic world, everyone is corrupt and every public statement is a lie. And if everyone is equally bad and untrustworthy, there’s no reason to hold Trump to any higher standard. This, ultimately, is why Trump and the tabloids were made for each other: They’re both committed to defining deviancy down.”

And while we’re at it, Guardian, let’s denounce this kind of thing for what it is. The G20 countries are responsible for poverty in Africa, and they’re not now going to solve it too. Just like the Paris agreement is complete nonsense: schemes to get rich.

• G20 Launches Plan To Fight Poverty In Africa (AFP)

G20 nations launched an unprecedented initiative Saturday at the group’s summit in Germany to fight poverty in Africa, but critics called the plan half-hearted. Under German Chancellor Angela Merkel’s “Investment Compacts”, an initial seven African countries would pledge reforms and receive technical support in order to attract new private investment. More than half of Africans are under 25 years old and the population is set to double by mid-century, making economic growth and jobs essential for the young to stop them from leaving, Merkel has said. Germany’s partner nations are Ghana, Ivory Coast and Tunisia, while Ethiopia, Morocco, Rwanda and Senegal are also taking part. Far poorer nations such as Niger or Somalia are so far not on the list.

“We are ready to help interested African countries and call on other partners to join the initiative,” said the G20 in their final communique. The plan, as well as multinational initiatives on helping girls, rural youths and promoting renewable energy, would help “to address poverty and inequality as root causes of migration”. Some 100,000 people, most of them sub-Saharan Africans, have made the dangerous journey to Europe across the Mediterranean in rickety boats this year as the migration crisis shows no sign of abating. Anti-poverty group ONE said that the investment compacts “promised much, but too many G20 partners missed the memo and failed to contribute. “The flimsy foundations must now be firmed up, follow through and improved, especially for Africa’s more fragile states.”

“..it is the most self-sufficient and diversified economy in the world.” Which is funny when you hear Putin argue against protectionism.

• The Russian Economy If You Aren’t Wearing NATO Night-Fighting Goggles (Helmer)

If your enemy is waging economic war on you, it’s prudent to camouflage how well your farms and factories are doing. Better the attacker thinks you’re on your last legs, and are too exhausted to fight back. A new report on the Russian economy, published by Jon Hellevig, reveals the folly in the enemy’s calculation. Who is the audience for this message? US and NATO warfighters against Russia can summon up more will if they think Russia is in retreat than if they must calculate the cost in their own blood and treasure if the Russians strike back. That’s Russian policy on the Syrian front, where professional soldiers are in charge. On the home front, where the civilians call the shots, Hellevig’s message looks like an encouragement for fight-back – the economic policymaker’s equivalent of a no-fly zone for the US and European Union. It’s also a challenge to the Kremlin policy of appeasement.

Hellevig, a Finnish lawyer and investment analyst, has been directing businesses in Russia since 1992. His Moscow-based consultancy Awara has published its assessment of Russian economic performance since 2014 with the title, “What Does Not Kill You Makes You Stronger.” The maxim was first coined by the `19th century German philosopher Friedrich Nietzsche. He said it in a pep talk for himself. Subsequent readers think of the maxim as an irony. Knowing now what Nietzsche knew about his own prognosis but kept secret at the time, he did too. The headline findings aren’t news to the Kremlin. It has been regularly making the claims at President Vladimir Putin’s semi-annual national talk shows; at businessmen’s conventions like the St. Petersburg International Economic Forum (SPIEF); and in Kremlin-funded propaganda – lowbrow outlets like Russia Today and Sputnik News, and the highbrow Valdai Club.

A charter for a brand-new outlet for the claims, the Russian National Convention Bureau, was agreed at the St. Petersburg forum last month. Government promotion of reciprocal trade and inward investment isn’t exceptional for Russia; it is normal practice throughout the world. The argument of the Hellevig report is that the US and NATO campaign against Russia has failed to do the damage it was aimed to do, and that their propaganda outlets, media and think-tanks are lying to conceal the failure. Small percentage numbers for the decline in Russian GDP and related measures are summed up by Hellevig as “belt-tightening, not much more”. Logically and arithmetically, similarly small numbers in the measurement of the Russian recovery this year ought to mean “belt expanding, not much more.” But like Nietzsche, Hellevig is more optimistic.

Here’s what he concludes:
• “Industrial Production was down merely 0.6%. A handsome recovery is already on its way with an expected growth of 3 to 4% in 2017. In May the industrial production already soared by a promising 5.3%.”
• “Unemployment remained stable all through 2014 – 2016, the hoped-for effect of sanctions causing mass unemployment and social chaos failed to materialize.”
• “GDP was down 2.3% in 2014-2016, expected to more than make up for that in 2017 with 2-3% predicted growth.”
• “The really devastating news for ‘our Western partners’ (as Putin likes to refer to them) must be – which we are the first to report – the extraordinary decrease in the share of oil & gas revenue in Russia’s GDP.”
• “In the years of sanctions, Russia has grown to become an agricultural superpower with the world’s largest wheat exports. Already in the time of the Czars Russia was a big grain exporter, but that was often accompanied with domestic famine. Stalin financed Russia’s industrialization to a large extent by grain exports, but hereby also creating domestic shortages and famine. It is then the first time in Russia’s history when it is under Putin a major grain exporter while ensuring domestic abundance. Russia has made an overall remarkable turnaround in food production and is now virtually self-sufficient.”
• “Russia has the lowest level of imports (as a share of the GDP) of all major countries… Russia’s very low levels of imports in the global comparison obviously signifies that Russia produces domestically a much higher share of all that it consumes (and invests), this in turn means that the economy is superbly diversified contrary to the claims of the failed experts and policymakers. In fact, it is the most self-sufficient and diversified economy in the world.

Bloomberg argues that austerity is bad for Britain but good for Greece. Blind bats.

• Britain Isn’t Greece, Prime Minister (BBG Ed.)

Britain’s government isn’t due to announce a new budget until the autumn, but debate is already raging over public-sector pay. With Brexit bearing down, the embattled prime minister, Theresa May, will have to choose between making another embarrassing U-turn and defending a policy that is both unpopular and unnecessary. Sadly for May, the U-turn makes better sense. For years it was an article of faith among Britain’s Conservatives that the budget deficit had to be eliminated — by 2020, if not yesterday. Some Tories are now ready to abandon that line of thinking; others still hold the principle, if not the timetable, sacrosanct. Speaking in Parliament on Wednesday, May came down firmly on the side of austerity: Greece shows you where fiscal indiscipline leads, she argued.

Labour leader Jeremy Corbyn was unmoved. He decried the “low-wage epidemic” and argued that the 1 percent cap on increases in public-sector wages should be removed. Corbyn has a point. Britain’s workers are getting squeezed, especially in the public sector, thanks to rising inflation caused in part by the Brexit-induced fall in sterling. But he’s wrong to look at wages in isolation. Public-sector pay is only one of many claims on the government’s budget. The National Health Service, for instance, is in a state of permanent crisis; spending on care for the elderly and other needs is woefully inadequate. The list of other worthy expenditures is endless. Trying to meet all such claims would indeed be a formula for fiscal collapse. The government has to prioritize.

Where higher wages are needed to recruit and retain workers for essential services, raise them. Where additional public spending is needed to provide vital infrastructure, spur productivity, and support growth, make the investment. In such cases, higher taxes and/or higher public borrowing can be justified. If caps and ceilings are used in a way that makes this necessary flexibility impossible – not as emergency measures, moreover, but as a system of long-term control – they’ll do more harm than good. May’s embrace of blanket austerity, by the way, is bad politics as well as bad economics. Most British voters have forgotten, or never experienced, the ruinous consequences of profligate public spending.

That’s why Corbyn’s expansive promises are more popular than you might expect – and why there’ll be greater support for fiscal control if it’s seen to be smart and discriminating, rather than an act of blind ideological faith. To be sure, the timing for a change of fiscal strategy is hardly propitious. Brexit has alarmed investors, giving the government less room for maneuver. Even so, the government shouldn’t be paralyzed – and shouldn’t argue that cautious flexibility would make the country another Greece. That line won’t fly. Targeted spending to improve vital services and drive future growth is good policy, and Britain’s best buffer against the perils ahead.

What a surprise. Maybe it’s time to inject some reality.

• Baby Boomers Not Financially Prepared For Retirement (MW)

Retirement is right around the corner for baby boomers – if they haven’t already entered it – yet so many are financially unprepared. Baby boomers, or those born between 1946 and 1964, expect they’ll need $658,000 in their defined contribution plans by the time they retire, but the average in those employer-sponsored plans is $263,000, according to a survey of 900 investors by financial services firm Legg Mason. Older boomers, who are 65 to 74, have an average of $300,000. Their asset allocation for all of their investments are also conservative, according to QS Investors, an investment management firm Legg Mason acquired in 2014, with 30% in cash, 24% in equities, 22% in fixed income, 4% in non-traditional assets, 8% in investment real estate, 2% in gold and other precious metals and 8% in other investments.

“They have less than half the assets they hope to have in retirement,” said James Norman, president of QS Investors. “That’s a pretty big miss.” Americans across the country, and all age groups, are drastically under-saved for retirement. Only a third of Americans who have access to a 401(k) plan contribute to it, and previous research suggests the typical middle-aged American couple only has $5,000 saved for the future. Meanwhile, millennials may not be able to picture themselves in retirement at all, though are urged by financial professionals to make a habit of saving, if even only as little as $5. There are a multitude of reasons people may not have enough for retirement, such as having to leave the workforce in between their prime years to care for loved ones, not working long enough to qualify for certain government benefits. or choosing to pay for their childrens’ college tuition instead of saving for their own retirement.

Still, not saving enough was the biggest regret among older Americans, according to a survey of 1,000 participants by personal finance site Bankrate.com. Generation X, or those born between 1965 and 1981, aren’t doing all that much better, though they have the benefit of more time to reach their financial goals. More of them have a defined contribution plan, according to the Legg Mason survey, with an average of $199,000 stashed away for a goal of $541,000 by retirement. They are also investing conservatively, with 25% in cash, 21% in equities, 17% in fixed income, 11% in non-traditional assets, 16% in investment real estate, 7% in gold and other precious metals and 4% in other investments. Conversely, QS Investors suggest their Gen-X aged clients have 80% in equities, which faces more risks from the stock market but could also realize higher returns.

Retirement isn’t the picture-perfect image of lounging on a beach with the idea of a 9-to-5 job long gone. Benefits aren’t the same, either – for example, in 1985, retirees could expect Social Security to cover most of their income and employers typically covered most health-care costs. Retirees 30 years ago also probably didn’t expect to live for decades after resigning at 65, whereas now people are being told to plan to live well into their 80s.

A medieval society.

• UK Homebuyers Desperate To Know Who Really Owns Their Freehold (G.)

Buyers who purchased new properties direct from some of the UK’s biggest builders have been left in the dark as investment companies play pass-the-parcel with the land their homes stand on. Take Joanne Darbyshire, 46, and her husband Mark, 47. They bought a five-bedroom house in Bolton from Taylor Wimpey in 2010, and are among thousands of unfortunate leaseholders put on “doubling” ground rent contracts that in extreme cases have left their properties almost worthless, with mortgage lenders refusing loans to future buyers. The only way to escape the escalating payments is to buy the freehold. But in Darbyshire’s case, Taylor Wimpey sold it to Adriatic Land 2 (GR2) in 2012. In January 2017 that company transferred it to Adriatic Land 1 (GR3), while some of Darbyshire’s neighbours have seen their freeholds transferred from Adriatic Land 2 (GR2) to Abacus Land Ltd.

“You have no idea who owns the land under your feet,” says Darbyshire. “Your dream house is traded from one offshore company to another for tax reasons, or who knows what else?” Paul Griffin (not his real name) bought a property from Morris Homes in Winsford, Cheshire, in November 2014. By last year, when he decided to add a conservatory, his freehold was in the hands of Adriatic Land 3 and managed by its fee-collecting agents HomeGround. Young was horrified to discover he had to pay £108 just to look at his file. Although the conservatory didn’t need local authority planning permission and was not subject to building regulations, HomeGround then demanded £1,200 for a “licence” for the work to go ahead. This was broken down into solicitors fees (£480), surveyors (£360), and its own fee of £360.

On top of this it demanded numerous official documents at Young’s expense totalling about £400. Helen Burke (not her real name) in Ellesmere Port, meanwhile, was shocked to discover that after Bellway sold her freehold to Adriatic, the cost of seeking consent for a small single-storey extension rocketed. Initially, she had applied to Bellway – the freeholder at the time – and it wanted £300. But after putting off the work for a few months she discovered that Bellway had sold the freehold to Adriatic Land 4 (GR1) Ltd. HomeGround then demanded £2,440 for consent. That is not planning permission, which householders must obtain separately from the local authority. It is simply a fee charged without any material services provided.

“It’s daylight robbery,” says Burke. “The most disgusting thing is the developers like Bellway think they are doing nothing wrong selling the freeholds on and state that our T&Cs don’t change. Yes, the lease terms don’t change, but for a permission fee to increase from £300 to £2,440 in a matter of months is disgraceful and it should absolutely be pointed out to new homeowners, up front, that this might happen if they don’t buy the freeholds.” Burke said she was quoted £3,750 to buy the freehold off Bellway, but once it was sold to Adriatic the price quadrupled to £13,000. After a long legal battle she has acquired it for £7,680.

“..$57 billion Wall Street has injected into the sector over the last 18 months.”

• Wall Street Cash Pumps Up Shale Oil Production Even as Prices Sag (WSJ)

Easy Wall Street cash is leading U.S. shale companies to expand drilling, even as most lose money on every barrel of oil they bring to the surface. Despite a 17% plunge in prices since April, drillers are on pace to break the all-time U.S. oil production record, topping 10 million barrels a day by early next year if not sooner, according to government officials and analysts. U.S. crude fell again on Friday, dropping 2.8% to $44.23 a barrel on the New York Mercantile Exchange. Yet the U.S. oil rig count rose Friday to the highest level in more than two years. Operators have now put more than 100 rigs back to work from Oklahoma to North Dakota in the past three months. Companies have more capital to keep drilling thanks to $57 billion Wall Street has injected into the sector over the last 18 months.

Money has come from investors in new stock sales and high-yield debt, as well as from private equity funds, which have helped provide lifelines to stronger operators. Flush with cash, virtually all of them launched campaigns to boost drilling at the start of 2017 in the hope that oil prices would rebound. The new wave of crude has again glutted the market. The shale companies are edged even further from profitability, and a few voices have begun to question the wisdom of Wall Street financing the industry’s addiction to growth. “The biggest problem our industry faces today is you guys,” Al Walker, chief executive of Anadarko, told investors at a conference last month.

Wall Street has become an enabler that pushes companies to grow production at any cost, while punishing those that try to live within their means, Mr. Walker said, adding: “It’s kind of like going to AA. You know, we need a partner. We really need the investment community to show discipline.” Even if companies cut back on drilling now, it wouldn’t be enough to stop a new wave of oil from hitting the market in the second half of the year: U.S. shale output typically lags behind new drilling by four to six months, analysts say. “There’s been insufficient discrimination on the part of sources of capital,” said Bill Herbert, an energy analyst with Piper Jaffray’s Simmons. Big shale companies “are able to get what they want and invest what they want.”

Well, that status was declared dead too. So there. People are next.

• Polluted Indian River Reported Dead Despite ‘Living Entity’ Status (G.)

One morning in late March, Brij Khandelwal called the Agra police to report an attempted murder. Days before, the high court in India’s Uttarakhand state had issued a landmark judgment declaring the Yamuna river – and another of India’s holiest waterways, the Ganges – “living entities”. Khandelwal, an activist, followed the logic. “Scientifically speaking, the Yamuna is ecologically dead,” he says. His police report named a series of government officials he wanted charged with attempted poisoning. “If the river is dead, someone has to be responsible for killing it.” In the 16th century, Babur, the first Mughal emperor, described the waters of the Yamuna as “better than nectar”. One of his successors built India’s most famous monument, the Taj Mahal, on its banks.

For the first 250 miles (400km) of its life, starting in the lower Himalayas, the river glistens blue and teems with life. And then it reaches Delhi. In India’s crowded capital, the entire Yamuna is siphoned off for human and industrial use, and replenished with toxic chemicals and sewage from more than 20 drains. Those who enter the water emerge caked in dark, glutinous sludge. For vast stretches only the most resilient bacteria survive. The waterway that has sustained civilisation in Delhi for at least 3,000 years – and the sole source of water for more than 60 million Indians today – has in the past decades become one of the dirtiest rivers on the planet.

“We have water records which show that, until the 1960s, the river was much better quality,” says Himanshu Thakkar, an engineer who coordinates the South Asia Network on Dams, Rivers and People, a network of rights groups. “There was much greater biodiversity. Fish were still being caught.” What happened next mirrors a larger Indian story, particularly since the country’s markets were unshackled in the early 1990s: one of runaway economic growth fuelled by vast, unchecked migration into cities; and the metastasising of polluting industries that have soiled many of India’s waterways and made its air the most toxic in the world.

Debt Rattle May 30 2017

May 302017

May 30, 2017 Posted by Raúl Ilargi Meijer at 8:50 am Finance Tagged with: Brexit, calamity, Corbyn, default, deposits, Draghi, Greece, Macron, Merkel, Putin, QE, Shale 5 Responses »

Inge Morath Paris 1954

• Australia Hedge Fund Returns Cash To Clients Citing Looming Calamity (SMH)

• Hong Kong Throngs of Thousands Defy Bid to Cool Home Market (BBG)

• Saudi Foreign Reserves Dip Below $500 Billion in April (BBG)

• The Great US Energy Debt Wall (SRSRocco)

• Greece, Italy Tensions Hit Euro, Asian Stocks, Lift Yen, Gold (R.)

• Draghi Rules Out Including Greece in ECB QE For Now (K.)

• Greece Warns Recovery Threatened If Debt Deal Is Blocked At Next Talks (G.)

• Deposits And Loans At Greek Banks Continue Slide (K.)

• EU Moves To Crack Down On Carmakers In Wake Of VW Emissions Scandal (G.)

• Painstaking Detail Of Brexit Process Revealed In EU Documents (G.)

• May Battles Against Complacency as UK Election Lead Slips Away (BBG)

• Russia Expects China To Help Resolve Syrian Crisis (DS)

• Putin, Macron Have ‘Open, Frank Exchange Of Opinions’ (RT)

• Let’s All Agree To Lock In This Russophobia For At Least 3.5 More Years (Saker)

• The So-Called Resistance (Jim Kunstler)

• Germany Steps Up Attack On Trump For ‘Weakening’ The West (G.)

• Greece, Germany Agree To Slow Refugee Family Reunification (F24)

After having milked the bubble for all it’s worth…

• Australia Hedge Fund Returns Cash To Clients Citing Looming Calamity (SMH)

Australian asset manager Altair Asset Management has made the extraordinary decision to liquidate its Australian shares funds and return “hundreds of millions” of dollars back to its clients, citing an impending property market “calamity” and the “overvalued and dangerous time in this cycle”. “Giving up management and performance fees and handing back cash from investments managed by us is a seminal decision, however preserving client’s assets is what all fund managers should put before their own interests,” Philip Parker, who serves as Altair’s chairman and chief investment officer, said in a statement on Monday. The 30-year veteran of funds management said that he had on May 15 advised all Altair clients that he planned to “sell all the underlying shares in the Altair unit trusts and to then hand back the cash to those same managed fund investors”.

Mr Parker said he had “disbanded the team for time being”, including his investment committee of chief economist Steve Roberts, senior healthcare analyst Sally Warneford and independent strategist Gerard Minack. “I would like to make clear this is not a winding up of Altair, but a decision to hand back client monies out of equities which I deem to be far too risky at this point,” Mr Parker’s statement said. “We think that there is too much risk in this market at the moment, we think it’s crazy,” Mr Parker said more candidly. “Valuations are stretched, property is massively overstretched and most of the companies that we follow are at our one-year rolling returns targets – and that’s after we’ve ticked them up over the past year.” “Now we are asking ‘is there any more juice in these companies valuations?’ and the answer is stridently, and with very few exceptions, ‘no there isn’t’.”

Mr Parker outlined a roll call of “the more obvious reasons to exit the riskier asset markets of shares and property”. They included: the Australian east-coast property market “bubble” and its “impending correction”; worries that issues around China’s hot property sector and escalating debt levels will blow up “later this year”; “oversized” geopolitical risks and an “unpredictable” US political environment; and the “overvalued” Aussie equity market. But it was the overheated local property market that was the clearest and most present danger, Mr Parker said. “When you speak to people candidly in the banks, they’ll tell you very specifically that they are extraordinarily worried about the over-leverage of the Australian population in general,” he said.

More looming calamity.

• Hong Kong Throngs of Thousands Defy Bid to Cool Home Market (BBG)

Snaking queues of thousands of prospective apartment buyers in Hong Kong signaled authorities have made no progress in cooling a red-hot property market, where prices are at records. People were lining up on Friday and over the weekend at Victoria Skye, a luxury project at the former airport site of Kai Tak, and at the Ocean Pride development by Cheung Kong Property and MTR. “Successive moves by the government in recent memory to cool the property market only resulted in it becoming crazier,” The Standard newspaper said in an editorial on Monday. “The result is a sea of madness.” The Hong Kong Monetary Authority has been tightening rules for lenders, including restricting levels of lending to developers, as it tries to limit financial risks and take some of the heat out of the market.

The Centaline Property Centa-City Leading Index of existing homes has advanced 23% in the past year, setting new price records week after week. At a Legislative Council meeting on Monday, HKMA Chief Executive Norman Chan said levels of demand were reminiscent of 20 years ago – before Hong Kong suffered a property bust – and he expressed concern that people with limited financial resources were buying just because they thought prices would only keep going up. [..] Developers sold 8,616 homes in the first five months of the year, already more than were sold in any first half since new purchasing rules were introduced in 2013, the Hong Kong Economic Times reported. K&K Property has offered an additional 200 units at Victoria Skye after it sold 306 flats on Saturday, Ming Pao newspaper reported. Cheung Kong will put another 346 up for grabs after selling 496 in a single day, May 26.

Buying too many weapons. The House of Saud is nervous.

• Saudi Foreign Reserves Dip Below $500 Billion in April (BBG)

Saudi Arabia’s net foreign assets dropped below $500 billion in April for the first time since 2011 even after the kingdom raised $9 billion from its first international sale of Islamic bonds. The Saudi Arabian Monetary Authority, as the central bank is known, said on Sunday its net foreign assets fell by $8.5 billion from the previous month to about $493 billion, the lowest level since 2011. That brings the decline this year to $36 billion. “Didn’t really see any major driver for such a huge drop, especially when accounting for the sukuk sale,” said Mohamed Abu Basha at EFG-Hermes, an investment bank. Even if the proceeds from the sale weren’t included, “the reserve decline remains huge,” he said.

Saudi Arabia’s foreign reserves have dropped from a peak of more than $730 billion in 2014 after the plunge in oil prices, prompting the IMF to warn that the kingdom may run out of financial assets needed to support spending within five years. Authorities have since embarked on an unprecedented plan to overhaul the economy and repair public finances. But the pace of the decline in reserves this year has puzzled economists who see little evidence of increased government spending, fueling speculation it’s triggered by capital flight and the costs of the kingdom’s war in Yemen. Finance Minister Mohammed Al-Jadaan said in April that the government didn’t withdraw from its central bank reserves during the first quarter. He said the decline could be attributed to local contractors paying overseas vendors after the government settled its arrears.

It’s not (just) the shale companies, it’s their lenders who are in danger.

• The Great US Energy Debt Wall (SRSRocco)

While the U.S. oil and gas industry struggles to stay alive as it produces energy at low prices, there’s another huge problem just waiting around the corner. Yes, it’s true… the worst is yet to come for an industry that was supposed to make the United States, energy independent. So, grab your popcorn and watch as the U.S. oil and gas industry gets ready to hit the GREAT ENERGY DEBT WALL. So, what is this “Debt Wall?” It’s the ever-increasing amount of debt that the U.S. oil and gas industry will need to pay back each year. Unfortunately, many misguided Americans thought these energy companies were making money hand over fist when the price of oil was above $100 from 2011 to the middle of 2014. They weren’t. Instead, they racked up a great deal of debt as they spent more money drilling for oil than the cash they received from operations.

As they continued to borrow more money than they made, the oil and gas companies pushed back the day of reckoning as far as they could. However, that day is approaching… and fast. According to the data by Bloomberg, the amount of bonds below investment grade the U.S. energy companies need to pay back each year will surge to approximately $70 billion in 2017, up from $30 billion in 2016. That’s just the beginning…. it gets even worse each passing year. As we can see, the outstanding debt (in bonds) will jump to $110 billion in 2018, $155 billion in 2019, and then skyrocket to $230 billion in 2020. This is extremely bad news because it takes oil profits to pay down debt. Right now, very few oil and gas companies are making decent profits or free cash flow. Those that are, have been cutting their capital expenditures substantially in order to turn negative free cash flow into positive.

Unfortunately, it still won’t be enough… not by a long-shot. If we use some simple math, we can plainly see the U.S. oil industry will never be able to pay back the majority of its debt: Shale Oil Production, Cost & Profit Estimates For 2018 • REVENUE = 5 million barrels per day shale oil production x 365 days x $50 a barrel = $91 billion. • EST. PROFIT = 5 million barrels per day shale oil production x 365 days x $10 a barrel = $18 billion. If these shale oil companies do actually produce 5 million barrels of oil per day in 2018, and were able to make a $10 profit (not likely), that would net them $18 billion. However, according to the Bloomberg data, these companies would need to pay back $110 billion in debt (bonds) in 2018. If they would use all their free cash flow profits to pay back this debt, they would still owe $92 billion.

BILD says Greeks have mentioned defaulting on July payments.

• Greece, Italy Tensions Hit Euro, Asian Stocks, Lift Yen, Gold (R.)

Concerns about a Greek bailout, early Italian elections and comments by the ECB chief about the need for continued stimulus all kept the euro under pressure on Tuesday. European geopolitical fears sapped risk appetite, weighing on Asian stocks and lifting safe havens including the yen and gold, though trading was thin with several markets closed for holidays. The euro slid 0.3% to $1.1129 in its fourth session of declines. James Woods at Rivkin Securities in Sydney attributed most of the currency’s decline on Tuesday to a German press report saying Athens may opt out of its next bailout payment if creditors cannot strike a debt relief deal. “The bailout payments are necessary to meet existing debt repayments due in July, so if Greece were to forgo this bailout payment the probability of a default would spike, reopening the discussion around a Grexit from the Euro zone,” Woods said.

However, he cautioned against reading “too much into it” without more details or confirmation, adding it was unlikely Greece would forego the bailout payment at this stage. Euro zone finance ministers failed to agree with the International Monetary Fund on Greek debt relief or to release new loans to Athens last week, but did come close enough to aim to do both at their June meeting. Comments by former Italian Prime Minister Matteo Renzi on Sunday in favour of holding an election at the same time as Germany’s in September also pulled the euro lower. So did a statement by ECB President Mario Draghi reiterating the need for “substantial” stimulus given subdued inflation.

If he includes Greece, it becomes harder for Germany to plunder it. And they’re not done with that.

• Draghi Rules Out Including Greece in ECB QE For Now (K.)

ECB chief Mario Draghi took the wind out of the government’s sails on Monday, telling the European Parliament that the ECB will not consider including Greece in its QE program before the conclusion of its bailout review and its debt is made sustainable. “First, let’s have an agreement, a full agreement, and let’s find measures that will make the debt sustainable through time,” Draghi told European lawmakers in Brussels, adding that he regretted that “a clear definition of the debt measures was not reached in the last Eurogroup.” Draghi also said that after creditors agree on what sort of debt relief measures Greece will get, the Governing Council of the ECB will carry out its own “fully independent” analysis to see if the debt would also be sustainable in adverse scenarios.

His comments came as Prime Minister Alexis Tsipras said that Greece was hoping that there will be an initiative in June for “a definitive settlement of the crisis through a clear solution of reducing the debt.” “Let there be a solution and let it come when it comes,” he said after his meeting in Athens with Estonian Prime Minister Juri Ratas, adding that the sooner the matter is solved the better. The tough road ahead for Greece was reflected in remarks yesterday by Finance Minister Euclid Tsakalotos, who said the country’s inclusion in QE is indeed “a difficult issue.” “The ECB, like our Lord, works in mysterious ways,” he told reporters. Draghi’s remarks were seen as another another blow, if not the killer, to the government’s narrative regarding the time frame it had laid out for the country to get on the road to economic recovery.

More specifically, Prime Minister Alexis Tsipras’s roadmap stipulated that after the second review of the country’s third bailout is wrapped up, creditors and the IMF would agree on how to make the country’s debt sustainable, and this would in turn allow Greece join the QE program, which would pave the way for the country’s return to international markets. But with the review all but concluded, and no definitive statements from the creditors on what sort of debt relief measures it can expect – or when – the best the government can hope for now is that the sequence of events outlined in the Tsipras roadmap will take place in the fall at the earliest, and definitely after the German national elections in September. The way things stand now, the most the government can expect from the June 15 Eurogroup is the release of the bailout tranche of more than €7 billion, but not the reassurance it wants in order to join the QE program.

That’s exactly why these deals keep on being blocked. The EU doesn’t want a Greek recovery. Cart, horse.

• Greece Warns Recovery Threatened If Debt Deal Is Blocked At Next Talks (G.)

Greece on Monday issued a panic warning that its recovery would be thrown into doubt if Brussels blocked a debt deal at the next meeting of euro area finance ministers. Fearing that Germany will insist on delays to an agreement until at least after elections in September, Athens’ finance minister hinted that the beleaguered nation could be plunged deeper into recession after seeing its economy contract by more than 25% since the start of its financial crisis. With £7.5bn in debt repayments due in July and lenders meeting on 15 June to try and reach an agreement after failing last month, Euclid Tsakalotos made an urgent appeal for clarity on Monday. “It is incumbent on all sides to find a solution,” he told foreign correspondents. “There is very little point in entering a [bailout] programme if the goal is not to leave the programme. And leaving the programme should be the responsibility not just of the debt country but the creditor country as well.”

Athens, Tsakalotos continued, had kept its side of the bargain, legislating highly unpopular reforms to produce savings of 2% of GDP, while the EU and IMF had not kept theirs. “We can’t accept a deal which is not what was on the table,” he said. “What was on the table was if Greece carried outs its reform package then creditors would ensure that there would be a clear runway through clarity for debt.” Instead, the IMF had refused to endorse the proposed solution – saying it fell far short of what was necessary to engender debt sustainability – with the result that Athens had been forced to reject it, Tsakalotos added. The Fund and Berlin – the biggest contributor of Greece’s three rescue programs – have long been in disagreement over how to reduce Greek debt.

Tsakalotos was addressing a hastily arranged press conference. Held in the dining room of the Athens’ mansion that houses the prime minister’s office, it appeared to highlight the mood of nervousness pervading the Greek government. With a debt mountain hovering around €314bn – or 180% of GDP – the Syriza-dominated coalition of Alexis Tsipras has long argued that debt relief is essential to foreign investment and economic recovery. [..] ..time, said Tsakalotos on Monday, was running out. “Our ask is … that everyone keeps their side of the bargain. The position [of creditors] is going to be very difficult to defend. What can they say? That the Greek government did everything but we will send it to the rocks.”

Which will affect Greek banks, which will affect the state, etc etc. There never was another option.

• Deposits And Loans At Greek Banks Continue Slide (K.)

Deposits in Greek banks declined by more than €2.4 billion in the first four months of the year, while credit contraction has continued in 2017 for an eighth consecutive year. Still, April was the second month of credit expansion. The sum of Greek deposits reached almost €118.9 billion at the end of last month, down from about €121.4 billion at end-December 2016, due to the uncertainty that has prevailed over the Greek economy this year. Bank of Greece data show a fresh €313.3 million drop in deposits from end-March to end-April – a result of the €665.3 million decline in the cash flow of corporations, from nearly €20.5 billion in March to almost €19.8 billion last month. In fact the picture of corporate deposits in April looks technically better than it would had it not been for the €620 million share capital increase by Fraport Greece and Sklavenitis’s €400 million bond.

The level of savings has practically reverted to what it was in 2001, when Greece was still using the drachma, and forecasts speak of a stable picture with few fluctuations expected in the rest of 2017. Senior bank officials say the next few months will be difficult despite the projections for more revenues from tourism: The tax obligations starting from July, with income tax and later Single Property Tax (ENFIA) deadlines, are expected to eat further into the savings of households and corporations’ cash flow. Meanwhile the difference between loans issued and old loans paid back has remained in negative territory in 2017, reaching a rate of -0.9% in the first four months. However, April showed a positive flow amounting to €659 million after an expansion of €307 million in March.

Yeah, they’re going to risk bankrupting German and French carmakers, right?

• EU Moves To Crack Down On Carmakers In Wake Of VW Emissions Scandal (G.)

The European Union has moved towards cracking down on carmakers who cheat emissions tests by giving the EU executive more powers to monitor testing and impose fines. The European council overcame initial objections from Germany and agreed to try to reform the system for approving vehicles in Europe in the wake of the Volkswagen emissions scandal. The draft now goes for negotiations with the European commission and the European parliament, where the car industry holds a strong influence. “Above all, the objective is building trust and credibility again in the European type-approval system,” said Chris Cardona, the economy minister of Malta, which holds the EU’s six-month rotating presidency.

The VW emissions scandal erupted in September 2015, with the carmaker admitting it had installed software defeat devices in 11m diesel cars worldwide, meaning the vehicles only cut their nitrogen oxide pollution during certification tests. The draft EU rules call for reducing the power of national authorities and empowering the European commission to test and inspect vehicles, to ensure compliance with emissions standards, and to respond to any irregularities. “This will increase the independence and quality of the EU type-approval system,” the council said in a statement. “The commission could also impose fines for infringements on manufacturers and importers of up to €30,000 [£26,000] per noncompliant vehicle.” Under the draft rules, every EU country will be required to check emissions in one in every 50,000 new vehicles based on real driving conditions.

The EU comes prepared.

• Painstaking Detail Of Brexit Process Revealed In EU Documents (G.)

Just 10 days before the general election, the EU published two documents that will affect every person living in Britain for years to come. Despite being dropped into the maelstrom of an election caused by Brexit, there was hardly a murmur. The documents were the most detailed positions yet from the EU’s chief negotiator, Michel Barnier, on the upcoming divorce talks with the UK. In two policy papers, the bloc has elaborated its stance on the Brexit bill and citizens’ rights. [..] The muted reaction can be explained partly by the fact that the texts were published with zero fanfare, when the country was still reeling from the terrorist atrocity in Manchester. Furthermore, the EU documents contain no surprises. The equivalent of dotting the Is and crossing the Ts, they are a reminder the EU has had 11 months to get ready for Brexit.

That is almost one year to assemble squadrons of specialists to pore over EU treaties and legal tomes to map the way ahead. The 10-page paper on the bill does not put a price on the divorce, but sets out in painstaking detail all EU bodies with a vested interest in the spoils – 40 agencies, eight joint projects on new technologies and a panoply of funds agreed by all countries, from aid for refugees in Turkey to supporting peace in Colombia. No detail is too small. Britain is even on the hook for funding teachers at the elite European schools that educate EU civil servants’ children. On citizens’ rights, the EU spells out in greater detail the protections it wants to secure for nearly 5 million people on the wrong side of Brexit – 3.5 million EU nationals in the UK and 1.2 million Britons on the continent.

Fear is all they have left. Blunt lies about Corbyn.

• May Battles Against Complacency as UK Election Lead Slips Away (BBG)

Theresa May began the U.K. election campaign warning that pollsters giving her a 20-point lead could be wrong. With her lead now slashed, she’s hoping they really are. A series of missteps by May and her advisers, along with a populist Labour campaign, have put the prime minister on the defensive. Activists no longer laugh when she raises the prospect of a Corbyn victory at her rallies and some have questioned the wisdom of building a campaign around her own personal brand, urging people to vote for “Theresa May and her team.” Investors have awoken to the fact that May’s promise of “strong and stable” government — never mind a landslide to match Tony Blair’s in 1997 — could be in jeopardy with the pound dipping after a specific poll showed May’s Conservative Party leading the Labour Party by just five points.

“The Tories are right to be worried if the momentum looks to be with Labour, but they can still turn it around,” Andrew Hawkins, chairman of pollsters ComRes, said in a telephone interview. With a nation still in shock over the Manchester bombing and June 8 elections round the corner, May got back to the campaign trail and reverted to her tested lines on Brexit: That Labour leader Jeremy Corbyn cannot be trusted to navigate Britain through two years of talks. “It’s important as people come closer to that vote – that’s only next week – that they focus on the choice that’s there before them,” the prime minister told activists at a rally in Twickenham, southwest London, on Monday. “If I lose just six seats my government loses its majority, that could mean in 10 days time a government in chaos with Jeremy Corbyn in Number 10.”

But gone was the confidence when she stunned Britain by calling a snap election on April 18. On the day of the announcement, an ICM/Guardian poll gave May’s Tories a lead over Labour of 21 points and surveys in the following weekend’s newspapers suggested leads of 24 and 25 points. Now, she is vulnerable to attack. Interviewer Jeremy Paxman quizzed May about her U-turns, in an interview on Sky News on Monday: “You have backed down over social care, and over national insurance. If I was in Brussels, I would think you are a blowhard who collapses at the first sign of gunfire.” Her rival on the other hand has grown more relaxed, holding his own against the same interviewer who has a reputation for being a rottweiler in his style of questioning. In one instance, Corbyn won a big round of applause when asked about whether he’d want to abolish monarchy: “Do you know what? I had a very nice chat with the Queen.”

US room to move gets smaller fast.

• Russia Expects China To Help Resolve Syrian Crisis (DS)

Moscow hopes for China’s help in solving the Syrian crisis and restoring the country, Russian Deputy Foreign Minister Igor Morgulov said Monday. “Our cooperation with China on Syria at various international venues is unprecedented. We blocked six attempts to pass anti-Syrian resolutions in the U.N. Security Council,” Morgulov said at “Russia and China: Taking on a New Quality of Bilateral Relations” international conference. The Russian deputy foreign minister added that Russia values Beijing’s position on the Syrian crisis, and hopes that, “the Chinese partners will continue their efforts to promote a political settlement.”

“Together we call for a peaceful and political-diplomatic solution to conflicts, without double standards, unilateral action or attempts at ousting regimes. Our approaches coincide, among other things, on the uncompromising fight against terrorism,” Morgulov said. Russia and China have repeatedly vetoed U.N. Security Council resolutions imposing sanctions against the Assad regime. Moscow has long-standing links to the Assad regime and is its key ally, while China has an established policy of non-intervention in other countries’ affairs.

French interests in Russia are substantial. Macron going after RT and Sputnik is a weird way to not offend Merkel.

• Putin, Macron Have ‘Open, Frank Exchange Of Opinions’ (RT)

Russian President Vladimir Putin and his French counterpart, Emmanuel Macron, had “difficult” but “frank” talks during their first meeting in Versailles. The two leaders vowed to improve relations and jointly address international problems. The first meeting of the Russian and French leaders lasted almost three hours, with Macron saying that “Franco-Russian friendship” was at the heart of the talks. The French president admitted, however, that he has “some disagreements” with his Russian counterpart, but said that the two leaders discussed them openly in a “frank exchange of views.” Putin also said that the two leaders have some differences, but said that they view many issues in a similar way, and that French-Russian relations could be “qualitatively” improved. “We sought … common ground [in dealing] with key issues of the international agenda. And I believe that we see it. We are able to … at least try to start resolving the key contemporary problems together,” Putin said.

The Russian leader went on to say that his talks with Macron helped the pair to find common points in dealing with major international problems, and the that two sides would try to further bring together their views on these issues. Putin also invited his French counterpart to Russia, saying: “I hope that he will be able to spend several weeks in Moscow.” French President Macron said that serious international problems cannot be resolved without Moscow, as he stressed the importance of the role Russia plays in the modern world. “No major problem in the world can be solved without Russia,” he told the press conference. Macron then said that France is interested in intensifying cooperation with Russia, particularly in resolving the Syrian crisis. The French leader went on to say that this issue demands “an inclusive political solution.”

Pretty brilliant. Much more at the link.

• Let’s All Agree To Lock In This Russophobia For At Least 3.5 More Years (Saker)

There I was again, flying first class on my shareholders’ dime from New York to San Francisco, when I was deeply saddened to read about the death of Zbigniew Brzezinski, National Security Adviser to Jimmy Carter. For a moment I thought: “Surely I can find some anti-Putin articles to read rather than this one?” Those always make me so happy! But then I remembered that Zbig was a man after my own heart, because he was one of the West’s greatest Russophobes. Even the New York Times talked of his “rigid hatred of the Soviet Union”. Zbig ended the détente led by Nixon as Carter, not Reagan, restarted good, old-fashioned, American Russophobia: Selling the Soviets computers with bugs for industrial sabotage, the propaganda effort of the 1980 Olympic Boycott, the US grain embargo to try and starve the Russian people, the arming of the Taliban’s forerunners to destabilize a left-wing government in Afghanistan and thus unleashing Islamic terrorism on the world, etc.

Just as American Democrats know for an undeniable fact that Jimmy Carter is our nation’s greatest living man of peace, I contend that Zbig’s anti-Russian stance makes him nearly as great a humanitarian, and certainly a model Democrat in 2017. And Zbig knew, as I and all good Democrats know, that the greatest fight of our generation is the fight against Vladimir Putin. Poverty, starvation, refugees, terrorism, climate change – everyone in America is realizing that if we can just get rid of Putin, everything else will surely fall into line. Surely! So I was pretty sad to read of Zbig’s passing, but that’s when it hit me: Just because he’s gone, it doesn’t mean we have to give up hating Russia! We’ve been hating Russia since November – more than 6 months now – and, frankly…it feels awesome! I don’t how long it takes to make a habit permanent, so let’s all agree to lock in this Russophobia for at least 3.5 more years, possibly 7.5!

It would be a fitting testament to a man whose prophetic Russophobia was misunderstood as “anti-communism”. Say it loud: It’s time for progressive Americans to unite behind hating Russians! Again! Let’s party like it’s 1979! Now, I’m as politically-correct a CEO as was ever made -my allegiance to Hillary proves that – but I can tell that some people think that I should equivocate by writing “hating the Russian government” instead of the “Russians”. Well, it’s bold, but being bold is why we CEOs deserve the big bucks and you deserve our crumbs. Not our table crumbs – those are too good for you – I mean the crumbs that fall around our fine, Italian shoes. Here’s the problem with the Russians: Putin’s approval rating is over 85%. It is a testament to the master of evil that he has duped nearly all 144 million Russian citizens. They said that 50 million Elvis fans can’t be wrong, but 124 million Putin fans clearly are. I don’t know anything about Russian domestic politics, but I don’t have to – that’s my right as an American.

Hillary posing as the resistance says it all. They don’t even have a narrative left.

• The So-Called Resistance (Jim Kunstler)

[..] what would a real resistance look like? First, it would oppose the aforementioned asset-stripping that the US economy has become, the transfer of capital in all its forms — monetary, political, cultural, social — from the dis-employed former middle classes to the tiny, select beneficiaries of financial manipulation. Note that the things being manipulated — markets, currencies, securities, and interest rates — are increasingly phantom entities that appear to maintain their value only because the high priests of financial authority say that they do. The shelf-life of that flim-flam approaches its endgame as it self-evidently immiserates the masses and their sheer faith in its recondite promises dwindles away to nothing.

A genuine resistance would begin to deconstruct this clerisy and its institutions, namely Too Big To Fail banks and the Federal Reserve. The best opportunity to accomplish that would have been the early months of Mr. Obama’s turn in the White House, the dark time of the previous financial crash when the damage was fresh and obvious. But the former president blew that under the influence of high priests Robert Rubin and Larry Summers. And the lower order clerics were allowed run their hoodoo machine flat out in the following eight years. Just look at the long chart of the Standard & Poors index. Tragically, this ever-upward arc is now taken to be the normal state of things, and when it fails the implosion will be orders of magnitude more violent than the last time.

One would think that a genuine resistance would also oppose the growing consolidation of power in the now-colossal spying apparatus of the nation — the often averred to “seventeen intel agencies” that show signs of being actively at war against other parts of the government and against citizens themselves. Hence, the non-stop murmur of allegation about “Russian interference in the election,” going back to the summer of 2016 without either any real evidence, or any clarification of what is actually alleged to have happened. Another tragic turn is that this fifth column of rogue intel agencies has recruited the major organs of the news to incessantly repeat its allegations until the public accepts the story as established fact rather than just the manufactured story it so far appears to be. Well, the lives of persons and societies founder on versions of the “reality” they fabricate for their own purposes. A genuine resistance would show foremost some fidelity to a reality beyond the spin-factories of self-delusion.

Election coming up, perhaps?

• Germany Steps Up Attack On Trump For ‘Weakening’ The West (G.)

Germany has unleashed a volley of criticism against Donald Trump, slamming his “short-sighted” policies that have “weakened the west” and hurt European interests. The sharp words from foreign minister Sigmar Gabriel came after the US president concluded his first official tour abroad taking in Saudi Arabia, Israel, Brussels and then Italy for a G7 summit. Angela Merkel warned on Sunday that the US and Britain may no longer be completely reliable partners. Germany’s exasperation was laid bare after the G7 summit, which wrapped up on Saturday with Trump refusing to affirm US support for the 2015 Paris climate accord. Days earlier, in Saudi Arabia, Trump presided over the single largest US arms deal in American history, worth $110bn over the next decade and including ships, tanks and anti-missile systems.

Gabriel said on Monday that “anyone who accelerates climate change by weakening environmental protection, who sells more weapons in conflict zones and who does not want to politically resolve religious conflicts is putting peace in Europe at risk”. “The short-sighted policies of the American government stand against the interests of the European Union,” he said, judging that “the west has become smaller, at least it has become weaker”. “We Europeans must fight for more climate protection, fewer weapons and against religious [fanaticism], otherwise the Middle East and Africa will be further destabilised,” Gabriel said. [..] The relationship between Merkel and Trump contrasts with the warm ties between herself and Barack Obama. The previous US president last week travelled to Berlin to attend a key Protestant conference. Obama’s participation in a forum with Merkel last Thursday came hours before her meeting with Trump in Brussels at the Nato summit.

Right, election coming up. Which trumps human rights and international law.

• Greece, Germany Agree To Slow Refugee Family Reunification (F24)

Greece and Germany have agreed to slow the reunification of refugee families divided between the two nations during their scramble to safety, according to a leaked letter published Monday. “Family reunification transfer to Germany will slow down as agreed,” Greek Migration Minister Yiannis Mouzalas wrote to German Interior Minister Thomas de Maiziere in a May 4 letter obtained by leftist daily Efimerida ton Syntakton. The Greek migration ministry declined to comment, but earlier this month Mouzalas said the slowdown was due to “technical difficulties.” In the letter, Mouzalas reportedly acknowledges that the move – enacted because of the sheer volume of asylum requests – will affect “more than two thousand people” while some “will have to wait for years” to reach Germany even though their requests have been approved.

Asylum seekers – mostly Syrian refugees in Greece’s case – are entitled to join family members elsewhere in the European Union within six months from the date their request is approved. In his letter, Mouzalas said Berlin and Athens had to agree on a “common line” to address “increasingly desperate and critical comments” so that Athens is not blamed for the delays. He then suggests a joint response: “We understand that asylum seekers are eager to meet with their family, but given that both Greece and Germany have very large asylum seeking populations, delays are inevitable.” Ulla Jelpke, a deputy of German far-left Party Die Linke, earlier this month said Berlin had capped the number of refugees eligible for reunification at 70 people per month. Accordingly, Efimerida ton Syntakton said there were just 70 transfers in April compared to 540 in March and 370 in February.

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