Nov 232018
 
 November 23, 2018  Posted by at 9:53 am Finance Tagged with: , , , , , , , , , , , , ,  


René Magritte Golconda 1953

 

438 Stocks on the NYSE Plunged 40%-94% from 52-Week Highs (WS)
Margin Debt Plunges, Next Up: Margin Calls (WS)
QE Created Dangerous Financial Dependence, Italy Hooked, Withdrawal Next (DQ)
Bitcoin Price Crash Causes Bankruptcy And Mass Mine Closures (Ind.)
UK’s Poorest Dying Nearly 10 Years Younger Than Rich (Ind.)
MPs Unite To Condemn May’s ‘Blindfold Brexit’ (Ind.)
Yanis Varoufakis: “The EU Declared War And Theresa May Played Along” (NS)
China Bans Millions From Flights As ‘Social Credit’ System Introduced (Ind.)
Google Wants To Data Mine Your Home And Kids’ Bedroom (ZH)
How Do You Give Thanks For Freedoms That Are Constantly Being Eroded? (RI)
CIA Holds ‘Smoking Gun Phone Call’ Of MbS On Khashoggi Murder (Hurriyet)
Comey, Loretta Lynch Subpoenaed To Testify Before Congress (AFP)
Hillary Clinton: Europe Must Curb Immigration To Stop Rightwing Populists (G.)
Clinton, Blair, Renzi: Why We Lost, And How To Fight Back (G.)
Elephant-Sized Mammal Cousin Lived Alongside Dinosaurs (R.)

 

 

“It’s barely a correction, technically speaking..”

438 Stocks on the NYSE Plunged 40%-94% from 52-Week Highs (WS)

It’s barely a correction, technically speaking, with the S&P 500 down 9.9% from its all-time closing high, the Dow down 9.2%, the Nasdaq down 14%, and the Russell 2000 small-caps index down 15%. But beneath the surface, there has been some serious bloodletting for many stocks. For example, 438 stocks among the 2,051 or so stocks traded on the New York Stock Exchange (NYSE) have plunged between 40% and 94% from their 52-week highs. This does not include any stocks traded on the Nasdaq. They have their own blacklist.

Those 438 plungers on the NYSE include a bunch of foreign companies trading on the NYSE (some are trading as ADRs). They include lots of companies in the oil-and-gas sector, homebuilders, gold miners, retailers, aluminum and steel makers, a weed company (other NYSE-listed weed companies are only down 30% to 40% and didn’t make this blacklist), financial services firms and banks, including some of the biggest in the world. Here is a brief rundown. Below is the complete list. Note that some of these stocks – such as GE, which is also on this blacklist – have plunged far more from their all-time highs established in prior years.

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Tempting to bring up Lehman, but if anything it’s starting to feel like Lehman cubed.

Margin Debt Plunges, Next Up: Margin Calls (WS)

There are many ways to use leverage to fund stock holdings, including credit card loans, HELOCs, loans at the institutional level, loans by companies to its executives to buy the company’s shares, or the super-hot category of SBLs, where brokers lend to their clients. None of them are reported on an overall basis. The only form of stock market leverage that is reported monthly is “margin debt” – the amount individual and institutional investors borrow from their brokers against their portfolios. Margin debt is subject to well-rehearsed margin calls. And apparently, they have kicked off. In the ugliest stock-market October anyone can remember, margin debt plunged by $40.5 billion, FINRA (Financial Industry Regulatory Authority) reported this morning – the biggest plunge since November 2008, weeks after Lehman Brothers had filed for bankruptcy:

During the stock market boom since the Financial Crisis, this measure of margin debt has surged from high to high, reaching a peak in May 2018 of $669 billion, up 60% from the pre-Financial Crisis peak in July 2007, and up 117% since January 2012. Since the peak in May, margin debt has dropped by $62 billion (-9.2%). Note the $40.5-billion plunge in October:

In the two-decade scheme of things, the relationship between stock market surges and crashes and margin debt becomes obvious. Back during the dot-com bubble, dot-com stocks, traded mostly on the Nasdaq, included what today are booming survivors like Amazon, barely hangers-on like RealNetworks, or goners like eToys. At the time, these stocks soared by stunning amounts, and people, such as myself, used margin debt, to enhance their returns. When stocks plunged, the margin calls came, and these people had to sell their holdings into an illiquid and plunging market. They ended up selling their best and most liquid stuff first and watched their trash get trashed further. When it was over by October 2002, the Nasdaq had plunged 78%. Over the same period, margin debt plunged 54%.

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“..who will purchase the roughly €275 billion of government securities Italy is forecast to issue in 2019?”

QE Created Dangerous Financial Dependence, Italy Hooked, Withdrawal Next (DQ)

The Bank of Italy, on behalf of the ECB, has bought up more than €360 billion of multiyear treasury bonds (BTPs) since the QE program was first launched in March 2015. In fact, the ECB is now virtually the only significant net buyer of Italian bonds left standing. This raises a key question, Nowotny said: With the ECB scheduled to exit the bond market in roughly six weeks time, “who will purchase the roughly €275 billion of government securities Italy is forecast to issue in 2019?”

With foreigners shedding a net €69 billion of Italian government bonds since May, when the right-wing League and anti-establishment 5-Star Movement took the reins of government, and Italian banks in no financial position to expand their already bloated holdings, it is indeed an important question (and one we’ve been asking for well over a year). According to former Irish central bank governor and ex-member of the ECB’s Governing Council Patrick Honohan, speaking at an event in London, when the ECB’s support is removed, “the yield on Italian government bonds will be much more vulnerable.”

[..] Perhaps the biggest risk the ECB runs in this latest escalation of tensions with Italy’s populist government is in reminding investors just how much governments in the Eurozone have come to depend on the ECB’s QE program. But it’s not just Italian bonds that are hooked on QE. In the past three years the ECB has spent €512 billion gobbling up German bonds (current 10-year yield: 0.35%); €416 billion on French bonds (10-year yield: 0.76%); €256 billion on Spanish bonds (1.62%); €114 billion on Dutch bonds (0.52%); €72 billion on Belgian bonds (0.83%); €57 billion on Austrian bonds (0.61%), and €36 billion on Portuguese bonds (1.98%).

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So far, crypto fails to replace whatever it is that is failing.

Bitcoin Price Crash Causes Bankruptcy And Mass Mine Closures (Ind.)

Bitcoin mining operations in the US and China are facing closures after the plummeting price of bitcoin means they may no longer be profitable. The world’s most valuable cryptocurrency is currently trading at around $4,500, having lost almost a third of its value in the space of a week. Bitcoin mining – the process of generating new units of the cryptocurrency by solving complex puzzles – requires vast amounts of electricity to power the computers performing the calculations. This means that the profitability of mining falls when bitcoin’s price drops, and if the price falls too far then operations may no longer be economically viable.

The biggest casualty so far may be the US-based mining firm Giga Watt, which was forced to file for Chapter 11 bankruptcy this week after it was unable to pay debts of around $7 million. “The corporation is insolvent and unable to pay its debts when due,” the filing stated, according to CoinDesk. The majority of bitcoin mining operations are based in China, where electricity costs are some of the lowest in the world. Yet despite the cheap electricity, images and videos of mining operations shutting down in the country have been spreading across social media. Hong Kong-based mining platform Suanlitou announced this week that it was unable to cover electricity fees for a 10-day period in November, according to the South China Morning Post.

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This is Theresa May’s prime achievement, and it’s hard to see why nobody calls her on it. The application of austerity and the Hostile Environment on Britain is her baby.

UK’s Poorest Dying Nearly 10 Years Younger Than Rich (Ind.)

The poorest groups in society are dying almost a decade earlier than the richest, new research shows, prompting concern that welfare cuts and a rising cost of living are leaving the most vulnerable “out of the collective gain”. The study by academics at Imperial College London revealed the life expectancy gap between the most affluent and most deprived sections of society increased from six years in 2001 to eight years in 2016 for women, and from nine to 10 years for men. Women in the most deprived communities in 2016 lived until an average 79 years old, compared with 87 years in the most affluent group, while for men, the life expectancy was 74 years among the poorest, compared with 84 years among the richest.

The findings, published in the journal Lancet Public Health, also reveals that the life expectancy of England’s poorest women has fallen in the last seven years – having dropped by three months since 2011. Child mortality rates were also considerably higher among deprived communities, with poorer children two-and-a-half times more likely to die before they reach adulthood than their peers from affluent families. The findings show that people in the poorest sectors died at a higher rate from all illnesses – but that a number of diseases showed a particularly stark difference between rich and poor, notably respiratory diseases, heart disease, lung and digestive cancers and dementias.

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One step up and two steps back every step of the way.

MPs Unite To Condemn May’s ‘Blindfold Brexit’ (Ind.)

MPs of all parties accused Theresa May of delivering a “blindfold Brexit” after she admitted her deal left the public in the dark on a range of vital questions about Britain’s future. Decisions about future trade, the Irish border backstop, fisheries and whether the UK will remain tied to EU rules until after the next general election have all been shelved, a 26-page “political declaration” struck with the EU revealed. The admission came as the deal still looked doomed to defeat in a landmark vote next month – as both pro- and anti-EU Tories attacked it during feisty Commons exchanges in which few supporters spoke up.

Significantly, two leading Brexiteers praised by Ms May for working with her on the document – Iain Duncan Smith and Owen Paterson – said they could not back it unless the backstop was stripped out. More than 80 Tories have criticised the package, pointing to a heavy defeat and a constitutional crisis, unless most can be talked around in the next few weeks of frantic arm-twisting.

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Merkel is a disaster “..but we’re going to miss her because whatever comes next will be worse.“

Yanis Varoufakis: “The EU Declared War And Theresa May Played Along” (NS)

In 2016, shortly before the EU referendum, Yanis Varoufakis warned that the UK was destined for a “Hotel California Brexit”: it could check out but it could never leave. The former Greek finance minister spoke from experience. In 2015, his efforts to end austerity – “fiscal waterboarding” – were thwarted by the EU. Theresa May’s draft Brexit deal confirmed Varoufakis’s prophecy: the UK would be condemned to purgatory. With fortuitous timing, on the evening that May’s agreement was published, Varoufakis delivered an Oxford Union lecture on Europe’s future. The 57-year-old Marxist and game theorist wryly remarked that Conservative cabinet ministers praised his analysis in private.

“The UK should never have entered the negotiations,” he told me when we met afterwards. “You do not negotiate with the EU because the EU does not negotiate with you. It sends a bureaucrat, in this case it was Mr Barnier…they could have sent an android, or an algorithm.” May’s fatal error, Varoufakis said, was to accept a two-phase negotiation: a divorce agreement followed by a new trade deal. “This was a declaration of war because Barnier said: ‘You will give us everything we want: money, people, Ireland. And only then will we discuss what you want.’ Well, that isn’t a negotiation, that’s a travesty. And Theresa May agreed to play along.” But Varoufakis, who helped persuade Jeremy Corbyn to support Remain in 2016, has little sympathy for the “People’s Vote” movement.

“It’s offensive. What was the first vote? Wasn’t it a people’s vote? To call it a people’s vote is to try and delegitimise the original vote – to say it was dictatorial, it was rigged.” He added: “You have to explain two things: first, how are you going to get the referendum completed before the Article 50 period is over? Secondly, how can you have a binary choice between five or six options? Explain those things and I’m with you.” [..] I asked Varoufakis how he viewed the liberal adulation of [Angela Merkel]. “I’m a dialectician: she has been a disaster and we’re going to miss her. She is a disaster because she squandered immense political capital that could have been used to reshape Europe. But we’re going to miss her because whatever comes next will be worse.”

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“Punishments [..] are also believed to include slowing internet speeds, reducing access to good schools for individuals or their children, banning people from certain jobs, preventing booking at certain hotels and losing the right to own pets.

China Bans Millions From Flights As ‘Social Credit’ System Introduced (Ind.)

Millions of Chinese nationals have been blocked from booking flights or trains as Beijing seeks to implement its controversial “social credit” system, which allows the government to closely monitor and judge each of its 1.3 billion citizens based on their behaviour and activity. The system, to be rolled out by 2020, aims to make it “difficult to move” for those deemed “untrustworthy”, according to a detailed plan published by the government this week. It will be used to reward or punish people and organisations for “trustworthiness” across a range of measures. A key part of the plan not only involves blacklisting people with low social credibility scores, but also “publicly disclosing the records of enterprises and individuals’ untrustworthiness on a regular basis”.

The plan stated: “We will improve the credit blacklist system, publicly disclose the records of enterprises and individuals’ untrustworthiness on a regular basis, and form a pattern of distrust and punishment.” For those deemed untrustworthy, “everywhere is limited, and it is difficult to move, so that those who violate the law and lose the trust will pay a heavy price.” The credit system is already being rolled out in some areas and in recent months the Chinese state has blocked millions of people from booking flights and high-speed trains. According to the state-run news outlet Global Times, as of May this year, the government had blocked 11.14 million people from flights and 4.25 million from taking high-speed train trips.

[..] People are awarded credit points for activities such as undertaking volunteer work and giving blood donations while those who violate traffic laws and charge “under-the-table” fees are punished. Other infractions reportedly include smoking in non-smoking zones, buying too many video games and posting fake news online. Punishments are not clearly detailed in the government plan, but beyond making travel difficult, are also believed to include slowing internet speeds, reducing access to good schools for individuals or their children, banning people from certain jobs, preventing booking at certain hotels and losing the right to own pets.

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Admit it or not, but it’s a very small step from China to Google.

Google Wants To Data Mine Your Home And Kids’ Bedroom (ZH)

New patents show Google is quietly developing a smart-home automated system that will routinely eavesdrop on your daily life. The patents describe how cameras and sensors will be mounted in almost every room of the house, scanning and analyzing every movement a human makes. According to the patent description, the smart cameras could recognize Will Smith’s face on a T-shirt. After cross-referencing this data against the human’s browser history, the smart-home might announce or send them a message, “You seem to like Will Smith. His new movie is playing in a theater near you.”

By blending that with an in-depth analysis of other electronic devices in the home, and audio signatures to determine gender, Google will have enough data to create a corporate profile on the human and even their family. The system will then calculate “fashion tastes” by scanning the human’s outfit, and could even determine their income or social class based on any “expensive mechanical and/or electronic devices” it detects. Even creepier, the smart-home will track audio signatures too, could be used to identify users, but also determine gender and age. With a treasure trove of data mined from every room of the home, the smart-home will then tell the human what to watch, what to eat, where to go, and what to buy.

If this all seems invasive, it is essential to understand that tech companies are already data mining you, it just happens to be online: “Google and Facebook both record and analyze user behavior, use it to sort people into categories, and then target them with ads and other content. Facebook likely knows your race and religion, while Google uses your emails and search history to sort you into ad-ready brackets. Netflix infers all types of data on users based on what they watch, then serves back hyper-specific movie and TV categories. This patent simply expands the areas in which your behavior is already mined and recorded from your phone and laptop to your bedroom,” wrote The Atlantic.

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“Washington didn’t intend Thanksgiving to be a day for offering up glib platitudes that require no thought, no effort and no sacrifice.”

How Do You Give Thanks For Freedoms That Are Constantly Being Eroded? (RI)

Listen: I know it’s been a hard, heart-wrenching, stomach-churning kind of year. It’s been a year of hotheads and blowhards and killing sprees and bloodshed and takedowns. It’s been a year in which tyranny took a few more steps forward and freedom got knocked down a few more notches. It’s been a year with an abundance of bad news and a shortage of good news. It’s been a year of too much hate and too little kindness. It’s been a year in which politics and profit margins took precedence over decency, compassion and human-kindness. We’ve been operating in this soul-sucking, topsy-turvy, inside-out, upside-down state for so long that it’s hard not to be overwhelmed by all that is wrong in the world in order to reflect and give thanks for what is good.

And now we find ourselves at this present moment, more than 200 years after George Washington issued the first Thanksgiving proclamation as a time to give thanks for a government whose purpose was to ensure the safety and happiness of its people and for a Constitution designed to safeguard civil and religious liberty. But how do you give thanks for freedoms that are constantly being eroded? How do you express gratitude for one’s safety when the perils posed by the American police state grow more treacherous by the day? How do you come together as a nation in thanksgiving when the powers-that-be continue to polarize and divide us into warring factions?

Washington didn’t intend Thanksgiving to be a day for offering up glib platitudes that require no thought, no effort and no sacrifice. He wanted it to be a day of contemplation, in which we frankly assessed our shortcomings, acknowledged our wrongdoings, and resolved to be a better, more peaceable nation in the year to come.

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Nice new tidbits every single day. “CIA has more wiretapped phone calls at hand than the public knows about.”, “Khashoggi was barred from media appearances after criticizing Trump in late 2016..”

CIA Holds ‘Smoking Gun Phone Call’ Of MbS On Khashoggi Murder (Hurriyet)

The CIA is in possession of a phone call recording of Saudi Crown Prince Mohammed bin Salman in which he is heard giving an instruction to “silence Jamal Khashoggi as soon as possible,” Hürriyet columnist Abdulkadir Selvi wrote on Nov. 22. According to Selvi, CIA Director Gina Haspel “signalled” during her trip to Ankara last month the existence of the wiretapped phone call between Crown Prince Mohammed and his brother Khaled bin Salman, who is Saudi Arabia’s ambassador to the United States. Citing unidentified sources, the Turkish columnist wrote that the two Saudi officials are heard in the CIA recording discussing the “discomfort” created by Khashoggi’s public criticism of the kingdom’s administration.

[..] “It is said that the crown prince gave an instruction to silence Jamal Khashoggi as soon as possible and this instruction was captured during the CIA wiretapping. The subsequent murder is the ultimate confirmation of this instruction,” Selvi added, stressing that an international investigation into the murder, if opened, “can reveal more jaw-dropping evidence, as CIA has more wiretapped phone calls at hand than the public knows about.” [..] Trump declared on Nov. 20 that he will not further punish Saudi Arabia for the murder, making clear in an exclamation-filled statement that the benefits of good relations with the kingdom outweigh the possibility its crown prince ordered the killing. Khashoggi was barred from media appearances after criticizing Trump in late 2016, according to the U.S. State Department.

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There may not be enough time before the new Congress is sworn in. It may become up to the Senate.

Comey, Loretta Lynch Subpoenaed To Testify Before Congress (AFP)

Former FBI director James Comey and former attorney general Loretta Lynch have been subpoenaed to testify before Congress next month before Republicans relinquish control of the House, documents showed Thursday. Comey confirmed he had received a subpoena from the House Judiciary Committee but said he would resist if made to answer questions behind closed doors. “I’m still happy to sit in the light and answer all questions,” he said on his Twitter account. “But I will resist a ‘closed door’ thing because I’ve seen enough of their selective leaking and distortion. Let’s have a hearing and invite everyone to see.”

Lynch, who served under former president Barack Obama, did not immediately comment, but copies of the subpoenas made public Thursday show she was summoned to testify on December 4. Comey was ordered to appear before the committee on December 3. US President Donald Trump has repeatedly accused Comey and Lynch of covering for Hillary Clinton in an investigation into her use of a private server for emails while she was secretary of state. He has often leveled charges of bias in countering a probe by Special Counsel Robert Mueller into whether the Trump campaign colluded with a Russian effort to sway the 2016 elections in the Republican’s favor.

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This is not just revisionist hypocrisy, this is Orwell.

Hillary Clinton: Europe Must Curb Immigration To Stop Rightwing Populists (G.)

Europe must get a handle on immigration to combat a growing threat from rightwing populists, Hillary Clinton has said, calling on the continent’s leaders to send out a stronger signal showing they are “not going to be able to continue to provide refuge and support”. In an interview with the Guardian, the former Democratic presidential candidate praised the generosity shown by the German chancellor, Angela Merkel, but suggested immigration was inflaming voters and contributed to the election of Donald Trump and Britain’s vote to leave the EU. “I think Europe needs to get a handle on migration because that is what lit the flame,” Clinton said, speaking as part of a series of interviews with senior centrist political figures about the rise of populists, particularly on the right, in Europe and the Americas.

“I admire the very generous and compassionate approaches that were taken particularly by leaders like Angela Merkel, but I think it is fair to say Europe has done its part, and must send a very clear message – ‘we are not going to be able to continue provide refuge and support’ – because if we don’t deal with the migration issue it will continue to roil the body politic.” [..] “The use of immigrants as a political device and as a symbol of government gone wrong, of attacks on one’s heritage, one’s identity, one’s national unity has been very much exploited by the current administration here,” she said.

“There are solutions to migration that do not require clamping down on the press, on your political opponents and trying to suborn the judiciary, or seeking financial and political help from Russia to support your political parties and movements.” Brexit, described by Clinton as the biggest act of national economic self-harm in modern history, “was largely about immigration”, she said.

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There are many more in this list, the former left sold out everywhere.

We came, we saw, we became irrelevant.

And Hillary is still entirely clueless about Trump’s appeal.

Clinton, Blair, Renzi: Why We Lost, And How To Fight Back (G.)

Hillary Clinton, Tony Blair, Matteo Renzi: three of rightwing populism’s greatest scalps. Clinton admits she was left dumbfounded by her 2016 election defeat at the hands of Donald Trump. Renzi’s centre-left party was defeated this year after a surge in the anti-establishment vote in Italy, a country he calls “the incubator” of populism. Blair may not have lost at the ballot box, but his legacy, particularly on Europe, was upended in the Brexit referendum. All three are shunned by sections of their own party that accuse them of being responsible for the failure of the centre-left to offer a sufficiently radical alternative.

But all three are still thinking deeply about rightwing populism – its causes and the threat it poses – the mistakes of the centre left, including their own, and how modern politics appears to be mobilising resentment towards a perceived elite. [..] All three interviewees argue that one significant problem for mainstream politicians is that detailed, reasoned arguments stand little chance against the antics of the populist, whose simplified, amplified rhetoric is apt to drown out costed healthcare programmes or earnest paeans to liberal values. And politicians are no longer held to their promises. “The press does not know how to cover these candidates who are setting themselves on fire every day, who are masters of diversion and distraction,” Clinton said. “That is new.

“I always believed in the [2016 US presidential] campaign … the moderators would ask the hard questions, they would force us to respond and they would draw out the differences. That never happened. Because the guy I was running against is a master at just waving his hands and tweeting and insulting, and dominating the news cycles.”

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Mammals lost out for about 150 million years, came back only when the dinosaurs were wiped out. Mammals would need to rule for another 100 million years or so to match the dinosaur rule.

Elephant-Sized Mammal Cousin Lived Alongside Dinosaurs (R.)

A stoutly built mammal cousin the size of an elephant that munched on plants with its horny beak roamed the European landscape alongside dinosaurs during the Triassic Period about 205 million to 210 million years ago, scientists said on Thursday. Scientists announced the surprising discovery in Poland of fossils of a four-legged beast called Lisowicia bojani that demonstrated that dinosaurs were not the only behemoths on Earth at that time and that the group of mammal-like reptiles to which Lisowicia belonged, called dicynodonts, did not die out as long ago as previously believed. “We think it’s one of the most unexpected fossil discoveries from the Triassic of Europe,” said paleontologist Grzegorz Niedzwiedzki of Uppsala University in Sweden.


A comparison of the Lisowicia bojani with a recent elephant. Tomasz Sulej and Grzegorz Niedzwiedzki/Handout via REUTERS

Lisowicia, the largest-known non-dinosaur land animal alive at its time, was about 15 feet (4.5 meters) long, 8.5 feet (2.6 meters) tall and weighed 9 tons. The only other giants around at the time were early members of the dinosaur group called sauropods that had four legs, long necks and long tails. “The Lisowicia skull and jaws were highly specialized: toothless and the mouth was equipped with a horny beak, as in turtles and horned dinosaurs,” Niedzwiedzki said, adding that it was unclear whether it had tusks as some of its relatives did. The Triassic was the opening chapter in the age of dinosaurs, followed by the Jurassic and Cretaceous periods. The first dinosaurs appeared roughly 230 million years ago. Many of the earliest dinosaurs were modest in size, overshadowed by big land reptiles including fearsome predators called rauisuchians and crocodile-like phytosaurs.

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Mar 312018
 
 March 31, 2018  Posted by at 10:08 am Finance Tagged with: , , , , , , , , , , , ,  


Giotto Lamentation 1306

 

What Could Dethrone the Dollar as Top Reserve Currency? (WS)
How Many Trillions In Debt Are Linked To Soaring LIBOR? (ZH)
Bitcoin Is On Track For Its Worst First Quarter Ever (CNBC)
Tesla’s ‘Day Of Reckoning’ Is Near (CNBC)
ECB To Buy More German Bank Bonds To Keep Stimulus Flowing (R.)
UK Must Bring Home ‘Just Over 50’ Of Its Diplomats From Russia (R.)
Jammers Stop Assange From Using Internet (PA)
China’s Social Credit System Punishes Untrustworthy Citizens (ABC.au)
China ‘Environment Census’ Reveals 50% Rise In Pollution Sources (G.)
Overfishing Turns Mediterranean Dolphins Into Thieves (Ind.)

 

 

Again: look at dollar-denominated debt in the world. And then check interest rates. The dollar will be in great demand.

What Could Dethrone the Dollar as Top Reserve Currency? (WS)

What will finally pull the rug out from under the dollar’s hegemony? The euro? The Chinese yuan? Cryptocurrencies? The Greek drachma? Whatever it will be, and however fervently the death-of-the-dollar folks might wish for it, it’s not happening at the moment, according to the most recent data. The IMF just released its report, Currency Composition of Official Foreign Exchange Reserves (COFER) for the fourth quarter 2017. It should be said that the IMF is very economical with what it discloses. The COFER data for the individual countries – the total level of their reserve currencies and what currencies they hold – is “strictly confidential.” But we get to look at the global allocation by currency.

In Q4 2017, total global foreign exchange reserves, including all currencies, rose 6.6% year-over-year, or by $709 billion, to $11.42 trillion, right in the range of the past three years (from $10.7 trillion in Q4 2016 to $11.8 trillion in Q3, 2014). For reporting purposes, the IMF converts all currency balances into dollars. Dollar-denominated assets among foreign exchange reserves rose 14% year-over-year in Q4 to $6.28 trillion, and are up 42% from Q4 2014. There is no indication that global central banks have lost interest in the dollar; on the contrary:

Over the decades, there have been some efforts to topple the dollar’s hegemony as a global reserve currency, which it has maintained since World War II. The creation of the euro was the most successful such effort. Back in the day, the euro was supposed to reach “parity” with the dollar on the hegemony scale. And it edged up for a while until the euro debt crisis derailed those dreams. And now there’s the ballyhooed Chinese yuan. Effective October 1, 2016, the IMF added it to its currency basket, the Special Drawing Rights (SDR). This anointed the yuan as a global reserve currency. But not all central banks disclose to the IMF how their foreign exchange reserves are allocated. In Q4, the allocation of 12.3% of the reserves hadn’t been disclosed.

These “unallocated reserves” have been plunging. Back in Q4 2014, they still accounted for 41% of total reserves. They’re plunging because more central banks report to the IMF their allocation of foreign exchange reserves, and the COFER data is getting more detailed. So among the 87.7% of the “allocated” reserve currencies in Q4 2017, the pie was split up this way, with changes since 2014: Disappointingly for many folks, the Chinese yuan – the thin red sliver in the pie chart above — didn’t exactly soar since its inclusion in the SDR basket. Its share ticked up by a minuscule amount to a minuscule share of 1.2% of allocated foreign exchange reserves in Q4. In other words, central banks seem to lack a certain eagerness, if you will, to hold yuan-denominated assets.

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Nobody has a clue why LIBOR rises, including whoever wrote this. A wild guess: $200 trillion?! It’s that dollar-denominated debt problem again.

How Many Trillions In Debt Are Linked To Soaring LIBOR? (ZH)

[..] we have commented extensively on what may (or may not) be behind the Libor blow out: if as many claim, the move is a benign technicality and a temporary imbalance in money market supply and demand, largely a function of tax reform (including the Base Erosion Anti-Abuse Tax) or alternatively of the $300BN surge in T-Bill supply in the past month, the Libor move should start fading. If it doesn’t, it will be time to get nervous. But no matter what the reason is behind the Libor move, the reality is that financial conditions are far tighter as a result of the sharp move higher in short-term rates in general, and Libor in particular, which for at least a few more years, remains the benchmark rate referenced by trillions in fixed income instruments.

Which brings us to a logical follow up question: ignoring the reasons behind the move, how does a higher Libor rate spread throughout the financial system, and related to that, how much notional debt is at risk of paying far higher interest expense, if only temporarily, resulting in even tighter financial conditions. For the answer, we look at the various ways that Libor, and short-term rates in general “channel” into the economy. Here, as JPMorgan explains, the key driver is and always has been monetary policy, which controls short-term rates, which affect the economy via various channels and pathways.

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45% feels like a lot.

Bitcoin Is On Track For Its Worst First Quarter Ever (CNBC)

Bitcoin is having a terrible first quarter, in fact the worst its ever seen. The price of the cryptocurrency has fallen from $13,412.44 on January 1 to $7,266.07 on March 30, marking a more than 45% decline, according to data from CoinDesk, a site which tracks the price of different digital coins. The quarter ends on Saturday. So far this quarter, $114.9 billion of market capitalization or value has been wiped off of bitcoin. The price decline this quarter is the biggest first quarter decline in bitcoin’s history. The previous biggest decline was a near 38% fall in the price in the first quarter of 2014, according to data from CoinDesk. It tracks the price of bitcoin back to the middle of 2010.

CNBC looked at bitcoin’s price performance in the first quarters of each year beginning in 2011. Bitcoin has recorded a decline in 5 of the 8 first quarters tracked, which includes the current 2018 Q1. The biggest price rise was a 599% surge in the price of bitcoin in the first quarter of 2013. Bitcoin saw a huge run up in price in 2017 and hit a record high above $19,000 towards the end of last year. But it has faced tougher regulatory scrutiny in 2018 and some of the air has come out of the market. At a G-20 meeting this month, Argentina’s central bank governor outlined a summer deadline for members to have “specific recommendations on what to do” and said task forces are working to submit proposals by July. Italy’s central bank leader told reporters after the meeting in Buenos Aires, Argentina, that cryptocurrencies pose risks but should not be banned, according to Reuters.

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What’s the recall of 123,000 cars going to cost?

Tesla’s ‘Day Of Reckoning’ Is Near (CNBC)

Tesla’s big stock drop this month will have negative implications for its ability to raise critically-needed funds, according to Wall Street analysts. The company’s shares declined 22% in March on concerns over a fatal car crash in California last week and worries over its Model 3 production rate. Tesla’s 5.3% bond, issued last August and maturing in 2025, also fell 4% to 87.25 cents Wednesday with a yield of 7.6%, according to FactSet. The bond’s price declined 8% this month. Morgan Stanley on Wednesday warned Tesla shareholders the stock’s fall could be a “self-fulfilling” prophecy for further declines.

“A lower share price begets a lower share price … For a company widely expected to continue to fund its strategy through external capital raises, a fall in the share price can take on a self-fulfilling nature that further exacerbates the volatility of the share price,” analyst Adam Jonas wrote. Jonas said the company needs to accelerate its rate of Model 3 production if it wants to raise funds at an attractive price for the company. “The precise timing of when Tesla can achieve a 2,500/week and then a 5,000/week production run-rate for its mass market sedan can make the difference between whether Tesla is potentially raising capital from a position of weakness at a price near our $175 bear case or whether it can access capital from a position of strength with a stock price near our $561 bull case,” he wrote.

Another financial firm is already pessimistic over Telsa’s Model 3 manufacturing capability. Moody’s downgraded Tesla’s credit ratings after the close Tuesday and changed the outlook to negative from stable, citing the “significant shortfall” in the Model 3 production rate and its tight financial situation. Tesla had $3.4 billion in cash or cash equivalents at year end 2017. The company lost nearly $2 billion last year and burned about $3.4 billion in cash after capital investments. Given the company’s cash burn rate and how it has $230 million of debt due in Nov. 2018 and another $920 million in Mar. 2019, Moody’s believes the company has to raise new capital soon.

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This is a week old, but we can’t repeat often enough how insane this is. Germany’s economy is supposedly soaring, but Draghi keeps saving its banks. “To boost inflation..” Bigger nonsense was never heard. Those banks are simply not doing well. But even then, let Germany solve the mess.

ECB To Buy More German Bank Bonds To Keep Stimulus Flowing (R.)

The European Central Bank will start buying bonds from a further seven state-owned German banks under its stimulus program, it said on Thursday, in a bid to avoid running out of debt to buy after three years of massive purchases. The seven regional banks, which include the Investitionsbank Berlin and Bavaria’s LFA Förderbank Bayern, join a small group of German development lenders whose debt the ECB has already been buying as part of its efforts to boost inflation. The move slightly enlarges the pool of German debt which the ECB can tap as part of its 2.55 trillion euro ($3.14 trillion) quantitative easing scheme, thereby pushing back a looming cap on owning more than a third of any one country’s public debt.

With euro zone inflation now comfortably above 1%, the ECB is widely expected to wind down its bond purchases this year and even start raising interest rates towards the middle of 2019. With Germany running a fiscal surplus, however, finding enough German bonds to buy has already become harder for the ECB, which has reduced its purchases of debt from Europe’s largest economy more than for other large countries in recent months. The ECB has set out to buy government bonds in proportion to the amount of capital that each country has paid into the central bank, which in turn depends on the size of its economy. Deviations from this so called “capital key”, however, have been substantial, with France, Italy and Spain enjoying oversized purchases while smaller countries such as Estonia and Portugal have fallen behind.

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And the whole time I’m thinking: why do they have so many people out there? What do they do all day long?

UK Must Bring Home ‘Just Over 50’ Of Its Diplomats From Russia (R.)

Russia has told Britain it must send home “just over 50” more of its diplomats in a worsening standoff with the West over the poisoning of a former Russian spy and his daughter in Britain. Russia has already retaliated in kind against Britain and ejected 23 British diplomats over the poisoning of former Russian spy Sergei Skripal and his daughter Yulia. London says Moscow stood behind the attack, something Russia denies. British Ambassador Laurie Bristow was summoned again on Friday and told London had one month to cut its diplomatic contingent in Russia to the same size as the Russian mission in Britain.

On Saturday, Foreign Ministry Spokeswoman Maria Zakharova told Reuters that meant Britain would have to cut “a little over 50” of its diplomats in Russia. “We asked for parity. The Brits have 50 diplomats more than the Russians,” said Zakharova. When asked if that meant London would have to bring home exactly 50 diplomats, she said: “A little over 50.”

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It doesn’t feel as if demanding internet access for Julian quite cuts it. He could be in much bigger trouble.

Jammers Stop Assange From Using Internet (PA)

Electronic jammers have been placed inside the Ecuadorian embassy in London to prevent WikiLeaks founder Julian Assange having access to the internet or social media, sources say. The Ecuadorian government took the measure on Tuesday evening, stopping Assange from tweeting, using the internet or phone. He has also been refused any visitors to the embassy, where he has been living since June 2012, believing he will be extradited to the US for questioning over the activities of WikiLeaks if he leaves. The measures follow the publication of an article in the Ecuadorian press concerning Assange’s tweets about the arrest of former Catalan president Carles Puigdemont in Germany earlier this week.

In a phone call to Assange’s lawyer on Tuesday, an adviser to Ecuadorian Foreign Minister Maria Fernanda Espinosa said the WikiLeaks founder must stop tweeting about the Catalan issue. He was also asked to erase a tweet which said: “In 1940 the elected president of Catalonia, Lluis Companys, was captured by the Gestapo, at the request of Spain, delivered to them and executed. Today, German police have arrested the elected president of Catalonia, Carles Puigdemont, at the request of Spain, to be extradited.” Assange did not erase the tweet. His lawyer was told that a decision had been taken to isolate Assange by preventing him from communicating with the outside world and that this was “by order of the president”, say sources.

The serving Ecuadorian ambassador to Washington DC Francisco Carrion tweeted on Thursday: “The decision of the government of Ecuador to prevent Assange from tweeting is correct.” The Ecuador government said in a statement: “The government of Ecuador has suspended the systems that allow Julian Assange to communicate to the outside of the Ecuador embassy in London. “The measure was adopted due to Assange not complying with a written promise which he made with the government in late 2017, by which he was obliged not to send messages which entailed interference in relation to other states.” WikiLeaks sources said there was no such agreement.

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Who needs Orwell? Or Facebook, for that matter?! Only difference is China does it openly.

China’s Social Credit System Punishes Untrustworthy Citizens (ABC.au)

Chinese authorities claim they have banned more than 7 million people deemed “untrustworthy” from boarding flights, and nearly 3 million others from riding on high-speed trains, according to a report by the country’s National Development and Reform Commission. The announcements offer a glimpse into Beijing’s ambitious attempt to create a Social Credit System (SCS) by 2020 — that is, a proposed national system designed to value and engineer better individual behaviour by establishing the scores of 1.4 billion citizens and “awarding the trustworthy” and “punishing the disobedient”.

Liu Hu, a 43-year-old journalist who lives in China’s Chongqing municipality, told the ABC he was “dumbstruck” to find himself caught up in the system and banned by airlines when he tried to book a flight last year. Mr Liu is on a “dishonest personnel” list — a pilot scheme of the SCS — because he lost a defamation lawsuit in 2015 and was asked by the court to pay a fine that is still outstanding according to the court record. “No one ever notified me,” Mr Liu, who claims he paid the fine, said. Like the other 7 million citizens deemed to be “dishonest” and mired in the blacklist, Mr Liu has also been banned from staying in a star-rated hotel, buying a house, taking a holiday, and even sending his nine-year-old daughter to a private school. And just last Monday, Chinese authorities announced they would also seek to freeze the assets of those deemed “dishonest people”.

As the national system is still being fully realised, dozens of pilot social credit systems have already been tested by local governments at provincial and city levels. For example, Suzhou, a city in eastern China, uses a point system where every resident is rated on a scale between 0 and 200 points — every resident starts from the baseline of 100 points. One can earn bonus points for benevolent acts and lose points for disobeying laws, regulations, and social norms. According to a 2016 report by local police, the top-rated Suzhou citizen had 134 points for donating more than one litre of blood and doing more than 500 hours of volunteer work. The city said the next step was to use the credit system to punish people for transgressions such as dodging transport fares, cheating in video games, and restaurant no-shows.

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Tried to make sense of this, several times. Still sounds entirely hollow.

China ‘Environment Census’ Reveals 50% Rise In Pollution Sources (G.)

China’s environment ministry has said the number of sources of pollution in the country has increased by more than half in less than a decade. Releasing preliminary results of an ongoing “environmental census”, China’s ministry of ecology and environment said the number of sources of pollution in the country stands at about 9m, compared to 5.9m in its first census, in 2010. “The objectives and scope of the second census is different from those of the first one,” said Hong Yaxiong, head of the pollution survey at the ministry, Thursday. “But overall, there are more pollution sources.” The census did not say whether pollution had increased but declines in airborne pollution in major cities have been recorded in other studies.

Hong said factories flouting emissions standards were the main problem. The ministry found 7.4m sources of industrial pollution, compared to a million in rural areas and 500,000 in urban locations. Five years ago, China declared a “war against pollution.” Since then, new coal plants have been barred from opening and existing ones have been ordered to cut emissions. Major cities restrict the number of cars allowed on the roads. This past winter, residents in Beijing were left without heat after their coal boilers were removed. As part of the campaign, officials this month expanded the powers of the country’s 10-year-old ministry of environmental protection to include water management, emissions reductions, agricultural pollution, and other duties previously managed by half a dozen other ministries.

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No, it’s not just the birds and the bees. Fish are gone too.

Overfishing Turns Mediterranean Dolphins Into Thieves (Ind.)

Dolphins short on prey are resorting to underhand tactics to find a meal – tearing into nets to access the fish inside. Researchers studying interactions between dolphins and fishermen in northern Cyprus found nets were six times more prone to damage when dolphins were in the vicinity. They concluded that the marauding marine mammals were therefore the most likely culprits. “It seems that some dolphins may be actively seeking nets as a way to get food,” said Dr Robin Snape, an ecologist at the University of Exeter, who led the study. Net damage is irritating for the fishermen themselves, and can cost individuals thousands of euros every year. This is particularly problematic as most operations in the region are small scale.

However, the scientists suggested the fishermen must take some share of the blame, as overfishing in the region is a likely driver for the dolphins’ unusual behaviour. Dr Snape highlighted a “vicious cycle” that is “probably driven by falling fish stocks, which also result in low catches – meaning more nets are needed and higher costs for fishers”. “Effective management of fish stocks is urgently needed to address the overexploitation that is causing this vicious cycle,” he said.

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Mar 172018
 


Times Square NYC ca. 1909

 

Higher Interest Rates To Spell Private Debt Trouble in Many Countries (BBG)
The US Economy Is Not Really Growing (RIA)
US Gross National Debt Spikes $1.2 Trillion in 6 Months, Hits $21 Trillion (WS)
Russia Expels 23 British Diplomats In Retaliation (Ind.)
EU Ready To Hit Big US Tech Firms With 3% Turnover Tax (R.)
Goldilocks, R. I. P. – Part 2 (Stockman)
School Daze (Jim Kunstler)
‘America’s New Vietnam’: The Homelessness Crisis Seems Unsolvable (G.)
An Information Apocalypse Is Coming. How Can We Protect Ourselves? (G.)
China To Bar People With Bad ‘Social Credit’ From Planes, Trains (R.)
Global Biodiversity Crisis Puts Mankind At Risk (AFP)

 

 

What’s kept us alive will kill us off.

Higher Interest Rates To Spell Private Debt Trouble in Many Countries (BBG)

Hong Kong, Sweden, China and Australia could all find themselves in hot water over private-sector debt if borrowing costs rise, according to research by Oxford Economics. That’s because those countries all have a particularly high share of floating-rate debt in relation to economic output. If interest rates increase, households and companies are likely to feel the pinch, the study of 16 economies found. With global economic momentum picking up, several major central banks are weighing steps to tighten policy, though the pace of movement varies significantly. The Federal Reserve is expected to raise interest rates again next week and economists also predict that Sweden’s Riksbank will tighten policy later this year.

Oxford Economics estimated that an interest rate rise of 100 basis points would raise Hong Kong’s debt service ratio by around 2.5% of GDP after a year, while Sweden, China and Australia would experience increases of between 1.5% and 1.7% of GDP. By contrast, Germany, where debt levels are moderate, as well as France and the U.S. are less likely to suffer. For the latter two, that’s because mortgages are typically of fixed rate.

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It’s embarrassing that we need this to be pointed out.

The US Economy Is Not Really Growing (RIA)

Most people are aware that GDP growth has been lower than expected in the aftermath of the Global Financial Crisis of 2008 (GFC). For example, real GDP growth for the past decade has been closer to 1.5% than the 3% experienced in the 50 years prior to 2008. As a result of the combination of slow economic growth and deficit spending, most people are also aware that the debt/GDP ratio has been rising. However, what most people don’t know is that, over the past ten years, the dollar amount of cumulative government deficit spending exceeded the dollar amount of GDP growth. Put another way, in the absence of deficit spending, GDP growth would have been less than zero for the past decade. Could that be true?

Let’s begin with a shocking chart that confirms the statements above, and begins to answer the question. The black line shows the difference between quarterly GDP growth and the quarterly increase in Treasury debt outstanding (TDO). When the black line is above zero (red dotted line), the dollar amount is GDP is growing faster than the increase in TDO. From 1971 to 2008, the amount of GDP typically grew at a faster rate than the increase in TDO, which is why the black line is generally above the red dotted line.

Most people are aware that GDP growth has been lower than expected in the aftermath of the Global Financial Crisis of 2008 (GFC). For example, real GDP growth for the past decade has been closer to 1.5% than the 3% During the 1971-2008 period, inflation, budget deficits, and trade deficits varied widely, meaning that the relationship between GDP growth and TDO was stable even in the face of changes in other economic variables. Regardless of those changing economic variables, the US economy tended to grow at a pace faster than TDO for four decades. The only interruptions to the pattern occurred during recessions of the early 1980s, early 1990s, and early 2000s when GDP fell while budget deficits did not.

[..] From 2008-2017, GDP grew by $5.051 trillion, from $14.55 trillion to $19.74 trillion. During that same period, the increase in TDO totaled $11.26 trillion. In other words, for each dollar of deficit spending, the economy grew by less than 50 cents. Or, put another way, had the federal government not borrowed and spent the $11.263 trillion, GDP today would be significantly smaller than it is. It is possible to transform Chart 1, which shows annual changes in TDO and GDP from 1970-2017, into Chart 3 below, which shows the cumulative difference between the growth of TDO and GDP over the entire period from 1970-2017. The graph below clearly shows the abrupt regime change that occurred in the aftermath of the GFC. A period in which growth in GDP growth exceeded increases in TDO has been replaced by a period in which increases in TDO exceeded GDP growth.

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“These dang trillions are flying by so fast, they’re hard to see.”

US Gross National Debt Spikes $1.2 Trillion in 6 Months, Hits $21 Trillion (WS)

The US gross national debt jumped by $72.8 billion in one day, on Thursday, the Treasury Department reported Friday afternoon. This March 16 is a historic date of gloomy proportions, because on this date, the US gross national debt punched through the $21 trillion mark and reached $21.03 trillion. Here’s the thing: On September 7, 2017, a little over six months ago, just before Congress suspended the debt ceiling, the gross national debt stood at $19.84 trillion. In those six-plus months – 132 reporting days, to be precise – the gross national debt spiked by $1.186 trillion. I tell you, these dang trillions are flying by so fast, they’re hard to see. And we wonder: What was that? Where did it go?

Whatever it was and wherever it went, it added 6% to the gross national debt in just 6 months. And with 2017 GDP at $19.74 trillion in current dollars, the gross national debt now amounts to 106.4% of GDP. In the chart below, the flat spots are the various debt-ceiling periods. This is a uniquely American phenomenon when Congress forbids the Administration to borrow the money that it needs to borrow in order to spend it on the things that Congress told the Administration to spend it on via the appropriation bills. So that’s where we are, on this glorious day of March 16, 2018:

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So many holes have been pointed out in ‘the official story’ that not much of it remains standing.

Russia Expels 23 British Diplomats In Retaliation (Ind.)

Russia has announced it will expel 23 British diplomats in response to the expulsion of 23 Russian diplomats from Britain. The move marks the latest development in the diplomatic spat over the poisoning of former Russian spy Sergei Skripal in Salisbury on 4 March. The Russian Foreign Ministry announced on Saturday morning that the 23 diplomatic representatives of the British Embassy in Moscow should leave Russia within a week. The ministry also said all activities by the British Council, the UK’s international organisation for cultural relations, would cease in Russia and that the planned reopening of the British consulate in St Petersburg would no longer go ahead. The ministry warned that Russia could take further measures if Britain takes any more “unfriendly actions” against the country.

Shortly before the announcement, British ambassador to Russia, Laurie Bristow, was summoned to the foreign ministry for talks, where he learned of the retaliation measures. As he left the ministry, Mr Bristow said: “This crisis has arisen as a result of an appalling attack in the UK, the attempted murder of two people using a chemical weapon developed in Russia and not declared by Russia to the Organisation for the Prohibition of Chemical Weapons (OPCW) as Russia is obliged to do under the Chemical Weapons Act.” The retaliation from Russia comes four days after Theresa May announced that 23 Russian diplomats would be expelled from Britain after Russia missed a deadline to provide an explanation for the poisoning of Skripal and his daughter Yulia. Both remain critically ill in hospital.

Russia has continued to dismiss accusations of Russian culpability for the attack and to deny possessing Novichok, the nerve agent used in the incident. On Friday, UK Foreign Secretary Boris Johnson directly accused Russian President Vladimir Putin of ordering the poisoning, saying it was “overwhelmingly likely” Mr Putin personally ordered the assassination attempt. Dmitry Peskov, Russian presidential press secretary, responded to the verbal escalation with a further denial of the state’s involvement. “Any reference or mention of our President in this connection is nothing but a shocking and unforgivable violation of the diplomatic rules of propriety,” Mr Peskov said.

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Once Europe does this, will other ‘entities’ follow?

EU Ready To Hit Big US Tech Firms With 3% Turnover Tax (R.)

Large companies with significant digital revenues in the European Union such as Google and Facebook could face a 3% tax on their turnover under a draft proposal by the European Commission seen by Reuters. The proposal, expected to be adopted next week and still subject to changes, updates an earlier draft which envisaged a tax rate of between 1 and 5%. The tax, if backed by EU states and lawmakers, would only apply to large firms with annual worldwide revenues above 750 million euros (£662.2 million) and annual “taxable” revenues above 50 million euros in the EU. The threshold for EU revenues has been raised from 10 million euros initially foreseen to exempt smaller companies and emerging start-ups from the tax.

Large U.S. firms such as Uber, Airbnb and Amazon could also be hit by the new levy, which would apply across the 28 EU countries. Big tech firms have been accused by large EU states of paying too little tax in the bloc by re-routing some of their profits to low-tax member states like Ireland and Luxembourg. Services that will be taxed are digital advertising, which would capture both providers of users’ data like Google, and companies offering ad space on their websites, like popular social media such as Facebook. The tax would be also be levied on online platforms offering “intermediation services,” a concept under which the Commission includes gig economy firms such as Airbnb and Uber. Digital market places, including Amazon, would also be within the scope of the levy.

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True enough: Kudlow was by no means the only one to get it all awfully wrong.

Goldilocks, R. I. P. – Part 2 (Stockman)

Goldilocks is a conceit of monetary central planning and its erroneous predicate that falsifying financial asset prices is the route to prosperity. In fact, it only leads to immense and unstable financial bubbles which eventually crash – monkey-hammering the purported Goldilocks Economy as they do. It also leads to a complete corruption of the economic and financial narrative on both ends of the Acela Corridor. To wit, the Fed’s serial financial bubbles on Wall Street are falsely celebrated as arising from a booming main street economy. In fact, they are an economic dagger that bleeds it of investment and cash and exposes it to “restructuring” mayhem from the C-suites when the egregious inflation of share prices and stock option values finally gets crushed by another financial meltdown.

In this context, the Washington Post (WaPo) is out this morning with brutal takedown of our friend Larry Kudlow for his ebullient whistling past the graveyard on the eve of the financial crisis and Great Recession. It would be an understatement to say he didn’t see it coming, but it’s also completely unfair not to acknowledge that 95% of Wall Street and 100% of the FOMC were equally bubble-blind. In fact, when Larry Kudlow waxed eloquently in a piece in the National Review about the awesome economy the George Bush Administration had produced in December 2007, he was just delivering the Wall Street consensus forecast for the coming year:

“There’s no recession coming. The pessimistas were wrong. It’s not going to happen. At a bare minimum, we are looking at Goldilocks 2.0. (And that’s a minimum). Goldilocks is alive and well. The Bush boom is alive and well. It’s finishing up its sixth consecutive year with more to come. Yes, it’s still the greatest story never told…….In fact, we are about to enter the seventh consecutive year of the Bush boom.”

Well, not exactly. The worst recession since the 1930s actually incepted that very month and 10 months latter came Washington’s hair-on-fire moment when the monetary and fiscal spigots were opened far wider than ever before – bailing out everything that was collapsing, tottering, moving or even standing still.

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Our education system serves uniquely to create pawns in games.

School Daze (Jim Kunstler)

Sunday night was Secretary of Education Betsy DeVos’s turn through the CBS 60-Minutes wringer of censure with a visibly frustrated inquisitor Lesley Stahl trying to hector her into self-incrimination. The sad truth about American schools is that they’re a mirror for the painful collapse of the society they supposedly serve — a process ongoing for decades before Ms. DeVos came on the scene. The expectation that some uber-regent can or ought to fix public education is bound to disappoint a news media searching for saviors. The further we leave the 20th century behind, the more anomalous its organizing principles look, especially the idea of preparing masses of young people for mass, regimented work at the giant corporate scale.

There’s a big divergence underway between the promises of schooling and the kind of future that the 21st century is actually presenting — of no plausible careers or vocations besides providing “therapy” and policing for the discontented masses stewing in anomie and compensatory pleasure-seeking, with all its nasty side effects. In the meantime, we’re stuck with wildly expensive, out-of-scale, giant centralized schools where the worst tendencies of human status competition are amplified by smart phones and social media to all but eclipse classroom learning.

Education in the years to come is destined to become more of a privilege than a right, and it will probably depend more on how much an individual young person really desires an education than just compelling masses of uninterested or indisposed kids to show up everyday for an elaborate and rather poorly supervised form of day-care. But it’s difficult to let go of old habits and obsolete arrangements, especially when we’ve spent countless billions of dollars on them. I call the future a World Made By Hand because it is going to be entirely unlike the sci-fi robotic fantasy that currently preoccupies the thought-leaders in this culture. A lot of what will be required in this time-to-come will be physical labor and small-scale skilled work in traditional crafts. There never were that many job openings for astronauts, not even in the 1960s, but in the decades ahead there will be none — notwithstanding Elon Musk’s wish to colonize Mars.

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In New York, 111,000 students in the public school system are homeless.

‘America’s New Vietnam’: The Homelessness Crisis Seems Unsolvable (G.)

In Los Angeles, the more the politicians push to solve the city’s festering homelessness crisis, the worse it seems to get. The city leadership has taken one bold step after another: restructuring the budget to free more than $100m a year in homelessness funding, sponsoring one voter-approved initiative to raise more than $1bn for housing and backing another regional proposal to raise the sales tax and generate an estimated $3.5bn for support services over the next decade. And yet the tent cities continue to proliferate, in rich neighborhoods and poor, by the beach, the airport, the Hollywood Walk of Fame and within view of City Hall itself. It’s the sorriest urban scene anywhere in America, and the same voters who not so long ago opened their hearts and their wallets to put an end to it are growing increasingly impatient.

As the numbers of homeless people continue to rise – the latest figures put the countywide number at 58,000, up more than 20% in a single year – and new encampments spring up on sidewalks, under freeways, and along stretches of river and rail lines, the politicians who not so long ago were earning praise for their courage are facing the beginnings of an angry backlash. “How many people have we housed?” the Los Angeles Times asked impatiently in a blistering series of editorials late last month. “How many are we on track toward housing? Is Los Angeles setting the national standard for rapid and effective response to a vexing problem? Or are its leaders merely mastering the art of appearances while passing the buck and hoping things turn around? … Who’s in charge here?”

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Sorry, but that apocalypse is already very much here. ‘Ordinary people’ already have no idea what’s true or real or not.

An Information Apocalypse Is Coming. How Can We Protect Ourselves? (G.)

John F Kennedy’s last speech reads like a warning from history, as relevant today as it was when it was delivered in 1963 at the Dallas Trade Mart. His rich, Boston Brahmin accent reassures us even as he delivers the uncomfortable message. The contrast between his eloquence and the swagger of Donald Trump is almost painful to hear. The problem is, Kennedy never spoke these words. He was killed before he made it to the Trade Mart. You can only hear them now thanks to audio technology developed by a British company, CereProc. Fragments of his voice have been taken from other speeches and public appearances, spliced and put back together, with neural networks employed to mimic his natural intonation.

[..] “Dual use” of technology is not a new problem. Nuclear physics gave us both energy and bombs. What is new is the democratisation of advanced IT, the fact that anyone with a computer can now engage in the weaponisation of information; 2016 was the year we woke up to the power of fake news, with internet conspiracy theories and lies used to bolster the case for both Brexit and Donald Trump. We may, however, look back on it as a kind of phoney war, when photoshopping and video manipulation were still easily detectable. That window is closing fast. A program developed at Stanford University allows users to convincingly put words into politicians’ mouths. Celebrities can be inserted into porn videos. Quite soon it will be all but impossible for ordinary people to tell what’s real and what’s not.

What will the effects of this be? When a public figure claims the racist or sexist audio of them is simply fake, will we believe them? How will political campaigns work when millions of voters have the power to engage in dirty tricks? What about health messages on the dangers of diesel or the safety of vaccines? Will vested interests or conspiracy theorists attempt to manipulate them? Unable to trust what they see or hear, will people retreat into lives of non-engagement, ceding the public sphere to the already powerful or the unscrupulous? The potential for an “information apocalypse” is beginning to be taken seriously. The problem is we have no idea what a world in which all words and images are suspect will look like, so it’s hard to come up with solutions.

Perhaps not very much will change – perhaps we will develop a sixth sense for bullshit and propaganda, in the same way that it has become easy to distinguish sales calls from genuine inquiries, and scam emails with fake bank logos from the real thing. But there’s no guarantee we’ll be able to defend ourselves from the onslaught, and society could start to change in unpredictable ways as a result. Like the generation JFK was addressing in his speech, we are on the cusp of a new and scary age. Rhetoric and reality, the plausible and the possible, are becoming difficult to separate. We await a figure of Kennedy’s stature to help us find a way through. Until then, we must at the very least face up to the scale of the coming challenge.

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Would have been nice to see Orwell comment on this.

China To Bar People With Bad ‘Social Credit’ From Planes, Trains (R.)

China said it will begin applying its so-called social credit system to flights and trains and stop people who have committed misdeeds from taking such transport for up to a year. People who would be put on the restricted lists included those found to have committed acts like spreading false information about terrorism and causing trouble on flights, as well as those who used expired tickets or smoked on trains, according to two statements issued on the National Development and Reform Commission’s website on Friday. Those found to have committed financial wrongdoings, such as employers who failed to pay social insurance or people who have failed to pay fines, would also face these restrictions, said the statements which were dated March 2.

It added that the rules would come into effect on May 1. The move is in line with President’s Xi Jinping’s plan to construct a social credit system based on the principle of “once untrustworthy, always restricted”, said one of the notices which was signed by eight ministries, including the country’s aviation regulator and the Supreme People’s Court. China has flagged plans to roll out a system that will allow government bodies to share information on its citizens’ trustworthiness and issue penalties based on a so-called social credit score.

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We’re going to figure this one out way too late. The time to stop this is now, not at some future point down the line. But we’re not doing anything at all. We blindly parrot claims about clean energy and electric cars that will allegedly ‘save’ us, because we want to do the saving without paying a price for it that makes our lives one iota less comfy.

Global Biodiversity Crisis Puts Mankind At Risk (AFP)

Earth is enduring a mass species extinction, scientists say – the first since the demise of the dinosaurs and only the sixth in half-a-billion years. The reason? Humanity’s voracious consumption, and wanton destruction, of the very gifts of nature that keep us alive. Starting Saturday, a comprehensive, global appraisal of the damage, and what can be done to reverse it, will be conducted in Colombia. “The science is clear: biodiversity is in crisis globally,” WWF director general Marco Lambertini told AFP ahead of a crucial meeting of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES). “We depend on biodiversity for the food we eat, the water we drink, the clean air we breathe, the stability of weather patterns, and yet our actions are pushing nature’s ability to sustain us to the brink.”

Scientists and government envoys will gather as the 128-member IPBES to dot the i’s and cross the t’s on five monumental assessment reports designed to inform global policymaking into the future. Compiled over the last three years, the reports will provide the most up-to-date picture of the health of the world’s plants, animals and soil. [..] Meeting host Colombia claims to boast the world’s largest variety of birds and orchids and is second only to Brazil in terms of overall species diversity. Paradoxically, decades of conflict have preserved fragile habitats in no-go zones in the country, whose mountainous topography supports 311 different ecosystems.

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