Dr. D today from an entirely unexpected angle: cattle farming from a engineer’s point of view. His interest here stems from the increasing numbers of people wanting to move “back to the land” in COVID time, who have very little idea what that entails. Well, here it is, here’s your manual:
Dr. D: Since the idea of 1840 has come up, let’s do something useful and work out math on 1840’s factory-food system. That is to say, cows.
In 1840 the Victorian age had started, and the world was moving away from the post-medieval 18th century in important ways. Far from the millennia-long tradition of shepherds and commons punctuated by manor houses, life was moving towards distributed farmsteads integrated with modest small businesses in the nearest town. From centuries-old regional breeds, active breeding had developed powerful new plants and animals with new niche purposes overnight. And likewise, active management of pastures led to a revolution in hay and fodder unimagined a few years previously.
Although railroads and canals radically transformed nations overnight, permitting that specialization of labor and radically reduced costs that expertise and infrastructure bring – that is to say, “Capital” – nevertheless, life remained solidly local by our standards. A farm might have been cleared last year or 200 years previous. It might be attached to a railroad or be in the Alps. It might be under the eye of the Feudal Lord or might be a colony of Anabaptists. But the general structure was now one of single family ownership, large or small, with a central house and barn, with fields moving back from the house and road into ever-wilder, less human territory, eventually becoming impassible forest in the great beyond.
While there was a human transformation happening, daily items were more historic than we might credit: a farm might have few iron nails and hinges, few window panes, with turf cellars and wood box granaries that a Viking would recognize. Spinning and weaving existed on site or in the cots nearby. Although an explosion in factory goods was beginning, there was still little to buy, and few stores to buy things from. At the same time, the new availability of iron, of steel for blacksmiths, but also for saws and new wood mills made materials unimaginably cheap, as material science opened the world to new inventions. The revolution of Jethro Wood’s steel plow opened up soil to production unimaginable a few years before, and Jethro Tull’s grain drill was finally becoming common instead of simply tossing seeds by the handful for the birds on ox-harrowed ground.
American corn, maize, was transforming from Indian-flint grown in hills and hung on poles to endless fields of food, cattle feed even for cities and feedlots far away. And with it, the opening of the north, of feeding chickens, pigs, and horses in a newly-sawn Dutch barns all winter. And cows. Cows have a different place in human life. Unlike sheep, who need little and can stay faraway much of the year, or chickens which require daily tending, cows live in the middle place. They can stay in the field, but essentially must be fenced. They may not need humans, but when used for milk they require human attention twice daily all year.
They can be an expensive breakeven, but with the right support and infrastructure, they are highly profitable in diverse ways: Milk, butter, cheese, which may be too much for one farm without a nearby market. Meat, leather, bones, which again tie into the butchers, markets, prices, tanners and railroads. And oxen, the slow tractor of the small, as well as calves for sale, and the milk they cause, starting the year over again. So a cow is not a cow: it’s a system. The system has parts, and the parts are not only breeds, traditions, methods, but expensive standing infrastructure – barns, fences, wells, dairies, markets — Capital — or else they are put afield, Roman-style, and wild, near-subsistence living returns again.
Of course all methods, all areas, all answers are local, but let’s take your British/French/U.S. areas as an example. In these wet, temperate areas, land requirements are ~1 acre/cow. In addition, in the north, but also in the new scientific methods of Victorian Britain, they were no longer leaving cows to destroy winter pasture in the cold and rain, but haying and sheltering them in barns at the expense of a building, the fields…and the enormous time of mucking and haying. But still it was a well-paying improvement.
A 1,200lb cow eats 10,000lbs a year. At this time, the high-tech cow would be left to field 9 months of the year. So let’s say 3 months or 3,300lbs of hay per cow. You need more rare and expensive Capital of troughs, sheds, and stanchions to feed carefully at this time, so much is wasted. Estimate 5,000lbs dry hay per cow. Cows are not “cows”; they live in herds. To milk, you need calves. To calve you need bulls. Bulls are generally overhead as they are quickly too tough for the butcher, and too tough for the farmer without a very strong fence and strong britches.
You can’t have a herd of 500 cows either: they are too many and will trample the soil to powder anywhere within walk of the house and barn. So you’re set with 5, 10, 20 cows for a family stead, and not many more on a manor, when for the same reasons they will break off and sublet to a new barn and pasture. 10 cows x 5,000lbs = 50,000lbs of hay. 25 tons. They used the new haystacks, cranes, hay elevators, but let’s visualize in hay bales, a technology common 70 years later. At 50lbs/bale, it’s 1,000 bales. 10 high, 10 deep, 10 wide. That’s 30ft x 16 feet x 14 feet.
A modest 1-story house. Picture 2 semis packed tight, +4 semis loose hay. For only three months. Weather and yield vary wildly by area and year but let’s say hay fields produce 3 tons per acre, so10 acres guarded hay in addition to 10 acres fenced summer pasture. What do we get for it? Hard to figure exactly but +2 gal/day/cow for these hardier breeds which varies wildly with shelter, season, and diet. 2 gallons milk = 2 pounds of cheese. It takes 1 year to raise beef, so 7,500lbs of hay = 1,200lb cow = 750lb beef.
While you need 20 acres for the feed alone, you’ll also need crop rotation, a barn, a springhouse, a dairy, an implement shed, a repair garage, a human house and cellar, and because of humans on site to support the cows: a chicken coop, pigs to eat the leftover dairy, a smokehouse, a garden and orchard, as well as wood for heat. That’s 1 acre / face cord, so let’s say 20 acres for cows, 10 acres for crop rotation, 10 acres for wood, and 10 acres for the homestead, garden, and buildings. What is the common size of American farms from Cape Cod to Iowa? 50 acres. 20 hectares. How many people? 4-10/farm. 1-2 humans/acre.
Why do I bring this up? It gives you a rough sense of transforming a suburban housing development back into the farm it came from. First: there’s no longer any forest. That means no boards, no firewood. We have new materials and oil too, so let’s not dwell on this. There is an enormous surplus of existing buildings. How many acres per house? Presently, it’s 1/5 acre. How many people per house? There are unimaginable difficulties answering this, but let’s say 2 people/house. That’s 10 people per acre.
Pablo Picasso Bull – Plate 4 1945
Starting to see the problem? At merely the cow-size, even ignoring the existing buildings, using McMansions for hay, ignoring firewood, even using solar or (insert fantasy here) you have to displace 20 acres, or 200 people. But you only have 10 cows feeding those 200 people, or 1/20th of 20 gallons = 1 gal, or 1 quart of milk + 12 oz of cheese per day. No grains, no veg. You could halve the population density and it’s not much better. This is your 1840s reality.
They might say this explains why we must have no cows and become vegetarians. But aside from land that cannot be gardened – the entire U.S. cattle plains, for instance, or the Swiss Alps – this is just more false science. Howso? There are 30 calories per cup of kale, 200 calories/pound. There are 1,500 calories per beef pound – 1,900cal/lb dry (jerky). So you need to eat 7x more kale than meat. All you’re doing is concentrating vegetables into meat with a small efficiency loss. So you can EAT more as a vegetarian, but you also HAVE to eat much more to break even. So when they say they can create more food by outlawing meat, be careful of what they’re saying. They’re not creating more calories, more life stuff. They will also calculate the maintenance of a cow from birth on corn feed, which is foolhardy. High-cost, high-input corn or grain feed is only used – or should be – in the last weeks if at all.
Comparing your 1840 yields (i.e. without petroleum fertilizer), that’s 800lbs field corn/acre – a very productive crop. But we just said we have 750lbs/acre in grass-fed beef. The calories are 1,600cal dry corn vs 1,900cal dry beef. Where’s the savings? Where’s the rennet, the suet, the soap, the fertilizer, the leather that could greatly increase the use, the “profit”, the value? Where’s the diversity? Where’s the life?
Here’s the engineering reality: only 442BTUs of sunlight fall per square foot. It may fall evenly or more in summer and less in winter. It may fall on trees, grass, or houses. You can eat it as beef, sugar or kale. You can burn it in the stove. But that’s the energy input of a non-carbon world. And since photovoltaic is at 12% efficiency, solar may be the single least efficient way to capture and store these BTUs – and that’s beyond the rare-earths, glass smelting, world-wide transportation, back-end space-age infrastructure, transmission loss, and replacement problems. Trees, grass, and cows may be the best way. It depends on your goal.
Now can I increase yields from 1840 levels? Yes. A lot. And they did too – I’m describing only one food stream of many overlapping. And although the soil is ruined and the present structures are practically useless in what Kunstler calls “the largest misallocation of resources in world history,” we can still leverage perfect roads, electric, ditches, water lines and structures. But to do so we would need to un-misallocate them, completely convert them out of centralization and suburbia, out of consumption and back into production, and all that takes time, energy, and materials.
And to think I started this discussion calculating how many people and how many scythes to take in those 10 acres of hay. 2 acres per man per day x 5 men, 2 pounds of steel per scythe per man. 10 pounds of finest steel per hay barn. 9 million barns, 90 million pounds of fine scythe steel for this one tool alone. 35 million blades, 1 blade smithed per man per day, 35 million days…on and on and on.
So if you plan to adjust to a new rural world, might want to start early and beat the rush.
Albert Cuyp Cows in a river 1650
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Wonder why it took the right wing so long to wake up to how Julian Assange is linked to the whole machine. Did they really need Tucker Carlson for that?
This is lawyer “sundance” at the Conservative Treehouse. The article has a lot more info, not just on Assange; he’s been digging for a long time. I know, it’s right wing media. But nobody else will cover this. And we want to get Assange released.
On April 11th, 2019, the Julian Assange indictment was unsealed in the EDVA. From the indictment we discover it was under seal since March 6th, 2018. On Tuesday April 15th more investigative material was released. Again, note the dates: Grand Jury, *December of 2017* This means FBI investigation prior to…. The FBI investigation took place prior to December 2017, it was coordinated through the Eastern District of Virginia (EDVA) where Dana Boente was U.S. Attorney at the time. The grand jury indictment was sealed from March of 2018 until after Mueller completed his investigation, April 2019. Why the delay? What was the DOJ waiting for? Here’s where it gets interesting…. The FBI submission to the Grand Jury in December of 2017 was four months after congressman Dana Rohrabacher talked to Julian Assange in August of 2017: “Assange told a U.S. congressman … he can prove the leaked Democratic Party documents … did not come from Russia.” [..]
Knowing how much effort the CIA and FBI put into the Russia collusion-conspiracy narrative, it would make sense for the FBI to take keen interest after this August 2017 meeting between Rohrabacher and Assange; and why the FBI would quickly gather specific evidence (related to Wikileaks and Bradley Manning) for a grand jury by December 2017. Within three months of the grand jury the DOJ generated an indictment and sealed it in March 2018. The EDVA sat on the indictment while the Mueller probe was ongoing. As soon as the Mueller probe ended, on April 11th, 2019, a planned and coordinated effort between the U.K. and U.S. was executed; Julian Assange was forcibly arrested and removed from the Ecuadorian embassy in London, and the EDVA indictment was unsealed.
As a person who has researched this three year fiasco; including the ridiculously false 2016 Russian hacking/interference narrative: “17 intelligence agencies”, Joint Analysis Report (JAR) needed for Obama’s anti-Russia narrative in December ’16; and then a month later the ridiculously political Intelligence Community Assessment (ICA) in January ’17; this timing against Assange is just too coincidental. It doesn’t take a deep researcher to see the aligned Deep State motive to control Julian Assange because the Mueller report was dependent on Russia cybercrimes, and that narrative is contingent on the Russia DNC hack story which Julian Assange disputes. This is critical. The Weissmann/Mueller report contains claims that Russia hacked the DNC servers as the central element to the Russia interference narrative in the U.S. election. This claim is directly disputed by WikiLeaks and Julian Assange, as outlined during the Dana Rohrabacher interview, and by Julian Assange on-the-record statements.
The predicate for Robert Mueller’s investigation was specifically due to Russian interference in the 2016 election. The fulcrum for this Russia interference claim is the intelligence community assessment; and the only factual evidence claimed within the ICA is that Russia hacked the DNC servers; a claim only made possible by relying on forensic computer analysis from Crowdstrike, a DNC contractor. The CIA holds a massive conflict of self-interest in upholding the Russian hacking claim. The FBI holds a massive interest in maintaining that claim. All of those foreign countries whose intelligence apparatus participated with Brennan and Strzok also have a vested self-interest in maintaining that Russia hacking and interference narrative. Julian Assange is the only person with direct knowledge of how Wikileaks gained custody of the DNC emails; and Assange has claimed he has evidence it was not from a hack.
Wisconsin Sen. Ron Johnson on Friday asked Department of Justice Inspector General Michael Horowitz to open an investigation into the dozen-plus phones belonging to associates of the Robert Mueller special counsel that had been wiped of data prior to being surrendered to investigators. Government documents released this week listed multiple phones belonging to members of Mueller’s Russia collusion probe as having been cleared of all data before they were handed over to Horowitz’s office. Many of the phones, according to the documents, were purged of data after the users entered incorrect passwords too many times.
In his letter, Johnson—the chairman of the Senate Committee on Homeland Security and Governmental Affairs—said the missing data “raise[s] concerns about record retention and transparency.” The senator asked Horowitz’s office to “open an investigation into this matter to determine what, why, and how information was wiped, whether any wrongdoing occurred, and who these devices belonged to.” Johnson also asked Horowitz to explain “when and how [his] office was made aware of this matter,” what steps the office took to “confirm whether information on these phones had been wiped,” whether or not the phones in question had “text message capabilities,” and if Horowtiz’s office has “the capability to retrieve the information from these phones?” The letter asks for a response “no later than September 18, 2020.”
Bob Woodward writes that Trump’s Secretary of Defense, General James Mattis, and Trump’s Director of National Intelligence, Dan Coats, spoke together about taking “collective action” to remove President Trump from office. General Mattis said Trump is “dangerous. He’s unfit.” This is the same thing that the Generals and the CIA said about President John F. Kennedy. When Generals and the CIA say that a president is unfit and dangerous, they mean he is dangerous to their budget. By “unfit” they mean he is not a reliable cold warrior who will keep hyping America’s enemies so that money keeps pouring into the military/security budget. By serving defense contractors instead of their country, generals end up very wealthy.
Both Kennedy and Trump wanted to normalize relations with Russia and to bring home US troops involved in make-war operations overseas that boost the profits of defense contractors. To stop Kennedy they assassinated him. To stop Trump they concocted Russiagate, Impeachgate, and a variety of wild and unsubstantiated accusations. The presstitutes repeat the various accusations as if they are absolute proven truth. The presstitutes never investigated a single one of the false accusations. These efforts to remove Trump did not succeed. Having pulled off numerous color revolutions in which the US has overthrown foreign governments, the tactics are now being employed against Trump. The November presidential election will not be an election. It will be a color revolution.
We have reached the point in the demise of our country that a simple statement of obvious truth is not believable. As a number of carefully researched and documented books, some written by insiders, have proved conclusively, the CIA has controlled the prestige American media since 1950. The American media does not provide news. It provides the Deep State’s explanations of events. This ensures that real news does not interfere with the agenda. The German journalst, Udo Ulfkotte, wrote a book, Bought Journalism, in which he showed that the CIA also controls the European press. To be clear, there are two CIA organizations. One is an agency that monitors world events and endeavors to provide more or less accurate information to policymakers.
The other is a covert operations agency. This agency assassinates people, including an American president, and overthrows uncooperative governments. President Truman publicly stated after he was out of office that he made a serious mistake in permitting the covert operations branch of the CIA. He said that it was an unaccountable government in inself. President Eisehnower agreed and in his last address to the American people warned of the growing unaccountable power of the military/security complex. President Kennedy realized the threat and said he was going “to break the CIA into a thousand pieces,” but they killed him first.
It would be easy for the CIA to kill Trump, but the “lone assassin” has been used too many times to be believable. It is easier to overthrow Trump’s reelection with false accusations as the CIA controlls the American and European media and has many Internet sites pretending to be dissident, a claim that fools insouciant Americans. Indeed, it is the leftwing that the CIA owns. The rightwing goes along because they think it is patriotic to support the military/security complex. After the CIA overthrows Trump, they will use Antifa, Black Lives Matter, and their presstitutes to foment race war. Then the CIA will ride in on the Pale Horse, and the population will submit.
“Real Time” host Bill Maher wasn’t nearly as confident about a Joe Biden victory in November as his guests were on Friday night. Maher began by citing what he called “frightening” finds from electoral analyst Nate Silver, who recently determined that if Biden wins the popular vote by less than 1%, he’ll have only a “6 percent chance” of becoming president through the electoral college. Similarly, if Biden wins the popular vote by 1 or 2%, he’ll have a “22% chance” of being elected in addition to the “46% chance” with a 2 to 3% popular vote margin. “So he could win by 3 percent and he still has less than half a chance of winning the election,” Maher said. “You’ve got to get up to 5 or 6% before he has a 98% chance of winning the election. That’s a f—ed up country.”
Author Jessica Yellin, a former CNN correspondent, dismissed any reason for panic among Democrats, pointing to Biden’s “unbelievably steady” polling throughout the year, stressing that he’s been “consistently up 6 points” against President Trump, and adding that the numbers don’t indicate the “worst-case scenario” like they did in 2016. Vanity Fair contributor Peter Hamby cited Trump’s weak polling among independents and women, insisting that a “fundamental shifting” among voters “would take something overwhelmingly dramatic.” “The whole ‘What about 2016?’ thing, it’s just not 2016,” Hamby insisted. “People have had four years of Donald Trump. A verdict has more or less been rendered since he’s taken office … and Joe Biden is just not Hillary Clinton. He’s not.”
“I know,” Maher responded. “But what Nate Silver is seeing, it doesn’t matter. Because 5 or 6% is a lot in this country. That’s a big, big, big victory. And if he doesn’t get that — and races tighten at the end! You sound like the panels I used to have on right before the last election. … You guys are whistling past the graveyard.” Yellin doubled down, telling Maher she thinks it’s “very hard” to see Trump convince the rest of undecided voters to support him, pointing to polling that shows his “law and order” messaging has not improved his standing among voters. “So far. Right now,” Maher told Yellin. “You think it’s going to shift?” Yellin replied. “It could,” Maher said. “People generally don’t like violence in the streets. I mean, yes, you’re right.
When he says, ‘I’m the one who’s going to protect you,’ they’re not getting that. They’re not buying that. What they’re saying is ‘Joe Biden is a healer and we need healing right now.’ But this could change.” Maher has previously expressed doubt about Biden’s chances for a November victory. Last month, he told MSNBC’s Joy Reid he was feeling “very nervous” following the conclusion of the Republican National Convention. “I am feeling less confident about this — maybe it’s just their convention bump got to me, but I’m feeling less confident than I was a month ago,” Maher said. “I feel very nervous, the same way I did four years ago at this time.”
We’re informed hours ago, for instance, that the top lawyers in Robert Mueller’s Special Counsel operation wiped all the records from their cell phones before the DOJ Inspector General could collect evidence of their communications from the SC team’s three-year exercise in overthrowing a president. How is that not an obstruction of justice, and who will answer for it?
That’s on top of many other bits of essential evidence in the RussiaGate coup and other perfidious acts mysteriously gone missing — Special Agent Joe Pientka’s original “302” document from the Flynn interrogation, thousands of Strzok-and-Page’s text messages, official verifications of the Steele Dossier submitted to the FISA court, communications between the FBI “small group” (Comey, McCabe, Priestap, Carlin, McCord, Baker, et al.) plus CIA Chief John Brennan and DNI James Clapper with Senators Burr and Warner on the Senate Intel Committee, communications between “whistleblower” Eric Ciaramella, Col. Alexander Vindman and House Intel Committee chair Adam Schiff, records of CIA prop Stephan Halper’s doings with the Pentagon’s Office of Net Assessment, all communication records between State Department official Jonathan Winer and British ex-spy Christopher Steele….
And now, like a fever building to climax, comes the news right out-front that the Democratic Party intends to foment insurrection if the election goes against them. They’re supporting the coming siege of Lafayette Square set to kick off fifty days of “protest” across from the White House beginning Sept 17 as a warm-up for anarchy in the streets across the nation following the Nov 3 vote. Behind us is the summer of riots, arson, and looting, and who paid to support all that? Who paid for flying Antifa and BLM personnel from city to city, feeding and housing them, paying for their “commercial-grade” fireworks, pallets of bricks, gas masks, lasers, bullhorns, black riot outfits? Why is it hard to find out who bought the plane tickets, booked the hotels? Months have gone by since all that started. Is someone in the DOJ following the money? And following their communications (especially considering the crimes against property they’ve committed)?
Russia has sent out the initial batches of the world’s first registered coronavirus vaccine to all parts of its vast territory, as authorities test the delivery system of the much-needed drug. The formula is expected to be delivered on Monday, said Russia’s Health Minister Mikhail Murashko. “The first small batches have already been shipped,” Murashko said, explaining that the government is testing the supply chain to ensure a robust delivery system across the country’s 85 regions. As well as testing the efficacy and safety of the vaccine itself, the government believes it is paramount to ensure the efficient distribution to citizens, especially to those at high risk. Russia’s homegrown Covid-19 formula is currently in the third and final stage of clinical trials, in which 40,000 Muscovites will take part.
While three-quarters will receive the jab, another quarter will be given a placebo. On Wednesday, Moscow’s Deputy Mayor Anastasia Rakova announced that testing had begun, and over 35,000 residents had applied. “Clinical trials have begun in Moscow,” Murashko said, adding that the ministry had also created “the world’s first mobile application” that allows participants to “report on their condition” throughout the lengthy trial period. [..] The vaccine’s development process has been criticized by some Western countries for its supposedly unsafe rapid development and improper testing. However, earlier this month, the respected British medical journal The Lancet published the Russian Ministry of Health’s Sputnik V study, showing the vaccine to be 100% effective, producing antibodies in all 76 participants of early-stage trials.
For Halloween I’m going to go as a normal person with no mask since that seems to scare the shit out of everyone.
A Chinese scientist who reportedly fled her home country out of fear for her safety has said that she intends to release evidence proving that SARS-Cov-2 did not arise in nature but was actually manufactured in the Wuhan Institute of Virology. Virologist Li-Meng Yan claims to have done some of the earliest work on COVID-19 when it first emerged in China last year. She has said she left China in April and that she is currently in hiding in the U.S. On the British ITV television show “Loose Women” on Friday, Yan said she intends to release evidence showing “why this has come from the lab in China, why they are the only ones who made it.”
“The genome sequence [of the virus] is like a human finger print,” she told the talk show. “And based on this you can identify these things.” Yan said at the start of the pandemic she attempted to warn her supervisors of the threat the virus posed yet she was ignored. The scientist on the show declared it “critical” for the world to understand the virus’s origins, claiming: “We can not overcome it, it will be life-threatening for everyone,” though current epidemiological data indicate that the virus likely has a survival rate above 99%.
With COVID-related income supplements and unemployment benefits now expired or reduced, we face a new wave of mortgage and rental delinquencies, many of which will come in the next few months. According to the Mortgage Bankers Association, as of June 30, mortgage delinquency in the U.S. had reached 8.2 percent, the highest since 2011 and almost double the 4.5 percent of a year earlier. With 53 million mortgages in the U.S., that means more than 4.3 million mortgages are delinquent. Add to that the fact that, per Black Knight mortgage analytics, almost 5 million homes have been in forbearance. With that, I estimate that at least 1 million to 2 million more of these loans will fall delinquent before the end of this year.
As for renters, the U.S. Census Bureau reports that, as of July, 18 percent were delinquent in their rent payments. That compares with less than 7 percent in prior years. With more than 43 million renters, that means more than 7.4 million are behind on their rental payments. With the loss of income and unemployment support, it is reasonable to believe that number will increase by several million over the next few months. Many of the resulting evictions that normally would have occurred have been forestalled by government mandate, and a major portion of the mortgage payments and apartment rental payments that would have been late have been staved off by the lifeline of the $1,200 checks from the CARES Act and augmented unemployment benefits.
Since this assistance has now expired, a new wave of delinquency is before us, and millions more Americans could go delinquent in the months immediately ahead. When people go delinquent on their mortgage or rent because of COVID-based job loss or income reduction, their lives often become a proverbial hell. Many resort to bankruptcy as a refuge. But that is just the start of what is a chain of impairment. For renters, their landlords are then hurt because of those missed rent payments, and so they in turn go into default on the loans they took out to buy the rental property, something felt especially by the small landlords who have little clout with their lenders. Then the lenders themselves — those that made mortgage loans to households and those that made property acquisition loans to the small landlords — suffer loss.
This all comes because the individuals who make up the first link in that chain can’t pay, often just temporarily. All can be protected — at least over the near term — by continued government support such as proposed in the HEROES Act now being debated in Congress. With that, individuals would be able to pay their rent and mortgages, and thus small landlords would be able to pay their loans, and community lenders could avoid major losses.
China’s steel exports have been subject to 15 new anti-dumping investigations in the first nine months of the year, more than all of last year, as experts warn that the US-China trade war and the coronavirus pandemic have hastened a trend towards global protectionism. The US, Britain, Australia and Thailand are among the countries that have initiated dumping probes into Chinese products, including steel plates, grinding balls, cylinders and strands, as well as galvanised wires. Last year, China faced 13 anti-dumping investigations into its steel exports, according to the China Trade Remedies Database. Thailand went a step further in August, slapping a 35.67 per cent anti-dumping tariff on Chinese hot-dipped galvanised coils and sheets.
China, the world’s biggest steel producer, has long been accused of flooding the international market with cheap, subsidised steel, primarily due to oversupply at home. It produced 996 million tonnes of crude steel last year, more than half of the world’s combined output of 1.8 billion tonnes, according to the World Steel Association. But against the backdrop of the coronavirus pandemic, many smaller steel producers in Asia have had enough and are doing everything possible to protect their domestic industries. Korrakod Padungjitt, a Thai steel manufacturer and secretary general of the Thailand Iron and Steel Industry Club, said his country’s latest anti-dumping tariff on Chinese steel would just be a drop in the ocean. Chinese steel started flowing into Thailand in the early 2000s and has increasingly squeezed regional manufacturers, Korrakod said.
The Chinese steel onslaught was so ferocious that in 2010, mainland producers mixed alloy in their steel products to circumvent existing tariffs, he added. The issue is now a regular feature of annual meetings between the Asean Iron and Steel Council and the China Iron and Steel Association. Thailand’s industrial sector has been hard hit by the pandemic, with both investment and consumption plummeting. In July, Thailand’s car production fell 47 per cent compared to the same time last year, which was a significant blow to the steel sector. Earlier this year, Thailand’s Department of Foreign Trade launched an anti-dumping investigation into Chinese hot-dipped galvanised coils and sheets, which are used largely in construction and manufacturing, and in August followed through with a 35.67 per cent duty.
Money that should go to refugees and homeless. Not French arms dealers. But due to historic and geographical factors, Greeks take their army very seriously. They’re one of few countries that meet their NATO quota.
Greece will strengthen its armed forces by buying new weapons systems, Prime Minister Kyriakos Mitsotakis announced Saturday. Specifically, Greece will acquire 18 Rafale fighters, a full squadron’s strength, to replacing the aging Mirage 2000 planes; 4 new frigates, while refurbishing 4 existing ones; 4 Romeo naval helicopters; antitank weapons for the Army; torpedoes for the Navy and guided missile for its Air Force. It will also add 15,000 professional soldiers to its armed forces over the next five years, Mitsotakis said. The new weapons procurement program comes amid heightened tensions with Turkey over resources in the eastern Mediterranean. Its announcement dominated the first half of Mitsotakis’ speech on the grounds of the Thessaloniki International Fair (TIF).
The trade fair itself has been canceled, due to the coronavirus pandemic, but Mitsotakis delivered the customary speech describing next year’s economic policy. The extra spending on defense did not prevent Mitsotakis from announcing a new €6.8 billion injection into the economy, in the form of payroll and other tax cuts, subsidies and payments of pension cuts restored by the courts. “A shift in priorities (toward defense spending) does not mean a change in goals,” Mitsotakis told a restricted audience of just 50, all wearing masks and maintaining social distancing. “Ankara is now adding to the provocations in the Aegean, the undermining of peace in the entire Mediterreanean,” Mitsotakis said. “It is threatening the eastern borders of Europe, and it is undermining security in a sensitive crossroads of three continents.”
Greece military boost
Greek riot police fired teargas at protesting refugees clamouring to leave Lesbos as the situation on the island became more explosive days after devastating fires forced thousands to flee its notorious migrant camp. Tensions mounted as asylum seekers, desperate to make their way to other parts of Europe, watched authorities, including the Greek army, rush to replace the now gutted facility of Moria with a new holding centre. “Freedom, freedom,” demonstrators chanted under the watchful eye of riot police deployed to the Aegean isle from Athens. “We don’t need new camp … we want freedom,” proclaimed some of the crude handwritten placards held aloft by protesters on Saturday.
Witnesses reported teargas being fired after younger migrants began lobbing rocks at the police units. A series of overnight blazes starting on Tuesday razed Moria, Europe’s largest refugee camp, decanting close to 13,000 men, women and children into the surrounding countryside. With the exception of 406 lone migrant children who have been flown to the Greek mainland, the former residents have been left to fend for themselves, many making makeshift shelters out of tarps and bamboo reeds along the side of a main road leading to Mytilene, the island’s port capital. Others have camped in fields, olive groves, churches and even cemeteries.
Frustration, the insistence of Greek officials that transferal is out of the question and a growing realisation that any prospect of leaving is diminishing fast have helped create an increasingly toxic atmosphere. The destruction of containers housing the asylum service in Moria has further fuelled a prevailing sense of desperation among refugees. “The thought that they may be here for even longer now, the sight of the replacement camp and being stranded without proper shelter for days has, for many, become the tipping point,” said one aid worker requesting anonymity because she was not authorised to speak. Earlier, Greece’s alternate migration minister, Giorgos Koumoutsakos, told SKAI TV Lesbos was facing a public health emergency, “a triple challenge” that also involves “public order and national security”.
On Saturday a woman and her 20-month-old baby were flown to Athens where they will be hospitalised after testing positive for the virus. They were not among the original group, most of whom were described as asymptomatic carriers of Covid-19. With fears of infection rates increasing, some 200,000 Covid-19 rapid tests were flown into Lesbos on a specially chartered plane on Friday. “There are now real fears among our island’s residents of the virus spreading,” local journalist Yannis Sinanis told the Guardian. Officials were working around-the-clock to erect the new settlement, a collection of 500 tents with the capacity to accommodate six people each. Other asylum seekers are expected to be accommodated in a ferryboat and naval ships.
The Academy of Motion Picture Arts and Sciences has stripped Schindler’s List of its Best Motion Picture award for not having enough LGBTQ+ characters, people of color, and other oppressed groups. “Schindler’s List would have been a great movie if it just had a dozen transgendered characters,” said Le’Jon de Froofroo, spokesperson for the Academy. “As it is, there are just a bunch of Jews and Germans — very privileged races.” “Also, the movie has Nazis — this is the current year, for goodness’ sake!” Steven Spielberg has been ordered by the Academy to re-release the film with an unnecessary LGBTQ+ side plot, a gay roommate for Schindler, and a song and dance number set to a Lady Gaga song over the end credits if he wishes to re-earn the Academy Award. Otherwise, it will be re-awarded to Brokeback Mountain. This is just the first Oscar winner to be stripped of its award, as the Academy has plans to strip the award from over 95% of the winners and give them all to Brokeback Mountain.
Assange was granted sanctuary due to Rafael Correa, then the President of Ecuador: unfortunately, Correa’s successor – one Lenin Moreno – has caved to pressure from the US and Britain, and it looks like Assange is going to be handed over to the British imminently. What happens next is anybody’s guess, but my own view is that there has indeed been a grand jury secretly deliberating his case, and charges will be made public: which means Assange will be sent to America, and to an uncertain fate. Uncertain due to the Supreme Court decision in the Pentagon Papers case, in which the Supremes ruled that the First Amendment protects journalists who report facts that may embarrass or otherwise inconvenience the government.
In other circumstances, and in an earlier era, his fate would not be uncertain, it would be sealed. After all, WikiLeaks has revealed more US government secrets than any single individual or state adversary in history. One after another the revelations came – a US helicopter gunship gunning down Iraqi civilians, the entire secret diplomatic history of the US, complete with original documents and references, the methodology of hi-tech US surveillance on ordinary Americans, and the list goes on and on. Assange is, in short, the greatest journalist of our time – and so naturally the rest of the profession hates his guts, and is calling for his head.
The reasons for this should be clear enough: the Russia-gate mythology, a matter of faith for the Fourth Estate, characterizes Assange as one of its chief demons. He is, in their fake-expert phraseology, a Russian “asset,” Putin’s puppet, who deprived Hillary Clinton of her rightful due and “stole” the 2016 presidential election on behalf of Donald Trump.
For its part, the Russian government has always categorically denied any involvement in the ill-fate of nationals living in exile in Britain. On the Skripal case, Moscow has pointed out that the British authorities have not produced any independently verifiable evidence against the Kremlin. Russian requests for access to the investigation file have been rejected by the British. On the Litvinenko case, Russia has said that the official British inquiry was conducted without due process of transparency, or Russia being allowed to defend itself. It was more trial by media. A common denominator is that the British have operated on a presumption of guilt. The “proof” is largely at the level of allegation or innuendo of Russian malfeasance.
But let’s turn the premise of the argument around. What if the British state were the ones conducting a campaign of assassination against Russian émigrés, with the cold-blooded objective of using those deaths as a propaganda campaign to blacken and criminalize Russia? In a recent British media interview Russia’s Foreign Minister Sergei Lavrov was typically harangued over alleged Russian malign activity in Britain. Lavrov rightly turned the question around, and said that the Russian authorities are the ones who are entitled to demand an explanation from the British state on why so many of its nationals have met untimely deaths. The presumption of guilt against Russia is based on a premise of Russophobia, which prevents an open-minded inquiry.
If an open mind is permitted, then surely a more pertinent position is to ask the British authorities to explain the high number of deaths in their jurisdiction. As ever, the litmus-test question is: who gains from the deaths? In the case of the alleged attempted assassination of Sergei Skripal and his daughter, would Russia risk such a bizarre plot against an exile who had been living in Britain undisturbed for 10 years? Or would Britain gain much more from smearing Moscow at the time of President Putin’s re-election in March, and in the run-up to the World Cup?
The more recent alleged nerve-agent poisoning of two British citizens – Charlie Rowley and Dawn Sturgess – in the southern English town of Amesbury revived official anti-Russia accusations and public fears over the earlier Skripal incident in nearby Salisbury. The Amesbury incident in early July occurred just as a successful World Cup tournament in Russia was underway. It also came ahead of US President Donald Trump’s landmark summit with Vladimir Putin in Helsinki. Again, who stands to gain most from these provocative events? Russia or Britain?
As we’ve discussed previously, in a post-Iraq invasion world the confident-sounding assertions of spies, government officials and media pundits is not sufficient evidence for the public to rationally support claims that are being used to escalate dangerous cold war tensions with a nuclear superpower. The western empire has every motive in the world to lie about the behaviors of a noncompliant government, and has an extensive and well-documented history of doing exactly that. Hard, verifiable, publicly available proof is required. Assertions are not evidence.
But even if there wasn’t an extensive and recent history of disastrous US-led escalations premised on lies advanced by spies, government officials and media pundits, the burden of proof would still be on those making the claim, because that’s how logic works. Whether you’re talking about law, philosophy or debate, the burden of proof is always on the party making the claim. A group of spies, government officials and media pundits saying that something happened in an assertive tone of voice is not the same thing as proof. That side of the Russiagate debate is the side making the claim, so the burden of proof is on them. Until proof is made publicly available, there is no logical reason for the public to accept the CIA/CNN Russia narrative as fact, because the burden of proof has not been met.
[..] There are many Russiagate skeptics who have been doing copious amounts of research to come up with other theories about what could have happened in 2016, and that’s fine. But in a way this can actually make the debate more confused, because instead of leaning back and insisting that the burden of proof be met, you are leaning in and trying to convince everyone of your alternative theory. Russiagaters love this more than anything, because you’ve shifted the burden of proof for them. Now you’re the one making the claims, so they can lean back and come up with reasons to be skeptical of your argument.
The media over the last few years has indulged in wild speculation around U.S.-Russian relations. And as seen, the run up to this weeks meeting at Helsinki between the leaders of the two nations has been no different. James believes the ongoing Russia investigation, the election of Donald Trump and the defeat of Hillary Clinton has made a certain class of people in the U.S. irrational. “I think that the thinking class in the United States has literally lost its mind. Donald Trump’s persona is so odious that it’s just driven them mad and he’s like a giant splinter in the eye of the thinking class.”
A registered Democrat, Kunstler doesn’t believe that the Russians interfered in the U.S. election in any meaningful way. And any efforts to punish or antagonize them are crazy and dangerous. The ongoing expansion of NATO, playing war games at Russia’s borders and the destabilizing of Ukraine has consolidated bad relations with Russia stretching back to the Cold War. History repeats itself tragically when the thinking classes of powerful nations start to behave extremely irrationally. “Doing anything to interfere with trade and erect barriers and put up tariffs might be a dangerous thing to do,” says Kunstler.
According to a memo seen by The Wall Street Journal that was sent to a supplier last week, Tesla said it is asking its suppliers for cash back to, drumroll, help it become profitable, as if that is somehow the priority of the company’s suppliers. And we are not talking about a few cents here and there: Tesla requested the supplier return what it calls a meaningful amount of money of its payments since 2016. But wait, it gets better: the memo which was sent by a global supply manager (who will probably be fired shortly), described the request as “essential to Tesla’s continued operation” and characterized it as an investment in the car company to continue the long-term growth between both players.
In other words, Tesla has given its vendors an ultimatum: give us a haircut, or else we won’t survive, and not only is your business with us over, but all those billions in payables we owe you, well, good luck with the other pre-petition claims in bankruptcy court. Or as one Tesla skeptic noted on twitter: “TSLA has been cranking out cars 24/7 at 2-3x the rate they can deliver them, turning supplier parts on credit into finished goods. Then they turn around and “ask” for a cash back so they don’t default on said suppliers. Y’all just got played.” For those wondering how much money Tesla owes its suppliers, or “ransom” as it is now better known, the answer is $2.6 billion and rising exponentially.
As the WSJ further adds, “while Tesla said in the memo that all suppliers were being asked to help it become profitable, it is unclear how many were asked for a discount on contracted spending amounts retroactively.” While Tesla did not comment on the memo, it spun the situation as standard industry practice (it isn’t) confirming it is seeking price reductions from suppliers for projects, some of which date back to 2016, and some of which final acceptance many not yet have occurred. The company called such requests a standard part of procurement negotiations to improve its competitive advantage, especially as it ramps up Model 3 production. Odd that Tesla did not consider all these aspects of its business when it signed contracts which laid out, very clearly, what its obligations were.
Ramón Rivera had barely gotten his olive oil business started in the sun-swept Algarve region of Portugal when Europe’s debt crisis struck. The economy crumbled, wages were cut, and unemployment doubled. The government in Lisbon had to accept a humiliating international bailout. But as the misery deepened, Portugal took a daring stand: In 2015, it cast aside the austerity measures its European creditors had imposed, igniting a virtuous cycle that put its economy back on a path to growth. The country reversed cuts to wages, pensions and social security, and offered incentives to businesses. The government’s U-turn, and willingness to spend, had a powerful effect. Creditors railed against the move, but the gloom that had gripped the nation through years of belt-tightening began to lift. Business confidence rebounded. Production and exports began to take off — including at Mr. Rivera’s olive groves.
“We had faith that Portugal would come out of the crisis,” said Mr. Rivera, the general manager of Elaia. The company focused on state-of-the-art harvesting technology, and it is now one of Portugal’s biggest olive oil producers. “We saw that this was the best place in the world to invest.” At a time of mounting uncertainty in Europe, Portugal has defied critics who have insisted on austerity as the answer to the Continent’s economic and financial crisis. While countries from Greece to Ireland — and for a stretch, Portugal itself — toed the line, Lisbon resisted, helping to stoke a revival that drove economic growth last year to its highest level in a decade. The renewal is visible just about everywhere. Hotels, restaurants and shops have opened in droves, fueled by a tourism surge that has helped cut unemployment in half.
In the Beato district of Lisbon, a mega-campus for start-ups rises from the rubble of a derelict military factory. Bosch, Google and Mercedes-Benz recently opened offices and digital research centers here, collectively employing thousands. Foreign investment in aerospace, construction and other sectors is at a record high. And traditional Portuguese industries, including textiles and paper mills, are putting money into innovation, driving a boom in exports. “What happened in Portugal shows that too much austerity deepens a recession, and creates a vicious circle,” Prime Minister António Costa said in an interview. “We devised an alternative to austerity, focusing on higher growth, and more and better jobs.”
A decade ago, in the summer of 2008, the price of West Texas Intermediate (WTI) crude was racing toward $150 a barrel. Over the previous three years, and despite strong demand growth, the world had only increased oil production by 1.2 million BPD, and it essentially all came from OPEC. Many analysts, including me, were extremely concerned about the future hold OPEC would maintain over the world’s oil supplies. It appeared that there would an enormous transfer of wealth from those countries dependent upon oil imports – like the United States – to OPEC countries. In many cases, these countries have interests that are hostile to those of the U.S., so this was very much an issue of national security.
But the future played out differently than it seemed it would in the summer of 2008. Unbeknownst to most people, oil producers were experimenting with a marriage between two established oil drilling technologies — horizontal drilling and hydraulic fracturing. The success of this marriage would unlock oil in tight oil and shale oil deposits that had previously been too expensive to recover, and would result in one of the greatest oil booms the world had ever seen. In fact, the “fracking revolution” caused U.S. oil production to turn upward in 2009, and then rise over the next seven years at the fastest rate in U.S. history.
While it is still true that OPEC still produced 42.6% of the world’s oil in 2017, the majority of new oil production since 2008 has come from the U.S. Of the 10.3 million BPD of new oil production since 2008, the U.S. supplied 6.2 million BPD (60%). The world’s two other major oil-producing countries, Saudi Arabia and Russia, saw their production increase by 1.7 million BPD and 1.2 million BPD respectively since 2008. OPEC overall increased its production by 3.6 million BPD since 2008, primarily as a result of production growth in Saudi Arabia, Iraq, and Iran. But OPEC’s gains were limited by production declines in Venezuela, Libya, and Nigeria. There were also regional production declines in Europe, Asia, Africa, and South and Central America.
Millions of Americans rent because they can’t afford to buy. And many of those people struggle to pay the rent, new research suggests, more so if they are African-American or Hispanic. A renter who earned $39,647 per year, the median black household income in the U.S., could afford just 16.2% of rentals available on Zillow if they kept their housing costs below 30% of their pretax income, according to a new analysis from the real-estate company. Hispanic renters fared somewhat better: Those who earned the median household income could afford 27.3% of rentals before they risked spending more than a third of their pretax income on housing.
Spending 30% of your gross income on rent is the traditional measure of affordability used by many real-estate experts. Comparatively, white renters who earned the median household income for their demographic could afford 49.7% of rentals, while Asian renters could afford 67.4%. “Perhaps more so than any other factor, income determines where and how we live in the United States today,” said Zillow senior economist Aaron Terrazas in the report. “Income disparities across racial and ethnic groups in the United States have remained stubbornly persistent and, as a result, black and Hispanic families encounter far fewer affordable rental options than white and Asian families,” he said.
China on Monday launched an anti-dumping probe into stainless steel imports worth $1.3 billion, including from a privately owned Chinese mill with operations offshore, after complaints that a flood of product has damaged the local industry. The Commerce Ministry said on Monday the investigation will target imports of stainless steel billet and hot-rolled stainless steel sheet and plate from the European Union, Japan, South Korea and Indonesia, which nearly tripled last year. The move follows a complaint by Shanxi Taigang Stainless Steel with backing from four other state-owned mills including Baosteel’s stainless steel division, which blamed cheap imports on falling prices, it said.
China makes and consumes around half of the world’s stainless steel, which is used to protect against corrosion in buildings, transportation and packaging. While the complaint targets eight foreign producers, it also lists a number Chinese companies, including the Indonesian unit of one of the world’s top producers, Tsingshan Stainless Steel, and 19 traders who import product. Some private Chinese companies have opened or started building plants in Indonesia in recent years, drawing on its plentiful nickel resources and lower-cost of production. A significant portion of the new production has been sold in China, analysts say.
Throughout the course of human history, the biggest cities have always seemed impossibly large. For many millennia, it was almost unfathomable for a city to sustain more than 1 million residents. In fact, as Visual Capitalist’s Jeff Desjardins notes, it wasn’t until the 19th century that the largest cities globally, such as London and Beijing, were able to consistently hold populations beyond that impressive mark. Despite this, in the modern era, we’ve quickly discovered that a city of 1 million people isn’t remarkable at all. In China alone, there are now over 100 cities with a million people today – and as such, our mental benchmark for what we consider to be a “big city” has changed considerably from past times.
Just like a city the size of modern Tokyo was hard to imagine for someone living in the 19th century, it can be an extremely difficult thought experiment for us to visualize what future megacities will look like. Researchers at the Global Cities Institute have crunched the numbers to provide us with one view of the potential megacities of the future, extrapolating a variety of factors to project a list of the 101 largest cities in the years 2010, 2025, 2050, 2075, and 2100.
Humanity is devouring our planet’s resources in increasingly destructive volumes, according to a new study that reveals we have consumed a year’s worth of carbon, food, water, fibre, land and timber in a record 212 days. As a result, the Earth Overshoot Day – which marks the point at which consumption exceeds the capacity of nature to regenerate – has moved forward two days to 1 August, the earliest date ever recorded. To maintain our current appetite for resources, we would need the equivalent of 1.7 Earths, according to Global Footprint Network, an international research organisation that makes an annual assessment of how far humankind is falling into ecological debt.
The overshoot began in the 1970s, when rising populations and increasing average demands pushed consumption beyond a sustainable level. Since then, the day at which humanity has busted its annual planetary budget has moved forward. Thirty years ago, the overshoot was on 15 October. Twenty years ago, 30 September. Ten years ago, 15 August. There was a brief slowdown, but the pace has picked back up in the past two years. On current trends, next year could mark the first time, the planet’s budget is busted in July. While ever greater food production, mineral extraction, forest clearance and fossil-fuel burning bring short-term (and unequally distributed) lifestyle gains, the long-term consequences are increasingly apparent in terms of soil erosion, water shortages and climate disruption.
Farmers across northern and central Europe are facing crop failure and bankruptcy as one of the most intense regional droughts in recent memory strengthens its grip. States of emergency have been declared in Latvia and Lithuania, while the sun continues to bake Swedish fields that have received only 12% of their normal rainfall. The abnormally hot temperatures – which have topped 30C in the Arctic Circle – are in line with climate change trends, according to the World Meteorological Organization. And as about 50 wildfires rage across Sweden, no respite from the heatwave is yet in sight. Lennart Nilsson, a 55-year-old cattle farmer from Falkenberg near Malmo and co-chair of the Swedish Farmers Association, said it was the worst drought he had experienced.
“This is really serious,” he said. “Most of south-west Sweden hasn’t had rain since the first days of May. A very early harvest has started but yields seem to be the lowest for 25 years – 50% lower, or more in some cases – and it is causing severe losses.” If no rain comes soon, Nilsson’s association estimates agricultural losses of up to 8bn Swedish kronor (£700m) this year and widespread bankruptcies. The drought would personally cost him around 500,000 kronor (£43,000), Nilsson said, adding that, like most farmers, he is now operating at a loss. The picture is little different in the Netherlands, where Iris Bouwers, a 25-year-old farmer, said the parched summer had been a “catastrophe” for her farm.
“Older families around me are comparing this to 1976,” she said. “My dad can’t remember any drought like this.” The Bouwerses expect to lose €100,000 this year after a 30% drop in their potato crop. After investing in a pig stable over the winter, the family have no savings to cover the loss. Asked what she would do, Bouwers just laughed. “Hope and pray,” she said. “There is not much more I can do. I wouldn’t talk about bankruptcy yet, but our deficit will be substantial. It probably means we need to have a very good talk with the bank.”
Trillions of dollars of fossil fuel wealth will be wiped out at some point over the next 17 years even if governments fail to impose binding carbon emissions limits on industry to curb global warming, according to a major new study. Environmentalists and policymakers have long warned of the threat of a “carbon bubble” and “stranded assets” for listed energy companies, based on the possibility they will never be able to realise the value of their vast stores of oil, gas and coal if politicians actually deliver on their decarbonisation promises.
But today a group of scientists and analysts from Cambridge, Nijmegen, Macao and the Open University take that warning a step further by arguing that these assets are destined to be stranded regardless of official policies to discourage the use of fossil fuels because clean energy technologies are now developing so rapidly that those polluting assets will be worthless in any case. “Our analysis suggests that, contrary to investor expectations, the stranding of fossil fuels assets may happen even without new climate policies. This suggests a carbon bubble is forming and it is likely to burst,” said Professor Jorge Viñuales from Cambridge University. If policymakers did deliver on the decarbonisation programmes, the loss for investors would be even more rapid.
The research is at odds with work from the International Energy Agency, which projects steady price rises for fossil fuels until 2040. And Donald Trump’s decision last year to pull the United States out of the Paris Agreement on climate change has also done nothing to persuade most investors to take the stranded assets warning seriously. But the researchers’ new “simulation-based, energy-economy-carbon-cycle climate” model suggests investing in fossil fuel firms today is likely to prove a disastrous bet, suggesting that between $1 trillion and $4 trillion could be wiped off the value of global fossil fuel assets by 2035.
Electricity production is heavily dependent on materials like steel, concrete, copper and aluminum, for both producing electricity and moving it around to where it’s needed (see figure). Solar and Wind energy take more steel than any other energy source. Natural gas and nuclear take the least. Solar needs 1,600 tons of steel per MW, wind energy needs over 400 tons of steel, while gas and nuclear need only 4 and 40 tons, respectively. Wind and solar also require ten times more transmission, also heavily steel-intensive, since they are usually sited far away from where the energy is used.
The average high-voltage transmission tower includes about 30 tons of steel and transmission wire contains about a ton of steel per mile. Going from our biggest solar array, located in the Mohave Desert, to Los Angeles is almost 300 miles, requiring on the order of 10,000 tons of steel depending on specific design. While we tend to think of renewables as associated with Blue States, they are actually growing faster in Red States. Four of the five states with the most installed wind energy are Texas (20,321 MW), Iowa (6,917 MW), Oklahoma (6,645 MW) and Kansas (4,451 MW). The only Blue State in the top five is California (5,662 MW).
Money is pouring into the U.S. economy and in turn helping provide support for the otherwise struggling stock market. If current conditions persist, corporations are likely this year to inject more than $2.5 trillion into what UBS strategists term “flow” — the combination of share buybacks, dividends, and mergers and acquisitions activity. The development comes as companies find themselves awash in cash, thanks primarily to years of stashing away profits plus the benefits of a $1.5 trillion tax break this year that slashed corporate rates and encouraged firms to bring back money idling overseas. Companies have nearly $2.5 trillion in cash parked domestically, according to the Federal Reserve, and as much as $3.5 trillion overseas, various estimates have shown.
When all is said and done for 2018, UBS expects dividend issuance to top $500 billion, buybacks to range from $700 billion to $800 billion, and M&A to constitute about $1.3 trillion. If the numbers pan out, they would equate to about 10% of the S&P 500’s market cap and 12.5% of GDP. “Assuming improving growth and stable rates, we expect the positive positioning/flow backdrop to support US equities, which is important as the daily corporate flow slows from mid-June to mid-July,” UBS strategist Keith Parker said in a note. Parker pointed out that the firm has overweight positions in both tech and health care as the two sectors are leading the buyback boom.
Buybacks specifically have been on a torrid pace and are helping provide a floor to a market that for much of 2018 had looked tired and volatile after a 20% S&P 500 gain the year before. Repurchases are up 83% year to date, far ahead of the 9% gain in dividends, while M&A activity involving U.S. companies has surged 130%, according to UBS. [..] UBS estimates that the combination of buybacks, dividends and demand flows account for some 40% in performance this year. The S&P 500 has nudged 2.6% higher and the Dow industrials are just ahead of breakeven.
In an op-ed published overnight in the FT, a central banker writes that when it comes to the turmoil gripping the world’s Emerging Markets, whether it is the acute, idiosyncratic version observed in Argentina and Turkey, which according to JPM may be doomed, or the more gradual selloffs observed in places like Indonesia, Malaysia, Brazil, Mexico and India, don’t blame the Fed’s rate hike cycle. Instead blame the “double whammy” of the Fed’s shrinking balance sheet coupled with the dollar draining surge in debt issuance by the US Treasury.
That’s the message from the current Reserve Bank of India, Urjit Patel, who writes that “unlike previous turbulence, this episode cannot be attributed to the US Federal Reserve’s moves on interest rates, which have been rising steadily since December 2016 in a calibrated manner.” But does that mean that the Fed is not to blame for what increasingly looks like another budding EM crisis? Not at all: according to Patel, the dollar funding shortage “upheaval” stems from what he sees as the confluence of two significant events of which the Fed’s balance sheet reduction is one, while the second is the dramatic increase in US Treasury issuance to pay for Trump’s tax cuts; what is notable is that both events are drastically soaking up dollar liquidity.
As a result, Patel blames a lack a coordination between the Fed and Treasury on the adverse flow through across global funding markets as a result of this decline in dollar liquidity, and writes that “given the rapid rise in the size of the US deficit, the Fed must respond by slowing plans to shrink its balance sheet. If it does not, Treasuries will absorb such a large share of dollar liquidity that a crisis in the rest of the dollar bond markets is inevitable.” Putting these two parallel processes – which threaten to materially impair dollar funding markets – in context, on one hand there is QT, or the gradual decline in the Fed’s balance sheet which is set to peak at a rate of $50BN/month by October, while at the same time US net Treasury issuance is set to jump to $1.2 trillion in 2018 and 2019 to cover the forecasted budget deficit of $804BN and $981BN in 2018 and 2019, respectively.
And in a curious coincidence, the withdrawal of dollar funding by the Fed in monthly terms, as it reduces its reinvestment of income received, is proceeding at roughly the same pace as that of net issuance of debt by the US government. Furthermore, both processes are open ended which means that over the next few years, the government’s net issuance will stabilize, albeit at a high level, whereas the Fed’s balance-sheet reduction will keep rising. Both are terrible news for Emerging Markets, which are in desperate need of reversing the ongoing dollar outflows; however as long as Trump continues to make America great, and funds said stimulus with excess debt issuance, emerging market turmoil is virtually guaranteed.
China’s debt crackdown is a key risk to the country’s economic growth and will have significant knock-on effects for the global economy, particularly emerging markets with high commodity dependence or close Chinese trade links, Fitch Ratings said. Beijing’s campaign to put a lid on debt could also lead to a sharp slowdown in business investment, Fitch said late on Sunday, forecasting that growth in the world’s second-biggest economy would slow to around 4.5% over the medium term. Fitch said the implications of this scenario for the global economy would be significant but not dramatic, unlike a full-scale hard landing.
One of the most significant effects would be on commodity prices, with Fitch expecting oil and metal prices to fall 5 to 10% from its baseline scenario, reflecting China’s large role as a commodity consumer. In April, a Reuters poll of 72 institutions showed economists expected China’s economic growth to slow to 6.5% this year and 6.3% next year as Beijing extends its crackdown on riskier lending practices. GDP in 2017 expanded 6.9% in real terms and 11.2% in nominal terms. Beijing’s financial crackdown, now in its third year, has slowly pushed up borrowing costs and is choking off alternative, murkier funding sources for companies such as shadow banking.
The ratio of Chinese corporate debt to GDP is already very high by international standards – at 168% in 2017 – and is expected to start rising again as nominal GDP growth declines towards 8% from the unusually high rate of more than 11% in 2017, Fitch said. If the government aims to stabilize its corporate debt ratio by 2022, Fitch said China’s nominal economic growth rate could fall by 1 percentage point a year over the medium term while business investment growth would drop 5percentage points per year.
The political upheaval and social unrest fueling the current crisis in Italy should surprise no one. On the contrary, the only uncertainty was when exactly matters would come to a head. Now they have. Italy’s per capita GDP in 2018 is about 8% below its level in 2007, the year before the global financial crisis triggered the Great Recession. And the International Monetary Fund’s projections for 2023 suggest that Italy will still not have fully recovered from the cumulative output losses of the past decade. Among the 11 advanced economies that were hit by severe financial crises in 2007-2009, only Greece has suffered a deeper and more protracted economic depression.
Greece and Italy were the two economies carrying the highest debt burdens at the outset of the crisis (109% and 102% of GDP, respectively), leaving them poorly positioned to cope with major adverse shocks. Since the crisis erupted a decade ago, economic stagnation and costly banking weaknesses have propelled debt burdens higher still, despite a decade of exceptionally low interest rates. Greece has already faced more than one “credit event” and, while Italy has also had a couple of close calls, the spring of 2018 is turning out to be its most tumultuous episode yet. The summer will probably be worse, bringing Italy closer to a sovereign debt crisis. On the surface, general government debt appears to have stabilized since 2013, at around 130% of GDP. However, as I have stressed here and elsewhere, this “stability” is misleading.
General government debt is not the whole story for Italy, even setting aside the private debt loads and the recent renewed upturn in nonperforming bank loans (a daunting legacy of the financial crisis). When evaluating Italy’s sovereign risk, the central bank’s debts (Target2 balances) must be added to those of the general government. As the most recent available data (through March) show, these balances increase the ratio of public-sector debt to GDP by 26%. With many investors pulling out of Italian assets, capital flight in the more recent data is bound to show up as an even bigger Target2 hole. This debt, unlike pre-1999, pre-euro Italian debt, cannot be inflated away. In this regard, it is much like emerging markets’ dollar-denominated debts: it is either repaid or restructured.
[..] we thought it would be a good idea to remind readers why the euro exists in the first place. The briefest possible answer: to make sure the Deutsche Mark does not. As presented in the chart below – which shows the performance for each of the EU12 countries against the German DEM in every decade from the 1950s to the start of the Euro in 1999 – apart from a small revaluation of core countries in the 1990s, every country devalued to Germany in every decade between the 1950s and the start of the Euro. Said otherwise, the Deutsche Mark appreciated in value against all of its European peers for 5 consecutive decades, a condition which if left unchanged, would have led to an economic and trade crisis.
And as a bonus chart, here is same data (with the US and UK added) from the end of the Bretton Woods system in 1971 to the start of the Euro (Lira -82% devaluation to German DM) and during the 1990s (-24% devaluation) – the decade immediately leading up to the Euro start. As can be seen Italy is amongs the weakest performers relative to the German DM over these periods and showed the momentum that existed in the period leading up to the start of the Euro.
And while the fixed exchange of the Euro for European nations allowed the German export industry to go into overdrive, the lack of the possibility for an external, i.e. currency, devaluation, meant that Italy has been forced to do it all by engaging in internal devaluation, i.e., lower wages, higher unemployment and boosting its current account deficit, which however is made virtually impossible given Italy’s deteriorating demographics. This is what DB’s Jim Reid said of Italy’s potential future: Looking forward, Italy will not find it easy to grow out of its problems as its facing one of the worst set of demographics of the G20 countries. Its population size has peaked (according to the UN) and is expected to decline out to 2050. Its working age population (15-64 year olds as a proxy) is set to fall -24% over the same period and is again one of the worst placed in the G20.
Housing in the Greater Toronto Area is, let’s say, retrenching. Canada’s largest housing market has seen an enormous two-decade surge in prices that culminated in utter craziness in April 2017, when the Home Price Index had skyrocketed 32% from a year earlier. But now the hangover has set in and the bubble isn’t fun anymore. Home sales plunged 22% in May compared to a year ago, to 7,834 homes, according to the Toronto Real Estate Board (TREB). It affected all types of homes, even the once red-hot condos: • Detached houses -28.5% • Semi-detached houses -29.4% • Townhouses -13.4% • Condos -15.5%.
It was particularly unpleasant at the higher end: Sales of homes costing C$1.5 million or more plummeted by 46% year-over-year to 508 homes in May 2018, according to TREB data. Compared to the April 2017 peak of 1,362 sales in that price range, sales in May collapsed by 63%. But it’s not just at the high end. At the low end too. In May, sales of homes below C$500,000 – about 68% of them were condos – fell by 36% year-over-year to 5,253 homes. The TREB publishes two types of prices – the average price and its proprietary MLS Home Price Index based on a “composite benchmark home.” Both fell in May compared to a year ago.
The average price in May for the Greater Toronto Area (GTA) fell 6.6% year-over-year to C$805,320, and is now down 12.3%, or an ear-ringing C$113,000, from the crazy peak in April 2017. There are no perfect measures of home prices in a market. Each has its own drawbacks. Average home prices can be impacted by the mix and by a few large outliers – but over the longer term, it gives a good impression of the direction. The chart below shows thepercentage change in average home prices in the GTA compared to a year earlier:
It doesn’t feel all that long ago that Australian banks were the envy of the world. In March 2009, when stress-testing of US financial institutions drove the final spasm of the previous year’s credit crisis, you could have bought all the shares in Citigroup, Royal Bank of Scotland Group and Barclays with their $US8.4 trillion ($11 trillion) of gross assets for less than you’d pay for the equity of Westpac, with $US347 billion of assets. Commonwealth Bank of Australia’s share price peaked six years later just a sliver south of three times the value of its net assets, an extraordinary level in a business where price-book ratios have struggled to break above one times over the past decade.
With the current Royal Commission inquiring into practices in the country’s financial services industry and a slew of court cases, those high-flyers have come to earth with a bump. CBA on Monday agreed to pay $700 million to settle a money laundering case in which it admitted that a software update allowed about 54,000 reportable transactions to go unreported over a period of almost three years. On Friday, ANZ and local units of Deutsche Bank and Citigroup announced they were facing possible criminal cartel charges over their handling of a $2.5 billion placement of ANZ shares in 2015. Having executives hauled up before government inquiries and paying out hundreds of millions in court settlements isn’t great for headlines, but it would be a mistake to see the declines in Australia’s banking sector as purely a result of this.
When your annual net income is in the region of $10 billion, as CBA’s is, a $700 million charge is more than just a rounding error. But the 1.2 per cent jump in the company’s stock after the settlement was announced Monday is an indication that the cost is worth less to shareholders than the benefit of putting the issue firmly in the past. The greater risk to Australia’s banks lurks not in the papers of regulators and inquisitors, but on the streets of the country’s sprawling suburbs. As we’ve argued before, the most ominous indicator to watch is also a favourite one of the Reserve Bank of Australia. Rents, as measured by the Australian Bureau of Statistics, have been increasing at less than 1 per cent for nine consecutive quarters , the worst performance for the measure since the housing crash of the early 1990s.
Apple will attempt to frustrate tools used by Facebook to automatically track web users, within the next version of its iOS and Mac operating systems. “We’re shutting that down,” declared Apple’s software chief Craig Federighi, at the firm’s developers conference. He added that the web browser Safari would ask owners’ permission before allowing the social network to monitor their activity. The move is likely to add to tensions between the two companies. Apple’s chief executive Tim Cook had previously described Facebook’s practices as being an “invasion of privacy” – an opinion Facebook’s founder Mark Zuckerberg subsequently denounced as being “glib”.
One cyber-security expert applauded the move. “Apple is making changes to the core of how the browser works – surprisingly strong changes that should enable greater privacy,” said Kevin Beaumont. “Quite often the changes companies make around privacy are small, incremental, they don’t shake the market up much. “Here Apple is allowing users to see when tracking is enabled on a website – actually being able to visually see that with a prompt is breaking new ground.”
It’s only been in the last thirty years that Seattle hoisted up its tombstone cluster of several dozen office and condo towers. That’s what cities do these days to demonstrate their self-regard, and Seattle is perhaps America’s boomingest city, what with Microsoft’s and Amazon’s headquarters there — avatars of the digital economy. A megathrust earthquake there today would produce a scene that even the computer graphics artistes of Hollywood could not match for picturesque chaos. What were the city planners thinking when they signed off on those building plans?
I survived the journey through the Seattle tunnel, dogged by neurotic fantasies, and headed south to California’s Bay Area, another seismic doomer zone. For sure I am not the only casual observer who gets the doomish vibe out there on the Left Coast. Even if you are oblivious to the geology of the place, there’s plenty to suggest a sense of impossibility for business-as-usual continuing much longer. I got that end-of-an-era feeling in California traffic, specifically driving toward San Francisco on the I-80 freeway out in the suburban asteroid belt of Contra Costa County, past the sinister oil refineries of Mococo and the dormitory sprawl of Walnut Creek, Orinda, and Lafayette.
Things go on until they can’t, economist Herb Stein observed, back in the quaint old 20th century, as the USA revved up toward the final blowoff we’ve now entered. The shale oil “miracle” (so-called) has given even thoughtful adults the false impression that the California template for modern living will continue indefinitely. I’d give it less than five years now.
Edward Snowden has no regrets five years on from leaking the biggest cache of top-secret documents in history. He is wanted by the US. He is in exile in Russia. But he is satisfied with the way his revelations of mass surveillance have rocked governments, intelligence agencies and major internet companies. In a phone interview to mark the anniversary of the day the Guardian broke the story, he recalled the day his world – and that of many others around the globe – changed for good. He went to sleep in his Hong Kong hotel room and when he woke, the news that the National Security Agency had been vacuuming up the phone data of millions of Americans had been live for several hours.
Snowden knew at that moment his old life was over. “It was scary but it was liberating,” he said. “There was a sense of finality. There was no going back.” What has happened in the five years since? He is one of the most famous fugitives in the world, the subject of an Oscar-winning documentary, a Hollywood movie, and at least a dozen books. The US and UK governments, on the basis of his revelations, have faced court challenges to surveillance laws. New legislation has been passed in both countries. The internet companies, responding to a public backlash over privacy, have made encryption commonplace.
Snowden, weighing up the changes, said some privacy campaigners had expressed disappointment with how things have developed, but he did not share it. “People say nothing has changed: that there is still mass surveillance. That is not how you measure change. Look back before 2013 and look at what has happened since. Everything changed.” The most important change, he said, was public awareness. “The government and corporate sector preyed on our ignorance. But now we know. People are aware now. People are still powerless to stop it but we are trying. The revelations made the fight more even.”
Bayer-Monsanto: “It will effectively control nearly 60% of the world’s supply of proprietary seeds, 70% of the chemicals and pesticides used to grow food, and most of the world’s GM crop genetic traits..”
Unless there is a major hiccup in the next few days, an incredibly powerful company will shortly be given a licence to dominate world farming. Following a nod from Donald Trump, powerful lobbying in Europe and a lot of political arm-twisting on several continents, the path has been cleared for Monsanto, the world’s largest seed company, to be taken over by Bayer, the second-largest pesticide group, for an estimated $66bn (£50bn). The merger has been called both a “marriage made in hell” and “an important development for food security”.
Through its many subsidiary companies and research arms, Bayer-Monsanto will have an indirect impact on every consumer and a direct one on most farmers in Britain, the EU and the US. It will effectively control nearly 60% of the world’s supply of proprietary seeds, 70% of the chemicals and pesticides used to grow food, and most of the world’s GM crop genetic traits, as well as much of the data about what farmers grow where, and the yields they get. It will be able to influence what and how most of the world’s food is grown, affecting the price and the method it is grown by. But the takeover is just the last of a trio of huge seed and pesticide company mergers.
Backed by governments, and enabled by world trade rules and intellectual property laws, Bayer-Monsanto, Dow-DuPont and ChemChina-Syngenta have been allowed to control much of the world’s supply of seeds. You might think that these mergers would alert the government, but because political parties in Britain are so inward-looking, and because most farmers in rich countries already buy their seeds from the multinationals, opposition has barely been heard.
Gordon Parks Daytona Beach, Florida. Bethune-Cookman College. Football practice 1943
Here’s a delicious little rant from Dr. D., by now a regular contributor at the Automatic Earth.
Dr. D: The schizophrenia surrounding the tariff plan is really startling. But then I could just say, “the level of insanity everywhere is startling.”
Self-avowed schmartz-guys are all “doesn’t the U.S. know their empire is failing and everybody is cutting them off? What are they thinking starting trade wars with allies and raising prices???” Stop. So your argument is the U.S. is losing its influence, other nations are about to cut it off and end the trade deficit, and thereby basically halt imports? While the U.S. has no internal manufacturing? And your argument here is that, not if but when the world cuts us off we a) would like to have some steel and aluminum to build factories, washing machines and tanks or b) do NOT want to have access to the basic raw materials of society? Whiskey Tango Foxtrot.
I’m sorry that this generation burned down the factory, then retreated to the mansion, sold off and burned all the furniture there too, then ran up the credit card with cocaine and heroin parties while yelling “I’m a rock star! I’m a Contender!”, but they did. Now there are only bad decisions, like the ones real adults have.
And there’s nothing but work to put that factory back up, and that’s going to cost something, in this case, money and higher prices, using the thousand-year method of protective tariffs. Why not? Europe has 25% tariffs. China has a virtual lockout. If the U.S. machine then also has higher real wages for U.S. workers they can afford the tariffs. I mean, what’s their counterargument? If it’s better to not have steel and aluminum, perhaps we should shut down the few remaining foundries and have NO materials? I mean, if a little is bad, surely none is way better.
Mish for example thinks this way: if China is willing to give us cheap, under-market steel we should take it. No, not if you want to have a country, you don’t. Isn’t it a matter of national security to be able to make tanks, ships, railroads, and artillery? There’s more to the world than money.
Nor is this arcane. You know that brewing Japanese scandal about approving sub-standard steel worldwide for going on 40 years? Well that sub-standard Chinese and Japanese steel was turned into, say, sub-standard U.S. Abrams Tanks, which may explain why they’ve been breaking and unexpectedly going up like roman candles. So how’s your low-cost steel discount look now that the U.S. doesn’t have an effective military? Come on, guys. Again, the world is not only money, to be measured in money. It’s strategy, it’s community, it’s values. I’m surprised we’re so lost I need to bring this up.
Don’t get me started on how we don’t own (and therefore don’t really secure) our toll roads, ports, bridges, and utilities. They are also widely owned by foreigners now. Really? We (or they) sold every living thing out of the United States, and we’re looking for Russians and Terrorists under the bed? For the love of Pete…
How do you prepare for an Argentina-like collapse and/or up to civil war we are so close to? People who have lived through it say, “you can’t.” If the whole country is mad, which it is, there is nowhere to turn for sense or even allies, to say nothing of dry goods. Co-Americans are now so immoral, so self-serving, so rapacious, so badly thinking, so ill-positioned and ill-prepared that they themselves are the largest single liability, to me, but mostly to themselves. Without basic morality — you know, like do your job, don’t lie about everyone around you, don’t sleep with other people and/or kids at the local high school — there is no “community” as Ilargi discusses. My place may be here, but I can only say: “stay exiled.”
Think the 30% uptick in opioid overdoses is bad? In my small county there are now 3 support groups of 30 each for pedophiles. These are mostly court-directed, meaning these are only the ones we know about. That’s in ADDITION to the self-help groups for alcohol and drug addition. Hey, where did we get those volunteers for Oxfam, UNICEF, and Haiti? And are the police, judges, Congressmen and FBI not also from this same population? Or are they going to arrest themselves and stop it? Maybe I should go arrest the police and see how that goes. It ain’t good.
Only Morality can fix it, where the nation cries out to God and says, “we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the return of justice and order, even if it means paying for my own crimes.” You see that happening yet? My biggest fear is the present turn will patch it over enough to limp on a little further with no reform, and yet that seems the most likely.
Adams said, “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.” Benjamin Franklin said, “only a virtuous people are capable of freedom.” This is just Tytler’s cycle of history:
We’ve done it all but bondage. When China cuts off the imports and calls the loans, the cycle of bondage will be complete. Until we find faith, we’ll be peasants in our own land, as planned.
While many fixed-income investors may be focused on the specter of higher long-term Treasury yields, there’s a sea change afoot at the shorter end – in U.S. money markets. The London interbank offered rate, or Libor, and rates on Treasury bills are at levels not seen since 2008. The Fed’s move to tighten policy forms the backdrop for the increase, but an added force behind the surge this year has come from a deluge of supply as U.S. deficits widen. Higher short-term borrowing costs have implications for investors and also for banks, which find themselves paying up to borrow through the commercial-paper market as they compete to lure cash. “We are in a new paradigm,” said Jerome Schneider at Pimco. “The clear focus for the market is where will incremental demand come from to meet this supply.”
The Treasury has been jacking up debt sales this quarter: Net issuance is slated to exceed $400 billion, with the bulk coming in bills. The Treasury increased the 4-week bill sale to $65 billion, from as low as $15 billion earlier in the year. The march higher in Libor has widespread consequences despite regulatory efforts to replace it following a price-fixing scandal. About $350 trillion of financial products and loans are linked to Libor, with a large chunk hinged to the dollar-based version of the benchmark. Libor is among the main indexes, along with one-year T-bill rates, used to set U.S. adjustable-rate mortgages.
Assets in U.S. government-only money funds, which include bills among key holdings, have risen to $2.26 trillion, from $2.07 trillion last year. As the Fed keeps hiking, with the next move likely this month, the influx may continue. But for banks, the increasing appeal of T-bill rates is making them pay up to compete, through offering better returns on the commercial paper they use for short-term borrowing. “Banks still need funding and they need to entice investors,” Schneider said.
The threat of China factored heavily into the U.S. government’s decision to block Broadcom’s proposed buyout of Qualcomm. President Donald Trump, for his part, officially declared on Monday that the proposed $117 billion deal was prohibited on national security grounds. The president said in his order that “there is credible evidence” leading him to believe that Broadcom through control of San Diego-based Qualcomm “might take action that threatens to impair the national security of the United States.” That conclusion may seem extreme given that Broadcom is based in Singapore — and looking to redomicile to the U.S., where it conducts most of its operations — but it’s not a fear of the Southeast Asian city state that is raising national security concerns.
“The case that has been constructed is that, given Broadcom’s business practices, the worry is that they will cut investment significantly, particularly in the 5G roadmap, weaken Qualcomm, as well as the U.S. position and allow Huawei, a Chinese company to take the lead,” explained Stacy Rasgon, chip analyst at Bernstein. The Treasury Department said last week in a letter to lawyers involved in the deal that Qualcomm was trusted by the U.S. government and cited Huawei as a competitive threat in the development of 5G, which is a telecommunications standard that will allow for faster transfer of data. Beyond those 5G concerns, there’s even more to Trump’s decision to block the deal, experts said.
“It is not just China, it is not just chips. It is broad technology. It is U.S. military power and economic power going forward and he’s got a very consistent point of view,” said Ron Napier, head of Napier Investment Advisors. “Trump has been saying all year long since he was inaugurated that security is very important to him, technology is very important to him, trade is very important to him and getting jobs back to the United States is very important to him. He’s making this all into one fabric,” he added. “He sees this as the U.S.’ last big stand if it’s going to remain the leader of the free world,” Napier told CNBC.
The looming conflict is a sign of the turning point at which the global economy finds itself. Recently, the economy in most corners of the globe has been healthy, with the world experiencing a rare phase of synchronous growth. But it looks as though that phase is now coming to an end. Interest rates are rising and sovereign debt is growing, the result of which is that governments are beginning to lose their flexibility and it is likely that some countries will soon face difficulties borrowing money on the open market. Increasing financial market instability shows that insecurity is on the rise. And in this situation, protectionist policies pursued by populists and nationalists harm economic growth and endanger international prosperity.
It is something on which a majority of economists actually agree: tariff barriers slow growth, put jobs at risk and drive up inflation. Once a trade war is triggered, there is no winner, although Munich-based economist Gabriel Felbermayr says that Germany has the most to lose. “There is no other country in the world that would be hit as hard.” Felbermayr, 41, heads up the Center for International Economics at the Center for Economic Studies (CES). The shaved-headed economics professor, originally from Austria, has examined just how devastating Trump’s economic policies could be for the German economy. Every fourth job in the country, he says, is dependent on exports. And in five key sectors – automobiles, machinery, electrical engineering, pharmaceuticals and precision instruments – fully three-quarters of all exports go to the United States.
“If the U.S. were to cut itself off, it would threaten the German business model,” Felbermayr says. “Everything would start teetering.” [..] The global steel market has been imbalanced for years, with producers manufacturing 1.6 billion tons of crude steel each year against an annual demand of just 900 million tons. China is primarily to blame for this lopsidedness. Inexpensive energy and low wages enable the country’s steel producers to sell their products cheaply around the world. If the U.S. were to make moves to protect its domestic steel producers, even more cheap steel would flow into the EU than is already the case. Were that to happen, says Wolfgang Eder, head of the Austrian steel concern Voestalpine, “Europe would threaten to become the world’s garbage pail.”
The EU told U.S. President Donald Trump it won’t be cowed by his escalating protectionist rhetoric and talk of punitive tariffs. “Europe is prepared,” Dutch Finance Minister Wopke Hoekstra said Monday as he headed into a meeting with his counterparts from the rest of the euro area. “We are not afraid, we will stand up to the bullies,” Trade Commissioner Cecilia Malmstrom said earlier in the day. Trump returned to the offensive over the weekend, raising the prospect of higher levies on European cars and telling supporters at a rally that the countries of the EU have banded together “to screw the U.S. on trade.” The latest brinkmanship follows new tariffs on steel and aluminum imports that are straining a transatlantic relationship already tested by disputes from climate change to Middle East policy.
“Secretary of Commerce Wilbur Ross will be speaking with representatives of the European Union about eliminating the large Tariffs and Barriers they use against the U.S.A.,” Trump tweeted on Monday. “Not fair to our farmers and manufacturers.” Trump’s rhetoric drew unanimous condemnation from European finance ministers gathering in Brussels. France’s Bruno Le Maire said that he’s concerned about “a trade war between the EU and the U.S.” while his Spanish counterpart Roman Escolano, making his debut as minister, said protectionism is always a mistake. Malmstrom accused the Trump administration of using trade “to threaten and intimidate” Europeans and using the issue as a “scapegoat.”
A meeting in Brussels between Malmstrom and her U.S. counterpart Robert Lighthizer on Saturday ended without a breakthrough, as the EU didn’t receive assurances that it will be exempted from the metal tariffs. “If anyone starts throwing stones, it’s better first to make sure he’s not living in a glass house,” European Commission spokesman Enrico Brivio said.
Donald Trump’s decision to impose tariffs on steel and aluminum could cause major disruption for companies in Europe, a business lobbyist told CNBC Monday, who argued that the U.S. president should have taken less severe measures to protect his domestic market. U.S.’s allies, including the European Union and Japan, are hoping to be excluded from new tariffs that Trump announced last week. The decision to raise steel import taxes by 25% and aluminum by 10% could hurt not only those industries directly, but also carmakers and construction firms which use the raw materials. Trump decided that the tariffs would be the best way to deal with overcapacity in these sectors and based his argument on national security.
“This is a very exceptional mechanism that is rarely used. It’s a bit considered like an atomic bomb, because really to use this is like saying ‘look we are really at a level where we cannot use anti-dumping or anti-subsidies’,” Luisa Santos, the international relations director at BusinessEurope, told CNBC Monday. [..] European steel and aluminum businesses are reportedly preparing for a collapse in local prices if the tariffs are indeed applied to their region. Charles de Lusignan, from the Steel Association for Europe, said ultimately the tariffs could mean a scaling back in Europe, with firms letting people go, cutting investment and also innovation. “We need to act immediately because the damage will be done within the first weeks,” he said. “In fact it might already be happening, because obviously an exporter knows that the steel might be blocked in the future so they already start sending it ahead.”
Whether you believe there is a “bubble” in the Technology stocks, or the markets, is really not important. There are plenty of arguments for both sides. At the peak of every bull market in history, there was no one claiming that a crash was imminent. It was always the contrary with market pundits waging war against those nagging naysayers of the bullish mantra that “stocks have reached a permanently high plateau” or “this is a new secular bull market.” (Here is why it isn’t.) Yet, in the end, it was something unexpected, unknown or simply dismissed that devastated investors. This is why the discussion of “this time is not like the last time” is largely irrelevant.
Individuals no longer “invest” to become a “shareholder” in a publicly traded business. The “quaint concept” of “valuations” died with the mainstreaming of investing during the 1990’s as the “Wall Street Casino” opened for business. Today, investors only think in terms of speculating on “electronically traded bits of paper” in the hopes the value will rise over time. The problem, of course, is they are never told when to “sell” to capture that valuation increase which is the most critical aspect of the investment process. Instead, individuals continue to “bet” the “greater fool” will always appear. For now, the “bullish case” remains alive and well. The media will go on berating those heretics who dare to point out the risks that prevail, but the one simple truth is “this time is indeed different.”
China said it will merge its banking and insurance regulators, according to a parliament document released on Tuesday, in a series of proposed changes in the biggest ministry shake-up in years. In a long-awaited move to streamline and tighten oversight of the financial system in the world’s second-biggest economy, China will also transfer some of the banking and insurance regulators’ roles to the central bank, documents showed. In much-anticipated plans to create seven new ministries and a raft of government agencies announced on Tuesday, one of the most significant changes was creation of the national markets supervision management bureau.
The new body will decide on antimonopoly and pricing issues, replacing the roles played by the three national antitrust regulators: the National Development & Reform Commission (NDRC), the Ministry of Commerce and the State Administration for Industry and Commerce (SAIC). Unifying the structure under one agency, rather than handing the responsibility to one of the three existing watchdogs, reflects the growing importance of the issue for the government. China will also form a powerful new competition regulator in a bid to ramp up oversight of mergers and acquisitions and price-fixing as the world’s second-largest economy seeks to make policymaking more efficient and coordinated. Since the beginning of last year, Beijing has cracked down on leverage and risky market practices, with China’s various regulators releasing a flurry of new rules in an attempt to rein in risks.
With so many central banks failing to hit their inflation targets, some are considering changes to the tool kits they use to steer their economies. Norway’s decision to lower its price target is just the latest example, and follows more or less official adjustments in Sweden, Argentina and the euro area. Even in New Zealand, the birthplace of inflation targeting, the central bank is shifting to a broader goal that includes a focus on employment. But there’s no one-fits-all solution for monetary authorities and debate is splintered. Raising inflation targets has been discussed equally intensively in recent years as reducing or amending them.
And while some central banks acknowledge a need to reconsider their mandates, others are doubling down on existing policies. Claudio Borio, a top official at the Bank for International Settlements, poured fuel on the debate in September with a provocative speech calling for a broad rethink that accounts for how globalization and technological advances have influenced inflation. “Shall we throw away the books?” ECB President Mario Draghi asked on Thursday. “There are serious costs about changing course on credibility and the anchoring of expectations. We can go on on this for a while about changing objective.”
The head of Britain’s biggest business lobby group has attacked Labour’s nationalisation plans as potentially just as damaging to the economy as Britain leaving the European Union without a deal. In a speech on Monday, Paul Drechsler, the CBI president, said renationalising large parts of the economy would cause serious harm to the UK’s reputation as a place for international investors, which he argued would be as bad as a hard Brexit and would damage job prospects and living standards. “So you want to nationalise energy, rail and water, and bring public services contracts back in house? Let’s see the evidence that it will deliver a better service to consumers at a lower cost,” he said.
The intervention by the lobby group – which represents about 190,000 companies, including transport and utility firms – constitutes a warning from the boardrooms of corporate Britain that they harbour concerns over Labour’s plans for the economy despite supporting the party over its stance on Brexit. The CBI was among leading business voices supporting Jeremy Corbyn’s move to keep Britain in a customs union with the EU. The lobby group warned before the referendum that Brexit could lead to almost a million job losses and cost the economy £100bn – the equivalent of 5% of GDP – by 2020. Drechsler challenged Labour to provide evidence that its plans would lead to a better service for consumers at a lower cost.
He said private investment had helped create jobs and improve the efficiency of utility companies since they were sold off under the Thatcher government of the 1980s, and argued that progress could be undone if they were taken back into state control. However, utility companies and railway operators have faced intense pressure over their service standards and prices at a time when households are under increasing financial strain. Public support has swung behind Labour’s plans for greater state control of several key industries – shown in recent polls that suggest widespread backing for nationalisation of the railways, water, gas and electricity.
That crusty ole rascal, Gov. Jerry Brown of California, seems to be enjoying his sunset journey into Civil War Two or maybe the destination is more like Blade Runner (since we know that history only rhymes but does not repeat). Anyway, it’s not a good place. The once-golden state begins to look something like what one federal official recently called — dare I say it? — a shithole. “A mix of used hypodermic needles, human feces, and other trash litters the streets and sidewalks in a large section of downtown San Francisco, a local news outlet reported Sunday night. It’s a problem that has grown by epic proportions in recent years and has many concerned for the health and safety of some the city’s youngest residents…” — The Blaze
Yes, quite literally. This particular failure of the political Left started in the 1970s when states began aggressively shuttering their large mental hospitals. Many of these institutions dated from the late 19th century – ghastly old gothic revival warehouses for the mentally ill, fraught with overtones of abuse and neglect, scenes out of Vincent Price movies… lightning flashes through the barred windows… a scream in the night… hysterical laughter echoing down the dark, tiled hallways…. They were an embarrassment, for sure, and certainly an affront to liberal sensibilities. But, of course, they fucked up the remedy for that. Instead of replacing the giant old state insane asylums with smaller, better-managed institutions, they just released the inmates under the rationale that they were a politically oppressed minority group. And there it ended.
And so here we are, going on a half-century later, with an economy that manufactures failure and immiseration at a greater volume than its other finished products, and many more lost souls out on the city streets, and now we are an even more ideologically inflamed society than we were in 1973, with the ranks of intersectional oppressed minorities and aggrieved victim groups grown into virtual armies-of-the-night — and the mentally ill just lost in the crowd. It never seems to occur to anyone that a mental hospital can be run humanely, at an appropriate scale, and that these poor, sad creatures might, at least, be better off there with a bed, a bathroom, and somebody to check in on them daily than they are wallowing in the gutters of San Francisco and other cities. Surely there are up-to-date models in other lands for this kind of caretaking — if maybe we sent a few bureaucrats overseas to have a look.
Russian Foreign Ministry Spokeswoman Maria Zakharova has dubbed as a ‘circus show’ comments of UK Prime Minister Theresa May on the poisoning of Sergey Skripal, a former colonel in Russia’s GRU military intelligence, and his daughter. “This is a circus show in Britain’s parliament,” she stressed. “The conclusion is obvious – a next political media campaign based on provocation,” Zakharova added. Earlier, Theresa May said it is “highly likely” that Russia is responsible for the poisoning of Sergey Skripal and his daughter. Moscow urges London to make public the results of the investigation into the deaths of Alexander Litvinenko and Boris Berezovsky, Zakharova said.
“Before making up new stories, let somebody in the Kingdom tell us what the previous fairy-tales ended in – those about Litvinenko, Berezovsky, Perepilichny and many others who died under mysterious circumstances on British soil,” the diplomat said. Former GRU Colonel Sergey Skripal, 66, and his 33-year-old daughter Julia on March 4 suffered from the effects of an unidentified nerve agent. They were found in an unconscious condition on a bench near The Maltings shopping center in Salisbury. Both are now in hospital in critical condition.
In 2004, Skripal was arrested by the federal security service FSB, charged, tried and convicted of high treason and stripped of all ranks and awards. In 2010 he was handed over to the United States under an arrangement to exchange persons arrested on spying charges. Later in the same year Skripal settled in Britain.
Prince Alwaleed Bin Talal remains chairman of Kingdom Holding Company following his release from detention, but the Saudi government reportedly has final say over decisions at the investment firm. Investment decisions at Kingdom Holding are now subject to approval by the government, The Wall Street Journal reported on Monday, citing senior Saudi advisers. Kingdom Holding has $12.5 billion invested across more than a dozen sectors around the world, according to its website. Alwaleed’s personal investment portfolio is also under government control, according to the Journal. Alwaleed holds substantial stakes in companies like Citigroup, Twitter, Lyft and Time Warner.
The Journal report does not indicate whether the government has exercised its newfound influence over these investments. However, sources tell the Journal the government has already intervened in a major real estate project, ordering senior managers at Kingdom Holding to abandon the Jeddah Tower, which would be the world’s tallest skyscraper when — and if — it is completed. Officials have directed Kingdom Holding to instead focus its energy on a new city called Neom, which is expected to cost $500 billion to build. The project was announced in October by Crown Prince Mohammed bin Salman, the influential king in waiting who is overseeing the kingdom’s economic transformation and spearheaded the campaign that led to Alwaleed’s detention.
Rich-listers like Californian billionaire Ric Kayne have issued a warning to New Zealand – banning house sales to foreigners could hurt the country’s reputation and turn wealthy investors away. Kayne, who has built an exclusive golf course in New Zealand and wants to expand his investments, is one of several rich businessmen who claim the proposed new law will have unintended consequences. They’re seeking amendments to the draft legislation or its withdrawal in its current form. “The vision we have for what we would like to contribute to New Zealand is now being threatened,” Kayne wrote in submissions to a parliamentary committee examining the proposed law change.
“The new rules will “impact on us personally, and others like us who, having discovered this country, want to devote considerable resources to preserving, protecting and enhancing it.” The new Labour-led government came to power in October on a pledge to fix a housing crisis with a raft of measures, including a ban on foreign speculators buying residential property. While data suggest non-residents have only a minor impact on the wider housing market, support for the move was boosted by headlines about rich foreigners buying mansions and farms in New Zealand as boltholes away from the world’s ills.
House prices have surged more than 60% in the past decade amid record immigration and a construction shortfall. In biggest city Auckland, prices have almost doubled since 2007 to an average of more than NZ$1 million ($730,000). That’s made it more difficult for first-time buyers to enter the market and driven up rents, leaving increasing numbers of poor people homeless. “It’s really important for us that we sort our housing market out, that we give New Zealanders a fair go at buying their first home,” Finance Minister Grant Robertson said in a television interview Sunday. While the country welcomes foreign investment, “what we want is good-quality investment that supports the productivity of the New Zealand economy,” he said.
The Pentagon helps Hollywood to make money and, in turn, Hollywood churns out effective propaganda for the brutal American war machine. The US has the largest military budget in the world, spending over $611 billion – far larger than any other nation on Earth. The US military also has at their disposal the most successful propaganda apparatus the world has ever known… Hollywood. Since their collaboration on the first Best Picture winner ‘Wings’ in 1927, the US military has used Hollywood to manufacture and shape its public image in over 1,800 films and TV shows. Hollywood has, in turn, used military hardware in their films and TV shows to make gobs and gobs of money.
A plethora of movies like ‘Lone Survivor,’ ‘Captain Philips,’ and even blockbuster franchises like ‘Transformers’ and Marvel, DC and X-Men superhero movies have agreed to cede creative control in exchange for use of US military hardware over the years. In order to obtain cooperation from the Department of Defense (DoD), producers must sign contracts that guarantee a military approved version of the script makes it to the big screen. In return for signing away creative control, Hollywood producers save tens of millions of dollars from their budgets on military equipment, service members to operate the equipment, and expensive location fees.
Capt. Russell Coons, director of the Navy Office of Information West, told Al Jazeera what the military expects for their cooperation: “We’re not going to support a program that disgraces a uniform or presents us in a compromising way.” Phil Strub, the DOD chief Hollywood liaison, says the guidelines are clear. “If the filmmakers are willing to negotiate with us to resolve our script concerns, usually we’ll reach an agreement. If not, filmmakers are free to press on without military assistance.”
Industrial fishing for krill in the pristine waters around Antarctica is threatening the future of one of the world’s last great wildernesses, according to a new report. The study by Greenpeace analysed the movements of krill fishing vessels in the region and found they were increasingly operating “in the immediate vicinity of penguin colonies and whale feeding grounds”. It also highlights incidents of fishing boats being involved in groundings, oil spills and accidents, which it said posed a serious threat to the Antarctic ecosystem. The report, published on Tuesday, comes amid growing concern about the impact of fishing and climate change on the Antarctic.
A global campaign has been launched to create a network of ocean sanctuaries to protect the seas in the region and Greenpeace is calling for an immediate halt to fishing in areas being considered for sanctuary status. Frida Bengtsson, from Greenpeace’s Protect the Antarctic campaign, said: “If the krill industry wants to show it’s a responsible player, then it should be voluntarily getting out of any area which is being proposed as an ocean sanctuary, and should instead be backing the protection of these huge swaths of the Antarctic.” Last month a study found a combination of climate change and industrial-scale fishing is hitting the krill population, with a potentially disastrous impact on larger predators.
Photograph: Justin Hofman/Alamy Stock Photo
The study warned that the penguin population could drop by almost one-third by the end of the century due to changes in krill biomass. Krill are a key part of the delicate Antarctic food chain. They feed on marine algae and are a key source of food for whales, penguins and seals. They are also important in removing the greenhouse gas carbon dioxide from the atmosphere by eating carbon-rich food near the surface and excreting it when they sink to lower, colder water. There is a growing global demand for krill-based health products which are claimed to help with a range of ailments from heart disease to high blood pressure, strokes and depression. A recent analysis of the global krill industry predicted it was on course to grow 12% a year over the next three years. Krill populations have declined by 80% since the 1970s.
Back in late 2016, we showed the unprecedented domination of capital markets by central banks using a chart from Citi, which had put together a fascinating slideshow asking simply “Where is the utility in marginal QE” and specifically pointing out that the longer unconventional monetary policy such as QE continues, the bigger its marginal cost, until eventually QE becomes a detriment. A broad criticism of monetary policy, the presentation carried an amusing footnote: “This presentation does not change any of Citi’s existing, published views on the actual future path of monetary policy. It is merely intended as a contribution to the ongoing debate about the efficacy of available policy tools” – after all, the last thing the market wanted is the realization that even banks no longer have faith in the central planners.
Incidentally, Citi’s broad critique of global QE took place when central banks owned just over $18 trillion in assets. Fast forward to today when in its latest update of central bank holdings, Citi shows that as of this moment not only has the total increased by another $3 trillion to a grand total of $21 trillion and rising, but that the big six central banks now own over 40% of global GDP, more than double the 17% they held before the financial crisis less than a decade ago. Which is remarkable in a world where there is still some confusion about what is behind the “global coordinated recovery”, and where there are deluded people who claim that central banks are now out of the picture.
Global debt has reached record heights without any signs of relief. While central bankers try to explain away the phenomenon of these out-of-control numbers, it’s not much of a mystery. Immediate consumption with the promise of repayment sometime in the future has consequences. Global debt is staggering to the point most of it will never be repaid. Certainly not in our generation. Perhaps by our grandchildren, but as global debt keeps mounting, the picture is doubtful. The per capita global debt is $30,000. Who, exactly, will be making repayments? Economists insist that the 2007 financial crisis could not have been predicted. Yet, all the signs of out-of-control credit where there.
Today, economists are repeating the same mantra, despite the spiraling world debt. The question is not if the next bubble will strike. It’s a matter of when. The math is fairly simple. The more a country increases its debt to simply stay afloat, the more like the increasing debt will cause a tightening of credit. The next step in the equation is a burst bubble and economic crisis. This is what happened in 1929, happened again in 2007, and it’s happening now. Past behavior is the best predictor of future behavior. Out-of-control credit will undoubtedly slow down the US’s current economic growth. It probably won’t cause an outright crisis. Other countries may not be as fortunate.
Countries such as China, Belgium, South Korea, Australia, and Canada are experiencing an unprecedented credit bubble, with few systems in place to control it. The resulted inflation or simply write-offs of debts could result in a global financial disaster we have not seen before. The current economic upswing is unlikely to continue.
Even before he decided to launch a trade war and roll the nuclear dice by agreeing in the course of a West Wing afternoon to a risky sit-down with Kim Jong Un, Donald Trump was telling friends he was tired of being reined in. “I’m doing great, but I’m getting all these bad headlines,” Trump told a friend recently. A Republican in frequent contact with the White House told me Trump is “frustrated by all these people telling him what to do.” With the departures of Hope Hicks and Gary Cohn, the Trump presidency is entering a new phase—one in which Trump is feeling liberated to act on his impulses. “Trump is in command. He’s been in the job more than a year now. He knows how the levers of power work. He doesn’t give a fuck,” the Republican said.
Trump’s decision to circumvent the policy process and impose tariffs on imported steel and aluminum reflects his emboldened desire to follow his impulses and defy his advisers. “It was like a fuck-you to Kelly,” a Trump friend said. “Trump is red-hot about Kelly trying to control him.” According to five Republicans close to the White House, Trump has diagnosed the problem as having the wrong team around him and is looking to replace his senior staff in the coming weeks. “Trump is going for a clean reset, but he needs to do it in a way that’s systemic so it doesn’t look like it’s chaos,” one Republican said. Sources said that the first officials to go will be Chief of Staff John Kelly and National Security Adviser H.R. McMaster, both of whom Trump has clashed with for months.
On Tuesday, Trump met with John Bolton in the Oval Office. When he plans to visit Mar-a-Lago next weekend, Trump is expected to interview more candidates for both positions, according to two sources. “He’s going for a clean slate,” one source said. Cohn had been lobbying to replace Kelly as chief, two sources said, and quit when he didn’t get the job. “Trump laughed at Gary when he brought it up,” one outside adviser to the White House said. Next on the departure list are Jared Kushner and Ivanka Trump. Trump remains fiercely loyal to his family, but various distractions have eroded their efficacy within the administration. Both have been sidelined without top-secret security clearances by Kelly, and sources expect them to be leaving at some point in the near future.
Hours after European Union trade chief Cecilia Malmstrom said she had “no immediate clarity” on whether the bloc will be let off the hook from planned U.S. tariffs, President Donald Trump laid down his conditions and repeated a threat if they’re not met. “The European Union, wonderful countries who treat the U.S. very badly on trade, are complaining about the tariffs on Steel & Aluminum,” he wrote on Twitter. “If they drop their horrific barriers & tariffs on U.S. products going in, we will likewise drop ours. Big Deficit. If not, we Tax Cars etc. FAIR!” Trump’s response came after Malmstrom on Twitter described what she called “frank” but fruitless talks with U.S. Trade Representative Robert Lighthizer in Brussels on Saturday.
There was still “no immediate clarity on the exact U.S. procedure on exemption,” Malmstrom, the 28-nation bloc’s trade commissioner, said after the meeting that also included Japanese Trade Minister Hiroshige Seko. “As a close security and trade partner of the U.S. the EU must be excluded from the announced measures,” she said. Canada, Mexico and Australia have secured exemptions from the tariffs of 25% on imported steel and 10% on aluminum announced by Trump, though Canada’s and Mexico’s were conditioned on progress renegotiating NAFTA. Trump has called the tariffs a matter of national security while threatening to tax European car imports and impose “reciprocal taxes” on countries that charge higher duties on U.S. goods than the U.S. now charges on their products.
China’s parliament voted to repeal presidential term limits, allowing President Xi Jinping to retain power indefinitely in a formal break from succession rules set up after Mao Zedong’s turbulent rule. The rubber-stamp National People’s Congress agreed Sunday to strike a 36-year-old constitutional provision barring the president from serving more than two consecutive terms. The amendment – announced by the Communist Party two weeks ago – removes the only barrier keeping Xi, 64, from staying on after his expected second term ends in 2023. The vote – never in doubt – gives Xi more time to enact plans to centralize party control, increase global clout and curb financial and environmental risks.
It also ties the world’s most populous country more closely to the fate of a single man than at any point since reformer Deng Xiaoping began establishing a system for peaceful power transitions in the aftermath of Mao’s death. Before Sunday’s vote in Beijing, Donald Trump had joked that Xi was “now president for life.” The NPC could appoint Xi to a second term as soon as Saturday. “In the long run, the change may bring some uncertainties, like ‘key man’ risk,” Yanmei Xie, a China policy analyst for Gavekel Dragonomics in Beijing, said before the vote. “Dissenting is becoming riskier. The room for debate is becoming narrower. The risk of a policy mistake could become higher and correcting a flawed policy could take longer.”
Russian President Vladimir Putin has told NBC News that he “couldn’t care less” if Russian citizens tried to interfere in the 2016 American presidential election because, he claims, they were not connected to the Kremlin. In an exclusive and at-times combative interview with NBC’s Megyn Kelly, Putin again denied the charge by U.S. intelligence services that he ordered meddling in the November 2016 vote that put Donald Trump in the White House. “Why have you decided the Russian authorities, myself included, gave anybody permission to do this?” asked Putin, who will probably be returned as president in the March 18 elections.
Putin was unmoved by an indictment filed by special counsel Robert Mueller last month that accused 13 Russian nationals and three Russian companies of interfering in the election – including supporting Trump’s campaign and “disparaging” Hillary Clinton’s. Mueller is investigating whether the Trump campaign colluded with the Kremlin. “So what if they’re Russians?” Putin said of the people named in last month’s indictment. “There are 146 million Russians. So what? … I don’t care. I couldn’t care less. … They do not represent the interests of the Russian state.” Putin even suggested that Jews or other ethnic groups had been involved in the meddling.
“Maybe they’re not even Russians,” he said. “Maybe they’re Ukrainians, Tatars, Jews, just with Russian citizenship. Even that needs to be checked. Maybe they have dual citizenship. Or maybe a green card. Maybe it was the Americans who paid them for this work. How do you know? I don’t know.” Asked whether he was concerned about Russian citizens attacking U.S. democracy, Putin replied that he had yet to see any evidence that the alleged interference had broken Russian law. “Are we the ones who imposed sanctions on the United States? The U.S. imposed sanctions on us.” “We in Russia cannot prosecute anyone as long as they have not violated Russian law,” he said. “At least send us a piece of paper. … Give us a document. Give us an official request. And we’ll take a look at it.”
U.S. intelligence agencies and many Western analysts have said that Russian interference came at the orders of the Kremlin. Putin, Russia’s longest-serving leader since Stalin, dismissed this. “Could anyone really believe that Russia, thousands of miles away … influenced the outcome of the election? Doesn’t that sound ridiculous even to you?” he said. “It’s not our goal to interfere. We do not see what goal we would accomplish by interfering. There’s no goal.”
Families struggling to make ends meet will be hit by the biggest annual benefits cut for six years, according to a new analysis that exposes the impact of continuing austerity measures on the low paid. Chancellor Philip Hammond is preparing to give a stripped-down spring statement on Tuesday, where he is expected to boast of lower than expected borrowing figures. He will use them to suggest Britain has reached a “turning point”. He will point to forecasts showing the “first sustained fall in debt for a generation” to claim “there is light at the end of the tunnel” in turning around Britain’s finances. However, he will be speaking just weeks before a further public spending squeeze will see the second largest annual cut to the benefits budget since the financial crash.
According to new research by the Resolution Foundation thinktank, the changes from April will save around £2.5bn and dent the incomes of the “just about managing” families that Theresa May has vowed to help. The cuts will affect around 11 million families, including 5 million of the struggling families that the prime minister stated she would focus on. There will also be some good news for the low paid, with more than 1.5 million workers set to benefit from a 4.4% pay rise when the national living wage increases from £7.50 to £7.83 at the start of April. However, that measure will be outweighed by the effective £2.5bn cuts to working-age benefits.
MPs are demanding an urgent explanation from ministers after being told that £817m allocated for desperately needed affordable housing and other projects in cash-strapped local authorities has been returned to the Treasury unspent. The surrender of the unused cash has astonished members of the cross-party housing, communities and local government select committee at a time when Theresa May has insisted housebuilding is a top priority and when many local authorities are becoming mired in ever deeper financial crises. On Monday the committee, which discovered the underspend for 2017-18, will interrogate housing minister Dominic Raab and homelessness minister Heather Wheeler on the issue, before Tuesday’s spring statement by the chancellor, Philip Hammond.
He is under heavy pressure from MPs, and the Tory-controlled Local Government Association, to signal extra help for the local authority sector, which has seen budget cuts of around 50% since 2010. The acting chair of the committee, the Tory MP Bob Blackman, said: “We will be wanting to know why this very large sum has not been spent at a time of great strain on local authority budgets, and why it was not channelled to other spending projects. It does not help those of us who argue that more should be given to local authorities if the chancellor knows money he gave last time has not even been spent.” MPs believe they can argue for more for local authorities because Hammond will announce that unexpectedly high tax receipts have left the Treasury with a windfall of between £7bn and £10bn.
When the chancellor Philip Hammond sits down on Tuesday after delivering his first spring statement – the streamlined replacement for what we used to call the budget – one man will be greatly in demand, popping up on every media outlet to tell us what the figures on borrowing levels and the projected deficit really mean. That man is Paul Johnson, director of the Institute for Fiscal Studies (IFS). I suggest to him that his official role is to pour a bucket of cold water over Hammond’s head, and he doesn’t disagree. [..] The idea of the spring statement, with the budget now pushed back to autumn, is to tell us where we are financially, and to kickstart consultations about the long-term fiscal challenges facing the UK. That, for Johnson, is the important bit.
If the spring statement works, it is an opportunity to counteract the short-termism that bedevils British politics and to start thinking about the issues that really matter – the ageing population, the buckling health service, the lack of any coherent plan for social care, the fact that soon taxes are going to have to rise or public services will fall to pieces. There comes a point when you can no longer kick the can down the road because the road is no longer usable. The Office for Budget Responsibility numbers cited in the spring statement will be better than those projected last autumn because tax receipts have been higher than anticipated, and Johnson reckons Hammond will indulge in some self-congratulation for having met the government’s austerity targets (albeit two years later than his predecessor George Osborne forecast) and eliminated the deficit on day-to-day spending.
But Johnson is ready with his bucket of cold water. “Chancellors always talk up the positive numbers,” he says, “but we’re not out of austerity; we’re nowhere near out of austerity. There are still big spending cuts and big social security cuts to come.” [..] He says the government has done well to get the deficit under control [..] Local government until 2014 was coping fine. It really isn’t any more. Clearly, the health service is struggling in a way that, three or four years ago, it wasn’t. So it feels as if we’ve got to the crunch point. We’re really beginning to feel the cost.” Government borrowing is now back to pre-financial crash levels. “It is quite an achievement to have got borrowing down from the highest level since the war to pretty much normal kinds of levels,” he says.
The march of the brand new car once seemed unstoppable. Cheap finance and personal contract plans (PCPs) fuelled a boom in new cars, accounting for more than 80% of all new car registrations. A fall at the start of 2017 was blamed on a collapse in consumer confidence in diesel vehicles and last year remains one of the highest on record for new car registrations. However, the latest figures reveal that the number of new cars registered in February fell by 2.8% compared with the same month last year, making it the 11th month in a row to show a decline. And once again it’s being blamed on falling demand for diesel vehicles; diesel cars accounted for just 35% of the new cars registered last month, compared with more than 44% in February 2017.
[..] The previous surge in new car registrations had been partly fuelled by changes to the way we buy vehicles. Buying a brand new car with a relatively small deposit and monthly fee can be more immediately affordable than buying an older car upfront. 37% of car buyers claim to have bought on finance because it enabled them to spread out their payment monthly, 36% to get a better deal and, revealingly, 36% because they couldn’t afford to purchase a car otherwise. [..] Justin Benson, KPMG’s UK head of automotive, says: “Consumers aren’t necessarily turning away from car finance. There is, however, evidence to suggest that the new car market is pretty saturated, ie most cars in the last few years have been bought using PCP plans. So many are using the vehicles they already have and we are seeing a drop in demand – although Brexit is also in the back of people’s minds.”
Turkey’s leader has scorched NATO allies over their failure to support his “counter-terrorist” operation in the Kurdish-held Syrian region of Afrin, but expressed gratitude that they at least had no guts to openly oppose Ankara. President Recep Tayyip Erdogan delivered the inflammatory comments while speaking before a gathering of his ruling AK Party in the Turkish city of Mersin on Saturday. “Hey NATO where are you? We’re fighting so much. NATO, Turkey is not a NATO country? Where are you? You’ve invited NATO-member states to Afghanistan,” Erdogan said. NATO members not only show no support towards Turkey’s Operation Olive Branch and would even openly oppose Ankara’s actions in Syria, but did not have the guts to do so, Erdogan claimed.
The offensive against Kurdish militias in Syria’s region of Afrin was launched late in January. Turkey describes the militias as offshoots of the terrorist-labeled outlawed Kurdistan Workers’ Party (PKK). So far, 3,213 “terrorists” have been killed during the operation, carried out by Turkish troops and affiliated Free Syrian Army (FSA) militants, Erdogan stated. “In fact, they would openly oppose Turkey in Syria if they could. But seeing Turkey’s adamant position, they did not find [the] resolve to do so,” the president said. The Turkish leader also reiterated his earlier statements, that his only goal in Syria was the “fight against terrorism.” When Ankara reaches it, the troops will be pulled out of the country, he stated.
[..] Washington has repeatedly called upon Turkey to stop its “aggression” against the Afrin region, omitting the fact that the US-led coalition itself spent years in Syria without any invitation from the government or international approval. The recent UNSC resolution, which urged a 30-days Syria-wide ceasefire, has been also used to call upon Erdogan to halt the invasion. “Turkey is more than welcome to go back and read the exact text of this UN Security Council resolution, and I would suggest that they do so,” US State Department spokeswoman Heather Nauert said on February 27, stating that the Afrin region was “certainly within Syria.”
As tensions rise over the detention of two Greek soldiers who crossed the Turkish border accidentally and over Turkish aggression off Cyprus, statements by both Greek and Turkish officials over the weekend underscored the fragility of the situation. In an interview with French daily Liberation on Saturday, Greek Defense Minister Panos Kammenos declared that “Greece is very close to a fatal accident with Turkey,” referring to Turkish violations of Greek air space and territorial waters. “We are obliged to defend our territory which is not only Greek but also European,” he said. Late last week, meanwhile, Kammenos had referred to two Greek soldiers being detained in Turkey as “hostages.”
Meanwhile, in an interview with German weekly Die Zeit published on Saturday, Turkish Foreign Minister Mevlut Cavusogu said Turkey’s judiciary was seeking to determine whether the Greek soldiers crossed into Turkey by accident or deliberately. Asked whether Ankara was considering exchanging the two men with eight Turkish servicemen who fled to Greece following an attempted Turkish coup in 2016, Cavusoglu ruled out such a prospect. “We do not want such an agreement,” he said.
Greece will probably not need a precautionary credit line after its bailout ends in August if the country sticks to reforms, the head of Europe’s rescue fund said in an interview released on Saturday. Greece has received 260 billion euros in financial aid from euro zone countries and the IMF since 2010, and its third bailout expires in August. The country regained market access last year but some European Union policymakers and Greek central bankers believe Athens cannot go it alone without a standby line of credit after its financial support ends. But a precautionary credit line would come with conditions attached, something the government is keen to avoid after eight years of austerity that has worn down Greeks and hurt its popularity in polls.
In an interview with Proto Thema newspaper, the head of the European Stability Mechanism (ESM), Klaus Regling, said having a precautionary arrangement available is good because it gives more assurances to markets, investors and the Greek population. “But it very much depends whether it’s really needed,” he said. “If everything remains quiet, reforms continue and Greece continues to develop its market access, then based on what we know today it’s probably not needed.” The ESM and the European Financial Stability Facility are Greece’s largest creditors, together holding more than half of its 332 billion euro public debt, a sum equal to nearly 180% of economic output.
They talk the talk because their pollsters say they must. And then deflect responsibility because they have no intention of doing anything. This way it becomes along term issue; the public must be heard first, and that takes years.
A tax on disposable cups is ridiculous. Just ban them, what’s the problem?
The public will be urged by the Government to suggest tax changes to curb plastic pollution, amid growing criticism that ministers are dragging their heels. A “call for evidence” on how tax incentives could cut the amount of single-use plastics – such as cutlery, foam trays and coffee cups – that end up littering the land and poisoning the seas will be launched. But the move, in Tuesday’s Spring Statement, is not expected to include any specific proposals, nor will a formal consultation be launched by the Treasury. Philip Hammond, the Chancellor, will tell MPs he is determined that Britain will “lead the world in creating innovative solutions to tackling this global problem”.
But the call for evidence was first proposed by Mr Hammond four months ago, the delay prompting criticism that ministers have simply “talked the talk on plastic pollution”. A proposal for a 25p “latte levy” on disposable coffee cups, made by a cross-party Commons committee in January was met with a cool response from the Government. In January, Theresa May delivered the first major speech on the environment from a sitting prime minister since 2004 and published a 25-year Environment Plan with the ambition of abolishing plastic waste by 2042. However, it was widely criticised for being vague, for the lack of proposed legislation and for the lengthy timescales for dealing with the problems involved. [..] The UK still creates 2.26 million tons of plastic packaging waste a year and recycles only around a third.
On Tuesday, Mr Hammond will say the call for evidence is intended to find ways to use the tax system to deliver both technological progress and behavioural change. Individuals, green groups and industry will be urged to have their say, as the Chancellor announces a £20m innovation fund for businesses and universities to develop the new technologies and approaches needed. The Chancellor said: “Single-use plastics waste is a scourge to our environment. From crisp packets to coffee cups, each year the UK produces millions of tonnes of waste which is neither recyclable nor biodegradable. “That’s why I want British businesses and universities to lead the world in creating innovative solutions to tackling this global problem.
Donald Trump took the biggest gamble of his presidency on Thursday, breaking decades of U.S. diplomatic orthodoxy by accepting an invitation to meet with North Korean leader Kim Jong Un. The bet is that Trump’s campaign to apply maximum economic pressure on Kim’s regime has forced him to consider what was previously unthinkable: surrendering the illicit nuclear weapons program begun by his father. If the president is right, the U.S. would avert what appeared at times last year to be a steady march toward a second Korean War. It was classic Trump, showing an unerring confidence to get the better end of any negotiation.
But it was also Trump in another way: high risk and high reward, with little regard for those in the foreign policy establishment who worry it’s too much, too soon. “He’s taking a risk,” said Patrick Cronin, senior director of the Asia-Pacific Security Program at the Center for a New American Security. “By seizing an opportunity for a summit meeting, a decision that would have taken much more time in another administration, the president has said, ‘I’m going to go right now. And we’re going to test this.”’
U.S. President Donald Trump pressed ahead on Thursday with import tariffs of 25% on steel and 10% for aluminum but exempted Canada and Mexico and offered the possibility of excluding other allies, backtracking from an earlier “no-exceptions” stance. Describing the dumping of steel and aluminum in the U.S. market as “an assault on our country,” Trump said in a White House announcement that the best outcome would for companies to move their mills and smelters to the United States. He insisted that domestic metals production was vital to national security. “If you don’t want to pay tax, bring your plant to the USA,” added Trump, flanked by steel and aluminum workers.
Plans for the tariffs, set to start in 15 days, have stirred opposition from business leaders and prominent members of Trump’s own Republican Party, who fear the duties could spark retaliation from other countries and hurt the U.S. economy. Within minutes of the announcement, U.S. Republican Senator Jeff Flake, a Trump critic, said he would introduce a bill to nullify the tariffs. But that would likely require Congress to muster an extremely difficult two-thirds majority to override a Trump veto. Some Democrats praised the move, including Senator Joe Manchin of West Virginia, who said it was “past time to defend our interests, our security and our workers in the global economy and that is exactly what the president is proposing with these tariffs.”
When the “tax cut” bill was being passed, everyone from Congress to the mainstream media, and even the CFP’s I spoke with yesterday, regurgitated the same “storyline:” “Tax cuts will lead to an economic boom as corporations increase wages, hire and produce more and consumers have extra money in their pockets to spend.” As I have written many times previously, this was always more “hope” than “reality.” The economy, as we currently calculate it, is roughly 70% driven by what you and I consume or “personal consumption expenditures (PCE).” The chart below shows the history of real, inflation-adjusted, PCE as a percent of real GDP.
If “tax cuts” are going to substantially increase the growth rate of the U.S. economy, as touted by the current Administration, then PCE has to be directly targeted. However, while the majority of consumers will receive an “average” of $1182 in the form of a tax reduction, (or $98.50 a month), the increase in take-home pay has already been offset by surging health care cost, rent, energy and higher debt service payments. [..] But this is nothing new as corporations have failed to “share the wealth” for the last couple of decades.
That was quick. The trade war scare was over by noon yesterday, and by the market close they were singing “Gary Cohn, we hardly knew ya”. Folks, what more evidence do you need that the financial markets are completely uncoupled from reality and that these feeble bounces between the 50-day and 20-day chart points are essentially the rigor mortis of a dead bull? At the moment, the 50-day stands at 2740 on the S&P 500 and is functioning as “resistance” according to the chart mavens, while the 20-day at 2700 is purportedly acting as “support”. So there’s that, but also this: At the exact mid-point of 2720, the broad market is currently trading at 25.6X reported earnings for 2017.
That’s the nosebleed section of history no matter how you slice it – and most especially in the context of an earnings growth trend that is shackled to the flat line, and which has no prospect of breaking away before the next recession, either. With virtually every company having reported, it turns out that GAAP earnings for 2017 came in at $109.46 per share on the S&P 500. Then again, 40 months earlier in September 2014 reported LTM earnings were $105.96 per share. That tabulates to a 1.0% per year gain during what will surely prove to have been the sweet spot (month #63 to month #102) of the current long-in-the-tooth business expansion.
Low interest rates. Easy credit. Poor regulation. Toxic mortgages. These were just a few reasons regulators gave for the collapse of the US housing market a decade ago. Since then, regulators have improved the standards that lenders use when Americans apply for mortgages. But today increasing danger lurks in the mortgage market, and economists say it could put the financial system at “even greater risk” when the next recession strikes or too many borrowers fall behind on their mortgage payments. A growing segment of the mortgage market is being financed by so-called non-bank lenders — financial institutions that offer loans to consumers but don’t provide saving or checking accounts.
Borrowers with poor credit have increasingly turned to these alternative lenders instead of traditional banks. The alternative lenders are subject to far less regulation and have fewer safeguards when borrower defaults start to pile up. “A collapse of the non-bank mortgage sector has the potential to result in substantial costs and harm to consumers and the US government,” economists at the Federal Reserve and the University of California, Berkeley, write in a paper released Thursday at a Brookings Institution conference. As of 2016, non-bank financial institutions originated close to half of all mortgages. They originated three-quarters of mortgages with explicit government backing, underscoring the risk to taxpayers.
“The experience of the financial crisis suggests that the government will be pressured to backstop the sector in a time of stress,” the authors write. The danger is that non-banks may have fewer resources to weather economic shocks to the mortgage market, like a rise in interest rates or a decline in house prices. “What happens if interest rates rise and non-bank revenue drops? What happens if commercial banks or other financial institutions lose their taste for extending credit to non-banks? What happens if delinquency rates rise and servicers have to advance payments to investors?” the authors write. “We cannot provide reassuring answers to any of these questions,” they write.
The end of the era of cheap money highlights the risk of “Enron-style” bankruptcies in many sectors, including renewable energy. With the path of three rate hikes in the United States in 2018 confirmed by the Federal Reserve and a nervous equity market, the challenges are more evident than ever. The past eight years of massive liquidity and low rates have not helped deleverage, and many companies have used this period to increase imbalances and create complex debt structures. In fact: • Corporate net debt to EBITDA levels is at record highs. About 20% of US corporates face default if rates rise, according to the IMF. • The number of zombie companies has risen above pre-crisis levels according to the Bank of International Settlements (BIS). • This is particularly evident in the renewable sector where, even in the years of high liquidity and low rates, bankruptcies soared.
The renewable sector has undergone an absolutely spectacular transformation in the past eight years. Technology advanced, costs fell and global leaders strengthened when their strategy was to develop an energy model. Understanding that disruptive technologies cannot be more leveraged than traditional ones was key. When technology reduces costs and disrupts inflationary models, basing the business on ever-increasing subsidies and higher prices and financing it with massive debt is suicidal. In the era of cheap money and extreme liquidity, many companies used the “green” subterfuge to implement an extremely leveraged builder-developer model, ignoring demand, costs, and competition. A model whose sole objective was to install for the sake of installing capacity, whether there was a demand or not, and that pursued subsidies while stating that it is very competitive.
Even in a period of falling interest rates and very high liquidity, there have been spectacular bankruptcies, so imagine what can happen when rates rise. [..] If a technology is viable, it does not need subsidies. If it is unviable, no subsidies will change it. Bankruptcies in the solar sector exceed all those of the inefficient coal and fracking companies combined. This domino of bankruptcies, which includes more than 120 corpses of large companies around the world, was self-inflicted. And now, winter is coming. [..] The global renewable sector faces refinancing needs in the next seven to eight years that exceed its entire market capitalization (134 billion euros, Renixx Index).
It is not a problem of technology, it is the addiction to cheap debt and growth for growth sake. And it’s not just a problem in the renewable sector. The combination of lower revenues and increased debt costs is a danger. Cost of debt rises, and cost of equity soars due to higher perceived risk, which in turn can dry up the market for capital increases and refinancing. It is not just renewables, but it is worth highlighting that energy is -again- the most vulnerable sector due to the cyclical nature of its revenues and the perpetuation of overcapacity of the past eight years.
Tesla CEO Elon Musk took to Twitter on Thursday to call on U.S. President Donald Trump to challenge China’s auto trade rules, which limit foreign ownership of Chinese ventures and impose steep tariffs on imported cars. In a series of tweets aimed at the president, Musk said he was “against import duties in general, but the current rules make things very difficult. It’s like competing in an Olympic race wearing lead shoes.” Tesla has been pushing hard to build cars in China, the world’s largest auto market, but has hit roadblocks in negotiations with local authorities, in part because Musk is keen to keep full control of any local venture. “No U.S. auto company is allowed to own even 50% of their own factory in China, but there are five 100% China-owned EV (electric vehicle) auto companies in the U.S.,” Musk wrote in another tweet.
Tesla “raised this with the prior administration and nothing happened. Just want a fair outcome, ideally where tariffs/rules are equally moderate. Nothing more. Hope this does not seem unreasonable,” he said. Trump quoted one of Musk’s tweets in his announcement on new tariffs and said American automakers have not been treated fairly by trade rules around the world. Trump announced steep tariffs on steel and aluminum imports on Thursday. Politicians “have known it for years and never did anything about it. It’s got to change,” Trump said, saying he plans to impose a “reciprocal tax” on other countries. “We’re changing things,” Trump added. “We just want fairness.”
China has moved away from its old growth model which was heavily reliant on investment and will rely less on stimulus to boost the economy in future, People’s Bank of China governor Zhou Xiaochuan said on Friday. Zhou’s comments echoed those of other top officials at China’s parliament this week which suggested that Beijing will be more cautious about spending this year while it focuses on reducing the risks from a rapid build-up in debt. After years of heavy pump-priming, markets worry less generous stimulus could retard the pace of growth not only in China but globally. But analysts believe Beijing will continue to keep the system well supplied with cash to avoid the risk of a sharp slowdown in economic growth, even as they continue to tighten the screws on financial regulations.
“We now emphasize the new normal of the economy, shifting from the past growth model of quantitative growth… referring to the accumulation of capital and investment to boost economic growth,” Zhou told reporters on the sidelines of the annual parliament session. “While pursuing higher quality growth, we will have to reduce our reliance on the old growth model of investment,” said Zhou, in what was likely his last news briefing before his expected retirement this month. Zhou said China needs to improve its regulatory supervision as soon as possible to curb risks to the financial system. He said China has begun to make progress in reducing such risks, but numerous threats remain, such as a lack of transparency at financial holding companies and digital currencies.
The UK’s pension funding crisis reached a new crisis milestone this week as the Office for National Statistics revealed the UK’s pension funding liabilities rose to £7.6 trillion at the end of 2015. The figure – the total amount promised to pay Brits’ future retirement income – includes £5.3 trillion of pension entitlements that were the responsibility of central and local government, most of which – around £4 trillion – came from State Pension entitlements. The remaining £2.3 trillion were private sector employee pension entitlements with £2 trillion due to final salary pensions, up from £1.4 trillion in 2010. As things stand, expert commentators suggest there is only around a third of that ‘in the bank’ in company pension funds.
The remainder, it is hoped, will be generated by future working populations. The figures are designed to provide a snapshot of household retirement entitlements, though they don’t include self-invested personal pensions, which have grown significantly in recent years thanks to legislative changes known as pensions freedoms. “While these are obviously large amounts of money, it is important to remember that the payments will be drawn over many years,” says Darren Morgan, head of national accounts for the ONS. “The figures say nothing about the sustainability of our pension system in future.”
In fact, pensions experts have been shocked by the statistics, which come just days after official warnings from the Government Actuary that National Insurance may have to increase by 5% to pay for future state pay outs. “The figures published by the ONS today are astonishing and bring into sharp relief the reasons behind proposed increases in the state pension age,” adds Tom Selby, senior analyst at AJ Bell. “Unfunded state pension entitlements are worth more than double UK GDP – these are promises that will, ultimately, have to be paid for by future generations either through higher taxes, a lower state pension income or a later retirement age.
Countrywide, Britain’s largest estate agent, has reported a 22.5% fall in core annual earnings and scrapped its dividend, sending its shares to record lows. It pledged to go “back to basics” to return its sales and lettings business to profitable growth after what it described as a disappointing year. “We have got to put our resources back in the front line and not at the head office,” said the executive chairman, Peter Long, adding that restructuring would reduce headcount to 350 from 400. Countrywide said its 2018 property pipeline was “significantly lower” and that it expected a fall of about 36% (£10m) in first-half adjusted earnings before interest, taxation and amortisation (Ebitda).
Its 2017 adjusted Ebitda fell 22.5% to £64.7m while group income fell almost 9% to £671.9m. Shares in Countrywide plunged to a record low of 66.64p before rising to 77p in mid-morning trading, down 13.4% . “The next few months will be messy as new plans are put into place,” Jefferies analysts said in a note to clients. “However, banks are lending their support to the new plan and we believe those equity investors who choose to do the same will have their patience rewarded.”
Toronto developers had one of their busiest months on record in February in another sign the condo market is alive and well in Canada’s biggest real estate market, even amid a broader slowdown. Builders began work on 5,677 units during the month, most of them multiple-unit projects like condos, the Canada Mortgage and Housing Corp. said Thursday in Ottawa. That’s the strongest February, and the sixth-highest figure for any month, in records back to 1948. The bulk of Toronto condo units are typically sold before construction begins, so the latest surge may simply reflect past sales. But the report also suggests developers are betting the condo market will be less affected by headwinds including higher borrowing costs and tighter mortgage qualification rules that are currently hitting Toronto housing.
“It’s probably lagging a little bit. Historically you tend to see supply follow demand,” said Robert Kavcic, an economist at Bank of Montreal. “The other nuance here is that a lot of the policy changes we’ve seen over the last year, they really had a bigger impact on the higher end of the single detached housing market.” [..] Construction is picking up in Toronto just as sales begin to slide, after various levels of government and regulators took measures to curb surging prices. Most recently, tougher mortgage guidelines came into play on Jan. 1, making it harder for prospective buyers to qualify for loans. Many buyers rushed into the market in December to get ahead of the rules.
Transactions fell 35% in February from a year earlier to 5,175 units, according to data released Tuesday by the Toronto Real Estate Board. It was the weakest February for sales since 2009. Prices are holding up better, particularly in the condo segment, which has gained consistently over the past year and is up 20% since last February. Prices for single-detached homes have fallen 12% since reaching a record last year. Fundamentals that favor condos seem to be at work, as rising immigration levels drive demand. And since the net effect of the new regulations is to limit the size of mortgage credit, the tougher rules may be buoying the less-expensive condo market.
The EU has thrown down an ultimatum to Theresa May in Brexit talks, warning that it will not open discussions about trade or other issues until the Irish border question is solved. Speaking in Dublin alongside the Irish Prime Minister Leo Varadkar, European Council President Donald Tusk said talks would be a case of “Ireland first” and that “the risk of destabilising the fragile peace process must be avoided at all costs”. “We know today that the UK Government rejects a customs and regulatory border down the Irish Sea, the EU single market, and the customs union,” the Mr Tusk said. “While we must respect this position, we also expect the UK to propose a specific and realistic solution to avoid a hard border.
“As long as the UK doesn’t present such a solution, it is very difficult to imagine substantive progress in Brexit negotiations. “If in London someone assumes that the negotiations will deal with other issues first before the Irish issue, my response would be: Ireland first.” British negotiators have long been keen to move to discussions about trade and had hoped to do so after the March meeting of the European Council in two weeks, but Mr Tusk’s latest ultimatum suggests further delays could be in store. The EU says a withdrawal agreement must be negotiated by October to give it time to ratify the deal before the UK falls out of the bloc in March 2019.
Mr Tusk recalled that the Good Friday Agreement, whose 20th anniversary is next month, had been “ratified by huge majorities north and south of the border”. “We must recognise the democratic decision taken by Britain to leave the EU in 2016 – just as we must recognise the democratic decision made on the island of Ireland in 1998 with all its consequences,” he said, in a play on the rhetoric used by Brexiteers regarding the 2016 EU referendum. The EU27 nations granted the UK “sufficient progress” to move to the rest of Brexit talks in the December meeting of the European Council after the UK made a commitment to avoid a hard border on the island of Ireland at all costs.
The boss of the port of Calais has said there could be tailbacks up to 30 miles in all directions and potential food shortages in Britain if a Brexit deal involves mandatory customs and sanitary checks at the French ferry terminal. Jean-Marc Puissesseau made an impassioned plea to Theresa May and Michel Barnier to put plans in place immediately to avert congestion in Calais and Dover, where bosses have already warned of permanent 20-mile tailbacks. At the same time a leading politician for the Calais region said the problems in France would be 10 times worse than at the Irish border. At a private meeting at the European parliament, Xavier Bertrand, a former French health minister and the president of the Hauts-de-France political region, said politicians needed to grasp the magnitude of the problem.
“I know Ireland is going to be a real problem, but please remember the economic issues in Ireland are 10 times smaller than what is going to happen here,” he said. “This is a black scenario, but it is going to get darker and darker,” he said, urging politicians in Brussels and London to take urgent action by setting up working groups and listening to business. Bertrand angrily denounced those who had power to influence the Brexit outcome. It was not right that economic operators should be expected to “sit on their hands waiting very anxiously for something to happen”.
At the same meeting, Puissesseau said both sides would be affected by the problems at the ports, with suppliers from the UK trying to get their goods through strict EU controls treated no better than those from a developing country. “The UK is part of the 21st century. But this takes us back 100 years. This is sad,” he said. “From Brexit day, 100% of our traffic will be from outside the EU. I tell you honestly that GB will be a third country, this frightens me. There’s such a long history between the UK and EU.” “At the moment, 70% of food imported comes from the EU. Even if that goes down to 50% after Brexit because of controls, it still needs to flow smoothly; people still need to eat,” he said.
Selling intensified for digital currencies on Friday, as the price of the No.1 cryptocurrency bitcoin pushed below $9,000. The price of a single bitcoin fell 4.8% to $8,847.85, but bounced off a low of $8,370.80, according to CoinDesk. In a week, bitcoin has dropped around 20%. Losses were widespread across cryptocurrencies. Ether was down 4.5% to $671.66, bitcoin cash slid 6.4% to $970.66 and Litecoin fell 6.2% to $166.22, according to CoinDesk. Ripple tumbled 10% to $0.78, according to CoinMarketCap. The moves build on sharp drops on Thursday, which some suggested were due to technical factors.
Across the United States, government officials are struggling to combat the next wave of the opioid epidemic, which is expected to deliver a massive blow to the heartland. A new report from the Centers for Disease Control and Prevention (CDC) confirms the opioid crisis has dramatically worsened since the second half of 2016. Raw data from hospital emergency rooms show a significant increase in drug overdoses across the U.S. In a press briefing on Tuesday, CDC Director Anne Schuchat, M.D., warned that the U.S. is currently experiencing the highest drug overdose death rates ever.
In the newly issued report, which examined data from 16 states, emergency department visits for suspected opioid overdoses jumped 30% from July 2016 through September 2017. In some regions of the country, overdoses were far more significant, but overall, data from most areas showed the opioid crisis is worsening, despite President Trump’s new initiative to tackle the epidemic.
The Bank of China has pledged at least 10bn yuan (£1.1bn) to create a vast panda conservation park in south-west Sichuan province, the Chinese forestry ministry has said. The Sichuan branch of the central bank signed an agreement with the provincial government to finance the vast national park’s construction by 2023. The park aims to bolster the local economy while providing the endangered animals with an unbroken range in which they can meet and mate with other pandas in order to enrich their gene pool.The ministry said the park will measure 2m hectares (5m acres), making it more than twice the size of Yellowstone national park in the US.
Zhang Weichao, a Sichuan official involved in the park planning, told the state-run China Daily the agreement would help alleviate poverty among the 170,000 people living within the project’s proposed territory. Plans for the park were initiated in January last year by the ruling Communist party’s central committee and the state council, the China Daily reported. Giant pandas are China’s unofficial national mascot and live mainly in the Sichuan mountains, with some in neighbouring Gansu and Shaanxi provinces. An estimated 1,864 live in the wild, where they are chiefly threatened by habitat loss. Another 300 live in captivity.
The world’s biggest seafood firms are all contributing to the deaths of more than 100,000 whales, dolphins, seals, turtles and seabirds that are killed in agony every year by discarded fishing equipment, according to a new report. Many of the creatures are drowned, strangled or mutilated by plastic gear lost or abandoned at sea, while others suffer “a prolonged and painful death, usually suffocating or starving” either because they cannot fish or their stomachs are full of plastic. Campaigners believe the fishing litter problem is becoming so bad that the oceans could end up unable to provide any catches for humans to eat.
They say “ghost gear” has become a huge but overlooked threat to marine life, and 640,000 tons of it are added to the oceans each year – a rate of more than a ton every minute. A new study analysed the approaches to fishing equipment of the world’s 15 biggest seafood companies, to rank them in five categories – but found that none could be ranked in the top two as having “best practice” or making “responsible handling” of their fishing gear integral to their business strategy. [..] The report, entitled Ghosts beneath the Waves, says abandoned and lost gear is four times more likely to trap and kill creatures than all other forms of marine debris combined, and more than 70% of visible plastic in the sea is fishing-related.
Microplastics – minuscule pieces – were found in the digestive tracts of 80% of seals tested off the coast of Ireland, while other research cited found that plastic accounted for 69% of the debris ingested by whales. Other studies said 98% of whale entanglements involved ghost gear, while 82% of North Atlantic right whales have become entangled at least once. “This is a huge crisis of animal suffering, yet hardly anyone is talking about it,” said World Animal Protection. In one deep water fishery in the north east Atlantic 25,000 nets have been recorded as lost or discarded each year, according to the report. “Even within small areas, the amount of ghost gear can be staggering,” it said. “The Florida Keys National Marine Sanctuary, for example, is estimated to be littered with 85,000 active ghost lobster and crab pots.
World stock markets have tumbled after Donald Trump said the United States would impose tariffs of 25% on steel imports and 10% on imported aluminum next week. The threat of a trade war with China and higher goods prices led to a sharp sell-off in Wall Street on Thursday, causing Asian markets to take fright on Friday. The Nikkei index in Japan fell 2.4%, Hong Kong and South Korea were down 1.6%, and the ASX200 in Sydney was off 1% in early afternoon trading. Asian steelmakers bore the brunt. South Korea’s Posco fell 3% and Japan’s Nippon Steel 4%. Michael McCarthy of CMC Markets in Sydney said it was a “sharp reminder of the initial negative reaction to the election of Mr Trump ..
… An explanation may come, but the initial market interpretation of the move is rank populism. The lack of structure makes anticipating further measures and possible responses to retaliatory moves difficult to predict.” The Dow Jones Industrial Average had initially fallen more than 570 points, with heavy losses for manufacturers like Caterpillar and Boeing. The index closed down 420 points and the S&P 500 and Nasdaq both dropped on the day. Trump campaigned on the promise of protecting the US steel industry but until now has done little to make good on those promises. At a meeting with US industry officials at the White House, he vowed to rebuild American steel and aluminum industries, saying they had been treated unfairly by other countries for decades.
The move is likely to increase tensions with China, whose top trade official, Lui He, is in Washington for trade talks. “People have no idea how badly our country has been treated by other countries, by people representing us that didn’t have a clue,” Trump said at a White House press conference attended by executives from the steel and aluminum industries. “Or if they did, then they should be ashamed of themselves because they’ve destroyed the steel industry, they’ve destroyed the aluminum industry, and other industries, frankly, when you look at all the plants, the car plants, automobile plants that moved down to Mexico for no reason whatsoever, except we didn’t know what we were doing. So we’re bringing it all back.”
Just when it looked like the global economy was running on all cylinders, President Donald Trump injected a degree of risk to the otherwise favorable outlook. The U.S. president announced on Thursday plans to impose 25% tariffs on imported steel and 10% tariffs on foreign aluminum, with more details to be unveiled next week. American equities cratered for a third day as fears of a trade war spread and expectations for U.S. economic growth weakened a bit. The move to protect American metals producers threatens to raise prices for consumers and businesses that buy goods made with the raw materials. That will have implications for a U.S. central bank that’s debating how fast to raise interest rates this year.
“If tariffs go up, it will, at the margin, tend to put more upward pressure on prices, and those upward pressure on prices will have to be considered by the monetary authority,” New York Fed President William Dudley said in a speech in Brazil on Thursday. The extent of any economic damage will depend on the fine-print of Trump’s new policies and the severity of countries’ retaliation. Some economists worried the move might presage a shift toward an era of more economy-inhibiting protectionism just when it looked like the growth headwinds were fading. “It is possible that a more aggressive shift in policy is under way that could undermine the pro-growth tilt of fiscal policy, harming the U.S. and global economic expansions,” JPMorgan analysts wrote in a research note after Trump’s announcement.
The stock market is flirting with a technical inflection point again. The S&P 500 Index briefly broke below its 100-day moving average Thursday, sinking as much as 2% after President Donald Trump said the U.S. will impose harsh tariffs on steel and aluminum imports. The announcement added fuel to a fire that’s been smoldering since last month’s selloff, as investors continue to worry about rising inflation and interest rates. That anxiety has brought the market close to collapsing through the line of defense the moving average represents.
“You’ve broken down below the halfway point, now you’re toying below the initial high after the collapse, and you’ve gotten into all sorts of technical problems,” Jim Paulsen, chief investment strategist at Leuthold Weeden, said by phone. “Breaking some technical averages here is starting to scare people.” The S&P 500 fell 1.1% to 2,684.02 as of 3:27 p.m. in New York, after going as low as 2,659.65. The index is down about 2.5% on the week. Before February’s correction, the gauge hadn’t touched the 100-day barrier since last August. And while the market is recovering some of Thursday’s losses late in the session, it still risks closing below the line for the third time in a month.
Last month, MarketWatch used a chart overlay to illustrate how the stock market under John F. Kennedy has closely followed its performance over the same time frame with Donald Trump in the White House. Fast forward three weeks and, as of Wednesday’s close, the S&P 500, in relative terms, sat almost exactly where it did at this point during Kennedy’s administration. If the trend persists—a HUGE if, of course—prepare for some rather steep losses in the coming weeks. Perhaps it’s already started, with the Dow Jones Industrial Average down nearly 600 points at its Thursday low.
“After 328 trading days since election day, the Trump S&P 500 sits right on top of the JFK S&P 500,” the blogger behind the Global Macro Monitor wrote. ”The index, 328 trading days after the election day of each president, is less than five basis points within one another. Rather stunning, don’t you think?”
NRA members have branded Donald Trump’s plans for stricter gun control legislation “stupid” and a “betrayal” after the president suggested reforms on Wednesday. In an open meeting with congressional Democrats and Republicans, Trump embraced raising the age limit on purchasing certain weapons and suggested that law enforcement should be allowed to confiscate people’s guns before going through due process in a court. Joe Biggs, an Austin, Texas-based NRA member and chief executive of Rogue Right, a conservative news website, was among those unimpressed by the proposal. “That’s the stupidest fucking thing I’ve ever heard in my life. Hopefully he was just having a momentary brain fart, a lapse of judgment,” Biggs said.
He added: “Hopefully someone pulled him into the back and said: ‘You’ve just lost half your base by saying something that stupid.’” During the meeting Trump called for a “beautiful” bill which would expand background checks on gun purchases and restrict young people from purchasing certain weapons. But it was his suggestion that in some cases law enforcement should be allowed to “take the guns first, go through due process second” – that most alarmed gun owners on the right. “You spend your whole life on the right and you always think that Democrats are going to be the ones who take your guns,” Biggs said. “And then you hear President Trump say: ‘Oh we’re gonna take your guns and go through due process later.’” Biggs said he would vote for another candidate in the 2020 presidential election if Trump pushed through his reforms.
Putin in his state of the union announced to his people that Russia can defend itself from any attacks, including nuclear. Western media twist his words; the Guardian claims that “Russia threatens arms race” and even Zero Hedge says :“..the era of the Western world attempting to prevent Russia’s expansion is over.”
The new US nuclear posture allows a nuclear strike in response to a conventional attack. President Vladimir Putin said Russia, if attacked with nuclear weapons, would not hesitate to respond in kind. The warning came during a state of the nation address delivered by the Russian president on Thursday, in which he presented a number of new advanced strategic weapon systems which, he said, would render all anti-missile capabilities that the US currently has powerless. Putin also mentioned the new American nuclear posture, which has relaxed some rules on when the US is prepared to use its nuclear weapons. “We are greatly concerned by some parts of the new nuclear posture, which reduces the benchmark for the use of nuclear weapons…
..Whatever soothing words one may try to use behind closed doors, we can read what was written. And it says that these weapons can be used in response to a conventional attack or even a cyber-threat,” he said. “Our nuclear doctrine says Russia reserves the right to use nuclear weapons only in response to a nuclear attack or an attack with other weapons of mass destruction against her or her allies, or a conventional attack against us that threatens the very existence of the state.” “It is my duty to state this: Any use of nuclear weapons against Russia or its allies, be it small-scale, medium-scale or any other scale, will be treated as a nuclear attack on our country. The response will be instant and with all the relevant consequences,” Putin warned.
The Chinese government has banned George Orwell’s dystopian satirical novella Animal Farm and the letter ‘N’ in a wide-ranging online censorship crackdown. Experts believe the increased levels of suppression – which come just days after the Chinese Communist Party announced presidential term limits would be abolished – are a sign Xi Jinping hopes to become a dictator for life. The China Digital Times, a California-based site covering China, reports a list of terms excised from Chinese websites by government censors includes the letter ‘N’, Orwell’s novels Animal Farm and 1984, and the phrase ‘Xi Zedong’. The latter is a combination of President Xi and former chairman Mao Zedong’s names.
Search terms blocked on Sino Weibo, a microblogging site which is China’s equivalent of Twitter, include “disagree”, “personality cult”, “lifelong”, “immortality”, “emigrate”, and “shameless”. It was not immediately obvious why the ostensibly harmless letter ‘N’ had been banned, but some speculated it may either be being used or interpreted as a sign of dissent. [..] Facebook, Twitter and YouTube have long been blocked in the country and even Winnie the Pooh recently found himself subject to China’s latest internet crackdown. In July, references to the cartoon bear on Sina Weibo were removed after his image was compared to President Xi.
Our car addiction is deeply rooted. We built our communities around them. Not around ourselves. That is a much bigger problem than what fuel a car uses to power a vehicle 10-20 times heavier than its driver, with a 10% fuel efficiency.
Over half of diesel cars recently approved for sale in Europe are emitting pollutants far above current legal air pollution limits, despite being marketed as the “cleanest in history”. Analysis of emissions data from nearly 100 car models revealed many vehicles from the new “Euro 6” generation would not be allowed on the market if they were tested today. An investigation by Greenpeace found dozens of these high-polluting vehicles were approved for sale during a “monitoring period” in which there was no limit set on the amount of nitrogen oxide (NOx) they could emit on roads. Many of these vehicles have only gone on sale across Europe in the recent months. The news comes after a German court ruled cities can impose driving bans on certain diesel cars in an effort to deal with the country’s air pollution.
Such restrictions on diesel cars – including the clean air zones found in London and other UK cities – tend to focus on older, dirtier car models. However, Greenpeace campaigners emphasised that while newer Euro 6 models are described as “light years away from their older counterparts” many of them still have the capacity to emit high levels of pollutants. Following the so-called “dieselgate” scandal in 2015, which found VW had installed “cheat software” in its vehicles to fool lab emissions tests, there was a widespread push for tough new regulations. In the aftermath of the scandal, testing revealed diesel cars that met the latest “Euro 6” limits for NOx emissions in lab tests were massively exceeding those limits when driving on the road.
In a recent post, I wrote that the U.S. would almost certainly set a new oil production record this year. I noted that the most recent data from the Energy Information Administration (EIA) showed that last November U.S. oil production exceeded 10 million barrels per day (BPD) for the first time since 1970. This week the EIA revised November’s oil production upward, which pushed it into the #1 spot for monthly production. The revision increased U.S. oil production in November to 10.057 million BPD, just edging out the previous record of 10.044 million BPD from November 1970. However, many new records should be set this year, as the EIA projects that oil production will reach 11 million BPD by year-end.
This would push the U.S. into first place among the world’s oil producers. But depending on how it is measured, the U.S. is already #1. The 2017 BP Statistical Review of World Energy ranks the U.S. #1 in oil production, but that’s because they include natural gas liquids (NGLs), which have surged in the U.S. along with natural gas production. The gains in U.S. oil production are being driven by production gains across tight oil plays in the Bakken and Eagle Ford, and especially the Permian Basin – where oil production is approaching a staggering 3 million BPD.
Earlier this year, when Bitcoin’s price fell by more than 60% from its record close, a less-noticed Bitcoin figure also plunged: the number of daily transactions. There are many explanations for the fall-off in trading, from software- to news-related. What’s less understood is why the level hasn’t recovered as Bitcoin’s price made a 50% comeback since Feb. 5. That’s left some investors wondering whether the cryptocurrency is waning in popularity. The average number of trades recorded daily has roughly dropped in half from the December highs and touched its lowest in two years last month, even as Bitcoin became a household name and roared back above $10,000.
Around the world, gender bias is attracting renewed attention. Through protest marches and viral social-media campaigns, women everywhere are demanding an end to sexual harassment, abuse, femicide, and inequality. But, as successful as the #MeToo and #TimesUp movements have been in raising public awareness, the struggle for parity is far from over. Empowering women and girls is key to achieving all 17 of the United Nations Sustainable Development Goals by 2030. At the moment, however, gender bias remains a significant obstacle to global progress, and it is particularly acute in the workplace. Today, only 5% of S&P 500 companies are led by women, according to Catalyst, a non-profit CEO watchdog.
That dismal figure is all the more remarkable when one considers that 73% of global firms allegedly have equal-opportunity policies in place, according to a survey by the International Labour Organization (ILO). Moreover, while research shows a clear link between a company’s gender balance and its financial health, women occupy fewer than 20% of governing board seats in the world’s largest companies. Addressing such deficiencies is both an economic and a moral imperative. A 2015 report by the McKinsey Global Institute found that if women and men played an “identical role in labor markets,” $28 trillion would be added to the global economy by 2025. These global gains would be in addition to the benefits for individual companies.
Firms with greater gender equality are more innovative, generous, and profitable. But, at the current rate of female empowerment, it would take nearly 220 years to close the gender gap. The world cannot afford to wait that long; we need a new approach.
National Grid has warned that the UK would not have enough gas to meet public demand on Thursday, as temperatures plummeted and imports were affected by outages. But the government said households would not notice disruptions to their supply or any increase in energy bills because suppliers, including British Gas, bought energy further ahead. The energy minister Claire Perry said people should cook and use their heating as they would normally. But experts said there was a strong chance that industrial users could experience interruptions to their gas supply. Within-day wholesale gas prices soared 74% to 200p per therm after the formal deficit warning, which acts as a call to suppliers to bring forward more gas.
It is the first time such an alert has been issued since 2010. By lunchtime on Thursday the price had spiked even higher, hitting a high of 275p per therm at one point. National Grid’s forecast for the day initially showed a shortfall across the day of 49.5m cubic metres (mcm) below the country’s projected need of 395.7mcm, which would normally be around 300mcm at this time of year. The gas deficit warning aims to fill the gap, which has since narrowed to 16.5mcm. “We are in communication with industry partners and are closely monitoring the situation,” the company said.
Gas demand is now at a five-year high, according to the market watchers S&P Global Platts. Simon Wood, a gas analyst at the group, said: “There’s a strong chance you’ll see some interruptions for industrial users to balance the system.” Big energy users such as car manufacturers have supply contracts which can be interrupted in return for lower prices. The situation has been compounded by several supply outages, which can relate to very cold weather. There have been problems with a pipeline to the Netherlands, reductions in gas flows from Norway, and technical issues at facilities in the UK, including at the North Morecambe Barrow terminal.
Brexit would lead to an unprecedented food shortage if the U.K. leaves the European Union without a deal, the CEO of the country’s second-biggest grocer said. “The impact of closing the borders for a few days to the free movement of food would result in a food crisis the likes of which we haven’t seen,” J Sainsbury CEO Mike Coupe said in an interview. “It’s inconceivable to me that there won’t be a solution found.” Tensions are simmering between London and Brussels, with U.K. Prime Minister Theresa May saying Wednesday that no one in her position could ever agree to the draft Brexit treaty published by the EU.
May is seeking to get the EU to sign on to a transition phase at a summit of leaders later this month, but Michel Barnier, the EU’s chief Brexit negotiator, warned Thursday that any such agreement could still unravel before Britain’s scheduled exit in March 2019. Almost half of the food eaten in the U.K. is imported. Trade barriers would be especially damaging to Britain’s fresh-food retailers, who rely heavily on the unencumbered movement of perishable goods throughout the EU. In 2016, the U.K. imported 22.4 billion pounds ($30.8 billion) worth of meat, fish, dairy products, fruit and vegetables, according to the Department for Environment, Food and Rural Affairs.
Wild bees and honeybees are put at risk by three pesticides from a group known as neonicotinoids, Europe’s food safety watchdog said on Wednesday, confirming previous concerns that prompted an EU-wide ban on use of the chemicals. The European Food Safety Authority (EFSA) report, which covered wild bees and honeybees and included a systematic review of scientific evidence published since EFSA’s 2013 evaluation, is seen as crucial to whether the European moratorium on neonicotinoid use remains in place. The updated risk assessment found variations due to factors such as species of bee, exposure and specific pesticide, “but overall the risk to the three types of bees we have assessed is confirmed,” said Jose Tarazona, head of EFSA’s pesticides unit.
The European Union has since 2014 had a moratorium on use of neonicotinoids — made and sold by various companies including Bayer and Syngenta — after lab research pointed to potential risks for bees, which are crucial for pollinating crops. EU nations will discuss a European Commission proposal to ban three neonicotinoids next month in the Plant Animal Food and Feed Standing Committee. “This is strengthening the scientific basis for the Commission’s proposal to ban outdoor use of the three neonicotinoids,” a spokeswoman for the EU executive said.
Designed to withstand a nuclear missile hit, the world’s biggest seed vault, nestled deep inside an Arctic mountain, is undergoing a makeover as rising temperatures melt the permafrost meant to protect it. Dubbed the “Noah’s Ark” of food crops, the Global Seed Vault is buried inside a former coal mine on Svalbard, a remote Arctic island in a Norwegian archipelago around 1,000 kilometres (650 miles) from the North Pole. Opened in 2008, the seed bank plays a key role in preserving the world’s genetic diversity: it is home to more than a million varieties of seeds, offering a safety net in case of natural catastrophe, war, climate change, disease or manmade disasters.
But warmer temperatures have disrupted the environment around the vault. In an unexpected development, the permafrost, which was meant to help keep the temperature inside the vault at a constant -18 Celsius (-0.4 Fahrenheit), melted in 2016. “The summer season was (warmer) than expected. We had water intrusions in the (access) tunnel that could be related to climate change,” Asmund Asdal, one of the seed bank’s coordinators, told AFP. The Arctic is warming twice as fast as the rest of the planet, scientific studies show. And while Europe is at the moment experiencing a subzero cold spell, the North Pole recently registered above-zero temperatures, 30 degrees higher than normal.
Scientists say warm spells like this are occurring with increasing frequency in the Arctic. Norway recently announced it would contribute 100 million kroner (10 million euros, $12.5 million) to improve the repository in a bid to protect the precious seeds. “We want to be sure that the seed vault will be cold throughout the whole year, even if the temperature continues to increase in Svalbard,” Norway’s Agriculture Minister Jon Georg Dale told AFP.
In Super Wednesday’s central bank double-header, the Federal Reserve’s show may be an afterthought to the Bank of Japan’s performance. In a case of unusual timing, both the BOJ and the Fed will announce the outcomes of their monetary policy meetings on Wednesday. [..] Analyst predictions for the BOJ’s next move varied widely, from expectations that the central bank would cut interest rates deeper into negative territory, to changing the size or make up of its quantitative easing asset purchases, to trying to steepen the yield curve or to doing nothing at all. “The BOJ has a propensity to surprise, although most of the time, the surprises are negative,” Lam said. The market certainly took a negative view of the BOJ’s late January surprise move to introduce a negative interest rate policy, when the central bank cut the rate it pays on certain deposits to negative 0.1%.
That counterintuitively sent the yen sharply higher, frustrating policymakers who had hoped a weaker currency would help the BOJ reach its long-delayed 2% inflation target by increasing the cost of imports and spurring more consumption. Indeed, the yen may become the bellwether of how the markets view the twin central bank meetings. “Dollar-yen has fallen pretty much every time we’ve had an FOMC and BOJ meeting week this year,” David Forrester at Credit Agricole told CNBC’s “Street Signs” on Monday. He expected that the BOJ would aim to steepen Japan’s bond yield curve and if that move “impressed” the Nikkei stock index, then the yen might weaken. Forrester also noted that if the Fed sounded more hawkish in its statement, that would push up the dollar, and by extension, weaken the yen.
Italian Prime Minister Matteo Renzi said on Monday that Germany’s central bank chief Jens Weidmann should concentrate on fixing the problems of his own country’s banks, after Weidmann had urged Italy to cut its huge public debt. Renzi told reporters in New York that Weidmann needed to solve the problem of German banks which had “hundreds and hundreds and hundreds of billions of euros of derivatives” on their books. Renzi, who has staked his career on a referendum on constitutional reform this autumn, has repeatedly criticized other European leaders in the last few days over what he sees as an inadequate European Union response to the problems of the economy and immigration. In an interview with daily La Stampa published on Monday, Weidmann said Italy needed to consolidate its budget to avoid doubts emerging about the sustainability of its public debt.
The housing crisis is driving a “geographic wedge” between the generations, weakening the bond between different age groups, according to new research. The study found that the rise in “age segregation”, caused by the lack of affordable housing for younger people, is damaging our society. Across England and Wales, the number of neighbourhoods in which half the population is aged over 50 has risen rapidly since 1991, the research from the Intergenerational Foundation (IF) found. In 1991 there were just 65 such neighbourhoods. This had risen to 485 by 2014, 60% of which were rural. But within urban areas, older people, children and young adults are also living increasingly separately.
“The housing crisis is driving a geographic wedge between the generations,” the research said. “It means that older and younger generations are increasingly living apart.” Since 1991, the median average age of neighbourhoods near the centre of cities has generally fallen by between five and 10 years, the report said. The report identified Cardiff, with its large student population, as “the most age segregated city in England and Wales”. Brighton, Leeds, Nottingham, Sheffield and Southampton were also identified by the report as age segregation “hotspots”. In Cardiff and Brighton, nearly a quarter of the population would need to move home in order to eliminate age segregation.
Surging house prices and a lack of choice for buyers have meant many people in the younger generation have had to move to find affordable housing close to employment. Younger generations are more likely rent than own, but older generations also face a “last-time buying crisis” due to a general lack of supply and a lack of affordable suitable accommodation to downsize into, the report said. Living apart in this way is making it harder for younger and older generations to look after each other, putting a bigger strain on the NHS. Age segregation also reduces people’s opportunities to find work and makes it harder for people to see different generations’ perspectives, it said.
Global rule makers think some banks are too clever by half. They want to limit the capital benefits those banks get from sophisticated risk models because they worry that these create a level of accuracy and detail as seductive as it is fallible. The Basel Committee, which sets global banking rules, wants to rein in the outliers: Those banks whose models produce the lowest-risk weightings and create most benefits in reducing their capital requirements. This will disproportionately affect European banks versus U.S. peers because Europeans have long designed their businesses around a risk-based approach to capital, while U.S. banks historically were governed by simpler leverage ratios that use plain asset measures.
It is quite easy to see which banks in Europe face the biggest potential impact from the changes currently being designed and debated by the rule makers who should complete them by the year’s end. Deutsche Bank, Société Générale, Barclays and BNP Paribas all have a relatively low-risk density, which is a measure of how little risk a bank assigns to the assets on its books. Each has a risk density of less than 30%, which means that every euro of loans or securities they own is worth less than 30 cents in risk-weighted assets. And it is risk-weighted assets that determines a bank’s capital requirement. For comparison, J.P. Morgan has a risk density of 61%.
Will the euro survive the next big crisis? A new report inspired by Jacques Delors, one of the architects of the single currency, says it probably won’t and urges policymakers to pursue immediate changes to Europe’s troubled monetary union to ward off the inevitable collapse. The report, entitled “Repair and Prepare – Growth and the Euro after Brexit”, comes at a time when even the most ardent defenders of the euro are cautioning against closer integration in the aftermath of Britain’s vote to leave the European Union. Pressing ahead, they worry, would deepen public resentment towards Europe after years of economic crisis that has pushed up unemployment and sent populist, eurosceptic parties surging in opinion polls.
The authors, a group of academics, think tankers and former policymakers from across Europe, acknowledge the obstacles but argue that politicians cannot afford to wait. They have put together a three-pronged plan for shoring up the euro that they believe is politically feasible despite the troubling backdrop. “Reforming the euro might not be popular. But it is essential and urgent: at some point in the future, Europe will be hit by a new economic crisis,” the report says. “We do not know whether this will be in six weeks, six months or six years. But in its current set-up the euro is unlikely to survive that coming crisis.”
[..] In a first stage to shore up the single currency, they recommend “quick fixes” that include a reinforcement of the euro zone’s rescue mechanism, the ESM, a strengthening of banking union and improved economic policy coordination that does not require changes to the EU treaty. This would be followed by a north-south quid pro quo on structural reforms and investments. In a third stage, the euro zone would move to a more federal structure, with risk and sovereignty sharing. This final stage, the most controversial, could take a decade or more to realize and is described as important but optional.
The only elements that differentiate Theresa May’s latest move from a Monty Python skit is her lack of a pith helmet and safari jacket. The British Prime Minister, per the Financial Times, plans to visit with top executives of major Wall Street firms to “canvass” them on “how Britain should structure its departure from the EU to reassure them that Brexit will not damage their UK business.” Mind you, she is not making this kiss-the-ring trip to New York to “reassure” the financial behemoths. That would mean the UK has a plan and is making the rounds to sell it and perhaps make cosmetic changes around the margins to make them feel important. Nor is it “consult,” which is diplo-speak for, “We’ll listen to your concerns but are making no commitment as to how much if any well take under advisement.”
No, “canvass” means they are a valued constituency she intends to win over and is seeking their input for real. This “canvass” is yet more proof of how out of its depth the UK government is in handling the supposedly still on Brexit. There’s a decent likelihood that May is running to the US because her team is short on staff and ideas and those clever conniving Americans might have some useful ideas up their sleeves. After all, they don’t want to go through the bother of getting more licenses and moving some staff to the Continent or Dublin. It’s much simpler to keep everything in London, particularly since top New York execs might face a tour of duty there, and the housing, shopping and schools are much more to their liking. Mind you, most financial services would remain in London with a Brexit, but Euroclearing will require a restructuring (that will have to be done out of an EU entity).
The embarrassing part is that May is apparently having to solicit input, when the big issue is obvious and binary: will the UK keep passporting rights for banking? This is binary and not hard to understand. If not, UK and US banks will need to obtain EU licenses to do certain types of business and some customer-facing personnel will need to be domiciled in the EU, not the UK. Numerous estimates have been bandied about, and they vary widely. Note that many important operations, like foreign exchange trading, were centered in the UK long before it entered the EU, are not regulated, and are conducted by phone and electronically, so there’s no reason to think they will need to migrate.
China has backed the creation of a giant national steel champion with continental reach, calling into question the country’s pledge at the G20 summit to slash over-production.Caixin Magazine said regulators have approved the merger of Baosteel and the loss-making group Wuhan Iron and Steel, calling it the birth of a strategic “behemoth” with a capacity of over 60 million tonnes a year. The move is touted as part of a restructuring plan to slash 100-150 million tonnes of excess capacity in China by 2020, with the loss of 180,000 steel jobs. But the evidence so far shows that output is still rising. An internal document from the German steel federation Stahl alleges that China has added 9m tonnes of extra capacity so far this year and there is no chance whatsoever that the country will meet its commitment to eliminate 45m tonnes of plant in 2016.
Stahl said China’s capacity has been increasing every year for the last four years, reaching 1,105m tonnes at a time when internal demand in China has slumped to 686m tonnes. Over-capacity has in effect doubled to 419m tonnes since 2012, more than twice the entire steel output of the EU. The Baosteel takeover of Wuhan is not necessarily a threat. Mergers can be part of the slow process of consolidation, and in this case the two state-owned companies have vowed to cut capacity by 13.4m tonnes between them. The nagging doubt is that steel is deemed a “strategic” industry by Beijing, a term with specific meaning in Communist Party ideology. The normal reflex of the authorities – especially regional party bosses – is to keep ailing steel mills alive by rolling over bad debts or forcing debt-equity swaps.
[..] For now the global steel crisis is in remission. The glut has been masked by China’s own policies over recent months, chiefly a fresh blast of infrastructure spending and a 20pc surge in new construction driven by easier credit. This looks like a cyclical bounce, now a routine feature of China’s stop-go economic management. The latest property boom is highly unstable. House prices rose 9.2pc in August from a year earlier, reaching 40pc in Hefei, 37pc in Shenzhen, 37pc in Nanjing, and 31pc in Shanghai. Once the new bubble deflates, a slowdown in building is likely to expose the immense scale of the steel glut once again.
China’s attempts to contain property prices have been halfhearted. If anything, they may have made the bubble grow even bigger. Average new-home prices in August were up 1.3% from July, the government reported, the 17th straight increase and the biggest since at least January 2011. Prices declined in only four of the 70 cities surveyed. The latest leg of China’s property boom, which began last year in the biggest cities—such as Shenzhen and Shanghai—has recently spread to smaller cities, driving local governments to roll out tightening measures. Some specifically aim at capping land prices, which in some places exceed the price per square meter of already-built housing nearby. Shanghai has suspended land auctions while other cities, including Nanjing and Guangzhou, have capped land prices.
These measures, however, may have backfired by reducing supply, driving developers to acquire land in other ways. Sunac China, for example, said Sunday it would buy 42 property projects from Legend Holdings, the biggest shareholder of computer maker Lenovo, for 13.8 billion yuan ($2.1 billion). More important, tightening measures haven’t tackled the key factor of rising home prices—easy credit. As a%age of total loans, outstanding mortgage loans are at their highest since at least 2008. For developers, cheaper money available in the onshore bond market fuels aggressiveness. Sunac, for example, a company whose dollar-denominated bonds were yielding 10% just 17 months ago, raised 4 billion yuan last month with coupons of 3.44% to 4%—despite a doubling of its net debt in just the past year. With so many parties including banks and local governments all depending on real estate, it may not make sense for them to pop the bubble.
Home prices in China are “high and hard to accept,” said 53.7% of the respondents in a survey by the People’s Bank of China, published today in the People’s Daily, the official paper of the Communist Party. Only 42.9% found them “acceptable.” And only 23.1% predicted that they would rise next quarter, while 11.9% expected them to fall. But that isn’t stopping people from wanting to participate in this frenzy: “Nevertheless, the ratio of residents who were prepared to buy a house within the next three months increased 1.3% from the third quarter to reach 16.3%.” That’s a lot of people “prepared to buy a house,” even with prices “high and hard to accept.”
There are several remarkable things in this survey: the worried tone in terms of the soaring prices, the increased desire to buy because, or despite, of the soaring prices, and the fact that this survey came via the official party organ from the PBOC which has been publicly fretting about the housing bubble, the debt bubble that comes along with it, and what it might do when it deflates. And what a bubble it is! The average new home price in 70 Chinese cities soared 9.2% in August year-over-year, after having jumped 7.9% in July, the eleventh month in a row of year-over-year gains, according to the China Housing Index, reported by the National Bureau of Statistics. In Tier 1 cities, prices skyrocketed: in Beijing, by 23.5% and in Shanghai by 31.2%!
Prices increased in 64 of the 70 cities, up from 51 in July. They fell in only four cities and remained flat in two. This chart by tradingeconomics.com shows the year-over-year percentage change in new home prices, the boom and bust cycles, and the stage of the boom where prices are at the moment:
China’s desire to stabilize the yuan risks undermining its future as a global reserve currency. For the second time this year, the overnight cost to borrow the offshore currency in Hong Kong surged above 20% amid speculation the People’s Bank of China is mopping up liquidity to boost the exchange rate. The volatility comes less than two weeks before the yuan’s inclusion in the IMF’s Special Drawing Rights – an event seen as a validation of President Xi Jinping’s efforts to promote its standing on the world stage. “This is not the sort of behavior you would expect from an SDR currency,” said Sue Trinh at Royal Bank of Canada in Hong Kong. “You can’t have funding for a reserve currency blowing up or moving in such a volatile fashion; it would be a nightmare for short-term portfolio management.”
Any use of borrowing rates to shake down bears risks eroding authorities’ pledges to give markets more sway in the world’s second-largest economy and undercutting Hong Kong’s position as the biggest offshore yuan trading center. The yuan’s funding costs at home and abroad have been more volatile than the four existing currencies in the IMF’s reserve basket over the past three years, data compiled by Bloomberg show. The offshore yuan funding cost, known as Hibor, jumped 15.7 percentage points to 23.7% on Monday, the second-largest increase on record, before falling to 12.4% on Tuesday. The rate previously surged to a high of 66.8% in January as China’s policy makers battled to restore control over the currency after a series of weaker fixings.
Traders are growing used to China’s policy makers intervening before key events, said Hao Hong at Bocom International in Hong Kong. “The central bank has done this before.” Still, the move is underscoring the greater volatility in China’s money markets compared with other reserve currencies. While the overnight Shanghai Interbank Offered Rate surged to 13% during a credit crunch in 2013, similar funding costs for the dollar, yen, euro and pound all traded within a 100 basis-point range in the past three years, according to data compiled by Bloomberg.
New Zealand’s sizzling economy has prompted Goldman Sachs to go out on a limb and call an end to the country’s easing cycle. Data last week showed GDP expanded 3.6% in the year through June, putting New Zealand among the fastest-growing economies in the developed world and suggesting inflation should finally start to gather pace. The Kiwi economy is “too strong to justify further rate cuts,” Tim Toohey, chief economist at Goldman Sachs Australia, wrote in a note to clients. He cancelled the two rate reductions he’d been forecasting and said the Reserve Bank of New Zealand will now hold its official cash rate at 2% through 2017. That’s a bold call after RBNZ Governor Graeme Wheeler all but committed himself to at least one more cut as he struggles to return inflation to target.
While 16 other economists surveyed by Bloomberg expect Wheeler to keep borrowing costs on hold at Thursday’s policy decision, they all predict he’ll lower them in November and some forecast another cut early next year. New Zealand’s strong dollar is damping the price of imports, meaning Wheeler has to crank up domestic price pressures to get inflation back into his 1-3% target band. He’s worried the longer the gauge stays low – it’s currently at 0.4% and forecast to slow further – the greater the risk inflation expectations will drop and create a deflationary spiral. Goldman may be on to something though. The GDP data showed a surge in household spending growth to a four-year high, suggesting inflation may be just around the corner. Spending was led by categories such as furniture, carpets and audio equipment.
The 2010 Deepwater Horizon oil-rig disaster, featured in a major-motion picture opening next week, may soon help Alabama rebuild its reserves, pay Medicaid expenses and fund road projects. Alabama plans to use annual payments from a $1 billion settlement with U.K. oil producer BP to back bonds issued within the next two months, said Bill Newton, the state’s acting director of finance, who also sits on the Alabama Economic Settlement Authority, which was created to handle the debt issue. The state will receive the payments under the settlement for 18 years.
State lawmakers earlier this month approved the bond sale and authorized creation of the six-member authority, which had its first meeting Monday. Under the legislation about $400 million of the bond proceeds will go to repay money the state loaned itself from reserve funds in prior years to balance budgets, with the rest going to fund Medicaid expenses and road work in the southern part of the state. The amount issued will depend on interest rates when the debt is sold. “We started the process to issue the bonds within the next two months,” said Newton. “We’ll see what the market brings.”
Wise words: “They can organize ten-acre farms instead of cell phone game app companies. They can do physical labor instead of watching television. They can build compact walkable towns instead of suburban wastelands….”
As is usually the case with troubled, over-ripe societies, these elites have begun to resort to magic to prop up failing living arrangements. This is why the Federal Reserve, once an obscure institution deep in the background of normal life, has come downstage front and center, holding the rest of us literally spellbound with its incantations against the intractable ravages of debt deflation. One way out of this quandary would be to substitute the word “activity” for “growth.” A society of human beings can choose different activities that would produce different effects than the techno-industrial model of behavior.
They can organize ten-acre farms instead of cell phone game app companies. They can do physical labor instead of watching television. They can build compact walkable towns instead of suburban wastelands (probably even out of the salvaged detritus of those wastelands). They can put on plays, concerts, sing-alongs, and puppet shows instead of Super Bowl halftime shows and Internet porn videos. They can make things of quality by hand instead of stamping out a million things guaranteed to fall apart next week. None of these alt-activities would be classifiable as “growth” in the current mode. In fact, they are consistent with the reality of contraction. And they could produce a workable and satisfying living arrangement.
The rackets and swindles unleashed in our futile quest to keep up appearances have disabled the financial operating system that the regime depends on. It’s all an illusion sustained by accounting fraud to conceal promises that won’t be kept. All the mighty efforts of central bank authorities to borrow “wealth” from the future in the form of “money” – to “paper over” the absence of growth – will not conceal the impossibility of paying that borrowed money back. The future’s revenge for these empty promises will be the disclosure that the supposed wealth is not really there – especially as represented in currencies, stock shares, bonds, and other ephemeral “instruments” designed to be storage vehicles for wealth. The stocks are not worth what they pretend. The bonds will never be paid off. The currencies will not store value. How did this happen? Slowly, then all at once.
Italian Premier Matteo Renzi on Monday reiterated his disappointment at Friday’s EU summit in Bratislava, which concluded with him openly coming out against Germany’s and France’s stance on migrants and economic growth for the bloc’s post-Brexit future. “If Europe continues like this, we’ll have to get organised and act autonomously on immigration,” Renzi said. “This is the only new development to come from Bratislava, where there were so many words, but we weren’t capable to saying anything clear about the issue of Africa. “That’s why, to use a euphemism, we didn’t take it well. ” Juncker says lots of wonderful things, but we don’t see actions. “This is one of Europe’s problems. Italy will go it alone. “It is capable of doing it, but this is a problem for the EU”
Thousands of refugees detained at one of Greece’s biggest camps, on the island of Lesbos, have fled the facility amid scenes of mayhem after some reportedly set fire to it, local police have said. Up to 4,000 panic-stricken men, women and children rushed out of the barbed-wire-fenced installation following rumours of mass deportations to Turkey. “Between 3,000 and 4000 migrants have fled the camp of Moria,” a police source said, attributing the exodus to fires that rapidly swept through the facility because of high winds. Approximately 150 unaccompanied children, controversially housed at the camp, had been evacuated to a childrens’ village, the police source added. No one was reported to have been injured in the blaze.
But damage was widespread and with tents and prefabricated housing units going up in flames, the Greek channel Skai TV, described the site as “a war zone”. The disturbances, it reported, had been fuelled by frustration over the notoriously slow pace with which asylum requests were being processed. A rumour, earlier in the day, that Greek authorities were preparing to send possibly hundreds back to Turkey – in a bid to placate mounting frustration in Germany over the long delays – was enough to spark the protests. [..] The increase in arrivals in recent months from Turkey – the launching pad for more than a million Europe-bound refugees last year – has added to the pressure on Greek authorities.
On Monday, the government announced that 60,352 refugees and migrants were registered in the country, essentially ensnared by the closure of borders along the Balkan corridor into Europe. Some 13,536 were detained on Aegean islands, including Lesbos which has borne the brunt of the influx. The detention centre at Moria has a capacity to house no more than 3,000 but is now said to be holding almost twice that number ..