Dec 232016
 
 December 23, 2016  Posted by at 9:53 am Finance Tagged with: , , , , , , , , , ,  


Ben Shahn Quick lunch stand in Plain City, Ohio 1938

Donald Trump Can’t Stop The Next Financial Crisis – Jim Rickards (MW)
“Russia Did It” – The Last Stand Of The Neocons (GEFIRA)
94% Of All New Jobs Created During Obama Era Were Part-Time Or Contract (IC)
World Trade Falls to 2014 Level, Trump “Trade War” Might Make it Worse (WS)
Central Banks Have Cut Interest Rates 690 Times Since Lehman Brothers (CNBC)
Italian Government Rides To Rescue Of Stricken Bank Monte Dei Paschi (R.)
Deutsche Bank, Credit Suisse Agree Billion-Dollar Fines With US (CNBC)
US Sues Barclays For Alleged Mortgage Securities Fraud (R.)
Why The Chinese Are Still Snapping Up US Commercial Property (CNBC)
EU Plans To ‘Revitalize’ Complex Financial Products (EUO)
Ron Paul: “We Don’t Have Very Much Room For Condemning Anybody Else” (ZH)
Is Obama a Russian Agent? (Dmitry Orlov)
Air Pollution Cause Of One In Three Deaths In China (SCMP)
1000s Of Refugees Left In Greek Cold, UN And EU Accused Of Mismanagement (G.)
The Automatic Earth in Greece: Big Dreams for 2017 (Automatic Earth)

 

 

“Policies that could prevent the crisis [..] include reinstatement of the Glass-Steagall separation of investment and commercial banking, breaking up big banks, banning most derivatives, and tougher law enforcement of bank wrongdoing.”

Donald Trump Can’t Stop The Next Financial Crisis – Jim Rickards (MW)

James Rickards sees threats in many places. In his latest book, “The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis,” he paints a picture of how that crisis will unfold. He argues that rather than pumping the financial system with liquidity, as happened in 2008, “elites” will freeze the financial plumbing until the crisis has passed. That means banks will close, as will exchanges. Money-market funds will be inaccessible. Forget trying to get your hands on money. Rickards, who was the principal negotiator of the 1998 bailout of Long-Term Capital Management as the hedge fund’s general counsel, calls this new world “ice-nine,” after a fictitious substance in Kurt Vonnegut’s “Cat’s Cradle.” Freezing customer funds in bank accounts is what happened in Cyprus is 2012 and Greece in 2015, he says. In the U.S., the Securities and Exchange Commission adopted a rule in 2014 that lets money-market funds suspend redemptions.

MarketWatch: Why do you believe a financial crisis is coming in 2018, and what do you see as the likely triggers? James Rickards: A financial crisis is certainly coming. In “The Road to Ruin,” I use 2018 as a target date and device because the two prior systemic crises, 1998 and 2008, were 10 years apart. I extended the timeline 10 years into the future from the 2008 crisis to maintain the 10-year tempo, and this is how I arrived at 2018. Yet I make the point in the book that the exact date is unimportant. What is most important is that the crisis is coming and the time to prepare is now. It could happen in 2018, 2019, or it could happen tomorrow. The conditions for collapse are all in place. It’s simply a matter of the right catalyst and array of factors in the critical state. Likely triggers could include a major bank failure, a failure to deliver physical gold, a war, a natural disaster, a cyber–financial attack and many other events. The trigger does not matter. The exact timing does not matter. What matters is that the crisis is inevitable and coming soon. Investors need to prepare.

MW : Is this likely to be on the scale of the 2008 financial crisis? Or what is a better comparison? J.R.: The new crisis will be of unprecedented scale. This is because the system itself is of unprecedented scale and interconnectedness. In complex dynamic systems that reach the critical state, the most catastrophic event that can occur is an exponential function of scale. This means that if you double the system, you do not double the risk; you increase it by a factor of five or 10. Since we have vastly increased the scale of the financial system since 2008, with larger banks, greater concentration of banking assets in fewer institutions, larger derivatives positions, and $70 trillion of new debt, we should expect the next crisis to be much worse than the last. There is no comparison short of wartime exigencies such as 1914. The next crisis will be of unprecedented scale and damage.

MW : On the flip side, what could prevent this crisis? And how do you respond to those who say this is just fear-mongering and a conspiracy theory? What are they missing? J.R.: Policies that could prevent the crisis are spelled out clearly in the book. These include reinstatement of the Glass-Steagall separation of investment and commercial banking, breaking up big banks, banning most derivatives, and tougher law enforcement of bank wrongdoing. The book also explains clearly why the dysfunctions in the system are not a “conspiracy” but the workings of like-minded individuals operating in a closed loop lacking cognitive diversity. I am not a fear-monger; people are already afraid, [and] I’m just trying to shed some light on the situation, which is why readers have responded so positively to the book. The critics do not have a firm grasp of the statistical properties of risk. They are clinging to obsolete equilibrium models instead of embracing more accurate models based on complexity theory and behavioral psychology.

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“..the European establishment is simultaneously bombing a country and importing the country’s inhabitants..”

“Russia Did It” – The Last Stand Of The Neocons (GEFIRA)

By the 2000s, Neocons had taken over the Republican Party in the US and the Labour Party in the UK and could count on allies in Italy (Berlusconi) and Spain (Aznar). In the following decade, Neocon ideology spread virulently, substituting for the failed experiment of military intervention to overthrow non-cooperating governments with covert operations funding and/or arming local groups in Libya, Syria,Tunisia Egypt, Georgia, and Ukraine. Neocon adherents took over the US state department, and their grip on it was strengthened by the appointment of Barack Obama as assistant to Victoria Nuland, Secretary of State for European affairs, wife of Robert Kagan, who is in turn a top Neocon ideologist alongside Paul Wolfowitz. They also created the narrative spread and reinforced by the mainstream media, which expose the alleged crimes of non-cooperating regimes in Syria, Russia and Libya, while ignoring the anti “democratic” behavior by friendly dictatorships such as Saudi Arabia’s kings.

The mission however never changed. What changed is the mood of Western citizens about the government changes and state-building projects of the Western leadership; as the economic and human cost grew endlessly, the Western public opinion has become fed up with interventionism around the world. The British Labour party was the first to face the malcontents: Blairites are being ousted in favour of anti-NATO, sworn pacifist Jeremy Corbyn. Then Donald Trump won the US election with his “America First” i.e. a policy of “non-interventionism and protectionism”, defeating Hillary’s hawkish one, publicly endorsed by Kagan and Wolfowitz; Sarkozy and Juppè were defeated in the primaries in France by Fillon, who is advocating the end of the trade war against big bad Neocon target Russia. The Neocon-backing Western establishment is facing political upheaval all over Europe and the US.

These revolutions are not mere popular movements. Trump’s election is the handing over of power from one influential group to another because a part of the establishment has become fully aware of the problems Europe and the US are facing. After a fourteen-year war on terror in Afghanistan and Iraq the bloodshed spilled over into the streets of Paris and Berlin. The killing of civilians in the streets in Europe was not supposed to happen after the eradication of Al Qaeda and the alleged elimination of its leader Osama Bin Laden. Or should we rather say European insanity is spilling over, as the European establishment is simultaneously bombing a country and importing the country’s inhabitants? What do the Western leadership expect to have on their hands? Meanwhile Russia is reemerging as a more successful international actor.

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Echo chambers are us.

94% Of All New Jobs Created During Obama Era Were Part-Time Or Contract (IC)

A new study by economists from Harvard and Princeton indicates that 94% of the 10 million new jobs created during the Obama era were temporary positions. The study shows that the jobs were temporary, contract positions, or part-time “gig” jobs in a variety of fields. Female workers suffered most heavily in this economy, as work in traditionally feminine fields, like education and medicine, declined during the era. The research by economists Lawrence Katz of Harvard University and Alan Krueger at Princeton University shows that the proportion of workers throughout the U.S., during the Obama era, who were working in these kinds of temporary jobs, increased from 10.7% of the population to 15.8%.

Krueger, a former chairman of the White House Council of Economic Advisers, was surprised by the finding. The disappearance of conventional full-time work, 9 a.m. to 5 p.m. work, has hit every demographic. “Workers seeking full-time, steady work have lost,” said Krueger. Under Obama, 1 million fewer workers, overall, are working than before the beginning of the Great Recession. The outgoing president believes his administration was a net positive for workers, however. “Since I signed Obamacare into law (in 2010), our businesses have added more than 15 million new jobs,” said Obama, during his farewell press conference last Friday.

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It’s going to keep falling no matter what. And regaining some domestic manufacturing capacity is never a bad thing. If you focus of producing essentials, that is.

World Trade Falls to 2014 Level, Trump “Trade War” Might Make it Worse (WS)

“If you get into a trade war with China, sooner or later we’ll have to come to grips with that,” Carl Icahn, now special advisor to President-Elect Trump, told CNBC on Thursday. “I remember the day something like that would really knock the hell out of the market.” A trade war with China surely would be another wall of worry for stocks to climb. Trump’s rhetoric against China, each morsel packaged into 140 characters or less, has already recreated much-needed turbulence [read… Trump Tweets about China, US Businesses Freak out]. “But maybe if you’re going to do it,” Icahn said about the looming trade war with China, “you should get it over with, right?”

This comes after rumors emerged that Trump’s transition team is chewing over the idea to impose import tariffs of up to 10%, “according to multiple sources,” including a “senior Trump transition official,” CNN reported. The idea is to boost US manufacturing. The new tariffs could be imposed by executive order or by Congress as part of broader tax reform legislation. The 10% would be an uptick from the 5% tariff that incoming White House Chief of Staff Reince Priebus had put on the table last week, in “meetings with key Washington players,” two sources “who represent business interests in Washington” told CNN. These tariffs would be in line with Trump’s campaign motto of “America First.” Other countries would, as they always do, retaliate. Hence the term “trade war.”

Countries will be careful not to escalate, but these things can escalate nevertheless, because no one wants to seem weak and back off. Either way, it would pull the rug out from under world trade. But world trade, a reflection of the health of the global goods-producing economy, is already in bad shape. For the past two years, it has been languishing in a condition we now call the Great Stagnation. The CPB Netherlands Bureau for Economic Policy Analysis, a division of the Ministry of Economic Affairs, just released the preliminary data of its Merchandise World Trade Monitor for October. World trade isn’t falling off a cliff, as it had done during the Great Recession, when global supply chains froze up overnight. But since November 2014, it has gone absolutely nowhere:

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“Is There A Way Out?” Not for most. And do give the ECB a special place in this: they are responsible for setting one single rate in countries that need completely different rates.

Central Banks Have Cut Interest Rates 690 Times Since Lehman Brothers (CNBC)

The top 50 central banks around the world have seen a total of 690 interest rate cuts since the collapse of Lehman Brothers in September 2008, according to data from JP Morgan. While this number means one rate cut every three trading days, analysts have warned that central banks may start to run out of ammunition soon. “Essentially these rate cuts came into effect to try and stimulate economic growth and to prop up economies post the financial crisis,” Alex Dryden, global market strategist at JP Morgan Asset Management, told CNBC via email. However, he warned that central banks are running out of room to maneuver.

“The Bank of Japan, for example, own over 45% of the government bond market, over 65% of the domestic ETF market and are a top 10 shareholder in 90% of listed firms. They have also cut rates into negative territory. There isn’t much more they can do.” Markets, however, continue to ride the wave of uncertainty and speculation over whether the world’s central banks will either continue to pump in more and more cash into the economy through bond-buying programs known as QE or conventional ways such as lowering interest rates to stimulate borrowing. But as we delve deeper into this world of ultra-low interest rate and easy monetary policy, there are other areas of the economy that could see a knock-on effect.

This raises a very big question – will the global economy ever exit this low interest rate environment? “No easy way out. The world has changed and the level of neutral interest rates has fallen for most countries,” Jan von Gerich, chief economist at Nordea, told CNBC via email. Gerich further explained that the way inflation is responding to growth seems to have changed, which makes monetary policy considerations harder for central bankers. “The situation varies a lot, though. The Fed is gradually finding at least a partial way out while it is hard to see the ECB raising rates before the next recession arrives.”

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Oh, sweet Jesus: “..allow Italy’s third-largest bank to finally return to operate at full throttle to support the economy..”

Italian Government Rides To Rescue Of Stricken Bank Monte Dei Paschi (R.)

The Italian government approved a decree on Friday to bail out Monte dei Paschi di Siena after the world’s oldest bank failed to win investor backing for a desperately needed capital increase. Looking to end a protracted banking crisis that has gummed up the economy, Prime Minister Paolo Gentiloni said his Cabinet had authorized a €20 billion fund to help lenders in distress – first and foremost Monte dei Paschi. Within minutes of the late-night Cabinet meeting ending, the country’s third largest lender issued a statement saying it would formally request state aid, opening the way for possibly the biggest Italian bank nationalization in decades. The government has said its long-awaited salvage operation will work within EU rules, meaning some Monte dei Paschi bondholders will be forced to accept losses to ensure the taxpayer does not pick up all of the bill.

However, the government and Monte dei Paschi promised protection for around 40,000 retail savers who had bought the bank’s junior debt. Many of the high street investors say they were unaware of the risks when they purchased the paper. “Today marks an important day for Monte dei Paschi, a day that sees it turn a corner and be able to reassure its depositors,” said Gentiloni, who only took office last week and has made the bank rescue his first priority. [..] The collapse of Monte dei Paschi would have threatened the savings of thousands of Italians and could have had devastated the wider banking sector, which is saddled with €356 billion of bad loans – a third of the euro zone’s total. [..] The government said full details of the rescue plan have yet to be worked out, but it outlined the contours in a statement.

It said the bank’s Tier 1 bonds, which are mostly held by professional investors, would be converted into shares at 75% of their nominal value. Tier 2 bonds, which are mostly in the hands of retail investors, will be converted instead at 100% of their face value. To further insulate small savers from losses, Monte dei Paschi will offer to swap the shares they end up with as a result of the forced conversion with regular bonds and sell the same shares to the state instead. “The rescue will require a (new) business plan that European authorities will need to approve and that will allow Italy’s third-largest bank to finally return to operate at full throttle to support the economy and with the full confidence of its depositors,” said Economy Minister Pier Carlo Padoan.

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Where are the indictments?

Deutsche Bank, Credit Suisse Agree Billion-Dollar Fines With US (CNBC)

Deutsche Bank will be hoping for a fresh start in 2017 after reaching a $7.2 billion deal with U.S. authorities to settle allegations of the mis-selling of mortgage-backed securities (MBS). Germany’s largest lender said on Friday morning it had agreed ‘in principle’ to pay a $3.1 billion civil fine to be supplemented with the payment of $4.1 billion in consumer relief overtime. The announcement of the fine comes amid a raft of banking stories related to the mis-selling of MBS which hit the wires before Friday’s European market open. This included news that U.S. federal prosecutors would sue Britain’s Barclays bank and that Credit Suisse had reached a provisional $5.3 billion deal, meaning the Swiss bank will take a pre-tax charge of about $2 billion.

Of the total amount demanded of Credit Suisse, $2.48 billion would be an immediate fine to settle the claims and an additional $2.8 billion would be paid over five years for consumer relief. Deutsche Bank’s agreement follows months of negotiations with the U.S.’s Department of Justice (DoJ) and ranks as the third-highest penalty imposed to date on a bank to settle claims of mis-sold mortgage-backed instruments. Although the $7.2 billion payment is far from negligible, investors may take some cold comfort from the fact it is less than $16.7 billion that Bank of America was required to stump up in August 2014 and the $9.0 billion charged to JPMorgan Chase in November 2013. Furthermore, of the full amount, only the $3.1 billion civil fine component is required to be imminently delivered in cash.

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Again, where are the indictments?

US Sues Barclays For Alleged Mortgage Securities Fraud (R.)

The U.S. Department of Justice on Thursday sued Barclays for fraud in the sale of mortgage securities in the run-up to the financial crisis. The British bank deceived investors about the quality of loans underlying tens of billions of dollars of mortgage securities between 2005 and 2007, according to the lawsuit, which was filed in U.S. district court in Brooklyn, New York. Loans had been made to borrowers with no ability to repay and were based on inflated home appraisals, the complaint said. Barclays said in a statement that the claims in the lawsuit are “disconnected from the facts” and that it has an obligation to defend against “unreasonable allegations and demands.”

In terms of demands, Barclays was apparently referring to negotiations with the Justice Department to settle the claims without a case being filed. “Barclays will vigorously defend the complaint and seek its dismissal at the earliest opportunity,” the statement said. The bank’s U.S.-traded shares were down 1.7 percent at $11.08 shortly before the close of the market. Barclays is among a number of European banks that have been under investigation for misconduct in the sale of mortgage securities, which contributed to the 2008 financial crisis.

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One word: Dollar.

Why The Chinese Are Still Snapping Up US Commercial Property (CNBC)

Interest in U.S. commercial real estate is perking up, particularly from China, as expectations of pro-growth policies from President-elect Donald Trump spark demand for dollar-denominated assets. “(Investors) are seeing the U.S.commercial real estate marketplace as really standing out on a global basis,” said Hessam Nadji, president and chief executive at commercial real estate firm Marcus and Millichap. “It’s not being overbuilt; it’s been very well balanced in this particular cycle in terms of loans that are not going up, the leverage that was very well balanced. They’re at much lower risk at this stage of recovery than we’ve seen in the past,” he told CNBC’s The Rundown. Concerns over the dollar’s appreciation are also prompting some motivation for capital allocation into the U.S. “particularly because the Chinese economy is slowing” and as the yield profile of commercial real estate is competitive, Nadji added.

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We don’t solve our problems, we package them.

EU Plans To ‘Revitalize’ Complex Financial Products (EUO)

The EU is trying to “revitalise” a market for controversial financial products, but one of the goals appears to already have been achieved without the EU’s help. Securitisation is the packaging of loans, mortgages, or other contractual debts into securities that can then be sold on the market, together with the risk attached to those debts. It had an instrumental role in the financial crisis of 2008, but the European Commission says giving the securitisation market a boost can help the real economy. The commission has not given a target figure of when “revitalisation” will have been achieved, but spoke in a press release of going back to the “pre-crisis average”.

The commission did not want to comment on the record, but one commission official said that if the market would return to average pre-crisis issuance levels, this would generate €100-€150 billion in additional funding for the economy. “This would already be a major achievement for the securitisation markets,” the commission official said. EUobserver looked at how average issuance levels have done so far, and found that more securities have been created through securitisation since the crisis than before the crisis. This website collected data from the Association for Financial Markets in Europe (AFME), a lobby group for the financial service sector, and the Securities Industry and Financial Markets Association, its US-based counterpart.

Taking a very narrow view, the “pre-crisis” years are 1996-2006. The average issuance of securities in Europe was €168 billion. When including 2007, the average was €203 billion. When including 2008 – when the financial crisis was in full swing – the average was €251 billion. Last week, AFME released data for the third quarter of 2016. The first three quarters of 2016 were the best three quarters since 2012. Taking the most recent data into account, the average annual issuance of securitisation since 2009, is €270 billion. Last year the figure was €216 billion. Even when correcting for inflation, the post-crisis period is already better than the pre-crisis period. Converting the averages to today’s prices, the average since 2009 is €282 billion, compared to a 1996-2007 average of €244 billion.

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“I think the spying and interference is sort of the nature of our governments.”

Ron Paul: “We Don’t Have Very Much Room For Condemning Anybody Else” (ZH)

When asked whether all the “Russian hacking” allegations were just a simple “political stunt” or whether a serious investigation needed to be conducted, Ron Paul offered up a startling bit of reality pointing out that America has a long history of interfering with elections and even invading countries “to have our guy in.” We suspect the following response was a bit more truth than Fox Business News expected.

“I think it is politics more than anything else. It’s really is nothing new. It’s like, guess what – somebody might have done A, B, C.” “The very rarely, if ever, compare what we do with election around the world. We are interfering all the time.” “I’m sure the Russians are interfering. But when you lose, you can jump on that and make a big point of it. But I don’t think it made any difference. I think it’s insignificant.” “If you review the history of how many elections we’ve been involved with, how many countries we’ve invaded and how many people we’ve killed to have our guy in, I’ll tell you what – we don’t have very much room for condemning anybody else.” “I think the spying and interference is sort of the nature of our governments. That’s why I’d like to see government much smaller.”

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HA!

Is Obama a Russian Agent? (Dmitry Orlov)

Sometimes a case looks weak because there is no “smoking gun”—no obvious, direct evidence of conspiracy, malfeasance or evil intent—but once you tally up all the evidence it forms a coherent and damning picture. And so it is with the Obama administration vis à vis Russia: by feigning hostile intent it did everything possible to further Russia’s agenda. And although it is always possible to claim that all of Obama’s failures stem from mere incompetence, at some point this claim begins to ring hollow; how can he possibly be so utterly competent… at being incompetent? Perhaps he just used incompetence as a veil to cover his true intent, which was always to bolster Russia while rendering the US maximally irrelevant in world affairs. Let’s examine Obama’s major foreign policy initiatives from this angle.

Perhaps the greatest achievement of his eight years has been the destruction of Libya. Under the false pretense of a humanitarian intervention what was once the most prosperous and stable country in the entire North Africa has been reduced to a rubble-strewn haven for Islamic terrorists and a transit point for economic migrants streaming into the European Union. This had the effect of pushing Russia and China together, prompting them to start voting against the US together as a block in the UN Security Council. In a single blow, Obama assured an important element of his legacy as a Russian agent: no longer will the US be able to further its agenda through this very important international body.

Next, Obama presided over the violent overthrow of the constitutional government in the Ukraine and the installation of an American puppet regime there. When Crimea then voted to rejoin Russia, Obama imposed sanctions on the Russian Federation. These moves may seem like they were designed to hurt Russia, but let’s look at the results instead of the intentions. First, Russia regained control of an important, strategic region. Second, the sanctions and the countersanctions allowed Russia to concentrate on import replacement, building up the domestic economy. This was especially impressive in agriculture, and Russia now earns more export revenue from foodstuffs than from weapons. Third, the severing of economic ties with the Ukraine allowed Russia to eliminate a major economic competitor.

Fourth, over a million Ukrainians decided to move to Russia, either temporarily or permanently, giving Russia a major demographic boost and giving it access to a pool of Russian-speaking skilled labor. Most Ukrainians are barely distinguishable from the general Russian population.) Fifth, whereas before the Ukraine was in a position to extort concessions from Russia by playing games with the natural gas pipelines that lead from Russia to the European Union, now Russia’s hands have been untied, resulting in new pipeline deals with Turkey and Germany. In effect, Russia reaped all the benefits from the Ukrainian stalemate, while the US gained an unsavory, embarrassing dependent.

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Worse than smoking.

Air Pollution Cause Of One In Three Deaths In China (SCMP)

Smog is related to nearly one-third of deaths in China, putting it on a par with smoking as a threat to health, according to an academic paper based on the study of air pollution and mortality data in 74 cities and published in an international journal. The findings by Nanjing University’s School of the Environment, which were published in the November edition of the journal the Science of the Total Environment, provides the latest scientific estimates of the health cost of China’s notorious smog. The latest bout of smog began last Friday, affecting about half a billion people on the mainland, with the severest impact in the last three days. Previous research work have found equally alarming results about the country’s toxic air.

The International Energy Agency published its first study on air pollution in June and estimated that severe air pollution has shortened life expectancy in China by an average 25 months. An academic paper co-authored by researchers from MIT in the US, Tsinghua University and Peking University in China, plus the Hebrew University of Jerusalem in 2013 concluded that bad air has cut life expectancy by an average of 5.5 years in the north of the country. There are so far no concrete or widely agreed estimates on the impact of air pollution on health in China partly because it is scientifically complicated to measure and also because there is little historical precedent for prolonged exposure to such high levels of air pollution.

The six researchers from Nanjing University said they conducted the study because air pollution was the “most severe and worrisome environmental problem in China”, but knowledge of its health effects was insufficient. When they looked into 3.03 million deaths in 2013 in 74 cities in the Beijing-Tianjin-Hebei region and the Yangtze River Delta and Pearl River Delta, they found 31.8 per cent could be linked to PM 2.5 pollution – the tiny smog particles most hazardous to health.

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Yeah, it’s bitter. Still, as I said yesterday on FB: “Right up the alley of my -repeat- article and appeal yesterday. Only, the Guardian itself runs a fund now. So it has reason to publish this. The problem: the paper supports 3 NGOs, all British. As if they know better than Greeks what to do in Greece. It’s a broken record problem. Too much money gets wasted on hubris and 1001 -repeat- preventable fuck-ups.”

1000s Of Refugees Left In Greek Cold, UN And EU Accused Of Mismanagement (G.)

The UN refugee agency and the EU’s aid department have been accused by other aid groups of mismanaging a multimillion-pound fund earmarked for the most vulnerable refugees in Europe, leaving thousands sleeping in freezing conditions in Greece. The Greek government, which has ultimate jurisdiction over camp activities, has also been criticised for failing to use nearly €90m (£75m) of separate EU funding to adequately improve conditions at the camps before the onset of winter. No single actor has overall control of all funding and management decisions in the camps, allowing most parties to distance themselves from blame.

The EU aid department, known as Echo, has given UNHCR more than €14m since April to help prepare roughly 50 refugee camps for the winter in Greece, where an estimated 50,000 mainly Syrian refugees have been stranded since the adoption of new European migration policies in March. A further €24m has been given to UNHCR for other projects. Both organisations stand accused by other aid groups of squandering this money, after failing to properly “winterise” or evacuate dozens of camps before snow fell in Greece earlier in December. In addition to providing warmer bedding and clothes, UNHCR was expected to use this money to move people from tents to heated containers or formal housing; heat warehouses where other refugees are living; provide a consistent supply of hot water; and install insulated flooring for anyone still left in tents.

Months after the funds were dispersed, roughly half of those living in camps had yet to be transferred to formal housing by the onset of winter. Of the 45 camps that were still active at the start of the month, the Guardian visited or was made aware of at least 15 camps that had yet to be properly adapted by the time snow fell in northern Greece at the start of December. UNHCR admitted it was itself aware of only eight camps where all the residents have been moved out of tents and into prefabricated containers.

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Because of all that goes wrong in the NGO structure, we support this:

The Automatic Earth in Greece: Big Dreams for 2017 (Automatic Earth)

Both Konstantinos and myself -and all the other volunteers at O Allos Anthropos- want to thank you so much for all the help you’ve given over the past year -and in 2015-. We’re around $30,000 for 2016 alone, another $5000 since my last article 4 weeks ago. I swear, for as long as I live, this will never cease to amaze me. And then of course what happens is people start thinking and dreaming about what more they can do for those in peril. Wouldn’t you know…

A Merry Christmas to all of you, to all of us. Very Merry. God bless us, every one. Thank you for everything.

If I may make a last suggestion, please forward this ‘dream’ to anyone you know -and even those you don’t-, by mail, Twitter, Facebook, Instagram, word of mouth, any which way you can think of. Go to your local mayor or town council, suggest they can help and get -loudly- recognized for it. There may be a dream involved for 2017, but that was our notion a year ago as well, and look what we’ve achieved a year later: it is very real indeed. And anyone, everyone can become part of that reality for just a few bucks. If the institutions won’t do it, perhaps the people themselves should. That doesn’t even sound all that crazy or farfetched. There’s a lot of us.


Konstantinos Polychronopoulos on Lesbos Dec 2015

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Dec 262015
 
 December 26, 2015  Posted by at 9:58 am Finance Tagged with: , , , , , , , , , ,  


Andreas Feininger Production B-17 heavy bomber at Boeing plant, Seattle Dec 1942

Christmas 2015 – Why There Is No Peace On Earth (Stockman)
China State Firms’ Profits Down 9.5% Year-on-Year In January-November (Reuters)
China Says AIIB Up And Running Early In The New Year
US Oil Bankruptcies Reach Highest Quarterly Level Since Recession (BBG)
Why Not People’s Quantitative Easing? (Steve Keen on Keiser Report)
Commerzbank Sues BNY Mellon, Wells Fargo, HSBC Over Mortgage Losses (Reuters)
Huge Leap In Number Of People Cashing In And Moving Out Of London In 2015 (G.)
The Sneaky Way Austerity Got Sold to the Public Like Snake Oil (Lynn Parramore)
Beijing Raises Smog Alert -Again- as Airport Cancels 227 Departures (BBG)
Pope Condemns ‘Monstrous Evil’ Fuelling Refugee Crisis (Guardian)
Remember That Christmas Is A Story Of Middle Eastern Refugees (Quartz)
Two Dead As Hundreds Of Migrants Storm Spanish Enclave in Morocco (AFP)

Because of Pax Americana. Long expose by Stockman.

Christmas 2015 – Why There Is No Peace On Earth (Stockman)

After the Berlin Wall fell in November 1989 and the death of the Soviet Union was confirmed two years later when Boris Yeltsin courageously stood down the red army tanks in front of Moscow’s White House, a dark era in human history came to an end. The world had descended into what had been a 77-year global war, incepting with the mobilization of the armies of old Europe in August 1914. If you want to count bodies, 150 million were killed by all the depredations which germinated in the Great War, its foolish aftermath at Versailles, and the march of history into the world war and cold war which followed inexorably thereupon. To wit, upwards of 8% of the human race was wiped-out during that span.

The toll encompassed the madness of trench warfare during 1914-1918; the murderous regimes of Soviet and Nazi totalitarianism that rose from the ashes of the Great War and Versailles; and then the carnage of WWII and all the lesser (unnecessary) wars and invasions of the Cold War including Korea and Vietnam. I have elaborated more fully on this proposition in “The Epochal Consequences Of Woodrow Wilson’s War“, but the seminal point cannot be gainsaid. The end of the cold war meant world peace was finally at hand, yet 25 years later there is still no peace because Imperial Washington confounds it.

In fact, the War Party entrenched in the nation’s capital is dedicated to economic interests and ideological perversions that guarantee perpetual war; they ensure endless waste on armaments and the inestimable death and human suffering that stems from 21st century high tech warfare and the terrorist blowback it inherently generates among those upon which the War Party inflicts its violent hegemony. So there was a virulent threat to peace still lurking on the Potomac after the 77-year war ended. The great general and president, Dwight Eisenhower, had called it the “military-industrial complex” in his farewell address, but that memorable phrase had been abbreviated by his speechwriters, who deleted the word “congressional” in a gesture of comity to the legislative branch.

So restore Ike’s deleted reference to the pork barrels and Sunday afternoon warriors of Capitol Hill and toss in the legions of beltway busybodies that constituted the civilian branches of the cold war armada (CIA, State, AID etc.) and the circle would have been complete. It constituted the most awesome machine of warfare and imperial hegemony since the Roman legions bestrode most of the civilized world. In a word, the real threat to peace circa 1990 was that Pax Americana would not go away quietly in the night.

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With numbers like those, statements like these are ludicrous: “The government has been struggling to reach its economic growth target of around 7% this year..”

China State Firms’ Profits Down 9.5% Year-on-Year In January-November (Reuters)

Profits at China’s state firms dipped 9.5% in the first 11 months of 2015 from a year earlier, after a 9.8% drop in the first 10 months, the Ministry of Finance said on Friday. Combined profits of state-owned enterprises totaled 2.04 trillion yuan ($315.18 billion) in the January-November period, the ministry said in a statement on its website. “The downward pressure on economic operations remains relatively big, although there are signs of warming up in some indicators,” the ministry said.

Excluding financial firms, combined revenues of state-owned firms fell 6.1% in the first 11 months from a year earlier to 40.66 trillion yuan, the ministry said. Companies in transportation, chemical and power sectors reported a rise in profit in the January-November period, while firms in oil, petrochemicals and building materials saw a drop in earnings. Firms in steel, coal and non-ferrous metal sectors continued to suffer losses. The government has been struggling to reach its economic growth target of around 7% this year, which would be the weakest pace in a quarter of a century.

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A foreign policy success is not the same as a financial success.

China Says AIIB Up And Running Early In The New Year

The China-backed Asian Infrastructure Investment Bank (AIIB) has been formally established and is expected to be operational early next year, the official Xinhua news agency said on Friday. The bank’s establishment came after 17 funding members of the AIIB, which account for just over 50% of its share capital, ratified an agreement on the bank, state television quoted Finance Minister Lou Jiwei as saying. The bank will hold its opening ceremony in mid-January and formally elect its president, state television said. The bank will initially focus on financing projects in power, transportation, and urban infrastructure in Asia, the television quoted the bank’s president-elect, Jin Liqun, as saying. First proposed by President Xi Jinping less than two years ago, the bank has become one of China’s biggest foreign policy successes. Despite the opposition of Washington, major U.S. allies such as Australia, Britain, Germany, Italy, the Philippines and South Korea have joined.

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You ain’t seen nothing yet. On January 1, all previous bets are off.

US Oil Bankruptcies Reach Highest Quarterly Level Since Recession (BBG)

Bankruptcies among oil and gas companies have reached quarterly levels last seen in the Great Recession, according to the Federal Reserve Bank of Dallas. At least nine U.S. oil and gas companies that accounted for more than $2 billion in debt have filed for bankruptcy in the fourth quarter, the bank said Wednesday in its energy economic update for the final three months of the year. “Lower oil prices have taken a significant financial toll on U.S. oil and gas producers, in part because many face higher costs of production than their international counterparts do,” according to the note written by Navi Dhaliwal, a research assistant, and Martin Stuermer, a research economist. “If bankruptcies continue at this rate, more may follow in 2016.” Since peaking in October 2014, U.S. oil and gas employment has fallen by 70,000 jobs, the analysts wrote in the report.

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Bit confusing at the start on differences between people’s QE and basic income. And the entire topic already confuses people with all the varying definitions. But it’s good to get the discussion going. And Steve’s Modern Debt Jubilee is still the most sensible thing out there.

Why Not People’s Quantitative Easing? (Steve Keen on Keiser Report)

In this special Winter Why Not? episode of the Keiser Report, Max Keiser and Stacy Herbert talk to Professor Steve Keen about solutions to our unpayable debts, including: basic income, a People’s Quantitative Easing and a global debt jubilee. Professor Keen explains why a modern debt jubilee could please both debtors and creditors, savers and spenders.

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Deals with deals that are almost a decade old.

Commerzbank Sues BNY Mellon, Wells Fargo, HSBC Over Mortgage Losses (Reuters)

Commerzbank has sued four banks in the United States, claiming that they failed to properly monitor billions of dollars in toxic mortgage-backed securities acquired by the German lender before the 2008 financial crisis. Bank of New York Mellon and units of Deutsche Bank, Wells Fargo and HSBC were named in the lawsuits filed on Wednesday and Thursday in Manhattan federal court. BNY Mellon was the trustee for over $1 billion in mortgage-backed securities bought by Commerzbank and $1.3 billion of investments tied to a collateralized debt obligation, Millstone II CDO, court documents showed. BNY Mellon “abandoned its obligations to protect the rights of investors” and did nothing to protect the collateral underlying the CDO, Commerzbank said, noting that it suffered $750 million in losses. Commerzbank made similar claims involving mortgage-backed securities of $640 million in the Deutsche Bank case; $290 million for Wells Fargo; and $204 million for HSBC.

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Ghost town.

Huge Leap In Number Of People Cashing In And Moving Out Of London In 2015 (G.)

The number of people selling up and moving out of London rose by two-thirds in 2015, figures showed on Saturday, as homeowners cashed in on the capital’s high house prices or escaped to more affordable parts of the country. More Londoners bought homes outside the capital than at any point since 2007, according to the property firm Hamptons International, purchasing 63,000 properties during the year. Almost nine out of 10 bought elsewhere in the south of England, but the Midlands saw a 165% increase in the number of Londoners moving into the area. Throughout 2014 house price growth in London outstripped that in other parts of the country, and although it has been less rapid this year, the gap between prices in the capital and outside is wider than ever. Johnny Morris, head of research at Hamptons International, said homeowners were taking advantage of this.

“As the gap between prices in London and the south-east has grown, so has the temptation for Londoners to cash in on record house prices and move out of the capital,” he said. “With expectations of future house price growth in London easing, many have chosen 2015 to make their move out of London.” High costs in London where, according to the Office for National Statistics, the average price of a home is now above half a million pounds, have also forced first-time buyers and those looking for more space to move out. The Hamptons research, based on figures from the UK’s largest estate agency, Countrywide, which it owns, found that the number of people moving out to buy their first home was up by 70%, or 11,000, over 2014’s figure. The most recent data from Nationwide building society on first-time buyer affordability shows that relative to earnings a home in London is at a record 9.6 times average pay.

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“Austerity is so powerful today because it feeds off of itself. It makes people uncertain about their lives, their debts, and their jobs. They become afraid. It’s a strong disciplinary mechanism.”

The Sneaky Way Austerity Got Sold to the Public Like Snake Oil (Lynn Parramore)

Orsola Costantini, Senior Economist at the Institute for New Economic Thinking, is the author of a new paper, “The Cyclically Adjusted Budget: History and Exegesis of a Fateful Estimate,” which exposes the fascinating — and disturbing — history of how a budget approach cloaked in a scientific and technical aura became a tool to manipulate public opinion and serve the interests of the powerful. In the following conversation, she reveals how austerity has been sold to the public through a process that damages the lives of ordinary people, consolidates knowledge and power at the top, and compromises democracy. As economic inequality reaches new heights and austerity programs are debated around the world (most recently, in Spain and Portugal), understanding how a lie becomes political and economic “truth” has never been more critical.

Lynn Parramore: Your recent work deals with something called the “cyclically adjusted budget.” What is it and what does it mean in the lives of ordinary people?

Orsola Costantini: The Cyclically Adjusted Budget (CAB) is a statistical estimate that aids government officials when they decide what to spend money on and how much they’re going to tax you. It is mostly federal governments that use it, but also international institutions like the IMF. Economists will tell you this tool is imprecise. Yet national and international institutions still rely on it to justify important decisions about government spending and taxation. But there’s something the experts aren’t telling you: the cyclically adjusted budget can be easily maneuvered depending on which way the political winds are blowing. And it appears technical and obscure enough so that regular people tend to look at it as objective and undisputable. That’s where the trouble comes in.

Politicians and government officials using the CAB can limit the range of political choices that appear viable to a community. Policymakers can avoid the hassle of taking political responsibility for these choices, too. We had to do it! The budget says so! Look at what happened all over Europe in 2008: It’s one thing to say to students in the streets that their education and economic wellbeing are not a priority for the government while saving banks is. It’s quite another to say that politics has nothing to do with it and the economy requires taking certain actions, sometimes painful.

LP: You indicate that this approach to budgeting was invented as a way of making the New Deal acceptable to the business community. How did that work? Over time, who has benefitted from it? Who has lost?

OC: Back in the 1940s, workers were fighting for their rights, class struggle was heating up, and soldiers would soon be returning from the fronts. At that point, a new business organization, the Committee for Economic Development (CED), came together. Led by Beardsley Ruml and other influential business figures, the CED played a crucial role in developing a conservative approach to Keynesian economics that helped make policies that would help put all Americans to work acceptable to the business community.
The idea was that more consumers would translate into more profits — which is good for business. After all, the economic experts and budget technicians said so, not just the politicians. And the business leaders were told that economic growth and price stability would go along with this, which they liked.

But things changed progressively over the 1970s and early 1980s. Firms went global. They became financialized. The balance of power between workers and owners started to shift more towards the owners, the capitalists. People were told they needed to sacrifice, to accept cuts to social spending and fewer rights and benefits on the job — all in the name of economic science and capitalism. The CAB was turned into a tool for preventing excessive spending — or justifying selected cuts. Middle class folks were afraid that inflation would erode their savings, so they were more keen to approve draconian measures to cut wages and reduce public budgets. People on the lower rungs of the economic ladder felt the pain first. But eventually the middle class fell on the wrong side of the fence, too. Most of them became relatively poorer. I suppose this shows the limits of democracy when information, knowledge, and ultimately power are unequally distributed.

LP: You’re really talking about birth of austerity and the way lies about public spending and budgets have been sold to the public. Why is austerity such a powerful idea and why do politicians still win elections promoting it?

OC: Austerity is so powerful today because it feeds off of itself. It makes people uncertain about their lives, their debts, and their jobs. They become afraid. It’s a strong disciplinary mechanism. People stop joining forces and the political status quo gets locked down. Even the name of this tool, the “cyclically adjusted budget,” carries an aura of respect. It diverts our attention. We don’t question it. It creates a barrier between the individual and the political realm: it undermines democratic participation itself. This obscure theory validates, with its authority, a big economic mistake that sounds like common sense but is actually snake oil — the notion that the federal government budget is like a household budget. Actually, it isn’t. Your household doesn’t collect taxes. It doesn’t print money. It works very differently, yet the nonsense that it should behave exactly like a household budget gets repeated by politicians and policymakers who really just want to squeeze ordinary people.

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Beijing has closed down thousands of companies. But how long can it do that for?

Beijing Raises Smog Alert -Again- as Airport Cancels 227 Departures (BBG)

Beijing issued an alert for severe air pollution Friday, warning children and the elderly to avoid outdoor activities as limited visibility from the thick smog forced the airport to cancel 227 departures. Officials in the capital raised their air pollution alert to orange, the second-highest on the city’s four-grade scale. The concentration of PM2.5 – the particles that pose the greatest health risks – was 503 micrograms per cubic meter near Tiananmen Square at 2 p.m. after reaching 647 in the morning, according to the municipal air-monitoring website. The World Health Organization recommends PM2.5 exposure of no more than 25 over 24-hours.

Beijing Capital International Airport, the world’s second-busiest by passengers, reported the cancellations on its website Friday and said another 12 departures were delayed as of 4 p.m. local time because of poor visibility. The canceled flights accounted for about 12% of scheduled departures Friday, according to the site. The chronic air pollution has renewed calls for the government to make better forecasts and act faster to help clear the skies over the city of 21.5 million. Beijing this year has imposed two red alerts, the highest on the scale, prompting measures including school closures, traffic restrictions and factory operation limits. The latest ended Tuesday. Smog also blanketed China’s eastern and central regions Friday.

PM2.5 levels were as high as 260 micrograms per cubic meter in Zibo and 322 in Jinan of Shandong province, data from the China National Environment Monitoring Center showed. The readings were 277 in Wuhan and 255 in Huanggang of Hubei province. Shanghai issued a yellow alert for air pollution, the third-highest of four levels. Children and the elderly were warned to avoid outdoor activities, with the Shanghai Environmental Monitoring Center reporting PM2.5 levels of 154 micrograms per cubic meter as of 2 p.m. About 50 cities in northern and eastern China have issued air pollution alerts, the China Daily reported on Friday. Smog across the eastern, northern and central parts of the country will weaken or disperse from north to south from Saturday, the China Meteorological Administration said.

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If “Only God’s mercy can free humanity from the many forms of evil..”, are we off the hook?

Pope Condemns ‘Monstrous Evil’ Fuelling Refugee Crisis (Guardian)

Pope Francis has praised the generosity of countries which have accepted Syrian refugees and condemned the “monstrous evil” which has forced increasing numbers of people to flee their homes in the Middle East. Delivering his Christmas Day homily at St Peter’s in Rome amid heavy security, the pontiff said he was praying for an end to human suffering in a world afflicted by war, poverty and extremist attacks. Francis referred to “brutal acts of terrorism” in Paris in November as well as conflicts in Africa, the Middle East and Ukraine. “Only God’s mercy can free humanity from the many forms of evil, at times monstrous evil, which selfishness spawns in our midst,” he told worshippers gathered in St Peter’s Square.

Thousands of people underwent airport-style security screening as they entered St Peter’s Square. Police armed with machine guns discreetly patrolled the area. Security around the Vatican has stepped up since the terrorist attacks in Paris last month. At the end of a year in which more than a million people have sought sanctuary in Europe, Francis asked God to “repay all those, both individuals and states, who generously work to provide assistance and welcome to the numerous migrants and refugees”. The pope called for “encouragement … to all those fleeing extreme poverty or war, travelling all too often in inhumane conditions and not infrequently at the risk of their lives”. He praised those who are helping migrants “to build a dignified future for themselves and for their dear ones, and to be integrated in the societies which receive them”.

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“..the responsibility to offer refuge is ours until the least of us have shelter.”

Remember That Christmas Is A Story Of Middle Eastern Refugees (Quartz)

As your social media contacts must have reminded you by now, Christmas truly is the story of a Middle Eastern family seeking refuge. Recent forensic research suggests that Jesus looked very much like the men that so many in the predominantly Christian Western world are frightened to let into their countries. Even in photos of the refugees, there are striking echoes of biblical iconography. “Whatever you did for one of the least of these brothers and sisters of mine, you did for me,” Jesus says in Matthew’s gospel. “Whatever you did not do for one of the least of these, you did not do for me.” This is at the very core of Christian values: love your neighbor as yourself—and as your god.

And yet Westerners are, by and large, keeping refugees at bay, bargaining their quotas down, as if the world’s 2.2 billion Christians had never been taught the story of Joseph and Mary being refused accommodation because they were poor strangers. Perhaps instead we can show mercy for mothers breastfeeding their children on a cold beach, for men who nearly drown trying to swim to shore, for children who have no choice but to follow their parents in chasing a future—any future, anywhere. These people are the real-life versions of the icons that Christians have come to associate with the passion of god as a human. Let us recognize them as such. Let us acknowledge, once and for all, that being a refugee—of war, poverty, or discrimination—is a sheer function of luck, and we did nothing to deserve our better fate. Whenever and wherever humanity is suffering, we are involved, and the responsibility to offer refuge is ours until the least of us have shelter.

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Contradictory reports in the media. Some say everyone swam, or that Ceuta is an island.

Two Dead As Hundreds Of Migrants Storm Spanish Enclave in Morocco (AFP)

Two migrants drowned and 12 others were injured Friday when they tried to enter into the tiny Spanish territory of Ceuta in North Africa by swimming from Morocco or scaling a barbed-wire fence, officials in both nations said. Just before 4:00 am (0300 GMT) a group of over 300 migrants tried to get into the Spanish city which borders Morocco and is located across the Strait of Gibraltar from mainland Spain, the Spanish government authority in Ceuta said in a statement. Moroccan forces intercepted over 120 migrants but 182 others managed to get into Ceuta by climbing over the fence or swimming into the territory, it said. “Three of them needed to be reanimated by Spanish police officers who rescued them from the sea.”

Twelve migrants were taken to hospital by the Red Cross to be treated for various injuries, it added. Two people were recovering from near-drowning, one had an open leg fracture and the rest had deep cuts, some requiring stitches, the Red Cross said. Morocco recovered two bodies in the waters near the border post, local officials told Moroccan state news service MAP. The would-be migrants threw stones and used sticks against police, injuring several officers, they added. The Spanish Red Cross said it gave clothes and shoes to the migrants before they were taken to a temporary detention centre in Ceuta. It published photos of Red Cross volunteers helping and feeding migrants, many of them covered in blankets.

Ceuta along with Melilla to the east are two Spanish territories on the northern coast of Morocco that together form the European Union’s only land borders with Africa. Spain fortified fences in the two territories last year in response to a rise in the number of migrants trying to jump over the barriers from neighbouring Morocco. Last year 15 migrants drowned in the Mediterranean after dozens tried to enter Ceuta by swimming from a nearby beach. Human rights groups and migrants said the Spanish police tried to keep them from crossing into Spanish territory by firing rubber bullets and spraying them with tear gas. Madrid has since said that its guards are now banned from using rubber bullets to repel migrants.

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Dec 082015
 
 December 8, 2015  Posted by at 10:42 am Finance Tagged with: , , , , , , , , ,  


NPC Tank truck with plow clearing snow, Washington, DC 1922

Commodities Rout Deepens As Chinese Trade Data Signal Weaker Demand (Guardian)
China November Exports Down -6.8%, Imports -8.7% (Reuters)
Anglo American Scraps Dividend As Shares Fall 71% So Far This Year (BBG)
OPEC Forces Re-Rating Of Oil Majors (BBG)
Peter Schiff: ‘The Whole Economy Has Imploded; Collapse Is Coming’ (SHTF)
We Are Shrinking! The Neglected Drop In Gross Planet Product (VoxEU)
Beijing Issues First-Ever Red Alert for Hazardous Smog (WSJ)
Euro Regime Is Working Like A Charm For France’s Marine Le Pen (AEP)
EU Is In Danger And Can Be Reversed: European Parliament’s Schulz (Reuters)
Tsipras Says IMF Behavior In Greek Crisis Not Constructive (Reuters)
Greece’s Five Ticking Time Bombs (BBG)
New Zealand Named The World’s Most Ignorant Developed Country (NZH)
Albuquerque Revises Approach Toward Homeless, Offers Them Jobs (NY Times)
Swedish Legal Watchdog Rejects Proposal For Border Controls (Reuters)
Escapism Magazine Devotes Whole Issue To Reality Of Refugee Crisis (Guardian)

Huh? “Analysts were unsure if the numbers signalled a possible improvement in Chinese domestic demand..”

Commodities Rout Deepens As Chinese Trade Data Signal Weaker Demand (Guardian)

The accelerating rout in commodity prices has piled pressure on energy and resources shares in Asia Pacific amid more signs of slowing demand from China. Although oil prices pushed back on Tuesday from seven-year lows, stock markets around the region felt the pain from uncertainty about global growth and the likely rise in US interest rates later this month. The Nikkei index in Japan was down almost 1% on Tuesday and the Shanghai Composite and Hang Seng indices were down more 0.9% and 1.6% respectively. In resource-rich Australia, the ASX/S&P200 benchmark had a volaltile day but bears had the upper hand by the afternoon with the index off 0.91% at the close with the big oil and gas and mining companies bearing the brunt.

“Beyond the December hike, investors are concerned about the lack of Chinese demand which is acting as a millstone around the neck of risky assets and most investors will stay away until they see a clearer direction on rates,” said Cliff Tan, east Asian head of global markets at Bank of Tokyo-Mitsubishi UFJ in Hong Kong. Data showed on Tuesday that China’s exports fell by a more-than-expected 6.8% in November from a year earlier, their fifth straight month of decline. Imports fell 8.7%, which was not as much as expected but enough to signal continued weak demand from the world’s second biggest economy.

Analysts were unsure if the numbers signalled a possible improvement in Chinese domestic demand, which has been a key factor in driving world commodity prices to multi-year lows. “The big picture hasn’t really changed that much. The US is doing okay, but the problems with emerging markets are really quite big,” said Kevin Lai, chief economist Asia Ex-Japan at Daiwa Capital Markets in Hong Kong. “Imports have been slumping for more than a year now, so the year-on-year figures are benefiting from a much lower base, which statistically we should expect. But I’m not so sure the number today reflects a real fundamental change for the better in import demand.”

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“While some market watchers have pointed the blame squarely on China for this year’s global trade slowdown, the latest data highlighted weak demand globally..”

China November Exports Down -6.8%, Imports -8.7% (Reuters)

China’s trade performance remained weak in November, casting doubt on hopes that the world’s second-largest economy would level off in the fourth quarter and spelling more pain for its major trading partners. The sluggish readings will reinforce expectations of economists and investors that the government will have to do more to stimulate domestic consumption in coming months given persistent weakness in global demand. Exports fell a worse-than-expected 6.8% from a year earlier, their fifth straight month of decline, while imports tumbled 8.7%, their 13th drop in a row. Imports did not slide as much as some economists had feared, but analysts were unsure if that signaled a possible improvement in soft Chinese domestic demand, which has been a key factor in driving world commodity prices to multi-year lows.

“The big picture hasn’t really changed that much. The U.S. is doing okay, but the problems with emerging markets are really quite big,” said Kevin Lai, chief economist Asia Ex-Japan at Daiwa Capital Markets in Hong Kong. “Imports have been slumping for more than a year now, so the year-on-year figures are benefiting from a much lower base, which statistically we should expect. But I’m not so sure the number today reflects a real fundamental change for the better in import demand.” To be sure, China imported more copper, iron ore, crude oil, coal and soybeans in November by volume than in the preceding month, preliminary data from the General Administration of Customs showed on Tuesday. But analysts said opportunistic Chinese buyers may have merely been taking advantage of a fresh slump in commodity prices, and will likely continue to export large quantities of finished products such as steel and diesel fuel because demand is not strong enough at home.

By value, China’s imports from the United States, the European Union and Japan all dropped, and in the case of Australia by a double-digit rate. While some market watchers have pointed the blame squarely on China for this year’s global trade slowdown, the latest data highlighted weak demand globally, with China’s shipments to every major destination, except South Korea, declining year-on-year. “China’s trade performance remains weak, as the trade value is likely to drop 8% for the whole year of 2015, versus an increase of 3.7% in 2014, clearly reflecting a de-leveraging process in the manufacturing sector that has dragged down demand for commodities,” Zhou Hao at Commerzbank in Singapore said.

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Miners hurt.

Anglo American Scraps Dividend As Shares Fall 71% So Far This Year (BBG)

Anglo American scrapped its dividend for the first time since 2009, announced further spending reductions and plans to consolidate its business units to three from six as it accelerated a fight against a collapse in commodities. The company will suspend its payouts for the second half of 2015 and for 2016, it said in a statement Tuesday. Anglo is abandoning its practice of steadily increasing the dividend in favor of a system that allows the payment to rise and fall with the company’s profits, known as a dividend payout ratio. The producer reduced spending forecasts for 2015 to 2017 by $2.9 billion and increased the amount it plans to raise from asset sales to $4 billion from $3 billion, with its phosphates and niobium businesses confirmed for disposal, it said.

Anglo expects impairments of $3.7 billion to $4.7 billion because of weak prices and asset closures. “We will be consolidating our six business unit structures into three –De Beers, industrial metals and bulk commodities – providing further opportunity to reduce the cost burden on our business,” CEO Mark Cutifani said in the statement. Cutifani is seeking to turn around the company’s fortunes in the face of metal prices at the lowest in at least six years. It has sold assets and cut jobs to preserve cash as the shares tumbled 70% this year, the second-biggest decline in the U.K.’s FTSE 100 Index. The last time Anglo cut its dividend, during the depths of the global financial crisis in 2009, the shares plunged 17% in one day.

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Downgrades for all.

OPEC Forces Re-Rating Of Oil Majors (BBG)

For months, many executives at the world’s largest oil producers have been talking about prices staying lower for longer. After OPEC’s decision to keep pumping full pelt that could become lower for even longer. Even before Friday, the prolonged slump in crude had forced analysts to cut their earnings-per-share estimates for the world’s 10 largest integrated oil companies in recent weeks. With oil dropping to the lowest in more than six years after the OPEC meeting on Friday, further downgrades are probably on the way. “A potential OPEC cut was the last source of hope for the bulls near term,” Aneek Haq with Exane BNP Paribas said Dec. 4.

“The oil majors have already started to underperform the market over the past few weeks, but this now coupled with earnings downgrades and valuations that imply $70 a barrel should put further pressure on share prices.” Mean adjusted 2016 EPS estimates for Exxon Mobil and Shell have been cut by more than 8 cents over the past month, according to data compiled by Bloomberg. EPS projections for Total, Europe’s second-biggest oil company, and Repsol are lower for 2016 than those for this year. Those estimates assume a much higher price than the $41.06 a barrel that Brent traded at as of 8:19 a.m. in London on Tuesday. Oswald Clint at Sanford C. Bernstein has based his EPS estimates for oil majors at a Brent price of $60 a barrel. Alexandre Andlauer at AlphaValue SAS has assumed a price of $63.

“The re-rating of the oil companies downwards will accelerate now,” Andlauer said Dec. 7 by phone from Paris. “Valuations will have to drop.” Shell’s B shares, the most actively traded, dropped 4.6% on Monday, the most in more than three months. BP dropped 3.4%, while the benchmark FTSE 100 Index declined 0.2%. “The lower-for-longer scenario that oil companies are predicting is going to become lower-for-even-longer,” said Philipp Chladek, a London-based oil sector analyst with Bloomberg Intelligence. “We will see some revisions in EPS forecasts in the near future because most forecasts are assuming an oil price recovery during 2016. Many will be taking that out now.”

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“..we have to come to terms with paying the bill..”

Peter Schiff: ‘The Whole Economy Has Imploded; Collapse Is Coming’ (SHTF)

Peter Schiff continues to argue that the economy is on a downhill trajectory and this time there’ll be no stopping it. All of the emergency measures implemented by the government following the Crash of 2008 were merely temporary stop-gaps. The light at the end of the tunnel being touted by officials as recovery, Schiff has famously said, is actually an oncoming train. And if the forecast he laid out in his latest interview is as accurate as those he shared in 2007, then the the train is about to derail.

We’re broke. We’re basically living off of debt. We’ve had a huge transformation of the American economy. Look at all the Americans now on food stamps, on disability, on unemployment. The whole economy has imploded… the bottom hasn’t dropped out yet because we’re able to go deeper into debt. But the collapse is coming.

Fundamentally, America is worse off now than it was pre-crash. With the national debt rising unabated and money being printed out of thin air without reprieve, it is only a matter of time. Schiff notes that while government statistics claim Americans are saving again and consumers seem to be spending, the average Joe Sixpack actually has a negative net worth. But most people don’t even realize what’s happening:

I read a statistic… The average American has less than a $5000 net worth… it’s pathetic… we’re basically broke… but in fact it’s much less… If you actually took the national debt and broke it down per capita, the average American has a negative net worth because the government has borrowed in his name more than the average American is able to save.

What’s happening is pretty much what we would anticipate. I don’t see from the data any real economic recovery, certainly not in the United States. We’re spending more money, but it’s not because we’re generating more wealth. We’re generating more debt. We’re using that borrowed money to consume and so temporarily it feels that we’re wealthier because we get to spend all that money… but we have to come to terms with paying the bill. The bills are going to come due. Right now interest rates are being kept at zero which makes it possible to service the debt even though it’s impossible to repay it… at least we can service it. But once interest rates go up then we can’t even service it let alone repay it. And then the party is going to come to an end.

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Its own data makes the IMF’s words look silly.

We Are Shrinking! The Neglected Drop In Gross Planet Product (VoxEU)

The analysis and forecasts of the IMF are well covered in the press. This column deals with a less noted development in the data provided by the IMF, namely the nominal decrease in Gross Planet Product. Since the IMF forecast both positive growth and positive inflation, the nominal shrinkage of GPP puts into question the consistency of the IMF World Economic Outlook data and forecasts. Presenting the October 2015 IMF World Economic Outlook, Maurice Obstfeld (2015) identified the fall of commodity prices as one of the powerful forces shaping the outlook for the world economy.

The strength of this force, however, is underestimated by the official forecasts in the IMF’s flagship publication. As illustrated in Figure 1 the IMF world economic outlook database reports a reduction of Gross Planet Product (GPP) for the year 2015 by -$3,8 trillion (-4.9%). A nominal reduction of GPP of this size has occurred only once since 1980 (the starting year of the IMF database), namely at the start of the Great Recession when GPP contracted by -5.3%. Table 1 illustrates that all previous contractions of nominal GPP are associated with major crises in the world economy.

Figure 1. Gross Planet Product at current prices (trillions of dollars, 1980 – 2015)

Source: IMF World Economic Outlook Database, October 2015.

Table 1. Years with nominal contractions of GPP (1980-2015)

Source: IMF World Economic Outlook Database, October 2015.

The reduction at current prices is especially noteworthy in view of the official IMF forecasts that set real economic growth at 3.1% and planetary inflation at 3.3%. Taken at face value these forecasts imply a growth rate of GPP of + 6.5 %. By implication the IMF is either too optimistic about real growth, too optimistic about the avoidance of deflation or too optimistic about both these factors.

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Close factories?!

Beijing Issues First-Ever Red Alert for Hazardous Smog (WSJ)

Beijing’s residents have long wondered: Just how bad do the capital’s skies have to get before the government issues an emergency red alert? The serially ‘airpocalypse’-stricken city has in the past resisted issuing such an alert, which requires that authorities implement a series of smog-combating measures. Among other steps, under a red alert half of the city’s cars are ordered off the streets, the government recommends that schools be shuttered and outdoor construction must come to a halt. Such alerts are — in theory at least — to be issued when authorities forecast an air-quality index of above 300 for at least three consecutive days. China’s air-quality index has a maximum reading of 500, or what the government calls “severely polluted.”

On Monday, Beijing issued a red alert for the first time. The alert goes into effect Tuesday morning, with its environmental protection bureau saying that bad air was expected to last until Thursday, Dec. 10. According to an analysis released earlier this year, air pollution could prematurely kill more than 250,000 Chinese residents in major cities. Greenpeace campaigner Dong Liansai said that greater scrutiny from authorities, as well as public pressure, had likely helped spur Monday’s decision. “The cost of issuing a red alert is really high for the city, so officials weren’t willing to do it so easily,” Mr. Dong said. “But everyone has been talking about the issue lately and wondering why Beijing hasn’t issued it before, even during the really bad spells of smog.”

Last week, high concentrations of smog in Beijing at times made it seem like an eerie, artificial dusk had descended on the nation’s capital, with pollution across the city breaching the government’s official air quality index. Photos of the unnatural pall that swallowed up buildings across town went viral on social media, with even normally more restrained state media outlets such as national broadcaster China Central Television giving wide coverage to the spectacle.

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“The Socialist Party was reduced to 15pc of what was once its core constituency, and can no longer make any plausible claim to be the voice of the French working class.”

Euro Regime Is Working Like A Charm For France’s Marine Le Pen (AEP)

France is trapped in an economic slump that is hauntingly reminiscent of the inter-war years from 1929 to 1936 under the Gold Standard. Each tentative rebound proves to be a false dawn. The unemployment rate has continued to climb since the Lehman crisis, in stark contrast to Germany, Britain and the US. It jumped by 42,000 in October to an 18-year high of 10.6pc. The delayed political fuse has finally detonated. Marine Le Pen’s Front National – these days a blend of nationalist-Right and welfare-Left – swept half the communes of France in the first round of regional elections over the weekend. The Front won 55pc of voters classified as workers (ouvriers). The Socialist Party was reduced to 15pc of what was once its core constituency, and can no longer make any plausible claim to be the voice of the French working class.

“Nothing has been done about unemployment despite all the promises. Nobody has been listening to the distress,” said Professor Brigitte Granville, from Queen Mary University of London. Mrs Le Pen has filled the vacuum. She has abandoned the free-market views of her father, party founder Jean-Marie Le Pen, who once espoused “Reaganomics” and vowed to shrink the state. She is eating into the Socialist base from the Left, vowing to defend the French welfare model against the “neo-liberals” and to defeat the “dictatorship of the markets”. She calls globalisation the “law of the jungle” that allows multinationals to play off cheap labour in China against French labour Her plans include a national industrial strategy that swats aside EU competition law, as well as a cut in the retirement age to 60, and a “realignment of taxation against capital and in favour of workers”.

Pierre Gattaz, head of the employers federation MEDEF, calls it a radical agenda stolen from the Left that would destroy France. Yet it clearly makes a heady brew for voters when mixed with nationalist identity politics. Mrs Le Pen once told The Telegraph that her first act in the Elysee Palace would be to order the treasury to draw up plans for a restoration of the French franc. “The euro ceases to exist the moment that France leaves. What are they going to do about it, send in tanks?” she said. Professor Jacques Sapir, from l’École des hautes études (EHESS) in Paris, says the Front National made its biggest strides in regions that have suffered the full force of de-industrialisation and the “globalisation shock”. Many of these areas are in the centre of the country, or in Burgundy and Lorraine, or parts of Normandy and Picardy, that are not key battlegrounds of France’s immigration and culture wars.

Prof Sapir said French industry is slowly being hollowed out. It is a drip-drip effect of closures – typically hitting 150 or 200 workers at a time – that slips below the radar screen of the national press. “These are the regions of rural misery,” he said. Prof Granville said there is no doubt that France’s problems are home-grown. It is entangled in a thicket of unworkable laws. There are 383 taxes, of which 50 cost more to enforce than they yield. The labour code is more than 3,000 pages, acting as a gale-force headwind against job creation. Yet monetary union has played its part, too. The eurozone’s twin policies of fiscal and monetary contraction from 2011 to 2014 aborted the recovery and led to a deep recession that went on long enough to cause lasting economic damage through labour “hysteresis”.

Prof Granville said there is another twist. France and Germany moved in radically different directions after the launch of the euro. While Paris introduced the 35-hour working week, Berlin pushed through the Hartz IV wage squeeze and an internal devaluation within EMU – a beggar-thy-neighbour strategy. The result is that France has lost 20pc in labour cost competitiveness. It had a current account surplus of 2.5pc of GDP at the start of the last decade. It is now bleeding national wealth slowly – as is Britain, for different reasons – with a cyclically-adjusted deficit of 1.5pc. She compared it to the slow torture France endured in the early 1930s under the Gold Standard, stoically accepting the “500 deflation decrees” of premier Pierre Laval. The dam broke in 1936 with the election of spurned outsiders, then the Front Populaire.

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Reality bites.

EU Is In Danger And Can Be Reversed: European Parliament’s Schulz (Reuters)

The European Union is at risk of falling apart and supporters must fight to keep it, the head of the European Parliament said in a German newspaper interview. Martin Schulz told Die Welt’s Tuesday edition that the EU was in danger and that there were forces trying to pull it apart. He was responding to a recent warning from Jean Asselborn, Luxembourg’s foreign affairs and migration minister, that the EU might break apart, “No one can say whether the EU will still exist in this form in 10 years’ time. If we want that then we need to fight very hard for it,” Schulz said. He was not specific about what was threatening the EU, but much of the interview was focused on the migrant crisis, which has stretched Europe’s unity and tolerance during the year.

Schulz said that the EU was not without alternatives and “could of course be reversed”, adding that other options including a Europe in which nationalism, borders and walls were prevalent. “That would be disastrous because that kind of Europe has repeatedly led our continent into catastrophe,” he added. Divisions in the EU over the migrant crisis are rife, notably between German Chancellor Angela Merkel, who has led efforts to take in more Syrians, and leaders in the formerly Communist East who oppose EU schemes to make them take in some asylum seekers. And Europe’s passport-free Schengen zone looks under threat too, with some countries re-introducing border controls.

Last Thursday Greece asked for European help to secure its borders and care for crowds of migrants, defusing threats from EU allies to bar it from Schengen if it failed to get control. Schulz said no country could single-handedly tackle challenges like migration, adding that this was only possible together as the EU.

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And now debt relief is no longer important?!

Tsipras Says IMF Behavior In Greek Crisis Not Constructive (Reuters)

Greek Prime Minister Alexis Tsipras said on Monday the IMF was not playing a constructive role in Greece’s bailout and should make up its mind whether it wants to stay in the program. He accused the Washington-based global lender of making unrealistic demands both on Greece for tough reforms and on its euro zone partners for debt relief beyond what they can accept. “This is a stance that cannot be called constructive in this process,” the leftist leader said in a television interview. “The Fund must decide if it wants to compromise, if it will stay in the program,” Tsipras said. “If it does not want that compromise, it should say so publicly.” The IMF has taken the hardest line in demanding pension reform with benefit cuts, and a far-reaching liberalization of Greece’s labor market.

It has also said European governments need to grant Athens debt relief on a scale they have so far been unwilling to consider – including a possible 30-year debt service holiday – to make the public debt mountain sustainable. The IMF has not disbursed any aid to Greece since August 2014 under a previous program due to expire next March. Athens defaulted on an IMF loan repayment in June but has since made up the arrears after receiving a third bailout from euro zone creditors. An IMF spokesman said last week the Fund would decide whether to co-finance the new bailout after the first review of compliance with the program, expected early next year, and in light of how much debt relief Greece receives.

Tsipras acknowledged that it was important for creditor countries such as Germany and Finland for the IMF to stay in the program to ensure discipline. But he said Europe had the expertise to manage such programs on its own. The Fund was not being helpful by making reform demands that Greece’s political system and society could not bear, “and by going to the (EU) partners demanding solutions and proposals on debt sustainability which they know our partners cannot accept”.

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“Rather than pushing to write off some of the face value of the debt – a “haircut,” in bond market jargon – Greece’s government is likely to accept delayed repayment of principal..”

Greece’s Five Ticking Time Bombs (BBG)

Remember the Greek crisis? Last time we checked in, a newly mandated Greek government reached an agreement with creditors and the country was on its way to recovery, or at least stability. Well, not exactly. Several days in Athens spent talking with investors, business leaders and government officials last week made it clear to me that the chances of a fatal misstep remain high. While Prime Minister Alexis Tsipras got approval for his 2016 budget – narrowly, after 153 lawmakers backed the budget, with 145 parliamentarians voting against and two abstentions – the challenges ahead make his previous Houdini acts (especially ignoring the result of his own referendum) look easy. The budget calls for selling state-owned assets, reforming public-sector wages, dealing with bad loans at the nation’s banks and fixing a broken pensions system. Any one of these could prove unpalatable to the Greek parliament and trigger a renewed crisis. Trying to pin officials down on precise dates for implementing these reforms is an exercise in futility. So here are five ticking time bombs that lie ahead for Greece in the coming weeks.

1 ) NON-PERFORMING LOANS – The percentage of Greek loans that aren’t being repaid, including mortgages, consumer debt and company loans, is more than 48%, according to an October report by the European Central Bank. No wonder Greek bank stocks have lost 95% of their value this year.

2) PENSION REFORM – Everyone agrees that with Greek unemployment averaging more than 25% this year, the current pensions system is unsustainable. There aren’t enough people paying in, and a jobless rate that’s been above 20% for more than four years risks creating an underclass of people who’ve never contributed and will never qualify. Many households are currently dependent on the pension income of a single family member to stay financially afloat.

3) PRIVATIZATIONS – In July, the government promised a “significantly scaled-up privatization program” to generate 50 billion euros ($54 billion) of proceeds. Thus far, there’s little evidence of progress, although officials insist that agreements on selling ports and local airports are on the verge of completion.

4) CAPITAL CONTROLS AND THE BANKS – An American I met in Athens last week was joking about how many Greek bank shares he could buy for the price of a New York subway ticket. But if you’re a Greek taxpayer, it’s not funny; the money the government put into the banks has effectively disappeared. Shares of Piraeus Bank, for example, trade at 65 euro cents; a year ago, they were worth 134 euros apiece. Its market capitalization is 39 million euros, down from more than 8 billion euros.

5) DEBT RELIEF – The good news is that Greek officials are being pragmatic about what’s achievable on the debt-relief front. The not-so-good news is they’ll still want to come back from Brussels with something they can sell to their voters. Rather than pushing to write off some of the face value of the debt – a “haircut,” in bond market jargon – Greece’s government is likely to accept delayed repayment of principal, although it also wants even lower interest rates.

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Too much time on their hands.

New Zealand Named The World’s Most Ignorant Developed Country (NZH)

A new report shows New Zealanders have the wrong idea about the world around them. The Perils of Perception survey shows New Zealand is the most ignorant developed country, with most people misunderstanding the facts that make up our country’s society. The Ipsos-MORI poll showed inequality was one area where New Zealanders got it wrong. Kiwis hugely overestimated the proportion of wealth owned by the wealthiest 1% in the country. The average response on the percentage of wealth controlled by the wealthiest 1% in New Zealand was 50%. In reality, the wealthiest New Zealanders hold 18% of the country’s wealth. Most of the other countries believed the wealthiest 1% should own a smaller proportion of the country’s wealth than they currently do, but New Zealand responded the opposite.

In contrast, when asked what percentage of wealth the wealthiest New Zealanders should hold, Kiwis answered 27%, which is nearly 10 percentage points more than what they control currently. New Zealanders underestimated the rate of obesity or overweight people in the country, guessing 47% of the population was obese or overweight, when in fact 66% fall into those categories. Religion was another area where New Zealanders were off the mark. Asked how many people in 100 they believed did not affiliate with any religion, New Zealanders responded 49 people. In fact, 37 out of 100 people do not affiliate with any religion. New Zealanders overestimated the number of migrants living in the country, saying they believed 37% of the population are migrants. This was the third highest percentage answered to the question by any country. The correct answer was 25%.

The most ignorant country was Mexico, followed by India and Brazil taking second and third place respectively. New Zealand was the most ignorant developed country in fifth place overall.

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Sanity. The dignity of work. What should be obvious and normal has become left field. But we can still do it. Do the obvious. Give people pay for doing what they can see has an effect in their community. It’s not that hard.

Albuquerque Revises Approach Toward Homeless, Offers Them Jobs (NY Times)

Will Cole steered an old Dodge van along a highway access road one recent Tuesday, searching for panhandlers willing to work. Four men waved him away dismissively at his first attempt, turning their backs on the van as it rolled past. By the third stop, though, nine men and one woman had hopped inside. They were homeless. But suddenly, as part of a novel attempt to deal with rising poverty and destitution here, they were city workers for the day. Donning gloves and fluorescent vests, they raked a piece of messy ground by some railroad tracks on the edge of downtown, cleaning up residues of lives that may well have been their own: a soiled burgundy blanket, two Bibles soaked by melting snow, a trail of crushed cans of Hurricane High Gravity Malt Liquor.

For participants, the toil paid off decently: $9 an hour and a lunch of sandwiches, chips and granola bars, enjoyed in a park. For the city, it represented a policy shift toward compassion and utility. “It’s about the dignity of work, which is kind of a hard thing to put a metric on, or a matrix,” Mayor Richard J. Berry said. “If we can get your confidence up a little, get a few dollars in your pocket, get you stabilized to the point where you want to reach out for services, whether the mental health services or substance abuse services — that’s the upward spiral that I’m looking for.”

After a schizophrenic homeless man, James Boyd, was fatally shot by the police last year — prompting protests and calls for reform of the Albuquerque Police Department, a force of 1,000 whose rate of deadly shootings was eight times that of New York’s — this city has sought to recalibrate its approach toward homelessness. While other cities, including New York, Baltimore, Los Angeles and Washington, have tried to clear out homeless camps or move the homeless further into the shadows, this city has decided to move away from the punitive approach that had defined strategies in the past.

It is, in part, the result of an agreement with the Justice Department, which released a blistering review of the use of force by police officers over the years, citing a pattern of violence and mistreatment that disproportionately affected mentally ill people, including many who were living on the streets. For example, training in crisis intervention has become a requirement for police cadets, who must try to find their way out of staged real-life scenarios — encounters with distressed drug addicts, rape victims or suicidal war veterans — without pulling out their guns.

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“The proposal has been prepared in great haste,” the Council wrote, adding that meant the draft text had been poorly prepared. “This is particularly serious because the proposal is similar to martial law.”

Swedish Legal Watchdog Rejects Proposal For Border Controls (Reuters)

The top legal watchdog in Sweden, a major destination for migrants flocking to Europe this year, on Monday rejected a government request for the right to impose tighter border controls and shut a bridge to Denmark. The Swedish Council on Legislation said the centre-left government’s plan resembled martial law and would violate refugees’ right to seek asylum in Sweden. Stockholm imposed temporary border controls in early November, the first in over two decades and a turn-around in its open-doors policy. The country has welcomed almost 160,000 refugees and migrants this year, more per capita than any other European Union country. Its latest step would fast-track a bill giving it the legal right to tighten the border controls and to close down the bridge between Sweden and Denmark if deemed necessary.

“The proposal has been prepared in great haste,” the Council wrote, adding that meant the draft text had been poorly prepared. “This is particularly serious because the proposal is similar to martial law.” The council has no legal mandate to disqualify proposed legislation but it is unusual for Swedish lawmakers to disregard its opinion. However, in a comment to local news agency TT, a government spokesman said it had no plans to withdraw the proposal. “The Council on Legislation makes a different assessment than the government regarding seriousness of the current refugee situation,” said Erik Brom Anderson, State Secretary to Infrastructure Minister Anna Johansson. “The government’s assessment has not changed.”

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Good move.

Escapism Magazine Devotes Whole Issue To Reality Of Refugee Crisis (Guardian)

Escapism magazine, which is distributed to commuters in central London, usually tells readers where they can enjoy exotic holiday destinations, the world’s best beaches and the coolest hotels. But the latest issue of the travel magazine is very different indeed. All 84 pages are dedicated to explaining the refugee crisis. And, in what must rank as a first for a giveaway title, it is entirely free from adverts. It highlights the various refugee crises across the world through a series of graphics, carries features written by refugees about their experiences, and there is a moving report from the Greek island of Lesbos where so many of the refugees from Syria and Afghanistan are currently living in camps.

Escapism’s associate editor, Hannah Summers, says: “For our readers, escapism has been a way to get away with family and friends, to relax on holiday. But, for many, it takes on a much more literal meaning – an escape from poverty and war.” In the magazine, Summers writes: “When I became a travel writer I never expected to cover an issue like this, but I’m grateful for an opportunity that has opened my eyes to an unjust and painful reality that’s also full of courage, humanity and, ultimately, hope. “This crisis affects us all, and we all have a part to play in how it unfolds. There are many ways you can get involved, but the most important thing is that you do get involved. Please, take action today.” A final page calls on readers to join “a kind and big-hearted group of volunteers” to help the refugees in the camp in Calais. For those who do not journey into the central zones of the London tube, much of the magazine’s content can be accessed on the magazine’s website.

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Nov 302015
 
 November 30, 2015  Posted by at 10:26 am Finance Tagged with: , , , , , , , , , , , ,  


John Vachon Trucks loaded with mattresses at San Angelo, Texas Nov 1939

COP-21 Climate Deal In Paris Spells End Of The Fossil Era (AEP)
Oil’s Big Players Line Up for $30 Billion of Projects in Iran (Bloomberg)
India Opposes Deal To Phase Out Fossil Fuels By 2100 (Reuters)
Beijing Smog Levels So High They Move ‘Beyond Index’ (Bloomberg)
World’s Biggest Pension Fund Loses $64 Billion Amid Equity Rout (Bloomberg)
Iron Ore Falls Below $40 A Metric Ton For The First Time (Bloomberg)
Fed To Take Up ‘Too Big To Fail’ Emergency Lending Curb (Reuters)
Did the Yuan Really Pass the IMF Currency Test? You’ll Know Soon (Bloomberg)
IMF Move Would Pressure China on Management of Yuan (WSJ)
IMF’s Yuan Inclusion Signals Less Risk Taking In China (Reuters)
VW Top Execs Knew Fuel Usage In Some Cars Was Too High A Year Ago (Reuters)
BlackRock Spreads its Tentacles in Brussels (Don Quijones)
The Silk Road Affair: Power, Pop and a Bunch of Billionaires (Bloomberg)
The Strange Case Of Julian Assange (Crikey)
Saudi Arabia’s 2015 Beheadings The Most In 20 Years (Al Jazeera)
EU Split Over Refugee Deal As Germany Leads Breakaway Coalition (Guardian)
European Union Reaches Deal With Turkey on Migration (WSJ)
Tsipras Takes On Turkey’s Davutoglu On Twitter (AP)
As the World Turns Away, Refugees are Still Drowning in the Mediterranean (HRW)

Ambroses say the darndest things. This Ambrose looks through rosy glasses. Probably drinks from them too. “..both countries have come to the realisation that it is possible to decarbonise without hurting economic growth..” Oh, for Christ sake.

COP-21 Climate Deal In Paris Spells End Of The Fossil Era (AEP)

A far-reaching deal on climate change in Paris over coming days promises to unleash a $30 trillion blitz of investment on new technology and renewable energy by 2040, creating vast riches for those in the vanguard and potentially lifting the global economy out of its slow-growth trap. Economists at Barclays estimate that greenhouse gas pledges made by the US, the EU, China, India, and others for the COP-21 climate summit amount to an epic change in the allocation of capital and resources, with financial winners and losers to match. They said the fossil fuel industry of coal, gas, andoil could forfeit $34 trillion in revenues over the next quarter century – a quarter of their income – if the Paris accord is followed by a series of tougher reviews every five years to force down the trajectory of CO2 emissions, as proposed by the United Nations and French officials hosting the talks.

By then crude consumption would fall to 72m barrels a day – half OPEC projections – and demand would be in precipitous decline. Most fossil companies would face run-off unless they could reinvent themselves as 21st Century post-carbon leaders, as Shell, Total, and Statoil are already doing. The agreed UN goal is to cap the rise in global temperatures to 2 degrees centigrade above pre-industrial levels by 2100, deemed the safe limit if we are to pass on a world that is more or less recognisable. Climate negotiators say there will have to be drastic “decarbonisation” to bring this in sight, with negative net emissions by 2070 or soon after. This means that CO2 will have to be plucked from the air and buried, or absorbed by reforestation.

Such a scenario would imply the near extinction of the coal industry unless there is a big push for carbon capture and storage. It also implies a near total switch to electric cars, rendering the internal combustion engine obsolete. The Bank of England and the G20’s Financial Stability Board aim to bring about a “soft landing” that protects investors and gives the fossil industry time to adapt by forcing it to confront the issue head on. Barclays said ,$21.5 trillion of investment in energy efficiency will be needed by 2040 under the current pledges, which cover 155 countries and 94pc of the global economy. It expects a further $8.5 trillion of spending on solar, wind, hydro, energy storage, and nuclear power. Those best-placed to profit in Europe are: Denmark’s wind group Vestas; Schneider and ABB for motors and transmission; Legrand for low voltage equipment; Alstom and Siemens for rail efficiency; Philips, and Osram for LEDs and lighting.

But this is a minimalist scenario. While the Paris commitments suggest a watershed moment, they do not go far enough to meet the targets set by the Intergovernmental Panel on Climate Change (IPPC). The planet has already used up two-thirds of the allowable “carbon budget” of 2,900 gigatonnes (GT), and will have used up three quarters of the remaining 1,000 GT by 2030. Barclays advised clients to prepare for a more radical outcome, entailing almost $45 trillion of spending on different forms of decarbonisation. “The fact that COP-21 in itself is clearly not going to put the world on a 2 degree track does not mean that fossil-fuel companies can simply carry on with business-as-usual. We think they should be stress-testing their business models against a significant tightening of global climate policy over the next two decades,” it said.

[..] Mr Jacobs said a deal in Paris is highly likely. “You can never rule out a break-down. These meetings always go to the wire. But we have gone past the turning point in the US and China, and both countries have come to the realisation that it is possible to decarbonise without hurting economic growth,” he said. It will not be a legally-binding treaty, but it is expected to have the same effect as each country transposes the targets into its own law. In the US it will be enforced through the legal mechanism of the Clean Air Act, anchored on earlier accords, without need for Senate ratification. The sums of money are colossal. Macro-economists say this is just what is needed to soak up the global savings glut and rescue the world from its 1930s liquidity trap. There might even be a boom.

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End of the fossil era, Ambrose? Not everyone agrees.

Oil’s Big Players Line Up for $30 Billion of Projects in Iran (Bloomberg)

Total, Royal Dutch Shell and Lukoil are among international companies that have selected oil and natural gas deposits to develop in Iran as the holder of the world’s fourth-largest crude reserves presents $30 billion worth of projects to investors. Total is one of the companies that have been in the forefront of discussions and Eni is also looking to invest, Oil Minister Bijan Namdar Zanganeh said. Shell, Total and Lukoil all specified fields they would be interested in developing in Iran, Ali Kardor, deputy director of investment and financing at National Iranian Oil Co. said in an interview in Tehran. “Many companies are interested. Europeans are interested, Asian companies are interested,” Zanganeh told reporters at a conference in Tehran on Saturday. “Total is interested, Eni is interested.”

Iran is pitching 70 oil and natural gas projects valued at $30 billion to foreign investors at a two-day conference in Tehran as the Persian Gulf country prepares for the end of sanctions that have stifled its energy production. All banking and economic sanctions will be lifted by the first week of January,” Amir Hossein Zamaninia, deputy oil minister for international and commerce affairs, said at the event. “We are interested to come back to Iran when the sanctions are lifted and if the contracts are interesting,” Stephane Michel, Total’s head of exploration and production in the Middle East said at the conference. “We have worked in this country for a long time, so we know specific fields on which we’ve worked.”

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Eh, Ambrose? “The entire prosperity of the world has been built on cheap energy. And suddenly we are being forced into higher cost energy. That’s grossly unfair..”

India Opposes Deal To Phase Out Fossil Fuels By 2100 (Reuters)

India would reject a deal to combat climate change that includes a pledge for the world to wean itself off fossil fuels this century, a senior official said, underlying the difficulties countries face in agreeing how to slow global warming. Almost 200 nations will meet in the French capital on Nov. 30 to try and seal a deal to prevent the planet from warming more than the 2 degrees Celsius that scientists say is vital if the world is to avoid the most devastating effects of climate change. To keep warming in check, some countries want the Paris agreement to include a commitment to decarbonize – to reduce and ultimately phase out the burning of fossil fuels like coal, oil and gas that is blamed for climate change – this century.

India, the world’s third largest carbon emitter, is dependent on coal for most of its energy needs, and despite a pledge to expand solar and wind power has said its economy is too small and its people too poor to end use of the fossil fuel anytime soon. “It’s problematic for us to make that commitment at this point in time. It’s certainly a stumbling block (to a deal),” Ajay Mathur, a senior member of India’s negotiating team for Paris, told Reuters in an interview this week. “The entire prosperity of the world has been built on cheap energy. And suddenly we are being forced into higher cost energy. That’s grossly unfair,” he said. Mathur said India, whose position at climate talks is seen by some in the West as intransigent, was committed to the 2 degrees ceiling as a long-term goal and was confident a deal would be reached.

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If PM2.5 is the threat, what good is staying indoors? You’d have to live in a bunker.

Beijing Smog Levels So High They Move ‘Beyond Index’ (Bloomberg)

Smog levels spiked in Beijing on Monday, highlighting the environmental challenges facing China as President Xi Jinping arrives in Paris for global climate talks. The concentration of PM2.5, fine particulates that pose the greatest risk to human health, went “beyond index” in the afternoon, according to a U.S. Embassy monitor. The PM2.5 level was 678 micrograms per cubic meter near Tiananmen Square, the Beijing government said. The World Health Organization recommends average 24-hour exposure to PMI of 25 or below. Public outrage over air pollution has been a catalyst for China’s transformation into a driving force for a breakthrough deal in Paris. Leaders including U.S. President Barack Obama and Chinese President Xi Jinping are scheduled to being discussions in the French capital Monday.

Beijing on Sunday raised its air pollution alert to orange, the second-highest level in its four-tier system, for the first time in 13 months. The heavy pollution in Beijing won’t clear up until Dec. 2, according to the environment bureau. The city will ask some factories to suspend or limit production and construction sites to stop transporting materials and waste while the orange alert is active, it said. Under the orange alert, people are advised to cut down on outdoor activity, while the elderly and people with heart and lung ailments should stay inside. Severe pollution was also reported in at least 17 other cities around Beijing, Tianjin, Hebei and Shandong, according to the Ministry of Environmental Protection. Shanghai’s air was also heavily polluted, the second worst level on a six-grade scale, with the PM2.5 reading at 170.4 micrograms per cubic meter as of 12 p.m..

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I warned this would happen the moment Abe pushed pension funds to prop up stock markets: they lose big. Japanese who read this will save even more, further crippling Abenomics.

World’s Biggest Pension Fund Loses $64 Billion Amid Equity Rout (Bloomberg)

The world’s biggest pension fund posted its worst quarterly loss since at least 2008 after a global stock rout in August and September wiped $64 billion off the Japanese asset manager’s investments. The 135.1 trillion yen ($1.1 trillion) Government Pension Investment Fund lost 5.6% last quarter as the value of its holdings declined by 7.9 trillion yen, according to documents released Monday in Tokyo. That’s the biggest percentage drop in comparable data starting from April 2008. The fund lost 8 trillion yen on its domestic and foreign equities and 241 billion yen on overseas debt, while Japanese bonds handed GPIF a 302 billion yen gain.

The loss was GPIF’s first since doubling its allocation to stocks and reducing debt last October, and highlights the risk of sharp short-term losses that come with the fund’s more aggressive investment style. Fund executives have argued that holding more shares and foreign assets is a better approach as Prime Minister Shinzo Abe seeks to spur inflation that would erode the purchasing power of bonds. [..] GPIF had 39% of its assets in Japanese debt at Sept. 30, and 21% in the nation’s equities, according to the statement. That compares with 38% and 23% three months earlier, respectively. The fund had 22% of its investments in foreign stocks at the end of September, and 14% in overseas bonds.

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Overleveraged overcapacity will disappear no matter how powerful the interests.

Iron Ore Falls Below $40 A Metric Ton For The First Time (Bloomberg)

Most-active iron ore futures in Singapore sank below $40 a metric ton for the first time on concern that the economic slowdown in China will cut demand as supplies from the largest miners climb. [..] The raw material has been pummeled since the start of 2014 as surging supplies from low-cost producers including BHP Billiton Ltd. and Rio Tinto in Australia and Brazil’s Vale combine with faltering demand in China to spur a glut. Losses in Singapore and Dalian could presage a drop in the benchmark price for spot ore in Qingdao, which will be updated later in the day. The latest sign of new supply came from Australia, with a vessel waiting offshore on Monday to load the first cargo from Gina Rinehart’s Roy Hill mine.

“Supply continues to rise while port inventories are starting to climb, weighing on iron ore prices,” analysts at Maike Futures Co. said in a note on Monday. “The overseas producers are still profitable and are greatly reducing costs.” The top miners are betting that higher output will enable them to cut unit costs and defend market share while smaller rivals shut. Mills in China, contending with overcapacity and depressed margins, will cut steel production by almost 3% next year, according to the China Iron & Steel Association.

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The Fed can elect to ignore the law, and Congress?

Fed To Take Up ‘Too Big To Fail’ Emergency Lending Curb (Reuters)

The Federal Reserve Board will consider on Monday a proposal to curb its emergency lending powers, a change demanded by Congress after the central bank’s controversial decision to aid AIG, Citigroup and others in 2008. A proposed rule, to be considered by the Fed’s Washington-based board in an open meeting, would require that any future emergency lending be only “broad-based” to address larger financial market problems, and not tailored to specific firms. The 2010 Dodd-Frank financial reform law instructed the Fed to curtail emergency loans to individual banks and prohibited it from lending to companies considered insolvent.

While some at the Fed worry the new rules will hamper the central bank’s response in future crises, some politicians have said the proposed regulations are too imprecise, for example in defining insolvency, to prevent the types of deals done in 2008. As the financial crisis intensified in 2008, the Fed invoked its little-used emergency lending power to stave off the failure of AIG and Bear Stearns, and help other “too big to fail” companies including Citigroup and Bank of America. The Fed also enacted a series of more general emergency programs, in all providing $710 billion in loans and guarantees. Those programs were separate from the much larger Fed asset and bond purchases known as quantitative easing.

The loans have been repaid and the guarantees ended, ultimately earning the Fed a net profit of $30 billion, according to a September Congressional Research Service review. However the effort was criticized as overreach, arguably important in limiting the crisis but also not clearly in line with the intended use of the Fed’s emergency authority. The Fed routinely lends money to banks on a short-term basis to smooth the operations of the financial system. That is part of why it exists. But since the 1930s it has had the power to lend more broadly in a crisis.

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Can’t see Lagarde crushing the expectations she herself built up. Unless there’s a dirty game going on behind the curtain.

Did the Yuan Really Pass the IMF Currency Test? You’ll Know Soon (Bloomberg)

IMF Managing Director Christine Lagarde and some two dozen officials on the fund’s executive board will gather Monday at headquarters in Washington for one of the most-anticipated decisions outside of actually approving loans for nations in crisis. The question inside the 12th-floor, oval boardroom: whether to grant China’s yuan status as a reserve currency by adding it to the fund’s Special Drawing Rights basket. The SDR, created in 1969, gives IMF member countries who hold it the right to obtain any of the currencies in the basket – currently the dollar, euro, yen and pound – to meet balance-of-payments needs. While there’s little suspense in the main thrust of the expected approval – Lagarde already announced that fund staff had recommended the yuan be included and that she supported the finding – the IMF is likely to give more details on how it arrived at the decision.

The IMF’s highest decision-making body is its board of governors, a group of mostly finance ministers and central bankers from its 188 member countries. The board of governors has delegated most of its powers to the executive board, made up of 24 executive directors who represent the membership. The meeting Monday has been classified as “restricted,” meaning no support staff will be allowed to attend. The executive board, which meets more than 200 times a year, usually makes decisions based on consensus, rather than formal votes. Mark Sobel, the U.S. executive director who answers to the Obama administration, wields the most power, with a 17% voting stake. Together, the Group of Seven countries control 43% of the vote, making them a formidable bloc. China, which holds a 3.8% voting share, is represented by former People’s Bank of China official Jin Zhongxia.

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Beijing’s hands will be tied.

IMF Move Would Pressure China on Management of Yuan (WSJ)

The IMF is on the verge of labeling China’s yuan a reserve currency. Now Chinese officials will have to prove they can treat it like one. The IMF on Monday is widely expected to say that next year, it will add the yuan to the elite basket of currencies that comprise its lending reserves, a status enjoyed only by the U.S. dollar, the euro, the British pound and the Japanese yen. The inclusion would represent recognition that the yuan’s status is rising along with China’s place in global finance. Now comes the hard part. The inclusion puts new pressure on Beijing to change everything from how it manages the yuan, also known as renminbi, to how it communicates with investors and the world. China’s pledges to loosen its tight grip on the currency’s value and open its financial system will come under new scrutiny.

“We will have to build up confidence in renminbi assets from investors both at home and abroad and at the same time, prevent the financial risks associated with a more global currency,” said Sheng Songcheng, head of the survey and statistics department at the People’s Bank of China, the country’s central bank. “That calls for carrying out various financial reforms in a coordinated way.” Inclusion would also put pressure on the central bank to offer the same degree of clarity and transparency that the U.S. Federal Reserve, the European Central Bank and other vital institutions strive for. That could be difficult: In the past six months alone, the PBOC shocked markets with a surprise currency devaluation, stood mostly silent during a Chinese stock-market rout and confused investors by issuing a new proclamation that turned out to be months old.

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Is the SDR Xi’s Trojan Horse?

IMF’s Yuan Inclusion Signals Less Risk Taking In China (Reuters)

When the IMF agrees on Monday to add the Chinese yuan to its reserves basket in the biggest shake-up in more than three decades, the IMF can afford itself a congratulatory nod. By acknowledging the yuan as a major global currency alongside the dollar, euro, yen, and pound, as is widely expected, IMF members will endorse the efforts of China’s economic reformers and by doing so hope that will spur fresh change in China. But Chinese policy insiders and international policymakers say reforms may not continue at the breakneck pace of recent months. In addition, Chinese sources suggest adding the yuan to the IMF basket leaves economic conservatives better positioned to resist further significant reform in a reminder of the period following China’s entry to the World Trade Organization (WTO).

A slowing in the pace has implications for those who bet that making the yuan a global reserve currency will give it a boost. The yuan has fallen almost 3% against the dollar this year, on course for its biggest annual fall since its landmark 2005 revaluation. The IMF decision will remove a key incentive – bolstering national pride – that reformers used to push otherwise reluctant conservatives to support reforms. More importantly, however, are worries in Beijing that the rickety economy can’t handle more aggressive reform that allows a freer flow of currency across China’s borders. Beijing is already rapidly losing a taste for more experimentation with capital flows, say the sources – economists involved in policy discussions who declined to be identified because of the sensitivity of the subject.

After the stock market buckled more than 40% in the summer – which many blamed on nefarious foreign capital – regulators have made it harder for money to leave China to counter yuan selling pressure and have intervened heavily in onshore and offshore currency markets. Not just conservatives, but more liberal economists are calling for a pause. “Our ability to control financial risk has yet to be improved,” said a senior economist at the China Centre for International Economic Exchanges (CCIEE), an influential Beijing think-tank. “Any rush to open up the capital account completely could be unfavorable for controlling financial risks … we will definitely be very cautious.”

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Which is why former CEO Winterkorn left in a hurry as soon as the scandal first broke.

VW Top Execs Knew Fuel Usage In Some Cars Was Too High A Year Ago (Reuters)

Volkswagen’s top executives knew a year ago that some of the company’s cars were markedly less fuel efficient than had been officially stated, Sunday paper Bild am Sonntag reported, without specifying its sources. VW in early November revealed that it had understated the level of carbon dioxide emissions and fuel usage in around 800,000 cars sold mainly in Europe. The scandal, which will likely cost VW billions, initially centered on software on up to 11 million diesel vehicles worldwide that VW admitted was designed to artificially suppress nitrogen oxide emissions in a test setting. The Bild am Sonntag report contradicts VW’s assertion, however, that it only uncovered the false CO2 emissions labeling as part of efforts to clear up the diesel emissions scandal, which became public in September.

Months after becoming aware of excessive fuel consumption, former Chief Executive Martin Winterkorn decided this spring to pull one model off the market where the discrepancy was particularly pronounced, the Polo TDI BlueMotion, the paper cited sources close to Winterkorn as saying. The paper did not separately cite its sources for saying that top executives knew about the fuel usage problem a year ago, however. VW at the time cited low sales figures as the reason for the withdrawal. The paper said that VW did not inform Polo TDI BlueMotion owners of the high fuel consumption, which was 18% above the nameplate value.

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Goldman, BlackRock, they are the de facto executive rulers of the world. And it makes them filthy rich.

BlackRock Spreads its Tentacles in Brussels (Don Quijones)

Much like Goldman Sachs, Blackrock is spreading tentacles across Europe at a startling rate. In a sign of its growing influence, the firm met EU officials to discuss financial market matters more times than any other company in the seven months to July, Financial Times reported this week. During that period the firm met Jonathan Hill, European Commissioner for financial services (and former City of London lobbyist), and his team five times — one more time than HSBC and two more times than Deutsche Bank. In fact, the only institutions that met the Commissioner as many times were London Stock Exchange Group, the British Bankers’ Association and Insurance Europe.

BlackRock’s lobbying efforts have worried some investors amidst concerns that the fund house, which offers traditional active mutual funds, passive funds and alternative products such as hedge funds, could have too much influence on European policy. By pure happenstance, the growth in BlackRock’s influence coincided with a 10-fold increase in the company’s self-reported lobbying spending in Brussels: in 2012 the firm spent €150,000; by 2014 that number had catapulted to €1.5m. That kind of money gets you a heck of a lot of access and influence in Brussels, the world’s second most important lobbying hub, especially when you’re already the world’s biggest asset manager.

According to EU Integrity Watch, BlackRock held meetings with Brussels officials over issues as far-reaching as the regulatory agenda in financial services by the EU and the US – a vital issue given the looming TTIP and TiSA trade treaties – capital markets union, Mr. Hill’s plan to boost business funding and investment financing, and money market funds. BlackRock’s most audacious coup to date took place in August, 2014, when the ECB announced its decision to hire BlackRock Solutions to provide advice on the design and implementation of the central bank’s upcoming purchase of asset-backed securities. In other words, just before the ECB embarked on one of the biggest QE programs in world history, it sought the advice of the world’s largest asset manager – i.e. the company most invested in the assets it intended to buy.

To ensure that there were/are no conflicts of interest, BlackRock’s contract stipulates that there must be an effective separation between the project team working for the ECB and its staff involved in any other ABS-related activities, which, as you can imagine, is an immense relief. So too is the fact that “all external audits related to the management of conflicts of interest would be made available to the ECB,” an institution famed worldwide for its blinding institutional transparency and accountability. To put all lingering fears to bed, a spokesperson for BlackRock told FT, “BlackRock advocates for public policies that we believe are in our investors’ long-term best interests.”

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Juicy story. Let’s do a movie.

The Silk Road Affair: Power, Pop and a Bunch of Billionaires (Bloomberg)

Even in post-Soviet Uzbekistan, an ancient crossroads where torture and bribery allegations are endemic, Gulnara Karimova, the president’s Harvard-educated daughter, stood out for her ruthlessness. As the U.S. embassy noted in a secret dispatch from 2005 that was later published by Wikileaks, Karimova was viewed by most Uzbeks “as a greedy, power-hungry individual who uses her father to crush business people or anyone else who stands in her way.” These days the 43-year-old former globetrotting socialite who once publicly praised God for “my face” is confined to her homeland along the legendary Silk Road, watched over by the security services of her aging father, Islam Karimov, who has ruled for a quarter century.

Even in isolation, though, Googoosha, as she’s called herself in music videos, remains in the eye of a storm, the protagonist in a multibillion-dollar tale of alleged greed and graft unfolding across three continents. This story stretches back more than a decade, from the fringes of the czarist empire to the tidy streets of Oslo, via Gibraltar, Geneva and beyond. It touches companies owned by six of Europe’s richest men – five Russians and a native Norwegian – and thrusts the staid Scandinavian business world into a strange new light. It also offers a glimpse into a mercurial U.S. ally, a nation of 30 million that is ranked among the most repressive and corrupt in the world by Freedom House and Transparency International, even while providing occasional logistical support for American troops in neighboring Afghanistan.

[..] In Switzerland, where Karimova once lived in a Geneva mansion, prosecutors have widened their own probe into suspected money-laundering and fraud offenses related to her role in awarding telecommunications contracts in Uzbekistan. In August, they said they’d confiscated more than 800 million Swiss francs ($781 million) of assets linked to her, without elaborating, bringing the total amount seized to about $1.1 billion. Add the $900 million VimpelCom has set aside for potential liabilities and the amount tied up in the investigations is pushing $2 billion. And that’s not even counting the impact on the market values of VimpelCom, MTS and TeliaSonera or the future costs of litigation. VimpelCom’s market value has plunged 59% to $6.3 billion since March 12, 2014, when it disclosed the U.S. and Dutch probes…

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Good overview. No charges have ever been filed. No prosecutor wants to interview Assange.

The Strange Case Of Julian Assange (Crikey)

Julian Assange faces very serious allegations, politicians like to say. That was the description from UK Prime Minister David Cameron’s office three years ago, defending the UK s determination to extradite him to Sweden. And that was the description early this year from then-UK deputy PM Nick Clegg, too – he should go to Sweden to face very serious allegations and charges of rape, said Clegg, not long before leading his party to annihilation in this year’s general election. Clegg, of course, was peddling the oft-repeated lie that there are charges against Assange. But for very serious allegations -sexual molestation, unlawful coercion, sexual assault- the UK and Swedish governments have displayed zero interest in investigating them. In fact, the history of the case against Assange is a history of increasingly bizarre efforts by authorities to avoid questioning him.

When Swedish prosecutors first examined complaints about Assange by two women in 2010, the Chief Prosecutor of Stockholm dismissed all but one of the allegations, including the accusation of sexual assault, saying there is no suspicion of any crime whatsoever. After speaking to prosecutors, Assange remained in Sweden for another week to be interviewed about the one remaining allegation (of molestation). However, after an appeal by former Swedish politician Claes Borgstrom, another prosecutor, Marianne Ny, reopened the whole case. Assange remained in Sweden and offered to be interviewed again, but, in the first of what would turn out to be a long litany of excuses, was told Ny was ill and unable to speak to him. Ny’s office then told Assange’s lawyer he was free to leave Sweden, but once Assange did so, an arrest warrant was issued for him.

Assange then offered to return to Sweden to speak to Ny and gave her a full week of dates in which he would do so. These were all rejected. This was all despite Swedish police having access to the texts of one of the alleged victims of Assange saying she did not want to put any charges on JA but that the police were keen on getting a grip on him , that she was shocked when he was arrested given she only wanted him to take an STD test, and that it was the police who made up the charges . Ny’s unwillingnness to interview Assange would become the pattern for the next five years: Assange repeatedly offered to speak to Swedish authorities by phone, by videolink, or in person at the Australian embassy. The Swedes refused all opportunities to do so and demanded Assange return to Sweden, issuing a European arrest warrant for him.

Eventually the EAW would be upheld by British courts under UK laws, which since then have been amended. Under current British law, a similar case to Assange’s would now be successfully appealed and the EAW rejected. Once he had sought refuge in the Ecaudorean embassy in 2012, Assange continued to offer Swedish authorities the opportunity to speak with him, and they continued to reject them. But while they regularly rejected Assange s offer to be interviewed, other suspects were treated very differently: during the last five years, the Swedes have on 44 occasions asked to travel to the UK to interview, or asked British police to interview, other people in Britain in relation to allegations including violent crime, fraud and even murder. Assange, however, couldn’t be treated the same way – he had to go to Sweden.

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Nice company to keep: “Saudi Arabia, Iran, China, the United States, and Iraq are the top five countries with the most executions.”

Saudi Arabia’s 2015 Beheadings The Most In 20 Years (Al Jazeera)

Saudi Arabia has executed at least 151 people so far this year – the most put to death in a single year since 1995. The stark rise in the number of executions has seen, on average, one person killed every two days, according to the human rights group, Amnesty International. “The Saudi Arabian authorities appear intent on continuing a bloody execution spree,” Amnesty’s report released on Monday said, quoting James Lynch, deputy director at the Middle East and North Africa programme. It is the most people put to death in the kingdom in one year since 1995, when 192 executions were reportedly carried out. Most recent years have had between 79 and 90 people killed by beheadings annually for crimes including “nonlethal offences, such as drug-related ones,” according to the London-based rights group.

The large number of executions shed further light on what Amnesty referred to as unfair judicial proceedings, with a disproportionate imposition of capital punishment on foreign nationals. “Of the 63 people executed this year for drug-related charges, the vast majority, 45 people, were foreign nationals,” the report said. Khalid al-Dakhil, a Saudi political commentator based in Riyadh, challenged “the integrity” of Amnesty’s report, saying it failed to mention Iran’s execution record. “Iran executes far more people a year than Saudi Arabia, but it does not get the negative publicity Saudi Arabia has. This is something that must be addressed,” Dakhil told Al Jazeera. Saudi Arabia, Iran, China, the United States, and Iraq are the top five countries with the most executions. In total, 71 people executed so far in 2015 have been foreigners. The majority were migrant workers from poorer countries who are often sentenced to die without any knowledge of the court’s proceedings because they don’t speak Arabic and do not receive translations.

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These people are busy creating absolute mayhem in Europe.

EU Split Over Refugee Deal As Germany Leads Breakaway Coalition (Guardian)

Months of European efforts to come up with common policies on mass immigration unravelled when Germany led a “coalition of the willing” of nine EU countries taking in most refugees from the Middle East, splitting the EU on the issues of mandatory refugee-sharing and funding. An unprecedented full EU summit with Turkey agreed a fragile pact aimed at stemming the flow of migrants to Europe via Turkey. But the German chancellor, Angela Merkel, frustrated by the resistance in Europe to her policies, also convened a separate mini-summit with seven other leaders on Sunday to push a fast-track deal with the Turks and to press ahead with a new policy of taking in and sharing hundreds of thousands of refugees a year directly from Turkey.

The surprise mini-summit suggested that Merkel has given up trying to persuade her opponents, mostly in eastern Europe, to join a mandatory refugee-sharing scheme across the EU, although she is also expected to use the pro-quotas coalition to pressure the naysayers into joining later. Merkel’s ally on the new policy, Jean-Claude Juncker, president of the European commission, said of the mini-summit: “This is a meeting of those states which are prepared to take in large numbers of refugees from Turkey legally.” But the frictions triggered by the split were instantly apparent. Donald Tusk, the president of the European council who chaired the full summit with Turkey, contradicted the mainly west European emphasis on seeing Ankara as the best hope of slowing the mass migration to Europe.

“Let us not be naïve. Turkey is not the only key to solving the migration crisis. The most important one is our responsibility and duty to protect our external borders. We cannot outsource this obligation to any third country. I will repeat this again: without control on our external borders, Schengen will become history.” He was referring to the 26-country free-travel zone in Europe, which is also in danger of unravelling under the strains of the migratory pressures and jihadi terrorism. Merkel’s mini-summit brought together the leaders of Germany, Austria and Sweden – the countries taking the most refugees – Finland, Belgium, Luxembourg, the Netherlands, and Greece. President François Hollande of France did not attend the mini-summit because of scheduling problems, but it is understood that France is part of the pro-quotas vanguard.

The nine countries include the EU’s wealthiest. The EU-Turkey summit agreed to pay Turkey €3bn (£1.4bn) in return for a deal that would see Ankara patrolling the Aegean borders with Greece – the main point of entry to the EU for hundreds of thousands this year. Ankara is also to resume its long-stalled EU membership negotiations by the end of the year and, according to the schedule agreed, is to have visas waived by next year for Turks travelling to the EU. In response, the EU will be able to start deporting “illegal migrants” to Turkey by next summer under a fast-tracked “readmissions agreement”.

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No there there, just hot air. “..EU leaders made it clear there would be no shortcut in Turkey’s long-stalled bid to join the bloc. [..] And the Turks couldn’t say how effective the agreement would be in reducing the number of the migrants and refugees entering the EU..”

European Union Reaches Deal With Turkey on Migration (WSJ)

The EU on Sunday agreed with Turkey’s government for Ankara to take steps to cut the flow of migrants into Europe in exchange for EU cash and help with its bid to join the 28-nation bloc. EU leaders hailed the agreement as a key step toward substantially reducing the number of asylum seekers entering the bloc, while Turkey’s Prime Minister Ahmet Davutoglu said Sunday’s summit marked a historic new beginning in the often fraught relations between Brussels and Ankara. Yet the continued lack of trust on both sides remained evident, as EU leaders made it clear there would be no shortcut in Turkey’s long-stalled bid to join the bloc.

“The issue hasn’t changed,” French President François Hollande said after leaving the summit to return to Paris for global climate talks. “There is no reason either to accelerate or to slow it down.” And the Turks couldn’t say how effective the agreement would be in reducing the number of the migrants and refugees entering the EU via Turkey. EU officials have said cooperation with Turkey is the best way to reduce migrant flows, arguing that Ankara was very effective in previous years in preventing the outflow of refugees from the country. Alongside fresh efforts to tighten their external borders, EU officials hope the Turkey agreement can help turn the tide in the bloc’s migration crisis, the biggest since the aftermath of World War II.

[..] it appeared that substantial efforts would be required to turn Sunday’s agreement into reality. European Council President Donald Tusk said the EU will closely watch Turkey’s implementation of the deal and will review Ankara’s actions on a monthly basis. EU governments are also still at loggerheads over who would pay the €3 billion Turkey is to receive for its cooperation. Moreover, Turkey must complete dozens of EU requirements to win a recommendation for visa-free access to the bloc by autumn of 2016. Even then, a final decision will need backing of all 28 member states. Meanwhile, Mr. Davutoglu acknowledged he couldn’t promise the number of migrants heading into Europe via Turkey would fall. “Nobody can guarantee a drop,” he said of the refugees heading west from war-torn Syria.

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He’s simply right.

Tsipras Takes On Turkey’s Davutoglu On Twitter (AP)

A highly unusual online exchange took place on Twitter between the prime ministers of Greece and Turkey late Sunday before the former deleted his tweets – but only from the English version of his account. The official English-speaking account of Greek prime minister Alexis Tsipras (@Tsipras_eu) posted four tweets addressed to his Turkish counterpart Ahmet Davutoglu, needling him about Turkey’s downing of a Russian jet and Turkey’s violations of Greek airspace. “To Prime Minister Davutoglu: Fortunately our pilots are not mercurial as yours against the Russians #EuTurkey” Tsipras tweeted. Both prime ministers attended an EU-Turkey summit on refugees in Brussels Sunday. Tsipras did not explain whether his tweets reproduced a conversation between the two or were written especially for Twitter.

“What is happening in the Aegean is outrageous and unbelievable #EUTurkey” Tsipras continued. “We’re spending billions on weapons. You -to violate our airspace, we -to intercept you #EUTurkey” Tsipras said in a third tweet, referring to intrusions of Turkish planes into Greek airspace, which Turkey contests, and Greek and Turkish pilots frequently buzzing each other. Tsipras said the two countries should focus on saving refugees, not on weapons. “We have the most modern aerial weapons systems–and yet, on the ground, we can’t catch traffickers who drown innocent people #EUTurkey,” the Greek premier said in a fourth tweet. Davutoglu chose to respond to only the first tweet and not engage in a detailed dialogue.

“Comments on pilots by @atsipras seem hardly in tune with the spirit of the day. Alexis: let us focus on our positive agenda,” @Ahmet_Davutoglu responded. Then, the @Tsipras_EU account deleted the four tweets, which have remained posted, however, in Tsipras’ Greek language account, @atsipras. The deletion sparked further furious tweeting, with comments such as “who is handling your account?” being the most common. Then, the English account posted further tweets, but less controversial this time. “Important Summit today for the EU, Turkey and our broader region #EUTurkey” A last Tsipras tweet obliquely referred to the deleted ones: “We are in the same neighborhood and we have to talk honestly so we can reach solutions #EUTurkey.”

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But the disgrace goes on. And it’s ours, you, me, everyone. Want to protest something?

As the World Turns Away, Refugees are Still Drowning in the Mediterranean (HRW)

Her name was Sena. She was four years old. She was wearing blue trousers and a red shirt. She drowned in a shipwreck on November 18 in the Aegean Sea off Bodrum, Turkey. His name was Aylan. He was three years old. He drowned on September 2nd, along with his mother and his five-year-old brother. Like Sena, he was Syrian, dressed in blue and red, and travelling with his family on a desperate journey to reach safety and a future in Europe. The picture of his tiny lifeless body washed up on shore appeared to shake Europe’s—indeed, the world’s—conscience. Yet at least 100 more children, including Sena, have drowned in the Aegean in the weeks since. This year has seen an unprecedented number of asylum seekers and migrants—over 712,000 as of this week—crossing from Turkey to the Greek islands, most of them in overcrowded flimsy rubber dinghies.

One-quarter of those risking their lives are children. We have witnessed an unbearable death toll this year, with at least 585 people missing or lost in the Aegean, most of them since Aylan’s death. War, persecution, geopolitics, dangerous smuggler tactics, the weather – all of these factors contribute to the surge in arrivals as well as the number of lives lost. The UN refugee agency, UNHCR, estimates that 60% of those coming to Greece by sea are Syrians, while 24% are from Afghanistan. The response of the European Union has to be multifaceted. It should include measures to reduce the need for dangerous journeys and tackle the root causes of refugee and migration flows in a way that respects human rights.

But the immediate imperative has to be to save lives. Turkish and Greek coast guard boats are out there every day patrolling the waters. And various EU countries have sent boats, personnel and other equipment to participate in Operation Poseidon in the Aegean, a mission of the EU’s external border agency Frontex. Combined, these actions have saved tens of thousands of lives. I’ve seen a burly Portuguese coast guard officer gently take a baby from her mother’s arms after a rescue. I’ve observed the professionalism of Norwegian police officers on patrol for Frontex. A colleague of mine was impressed by the way Greek coast guard officers handled two difficult rescues. But more needs to be done.

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