Sep 262022
 


Henri Matisse Cap d’Antibes 1922

 

Meloni’s Right-Wing Alliance Wins Clear Majority In Italian Elections (ZH)
Thousands Of Firms In Italy On Brink Of Closure (RT)
The Return of Fascism (Chris Hedges)
Russia Says US “Wrecked” Ukraine Talks, But Peace Is Still Possible (Maté)
Early Turnout Numbers For Referendums On Joining Russia (RT)
Russia Says It’s Not Threatening Anyone With Nukes (Antiwar)
We Might Be Spared Nuclear War But Threat of Home Grown Tyranny Remains (PCR)
Pound Slumps To All-time Low Against Dollar (BBC)
UK To Double Military Spending Amid Cost-of-living Crisis (RT)
The Tories Declare Class War (Craig Murray)
US Facing Natural Gas Shortage – Reuters (RT)
New Zealand Prime Minister Calls for a Global Censorship System (Turley)
Psaki : If Midterms Are A ‘Referendum’ On Biden, Democrats Are Doomed (NYP)
Roger Waters Cancels Poland Concerts After Ukraine War Remarks (RFE)

 

 

Giorgia Meloni has won the Italian elections and is the next PM. The MSM has been loaded full of terms like Mussolini, ultra right wing and fascist. While she speaks of God, country and family. I don’t know exactly who is behind her, and I don’t need to. I have only to look at the mess Mario Draghi has made of Italy.

And more importantly, I look at the lockdowns and vaccine mandates, the unlimited support for the Ukraine nazis, and the cold and hungry winter many people in Europe, not least Italy, will face because of it.

Want to talk fascism? First learn to identify it.

 

 

 

 

Second largest food distribution centre in the world
https://twitter.com/i/status/1574124957377777664

 

 

 

 

 

 

 

 

“Meloni’s alliance which includes Salvini’s League and Berlusconi’s Forza Italia will win around 43% of the vote..”

Meloni’s Right-Wing Alliance Wins Clear Majority In Italian Elections (ZH)

Europe’s unelected authoritarian ruler, Ursula von der Leyen, is not going to be happy: according to early exit polls out of Italy’s national election, the right-wing bloc of Giorgia Meloni – which the ultra-left wing press just can’t stop comparing to Mussolini – is set for a historic, if largely expected, victory and a clear majority (if, however, not a super-majority) which will propel Meloni to the top of the Italian government as the country’s next prime minister, ushering in a historic right-wing shift for a country that – like Sweden until two weeks ago – has traditionally been very left-wing. Meloni’s Brothers of Italy party, which won just 4% of the vote during the last national election in 2018, won the biggest share of the vote in Sunday’s parliamentary elections with around 22.5%-26.5% of the vote according to an exit poll released by Italian national broadcaster Rai.

She is now set to become prime minister but would require approval from junior partners in her coalition to assume the role. According to an exit poll from Rai, Meloni’s alliance which includes Salvini’s League and Berlusconi’s Forza Italia will win around 43% of the vote. The Center-Left alliance will have just 25.5%-29.5% of the vote, while the 5 Star movement has 13.5%-17.5% of the final vote. Italy’s electoral system, which strongly favors parties that run as part of a coalition, is expected to help the right to an ample majority in both houses of Parliament: with 228 votes in the Lower House and 115 seats in the Senate (according to SkyTG24), Meloni will have a majority as just 104 votes are required. As the WSJ notes, the Italian election is “the first big test of the European Union’s political cohesion as it confronts Russia’s attempt to redraw the continent’s post-Cold War order.

Russian President Vladimir Putin’s restriction of natural-gas deliveries has sparked an energy-price crunch that, combined with other inflationary pressures, is expected to push much of Europe into a recession this winter.” Meloni replaces former Goldman Sachs partner and ECB technocrat and globalist, Mario Draghi, and will be the country’s first female prime minister. The likely right-wing government will face difficult decisions over how to protect Italian households and businesses from sky-high prices for natural gas and electricity. While Italy’s parlous public finances allow limited scope for fiscal largess, if the UK is any example – and it is – Italy will engage in a similar strategy of targeted and debt-funded fiscal stimulus which will lead to a blowout in Italian debt, a further plunge in the euro and much chaos everywhere.

[..] During the election campaign, Meloni tried to reassure voters and investors that she will keep Italy’s mammoth debt under control and won’t question the country’s foreign alliances or support for Ukraine. Expect all of that to change tomorrow.

Meloni

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Where Meloni comes from.

Thousands Of Firms In Italy On Brink Of Closure (RT)

Over 100,000 businesses in Italy are in danger of closing down due to soaring energy bills, the news outlet Corriere della Sera reported on Saturday, citing Carlo Sangalli, head of the Italian business association Confcommercio. “Already today many companies are reorganizing or reducing services… Between now and the first half of 2023, at least 120,000 small businesses in the service sector are at risk… This is a cautious estimate that does not take into account the largest companies,” Sangalli told the news outlet. According to the official, the situation could lead to the loss of more than 370,000 jobs. Sangalli noted that energy prices in Italy are much higher than in other countries, which puts a strain on small and medium-sized businesses.


“In terms of energy costs, our hotels, bars, restaurants and stores will pay 40-60% more on their bills this year than in Germany, and three times that than in France,” Sangalli said. He noted that the energy crisis may deal the final blow to many businesses that have already been made vulnerable by the Covid-19 pandemic. The official said the country needed “good reforms and good investments” that will “make our country work better and in a simpler way,” and called for some of the support measures introduced during the pandemic to be reinstated. Italy, along with other EU countries, has been battling a record-high inflation. Annual inflation in the country reached 8.4% in August, driven largely by energy costs. Italy relies on imports for nearly 75% of its energy. At the start of this year, it was importing 40% of its gas from Russia, but in July its Russian purchases dropped to 25% due to sanctions.

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Chris is getting too old. He’s glued to the rear view mirror.

The Return of Fascism (Chris Hedges)

Meloni got her start in politics as a 15-year-old activist for the youth wing of the Italian Social Movement, founded after the World War II by supporters of Benito Mussolini. She calls EU bureaucrats agents of “nihilistic global elites driven by international finance.” She peddles the “Great Replacement” conspiracy theory that non-white immigrants are being permitted to enter Western nations as part of a plot to undermine or “replace” the political power and culture of white people. She has called on the Italian navy to turn back boats with immigrants, which the far-right Interior Minister Matteo Salvini did in 2018. Her Fratelli d’Italia, Brothers of Italy, party is a close ally of Hungary’s President, Viktor Orban. A European Parliament resolution recently declared that Hungary can no longer be defined as a democracy.

Meloni and Orban are not alone. Sweden Democrats, which took over 20 percent of the vote in Sweden’s general election last week to become the country’s second largest political party, was formed in 1988 from a neo-Nazi group called B.S.S., or Keep Sweden Swedish. It has deep fascist roots. Of the party’s 30 founders, 18 had Nazi affiliations, including several who served in the Waffen SS, according to Tony Gustaffson a historian and former Sweden Democrat member. France’s Marine Le Pen took over 41 percent of the vote in April against Emmanuel Macron. In Spain, the hard-right Vox party is the third largest party in Spain’s Parliament. The far-right German AfD or Alternative for Germany party took over 12 percent in federal elections in 2017, making it the third largest party, though it lost a couple percentage points in the 2021 elections. The U.S. has its own version of fascism embodied in a Republican party that coalesces in cult-like fashion around Donald Trump, embraces the magical thinking, misogyny, homophobia and white supremacy of the Christian Right and actively subverts the election process.

Economic collapse was indispensable to the Nazis’ rise to power. In the 1928 elections in Germany, the Nazi party received less than 3 percent of the vote. Then came the global financial crash of 1929. By early 1932, 40 percent of the German insured workforce, six million people, were unemployed. That same year, the Nazis became the largest political party in the German parliament. The Weimar government, tone deaf and hostage to the big industrialists, prioritized paying bank loans and austerity rather than feeding and employing a desperate population. It foolishly imposed severe restrictions on who was eligible for unemployment insurance. Millions of Germans went hungry. Desperation and rage rippled through the population. Mass rallies, led by a collection of buffoonish Nazis in brown uniforms who would have felt at home at Mar-a-Lago, denounced Jews, Communists, intellectuals, artists and the ruling class, as internal enemies. Hate was their main currency. It sold well.

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“..talks between Ukraine and Russia collapsed after then-UK Prime Minister Boris Johnson visited Kiev in April and informed Zelensky that Putin “should be pressured, not negotiated with.”

Russia Says US “Wrecked” Ukraine Talks, But Peace Is Still Possible (Maté)

In his Sept. 21 speech announcing an escalation of Russia’s invasion of Ukraine, Russian President Vladimir Putin accused NATO states of sabotaging a peace deal that could have ended it months ago. At talks brokered by Turkey in March, Putin said, “Kiev representatives voiced quite a positive response to our proposals… But a peaceful settlement obviously did not suit the West, which is why, after certain compromises were coordinated, Kiev was actually ordered to wreck all these agreements.” Speaking at the United Nations hours later, President Joe Biden criticized the Russian leader but did not address his claim that the US thwarted negotiations. Asked about Putin’s remarks, officials from the White House’s National Security Council (NSC) and the State Department offered differing responses.

An NSC official referred me to the Ukrainian government for comment about “their peace negotiations in the spring.” But overall, the official added, “it is inaccurate that the U.S. discouraged Ukraine from seeking a peace agreement. Throughout this conflict, we have said that it is up to Ukraine to make their own sovereign decisions.” A State Department spokesperson did not address Putin’s rendering of the March-April negotiations, and instead focused on the period before the invasion. “As part of our efforts to deter President Putin from launching a full-scale invasion of Ukraine’s sovereign territory on February 24, 2022, the United States consistently spoke of the two paths Russia could choose: dialogue and diplomacy, or escalation and massive consequences,” the State Department wrote. “We made genuine and sincere efforts to pursue the former, which we vastly preferred, but Putin chose war.”

Asked if it had any response to Putin’s account of the peace talks that occurred after the invasion, the State spokesperson did not respond. The Russian government has not offered any additional detail or evidence for Putin’s claim that Ukraine and Russia were close to a “settlement,” and that Kiev’s NATO backers intervened to “wreck” it. But the Kremlin is also not the first to assert it. The claim originated with sources to Ukrainian President Volodymyr Zelensky, who described the episode to Ukrainian media outlet Ukrayinska Pravda. According to their account, talks between Ukraine and Russia collapsed after then-UK Prime Minister Boris Johnson visited Kiev in April and informed Zelensky that Putin “should be pressured, not negotiated with.”

Johnson also relayed that “even if Ukraine is ready to sign some agreements on [security] guarantees with Putin,” Western nations “are not.” That report was followed this month by an overlooked disclosure from former White House Russia expert Fiona Hill. Citing “multiple former senior U.S. officials,” Hill wrote that “Russian and Ukrainian negotiators appeared to have tentatively agreed on the outlines of a negotiated interim settlement” in April. Russia would withdraw to its pre-invasion position, while Ukraine would pledge not to join NATO “and instead receive security guarantees from a number of countries.”

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I see videos of people ostensibly being forced to vote Russia. Not exactly subtle. But who needs subtlety in an echo chamber?

Early Turnout Numbers For Referendums On Joining Russia (RT)

The referendums on joining Russia are continuing in the Donbass republics and Russian-controlled regions of southern Ukraine. On Sunday, the turnout already reached the required 50% threshold in the Donetsk and Lugansk republics and Zaporozhye Region, with only Kherson lagging behind. In the Lugansk People’s Republic (LPR), more than 76% of eligible voters have already cast their votes, according to official figures. The referendum in the Donetsk People’s Republic (DPR) is proceeding at a similar pace, with some 77% of voters having shown up at the polling stations. Kherson and Zaporozhye Regions, which were largely seized by Russian forces amid the ongoing conflict, have demonstrated a lower turnout.


Still, the latter region has already met the required legal threshold, with some 51.55% of registered voters already casting their ballots, according to the head of the Zaporozhye electoral committee, Galina Katyshenko. Kherson has so far demonstrated lower turnout, with nearly 49% of voters showing up for the referendum. Polls across the two regions and in the Donbass republics are set to stay open for the next two days. Ukraine and its Western backers have rejected the referendums on joining Russia as illegal and have vowed to not recognize them regardless of their outcome. Speaking to US broadcaster CBS on Sunday, Ukrainian President Vladimir Zelensky warned that should Russia complete the referendums, it would “make it impossible, in any case, to continue any diplomatic negotiations” with Moscow.

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It isn’t.

Russia Says It’s Not Threatening Anyone With Nukes (Antiwar)

On Friday, Russian Deputy Foreign Minister Sergei Ryabkov said that Russia wasn’t threatening anyone with nuclear weapons and said Moscow doesn’t want a direct conflict with the US and NATO. “We are not threatening anyone with nuclear weapons,” Ryabkov said. “The criteria for their use are outlined in Russia’s military doctrine.” Russia’s doctrine is that it could use nuclear weapons if it is facing an “existential threat,” and Russian officials have made clear throughout the current war in Ukraine that this is still the policy. Russian President Vladimir Putin said last week that Moscow could use nuclear weapons to defend its “territorial integrity.” While his comments were a more explicit warning, it still falls in line with the doctrine. But Russian territory is set to expand into Ukraine after referendums that are being held in the Donbas, Kherson, and Zaporizhzhia.


Ukraine is planning to launch more counter-offensives against these territories using weapons and intelligence provided by the US and other NATO countries. Ryabkov said that it’s not in Russia’s interest to be in a direct conflict with the US and NATO. “A face-off with the United States and NATO, which is fraught with an open armed conflict, is not in our interests,” he said. “We hope that the Biden administration understands the risks of uncontrolled escalation of the conflict in Ukraine, given the repeated statements by their officials that they don’t plan to send American servicemen to Ukraine,” Ryabkov added. President Biden has repeatedly stated that he won’t send US troops into Ukraine to fight Russia, although there is a CIA presence on the ground, according to a report from The New York Times that was published in June. The report also said special operations forces from Britain, France, Canada, and Lithuania are on the ground in Ukraine.

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“..the referendums that begin today in the liberated areas of Ukraine, which without question will succeed, promise to reduce the threat of Armageddon..”

We Might Be Spared Nuclear War But Threat of Home Grown Tyranny Remains (PCR)

As readers know, I am convinced that Putin’s toleration of insults and provocations has had the effect of encouraging more and worse provocations and not, as he intended, to downplay conflict. As you also know, I am convinced that his “limited military operation” in Donbass designed to protect the Donbass Russians, formerly a part of Russia, from horrible abuse by Ukrainian forces and the neo-Nazi militias, was a mistake. It is a mistake because the West characterized a limited operation as an “invasion of Ukraine,” and used its slow progress as evidence of Russian failure. It is a mistake because the go-slow nature of the Russian offensive in order to minimize the impact on civilian lives and infrastructure gave the West plenty of time to convince itself to get more and more involved with diplomatic support, money, armaments and ammunition, training, and now with satellite information for targeting the Russian forces.

As I see it, Putin has been behaving as British Prime Minister Chamberlain is alleged to have behaved, thus encouraging more aggressive actions. Wanting peace at all costs brings war. As it is no longer possible for the Kremlin to speak of “our Western partners” or to deny that the West is at war with Russia, the Kremlin, trying to avoid a war that it knows would be nuclear, has reached my conclusion of eight years ago that if the areas in today’s artificial borders of Ukraine that require Russian protection were reincorporated into Russia, the conflict would have to cease or become direct Western military aggression against Russia. As Biden says he has no stomach for a war with Russia and will not permit one, and as NATO is incapable of such war, the referendums that begin today in the liberated areas of Ukraine, which without question will succeed, promise to reduce the threat of Armageddon.

Although in my opinion the leadership everywhere in the Western world is Satanic and insane, I do not think the Western governing elites are ready to commit suicide by attacking Russian territory. The West can say it doesn’t recognize the rights of people to self-determination, but if Russia says it is Russian territory, it is. So that you understand, the referendums are Putin’s way of ending the conflict before it widens into nuclear war. Putin’s rescue of the world from nuclear war will not be acknowledged by the Western presstitutes, Washington’s puppet EU and UK governments, or by the puppet who serves as NATO secretary general. But what they think does not matter. Putin, belatedly, is doing his best to save us all from nuclear war. Pray that he succeeds.

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“..historic tax cuts funded by huge increases in borrowing..”

Pound Slumps To All-time Low Against Dollar (BBC)

The pound has fallen to its lowest level against the US dollar since decimalisation in 1971. In early Asia trade, sterling fell by more than 4% to $1.0327 before regaining some ground to around $1.05. That came after UK Chancellor Kwasi Kwarteng unveiled historic tax cuts funded by huge increases in borrowing. The pound has also been under pressure as the dollar has been boosted by the US central bank continuing to raise interest rates. The euro also touched a fresh 20-year-low against the dollar in morning Asia trade amid investor concerns about the risk of recession as winter approaches with no sign of an end to the energy crisis or the war in Ukraine.


Peter Escho, the co-founder of investment firm Wealthi, said: “All currencies are getting sold off against the US dollar, so there is a large element of US dollar strength. But with the pound, it has really been exacerbated by news that the new government will be cutting taxes, which is inflationary. “Add to that recent energy subsidies and news that the Bank of England might need to have an emergency rate-hike meeting, this all results in a sense of panic,” he added. Some investors think the Bank of England will be forced to take emergency action to halt the pound’s slide. “To stop the bleeding even temporarily, the BOE may well enter ‘whatever it takes’ territory to bring inflation down. An emergency meeting rate hike could happen as soon as this week to regain credibility in the market. We could even see a hike today,” Stephen Innes, managing partner at SPI Asset Management told the BBC.

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Add Chucky the Third and you have a crazy winter.

UK To Double Military Spending Amid Cost-of-living Crisis (RT)

Britain will boost its military spending considerably in the coming years, Defence Secretary Ben Wallace has revealed, despite the fact the nation is facing an economic crisis stemming from Covid-19 measures and London’s sanctions on Moscow. In an interview with the Sunday Telegraph published on Sunday, Wallace said the British government will shell out at least £52 billion ($56.5 billion) to shore up the military, which is “actually going to grow.” The plans are in keeping with Prime Minister Liz Truss’ campaign promise to boost defense spending. According to the official, Britain’s annual defense budget will amount to £100 billion by 2030. Wallace also took aim at former Chancellor of the Exchequer Rishi Sunak and the Treasury for what he described as a “corporate raid” of the armed forces which started back in the 1990s.

He claimed that the Treasury had even tried to “stipulate the size of the Army.” “My department has been so used to 30 or 40 years of defending against cuts or reconciling cuts with modern fighting, they’re going to have to get used to a completely different culture,” the defence secretary noted. Wallace expressed confidence, however, that Sunak’s successor in the office, Kwasi Kwarteng, would show more understanding toward the military’s needs. The defence secretary, who retained his post after Liz Truss defeated Sunak in the race to become prime minister in early September, told journalists that the new leader’s willingness to spend more on the military was one of the key factors for him in deciding which candidate to back for prime minister. “The reason I supported Liz Truss was that the risks we were prepared to tolerate in the middle of the decade are not risks I want to tolerate any more in light of Russian aggression,” Wallace said.

Addressing world leaders at the UN General Assembly in New York, Truss reiterated her campaign pledge to spend 3% of GDP on defense by 2030. According to Bloomberg, the new prime minister reversed former PM Boris Johnson’s plans to slash the military by 9,500 personnel. Commenting on the changes, which are expected to be unveiled by the end of 2022, Downing Street clarified that they were needed to “stand firm against coercion from authoritarian powers like Russia and China.” The decision comes despite the UK government’s interest payable on debt hitting the highest level on record, as reported by the Office for National Statistics (ONS) earlier this week. Inflation, food, and energy prices have also soared, while the British pound and consumer confidence have hit the lowest levelsin decades.

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“The idea of the cap on bankers’ bonuses was to remove the perverse incentive whereby a banker got a bonus of ten years salary by creating “assets” of bad loans..”

The Tories Declare Class War (Craig Murray)

The “cap” on bankers bonuses that the Tories have just removed had been set at double their annual salary. Yes, double ptheir annual salary. So a banker on £320,000 a year could only get an annual bonus of £640,000. That has now been lifted so they will be able to get annual bonuses of millions again. On each million of which they will also benefit from a new £55,000 tax cut. The greatest irony of this is that the first multimillion pound bankers’ bonuses will be going this Christmas to bankers who shorted the pound before Kwasi Kwarteng’s “mini-budget”. The cap on bankers’ bonuses was largely a sop to the public who had bailed out the bankers with public money borrowed – with trillions in interest – from the very bankers we were bailing out.

In effect Gordon Brown created sterling and gave it free to the bankers who caused the collapse, so they could lend it to the public purse and we could pay it back over two decades of public austerity. The idea of the cap on bankers’ bonuses was to remove the perverse incentive whereby a banker got a bonus of ten years salary by creating “assets” of bad loans, with no care whether those loans collapsed or not two years later, as he already had his ten years’ bonus. The Tories have just brought back that perverse incentive. Krug all round in the City!! It’s a bonanza for lap dance club owners and cocaine dealers. It’s a disaster for us. This perverse incentive will be needed to keep any money flowing into UK mortgages.

With the Bank rate sure to exceed 5% in the next few months and inflation continuing, mortgage rates will be in double digits by this time next year, and we are only a couple of years away from mass default and repossession. The wealthy will of course be able to use some of their tax cut money to take advantage of the stamp duty cut and snap up the repossessed properties as buy to let. That is what the Tories call growing the economy. Over 50% of the money from the tax cuts will benefit the top 5% of earners. If wealth inequality were the primary driver of economic growth – and that is the basis of Kwarteng’s economic theory – then how do you explain that the UK already has the second highest wealth inequality in the G7, behind only the USA, yet the lowest economic growth?

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“.. they are up by a whopping 300% from a few years ago..”

US Facing Natural Gas Shortage – Reuters (RT)

Shale producers in the United States are struggling to meet growing domestic and international natural gas demand, according to an analysis by Reuters. The report concluded that a hotter-than-expected summer and a lack of alternative energy sources have left the nation’s inventories below the seasonal average. It added that there were no signs of improvement in the level of inventories, despite the rise in gas prices. The latest data showed that the Permian Shale Basin, which contributes some 12% of US total gas output, and the rig count in the Permian, has been down for two weeks in a row. “Less drilling means less associated gas to add to the national total,” the news outlet reported.


While American energy companies have been exporting liquified natural gas (LNG) to Europe at record rates, calls have emerged lately to reduce those supplies to make sure there is enough for the US market. “With heating season around the corner in both Europe and the United States and with a lot of people in both places using gas for heating, the price outlook for gas does not look good from a consumer’s perspective,” Reuters wrote. The report noted that it is unlikely US gas prices will climb anywhere near European levels, “but they are up by a whopping 300% from a few years ago when gas was cheap because it was abundant.”

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WEF needs to go.

New Zealand Prime Minister Calls for a Global Censorship System (Turley)

New Zealand Prime Minister Jacinda Ardern is the latest liberal leader to call for an international alliance to censor speech. Unsatisfied with the unprecedented corporate censorship of social media companies, leaders like Hillary Clinton have turned from private censorship to good old-fashioned state censorship. Speech regulation has become an article of faith on the left. Ardern used her speech this week to the United Nations General Assembly to call for censorship on a global scale. Ardern lashed out at “disinformation” and called for a global coalition to control speech. After nodding toward free speech, she proceeded to lay out a plan for its demise through government regulation:

But what if that lie, told repeatedly, and across many platforms, prompts, inspires, or motivates others to take up arms. To threaten the security of others. To turn a blind eye to atrocities, or worse, to become complicit in them. What then? This is no longer a hypothetical. The weapons of war have changed, they are upon us and require the same level of action and activity that we put into the weapons of old. We recognized the threats that the old weapons created. We came together as communities to minimize these threats. We created international rules, norms and expectations. We never saw that as a threat to our individual liberties – rather, it was a preservation of them. The same must apply now as we take on these new challenges.

Ardern noted how extremists use speech to spread lies without noting that non-extremists use the same free speech to counter such views. To answer her question on “how do you tackle climate change if people do not believe it exists” is that you convince people using the same free speech. Instead, Ardern appears to want to silence those who have doubts. While referring to a global censorship coalition as a “light-touch approach to disinformation,” Ardern revealed how sweeping such a system would likely be. She defended the need for such global censorship on having to combat those who question climate change and the need to stop “hateful and dangerous rhetoric and ideology.”

“After all, how do you successfully end a war if people are led to believe the reason for its existence is not only legal but noble? How do you tackle climate change if people do not believe it exists? How do you ensure the human rights of others are upheld, when they are subjected to hateful and dangerous rhetoric and ideology?” That is the same rationale used by authoritarian countries like China, Iran, and Russia to censor dissidents, minority groups, and political rivals. What is “hateful” and “dangerous” is a fluid concept that government have historically used to silence critics or dissenters. Ardern is the smiling face of the new generation of censors. At least the old generation of censors like the Iranians do not pretend to support free speech and openly admit that they are crushing dissent. The point is that we need to be equally on guard when censorship is pushed from the left with the best of motivations and the worst of means.

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Oh, right, MSNBC.

Psaki : If Midterms Are A ‘Referendum’ On Biden, Democrats Are Doomed (NYP)

Former White House press secretary Jen Psaki bluntly admitted that if the November midterm elections are a “referendum” on President Biden, the Democrats will lose. Psaki, who left the White House in May to take a job at MSNBC, said if the midterms focus on the “most extreme” party, mentioning Republican Georgia Rep. Marjorie Taylor Greene by name, then Democrats will be celebrating on election day. “If it is a referendum on the president, they will lose. And they know that. They also know that crime is a huge vulnerability for Democrats, I would say one of the biggest vulnerabilities,” Psaki said Sunday on NBC News’ “Meet the Press.”


She said she has been watching the US Senate race play out in Pennsylvania between Lt. Gov. John Fetterman, the Democratic candidate, and GOP celebrity heart surgeon Dr. Mehmet Oz, and noted that Republicans are running ads painting Fetterman as soft on crime. What’s been interesting to me is it’s always you follow the money, and where are people spending money. And in Pennsylvania, the Republicans have been spending millions of dollars on the air on crime ads against Fetterman because that’s where they see his vulnerability , Biden’s one-time chief spokeswoman said. So yes, the economy is hanging over everything. But you do have to look at state-by-state factors, and crime is a huge issue in the Pennsylvania race, she said. While Biden’s approval ratings have recently climbed into the mid-40s from the dregs in recent polls, a Washington Post/ABC News survey released Sunday found it remains below that at 39%. The president’s disapproval rating is at 53%, the poll found.

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Peace is not welcome in Krakow.

Roger Waters Cancels Poland Concerts After Ukraine War Remarks (RFE)

Pink Floyd co-founder Roger Waters has canceled concerts planned in Poland amid anger over his stance on Russia’s unprovoked war against Ukraine, Polish media reported. An official with the Tauron Arena in Krakow, where Waters was scheduled to perform two concerts in April, said they would no longer take place. “Roger Waters’ manager decided to withdraw…without giving any reason,” Lukasz Pytko from Tauron Arena Krakow said on September 24 in comments carried by Polish media outlets. The website for Waters’ This Is Not a Drill concert tour did not list the Krakow concerts previously scheduled for April 21 and 22.


City councilors in Krakow were expected to vote next week on a proposal to name Waters as a persona non grata, expressing “indignation” over the musician’s stance on the war in Ukraine. Allowing “Roger Waters, an open supporter of [Russian President Vladimir] Putin, to play in Krakow…would be shameful for our city,” city councilor Lukasz Wantuch said last week on social media. “Let him sing in Moscow.” Waters wrote an open letter to Ukrainian first lady Olena Zelenska earlier this month in which he blamed “extreme nationalists” in Ukraine for having “set your country on the path to this disastrous war.” Waters has also criticized NATO, accusing it of provoking Russia.

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Malhotra

 

 


This is not stained glass. It’s a dragonfly’s wing seen up close. Dragonfly wings kill bacteria on contact by ripping apart their cell membranes with sharp nanopillars.

 

 

Bolt

 

 


Hydrosaurus, aka the Sailfin Dragon, is found in the rainforests of the Philippines

 

 

 

 

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Jul 302019
 
 July 30, 2019  Posted by at 9:28 am Finance Tagged with: , , , , , , , , , , ,  11 Responses »


Odilon Redon The winged man (The fallen angel) 1880

 

Pound Worth Just 85 Euro Cents At UK Airports (Ind.)
Boris Johnson Refuses To Meet EU Leaders Unless They Scrap Backstop (G.)
EU Rejects Dominic Raab’s ‘Easier’ No-Deal Brexit Claim (G.)
Boris Johnson’s New Brexit Chief Wants To Scrap Workers’ Rights (Ind.)
Things to Come (Kunstler)
Fake Cash, Fake Accounting: China Regulators Halt 46 IPOs, Bond Offerings (WS)
US Firms See Little Clarity On Huawei As US-China Talks Resume (R.)
Capital One: Information Of Over 100 Million People In US, Canada Hacked (R.)
The World is Not Enough (Statista)
Lost Cities and Climate Change (SciAm)

 

 

In currency markets, sterling is still worth 10% more than the euro, not 15% less. Three years ago it was worth 25% more. Scary to think what a no-deal Brexit could do. Well, unless you’re a short seller.

Pound Worth Just 85 Euro Cents At UK Airports (Ind.)

The pound has sunk well below €1 at Britain’s biggest airports – while the dollar is at parity. At the ICE desk at Heathrow airport on Tuesday morning, The Independent was quoted £117 for buying €100 – making each pound worth just 85 euro cents. At Gatwick airport on Monday night, the rate was £1 = €0.90. With commission added to a €100 transaction, the cost in sterling was £116. The interbank rate at 7am sank below £1 = €1.09, as the downward pressure on the pound continued. The currency market has marked down sterling as the prospect of a no-deal Brexit appears increasingly likely. At the peak of the holiday season, prices for British travellers will be at a two-year high.


The best rates for the euro found by The Independent were for “click and collect” transactions at London bureaux de change: €1.08 at branches of Thomas Exchange Global or ICE at Waterloo station. The interbank rate for dollars was £1 = $1.21, but Moneycorp at Gatwick airport was quoting parity: £1 = $1. Anyone changing £1,000 into the US currency and immediately back to sterling would lose over one-third of their money, receiving just £648.

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I don’t see how they could scrap the backstop, Brussels must stand up for its member state, Ireland. No choice. For Brussels, Ireland is a full-fledged nation. For London, it still doesn’t appear to be.

Boris Johnson Refuses To Meet EU Leaders Unless They Scrap Backstop (G.)

Boris Johnson is refusing to sit down for talks with EU leaders until they agree to ditch the Irish backstop from the Brexit withdrawal agreement, despite invitations to meetings from the German chancellor, Angela Merkel, and the French president, Emmanuel Macron. His official spokeswoman said the prime minister had made clear that he wanted to strike a deal, but that there was no point in holding face-to-face talks unless the EU agreed to reopen the agreement. But on a visit to the Trident nuclear base at Faslane in Scotland on Monday, Johnson painted a more optimistic picture of the prospects for talks, telling reporters there was “ample scope” to achieve a new deal.

He said: “We are not aiming for a no-deal Brexit at all. What we want is to get a deal and I’ve had some interesting conversations with our European partners. I’ve talked to [the European commission president] Jean-Claude [Juncker] and Angela Merkel and we’re reaching out today to [the Irish prime minister] Leo Varadkar. The feeling is, yes there’s no change in their position, but it’s very, very positive.” But he added: “They all know where we are: we can’t accept the backstop, it was thrown out three times, the withdrawal agreement as it stands is dead and everybody gets that. But there is ample scope to do a new deal and a better deal.”

While Johnson has spoken to Merkel and Macron, there are no plans to accept their invitations to visit without a change in their position on the backstop. Irish officials are understood to view the delay in contacting Varadkar as indicative of an unwillingness to enter serious talks. Varadkar is adamant that the backstop must stay to prevent a return to a hard border on the island of Ireland and preserve the integrity of the single market.

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Blame Games ‘R’ Us.

EU Rejects Dominic Raab’s ‘Easier’ No-Deal Brexit Claim (G.)

European Union officials have rejected Dominic Raab’s claim that negotiating a free-trade deal would be “much easier” after a no-deal Brexit. While the foreign secretary contends that leaving the EU without an agreement would ease the way to solving the disputed Irish border question, European sources fear a no-deal Brexit would trigger an acrimonious blame game. “It would mean the complete breakdown of political relations and I don’t think there would be much trust on the EU side with the Tories, or with the prime minister,” a senior diplomat said. “Eventually we would get around it because we are pragmatic, but this would be really, really bad, because of all the rhetoric around blaming.”


A second diplomat, speaking before Raab’s intervention, argued that all contact would cease after a no-deal Brexit. “Our phones will not be connected at that time … I don’t think they will be connected to someone who has reneged on their obligations,” they said. European officials agree that a precondition of talks would be a British pledge to honour the three core parts of the withdrawal agreement – citizens’ rights, the Irish border and the financial settlement. At the weekend, the EU budget commissioner, Günther Oettinger, told Der Tagesspiegel the UK’s credit rating would be hit if Boris Johnson carried out his threat not to honour payments promised to the EU. Tanja Fajon, the Social Democrat member of the European parliament’s foreign affairs committee, said: “To negotiate a free trade agreement usually takes years and I believe the UK doesn’t have that time after a no-deal Brexit.”

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The UK has been instrumental in defining EU law for 40 years. Now they want to cherry-pick? That would put any future trade deals at risk. Unfair competition.

Boris Johnson’s New Brexit Chief Wants To Scrap Workers’ Rights (Ind.)

Boris Johnson’s new Brexit chief wants to scrap Theresa May’s commitment to protect British workers’ rights, and has suggested Brexit is an opportunity to escape the EU’s “heavy labour market regulation”, The Independent can reveal. Just two months ago David Frost said he was opposed to the approach advocated “by the leaders of both major political parties”, and argued that EU rights should not automatically be written into law after Brexit. Mr Frost, former chief executive of the London Chamber of Commerce and Industry, was appointed last week by Mr Johnson to replace Olly Robbins as Downing Street’s EU chief, a role that will see him leading any future talks with Brussels.

“Business organisations have often in the past criticised the EU’s drift towards heavy labour market regulation,” Mr Frost said in May 2019 in an article reproduced on the London Chamber of Commerce and Industry website. “So I will take some persuading it will be a good outcome if the EU is able to set new UK labour market rules without any UK say – as currently seems to be envisaged by the leaders of both major political parties.” Theresa May committed the government to maintaining the current level of European Union workers rights, and also went even further, legislating for parliament to automatically be given votes on staying aligned with the bloc’s rules when future legislation emerges.

The “dynamic alignment” plans were unveiled by the government in a failed bid to get Labour MPs to back the withdrawal agreement. Additionally, during the transition period included in the withdrawal agreement, the UK would have to accept rights with no say at all, as rejected by Mr Frost. Brussels has also suggested the UK would have to stay aligned with future EU workers’ rights, as well as environmental and social legislation, past the end of the transition period – if it wants a trade agreement. Chief negotiator Michel Barnier has said the bloc would seek non-regression clauses to ensure Britain does not backslide on rules and try to undercut its neighbours.

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“Now, there is just suspicion that we’ve reached the limits of borrowing. Soon it will be a fact and that fact will upend everything we’ve been doing. ”

Things to Come (Kunstler)

The economic contraction ahead will put this borderline psychotic country through some interesting ch-ch-ch-changes. Mr. Trump now fully owns the Potemkin status quo of record stock markets poised against a withering rot of human capital at the core of an industrial society in sunset mode. Leadership at every corner of American life — politics, business, media — expects an ever-higher tech magical updraft of fortune from an increasingly holographic economy of mere fugitive appearances in which everybody can get more of something for nothing. The disappointment over how all this works out will be epic.

Globalism is wobbling badly. It was never what it was cracked up to be: a permanent new plateau of exquisitely-tuned international economic cooperation engineered to perfection. It was just a set of provisional relations based on transient advantage. As it turned out, every move that advantaged US-based corporations blew back ferociously on the American public and the long-term integrity of the social order. Sinister as it seems, the process was simply emergent: a self-organizing evolution of forces previously set in motion. And, like a lot of things in history, it seemed like a good idea at the time.

“Off-shoring” US industry jacked up corporate profits while it decimated working class livelihoods. In return, that large demographic got “bargain shopping” at Walmart, a life of ever-upward revolving debt, and dead downtowns. The country got gigantic trade deficits and government debt loads. In effect, globalism compelled America to borrow as much as possible from the future to keep running things the way they were set up to run. Now, there is just suspicion that we’ve reached the limits of borrowing. Soon it will be a fact and that fact will upend everything we’ve been doing.

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What is real in China?

Fake Cash, Fake Accounting: China Regulators Halt 46 IPOs, Bond Offerings (WS)

On Monday, Jinhe Biotechnology and Liande Automatic Equipment disclosed in filings that they had been ordered by the China Securities Regulatory Commission (CSRC) to suspend their plans to sell bonds. On Sunday night, four companies — Hunan Baili Engineering Sci&Tech, Jiaao Enprotech Stock, MLS Co., and Woer Heat-Shrinkable Material Co. – disclosed in filings that they had been ordered by the CSRC to suspend their IPOs in Shanghai and Shenzhen. Regulators also stopped four IPOs on Shanghai’s Star Market, which itself debuted just last week with great fanfare. The 25 stocks listed on it gained 140% on the very first day, followed by steep declines the second day.


[..] On Sunday, two companies disclosed that their bond offerings were stopped by regulators, according to Yicai. On Friday, seven companies disclosed that their bond offerings have been halted. In total, regulators suspended 46 IPOs and bond offerings, based on filings made at the Shanghai and Shenzhen stock exchanges, including Shanghai’s Star Market, as of Monday, according to the South China Morning Post. The reason: these companies had chosen Ruihua Certified Public Accountants as their auditors. Ruihua, the second largest audit firm in China, has been embroiled in scandals involving large amounts of fake data, including fake cash, on its clients’ books. The fakeness of this cash became obvious when these companies defaulted on debt that they could have easily serviced with the cash they claimed to have on their books but didn’t. And Ruihua had just signed off on those fake books.

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“..the department has yet to respond to any of a total of around 50 license requests from about 35 companies..”

US Firms See Little Clarity On Huawei As US-China Talks Resume (R.)

A month after President Donald Trump said he would allow U.S. companies to resume selling to blacklisted Chinese telecommunications giant Huawei HWT.UL, his administration has done little to clarify what sales will be permitted. The lack of clarity on what U.S. firms can supply to the world’s top producer of telecommunications equipment as long as it’s on a so-called “entity list” is likely to cast a shadow over this week’s U.S.-China trade negotiations in Shanghai. Trump had pledged to allow the sales as a goodwill gesture to President Xi Jinping when the two met last month and agreed to restart talks to try to resolve their year-long trade war.


China, for its part, agreed to restart large-scale agricultural purchases. U.S. chipmakers cheered Trump’s announcement, which administration officials clarified afterwards meant the government would issue export licenses in cases where there is no national security risk and where the items are “non-sensitive” and readily replaced by rivals. But the department has yet to respond to any of a total of around 50 license requests from about 35 companies, sowing uncertainty in the industry and in Beijing. “At this stage, there is mass confusion,” said William Reinsch, a former Commerce official, adding that the plan for case-by-case decisions “maximizes the uncertainty.”

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No information is safe.

Capital One: Information Of Over 100 Million People In US, Canada Hacked (R.)

Capital One Financial Corp said on Monday that personal information including names and addresses of about 100 million individuals in the United States and 6 million people in Canada were obtained by a hacker who has been arrested. The suspect, a 33-year-old former Seattle technology company software engineer identified as Paige Thompson, made her initial appearance in U.S. District Court in Seattle on Monday, the U.S. Attorney’s office said. According to a complaint filed in the District Court for the Western District of Washington at Seattle, Thompson posted information from her hack, which occurred between March 12 and July 17, on coding platform GitHub. Another user saw the post and notified Capital One of the breach.


Law enforcement officials were able to track Thompson down as the page she posted on contained her full name as part of its digital address, the complaint said. Capital One said it identified the hack on July 19. A representative for the U.S. Attorney’s office said it was not immediately clear what the suspect’s motive was. The incident is expected to cost between $100 million and $150 million in 2019, mainly because of customer notifications, credit monitoring and legal support, Capital One said. The hacker did not gain access to credit card account numbers, but about 140,000 Social Security numbers and 80,000 linked bank account numbers were compromised, Capital One said. Other personal information accessed included phone numbers and credit scores.

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Are we immune to this yet?

The World is Not Enough (Statista)

Earth Overshoot Day came on July 29 this year. This is the second time the day, which marks the time at which humanity has used up its allotment of natural planetary resources for the year, occurred in the month. It had occurred in August between 2010 and 2017. The day, whose existence is highlighted by the NGO Global Footprint Network, means that all humans on Earth for this year have already used up more natural resources than mother nature can reproduce annually. Emissions, but also of resources like wood or fish and the use of land for crops, are among the things counted in when calculating Earth Overshoot Day.


Industrialized nations have the biggest share in pushing its date forward, as seen in the organization’s country profiles. The U.S. is the biggest offender. If all nations lived like U.S. residents, the resources of five Earths would be needed each year in order for the natural environment to regenerate. The U.S. overshoot day is therefore on March 15. Australia, which had been ahead of the U.S. for some years, now had its overshoot day on March 31, with 4.1 “Earths” used annually. India was among the countries whose style of living would use up less than a whole Earth each year if practiced globally, which also has to do with poverty still being widespread in the country.

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“The scariest thing about climate change is what it will make us do to each other.”

Lost Cities and Climate Change (SciAm)

Not far from my grandmother’s house is a ghost city. At Angel Mounds on the Ohio river about eight miles west of Evansville, there are a few visible earthworks and a reconstructed wattle-and-daub barrier. There is almost nothing left of the people who build these mounds; in a final insulting erasure, the site is now named after the white settler family who most recently farmed the land. There are traces of other dead villages along the Ohio and Mississippi rivers, mounds scattered from present-day Indiana to Arkansas and Alabama. In southern Illinois, a few miles from the Missouri border, hidden among empty corn and soy fields, is the center of that dead civilization’s gravity: the lost city of Cahokia.

Cahokia was larger than London, centrally planned, the Manhattan of its day. Most people there would have come from somewhere else. There were defensive foundations, playing fields, and a magnificent temple. There would have been sacred ceremonies and salacious gossip. It must have been a very exciting place to live. And then, relatively abruptly, it ceased to exist. We know of the city only because of the physical traces left behind. Few stories of Cahokia have survived; it disappeared from oral tradition, as if whatever happened to it is best forgotten. The archaeological record shows traces of the desperation and bloodshed that almost always accompany great upheavals: skeletons with bound hands, pits full of strangled young women.

The North American Drought Atlas, a historical record of climate conditions pieced together from the rings of old trees, provides a hint of what might have happened. The tenth century CE, when the Cahokia civilization would have developed, marked a distinct shift in the regional climate from persistent drought to rainier conditions more suitable for agriculture, centralization, and civilization. But the good times were not to last. In the middle of the fourteenth century, the climate swung back toward drought. This shift was likely associated with shifting temperature patterns in the ocean that affected the jet stream, pulling cool air down from the Arctic and displacing rainfall patterns.

These changes are attributable to some combination of natural internal climate variability and externally forced changes from solar activity and increased volcanic eruptions. Their effects were profound. In Europe around the same time, a confluence of natural factors perhaps related and perhaps separate from the forces drying out the Mississippi Valley caused it to rain heavily in the summer of 1314. The rains continued into the winter, and then into the next year, and then the next. Crops rotted in the fields, and the entire continent went hungry. Contemporaneous historical records complain of rain and famine, villages forced to eat dogs and cats, the dead, and even each other.

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Jan 162019
 
 January 16, 2019  Posted by at 10:45 am Finance Tagged with: , , , , , , , , , , , ,  11 Responses »


Pablo Picasso Women running on the beach 1922

 

Theresa May Faces No Confidence Vote After Historic 230-Vote Defeat (Ind.)
The People Want A Final Say – Whatever The Papers Say (Ind.)
Market Reaction To Theresa May’s Brexit Defeat Is Over-Optimistic (Coppola)
Expect A Wild Ride For The British Pound – Steve Keen (RT)
EU States Escalate No-Deal Brexit Preparations After May Defeat (G.)
Time For Playing Games On Brexit Over – German Foreign Minister (R.)
China Vows Tax Cuts, More Public Spending To Halt Economic Slowdown (G.)
Rosenstein, DOJ Explore Ways To More Easily Spy On Journalists (Solomon)
Here Is A List Of All The Good Things Trump Did For Russia (MoA)
Russian Security Chief Calls BBC A ‘Fake News Factory’ (RT)
Putin Slams FYROM Name-Change Deal (K.)
Canada Sees No Cancer Risk From Monsanto’s Roundup Weed Killer (RT)
EU Glyphosate Approval Was Based On Plagiarised Monsanto Text (G.)
Immediate Fossil Fuel Phaseout Could Arrest Climate Change (G.)

 

 

It’s either the biggest loss ever, or the biggest since 1924. And still May doesn’t want to step down. Someone must force her. Send her the bill.

Theresa May Faces No Confidence Vote After Historic 230-Vote Defeat (Ind.)

Brexit has been dealt a hammer blow after Theresa May’s plans fell to the biggest ever Commons defeat and Jeremy Corbyn launched a bid to topple her government within 24 hours. Even Downing Street insiders admitted being shocked by the scale of the rout, which sent shockwaves across the English Channel and saw critics brand her deal “dead”. In total, 118 of the prime minister’s own MPs refused to back the withdrawal agreement she spent 19 arduous months negotiating with Brussels. Labour leader Mr Corbyn branded the result “catastrophic” and immediately said he would table a motion of no confidence, which Ms May must win on Wednesday to avoid a general election.

The prime minister will simultaneously begin a desperate scramble to save her deal, meeting senior parliamentarians from across the political spectrum to see what changes she might seek to win support. But sources from both the pro-EU and Eurosceptic wings of the cabinet admitted to The Independent in the aftermath, that a softer Brexit was now a more likely outcome. Ms May’s spinners had briefed that they hoped to limit the number of Tory MPs opposing her to double digits, with many people thinking Conservative opposition would weaken as the big moment approached. But there were gasps as the result was read out – 432 votes against and just 202 for – making it a bigger margin of defeat than the previous comparable loss suffered by Labour’s Ramsay MacDonald in 1924.

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The Independent had two headlines for this piece. The other one was: “Despite the views of the right-wing press, the British people still want a Final Say on Brexit”. Because they’re just one the papers themselves. Also interesting: they talk about “Her Majesty’s Press”. What a curious view of the media that is.

The People Want A Final Say – Whatever The Papers Say (Ind.)

Judging by the polling evidence, a small but consistent majority of people favour a second referendum to resolve the current crisis over Britain’s relationship with Europe. The divergence between this and the house views of most traditional media outlets is quite striking. Of the national titles, only The Independent has given its unequivocal support to such an outcome, although The Guardian has come close with its call for “people’s assemblies” that it admitted could very well lead to a fresh poll. The remainder have either backed May’s deal, with more or less tepidity, or a no deal – with the exception of the Daily Mirror, which is in tune with the Labour leadership’s desire for a general election that probably won’t resolve anything and, as things stand, is unlikely to happen.

The London-centric media is often said to be “out of touch” with the world outside the M25. I’d suggest that the gulf has seldom been as wide as it is today, at least on this issue. Whichever way you look at it, the views of such a substantial portion of the British population have one only one, or perhaps two, outlets in what one might describe as the mainstream media. That could be considered worrying. It surely can’t be a good thing at such a polarised time that such a substantial portion of the population is being ignored by the majority of Her Majesty’s press – even though it is probably true that many if not most readers of the right-leaning titles (including The Sun, the Daily Express, the Daily Mail and the The Daily Telegraph) would, on balance, reject a Final Say referendum on Theresa May‘s Brexit deal.

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“It’s time to buy the pound,” said Deutsche Bank’s analysts..

Market Reaction To Theresa May’s Brexit Defeat Is Over-Optimistic (Coppola)

Theresa May has just suffered the heaviest defeat of any U.K. Prime Minister for a century. Her Brexit deal was resoundingly rejected by the House of Commons. More than twice as many lawmakers voted against the deal as for it, including over a hundred members of her own party. Previous prime ministers that have suffered such humiliation have resigned. But not Mrs. May. Her deal is dead in the water, but she intends to struggle on. Though it is not clear where she goes from here, or even for how long she will survive. Tomorrow, she faces a vote of no confidence. If she loses it, her government will fall. You would think that all this drama would elicit a strongly negative response from markets, wouldn’t you?

A run on the pound, perhaps? After all, May’s previous gaffes and humiliations caused sterling’s exchange rate to fall. Not a bit of it. The pound rose on the news that May’s horrible deal had been resoundingly defeated. On Twitter, Jamie McGeever of Reuters reported that both Deutsche Bank and Nomura were going long sterling. “It’s time to buy the pound,” said Deutsche Bank’s analysts: “Prime Minister May lost tonight’s UK parliamentary vote on her Brexit deal by a larger margin than expected – 432 votes to 202. Notwithstanding, after more than two years since the UK triggered Article 50 to leave the EU and over eighteen months of negotiations, a positive Brexit resolution is finally in sight.”

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Steve doesn’t agree with Deutsche: “In general, I think the pound will be at least 30 percent lower than it had been..”

Expect A Wild Ride For The British Pound – Steve Keen (RT)

As the British Parliament voted down Prime Minister Theresa May’s Brexit plan on Tuesday, analysts expect more losses for sterling amid uncertainty over how the UK’s eventual withdrawal from the EU will take shape. Professor of Economy, Steve Keen who is the author of Debunking Economics, told RT that it’s hard to say how the vote will affect the British currency but added “definitely, expect a wild ride,” while the markets are “completely dominated with speculation.” “With speculators gambling one can’t actually say whether it will have impact one way or the other,” he said. “In general, I think the pound will be at least 30 percent lower than it had been,” Keen said, explaining “I think it is overvalued and that makes British manufacturing uncompetitive…”

The professor also said that if the break with the European Union happens the pound will fall in value but “overall it won’t be a good thing or a bad thing” because it is already seriously overvalued. The British currency has been sliding since 2008, well before the Brexit referendum. According to Keen, that means that Britain has some other serious economic problems. “The main problem the British have had is that they made a mistake 40 years ago deciding to go with services rather than manufacturing.” He explained that Britain is now running a substantive deficit compared to Germany which is running a gigantic balance of trade surplus. “So, that is the key problem for the British economy and it really has almost nothing to do with Brexit,” Keen said.

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The costs are already running in the many billions. Who will pay, the UK?

EU States Escalate No-Deal Brexit Preparations After May Defeat (G.)

European Union capitals were ramping up their preparations to minimise the chaos and disruption of a possible no-deal Brexit after Theresa May’s plan was crushed by MPs. With 72 days until the UK is due to leave the EU, the Belgian prime minister, Charles Michel, met cabinet ministers on Tuesday to discuss their top priorities for a package of emergency Brexit laws that he wants to present to parliament before the end of February. The Belgian government has told businesses and citizens that a no-deal Brexit could lead to the imposition of up to €2.2bn in extra tariffs on goods and the loss of more than 40,000 jobs. In France, which has already passed its no-deal contingency legislation, the Europe minister, Nathalie Loiseau, stressed that no further concessions could be expected from the bloc.

“It’s up to the British parliament and the British government to have a back-up plan in case,” Loiseau told reporters at the European parliament in Brussels. “It’s no longer up to us – we have given everything we can give.” The Spanish government this week launched an online information service for citizens and businesses, including advice on how to prepare for a no-deal Brexit. It has also drafted a decree enabling it to enact no-deal contingency provisions drawn up by the European commission. [..] The EU’s executive last month unveiled bare-bones plans to keep planes in the air and money flowing should the UK crash out, saying it would take all necessary steps to limit the fallout from the ensuing disruption for its members.

A temporary nine-month regime would allow UK airlines to fly to the continent and back (but not between EU cities), EU banks to clear transactions in the City of London, British trucks to deliver goods into the EU, and vital data to be shared. The bloc can terminate this regime unilaterally. [..] The Netherlands, home to Europe’s largest port in Rotterdam, aims to have hired more than 900 extra customs officials by the end of the year – one-third of them by the time Britain plans to leave the EU on 29 March – as well as 150 vets and other scientists for checks on food, plant and animal products. Along with the Belgians, French and Danish, the Dutch have launched comprehensive Brexit impact assessment schemes allowing companies to analyse their specific no-deal risks based on business sector and relationship with the UK.

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German car exports are down some 10%. They would not like losing UK sales.

Time For Playing Games On Brexit Over – German Foreign Minister (R.)

With the clock ticking ahead of Britain’s scheduled exit from the European Union at the end of March, German Foreign Minister Heiko Maas said on Wednesday the “time for playing games” was over after London’s rejection of a withdrawal agreement. Maas said further talks would almost certainly be needed after Britain’s parliament voted down the exit deal worked out between London and the bloc over the past two years. “The time for playing games is over,” Maas told Deutschlandfunk radio, adding that the EU would deal “constructively” with any British request to delay the departure date. German economy minister Peter Altmaier said that the EU would look at any fresh proposals London made, but said the substance of the deal was non-negotiable.

But umbrella groups representing German industry, whose cross-border supply chains stand to be hit by the imposition of a hard customs border between Britain and the continent, were less conciliatory. Martin Wansleben, head of the German Chambers of Commerce, warned that the political uncertainty now made planning almost impossible and that German companies were already starting to build inventory in preparation. German auto makers would start asking whether it was worth investing in Britain, he added. “The House of Commons has missed an opportunity to avert a hard Brexit and lay the foundations for close ties to the EU,” said Carl Martin Weicker, head of machine tools association VDMA.

“It is simply irresponsible that the British governing coalition is still trying to reach a unified position 10 weeks before the exit deadline,” he added.

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China’s like Japan: deperate attempts to stimulate domestic demand fail miserably. You can’t force people to consume, and the more you try, the more suspicious they become, causing them to halt spending.

China Vows Tax Cuts, More Public Spending To Halt Economic Slowdown (G.)

China has vowed to take action to support its slowing economy with a package of tax cuts for small businesses and higher public spending. Officials said they would cut taxes “on a larger scale” in order to boost business activity, announced against a backdrop of disappointing industrial production figures and the first drop in car sales for almost three decades. The interventions, designed to soothe concerns among international investors, come after official figures on Monday revealed a 4.4% decline in exports in December – the biggest drop since 2016 – on the back of faltering demand in most of its key markets. Imports also fell by 7.6% as domestic appetite waned.

China has been embroiled in a trade dispute with the US, which has put a handbrake on global trade. Although Beijing and Washington are edging closer to a deal, concerns remain the dispute could be reignited. Financial markets around the world rallied after the announcement from Beijing, with the FTSE 100 closing up more than 40 points and gains on other stock markets elsewhere across Europe. The Dow Jones industrial average had gained about 90 points in afternoon trading in New York. While exact details of the stimulus package are yet to be unveiled, the Chinese finance ministry suggested the measures would include cutting value added tax for some companies, particularly in the manufacturing sector, as well as rebates for other businesses to ward off a more damaging slowdown.

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“Sources close to Whitaker say he will await final judgment but, in recent days, has developed reservations about proceeding with the plan…”

Rosenstein, DOJ Explore Ways To More Easily Spy On Journalists (Solomon)

For months now, the Department of Justice (DOJ) quietly has been working on a revision to its guidelines governing how, when and why prosecutors can obtain the records of journalists, particularly in leak cases. The work has been supervised by Deputy Attorney General Rod Rosenstein’s office, especially since former Attorney General Jeff Sessions departed, but is not wrapped up. The effort has the potential to touch off a First Amendment debate with a press corps that already has high degrees of distrust of and disfunction with the Trump administration. Acting Attorney General Matt Whitaker is aware of the effort but has not been given a final recommendation. Sources close to Whitaker say he will await final judgment but, in recent days, has developed reservations about proceeding with the plan.

“After a lengthy period of turmoil and regular criticism from President Trump, DOJ has enjoyed a period of calm normalcy that has put employees’ focus back on their work and not the next tweet. Matt doesn’t want to disrupt that unless a strong legal case can be made,” a source close to the acting AG told me. The current guidelines have their origins back to a time when Bill Clinton was president and Janet Reno was attorney general, long before WikiLeaks was a twinkle in Julian Assange’s eye. They were designed to strike a balance between law enforcement’s investigative interests and the First Amendment rights of reporters.

[..] With Rosenstein signaling last week that he plans to step aside in a few weeks, palace intrigue has risen inside Justice about whether the rule changes will be finished and whether Whitaker might reject them. If not, a process begun under Sessions could drag into the tenure of a new attorney general. Trump has nominated William Barr for the job, which Barr held under President George H.W. Bush three decades earlier. According to my sources, the arguments for changing the rules emanate from the stresses that a massive increase in criminal leak investigations have placed on the DOJ.

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Moon of Alabama has a long list. Check it out.

Here Is A List Of All The Good Things Trump Did For Russia (MoA)

Slate’s Fred Kaplan writes: “The Washington Post’s Greg Miller reported Sunday that President Donald Trump’s confiscation of the translator’s notes from a one-on-one conversation with Russian President Vladimir Putin in 2017 was “unusual.” This is incorrect. It was unprecedented. There is nothing like it in the annals of presidential history.” Not really. Other U.S. leaders held long private meetings with their counterparts without notes being taken. When Richard Nixon met Leonid Brezhnev he did not even bring his own interpreter: “Nixon would meet Brezhnev alone, the only other person in attendance being Viktor Sukhodrev, the Soviet interpreter. “Our first meeting in the Oval Office was private, except for Viktor Sukhodrev, who, as in 1972, acted as translator.” Nixon on Brezhnev’s 1973 visit. RN, p.878 .

Therefore, the only “notes” that would exist would be those of the Soviet interpreter. Not sure he would have time to make notes and translate and, even if he did so, whether those notes would be housed in any US archive. Nixon’s White House office was bugged. There are probably tape recordings of the talks. There might also be recordings of the Trump-Putin talks. At their 1986 Reykjavik summit Ronald Reagan and Mikhail Gorbachev talked without their notetakers: “Mr. Reagan and Mr. Gorbachev began their second day of talks with a private meeting that had been scheduled to last 15 minutes but ran for nearly 70 minutes, with only interpreters present. They met in a small room in the Soviet Mission, with the Soviet leader seated in a small armchair and Mr. Reagan on a sofa. In the afternoon, they meet alone for a little over 20 minutes and then again for 90 minutes. All told, the two leaders have spent 4 hours and 51 minutes alone, except for interpreters, over the two days here.”

The archives of the Reykjavik talks do not include any notes of those private talks. But, who knows, maybe Nixon and Reagan where also on the Russian payroll, just like Donald Trump is today. Only that Trump is controlled by Putin can explain why the FBI opened a counter-intelligence investigation against Trump (see section three). That the FBI agents involved in the decision were avid haters of Russia and of Trump has surely nothing to do with it. That the opening of a counter-intelligence investigation gave them the legal ability under Obama’s EO12333 to use NSA signal intelligence against Trump is surely irrelevant.

What the FBI people really were concerned about is Trump’s public record of favoring Russia at each and every corner. Trump obviously wants better diplomatic relations with Russia. He is reluctant to counter its military might. He is doing his best to make it richer. Just consider the headlines below. With all those good things Trump did for Putin, intense suspicions of Russian influence over him is surely justified.

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“Britain is not alone in its Russophobic policy. Except the nations with the same mindset mostly are in Eastern Europe.”

Russian Security Chief Calls BBC A ‘Fake News Factory’ (RT)

Britain is a former empire trying to stay relevant in European affairs by becoming an anti-Russian champion, Nikolai Patrushev, a senior Russian security official, believes. British people see through this ruse, he said. Patrushev, the former head of the security service FSB, who currently chairs the Russian national security council, painted a highly unfavorable picture of modern Britain in an interview with Rossiyskaya Gazeta. He said the British establishment still cannot get over their country’s rapid transition from the world’s most-powerful empire to a nation subjugated by its former colony, the United States. Today the British leadership learns about the most important decisions taken in the White House from the media. Britain cannot remain even the leader of the Old World.

The continental Europe is tired of London’s arrogant one-sided policy, its outdated habit of trying to dictate terms to others. The Russian official said Britain is trying to preserve its diminishing influence by becoming Europe’s champion in an anti-Russian crusade, based on supposed common European values. This foundation however is false, Patrushev said. “Britain poses as a model democracy. But it’s not clear how it complies with the strict censorship in the British media, for example,” he said. “The BBC has pretty much become a fake news factory that the Britons themselves take with a smile,” Patrushev added. “Admittedly, Britain is not alone in its Russophobic policy. Except the nations with the same mindset mostly are in Eastern Europe.”

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The deal is designed to let FYROM enter NATO. Greek PM Tsipras has lost his coalition partner recently over it, and called a confidence vote this week. All for NATO.

Putin Slams FYROM Name-Change Deal (K.)

Russian President Vladimir Putin has criticized the name deal between Greece and the Former Yugoslav Republic of Macedonia (FYROM) suggesting it is part of a campaign to increase western influence in the Balkan region. In an interview with Serbia’s Vecernje Novosti newspaper Tuesday ahead of his scheduled visit to the country later this week, Putin said that the so-called Prespes accord had been enforced from outside against popular will in a bid to draw the country into the NATO military alliance. In the same interview, the Russian president said the United States were destabilizing the Balkan peninsula by “asserting their dominant role” in the region.

Also on Tuesday, Moscow dismissed Greece’s accusation that it was meddling in its internal affairs but insisted it will express its opinion about the Prespes agreement to the United Nations Security Council. “We are in no way meddling in Greece’s internal affairs, but Russia will be expressing its point of view on the issues within the competence of the UN Security Council,” said Russia’s Deputy Foreign Minister Alexander Grushko. Grushko said the Russian Foreign Ministry statement was a fundamental assessment of “how negotiations [between Athens and Skopje] had proceeded.” He said the West’s interference was unprecedented and was aimed at achieving quite clear geopolitical goals.

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Canada is for sale. And Monsanto has plenty cash.

Canada Sees No Cancer Risk From Monsanto’s Roundup Weed Killer (RT)

Canadian farmers will continue using glyphosate after Health Canada concluded that the active ingredient in Monsanto’s Roundup weed killer poses no human risks. The federal agency dismissed eight notices of objection and assertions made in the so-called Monsanto Papers in 2017. “After a thorough scientific review, we have concluded that the concerns raised by the objectors could not be scientifically supported when considering the entire body of relevant data. The objections raised did not create doubt or concern regarding the scientific basis for the 2017 re-evaluation decision for glyphosate,” Health Canada said in a press release.

The 2017 re-evaluation determined that glyphosate is not genotoxic and is unlikely to pose a human cancer risk. It also determined that dietary exposure associated with the use of glyphosate is not expected to pose a risk of concern to human health. When used according to revised label directions, glyphosate products are not expected to pose risks of concern to the environment, according to the study. Health Canada said it has selected a group of 20 of its own scientists who were not involved in the 2017 decision to evaluate the eight objections and the concerns raised publicly around glyphosate. The agency said its scientists “left no stone unturned in conducting” the review.

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What a surprise.

EU Glyphosate Approval Was Based On Plagiarised Monsanto Text (G.)

EU regulators based a decision to relicense the controversial weedkiller glyphosate on an assessment plagiarised from industry reports, according to a report for the European parliament. A crossparty group of MEPs commissioned an investigation into claims, revealed by the Guardian, that Germany’s Federal Institute for Risk Assessment (BfR) copy-and-pasted tracts from Monsanto studies. The study’s findings have been released hours before a parliamentary vote on tightening independent scrutiny of the pesticides approvals process. The authors said they found “clear evidence of BfR’s deliberate pretence of an independent assessment, whereas in reality the authority was only echoing the industry applicants’ assessment.”

Molly Scott Cato, a Green MEP, said the scale of alleged plagiarism by the BfR authors shown by the new paper was “extremely alarming”. “This helps explain why the World Health Organization assessment on glyphosate as a probable human carcinogen was so at odds with EU assessors, who awarded this toxic pesticide a clean bill of health, brushing off warnings of its dangers,” she said. The study found plagiarism in 50.1% of the chapters assessing published studies on health risks – including whole paragraphs and entire pages of text. The European Food Safety Authority (Efsa), based its recommendation that glyphosate was safe for public use on the BfR’s assessment.

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But are we ready for no economy?

Immediate Fossil Fuel Phaseout Could Arrest Climate Change (G.)

Climate change could be kept in check if a phaseout of all fossil fuel infrastructure were to begin immediately, according to research. It shows that meeting the internationally agreed aspiration of keeping global warming to less than 1.5C above pre-industrial levels is still possible. The scientists say it is therefore the choices being made by global society, not physics, which is the obstacle to meeting the goal. The study found that if all fossil fuel infrastructure – power plants, factories, vehicles, ships and planes – from now on are replaced by zero-carbon alternatives at the end of their useful lives, there is a 64% chance of staying under 1.5C.

In October, the IPCC said the difference between 1.5C of warming and the earlier international target of 2C was a significantly lower risk of drought, floods, heatwaves and poverty for hundreds of millions of people. Christopher Smith, of the University of Leeds, who led the research, said: “It’s good news from a geophysical point of view. But on the other side of the coin, the [immediate fossil fuel phaseout] is really at the limit of what we could possibly do. We are basically saying we can’t build anything now that emits fossil fuels.” Nicholas Stern, of the London School of Economics, who was not part of the research team, said: “We are rapidly approaching the end of the age of fossil fuels. This study confirms that all new energy infrastructure must be sustainable from now on if we are to avoid locking in commitments to emissions that would lead to the world exceeding the goals of the Paris agreement.”

[..] The study, published in the journal Nature Communications, used computer models to estimate by how much global temperatures would rise if a fossil fuel infrastructure phaseout began immediately. The lifespan for power plants was set at 40 years, cars an average of 15 years and planes 26 years. The work also assumes a rapid end to beef and dairy consumption, which is responsible for significant global emissions. In this scenario, the models suggest carbon emissions would decline to zero over the next four decades and there would be a 66% chance of the global temperature rise remaining below 1.5C. If the phaseout does not begin until 2030, the chance is 33%.

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Jun 072016
 
 June 7, 2016  Posted by at 8:29 am Finance Tagged with: , , , , , , , , , , ,  9 Responses »


Esther Bubley Soldiers with their girls at the Indianapolis bus station 1943

This Job Market Slump Started In January
Yellen Sees Rates Rising Gradually But .. (BBG)
The Shadow Looming Over China (Balding)
Nation of Debt: New Zealand Sitting on Half-Trillion-Dollar Debt Bomb (NZH)
Sterling Swings Wildly As Polls Suggest UK Heading For EU Exit (G.)
S&P Downgrades Royal Bank of Canada Outlook (WSJ)
Goldman Probed Over Malaysia Fund 1MDB (WSJ)
This Fannie-Freddie Resurrection Needs To Die (WaPo ed.)
State Department Blocks Release Of Hillary Clinton’s TPP Emails (IBT)
Debt Buyers (John Oliver)
Taxes And Recession Slash Income Of Greek Households (Kath.)
Nausea Rising (Jim Kunstler)
NATO Countries Begin Largest War Game In Eastern Europe Since Cold War (G.)
Finns To Bury Nuclear Waste In World’s Costliest Tomb (AFP)
Great Barrier Reef: The Stench Of Death (G.)

And this is Yellen’s favorite index?! Makes you wonder.

This Job Market Slump Started In January

The sharp May hiring slowdown revealed in Friday’s employment report took a lot of people – including me – by surprise. It shouldn’t have. Things have actually been on the downswing for the U.S. labor market for months, according to the Federal Reserve’s Labor Market Conditions Index. The LMCI is a new measure cooked up by Federal Reserve Board economists in 2014 that consolidates 19 different labor market indicators to reflect changes in the job market. They calculated it going all the way back to 1976; the chart above shows its movements since the end of the last recession in June 2009. The May index, released Monday morning, showed a 4.8-point decline from April. As you can see from the chart, the index has now declined for five straight months — its worst performance since the recession.

The index does get revised a lot. When the January number was first reported on Feb. 8, for example, it was still modestly positive. Still, since the February number was released on March 7 the news from the LMCI has been unremittingly negative. Which probably should have told us something. Not many people were paying attention, though. Fed Chair Janet Yellen is apparently a fan of the LMCI, but I have to admit that I first learned of its existence Monday when Erica Groshen, the Commissioner of the BLS, mentioned it at a conference for BLS data users in New York. It was a good reminder, as were a lot of the other presentations at the conference, that the headline jobs numbers that get the lion’s share of attention – the monthly change in payroll employment and the unemployment rate – aren’t always the best places to look for information on the state of the jobs market.

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They should really start having her do these speeches in a cave filled with smoke and vapors.

Yellen Sees Rates Rising Gradually But .. (BBG)

Federal Reserve Chair Janet Yellen said the U.S. economy was making progress but was silent on the timing of another interest-rate increase, an omission viewed as a signal that a June move was off the table. “I continue to think that the federal funds rate will probably need to rise gradually over time to ensure price stability and maximum sustainable employment in the longer run,” Yellen said Monday during a speech in Philadelphia. Her comments were less specific than in her previous remarks in describing when she thought the Fed should raise rates again.

On May 27 at Harvard University, she said an increase would likely be appropriate in “coming months,” a phrase she didn’t repeat on Monday. Since then, the Labor Department reported U.S. employers in May added the fewest number of new jobs in almost six years, causing expectations for a rate increase to plunge. “She did not address the timing of the Fed’s next gradual move, which suggests to us that she is in no hurry,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd, arguing that her comments on the payroll report “largely rules out a move in rates next week. July is not a strong bet either.”

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Beijing has not just allowed shadow banks to grow much too big, it has used this growth to hide its actions behind. Local governments got most of their credit to build highways to nowhere from shadow banks. It’s really weird that the western press only catches on now.

The Shadow Looming Over China (Balding)

Of all the topics sure to be come up in Sino-U.S. economic talks this week – from the problem of excess capacity to currency controls – the health of China’s financial sector will no doubt feature high on the list. Especially worrying are the multiplying links between the country’s commercial and “shadow” banks – the name given to a broad range of non-bank financial institutions from peer-to-peer lending platforms to trusts and wealth management companies. All told, the latter now hold assets that exceed 80 percent of China’s gross domestic product, according to Moody’s – much of them linked to the commercial banking sector in one way or another. That poses a systemic threat, and needs to be treated as such. There’s nothing inherently wrong with shadow banks, of course.

Largely owned by the government, China’s commercial banks focus primarily on directing capital from savers to state-owned enterprises, leaving Chinese households and smaller private enterprises starved for funds. Shadow banks have grown to meet the demand. At their best, they allocate capital more efficiently than state-owned lenders and keep afloat businesses that create jobs and growth. The line between good shadow banks and dodgy ones is increasingly fuzzy, however, as is the divide between shadow and commercial banking. Traditional banks often assign their sales teams to sell shadow products. This gives an unwarranted sheen of legitimacy to schemes that are inherently risky. Buyers trust that the established bank will make them whole if their investment goes south.

Shadow banks are also selling more and more products directly to commercial banks. Wealth management products held as receivables now account for approximately 3 trillion yuan of interbank holdings, or around $500 billion — a number that’s grown sixfold in three years. According to Autonomous Research, as much as 85 percent of those products may have been resold to other shadow banks, creating a web of cross-ownership with disturbing parallels to the U.S. mortgage securities market just before the 2008 crash. In total, the big four state-owned banks hold more than $2 trillion in what’s classified as “financial investment,” much of it in trusts and wealth-management products.

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A nation of lost souls.

Nation of Debt: New Zealand Sitting on Half-Trillion-Dollar Debt Bomb (NZH)

New Zealand is sitting on a half-a-trillion-dollar debt bomb and Kiwis are increasingly treating their houses like cash machines, piling on the debt as they watch the value of their properties soar. Reserve Bank figures show household debt, excluding investment property, has risen 23% in the past five years to $163.4 billion. Incomes have risen only 11.5%. Households are now carrying a debt level that is equivalent to 162% of their annual disposable income – higher than the level reached before the global financial crisis. Including property investment the total debt households owed as of April was $232.9 billion, according to the Reserve Bank. Satish Ranchhod, a senior economist at Westpac Bank, says the main driver has been low interest rates.

“Continued low interest rates have sparked a sharp increase in household borrowing at a time when income growth has been very modest.” And it’s housing loans where the growth has mainly come from. Housing loan debt has risen 23.4% to $132.83 billion. Student loans were up 22.9% to $14.84 billion and consumer loans are up 16.6% to $15.7 billion. Ranchhod said much of the rising debt on housing was down to investors, as more people jumped into the property market on the back of rising house prices. He also believed many people were using their home loans to make consumer purchases. “We think a lot of the increase in lending on housing loans will also be an increase in spending … people feel wealthy when the value of their home goes up.”

Hannah McQueen, an Auckland financial coach and managing director of EnableMe, said she had seen three clients in the past week alone who had paid for a new car by using the equity in their home to increase their mortgage debt. “It’s definitely on the increase … People think, ‘I’m worth so much more now …'”

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Volatility just getting started.

Sterling Swings Wildly As Polls Suggest UK Heading For EU Exit (G.)

The pound swung wildly on currency markets on Monday, reaching extremes of volatility not seen since the financial crisis, as City traders reacted to polls suggesting voters were increasingly likely to send Britain out of the EU this month. The poll boost to the Vote Leave campaign sent the pound tumbling by up to 1.5 cents to below $1.44, adding to a decline of 2 cents last week and indicating the degree of pressure on the UK currency since the remain camp’s lead in the polls began to evaporate. A dovish speech by the US central bank chief, Janet Yellen, hinting that poor jobs data meant the Federal Reserve was unlikely to raise rates this month, steadied the pound – despite her comments that a vote to leave the EU could hurt the US economy.

“One development that could shift investor sentiment is the upcoming referendum in the United Kingdom. A UK vote to exit the European Union could have significant economic repercussions,” she said. Sterling’s value has become increasingly volatile as fears of a Brexit have increased among investors. The index charting the daily swings in the pound’s value has risen to its highest level of volatility since the first quarter of 2009. It is double the level seen in April when the remain camp was ahead in the polls. Elsa Lignos, a foreign exchange expert at City firm RBC, one of many to warn that the pound would come under further pressure should the lead established by Vote Leave be consolidated, said: “Brexit is almost all that matters for the pound at the moment.”

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Hmm.. “..speculative-grade borrowers..”, “..highly indebted Canadian consumers ..”

S&P Downgrades Royal Bank of Canada Outlook (WSJ)

Standard & Poor’s is downgrading the outlook for Royal Bank of Canada, a change it says reflects the lender’s increased risk appetite and credit-risk exposure relative to other domestic banks. The credit-ratings firm said Monday it was revising its outlook on RBC, Canada’s largest bank by assets, to “negative” from “stable,” but would leave its credit ratings untouched. The move comes less than two weeks after the Toronto-based lender reported a stronger-than-expected fiscal second-quarter profit but set aside bigger provisions to cover soured loans. “The outlook revision reflects concerns over what we see as RBC’s higher risk appetite, relative to peers,” said S&P credit analyst Lidia Parfeniuk in a release.

“We see one example of this in its aggressive growth in loans and commitments in the capital markets wholesale loan book, particularly in the U.S., with an emphasis on speculative-grade borrowers, including exposure to leveraged loans,” she added. S&P also pointed to RBC’s “higher-than-peer average exposure” to highly indebted Canadian consumers and to the country’s oil- and gas-producing regions, which have been hard hit by the collapse in crude-oil prices. S&P, however, affirmed RBC’s ratings including its “AA-/A-1+” long- and short-term issuer credit ratings. “RBC is one of the strongest and highest rated banks in Canada, reflecting our strong financial profile and the success of our diversified business model,” said RBC in an emailed statement. “This outlook change will have no direct impact to RBC clients,” it later added.

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“..Goldman wired the $3 billion in proceeds to a Singapore branch of a small Swiss private bank instead of to a large global bank, as would be typical for a transfer of that size..”

Goldman Probed Over Malaysia Fund 1MDB (WSJ)

U.S. investigators are trying to determine whether Goldman Sachs broke the law when it didn’t sound an alarm about a suspicious transaction in Malaysia, people familiar with the investigation said. At issue is $3 billion Goldman raised via a bond issue for Malaysian state investment fund 1Malaysia Development Bhd., or 1MDB. Days after Goldman sent the proceeds into a Swiss bank account controlled by the fund, half of the money disappeared offshore, with some later ending up in the prime minister’s bank account, according to people familiar with the matter and bank-transfer information viewed by The Wall Street Journal. The cash was supposed to fund a major real-estate project in the nation’s capital that was intended to boost the country’s economy.

U.S. law-enforcement officials have sought to schedule interviews with Goldman executives, people familiar with the matter said. Goldman hasn’t been accused of wrongdoing. The bank says it had no way of knowing how 1MDB would use the money it raised. Investigators are focusing on whether the bank failed to comply with the U.S. Bank Secrecy Act, which requires financial institutions to report suspicious transactions to regulators. The law has been used against banks for failing to report money laundering in Mexico and ignoring red flags about the operations of Ponzi scheme operator Bernard Madoff. The investigators believe the bank may have had reason to suspect the money it raised wasn’t being used for its intended purpose, according to people familiar with the probe.

One red flag, they believe, is that Goldman wired the $3 billion in proceeds to a Singapore branch of a small Swiss private bank instead of to a large global bank, as would be typical for a transfer of that size, the people said. Another is the timing of the bond sale and why it was rushed. The deal took place in March 2013, two months after Malaysia’s prime minister, Najib Razak, approached Goldman Sachs bankers during the annual meeting of the World Economic Forum in Davos, Switzerland. And it occurred two months before voting in a tough election campaign for Mr. Najib, who used some of the cash from his personal bank account on election spending, the Journal has reported, citing bank-transfer information and people familiar with the matter.

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This being from the mouthpiece WaPo, g-d only knows what’s behind it.

This Fannie-Freddie Resurrection Needs To Die (WaPo ed.)

It’s been said that Washington is where good ideas go to die. We don’t know about that, but some bad ideas are certainly hard to get rid of. Consider the persistent non-solution to the zombie-like status of Fannie Mae and Freddie Mac known as “recap and release.” The plan is to return the two mortgage-finance giants to their pre-financial-crisis status as privately owned but “government-sponsored” enterprises. That is to say, to recreate the private-gain, public-risk conflict that helped sink them in the first place. Their income would recapitalize the entities, rather than be funneled to the treasury, as is currently the case. Then they could exit the regulatory control known as “conservatorship” that has constrained them since 2008 — and resume bundling home loans and selling them, as if it had never been necessary to bail them out to the tune of $187 billion in the first place.

Congress last year effectively barred recap and release, at least for the next two years. Coupled with the Obama administration’s firm opposition, you’d think that would put a stake through its heart. But “no” is not an acceptable answer for the handful of Wall Street hedge funds that scooped up Fannie and Freddie’s beaten-down common stock for pennies a share after the bailout — and would realize a massive windfall if the government suddenly decided to let shareholders have access to company profits again. With megabillions on the line, the hedge funds have been arguing high-mindedly that their true concerns are property rights and the rule of law; they have also made common cause with certain low-income-housing advocates who see a resurrected Fan-Fred as a potential source of funds for their programs.

Left unexplained, because it’s inexplicable, is how the hedge funds’ arguments square with the fact that there wouldn’t even be a pair of corporate carcasses to fight over but for the massive infusion of taxpayer dollars and the public risk that represented. The latest iteration of recap and release is a hedge-fund-backed bill sponsored by Rep. Mick Mulvaney (R-SC), which would set Fannie and Freddie, unreformed, loose on the marketplace again and do so under terms wildly favorable to the hedge funds. Specifically, shareholders would be charged nothing for the government backing the entities would retain, supposedly to save scarce resources for the capital cushion. But as the WSJ recently noted, capital could be “risk-weighted” so forgivingly that the actual cushion required might be considerably less than headline numbers suggest.

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Desperate move.

State Department Blocks Release Of Hillary Clinton’s TPP Emails (IBT)

Trade is a hot issue in the 2016 U.S. presidential campaign. But correspondence from Hillary Clinton and her top State Department aides about a controversial 12-nation trade deal will not be available for public review — at least not until after the election. The Obama administration abruptly blocked the release of Clinton’s State Department correspondence about the so-called Trans-Pacific Partnership (TPP), after first saying it expected to produce the emails this spring. The decision came in response to International Business Times’ open records request for correspondence between Clinton’s State Department office and the United States Trade Representative. The request, which was submitted in July 2015, specifically asked for all such correspondence that made reference to the TPP.

The State Department originally said it estimated the request would be completed by April 2016. Last week the agency said it had completed the search process for the correspondence but also said it was delaying the completion of the request until late November 2016 — weeks after the presidential election. The delay was issued in the same week the Obama administration filed a court motion to try to kill a lawsuit aimed at forcing the federal government to more quickly comply with open records requests for Clinton-era State Department documents.

Clinton’s shifting positions on the TPP have been a source of controversy during the campaign: She repeatedly promoted the deal as secretary of state but then in 2015 said, “I did not work on TPP,” even though some leaked State Department cables show that her agency was involved in diplomatic discussions about the pact. Under pressure from her Democratic primary opponent, Bernie Sanders, Clinton announced in October that she now opposes the deal — and has disputed that she ever fully backed it in the first place.

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John Oliver buys $15 million of unpaid debt for $60,000. And then forgives it. Now there’s an idea. Unless I’m very mistaken, that means $1 million could forgive $250 million in debt. $10 million, you free $2.5 billion in debt. Well, quite a bit more, actually, because now we’d be talking wholesale. People raise a millon bucks for all sorts of purposes all the time. Know what I mean?

Someone get this properly organized in a fund, and why wouldn’t they (?!), means: You donate $1 and $250 in debt goes away. Donate $100 and $25,000 goes up in air. 100 people donate $100 each, $2,500,000 in debt is gone. I’m not the person to do it, but certainly somebody can?! (Do call me on my math if I missed a digit..). It’s crazy people like Bill Gates or Mark Zuckerberg are not doing this. Or even Janet Yellen. Not all that smart after all, I guess. $1 billion can buy off $250 billion in debt. Want to fight deflation?

Debt Buyers (John Oliver)

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How to make sure an economy and society cannot recover.

Taxes And Recession Slash Income Of Greek Households (Kath.)

The avalanche of new taxes that began this month will deal a devastating blow to household incomes, consumption and the prospects of the Greek economy in general. As the dozens of new measures are implemented, the market will also be forced to deal with the higher charges that will strengthen the lure of tax evasion. All this is expected to extend the recession and deter investment, while leading to more business shutdowns. Crucially, the disposable income of households will shrink anew due to the increase in taxation and the hikes in almost all indirect taxes and social security contributions.

Hundreds of thousands of families are cutting down on their basic expenses while many have run into debt over various obligations: For example, unpaid Public Power Corporation bills now total €2.7 billion. All that has resulted in major drop in retail spending. A consumer confidence survey carried out by Nielsen for the first quarter of the year shows that eight out of 10 Greeks are constantly attempting to reduce their household expenditure. Their main targets for cuts are going out for entertainment and food delivery, while they are buying cheaper and fewer groceries.

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JHK: “As you may know, Kunstler.com is currently under an aggressive Denial of Service (DoS) attack. My web and server technicians are working to get the website and blog back up and live soon (though it’s going to cost a pretty penny). In the meantime, here is today’s blog. Please share this with any of your friends so they don’t miss out.”

Nausea Rising (Jim Kunstler)

The people of the United States have real grievances with the way this country is being run. Last Friday’s job’s report was a humdinger: only 38,000 new jobs created in a country of over 300 million, with a whole new crop of job-seeking college grads just churned out of the diploma mills. I guess the national shortage of waiters and bartenders has finally come to an end. What’s required, of course, is a pretty stout restructuring of the US economy. And that should be understood to be a matter of national survival. We need to step way back on every kind of giantism currently afflicting us: giant agri-biz, giant commerce (Wal Mart etc.), giant banking, giant war-making, and giant government — this last item being so larded with incompetence on top of institutional entropy that it is literally a menace to American society.

The trend on future resources and capital availability is manifestly downward, and the obvious conclusion is the need to make this economy smaller and finer. The finer part of the deal means many more distributed tasks among the population, especially in farming and commerce operations that must be done at a local level. This means more Americans working on smaller farms and more Americans working in reconstructed Main Street business, both wholesale and retail. This would also necessarily lead to a shift out of the suburban clusterfuck and the rebuilding of ten thousand forsaken American towns and smaller cities.

For the moment, many demoralized Americans may feel more comfortable playing video games, eating on SNAP cards, and watching Trump fulminate on TV, but the horizon on that is limited too. Sooner or later they will have to become un-demoralized and do something else with their lives. The main reason I am so against the Hillary and Trump, and so ambivalent on Bernie is their inability to comprehend the scope of action actually required to avoid sheer cultural collapse.

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Completely crazy. Is Trump really the only person who can stop this? For the first time since the Nazi invasion of Soviet-occupied Poland began on 22 June 1941, German tanks will cross the country from west to east.

NATO Countries Begin Largest War Game In Eastern Europe Since Cold War (G.)

The largest war game in eastern Europe since the end of the cold war has started in Poland, as Nato and partner countries seek to mount a display of strength as a response to concerns about Russia’s assertiveness and actions. The 10-day military exercise, involving 31,000 troops and thousands of vehicles from 24 countries, has been welcomed among Nato’s allies in the region, though defence experts warn that any mishap could prompt an offensive reaction from Moscow. A defence attache at a European embassy in Warsaw said the “nightmare scenario” of the exercise, named Anaconda-2016, would be “a mishap, a miscalculation which the Russians construe, or choose to construe, as an offensive action”. Russian jets routinely breach Nordic countries’ airspace and in April they spectacularly “buzzed” the USS Donald Cook in the Baltic Sea.

The exercise, which US and Polish officials formally launched near Warsaw, is billed as a test of cooperation between allied commands and troops in responding to military, chemical and cyber threats. It represents the biggest movement of foreign allied troops in Poland in peace time. For the first time since the Nazi invasion of Soviet-occupied Poland began on 22 June 1941, German tanks will cross the country from west to east. Managed by Poland’s Lt Gen Marek Tomaszycki, the exercise includes 14,000 US troops, 12,000 Polish troops, 800 from Britain and others from non-Nato countries. Anaconda-2016 is a prelude to Nato’s summit in Warsaw on 8-9 July, which is expected to agree to position significant numbers of troops and equipment in Poland and the Baltic states.

It comes within weeks of the US switching on a powerful ballistic missile shield at Deveselu in Romania, as part of a “defence umbrella” that Washington says will stretch from Greenland to the Azores. Last month, building work began on a similar missile interception base at Redzikowo, a village in northern Poland. The exercise comes at a sensitive time for Poland’s military, following the sacking or forced retirement of a quarter of the country’s generals since the nationalist Law and Justice government came to power in October last year. So harsh have the cuts to the top brass been that the Polish armed forces recently found themselves unable to provide a general for Nato’s multinational command centre at Szczecin.

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Tell me, do I feel safe now? 100,000 years is a long time. No fault lines? Volcanic activity?

Finns To Bury Nuclear Waste In World’s Costliest Tomb (AFP)

Deep underground on a lush green island, Finland is preparing to bury its highly-radioactive nuclear waste for 100,000 years — sealing it up and maybe even throwing away the key. Tiny Olkiluoto, off Finland’s west coast, will become home to the world’s costliest and longest-lasting burial ground, a network of tunnels called Onkalo – Finnish for “The Hollow”. Countries have been wrestling with what to do with nuclear power’s dangerous by-products since the first plants were built in the 1950s. Most nations keep the waste above ground in temporary storage facilities but Onkalo is the first attempt to bury it for good. Starting in 2020, Finland plans to stow around 5,500 tons of nuclear waste in the tunnels, more than 420 metres (1,380 feet) below the Earth’s surface.

Already home to one of Finland’s two nuclear power plants, Olkiluoto is now the site of a tunnelling project set to cost up to €3.5 billion until the 2120s, when the vaults will be sealed for good. “This has required all sorts of new know-how,” said Ismo Aaltonen, chief geologist at nuclear waste manager Posiva, which got the green light to develop the site last year. The project began in 2004 with the establishment of a research facility to study the suitability of the bedrock. At the end of last year, the government issued a construction license for the encapsulation plant, effectively giving its final approval for the burial project to go ahead. At present, Onkalo consists of a twisting five-kilometre (three-mile) tunnel with three shafts for staff and ventilation. Eventually the nuclear warren will stretch 42 kilometres (26 miles).

[..] The waste is expected to have lost most of its radioactivity after a few hundred years, but engineers are planning for 100,000, just to be on the safe side. Spent nuclear rods will be placed in iron casts, then sealed into thick copper canisters and lowered into the tunnels. Each capsule will be surrounded with a buffer made of bentonite, a type of clay that will protect them from any shuddering in the surrounding rock and help stop water from seeping in. Clay blocks and more bentonite will fill the tunnels before they are sealed up.

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Long piece on bleaching by the Guardian. Depressing.

Great Barrier Reef: The Stench Of Death (G.)

It was the smell that really got to diver Richard Vevers. The smell of death on the reef. “I can’t even tell you how bad I smelt after the dive – the smell of millions of rotting animals.” Vevers is a former advertising executive and is now the chief executive of the Ocean Agency, a not-for-profit company he founded to raise awareness of environmental problems. After diving for 30 years in his spare time, he was compelled to combine his work and hobby when he was struck by the calamities faced by oceans around the world. Chief among them was coral bleaching, caused by climate change. His job these days is rather morbid. He travels the world documenting dead and dying coral reefs, sometimes gathering photographs just ahead of their death, too.

With the world now in the midst of the longest and probably worst global coral bleaching event in history, it’s boom time for Vevers. Even with all that experience, he’d never seen anything like the devastation he saw last month around Lizard Island in the northern third of Australia’s spectacular Great Barrier Reef. As part of a project documenting the global bleaching event, he had surveyed Lizard Island, which sits about 90km north of Cooktown in far north Queensland, when it was in full glorious health; then just as it started bleaching this year; then finally a few weeks after the bleaching began. “It was one of the most disgusting sights I’ve ever seen,” he says. “The hard corals were dead and covered in algae, looking like they’ve been dead for years. The soft corals were still dying and the flesh of the animals was decomposing and dripping off the reef structure.”

[..] When the coral dies, the entire ecosystem around it transforms. Fish that feed on the coral, use it as shelter, or nibble on the algae that grows among it die or move away. The bigger fish that feed on those fish disappear too. But the cascading effects don’t stop there. Birds that eat fish lose their energy source, and island plants that thrive on bird droppings can be depleted. And, of course, people who rely on reefs for food, income or shelter from waves – some half a billion people worldwide – lose their vital resource.

[..] What’s at stake here is the largest living structure in the world, and by far the largest coral reef system. The oft-repeated cliche is that it can be seen from space, which is not surprising given it stretches more than 2,300km in length and, between its almost 3,000 individual reefs, covers an area about the size of Germany. It is an underwater world of unimaginable scale. But it is up close that the Great Barrier Reef truly astounds. Among its waters live a dizzying array of colourful plants and animals. With 1,600 species of fish, 130 types of sharks and rays, and more than 30 species of whales and dolphins, it is one of the most complex ecosystems on the planet.


Coral off Lizard Island, bleached in March, and then dead and covered in seaweed in May. Photo: the Ocean Agency

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Mar 252016
 
 March 25, 2016  Posted by at 9:28 am Finance Tagged with: , , , , , , , , , ,  2 Responses »


DPC Shoppers on Sixth Avenue, New York City 1903

Bubbles Spread Like a Zombie Virus (BBG)
Junk Territory: US Corporate Debt Ratings Near 15-Year Low (CNN)
Earnings Growth Based On Debt And Buybacks? Totally Unsustainable (SA)
Everyone Is Worried That A Third China Bubble Is About To Pop (BI)
Coming to the Oil Patch: Bad Loans to Outnumber the Good (WSJ)
Traders Are Betting Heavily That The Pound Will Drop To 1980s Lows (BBG)
Yuan Weakens For 6th Straight Day – Longest Losing Streak In 2 Years (ZH)
Sweden Cuts Maximum Mortgage Term To 105 Years -The Average Is 140 (Tel.)
Shenzhen is Home To The Planet’s Fastest Rising House Prices (Guardian)
Hedge Funds Control Greek NPLs Anyway (Kath.)
Who Will Speak For The American White Working Class? (Guardian)
China ‘Detains 20 Over Xi Resignation Letter’ (BBC)
Facing Life Sentence, Turkish Journalist Vows To Expose State Crimes (Reuters)
Mass Extinctions and Climate Change (C.)
Has James Hansen Foretold The ‘Loss Of All Coastal Cities’? (G.)
Greece Pledges To Provide Shelters For 50,000 Refugees Within 20 Days (Kath.)

Bubbles are so prevalent people tend not to see them anymore.

Bubbles Spread Like a Zombie Virus (BBG)

The leading academic theory of asset bubbles is that they don’t really exist. When asset prices skyrocket, say mainstream theorists, it might mean that some piece of news makes rational investors realize that fundamental values like corporate earnings are going to be a lot higher than anyone had expected. Or perhaps some condition in the economy might make investors suddenly become much more tolerant of risk. But according to mainstream theory, bubbles are not driven by speculative mania, greed, stupidity, herd behavior or any other sort of psychological or irrational phenomenon. Inflating asset values are the normal, healthy functioning of an efficient market. Naturally, this view has convinced many people in finance that mainstream theorists are quite out of their minds. The problem is, mainstream theory has proven devilishly hard to disprove.

We can’t really observe how investors in the financial markets form their beliefs. So we can’t tell if their views are right or wrong, or whether they’re investing based on expectations or because of changing risk tolerance. Basically, because we can usually only look at the overall market, we can’t get into the nuts and bolts of how people decide what prices to pay. But what about the housing market? Housing is different from stocks and bonds in at least two big ways. First, because house purchases are not anonymous, we can observe who buys what. Second, housing markets are local, so we can see what is happening around them, and thus have some sort of idea what information they are receiving. These unique features allow us to know much more about the decision-making process of each buyer than we know about investors in the anonymous national financial markets.

In a new paper, economists Patrick Bayer, Kyle Mangum and James Roberts make great use of these features to study the mid-2000s U.S. housing boom. Their landmark results ought to have a major effect on the debate over asset bubbles. Bayer et al. find that as the market overheated, the frenzy spread like a virus from block to block. They look at the greater Los Angeles area – a hotbed of bubble activity – from 1989 through 2012. Since they want to focus on people buying houses as investments (rather than to live in), the authors looked only at people who bought multiple properties, and they tried to exclude primary residences from the sample. They found, unsurprisingly, that the peak years of 2004-2006 saw a huge spike in the number of new investors entering the market. Here is the graph from their paper:

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It’s like when you start with a basket with a few bad apples: in the end, everything turns to junk.

Junk Territory: US Corporate Debt Ratings Near 15-Year Low (CNN)

Red flags are rising on Corporate America’s debt. The average rating on U.S. corporate debt has hit nearly a 15-year low, according to a new report by Standard & Poor’s. “We believe corporate default rates could increase over the next few years,” according to S&P credit analysts Jacob Crooks and David Tesher. The average rating on companies that issue debt has fallen to ‘BB,’ or junk status. That is even below the average S&P rating for U.S. corporate debt during and in the aftermath of the financial crisis in 2008 and 2009. There are already concerns about energy companies defaulting on loans due to low oil prices. But new tech firms like Solera and media companies like iHeart too have had their credit rating downgraded this year, according to S&P. Since 2012, there’s been a surge in low-rated companies seeking cash.

In the past four years, S&P has assigned a single-B rating to 75% of companies accessing the debt markets for the first time. That rating is just one notch up from triple-C, a rating given to companies with a high probability of default. Companies with a single-B rating include PF Chang’s, Toys R US and Men’s Wearhouse (MW). That doesn’t mean they’re going to default: They’re just dangerously close to the territory where companies tend to default. The “rapid rise” in companies with low credit ratings accessing the bond markets can be traced to the easy availability of cash in recent years. How did this happen?

Here are a few key dominoes.
1. The Fed created a super low interest rate environment when it put rates next to zero in 2008.
2. Investors looking for more yield move away from safe assets like U.S. Treasury bonds and into higher-risk assets like bonds issued by lower-rated companies.
3. That makes it easier for low-rated companies to get cash at low rates from the capital markets.
Now, however, the tables are turning. The Fed is slowly starting to increase rates and investors’ appetite – and the cash available – for low-rated companies is on the decline. Add to that the gloomy outlook for the global economy and low commodity prices, and some companies may struggle to pay back what they borrowed.

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History rhymes.

Earnings Growth Based On Debt And Buybacks? Totally Unsustainable (SA)

My grandfather was never rich. He did have some money in the 1920s, but he lost most of it at the tail end of the decade. Some of it disappeared in the stock market crash in October of 1929. The rest of his deposits fell victim to the collapse of New York’s Bank of the United States in December of 1931. I wish I could say that my grandfather recovered from the wrath of the stock market disaster and subsequent bank failures. For the most part, however, living above the poverty line was about the best that he could do financially, as he buckled down to raise two children in Queens. There was one financial feature of my grandfather’s life that provided him with greater self-worth. Specifically, he refused to take on significant debt because he remained skeptical of credit. And with good reason.

The siren’s song of “you-can-pay-me-Tuesday-for-a-hamburger-today” only created an illusion of wealth in the Roaring Twenties; in fact, unchecked access to favorable borrowing terms as well as speculative excess in the use of debt contributed mightily to the country’s eventual descent into the Great Depression. G-Pops wanted no part of the next debt-fueled crisis. Here’s something few people know about the past: Consumer debt more than doubled during the ten year-period of the Roaring 1920s (1/1/1920-12/31/1929). And while you may often hear the debt apologist explain how the only thing that matters about debt is the ability to service it, the reckless dismissal ignores the reality of virtually all financial catastrophes.

During the Asian Currency Crisis and the bailout of Long-Term Capital Management (1997-1998), fast-growing emerging economies (e.g., South Korea, Malaysia, Thailand, etc.) experienced extraordinary capital inflows. Most of the inflows? Speculative borrowed dollars. When those economies showed signs of strain, “hot money” quickly shifted to outflows, depreciating local currencies and leaving over-leveraged hedge funds on the wrong side of currency trades. The Fed-orchestrated bailout of Long-Term Capital coupled with rate cutting activity prevented the 19% S&P 500 declines and 35% NASDAQ depreciation from charting a full-fledged stock bear. Did we see similar debt-fueled excess leading into the 2000-2002 S&P 500 bear (50%-plus)? Absolutely. How long could margin debt extremes prosper in the so-called New-Economy?

How many dot-com day-traders would find themselves destitute toward the end of the tech bubble? Bring it forward to 2007-2009 when housing prices began to plummet in earnest. How many “no-doc” loans and “negative am” mortgages came with a promise of real estate riches? Instead, subprime credit abuse brought down the households that lied to get their loans, destroyed the financial institutions that had these “toxic assets” on their books, and overwhelmed the government’s ability to manage the inevitable reversal of fortune in stocks and the overall economy. Just like 1929-1932. Just like 1997-1998. Just like 2000-2002.

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Housing, stocks and now credit.

Everyone Is Worried That A Third China Bubble Is About To Pop (BI)

First, China’s property bubble popped. Then, China’s stock market bubble burst over the summer, and investors lost a ton of money before the government took control of the system. Now the concern floating around the world of markets is that the third in China’s “triple bubble” is about to burst. That bubble is credit, especially corporate bonds, which have absolutely exploded over the past year as refugees from the other bubble bursts searched for yield. This one is going to be for a very straightforward reason, too — supply. Simply put, there are about to be too many bonds in China, and that could ultimately harm the weakest part of the Chinese economy, the debt-loaded zombie companies that helped form the property bubble and are now unable to turn a healthy profit.

Here’s how all of this happened. When the Chinese stock market went careening downward last summer, a ton of the money that was invested in the market ran into the credit market, specifically corporate bonds. “In our view, China is in the midst of a triple bubble, with the third-biggest credit bubble of all time, the largest investment bubble (proxied by the investment share of GDP) and the second-biggest real-estate bubble,” Credit Suisse analyst Andrew Garthwaite wrote in a note back in July. This was great for China’s debt-laden corporates. They could keep running on easy credit because demand was so high. Corporate-bond issuance increased 21% from 2014 to 2015, and by the end of last year their total stock made up 21.6% of GDP, as opposed 18.4% the year before, according to Societe Generale.

Chinese Treasury-bond supply is set to increase too, from 936 billion yuan in 2015 to 1.4 trillion yuan in 2016. At the same time, the government has been getting a move on an important project it has been working on for some time — turning local-government debt from the country’s infrastructure boom into a real municipal-bond market. We’re talking a lot of money here. In March alone the government allowed 1 trillion yuan ($160 billion) of local-government debt to be converted into local-government bonds (LGB). In 2016 analysts expect the government to issue another 6 trillion yuan in LGBs. That’s a lot of bonds.

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Denial continues.

Coming to the Oil Patch: Bad Loans to Outnumber the Good (WSJ)

Bad loans are likely to outnumber good ones soon in the U.S. oil patch, an indication of the pressure on energy companies and their lenders from the crash in prices. The number of energy loans labeled as “classified,” or in danger of default, is on course to extend above 50% this year at several major banks, including Wells Fargo and Comerica, according to bankers and others in the industry. In response, several major banks are reducing their exposure to the energy sector by attempting to sell off souring loans, declining to renew them or clamping down on the ability of oil and gas companies to tap credit lines for cash, according to more than a dozen bankers, lawyers and others familiar with the plans.

The pullback is curtailing the flow of money to companies struggling to survive a prolonged stretch of low prices, likely quickening the path to bankruptcy for some firms. 51 North American oil-and-gas producers have already filed for bankruptcy since the start of 2015, cases totaling $17.4 billion in cumulative debt, according to law firm Haynes and Boone. That trails the number from September 2008 to December 2009 during the global financial crisis, when there were 62 filings, but is expected to grow: About 175 companies are at high risk of not being able to meet loan covenants, according to Deloitte. “This has the makings of a gigantic funding crisis” for energy companies, said William Snyder, head of Deloitte’s U.S. restructuring unit. If oil prices, which closed at $39.79 a barrel Wednesday, remain at around $40 a barrel this year, “that’s fairly catastrophic.”

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Against the USD is a safe bet if the term is long enough.

Traders Are Betting Heavily That The Pound Will Drop To 1980s Lows (BBG)

As Britain ponders its future in the EU, investors are betting an amount almost the size of Iceland’s economy on the pound falling to levels last seen in the 1980s. At least 11 billion pounds ($16 billion) has been wagered this year on options that would profit if sterling fell to or below $1.3502, a 4.5% drop from current levels, after the June 23 referendum. More than half of the positions were placed since the date of the vote was set on Feb. 20. The figures give an indication of what’s at stake as investors weigh the possibility of the U.K. quitting the world’s largest single market, which accounts for about half its imports and exports. Even with opinion polls showing no clear lead for either side, the prospect of a “Brexit” has seen the pound fall more than any other major currency versus the dollar this year.

“There is a risk premium in sterling, both in terms of the spot rate and in terms of the volatility market, but this is one of those events where you have no way of calibrating how big it should be,” said Paul Meggyesi at JPMorgan Chase in London. “Few investors believe that sterling has fallen to levels where the risk-reward favors buying.” While tumbling to $1.3502 would barely exceed the pound’s decline so far this year, it would take the U.K. currency to the lowest level since 1985. Traders assign 54% odds to sterling reaching that level by the day of the referendum, according to Bloomberg’s options calculator. Meggyesi sees the pound falling to $1.38 by mid-year, from $1.4145 as of 4:45 p.m. London time on Thursday. Even forecasts of a drop to these levels may be optimistic if the U.K. actually ends up leaving the EU.

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In the shadows, China keeps devaluing.

Yuan Weakens For 6th Straight Day – Longest Losing Streak In 2 Years (ZH)

PBOC fixed the Yuan at its weakest in 3 weeks, pushing the devaluation streak to its longest since early January. However, Offshore Yuan has now dropped over 1.1% against the USD, extending losses for the 6th straight day to 3-week lows. This is the longest streak of weakness in the offshore Yuan since April 2014.

 

It appears EUR and JPY took enough pain so the basket is reverting to the USD again…


What’s the opposite of passive-aggressive as a clear message is being sent to The Fed – tighten and we unleash the Yuan-weakness-driven turmoil…

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Now that’s a housing bubble.

Sweden Cuts Maximum Mortgage Term To 105 Years -The Average Is 140 (Tel.)

Think there’s a housing affordability crisis in Britain, with low mortgage rates likely to drive house prices even higher? Take a look at Sweden where lending policies have been more generous, and where house price inflation has been (at least recently) more extreme. A number of banks and analysts have warned that Sweden’s housing market is overheating, with HSBC in January saying: “The pace of acceleration in the housing market points to a bubble.” House prices across the country were up 18pc last year. This compares to Britain’s house price rises in 2015 of between 5pc and 10pc, depending on which index is used. Now Sweden is dealing with its overheated housing market by reining in mortgage availability.

Regulators introduced restrictions which will mean mortgage terms – the time homebuyers have to clear the debt – will be drastically reduced to just… 105 years. The move comes because historically there has been no time limit on mortgage duration. So as prices rose and affordability became tougher, Swedish banks’ response was to extend terms, as had been the case in other high-cost property markets including Japan in the Eighties. The average term is reported to be 140 years. This meant many people who inherited property but who could not afford to take on the mortgage debt had to sell up. Swedish banks were quoted in the local press as opposing the move.

“It isn’t good for the finances of households as it will make mortgages more expensive and the terms not as good. And it isn’t good for financial stability,” the head of Swedish Bankers’ Association was reported to say. In Britain, there has been a move by some lenders to increase mortgage terms but only for younger borrowers. Even then, the maximum term tends to be 35 years, although some lenders – including Halifax and Nationwide – go up to 40, brokers say. The Mortgage Market Review introduced by British regulators in 2013 made it difficult for lenders to arrange loans which went into borrowers’ likely retirement.

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And here’s another one. How desperate must Xi be to let this happen?!

Shenzhen is Home To The Planet’s Fastest Rising House Prices (Guardian)

House prices in Shenzhen, the city which is a hub for technology hardware and known as China’s Silicon Valley, soared by almost 50% last year – the fastest growth in residential property prices worldwide. A new survey puts two Chinese cities – Shenzhen and Shanghai – in the top five fastest-growing property markets despite the Chinese stock market tumbling in 2015. The research, by the estate agents Knight Frank (pdf), also shows the impact of last year’s debt crisis in Greece. House prices in the two biggest Greek cities – Thessaloniki and Athens – were both ranked among the worst six in the survey of 165 cities, falling 5.9% and 4.8% respectively. There were also significant drops in some Italian cities, including Rome, Trieste and Genoa. Nicosia and Larnaca in Cyprus were also among the worst performers.

The Global Residential Cities Index showed that house prices in cities worldwide went up 4.4%. Behind Shenzhen, Auckland was the second fastest growing market with rises of 25.4%, followed by Istanbul (25%) and Sydney (19.9%). Shenzhen has become a hub for the production of hardware used in electronics and has a permanent population of 10 million, rising to 15 million in the summer – autumn electronics season. Their average age is 30. The city bordering Hong Kong did not exist 30 years ago, sporting just a few fishing villages. In 1979, it was declared China’s first special economic zone and surrounded by an 85-mile long, barbed wire fence. Investment and migrant workers flooded the area and factories and housing were built from scratch. By the mid-90s, the population had climbed to 3 million.

In 2004, the first metro station opened and a decade later the network had grown to 131 stations. Two Turkish cities featured in the top 10 – Istanbul and Izmir – while Budapest recorded the biggest rise among European Union cities, with prices up 16.3%. Budapest is also the strongest performing capital city in the index, with demand fuelled by an investment immigration bond for Chinese nationals. Cities traditionally associated with high prices failed to feature prominently. London was ranked at 16 (11.4% growth) with New York at 89th (3.3%). The fast rising prices of Sydney, the fourth fastest rising market, has resulted in high rents and the same sort of concerns about the effects on the young population in the city as in London. In the US, Portland in Oregon and San Francisco were the highest risers, both with increases over the year of 10%. The fastest growing North American city was Vancouver, with prices up nearly 12% on an annual basis.

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Greece is ruled by the global finance squid.

Hedge Funds Control Greek NPLs Anyway (Kath.)

Despite all the government talk about the nonperforming loans secured by borrowers’ homes being protected from falling into the hands of hedge funds, the latest recapitalization process has resulted in the entire credit sector now being controlled by foreign investors – hedge funds no less. Those foreign firms, the majority of which control high-risk portfolios, hold stakes of more than 50% in all of Greece’s systemic lenders, and in some cases far above that. Therefore, by extension, they control a loan portfolio which exceeds 200 billion euros and includes performing loans amounting to some 100 billion and bad loans that also add up to around 100 billion, and there is currently a negotiations battle under way for them not to be sold on to others.

It makes no difference to borrowers who owns their loans; it is the general legal framework and the legal moves they can make in case they are unable to fulfill their obligations that matter. The banks’ planning does not provide for the sale of bad loans, and there are strong indications that the existing stock of NPLs includes many strategic defaulters who have taken advantage of the crisis to avoid fulfilling their obligations. The Bank of Greece estimates that they account for 20% of all bad loans.

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“..an economic version of the Hunger Games.”

Who Will Speak For The American White Working Class? (Guardian)

The National Review, a conservative magazine for the Republican elite, recently unleashed an attack on the “white working class”, who they see as the core of Trump’s support. The first essay, Father Führer, was written by the National Review’s Kevin Williamson, who used his past reporting from places such as Appalachia and the Rust Belt to dissect what he calls “downscale communities”. He describes them as filled with welfare dependency, drug and alcohol addiction, and family anarchy – and then proclaims: “Nothing happened to them. There wasn’t some awful disaster, There wasn’t a war or a famine or a plague or a foreign occupation. … The truth about these dysfunctional, downscale communities is that they deserve to die. Economically, they are negative assets. Morally, they are indefensible. The white American underclass is in thrall to a vicious, selfish culture whose main products are misery and used heroin needles.”

A few days later, another columnist, David French, added: “Simply put, [white working class] Americans are killing themselves and destroying their families at an alarming rate. No one is making them do it. The economy isn’t putting a bottle in their hand. Immigrants aren’t making them cheat on their wives or snort OxyContin.” Both suggested the answer to their problems is they need to move. “They need real opportunity, which means that they need real change, which means that they need U-Haul.” Downscale communities are everywhere in America, not just limited to Appalachia and the Rust Belt – it’s where I have spent much of the past five years documenting poverty and addiction. To say that “nothing happened to them” is stunningly wrong. Over the past 35 years the working class has been devalued, the result of an economic version of the Hunger Games.

It has pitted everyone against each other, regardless of where they started. Some contestants, such as business owners, were equipped with the fanciest weapons. The working class only had their hands. They lost and have been left to deal on their own. The consequences can be seen in nearly every town and rural county and aren’t confined to the industrial north or the hills of Kentucky either. My home town in Florida, a small town built around two orange juice factories, lost its first factory in 1985 and its last in 2005. [..] Over the past 35 years, except for the very wealthy, incomes have stagnated, with more people looking for fewer jobs. Jobs for those who work with their hands, manufacturing employment, has been the hardest hit, falling from 18m in the late 1980s to 12m now.

The economic devaluation has been made more painful by the fraying of the social safety net, and more visceral by the vast increase at the top. It is one thing to be spinning your wheels stuck in the mud, but it is even more demeaning to watch as others zoom by on well-paved roads, none offering help. It is not just about economic issues and jobs. Culturally, we are witnessing a tale of two Americas that are growing more distinct by the day.

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Crackdowns deflate economic confidence.

China ‘Detains 20 Over Xi Resignation Letter’ (BBC)

A total of 20 people have been detained in China following the publication of a letter calling on President Xi Jinping to resign, the BBC has learned. The letter was posted earlier this month on a state-backed website Wujie News. Although quickly deleted by the authorities, a cached version can still be found online. In most countries the contents of the letter would be run-of-the-mill political polemic. “Dear Comrade Xi Jinping, we are loyal Communist Party members,” it begins, and then cuts to the chase. “We write this letter asking you to resign from all party and state leadership positions.” But in China, of course, and in particular on a website with official links, this kind of thing is unheard of and there have already been signs of a stern response by the authorities. The detention of a prominent columnist, Jia Jia, was widely reported to be in connection with the letter.

Friends say he simply called the editor of Wujie to enquire about it after seeing it on line. But now the BBC has spoken to a staff member at Wujie who has asked to remain anonymous and who has told us that in addition to Jia Jia another 16 people have been “taken away”. The source said they included six colleagues who work directly for the website, including a senior manager and a senior editor, and another 10 people who work for a related technology company. And a well-know Chinese dissident living in the US said three members of his family, living in China’s Guangdong Province, had also been detained in connection with the letter. Wen Yunchao said he believed his parents and his brother had been detained because authorities were trying to pressure him to reveal information. But he told the BBC that he knew nothing about the letter.

The letter focuses its anger on what it says is President Xi’s “gathering of all power” in his own hands, and it accuses him of major economic and diplomatic miscalculations, as well as “stunning the country” by placing further restrictions on freedom of speech. The latter is a reference to Mr Xi’s high profile visit last month to state-run TV and newspaper offices, where he told journalists that their primary duty was to obey the Communist Party. The letter first appeared on an overseas-based Chinese language website, well outside the realm of Communist Party censors, but the big question is how it then made its way onto Wujie. The idea that any Chinese editor of sane mind would knowingly publish such a document seems so unlikely that there has been speculation amongst some Chinese journalists, in private, that Wujie was either hacked, or had perhaps been using some kind of automatic trawling and publishing software.

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The backdrop of the refugee deal. Yes, we have no decency.

Facing Life Sentence, Turkish Journalist Vows To Expose State Crimes (Reuters)

One of two prominent Turkish journalists facing life in prison on charges of espionage vowed to make the trial, which begins on Friday, a prosecution of official wrongdoing. Can Dundar, editor-in-chief of Cumhuriyet, told Reuters he would use his trial, which has drawn international condemnation, to refocus attention on the story that landed him in the dock. Dundar, 54, and Erdem Gul, 49, Cumhuriyet’s Ankara bureau chief, stand accused of trying to topple the government over the publication last May of video purporting to show Turkey’s state intelligence agency helping to truck weapons to Syria in 2014. “We are not defendants, we are witnesses,” Dundar said in an interview at his office, promising to show the footage in court despite a ban and at the risk that judges may order the hearings to be held behind closed doors.

“We will lay out all of the illegalities and make this a political prosecution … The state was caught in a criminal act, and it is doing all that it can to cover it up.” Dundar and Gul spent 92 days in jail, almost half of it in solitary confinement, before the constitutional court ruled last month that pre-trial detention was unfounded because the charges stemmed from their journalism. Both were subsequently released pending trial, although President Tayyip Erdogan said he did not respect the ruling. Erdogan has acknowledged that the trucks, which were stopped by gendarmerie and police officers en route to the Syrian border, belonged to the MIT intelligence agency and said they were carrying aid to Turkmens in Syria. Turkmen fighters are battling both President Bashar al-Assad’s forces and Islamic State.

Erdogan has said prosecutors had no authority to order the trucks be searched and that they acted as part of a plot to discredit the government, allegations the prosecutors denied. Erdogan has cast the newspaper’s coverage as part of an attempt to undermine Turkey’s global standing and has vowed Dundar would “pay a heavy price.” The trial comes as Turkey deflects criticism from the European Union and rights groups that it is bridling a once vibrant press. “We were arrested for two reasons: to punish us and to frighten others. And we see the intimidation has been effective. Fear dominates,” Dundar said.

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800,000 years and counting.

Mass Extinctions and Climate Change (C.)

We now know that greenhouse gases are rising faster than at any time since the demise of dinosaurs, and possibly even earlier. According to research published in Nature Geoscience this week, carbon dioxide (CO2 ) is being added to the atmosphere at least ten times faster than during a major warming event about 50 million years ago. We have emitted almost 600 billion tonnes of carbon since the beginning of the Industrial Revolution, and atmospheric COC concentrations are now increasing at a rate of 3 parts per million (ppm) per year. With increasing CO2 levels, temperatures and ocean acidification also rise, and it is an open question how ecosystems are going to cope under such rapid change. Coral reefs, our canary in the coal mine, suggest that the present rate of climate change is too fast for many species to adapt: the next widespread extinction event might have already started.

In the past, rapid increases in greenhouse gases have been associated with mass extinctions. It is therefore important to understand how unusual the current rate of atmospheric CO2 increase is with respect to past climate variability. There is no doubt that atmospheric COC concentrations and global temperatures have changed in the past. Ice sheets, for example, are reliable book-keepers of ancient climate and can give us an insight into climate conditions long before the thermometer was invented. By drilling holes into ice sheets we can retrieve ice cores and analyse the accumulation of ancient snow, layer upon layer. These ice cores not only record atmospheric temperatures through time, they also contain frozen bubbles that provide us with small samples of ancient air. Our longest ice core extends more than 800,000 years into the past.

During this time, the Earth oscillated between cold ice ages and warm interglacials . To move from an ice age to an interglacial, you need to increase COC by roughly 100 ppm. This increase repeatedly melted several kilometre-thick ice sheets that covered the locations of modern cities like Toronto, Boston, Chicago or Montreal. With increasing COC levels at the end of the last ice age, temperatures increased too. Some ecosystems could not keep up with the rate of change, resulting in several megafaunal extinctions, although human impacts were almost certainly part of the story. Nevertheless, the rate of change in COC over the past million years was tame when compared to today. The highest recorded rate of change before the Industrial Revolution is less than 0.15 ppm per year, just one-twentieth of what we are experiencing today.

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“All hell will break loose in the North Atlantic and neighbouring lands..”

Has James Hansen Foretold The ‘Loss Of All Coastal Cities’? (G.)

James Hansen’s name looms large over any history that will likely be written about climate change. Whether you look at the hard science, the perils of political interference or modern day activism, Dr Hansen is there as a central character. In a 1988 US Senate hearing, Hansen famously declared that the “greenhouse effect has been detected and is changing our climate now”. Towards the end of his time as the director of NASA’s Goddard Institute for Space Studies, Hansen described how government officials had on other occasions changed his testimony, filtered scientific findings and controlled what scientists could and couldn’t say to the media – all to underplay the impact of fossil fuel emissions on the climate. In recent years, the so-called “grandfather of climate science” has added to his CV the roles of author and twice-arrested climate activist and anti-coal campaigner. He still holds a position at Columbia University.

So when Hansen’s latest piece of blockbuster climate research was finalized and released earlier this week, there was understandable global interest, not least because it mapped a potential path to the “loss of all coastal cities” from rising sea levels and the onset of “super storms” previously unseen in the modern era. So what is Hansen claiming? Well, the first thing to understand is that Hansen’s paper, written with 18 other co-authors, many of them highly-reputable names in climate science in their own right, is far from conventional. Most scientific papers only take up four or five pages in a journal. Hansen’s paper – in the journal Atmospheric Chemistry and Physics – grabs 52 pages (although it’s hard to quibble over space when you’re laying out a possible path to widespread global disruption and the complete reshaping of coastlines).

Nor was the paper published in a conventional way. If you’re getting a faint sense of déjà vu about Hansen’s findings, then that could be down to how a draft version of the study was published and widely covered in July last year. The journal runs an unconventional interactive system of peer review where comments and criticisms from other scientists are published for everyone to see, as are the responses from Hansen and his colleagues. This is arguably a more transparent way of conducting the scientific process of peer review – something usually carried out privately and anonymously. None of this should really detract from Hansen and his co-author’s central claims. Firstly, Hansen says they may have uncovered a mechanism in the Earth’s climate system not previously understood that could point to a much more rapid rise in sea levels. When the Earth’s ice sheets melt, they place a freshwater lens over neighboring oceans.

This lens, argues Hansen, causes the ocean to retain extra heat, which then goes to melting the underside of large ice sheets that fringe the ocean, causing them to add more freshwater to the lens (this is what’s known as a “positive feedback” and is not to be confused with the sort of positive feedback you may have got at school for that cracking fifth grade science assignment). Secondly, according to the paper, all this added water could first slow and then shut down two key ocean currents – and Hansen points to two unusually cold blobs of ocean water off Greenland and off Antarctica as evidence that this process may already be starting. If these ocean conveyors were to be impacted, this could create much greater temperature differences between the tropics and the north Atlantic, driving “super storms stronger than any in modern times”, he argues. “All hell will break loose in the North Atlantic and neighbouring lands,” he says in a video summary.

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Europe is waiting for unrest in Greece to break out. Then it can send in it own police and military forces. or so it thinks.

Greece Pledges To Provide Shelters For 50,000 Refugees Within 20 Days (Kath.)

The government said Thursday it will fast-track procedures to create new centers to accommodate 30,000 people within the next 20 days as it finds itself in a race against time to meet an obligation to provide shelter to more than 50,000 asylum seekers stranded in the country, and to prevent an imminent humanitarian disaster. The current capacity of shelters is 38,000. The decision came after a meeting of the government’s council of ministers, chaired by Prime Minister Alexis Tsipras, amid a growing sense of urgency surrounding camps around the country and the increasing realization that the existing infrastructure simply cannot cope with the huge refugee numbers. It also follows the worsening toll on migrants’ health after the withdrawal on Wednesday of aid agencies from camps in Greece to protest the recent EU-Turkey deal – which was activated last Sunday – to stem refugee inflows to Europe, which, they say, contravenes international law.

At the same time, the spokesman of the coordinating committee for refugees, Giorgos Kyritsis, said legislation facilitating the implementation of the EU deal will be tabled in Parliament on Wednesday. The government also said it will further empower the Immigration Policy Ministry to deal with increased obligations implicit in the deal, while temporary staff will also be enlisted. Kyritsis also announced the creation of a monitoring mechanism under the general secretary of the Defense Ministry, Yiannis Tafyllis. The government’s immediate priority, Kyritsis said, will be to provide relief to the sprawling and overcrowded border camp of Idomeni in northern Greece. He added that transport means will be made available over the next few days to transfer refugees to other centers affording more humane conditions.

The mayor of the nearby town of Paionia, Christos Goudenoudis, is calling for the camp’s immediate evacuation as the local community, he said, is feeling increasingly insecure as crime in the area has proliferated. Meanwhile the latest figures suggest a marked decrease in refugee flows into the country over the last few days, while none arrived Thursday – for the first time since the deal between the European Union and Turkey was struck. Authorities, however, have attributed this mostly to bad weather. On Tuesday, inflows were limited to 260 – a significant decrease from the several thousand a couple of weeks ago.

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