Aug 122019
 


Samuel Peploe Paris-plage 1907

 

Jeffrey Epstein’s Trail Of Bankruptcy And Ruined Lives (WaPo)
Jeffrey Epstein Kept “Meticulously Detailed” Secret Diaries (Mirror)
New York Coroner ‘Confident’ Epstein’s Death Was Suicide (R.)
Lawyers Say Epstein Victims To Sue Financier’s Estate This Week (R.)
Hong Kong Airport Cancels All Outgoing Flights Over Protests (BBC)
Hong Kong Protests: Brutal Undercover Police Tactics Spark Outcry (G.)
Britons Have Spent £4bn Stockpiling Goods In Case Of No-Deal Brexit (PA)
The Biggest Migration Since the Barbarian Invasions of Rome (Casey)
Assange’s Lawyer Pleads With Australians To Help Bring Him Home (TND)
Ai Weiwei On Leaving Berlin: ‘Germany Is Not An Open Society’ (Local.de)

 

 

Not a great article, but it does add something interesting to the picture: the image of Epstein as an ordinary swindler, albeit on a large scale (Ponzi). His victims are not only the underage girls.

Jeffrey Epstein’s Trail Of Bankruptcy And Ruined Lives (WaPo)

The story of Epstein’s first great escape is a tale of financial wizardry and brazen criminality, in which hundreds of thousands of Americans lost their retirement money, their life’s savings, on an investment intended to enrich only its creators. “That money would have been my real retirement,” said Veriena Braune, a 91-year-old retired teacher in Granbury, Texas, who invested all of her savings – $112,000 – in bonds that a young Epstein sold for his partner, Steven Hoffenberg. She lost every penny of the money. “Somebody should know: that Epstein did a number on a little teacher in Texas,” Ms Braune said.

Mr Hoffenberg, who headed up the investment scheme and spent 18 years in prison because of it, said in an interview with The Washington Post this week that Epstein was “the architect of the scam.” Federal prosecutors agreed. Yet Epstein was never charged. His name, initially included in prosecutors’ descriptions of the scheme, quickly vanished from the record. “I thought Jeffrey was the best hustler on two feet,” Mr Hoffenberg said. “Talent, charisma, genius, criminal mastermind. We had a thing that could make a lot of money. We called it Ponzi.” Mr Hoffenberg pleaded guilty in 1995 to mail fraud, obstruction of justice and tax evasion in two scams – one designed to misuse the assets of two Illinois insurance companies and the other fleecing more than $460 million from about 200,000 investors who bought notes and bonds from Mr Hoffenberg’s Towers Financial Corp.

[..] Sometimes, the machinations went very wrong. The money Towers used to try to buy control of Emery Air Freight was lost when Emery’s stock price plummeted. By 1993, prosecutors in Illinois and New York who had spent years investigating Mr Hoffenberg’s companies were ready to spell out their findings. In front of a grand jury in Chicago, federal prosecutor Edward Kohler walked Mr Hoffenberg, who had just agreed to cooperate with the government, through the design of the scam. In the narrative Mr Kohler laid out, Epstein was the technical wizard who kept the money moving around to support Mr Hoffenberg’s various schemes. Over and over, Mr Kohler asked Mr Hoffenberg whether Epstein had designed Towers’ scams.

Mr Hoffenberg affirmed the prosecutor’s story at every turn. “Jeffrey Epstein was the person in charge of the transactions,” Mr Hoffenberg said. “Epstein was trying to manipulate the price of the stock?” Mr Kohler asked. “Yes,” Mr Hoffenberg replied. “You didn’t object to that, sir?” “No,” Mr Hoffenberg said. That was in November 1993. Three months later, Epstein’s name disappeared from the case. In court hearings, FBI reports and affidavits throughout 1994 and 1995, prosecutors and FBI agents referred to Hoffenberg’s “co-conspirators,” “confederates” and “others.” A review of court files finds no further reference to Epstein as the case moved towards a conclusion that convicted Mr Hoffenberg and sent him to prison for 18 years.

Read more …

Prince Andrew under pressure.

Jeffrey Epstein Kept “Meticulously Detailed” Secret Diaries (Mirror)

Sources revealed Epstein kept a diary detailing his friendships with powerful associates – including Andrew and socialite Ghislaine Maxwell – as an “insurance policy”. Epstein’s diary will be a source of great anxiety to her and the other senior royals. Its existence emerged as lawyers for the victims look to obtain a statement from the Prince as part of ongoing investigations by various US law enforcement authorities. Despite Epstein’s death, government prosecutors have vowed to continue their enquiries, indicating they will pursue all those involved in the billionaire’s offending. US Attorney Geoffrey Berman said: “To those brave young women who have already come forward and to the many others who have yet to do so, let me reiterate that we remain committed to standing for you.”

And yesterday, lawyer Jack Scarola, who represents scores of victims, told the Mirror his clients “will not rest” in their fight for justice. It comes four years after an attempt to ask Andrew to testify under oath about his time with Epstein failed. Following the billionaire’s jail-cell death, it was claimed Epstein’s associates were “breathing a huge sigh of relief”. Now, as questions are being asked about whether the 66-year-old took his own life or was killed to silence him, the pervert’s secrets are set to spark panic among his powerful circle of friends, including Donald Trump and Bill Clinton. A source revealed: “All Jeff ever had he bought, including his friends. “He used his wealth to buy buddies and then bestow his money on those he courted.

“Jeff knew his relationships with the rich and famous brought him protection. “He kept a diary in meticulous detail in case he ever needed it. “One former congressman said there are a lot of people ‘breathing a huge sigh of relief’ now Jeff is dead. “They should hold their breath for a long time to come. It ain’t over.”

Read more …

Meaningless.

New York Coroner ‘Confident’ Epstein’s Death Was Suicide (R.)

New York City’s chief medical examiner is confident Jeffrey Epstein died by hanging himself in the jail cell where he was being held without bail on sex-trafficking charges, but is awaiting more information before releasing her determination, the New York Times reported on Sunday, citing a city official. An autopsy was performed earlier in the day on the disgraced financier found unresponsive on Saturday in a New York City jail, chief medical examiner Dr. Barbara Sampson said. A private pathologist observed the autopsy on behalf of Epstein’s representatives, which she called “routine practice.”


A determination on the cause of death “is pending further information at this time,” Sampson said in a statement. The suspicion in Epstein’s death was hanging, said a city official not authorized to speak on the record. The Times did not say why it could not identify the source of information on the medical examiner’s likely determination of the cause of death. Epstein, 66, was not on suicide watch at the time in his cell in the Special Housing Unit of the Metropolitan Correctional Center (MCC), a source said. Epstein, a well-connected money manager, was found hanging by his neck, according to the source, who was not authorized to speak on the record.

Read more …

“The “Child Victims Act,” which takes effect on Aug. 14, gives people a year to sue over allegations of sexual abuse, regardless of when the alleged acts occurred.”

Lawyers Say Epstein Victims To Sue Financier’s Estate This Week (R.)

Lawyers for several women who say they were sexually abused by disgraced financier Jeffrey Epstein plan to file lawsuits this week against his estate following his apparent suicide in a New York jail cell. Los Angeles attorney Lisa Bloom, who represents two women, told Reuters “we intend to promptly file those civil claims” having held off suing while federal prosecutors pursued sex trafficking charges against Epstein. New York lawyer Roberta Kaplan said she hopes to file on Wednesday on behalf of a client to take advantage of a new New York State law which makes it possible to pursue decades-old claims of abuse.


The “Child Victims Act,” which takes effect on Aug. 14, gives people a year to sue over allegations of sexual abuse, regardless of when the alleged acts occurred. Kaplan will sue on behalf of a woman described in the indictment against Epstein as a minor victim. The unidentified woman was recruited to engage in sex acts with Epstein around 2002 and paid hundreds of dollars for each encounter with the financier, according to the indictment. She was 14 when it happened, Kaplan said. [..] Epstein’s death is likely to “unleash an avalanche of civil suits against his estate,” said New York attorney Paul Callan, who is not involved with the case.

Read more …

“..one of the world’s busiest..”

Hong Kong Airport Cancels All Outgoing Flights Over Protests (BBC)

Hong Kong International Airport has cancelled departing flights, as anti-government protests in its main terminal continue for a fourth day. Thousands are gathered at the airport – which is one of the world’s busiest. In a statement, officials said operations had been “seriously disrupted” by the public assembly. Many of those protesting are critical of the actions of police, who on Sunday were caught on film firing tear gas and non-lethal ammunition at close range. Hong Kong’s mass demonstrations and unrest show no sign of abating, more than two months after they were sparked by a controversial extradition bill. In a statement on Monday, Hong Kong’s Airport Authority said they were cancelling all flights that were not yet checked in. They advised members of the public not to travel to the airport but said arrivals already heading into Hong Kong would be allowed to land.

Read more …

Looked ugly.

Hong Kong Protests: Brutal Undercover Police Tactics Spark Outcry (G.)

Rights groups and democracy activists have accused police in Hong Kong of using excessive force after teargas was fired into an enclosed subway station and officers posed as protesters before making arrests during an intense weekend of clashes. “Clashes between protesters and police over the weekend escalated to another level especially on the police side,” said Man-Kei Tam, director of Amnesty International Hong Kong. Tam cited video footage of police firing teargas into a subway station on Sunday night in Kwai Fong. It was not clear how many protesters were inside the station at the time, but it has been rare for officers to fire tear gas indoors. He also shared footage of police firing non-lethal projectiles at close range as protesters attempted to flee down a separate subway station escalator.

Tam questioned the need for such force in both cases as protesters appeared to be showing “no aggression” towards officers. “These are all very ugly things,” he said. Pro-democracy street protests in Hong Kong stretched into their 10th week on Monday with no sign of either side backing down. The police have also reported injuries among their ranks, including eye irritation from laser pointers and burns from a petrol bomb. Civil Rights Observer, a local rights group that sends observers to protests, said it had “very serious concerns” about police violence and had seen “very clear evidence to show the police are violating their guidelines”, according to spokesman Icarus Wong.

Wong said the group was particularly concerned by the use of undercover officers for the first time, who later turned on protesters on Sunday night. He said it was unclear if they may have acted as agitators before making mass arrests. During the weekend protests, website Hong Kong Free Press showed footage of one arrest that appeared to include officers dressing as protesters who injured a demonstrator pressed to the ground. The young man, who said his name was Chow Ka-lok and asked for a lawyer, was left with bleeding head wounds and a broken tooth.

Read more …

Otherwise, the economy would even look much worse.

Britons Have Spent £4bn Stockpiling Goods In Case Of No-Deal Brexit (PA)

Britons have spent £4bn stockpiling goods in preparation for a possible no-deal Brexit, new research suggests. One in five people are already hoarding food, drinks and medicine, spending an extra £380 each, according to a survey by the finance provider Premium Credit. The survey found that about 800,000 people have spent more than £1,000 building up stockpiles before the 31 October Brexit deadline. If the UK leaves with no deal, businesses predict there will be short-term supply problems, which the government says it is mitigating. Similar research in the weeks leading up to the original deadline for the UK to leave the EU found that about 17% of the population had spent some money building up supplies, with a total stockpile spend calculated at £4.6bn ahead of the 31 March deadline.


Of the people who are stockpiling, 74% of those surveyed said they had bought extra food, 50% bought medicines and 46% bought drinks. Brexit-related stockpiling is also hitting cashflow, according to the report, with companies taking out credit to cover the cost of insurance and other fixed costs. Adam Morghem of Premium Credit said: “The level of stockpiling by British businesses and households is well documented, but there has been little focus on the impact this has had on cashflow, which has been quite negative. “Interestingly, over the past three months we have seen an increase in clients looking to use premium finance to pay for their insurance, and we believe a key factor behind this is the impact of stockpiling on cashflows, forcing more businesses and households to spread the cost of their insurance. “Businesses should also check with their brokers to make sure their stockpiled goods are properly insured.”

Read more …

The Chinese move to Africa and the Africans move to Europe.

The Biggest Migration Since the Barbarian Invasions of Rome (Casey)

Africa is the only part of the world where the population is still growing and growing rapidly. Africa south of the Sahara was about 6% of the world’s population in the ’50s, now it’s about 16%. But by the turn of the century, it’s going to be 45%. Assuming there isn’t some kind of catastrophe. It’s not clear that the Africans can grow enough food for billions more people. In fact, if the West stops supporting the continent with capital and technology, it could be in for very tough times. [..] Few people realize how fast the population is growing, and things are changing in Africa. I ask knowledgeable people what they think the biggest cities in the world will be at the turn of the next century. They all guess cities in China or India.

But that’s not true. Eighty years from now, Lagos, Nigeria, will be the largest city in the world. It’s on track to have a population of more than 90 million. The world’s second biggest city will be Kinshasa in the Congo with about 80 million people. Dar es Salaam, Tanzania, will be the world’s third biggest city with a population of roughly 75 million people. It’s quite amazing. When I first visited Dar in the early ’80s, it was a quiet, exotic seaport with old tramp steamers in the harbor. Now all those people have cell phones, and they’re well aware of the fact that the standard of living is vastly higher in Europe and every other part of the world than in Africa. And they’re well aware of the fact that there are welfare benefits of all types if they can get to Europe.

[..] It’s a growing tidal wave. With the European population diminishing and the African population growing, you’re going to see Europe basically taken over by Africa in the next several generations.

Read more …

An article in Australia’s The New Daily about Jennifer Robinson’s efforts to wake up the country turns into yet another smear piece.

Assange’s Lawyer Pleads With Australians To Help Bring Him Home (TND)

Assange still has a support base in Australia, but it has dwindled in the years since he entered the embassy. Between sexual assault allegations, alleged connections to the Russian government and a failed tilt at electoral success with the WikiLeaks Party, Assange has become a divisive character. His supporters are desperately trying to separate his extradition to the US from the other storms blowing around him. Lead campaign adviser in Australia Greg Barns is asking Australians to put aside “what they think” about Assange. “At the end of the day we need to remember what is it he exposed, for which he’s been prosecuted. He revealed war crimes and he’s being punished for it,” he said.


“Irrespective of the DNC (Democratic National Committee) emails and what people think about the matters relating to Sweden, even if you don’t support Assange – you have to differentiate that from the US prosecuting him.” But Assange’s public image has suffered as debate has raged around his motives and connections. Some think he’s a neo-right activist, some a Russian agent, while others label him a leftist crusader. Ms Robinson says none of these labels matters. “If you take any of the publications since 2010, the principle of what they’ve done is the same. They publish in the public interest, irrespective of the politics. “The principle has not changed, whatever the politics. It’s about publishing in the public interest.”

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“This country doesn’t need me because it’s so self-centered.”

Ai Weiwei On Leaving Berlin: ‘Germany Is Not An Open Society’ (Local.de)

Ai Weiwei, the Chinese activist and artist, has lived in self-imposed exile in Berlin since 2015. But he plans to leave Germany because he believes it is too intolerant. In an interview with the German daily Welt published Friday, Ai said: “Germany is not an open society. It is a society that wants to be open, but above all it protects itself. German culture is so strong that it doesn’t really accept other ideas and arguments.” Ai, 61, added that there is “hardly any room for open debate”. The artist, who is an outspoken critic of China’s government, moved to Berlin in July 2015 after spending four years under house arrest in China. The artist said he had reported experiences of discrimination to authorities while living in Berlin, such as being thrown out of taxis.


However, the office investigating them had come to the conclusion the incidents involved “cultural differences” rather than discriminatory offences, he said. Ai added: “This sounds to me like the Chinese government justifying its violations of human rights with ‘cultural differences’ to the West. Ai also slammed German politicians and cultural institutions for not denouncing Chinese human rights violations. “My family and I enjoyed living here very much, but I am leaving Berlin,” he said. “This country doesn’t need me because it’s so self-centered.” The artist doesn’t yet know where he’ll move to with his family. “I don’t have a place I belong to because China has rejected me since I was born,” he said. “Those who know their destination are no longer refugees. I am a refugee.”

Read more …

 

 

 

 

 

Aug 102019
 


Pablo Picasso Man with ice cream cone 1938

 

My first thought after reading about Jeffrey Epstein’s so-called suicide is: let it go, watch a movie instead, or go out to dinner. But a suicide of someone under suicide watch is just too much. And then I understand NBC -oh wait, and Reuters too- said he wasn’t even on suicide watch anymore. A guy who allegedly tried to kill himself two weeks ago. But of course. Why should he be?

The FBI has announced an investigation, and so has Bill Barr’s DOJ. Problem is, there are so many people with strong connections to both FBI and DOJ that these investigations are as likely to bury the truth as they are to reveal it. Because this ceased being about Epstein the very moment he was apprehended at Teterboro Airport in New Jersey July 6.

It became about Bill Clinton, Donald Trump, Alan Dershowitz, Ehud Barak, and god knows who else. It wasn’t about Jeffrey Epstein anymore, it was about his ‘friends’. It was also about Ghislaine Maxwell, the daughter and heiress of media tycoon and Mossad asset Robert Maxwell, another ‘victim’ of an apparent suicide two decades ago.

Ghislaine who still walks around free, who hasn’t been charged with a thing, after having been credibly and repeatedly accused of procuring at least dozens of underage girls for Epstein and his friends.

It’s pretty safe to say that in the highest, re: richest, circles of our societies, this is what goes on. A lot. Presidents, prime ministers, corporate tycoons, they were/are in Epstein’s black book, and it makes no difference whether they succeed in making that book disappear. We just got another glance at their world.

Sociopaths and psychopaths are the shit that floats to the top of our societies. Because that’s where they can do most damage. Because that’s where they find the power their distorted minds crave more than anything.

Jeffrey Epstein to my knowledge never ordered bombing campaigns that killed 1000s of people in Iraq, Syria, Afghanistan. But some of the people he hung out with, and provided young girls and boys for, did.

We can only hope that Bill Barr and Donald Trump are going to be serious about finding out everything about Epstein’s world. I understand that the warrant on his Manhattan mansion stands, and now that he’s gone, there’s no-one left to fight it, so everything on the premises is fair game, whoever is mentioned in all the files, videos, books etc.

But I can’t say I’m very hopeful. For instance, it appears overly obvious that Prince Andrew plays a very dark role in the whole Epstein play, but what are the odds he’ll be arrested for it? I would venture that the odds MI6 murdered Epstein are much higher. But that’s just me, and I’m not a betting man.

 

Epstein was arrested at Teterboro on July 6. I wrote the piece linked below on July 19, three weeks ago to the day. His first ‘suicide attempt’ was two weeks ago. When he ‘killed himself’ today he was allegedly no longer on suicide watch.

What did George W. Bush say again about ‘fool me twice’? “I know it’s in Texas, probably in Tennessee that says, ‘Fool me once, shame on … shame on you. Fool me… You can’t get fooled again!'”

And wait a minute, who’s going to get all of Epstein’s money? Here’s me on July 19:

 

How Long is Jeffrey Epstein For This World?

There are three main threats to Jeffrey Epstein’s life (or four, if you include his victims).

No. 1 is his fellow inmates in the Manhattan MCC. He’ll be in very strict isolation, because inmates and pedophilia is a very explosive combination. So isolation, but that’s never 100%. And Judge Berman yesterday ordered him in jail until his trial(s), instead of in his $77 million Manhattan mansion not far from that same prison, so he’ll be there a while; that trial could take a very long time to happen, even years. All the more chance for an inmate to make an easy $1000 by offing him.

The no. 2 threat is Epstein himself. Berman’s decision means he’s very unlikely to ever get out again. Chances of him being declared innocent are as close to zero as as anything Kelvin. So why would he want to continue to live? Perhaps his lawyers try and tell him he’s always got a shot, and there’s always a next court date, but he doesn’t strike me as fully delusional. I could be wrong, sure, about much of all this, but I don’t think so.

The no. 3 threat is, obviously, the people he might “sing” about. And that’s an litany of the world’s who’s who. No doubt the FBI may already have their IDs and photos and what-not, but why chance it when you can take down the -potential- crown witness?

 

[..] …Fox, also from July 18, because it targets Prince Andrew. Is MI6 going to be able to muffle away the obviously very strong and long-term connection between Epstein and Andrew? I’m thinking they’d probably have to get those 2,000 pages re-sealed. Or, you know, burned down. Nuked. To summarize my thoughts on this, and the reason I started writing this, I can’t see Epstein living much longer. There are too many people who would rather see him dead, including perhaps himself. And there are very few people who want him to get into lengthy talks with prosecutors who are actually looking for the truth.

Now of course we must wonder if any prosecutor wants that truth. Alex Acosta left his US government job because “Epstein is intelligence” was not enough to let him keep his job. And if we can believe some of the stories about the CIA, the State Dept and Mossad being linked to Epstein (and we got worse than that), it looks like he’s just got to go. Unless someone, or some party involved, has a reason to protect him against all odds. If only to handicap some other people.

 

 

 

 

Sep 262018
 
 September 26, 2018  Posted by at 9:14 am Finance Tagged with: , , , , , , , , , , , ,  5 Responses »


Pablo Picasso Five women 1907

 

Europe, Russia And China Join Forces To Dodge Iran Sanctions (CNBC)
Europe Unveils “Special Purpose Vehicle” To Bypass SWIFT (ZH)
Fed Likely To Raise Rates, Possibly End ‘Accommodative’ Policy Era (R.)
Free-Riding Investors Set up Markets for a Major Collapse (Rickards)
Corbyn Vows To End ‘Greed-is-Good’ Capitalism In UK (G.)
Why Corbyn Is Promising A “Green Jobs Revolution” (NS)
Brexit Agreement Could Come In October – Merkel (CNBC)
1000s Told To Flee As Florence-Triggered Floods Wash Into South Carolina (R.)
Global Waste Could Increase By 70% By 2050 – World Bank (WEF)
The Man Who Beat Monsanto: ‘They Have To Pay For Not Being Honest’ (G.)
Monsanto’s Glyphosate Linked To Global Decline In Honey Bees (ZH)
IRC Warns Of Mental Health Crisis On Lesbos As Greece Moves Asylum Seekers (R.)
Ending Decades Of Doubt, ‘Biggest Bird’ Dispute Put To Nest (AFP)

 

 

Not much on the Kavanaugh front right now, other than the same voices saying more of the same. We don’t expect that to last through the day today. We expect mayhem. But first, some economy:

Europe, Russia And China Join Forces To Dodge Iran Sanctions (CNBC)

In the latest sign of the growing divide between Washington and its allies, the European Union’s foreign policy chief announced Monday that the bloc was creating a new payment mechanism to allow countries to transact with Iran while avoiding U.S. sanctions. Called the “special purpose vehicle” (SPV), this mechanism would aim to “assist and reassure economic operators pursuing legitimate business with Iran,” according to a joint statement released by the remaining members of the Iran nuclear deal — France, Britain, Germany, Russia and China.

“This will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue to trade with Iran in accordance with EU law and could be open to other partners in the world,” Federica Mogherini, the EU’s high representative for foreign affairs, told the UN General Assembly on Tuesday. The technical details will be worked on by experts in future meetings, she said. American sanctions have already been imposed on a number of Iran’s industries — including aviation, metals, automotives and its ability to trade gold and acquire dollars — as a result of President Donald Trump’s withdrawal from the 2015 nuclear deal. On November 4, a second round of penalties will fall on Iran’s massive oil sector, which accounts for 70 percent of the country’s exports. Iran is the world’s seventh-largest oil producer.

Read more …

More detail on the above.

Europe Unveils “Special Purpose Vehicle” To Bypass SWIFT (ZH)

Germany, France and the U.K. would set up a multinational state-backed financial intermediary that would deal with companies interested in Iran transactions and with Iranian counter-parties. Such transactions, presumably in euros and pounds sterling, would not be transparent to American authorities. European companies dealing with the state-owned intermediary technically might not even be in violation of the U.S. sanctions as currently written. And, in a potentially massive development, the system would be likely be open to Russia and China as well as it would enable the world’s economies to trade with each other, fully independent of SWIFT.

Europe would thus provide an infrastructure for legal, secure sanctions-busting — and a guarantee that the transactions would not be reported to American regulators. That said, Washington would not be without recourse, although at that point, all the U.S. could do is sanction the participating countries’ central banks or SWIFT for facilitating the transactions (if the special purpose vehicle uses SWIFT, rather than ad hoc messaging).

That, Hellman and Batmanghelidj wrote, would be self-defeating: “There are two possible outcomes if these institutions proceed to work with Iran despite U.S. secondary sanctions. Either U.S. authorities fail to take enforcement action given the massive consequences for the operations and integrity of the American financial system, serving to “defang” the enforcement threats and reduce the risk of European self-sanctioning on the basis of fear, or U.S. authorities take such an enforcement action, a step that would only serve to accelerate European efforts to create a defensible banking architecture that goes beyond the Iran issue alone.”

Europe, naturally, needs a “neutral” pretext to implement this SPV, and that would be Brussels’ desire to continue transacting with Iran: “We are not backing down [on the Iran nuclear agreement],” said a European diplomat. He said the speeches of European leaders at a Security Council meeting Mr. Trump is hosting on Wednesday on nonproliferation, including Iran, will reflect the Monday night statement. Additionally, as basis for the potentially revolutionary development, the participants of the 2015 nuclear deal, formally known as the Joint Comprehensive Plan of Action or JCPOA, “underlined their determination to protect the freedom of their economic operators to pursue legitimate business with Iran.”

Read more …

There’s one thing only that keeps the wheeels turning: cheap debt. They’re about to take that away. I added the graph.

Fed Likely To Raise Rates, Possibly End ‘Accommodative’ Policy Era (R.)

With the Federal Reserve widely expected to raise interest rates on Wednesday, financial markets are focused on whether signs of an acceleration in U.S. economic growth will prompt the central bank to ramp up the pace of monetary policy tightening. This week’s two-day policy meeting could mark the formal end of the “accommodative” level of rates the Fed has used to support the American economy since the onset of the 2007-2009 recession. The Fed’s current policy statement has included that description of loose policy as a staple element in recent years, though officials recently have described it as out of date and likely to be removed, either this week or in the near future.

The probability the Fed will raise its benchmark overnight lending rate by a quarter of a percentage point on Wednesday, in what would be its third hike this year, is nearly 95 percent, based on an analysis of fed fund futures contracts by CME Group. The larger question is whether the Fed reshapes its monetary policy outlook for the next few years to factor in stronger GDP growth or whether concerns about a possible global trade war or economic slowdown cause it to stick close to its current view.

Read more …

Jamie Dimon as a parasite.

Free-Riding Investors Set up Markets for a Major Collapse (Rickards)

The biggest free riders in the financial system are bank executives such as Jamie Dimon, the CEO of J.P. Morgan. Bank liabilities are guaranteed by the FDIC up to $250,000 per account. Liabilities in excess of that are implicitly guaranteed by the “too big to fail” policy of the Federal Reserve. The big banks can engage in swap and other derivative contracts “off the books” without providing adequate capital for the market risk involved. Interest rates were held near zero for years by the Fed to help the banks earn profits by not passing the benefits of low rates along to their borrowers. Put all of this (and more) together and it’s a recipe for billions of dollars in bank profits and huge paychecks and bonuses for the top executives like Dimon.

What is the executives’ contribution to the system? Nothing. They just sit there like parasites and collect the benefits while offering nothing in return. Given all of these federal subsidies to the banks, a trained pet could be CEO of J.P. Morgan and the profits would be the same. This is the essence of parasitic behavior. Yet there’s another parasite problem affecting markets that is harder to see and may be even more dangerous that the bank CEO free riders. This is the problem of “active” versus “passive” investors. An active investor is one who does original research and due diligence on her investments or who relies on an investment adviser or mutual fund that does its own research.

T he active investor makes bets, takes risks and is the lifeblood of price discovery in securities markets. The active investor may make money or lose money (usually it’s a bit of both) but in all cases earns her money by thoughtful investment. The active investor contributes to markets while trying to make money in them. A passive investor is a parasite. The passive investor simply buys an index fund, sits back and enjoys the show. Since markets mostly go up, the passive investor mostly makes money but contributes nothing to price discovery.

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That’ll be good for a whole lot more smear. The Telegraph runs a we ad right now that says: “We must ditch Chequers or be condemned to a crazed Corbynista takeover”. And a photo of Hitler accompanied by: “The Nazis were socialists”.

Corbyn Vows To End ‘Greed-is-Good’ Capitalism In UK (G.)

Jeremy Corbyn will on Wednesday attack the “greed-is-good” capitalism that he claims has resulted in large swaths of the UK being left behind, promising a raft of new policies including a “green jobs revolution” that will create 400,000 new positions. The Labour leader will attempt to reset the theme of the Labour conference which has so far been dominated by deep divisions over its Brexit stance and return to his core argument about the failure of the broken economic system. Corbyn will use his main conference speech to set out his plans to change the direction of the economy, following a week in which his shadow chancellor, John McDonnell, laid out a series of redistributive policies.

The Labour leader will say: “Ten years ago this month, the whole edifice of greed-is-good, deregulated financial capitalism, lauded for a generation as the only way to run a modern economy, came crashing to earth, with devastating consequences.” ”But instead of making essential changes to a broken economic system, the political and corporate establishment strained every sinew to bail out and prop up the system that led to the crash in the first place. “People in this country know – they showed that in June last year – that the old way of running things isn’t working any more. That’s why Labour is offering a radical plan to rebuild and transform Britain.” Corbyn will announce plans for a rollout of green technologies including 13,500 onshore and offshore wind turbines, solar panels on thousands of roofs and wide-scale home insulation.

Read more …

Well, he doesn’t hold back.

Why Corbyn Is Promising A “Green Jobs Revolution” (NS)

A Labour government would “kickstart a green jobs revolution” in a bid to radically overhaul the economy after Brexit, Jeremy Corbyn will say in a conference speech that implicitly criticises the last Labour government tomorrow. Laying out his party’s vision to reduce carbon emissions and create 400,000 new skilled jobs by 2030, the Labour leader will tell delegates in Liverpool that his government will return “skills and security to communities held back for too long” with a large-scale programme of investment in green infrastructure and training. Sources close to Corbyn have described the speech as a direct pitch to communities that voted for Brexit – “the millions of people who have been most directly affected by deindustrialisation and austerity” – and its policy platform as a bid to remedy to its root economic causes.

Corbyn will announce plans to reduce carbon emissions by 60 per cent by 2030, and to zero by 2050, through a large-scale programme of public sector investment and sweeping changes to planning regulations. A Labour government would seek to increase offshore wind power by seven times, double onshore wind, treble solar panel, and would launch a £12.8 billion home insulation programme. An independent panel of researchers said that the plans – which would involve both public and private sector investment – would create some 400,000 skilled jobs. Corbyn will describe the plans as a “radical plan we need to rebuild and transform Britain”, adding: “The old way of running things isn’t working anymore.”

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If May gives in enough, it could come later today.

Brexit Agreement Could Come In October – Merkel (CNBC)

German Chancellor Angela Merkel said Tuesday that a Brexit agreement between the European Union and the U.K. is possible in October, but it is not yet clear what the British government wants. Speaking at a conference in Germany, Merkel said the U.K. cannot choose to be part of the single market — the European common area where goods, services and people move freely — without respecting all its principles. The U.K. government wants to control the number of European citizens moving to the U.K. During a cabinet meeting Monday, Prime Minister Theresa May’s government agreed that EU workers should face the same immigration rules as non-EU citizens. Some have argued that restricting the number of low-skilled EU migrants will hurt the U.K. economy.

Merkel also said Tuesday that European businesses need clarity, which demands “hard work” from Brexit negotiators in the next six to eight weeks. There have been repeated comments from both sides of the English Channel that negotiations need to be intensified to reach a deal by no later than November. However, many analysts are sceptical that a Brexit agreement will be reached. “We have highlighted for some time that the risks of ‘no deal’ are appreciably high,” Dean Turner, economist at UBS Global Wealth Management, said in a note Tuesday morning. “We don’t believe that this will happen by design, as it is in neither sides’ interests to generate the kind of economic disruption that would likely ensue. But with every day that passes without progress, the risks grow that such an outcome could occur by accident.”

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Two weeks on…

1000s Told To Flee As Florence-Triggered Floods Wash Into South Carolina (R.)

Thousands of people in the Georgetown, South Carolina, area were urged to evacuate their homes on Tuesday as rainwater unleashed by Hurricane Florence surged down rivers, threatening to submerge some neighborhoods under 10 feet of water. Georgetown, which sits at the confluence of the Waccamaw, Great Pee Dee and Sampit rivers, was largely spared the initial fury of Florence, which came ashore on Sept. 14 as a Category 1 hurricane, killing 46 people in three states. But the port city of more than 9,000 stands in the path of what the National Weather Service has said could be significant flooding as water dumped by the storm system drains to the ocean.

“We are urging people to take this event seriously. We expect the flooding to be worse than Hurricane Matthew a couple years ago,” said Randy Akers, deputy public information officer for Georgetown County. “We always urge people to prepare for the worst and hope for the best.” Akers said between 6,000 and 8,000 people have been exhorted to leave, but it was not clear how many had done so as of Tuesday evening. He said the county lacked authority to mandate evacuations.

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They blame it on mismanagement. Not on producing the waste in the first place. World Bank.

Global Waste Could Increase By 70% By 2050 – World Bank (WEF)

Global waste could grow by 70 percent by 2050 as urbanisation and populations rise, said the World Bank on Thursday, with South Asia and Sub-Saharan Africa set to generate the biggest increase in rubbish. Countries could reap economic and environmental benefits by better collecting, recycling and disposing of trash, according to a report, which calculated that a third of the world’s waste is instead dumped openly, with no treatment. “We really need to pay attention to South Asia and Sub-Saharan Africa, as by 2050, South Asia’s waste will double, sub-Saharan Africa’s waste will triple,” said Silpa Kaza, World Bank urban development specialist and report lead author.

“If we don’t take any action it could have quite significant implications for health, productivity, environment, livelihoods,” she told the Thomson Reuters Foundation by phone from Belarus. The rise in rubbish will outstrip population growth, reaching 3.4 billion tons by 2050 from around 2 billion tons in 2016, according to the report. High-income countries produce a third of the world’s waste, despite having only 16 percent of world’s population, while a quarter comes from East Asia and the Pacific regions, it said. While more than a third of waste globally ends up in landfill, over 90 percent is dumped openly in lower income countries that often lack adequate disposal and treatment facilities, said the report.

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“This guy is dealing with the reality of his mortality..”

The Man Who Beat Monsanto: ‘They Have To Pay For Not Being Honest’ (G.)

Regardless of the outcome, Johnson v Monsanto was always going to be a newsworthy trial, because the judge allowed the cancer patient’s legal team to bring scientific arguments to the courtroom. The proceedings further shined a light on internal Monsanto emails over the years that Johnson’s attorneys said showed how the company had repeatedly rejected critical research and expert warnings. Some evidence suggested that Monsanto had also strategized plans to “ghostwrite” favorable research. Monsanto, which was bought by pharmaceutical giant Bayer earlier this year, has continued to argue that Roundup does not cause cancer and that critics are “cherrypicking” studies while ignoring research that showed its products were safe.

The jury disagreed. They ruled that Johnson also deserved $250m in punitive damages and $39.2m for losses. When the verdict was announced, Johnson said his body briefly went into a kind of shock. “I felt like all the fluids went out of my body and rushed back in,” he recalled. The jury’s unanimous decision said Monsanto’s products presented a “substantial danger” to people and the company failed to warn consumers of the risks. “They have been hiding for years and getting away with it,” Johnson said. “They have to pay the price for not being honest and putting people’s health at risk for the sake of making a profit.”

Prior to the verdict, Johnson said he had no expectations about the outcome. “I never really discussed winning or money or amounts with the legal guys,” he said, adding that he did fear the implications of a Monsanto win: “If we lose, the facts won’t keep coming out. That would be the worst part.” Pedram Esfandiary, one of Johnson’s lawyers, said he was consistently impressed with Johnson’s ability to remain optimistic and focused on exposing the facts and protecting others from Roundup hazards. “This guy is dealing with the reality of his mortality,” he said. “His life is on the line because of what happened … He was concerned about getting the truth out.”

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Time for a boycott. Demand labels that say whether glyphosate was used in crops.

Monsanto’s Glyphosate Linked To Global Decline In Honey Bees (ZH)

In recent times, US beekeepers have reported a massive loss of bees or CCD. Millions of bees mysteriously disappeared, leaving farms with fewer pollinators for crops. Officials have been baffled, and the media has been quite about the bee population collapse. Explanations for the phenomenon have included exposure to pesticides or antibiotics, habitat loss, and bacterial infections. The latest study now adds herbicides to the list as a possible contributing factor. “It’s not the only thing causing all these bee deaths, but it is definitely something people should worry about because glyphosate is used everywhere,” said Motta.

And that, researchers, believe, is evidence that glyphosate might be contributing to the collapse of honeybees around the world. The Western honeybee, the world’s premier pollinator species, has been in high demand for its services on fruit, nut, and vegetable farmers. Among the nuts, almond growers have the largest need for bee pollination. Bee pollination is worth $15 billion to the US farming industry.

Any sharp change in global bee populations could affect the beef and dairy industries. Bees pollinate clover, hay, and other forage crops. As the bee population dwindles, it increases the cost of feedstock. That forces inflation into beef and milk prices at the grocery store and ultimately hurts the American consumer. This could then lead to increased imports of produce from foreign countries where bee populations are healthy, further widening the trade deficit. Couple this with the current trade war and this particular “black swan” – or rather “black bee” – problem, may be just the tipping point that finally forces the US economy to catch down to the rest of the world.

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EU starts investigating abuse of funds. Been going on for years now. 30% of people have attempted suicide.

IRC Warns Of Mental Health Crisis On Lesbos As Greece Moves Asylum Seekers (R.)

Greece moved another 400 people from its biggest migrant camp on Tuesday as the International Rescue Committee (IRC) charity warned of a mental health emergency there with 30 percent of people having attempted suicide. The government, under pressure from aid groups and local authorities, has said it will transfer 2,000 people from Moria camp on Lesbos to the mainland by the end of the month. In a report published on Tuesday, the IRC said asylum-seekers in Moria, most of whom are Syrian, Iraqi and Afghan, were under “enormous mental strain”. Citing testimonials of patients who have visited its own clinic on the island, IRC said that in addition to the 30 percent of people who had attempted suicide about 60 percent had contemplated it.

“Several times I have attempted suicide,” it quoted Ahmad, a 35-year-old Iraqi single father of four children as saying. “The only reason I am glad I didn’t succeed is because of the children.” Asylum seekers were living in conditions that did not meet humanitarian standards, IRC said. Eighty-four people shared one shower and 72 shared one toilet. “The sewage system is so overwhelmed that raw sewage has been known to reach the mattresses where children sleep, and flows untreated into open drains and sewers,” IRC said. Moria, in a disused military base, now holds nearly three times as many people as it was designed to, according to government figures, forcing hundreds to spill over in tents in an olive grove.

Close to 900 people were moved between Sept. 10-20 and a another 1,000 will be transferred this week, Migration Minister Dimitris Vitsas said on Monday. Most are taken to facilities in northern Greece.

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Oh, to once have met one, just the once.

Ending Decades Of Doubt, ‘Biggest Bird’ Dispute Put To Nest (AFP)

[..] scientists said Wednesday they have finally solved the riddle of the world’s largest bird. For 60 million years the colossal, flightless elephant bird — Aepyornis maximus — stalked the savannah and rainforests of Madagascar until it was hunted to extinction around 1,000 years ago. In the 19th century, a new breed of buccaneering European zoologist obsessed over the creature, pillaging skeletons and fossilised eggs to prove they had discovered the biggest bird on Earth. But a study released Wednesday by British scientists suggests that one species of elephant bird was even larger than previously thought, with a specimen weighing an estimated 860 kilogrammes (1,895 pounds) — about the same as a fully grown giraffe.

“They would have towered over people,” James Hansford, lead author at the Zoological Society of London, told AFP. “They definitely couldn’t fly as they couldn’t have supported anywhere near their weight.” In the study, published in the journal Royal Society Open Science, Hanson examined elephant bird bones found around the world, feeding their dimensions into a machine-learned algorithm to create a spread of expected animal sizes. Until now, the largest-ever elephant bird was described in 1894 by the British scientist C.W. Andrews as Aepyornis titan — a larger species of Aepyornis maximus. But a French rival of Andrews dismissed the discovery of titan as just an outsized maximus specimen, and for decades the debate remained deadlocked.

Hanson said his research proved titan was indeed a different species. But he also found that its bones were so distinct from other elephant bird specimens that titan was in fact an entirely separate genus. Named Vorombe titan – Malagasy for “big bird” – the creature would have stood at least three metres (10 feet) tall, and had an average weight of 650 kilogrammes, making it the largest bird genus yet uncovered. “At the extreme extent we found one bone that really pushed the limits of what we now understand about bird size,” said Hanson, referring to the 860-kilogramme specimen. “And there were some that led up to that too, so it’s not an outlier — there was a range of masses that are extraordinarily large.”

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Aug 282018
 
 August 28, 2018  Posted by at 9:38 am Finance Tagged with: , , , , , , , , , , , , ,  17 Responses »


Vincent van Gogh Cypresses in starry night (reed pen) 1889

 

Meadows: FBI/DOJ Leaked To Press, Used Articles To Obtain FISA Warrants (ZH)
Lanny Davis Admits Being Source For CNN Trump Tower “Bombshell” (ZH)
Trump Announces US-Mexico Trade Deal, Setting Stage For Nafta Overhaul (G.)
Iran Says It Has Full Control Of Gulf And US Navy Does Not Belong There (R.)
Theresa May Says A No-Deal Brexit ‘Wouldn’t Be The End Of The World’ (G.)
Out In Left Field (Kunstler)
Skripals – When the BBC Hide the Truth (Craig Murray)
‘Criminal’ Roger Waters Blacklisted By Ukraine Over Russian Interviews (RT)
Greece Needs €4.7 Billion In Additional Tax Revenues To Reach Targets (K.)
Children Attempting Suicide At Greek Refugee Camp (BBC)
The Impending End Of Most Life On Earth (G.)

 

 

2nd special counsel, where are you?

Meadows: FBI/DOJ Leaked To Press, Used Articles To Obtain FISA Warrants (ZH)

Freedom Caucus Chairman Mark Meadows (R-NC) dropped a late-night bombshell on Monday suggesting there’s evidence that the FBI and DOJ rigged their own FISA spy warrants by leaking information to the press, then using the resultant articles to obtain court authorization to surveil targets. “We’ve learned NEW information suggesting our suspicions are true: FBI/DOJ have previously leaked info to the press, and then used those same press stories as a separate source to justify FISA’s,” tweeted Meadows. Until now, we’ve known that the creator of the so-called Steele Dossier, former UK spy Christopher Steele, leaked information directly to Yahoo! News journalist Michael Isikoff – whose article became a supporting piece of evidence in the FBI’s FISA warrant application and subsequent renewals for Trump adviser Carter Page.

So while we’ve known that Steele seeded Isikoff with information from his dubious dossier, and that the FBI then used both Steele’s dossier and Isikoff’s Steele-inspired article to game the FISA system, Rep. Mark Meadows now says that the FBI/DOJ directly leaked information to the press, which they then used for the same type of FISA scheme. Strong evidence was discovered in January suggesting that former FBI employee Lisa Page leaked privileged information to Devlin Barrett, formerly of the Wall Street Journal and now with the Washington Post. Whether any of Barrett’s reporting was subsequently used to obtain a FISA warrant is unknown.

Meanwhile, Rep. Meadows’s Monday night tweet comes hours before twice-demoted DOJ employee Bruce Ohr is set to give closed-door testimony to the House Oversight Committee. Ohr was caught lying about his involvement with opposition research firm Fusion GPS co-founder Glenn Simpson – who employed Steele. Ohr’s CIA-linked wife, Nellie, was also employed by Fusion as part of the firm’s anti-Trump efforts, and had ongoing communications with the ex-UK spy, Christopher Steele as well.

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Cohen’s lawyer is the best thing that happened to Trump in ages.

Lanny Davis Admits Being Source For CNN Trump Tower “Bombshell” (ZH)

On July 26th, CNN unleashed a “bombshell” report that Michael Cohen was claiming that candidate Trump knew in advance about the infamous 2016 Trump Tower meeting. Dropping this line in the middle of their story: “Contacted by CNN, one of Cohen’s attorneys, Lanny Davis, declined to comment.”Then, last week, amid the deafening euphoria of the ‘anti-Trump’-ers, Davis told Anderson Cooper: “I think the reporting of the story got mixed up in the course of a criminal investigation. We were not the source of the story.” Davis increasingly backed away from the story in recent days, telling the Washington Post that he is not certain if the claim is accurate, and that he could not independently corroborate it. Destroying CNN’s “bombshell” story, crushing the hopes of millions of ‘not my president’-ers.

As Buzzfeed notes, after Davis publicly backtracked from the claims, the New York Post and the Washington Post outed him as their confirming source and published apologies from Davis But, of course, CNN was giving up such a great story so easily (whether it’s true or fake news), and followed up anxiously by none other than Brian Stelter who gushed over Twitter in the face of Davis’ refutation of their entire story that: ” Re: CNN’s July 27 story about Cohen claiming that Trump knew in advance about the Trump Tower meeting: “We stand by our story, and are confident in our reporting of it.”” All of which brings up to date, safe in the knowledge that despite Davis’ denial that CNN’s story ever occurred, CNN has “a source” that confirmed it and that’s good enough for them.

BUT… Now, after all that pre-amble, double-talk, and utterly bullshit fake news reporting, Lanny Davis – who we perhaps need to remind readers once again is an extremely well-paid f**king lawyer and communications expert – has told Buzzfeed that he was the anonymous source in a July CNN story. Tonight, Davis told BuzzFeed News that he regrets both his role as an anonymous source and his subsequent denial of his own involvement. Davis told BuzzFeed News that he did, in fact, speak anonymously to CNN for its story, which cited “sources with knowledge” — meaning more than one person. “I made a mistake,” Davis said. Regarding his comments about a month later to Cooper, he added, “I did not mean to be cute.”

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Canada on hold.

Trump Announces US-Mexico Trade Deal, Setting Stage For Nafta Overhaul (G.)

Donald Trump has said he will strike a new trade deal with Mexico while ripping up the North American Free Trade Agreement (Nafta) and threatening a trade war with Canada. “I’ll be terminating the existing deal and going into this deal,” the US president told reporters in the Oval Office on Monday. “We’ll be starting negotiating with Canada relatively soon. They want to negotiate very badly.” He added: “One way or the other, we have a deal with Canada. It’ll either be a tariff on cars or it will be a negotiated deal. Frankly, a tariff on cars is a much easier way to go but perhaps the other would be much better for Canada.”

Trump also said it might be possible to make a deal involving all three countries, like the 24-year-old Nafta pact, but that separate bilateral agreements are also a possibility. However, any trade deal would have to first be approved by Congress, and time is running out. Mexico’s President Enrique Peña Nieto will soon leave office and there is no guarantee his successor, Andrés Manuel López Obrador, will agree to the same terms. Nafta reduced most trade barriers between the US, Mexico and Canada. But Trump and other critics say it encouraged US manufacturers to move south of the border to exploit low-wage Mexican labour.

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They have a point.

Iran Says It Has Full Control Of Gulf And US Navy Does Not Belong There (R.)

Iran has full control of the Gulf, and the U.S. Navy does not belong there, the head of the navy of Iran’s Revolutionary Guards, General Alireza Tangsiri, said on Monday, according to the Tasnim news agency. The remarks come at a time when Tehran has suggested that it could take military action in the Gulf to block oil exports of other regional countries in retaliation for U.S. sanctions intended to halt its oil sales. Washington maintains a fleet in the Gulf which protects oil shipping routes. Tangsiri said Iran had full control of both the Gulf itself and the Strait of Hormuz that leads into it. Closing off the strait would be the most direct way of blocking shipping.

“We can ensure the security of the Persian Gulf and there is no need for the presence of aliens like the U.S. and the countries whose home is not in here,” he said in the quote, which appeared in English translation on Tasnim. Tension between Iran and the United States has escalated since President Donald Trump pulled out of a 2015 nuclear deal between Iran and world powers in May and reimposed sanctions.

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Just the end of her.

Theresa May Says A No-Deal Brexit ‘Wouldn’t Be The End Of The World’ (G.)

Theresa May claimed that a no-deal Brexit “wouldn’t be the end of the world” as she sought to downplay a controversial warning made by Philip Hammond last week that it would cost £80bn in extra borrowing and inhibit long-term economic growth. The prime minister conceded that crashing out of the European Union without a deal “wouldn’t be a walk in the park” but went on to argue that the UK could make an economic success of the unprecedented situation if it proved impossible to negotiate a satisfactory divorce. Her comments were designed to distance herself from pessimistic Treasury forecasts highlighted by the chancellor at the end of last week, predictions that incensed the Tory right and led to renewed calls from hard Brexiters for Hammond’s dismissal.

Speaking to reporters as she began a three-day trip to Africa, May cited and endorsed remarks about the Brexit situation made last week by Roberto Azevêdo, the director general of the World Trade Organisation, to justify a gentle rebuke of the chancellor. The prime minister said: “Look at what the director general of the World Trade Organisation has said. He has said about the no-deal situation that it will not be a walk in the park, but it wouldn’t be the end of the world. “What the government is doing is putting in place the preparation such that if we are in that situation, we can make a success of it, just as we can make a success of a good deal.”

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Huber. Remember the name.

Out In Left Field (Kunstler)

With Russian “meddling” stalled in the dead letter office, The New York Times has apparently re-branded itself Floozie Central in its quixotic campaign to unseat the Golden Golem of Greatness by all means necessary. The Stormy Daniels affair, and its slime-trail of payoffs, is the slender thread that the Resistance hopes to hang Donald Trump on. The great legal minds of cable TV have been very busy trying to suss out which part of the $130,000 non-disclosure payoff might apply as a campaign financing violation. If Rudy Giuliani still had his wits about him, of course, he would claim that the money was just Ms. Daniel’s going rate for an overnight frolic amongst her legendary twin peaks, that is, a sex worker’s simple transaction fee.

Where does it say in the constitution that a president may not consort with tramps and hussies? It was hilarious to discover that Mr. Trump’s erstwhile personal lawyer, Michael Cohen, picked DC Swamp attorney and Clinton insider, Lanny Davis, to represent him in negotiations with Special Counsel Robert Mueller. It must be like the old days in the locker room of the Burning Tree Golf Club for Lanny and Bob. They go back at least to the days when the Clintons fended off accusations of issuing pardons to special friends for a $450,000 payoff on Bubba’s last day in office, January 19, 2001. And there must have been a reunion around 2010 on the Uranium One matter, in which a tidy $145-million from Russian Oligarch Central landed in the Clinton Foundation coffers after Madam Secretary Hillary signed onto a go-ahead with the U-1 deal.

Meanwhile, way out in Left Field — Salt Lake City, actually —a forgotten lone ranger named John W. Huber is ostensibly toiling away on a roster of allegations so far ignored by the Mueller team, namely the politicization of the FBI and the Department of Justice, and the actions taken deviously by senior employees there against Mr. Trump during and after the 2016 election. Mr. Huber was tapped to carry out this assignment by Attorney General Jeff Sessions late in 2017.

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BBC Newsnight correspondent Mark Urban met with Skripal multiple times in 2017.

Skripals – When the BBC Hide the Truth (Craig Murray)

On 8 July 2018 a lady named Kirsty Eccles asked what, in its enormous ramifications, historians may one day see as the most important Freedom of Information request ever made. The rest of this post requires extremely close and careful reading, and some thought, for you to understand that claim. “Dear British Broadcasting Corporation, 1: Why did BBC Newsnight correspondent Mark Urban keep secret from the licence payers that he had been having meetings with Sergei Skripal only last summer. 2: When did the BBC know this? 3: Please provide me with copies of all correspondence between yourselves and Mark Urban on the subject of Sergei Skripal. Yours faithfully, Kirsty Eccles

The ramifications of this little request are enormous as they cut right to the heart of the ramping up of the new Cold War, of the BBC’s propaganda collusion with the security services to that end, and of the concoction of fraudulent evidence in the Steele “dirty dossier”. This also of course casts a strong light on more plausible motives for an attack on the Skripals. Which is why the BBC point blank refused to answer Kirsty’s request, stating that it was subject to the Freedom of Information exemption for “Journalism”.

“The information you have requested is excluded from the Act because it is held for the purposes of ‘journalism, art or literature.’ The BBC is therefore not obliged to provide this information to you. Part VI of Schedule 1 to FOIA provides that information held by the BBC and the other public service broadcasters is only covered by the Act if it is held for ‘purposes other than those of journalism, art or literature”. The BBC is not required to supply information held for the purposes of creating the BBC’s output or information that supports and is closely associated with these creative activities.”

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Fun.

‘Criminal’ Roger Waters Blacklisted By Ukraine Over Russian Interviews (RT)

Pink Floyd founder Roger Waters has found himself blacklisted by being added to the Ukrainian database of national enemies, after statements to Russian media about Crimea and the conflict in Ukraine. Waters, 74, is wrapping up his US+Them European tour with concerts in St. Petersburg and Moscow this week and spoke with several Russian outlets about both music and his political activism. The rock musician has been an outspoken champion of the Palestinian cause and a critic of Western-backed rebels in Syria. On Monday, however, his name appeared in the “purgatory” database of Mirotvorets (Peacemaker), maintained by people connected with Ukraine’s security and intelligence services and listing alleged enemies of the state.

The site says “criminal” Waters is responsible of “anti-Ukrainian propaganda, attacks on the territorial integrity of Ukraine [and] participation in attempts to legalize the Russian annexation of Crimea.” As proof, the site lists links to two interviews Waters gave to Russian media outlets RIA and Izvestiya, and quotes specifically a statement about the city of Sevastopol being Russian and important to Russians. Waters called “laughable” the idea of blaming Russia for the conflict in Ukraine and said the blame rests with Victoria Nuland, the senior State Department official for Europe and Eurasia during the Obama administration. [..] Waters also expressed concern about the US leadership, which he said does not seem to recognize any agreements and does whatever it wants. Such a policy will eventually get everyone killed, the rock star told Izvestiya, in an interview published Monday.

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Already grossly overtaxed.

Greece Needs €4.7 Billion In Additional Tax Revenues To Reach Targets (K.)

The Greek government will have to collect additional tax revenues of 4.7 billion euros in the first post-bailout period of enhanced supervision (2018-2022) by its creditors, in order to achieve the agreed primary surpluses and record surpluses. These revenues are not expected to come only from economic growth but also from the imposition of new taxes, notably the trimming of the tax reduction from a current level of 1,900 euros to 1,250 euros – a change that will affect 6 million salaried employees and pensioners.

In 2018, direct taxes are projected to generate 17.4 billion euros, slightly less than the 17.7 billion of 2017. The reduction is entirely attributable to the fact that high tax rates result in an ever-increasing reduction of declared incomes. As for indirect taxes, they are expected to drop to 35.2 billion euros this year compared with 35.4 billion in 2017, while no significant change is expected for 2019, despite the projected economic growth. For 2020, tax revenues are expected to rise further when the government is seen reducing the tax-free threshold. It is indicative that revenues from direct taxes are seen rising to 18.40 billion euros that year, versus 17.43 billion in 2019.

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“..her family spend all day queuing for food at the camp and all night ready to run..”

Children Attempting Suicide At Greek Refugee Camp (BBC)

At Moria camp on the Greek island of Lesbos, there is deadly violence, overcrowding, appalling sanitary conditions and now a charity says children as young as 10 are attempting suicide. The Victoria Derbyshire programme has been given rare access inside. “We are always ready to escape, 24 hours a day we have our children ready,” says Sara Khan, originally from Afghanistan. “The violence means our little ones don’t get to sleep.” Sara explains that her family spend all day queuing for food at the camp and all night ready to run – in fear of the fights that break out constantly. Conditions are so appalling that charities have actually left in protest.

The place smells of raw sewage, and there are around 70 people per toilet, according to medical charity Medecins Sans Frontieres (MSF). Some people live in mobile cabins, but rammed in-between them all are tents and tarpaulin sheets – homes for those who cannot obtain any official living space. The camp is also now sprawling into surrounding countryside. One tent houses 17 people – four families under one canvas. MSF says there are currently more than 8,000 people crammed into Moria camp, which was supposed to house 3,000. [..] The camp opened in 2015 and was initially designed as a transit post for people to stay for a matter of days – but some have been here for years.

It is controlled by the Greek government, and the overcrowding is because Greece is enforcing the EU’s “containment” policy, keeping people on the island rather than transferring them to the Greek mainland. It is part of the EU-Turkey deal which aims to return thousands of refugees to Turkey, and it has been in force since March 2016. From then to July 2018, according to EU figures, 71,645 new refugees arrived in Greece by sea and only 2,224 have been returned to Turkey. George Matthaiou, a Greek government press representative on Moria, concedes conditions are terrible, but blames the EU rather than Greece. “We don’t have the money. You know the situation of Greece, economically,” he says. “I want to help but I can do nothing, because the European Union closed the borders.”

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“I’m not going to write anymore because there’s nothing more that can be said..”

The Impending End Of Most Life On Earth (G.)

We’re doomed,” says Mayer Hillman with such a beaming smile that it takes a moment for the words to sink in. “The outcome is death, and it’s the end of most life on the planet because we’re so dependent on the burning of fossil fuels. There are no means of reversing the process which is melting the polar ice caps. And very few appear to be prepared to say so.” Hillman, an 86-year-old social scientist and senior fellow emeritus of the Policy Studies Institute, does say so. His bleak forecast of the consequence of runaway climate change, he says without fanfare, is his “last will and testament”. His last intervention in public life. “I’m not going to write anymore because there’s nothing more that can be said,” he says when I first hear him speak to a stunned audience at the University of East Anglia late last year.

From Malthus to the Millennium Bug, apocalyptic thinking has a poor track record. But when it issues from Hillman, it may be worth paying attention. Over nearly 60 years, his research has used factual data to challenge policymakers’ conventional wisdom. In 1972, he criticised out-of-town shopping centres more than 20 years before the government changed planning rules to stop their spread. In 1980, he recommended halting the closure of branch line railways – only now are some closed lines reopening. In 1984, he proposed energy ratings for houses – finally adopted as government policy in 2007. And, more than 40 years ago, he presciently challenged society’s pursuit of economic growth.

[..] In 1971, 80% of British seven- and eight-year-old children went to school on their own; today it’s virtually unthinkable that a seven-year-old would walk to school without an adult. As Hillman has pointed out, we’ve removed children from danger rather than removing danger from children – and filled roads with polluting cars on school runs. He calculated that escorting children took 900m adult hours in 1990, costing the economy £20bn each year. It will be even more expensive today.

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Aug 312017
 


Prohibition sale June 24 1920

 

Hurricane Harvey the Costliest Natural Disaster in US History (H.)
“No Way To Prevent Imminent Explosion” At Texas Chemical Plant (ZH)
Texans To Be Hit With New Insurance Law (Ind.)
A Decade of G7 Central Bank Collusion – And Counting… (Nomi Prins)
It’s Time For Your Reminder That Most Commodities Are Priced In US Dollars (BI)
A Universal Basic Income Would Grow The Economy (Vox)
The Promise of Fiscal Money (Varoufakis)
America and China’s Codependency Trap (Stephen Roach)
Financial Firms Fear Turmoil Over Fraught US Debt Ceiling Talks (R.)
Weird Things Are Happening With Gold (Rickards)
‘More Europe’ Won’t Solve Europe’s Fiscal Quandary (BBG)
Victory For Assad Increasingly Likely As World Loses Interest In Syria (G.)
‘Our Society Is Broken’: Canada’s First Nations Suicide Epidemic (G.)

 

 

$160 billion and counting.

Hurricane Harvey the Costliest Natural Disaster in US History (H.)

Hurricane Harvey is predicted to be the costliest natural disaster in the history of the U.S., with a damage cost exceeding Hurricanes Sandy and Katrina. AccuWeather predicts that the damage cost will hit $160 billion. AccuWeather, a private weather firm, notes that the storm’s cost represents 0.8% of the national GDP, which is now at $19 trillion. “Business leaders and the Federal Reserve, major banks, insurance companies, etc. should begin to factor in the negative impact this catastrophe will have on business, corporate earnings and employment. The disaster is just beginning in certain areas,” AccuWeather founder Dr. Joel N. Myers said in a statement.

“Parts of Houston, the United States’ fourth largest city will be uninhabitable for weeks and possibly months due to water damage, mold, disease-ridden water and all that will follow this 1,000-year flood.” Before Harvey, the costliest hurricane to hit the U.S. was Hurricane Katrina, which caused $108 billion in damage along the Gulf Coast in 2005. The second-costliest was Hurricane Sandy, which caused $75 billion in damage in 2012. Hurricane Ike, the last storm to make landfall in Texas before Harvey, caused $37.5 billion in damage in 2008. [..] The Associated Press reports that 80% of Harvey’s victims do not have flood insurance. Thousands of families will have to take on more debt or spend much more to fix their homes. Others will sell their property to move out.

Robert Hunter, director of insurance at the Consumer Federation of America, estimated that flood damage alone cost at least $35 billion. Hunter explained to the AP that if you don’t have flood insurance, you can apply for federal disaster benefits. However, these are low interest loans that will add more debt. Homeowners insurance covers water damage caused by wind damage, but not if the water comes through the floor or walls, the AP explains. “Homeowners with water damage can get paid through their homeowners insurance but only if wind blows out a window or sends a roof aloft first, allowing the water in,” the AP notes. “If the water rushes through the floorboard or walls, you’re not covered.”

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There have been scores of chemicals released into the air already in the area.

“No Way To Prevent Imminent Explosion” At Texas Chemical Plant (ZH)

[..] in a potentially disastrous outcome from the Harvey flooding, a chemical plant in Crosby, Texas belonging to French industrial giant Arkema, has announced it is evacuating workers due to the risk of an explosion, after primary power was knocked out and flooding swamped its backup generators. The French company said the situation at the plant “has become serious” and said that it is working with the Department of Homeland Security and the State of Texas to set up a command post in a suitable location near our site. The plant, which produces explosive organic peroxides and ammonia, was hit by more than 40 inches of rain and has been heavily flooded, running without electricity since Sunday. The plant was closed since Friday but has had a skeleton staff of about a dozen in place.

Following the flood surge, the plant’s back-up generators also failed. The threat emerged once the company could no longer maintain refrigeration for chemicals located on site, which have to be stored at low temperatures. The plant lost cooling when backup generators were flooded and then workers transferred products from the warehouses into diesel-powered refrigerated containers. On Tuesday afternoon, the company released a statement which admitted that “refrigeration on some of our back-up product storage containers has been compromised due to extremely high water, which is unprecedented in the Crosby area. We are monitoring the temperature of each refrigeration container remotely.” It then warned that “while we do not believe there is any imminent danger, the potential for a chemical reaction leading to a fire and/or explosion within the site confines is real.”

One day later, and with the torrential rains finally over, has the situation at the giant peroxide chemical plant stabilized? Unfortunately, according to Reuters, the answer is no. Speaking to reporters on Wednesday afternoon, Richard Rowe, the chief executive of Arkema’s American operations said that “the company has no way of preventing chemicals from catching fire or exploding at its heavily flooded plant.” Rowe added that the company now expects chemicals on site to catch fire or explode within the next six days. Since the plant remains flooded by about six feet of water, “the company has no way to prevent” this worst-case outcome. Anticipating the worst, the company earlier evacuated all remaining workers, while Harris County ordered the evacuation of residents in a 1.5-mile radius of the plant that makes organic chemicals.

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Insult. Injury.

Texans To Be Hit With New Insurance Law (Ind.)

The embattled populations of southeastern Texas, may soon encounter a new obstacle in their quests to rebuild their lives after Harvey when a new state insurance law that makes it harder for consumers to receive full claims goes into effect Friday. The new law decreases the chances that an insurance company will be forced to pay claim delay penalties and plaintiff attorneys’ fees related to weather-involved claims — a protection that may discourage struggling households from pursuing legal action even if they think the insurance companies are offering less of a payout than they should. Under the new regulations, insurance companies will enjoy greater freedoms to push back on insurance claims, and the first wave of such claimants are likely to be coming from areas impacted by Harvey.

Residents reeling from Harvey now have until just Friday to assess the damages to their homes that may still be under water, and to notify their insurance company of nay damages if they want to avoid navigating that new law. After Friday, new legal restrictions will be in place that make things more difficult for consumers, and interest rates imposed on insurance companies to deter late payments will be cut nearly in half. “Without this law, and as the law currently is until Friday, I think insurance companies would be more responsive to claims,” Kir Pittard, a Dallas attorney, wrote on Facebook of the new law. “After Friday, there won’t be the incentive because the penalty for delays have been reduced.” To put it bluntly, a lot of residents in the impact area of Harvey may face a long battle ahead to replace the roofs torn off their homes from high winds, activists say.

“Insurance companies already had a lot of power, and the bill gives them a lot more power. As we know, too often insurance companies wrongfully withhold payments, they delay payments, they deny claims,” Ware Wendell, the executive director of consumer watchdog group Texas Watch, told The Independent. “So, we’re very concerned that people are going to have blue tarps on their homes instead of roofs.”

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Nomi sees central banks the same way I do.

A Decade of G7 Central Bank Collusion – And Counting… (Nomi Prins)

Since late 2007, the Federal Reserve has embarked on grand-scale collusion with other G-7 central banks to manufacture a massive amount of money. The scope and degree of this collusion are historically unprecedented and by admission of the perpetrators, unconventional in approach, and – depending on the speech – ineffective. Central bank efforts to provide liquidity to the private banking system have been delivered amidst a plethora of grandiose phrases like “unlimited” and “by all means necessary.” Central bankers have played a game with no defined goalposts, no clock rundown, no max scores, and no true end in sight. At the Fed’s instigation, central bankers built policy on the fly. Their science experiment morphed into something even Dr. Frankenstein couldn’t have imagined.

Confidence in the Fed and the U.S. dollar (as well as in other major central banks globally) has dropped considerably, even as this exercise remains in motion, and even though central bankers have tactiltly admitted that their money creation scheme was largely a bust, though not in any one official statement. On July 31, 2017, Stanley Fischer, vice chairman of the Fed, delivered a speech in Rio de Janeiro, Brazil. There, he addressed the phenomenon of low interest rates worldwide. Fischer admitted that “the effects of quantitative easing in the United States and abroad” are suppressing rates. He also said there was “a heightened demand for safe assets affecting yields on advanced-economy government securities.” (Actually, there’s been heighted demand for junky assets, as well, which has manifested in a bi-polarity of saver vs. speculator preference.)

What Fischer meant was that investors are realizing that low rates since 2008 haven’t fueled real growth, just asset bubbles. Remember, Fischer is the Fed’s No. 2 man. He was also a professor to former Fed Chair Ben Bernanke and current European Central Bank President Mario Draghi. Both have considered him to be a major influence in their economic outlook. The “Big Three” central banks – the Fed, the European Central Bank and the Bank of Japan – have collectively held rates at a zero% on average since the global financial crisis began. For nearly a decade, central banks have been batting about tens of trillions of dollars to do so. They have fueled bubbles. They have amassed assets on their books worth nearly $14 trillion. That’s money not serving any productive, real-economy purpose – because it happens to be in lock-down.

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When the reserve currency sinks, strange things can happen.

It’s Time For Your Reminder That Most Commodities Are Priced In US Dollars (BI)

The commodity rally since June has been impressive, and it could be tied to weakness in the US dollar. Those sharp increases — ranging between 15-40% — have had Morgan Stanley strategists slightly puzzled. On one hand, bulk commodities such as iron ore and coal have benefited from steady increases in demand. “Similarly, restocking in zinc and nickel markets have helped lift prices of those trades,” the analysts said. However, they added that fundamentals alone can’t explain the rise in the prices of copper, aluminium and lead. That suggests some of the price action is being driven by an external factor: the recent weakness in the US dollar. The analysts noted that this is the second commodity rally within the last year that’s been directly connected to the US dollar.

But the first one was the other way round — commodities staged a 4-week rally in the wake of the US election last November, when the US dollar was also rising. So why the difference? According to Price and Bates, it’s because the outlook for inflation has now largely reversed. “Post-election, markets positioned for new inflation risk, on the promise of a US infra-build story,” they said. But infrastructure reform is yet to get off the ground amid political gridlock in Washington, and US inflation remains stuck below the Federal Reserve’s target rate of 2-3%. Currency markets have reacted by driving the US dollar lower throughout most of 2017. So it follows that commodities priced in US dollars have benefited from a fall in the greenback while overall commodity-demand remains unchanged.

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Try it in a smaller country first?!

A Universal Basic Income Would Grow The Economy (Vox)

A universal basic income could make the US economy trillions of dollars larger, permanently, according to a new study by the left-leaning Roosevelt Institute. Basic income, a proposal in which every American would be given a basic stipend from the government no strings attached, is often brought up as a potential solution to widespread automation reducing demand for labor in the future. But in the meantime, its critics typically allege that it is far too expensive to be practical, or else that it would spur millions of Americans to drop out of the labor force, wrecking the economy and depriving the government of a tax base for funding the plan. The Roosevelt study, written by Roosevelt research director Marshall Steinbaum, Michalis Nikiforos at Bard College’s Levy Institute, and Gennaro Zezza at the University of Cassino and Southern Lazio in Italy, comes to a dramatically different conclusion.

And it does so using some notably rosy assumptions about the effects of large-scale increases to government spending, taxes, and deficits, assumptions that other analysts would dispute vociferously. Their paper analyzes three different models for a universal basic income: • A full universal basic income, in which every adult gets $1,000 a month ($12,000 a year) • A partial basic income, in which every adult gets $500 a month ($6,000 a year) • A child allowance, in which every child gets $250 a month ($3,000 a year) They find that enacting any of these policies by growing the federal debt — that is, without raising taxes to pay for it — would substantially grow the economy. The effect fades away within eight years, but GDP is left permanently higher. The big, $12,000 per year per adult policy, they find, would permanently grow the economy by 12.56 to 13.10% — or about $2.5 trillion come 2025.

It would also, they find, increase the%age of Americans with jobs by about 2%, and expand the labor force to the tune of 4.5 to 4.7 million people. They also model the impact of the plan if it’s paid for with taxes. That amounts to large-scale income redistribution, which, the authors argue, would stimulate the economy, because lower-income people are likelier to spend their money in the near-term than rich people are. Thus, they find that a full $12,000 a year per adult basic income, paid for with progressive income taxes, would grow the economy by about 2.62% ($515 billion) and expand the labor force by about 1.1 million people.

These are extremely contentious estimates, borne of controversial assumptions about the way the economy works and the effects that a basic income would have on it. Many, if not most, economic modelers would come to very different conclusions: that a basic income discourages work, that raising taxes to pay for it could have profound negative economic impacts, and that not paying for it and exploding the deficit is a recipe for fiscal and economic ruin. But the authors argue that the economic model they’re using, run by the Bard College Levy Economics Institute, uses more realistic assumptions than alternative models, and is particularly well-suited for predicting a UBI’s impact.

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Part of Yanis’ plans for Greece. A parallel system.

The Promise of Fiscal Money (Varoufakis)

any attempt to bring treasuries and central banks back under one roof would expose politicians to accusations of trying to get their grubby hands on the levers of monetary policy. But another response to the new reality is available: Leave central banks alone, but give governments a greater say in domestic money creation – and, indeed, greater independence from the central bank – by establishing a parallel payments system based on fiscal money or, more precisely, money backed by future taxes. How would fiscal money work? For starters, it would “live” on the tax authority’s digital platform, using the existing tax file numbers of individuals and companies. Anyone with a tax file number (TFN) in some country receives a free account linked to their TFN.

Individuals and firms will then be able to add credit to their TFN-linked account by transferring money from their normal bank account, in the same way that they do today to pay their taxes. And they will do so well in advance of tax payments because the state guarantees to extinguish in, say, a year €1,080 of the tax owed for every €1,000 transferred today – an effective annual interest rate of 8% payable to those willing to pay their taxes a year early. In practice, once, say, €1,000 has been transferred to one’s TFN-linked account, a personal identification number (the familiar PIN) is issued, which can be used either to transfer the €1,000 credit to someone else’s TFN-linked account or to pay taxes in the future. These time-stamped future tax euros, or fiscal euros, can be held for a year until maturity or be used to make payments to other taxpayers.

Smartphone apps and even government-issued cards (doubling as, say, social security ID) will make the transactions easy, fast, and virtually indistinguishable from other transactions involving central bank money. In this closed payments system, as fiscal money approaches maturity, taxpayers not in possession of that vintage will fuel rising demand for it. To ensure the system’s viability, the Treasury would control the total supply of fiscal money, using the effective interest rate to guarantee that the nominal value of the total supply never exceeds a%age of national income, or of aggregate taxes, agreed by the legislature. To ensure full transparency, and thus trust, a blockchain algorithm, designed and supervised by an independent national authority, could settle transactions in fiscal money.

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Is it low savings or high debt levels?

America and China’s Codependency Trap (Stephen Roach)

Caught up in the bluster of the US accusations being leveled at China, little attention is being paid to the potential consequences of Chinese retaliation. Three economic consequences stand out. First, imposing tariffs on imports of Chinese goods and services would be the functional equivalent of a tax hike on American consumers. Chinese producers’ unit labor costs are less than one fifth those of America’s other major foreign suppliers. By diverting US demand away from Chinese trade, the costs of imported goods would undoubtedly rise sharply. The possibility of higher import prices and potential spillover effects on underlying inflation would hit middle-class US workers, who have faced more than three decades of real wage stagnation, especially hard.

Second, trade actions against China could lead to higher US interest rates. Foreigners currently own about 30% of all US Treasury securities, with the latest official data putting Chinese ownership at $1.15 trillion in June 2017 – fully 19% of total foreign holdings and slightly higher than Japan’s $1.09 trillion. In the event of new US tariffs, it seems reasonable to expect China to respond by reducing such purchases, reinforcing a strategy of asset diversification away from US dollar-based assets that has been under way for the past three years. In an era of still-large US budget deficits – likely to go even higher in the aftermath of Trump administration tax cuts and spending initiatives – the lack of demand for Treasuries by the largest foreign owner could well put upward pressure on borrowing costs.

Third, with growth in US domestic demand still depressed, American companies need to rely more on external demand. Yet the Trump administration seems all but oblivious to this component of the growth calculus. It is threatening trade sanctions not only against China – America’s third-largest and fastest-growing major export market – but also against NAFTA partners Canada and Mexico (America’s largest and second-largest export markets, respectively). As the reactive pathology of codependency would suggest, none of these countries can be expected to acquiesce to such measures without curtailing US access to their markets – a counter-response that could severely undermine the manufacturing revival that seems so central to the Trump presidency’s promise to “Make America Great Again.”

In the end, China’s economic leverage over America is largely the result of low US domestic saving. In the first quarter of 2017, the so-called net national saving rate – the combined depreciation-adjusted saving of businesses, households, and the government sector – stood at just 1.9% of national income, well below the longer-term average of 6.3% that prevailed over the final three decades of the twentieth century. Lacking in saving and wanting to consume and grow, the US must import surplus saving from abroad to close the gap, forcing it to run massive current-account and trade deficits with countries like China to attract the foreign capital.

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“..the now-notorious 2011 standoff led S&P Global Ratings to downgrade U.S. sovereign debt for the first time. The episode wiped $2.4 trillion off U.S. stocks.”

Financial Firms Fear Turmoil Over Fraught US Debt Ceiling Talks (R.)

Financial firms are sounding alarm bells and dusting off contingency plans over fears an increasingly dysfunctional U.S. Congress may fail to reach a deal to raise the country’s debt limit. Several lobbyists, representing dozens of bankers, investors and credit rating agencies, told Reuters they are worried that dynamics at play in Washington – a bitterly divided Republican party and unpredictable President Donald Trump – could rule out a deal before an October deadline. Policymakers have vowed to provide disaster relief to areas affected by Hurricane Harvey, boosting hopes the debt limit battle could be included in an agreement on a legislative package.

But the acrimonious atmosphere following Trump’s remarks about the Charlottesville protests this month, which cost him key backers in the business community and raised worries about his ability to broker a deal, still lingers. The debt ceiling is a legal cap on how much money the government can borrow to fund its budget deficits and meet debt obligations. Failure to raise it from the current $19.8 trillion could lead to default, sending shockwaves across global markets. “The stakes here are incredibly high. The economic impact associated with debt default is so immense,” said Rob Nichols, president and CEO of the American Bankers Association (ABA), one of the country’s key financial lobby groups. “We’re monitoring this extremely closely and we will mobilize as needed throughout September.”

While leading lawmakers and the administration have pledged it will get done, some corners of financial markets are already on edge. After all, Goldman Sachs estimated that failure to lift the cap would force a government spending cut equal to between 3 and 4% of U.S. gross domestic product, which would have crippling economic consequences. Moreover, previous debt limit negotiations went down to the wire, and the now-notorious 2011 standoff led S&P Global Ratings to downgrade U.S. sovereign debt for the first time. The episode wiped $2.4 trillion off U.S. stocks.

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“U.S. gold is currently officially valued at $42.22 per ounce on the Treasury’s books versus a market price of $1,285 per ounce”

Weird Things Are Happening With Gold (Rickards)

The first strange gold story involves Germany… The Deutsche Bundesbank, the central bank of Germany, announced that it had completed the repatriation of gold to Frankfurt from foreign vaults. The German story is the completion of a process that began in 2013. That’s when the Deutsche Bundesbank first requested a return of some of the German gold from vaults in Paris, in London and at the Federal Reserve Bank of New York. Those gold transfers have now been completed. This is a topic I first raised in the introduction to Currency Wars in 2011. I suggested that in extremis, the U.S. might freeze or confiscate foreign gold stored on U.S. soil using powers under the International Emergency Economic Powers Act, the Trading With the Enemy Act or the USA Patriot Act.

This then became a political issue in Europe with agitation for repatriation in the Netherlands, Germany and Austria. Europeans wanted to get gold out of the U.S. and safely back to their own national vaults. The German transfer was completed ahead of schedule; the original completion date was 2020. But the German central bank does not actually want the gold back because there is no well-developed gold-leasing market in Frankfurt and no experience leasing gold under German law. German gold in New York or London was available for leasing under New York or U.K. law as part of global price-manipulation schemes. Moving gold to Frankfurt reduces the floating supply available for leasing, making it more difficult to keep the manipulation going.

Why did Germany do it? The driving force both in 2013 (date of announcement) and 2017 (date of completion) is that both years are election years in Germany. Angela Merkel’s position as chancellor of Germany is up for a vote on Sept. 24, 2017. She may need a coalition to stay in power, and there’s a small nationalist party in Germany that agitates for gold repatriation. Merkel stage-managed this gold repatriation with the Deutsche Bundesbank both in 2013 and this week to appease that small nationalist party and keep them in the coalition. That’s why the repatriation was completed three years early. She needs the votes now.

The truly weird gold story comes from the United States… Secretary of the Treasury Steve Mnuchin and Senate Majority Leader Mitch McConnell just paid a visit to Fort Knox to see the U.S. gold supply. Mnuchin is only the third Treasury secretary in history ever to visit Fort Knox and this was the first official visit from Washington since 1974. The U.S. government likes to ignore gold and not draw attention to it. Official visits to Fort Knox give gold some monetary credence that central banks would prefer it does not have. Why an impromptu visit by Mnuchin and McConnell? Why now? The answer may lie in the fact that the Treasury is running out of cash and could be broke by Sept. 29 if Congress does not increase the debt ceiling by then. But the Treasury could get $355 billion in cash from thin air without increasing the debt simply by revaluing U.S. gold to a market price. (U.S. gold is currently officially valued at $42.22 per ounce on the Treasury’s books versus a market price of $1,285 per ounce.)

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Naked power plays.

‘More Europe’ Won’t Solve Europe’s Fiscal Quandary (BBG)

To a certain cast of people, the solution to every problem in Europe is “more Europe” – even, or especially, those problems that have been caused by Europe. The economic crisis that began a decade ago has exposed many flaws in the European economic model. The solution? Some are calling for a euro-zone budget and a euro-zone finance minister. France’s new president, Emmanuel Macron, is dedicated to the idea. Berlin has signaled conditional support. And Brussels is always happy to accrue more power. The idea makes superficial sense: Monetary union, most people now accept, doesn’t really work without fiscal union. The European Central Bank is constantly under pressure to loosen monetary policy to help the weakest euro members, and to keep it tight to help the strongest. But currency is a blunt instrument.

The “more Europe” thinking is that if the EU had a large budget, it could redistribute wealth to more directly help struggling members. (This is what happens in the U.S.) A powerful finance minister would oversee member countries to keep deficits and debts down and prevent debt crises. Except that that doesn’t make much sense: As Martin Sandbu points out, the U.S. federal budget, hovering at around 20% of GDP, isn’t enough to act as much of a macro-economic stabilizer, and nobody contemplates an EU budget of even that scale in the foreseeable future. Regardless, the so-called debt crises in the euro zone were not ultimately caused by deficits and debts as such, but by monetary phenomena. The euro made Mediterranean countries uncompetitive, leading to slow growth and debt and deficits, and the interest on those debts spiked only when the implicit euro-zone-wide guarantee on those debts was called into question by Germany.

What of Germany, which is essential to any EU reform effort? Germany historically, and Angela Merkel especially, has always been keen on more European integration – but also doesn’t want to pay for it. German Finance Minister Wolfgang Schaeuble has favored the idea of an EU budget – with a little-noticed but all-important asterisk. EU countries’ access to a European macroeconomic stabilization fund would be conditioned on “the bailout fund having more say over national debt and budgets,” he told the German Bild newspaper. In other words, Germany would be happy to pay a little something toward a macro-economic stabilization fund in exchange for having practical control over the budgets of all the euro-zone countries.

The commitment to pay into the fund is probably not daunting, because the budgetary orthodoxy rules Germany would come up with would be unattainable, and the money would probably never be spent. In other words, Macron and the “more Europe” camp are willing to hand Germany control over the euro zone’s finances, in exchange for … well, perhaps nothing. It’s an offer that Merkel can’t refuse.

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No, it’s not ideal. But at least all-out chaos like in Libya has been prevented.

Victory For Assad Increasingly Likely As World Loses Interest In Syria (G.)

In recent months, as supplies of aid, money and weapons to Syria’s opposition have dwindled, it had clung to the hope that ongoing international political support would prevent an outright victory for Bashar al-Assad and his backers. Not any more. An announcement earlier this week by Jordan – one of the opposition’s most robust supporters – that “bilateral ties with Damascus are going in the right direction” has, for many, marked a death knell for the opposition cause. Within the ranks of the political opposition, and regional allies, the statement was the opening act of something that all had dreaded: normalisation with a bitter foe. And without anything much to show for it.

Emphasising his words, Jordanian government spokesman Mohammad al-Momani said: “This is a very important message that everyone should hear.” And indeed, the about-face in Amman was quickly noted in Ankara, Doha, and Riyadh, where – after seven and a-half years of war – states that were committed to toppling the Syrian leader are now resigned to him staying. Returning from a summit in the Saudi capital last week, opposition leaders say they were told directly by the foreign minister, Adel al-Jubeir, that Riyadh was disengaging. “The Saudis don’t care about Syria anymore,” said a senior western diplomat. “It’s all Qatar for them. Syria is lost.”

In Britain too, rhetoric that had demanded Assad leave the Presidential Palace, as a first step towards peace, has been replaced by what Whitehall calls “pragmatic realism”. The foreign secretary, Boris Johnson, last week couched Assad’s departure as “not a precondition. But part of a transition.” Rex Tillerson, the US secretary of state, has openly delegated finding a solution to Syria to Russia. Donald Trump, meanwhile, has pledged to close a CIA-run programme, which had sent weapons from Jordan and Turkey to vetted Syrian rebel groups for much of the past four years. Washington has adopted a secondary role in twin, ailing, peace processes in Geneva and Astana and has focused its energies on fighting Isis, not Assad.

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How long ago is it that Justin vowed to fix this? “.. more than 100 reserves still lack housing, electricity or running water “

‘Our Society Is Broken’: Canada’s First Nations Suicide Epidemic (G.)

The suicide epidemic affecting First Nations communities across Canada has been a national crisis for decades, but it attracted international headlines after three indigenous communities were moved to declare a state of emergency in response to a series of deaths. In the spring of 2016, Attawapiskat First Nation reserve in Ontario declared a state of emergency after 11 young people tried to commit suicide in one night – adding to the estimated 100 attempts made over 10 months among this community of 2,000 people. Not long after, it was revealed that six people, including a 14-year-old girl, had killed themselves over a period of three months in the Pimicikamak Cree Nation community of northern Manitoba. In the aftermath, more than 150 youths in this remote community of 6,000 were put on suicide watch.

Then in June this year, another First Nations reserve in Ontario lost three 12-year-old girls who had reportedly agreed a suicide pact. This string of tragic events has seen media and government turn the spotlight on an issue too often ignored in Canada. Across the country, suicide and self-inflicted injury is the leading cause of death for First Nations people below the age of 44. Studies show young indigenous males are 10 times more likely to kill themselves than their non-indigenous male counterparts, while young indigenous females are 21 times more likely than young non-indigenous females. [..] The government has been criticised for its lack of support and funding for First Nations communities, which total 1.4 million people – just under 4.3% of Canada’s population. “We call that injustice,” says Roderick McCormick, an expert in indigenous health and suicide at Thompson Rivers University in Kamloops BC.

He suggests a complex web of severe poverty plus lack of education and basic necessities underpins the rise in suicides among indigenous youths. “In terms of educational opportunities, healthcare and child welfare, the government is doing an injustice by not adequately funding our communities,” McCormick says. “When these remote reserves compare themselves to other communities across Canada, there is a huge gap that has become really evident.” Recent research has found more than 100 reserves still lack housing, electricity or running water – with almost 90 of them being advised to boil their drinking water. Another study by the Canadian Centre for Policy Alternatives found that 60% of children on these reserves are living in poverty. “The communities I represent are living in abject poverty,” Wilson says. “My people are the poorest in this country, and that’s not right.”

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Jul 172016
 
 July 17, 2016  Posted by at 8:45 am Finance Tagged with: , , , , , , , ,  Comments Off on Debt Rattle July 17 2016


Russell Lee Store, La Forge, Missouri 1938

Why Brexit Is The Shot In The Arm Britain’s Economy Needs (CityAM)
Italy’s Banking Crisis Will Shake The Eurozone To Its Core (Tel.)
Italy Hires JP Morgan To Hammer Out €50 Billion Bad Bank Bailout Plan (Tel.)
Great Numbers! Curious Timing? (Rubino/ZH)
A Historical Measurement Of The Insanity Of Central Bankers (Gordon)
Russia Purges Its Banking Industry (BBG)
China Will Struggle To Maintain Growth Pace For Wages (R.)
Homebuilders Struggle To Keep Up With Canada Boom (R.)
Bank of Mum and Dad Is Now Paying The Rent, Too (Ob.)
A Travesty of Financial History (Michael Hudson)
One of India’s Poorest States Just Created a Happiness Ministry (BBG)

 

 

No-one knows how this will play out, not the leavers nor the fear mongerers on the other side. And basing conclusions on anything that happens in today’s highly manipulated markets is fraught with error.

Why Brexit Is The Shot In The Arm Britain’s Economy Needs (CityAM)

It is less than three weeks since the British people voted to leave the EU. In that time, much of the media response has been verging on hysterical. The political establishment, City and even bookmakers simply did not see Leave coming. Figures who were top of their game a month ago have fallen on their swords: David Cameron, George Osborne, Michael Gove. We have been treated to tales of woe and despair, highlighting the fall in sterling, claiming there was no Plan B, portrayals of Leave supporters as naive at best, stupid at worst and being responsible for economic catastrophe. This analysis is unreasonable – early signs post-Brexit are encouraging.

First, the political earthquake is subsiding; we now have a new Prime Minister and cabinet. At the time of writing, the pound is up 3.4% since the beginning of the week, taking a cue from the political stability Theresa May’s appointment brings and the Bank of England’s decision to leave interest rates unchanged, at 0.5%. Second, the reaction of capital markets has not been out of the ordinary anyway. While the decline of sterling against the dollar and euro has been pronounced, at around 8% against the average of the three months preceding the referendum, this is broadly in line with our expectations – and somewhat less than some of the more aggressive scaremongering predictions. Remember, it was the fall in sterling in 1992 that resulted in an export-led boom; the same can happen now. Port Talbot steel plant has just become 8% more competitive, but for some reason the BBC don’t want to know.

Third, UK gilts have strengthened. The cost of borrowing has fallen by around 0.6 percentage points to 0.72 percentage points for UK 10-year gilts. The debt market anticipates that the Bank will cut rates in August, which has the direct effect of lowering the cost of bank borrowing and mortgages. We are now seeing the embryo of a mortgage price war. HSBC, for example, is now offering a two year fix at 0.99%. This is good news for a consumer driven economy. Fourth, the FTSE 100 continues to power ahead at the years’ all-time high and over 1,000 points higher than the February low. It has been one of the three very best performing markets in the world in 2016.

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“They call them le sofferenze – the suffering. The imagery is striking, the thousands of sofferenze across Italy, unwanted and ignored, a problem unsolved. But despite the emotional name, these are not people. They are loans.”

Italy’s Banking Crisis Will Shake The Eurozone To Its Core (Tel.)

They call them le sofferenze – the suffering. The imagery is striking, the thousands of sofferenze across Italy, unwanted and ignored, a problem unsolved. But despite the emotional name, these are not people. They are loans. Bad debts, draining banks of profits and undermining economic growth. The name is less clinical than the English term “non-performing loans”, a reflection of the Italian authorities’ emotional rather than business-like approach to the problem. None the less, the loans are indeed causing real suffering. The €360bn (£300bn) of sofferenze from Italian banks show borrowers are weighed down with debts they cannot afford, while the banks are struggling to offer new credit to the households and firms that need them.

When other countries such as the UK, Ireland and Spain ran into trouble, they bit the bullet and cleaned up their banks quickly. Italy did not. In a way, Italy’s authorities had good intentions. When loans turn bad and banks lose money, someone has to pay. It should be the banks’ investors, the shareholders and bondholders who take the risk of investing in return for the chance of profits. Unfortunately in Italy, households are keen investors in bank bonds, and would be badly burnt if they had to face up to those losses. So nothing was done. The bondholders have so far kept sight of their savings, and the banks have been allowed to ignore their bad loans. It saved the country some short-term pain, but the financial problems never went away.

Now they have spread to the wider economy, and are morphing into a political crisis with implications across the EU. It could bring down Italy’s government. If no compromise is reached between Rome, which wants to protect bondholders, and the EU, which wants to enforce the rules, it could even bring down the eurozone. “This could be a bigger risk than Brexit,” says a lawyer who is close to the situation. “The Greeks are desperate to be anchored into Europe, they are willing to suffer and suffer and suffer to stay in – I am not sure that Italy is willing to suffer.” The stakes are that high, and nobody knows whether the EU can muddle through another crisis, or if shock waves from Italy will split the union. Long nights and fraught nerves lie ahead.

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Yeah, getting Wall Street involved in eurozone problems has proven to be a real good idea.

Italy Hires JP Morgan To Hammer Out €50 Billion Bad Bank Bailout Plan (Tel.)

The Italian government is working on plans to set up a €50bn bad bank which would aim to clean up the country’s stricken lenders, the Sunday Telegraph has learned. It is understood that €10bn of public money could be used to buy bad loans at a knock-down price, taking assets with a face value of €50bn off the banks’ hands, allowing them to start giving out more good loans instead. The scheme, which is being put together by JP Morgan, could help clean up the banks, but also puts the country’s authorities on a collision course with the EU, which does not want taxpayers bailing out banks before private investors take a hit. Italy’s banks are labouring under €360bn of bad loans but have set aside funds to cover less than half of the associated losses.

This is dragging down the banks and the wider economy, and the government is keen to help recapitalise the institutions, restoring them to health and potentially boosting the economy by re-starting the provision of credit to households and firms. One key part of the bailout package is being built by the investment bankers, who envisage the government taking on some of the bad loans at a price of 20 cents in the euro. The state-backed entity would then work through the loans to either sell them onto other investors, hold them to maturity if there is a chance of borrowers paying them back, or offer debt relief if the customers are in such poor financial shape they cannot repay the loans.

The plan is not certain be implemented, in part because other ideas are also under discussion, but also because the Italian government is currently at loggerheads with the EU over the scheme. European rules state that private investors such as shareholders and bondholders have to pay up before the taxpayer does, in an effort to avoid a repeat of the bailouts of the financial crisis. Italy’s government does not want to inflict harm on the households across the country who invest their savings into those bonds. It hopes that this scheme to split the cost of recapitalisation between the government and the banks will show some thought has been given to the new rules, even if it does not fully comply.

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Not everything adds up…

Great Numbers! Curious Timing? (Rubino/ZH)

Pretend you’re running a corrupt government and something big and scary happens in another part of the world. Brexit, for instance. You’re quite naturally worried about the impact on your local economy and political system. What do you do? Well, one obvious thing would be to call the statisticians who compile your economic reports and tell them to fudge the next batch of numbers. [ZH:Notice the spike in macro data hit right as Brexit crashed markets… but bonds aren’t buying it…]

[ZH: And some more context for this sudden ramp in awesome data…]

Since you already do this prior to most major elections, they’re neither surprised by the request nor concerned with how to comply. They simply go into the black boxes that control seasonal adjustments or fabricate things like “hedonic quality” or “imputed rent,” and bump up the near-term levels. Later revisions will lower them to their true range but by that time, hopefully, the danger will have passed and no one will be paying attention. So…Brexit spooks the global markets and — surprise — some big economies report excellent numbers. Among them:

China’s GDP growth comes in at 6.7%, slightly better than expected

US retail sales pop by 0.6%, versus expectations of just 0.1%

US industrial output surges in June, led by autos

These are indeed really good numbers, and anyone looking solely at the headlines would have to conclude that the things the major governments have done lately are working. Nothing to see here folks, everything is fine. The experts have it covered. But a clearer, far less rosy picture emerges when you look at the numbers below the headlines, which are either harder to fudge because they’re calculated by private sector entities or are too obscure to be worth fudging. Industrial Production is in the middle of its longest non-recessionary slump in American history…

Business inventories, for instance, are a pretty good indicator of future activity, with high inventories implying slow growth (because factories have already produced plenty of stuff for the months ahead) and low inventories meaning the opposite (because factories will have to resupply their customers shortly). Here’s a chart from Zero Hedge showing “Business Inventories At Highest Level To Sales Since The Crisis”:

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“…we must recognize and attempt to fully appreciate that global central banks are on a collective suicide mission.”

A Historical Measurement Of The Insanity Of Central Bankers (Gordon)

One of the more preposterous deeds of modern central banking involves creating digital monetary credits from nothing and then using the faux money to purchase stocks. If you’re unfamiliar with this erudite form of monetary policy this may sound rather fantastical. But, in certain economies, this is now standard operating procedure. For example, in Japan this explicit intervention into the stock market is being performed with the composed tedium of a dairy farmer milking his cows. The activity is more art than science. Similarly, if you stop – even for a day – pain swells in certain sensitive areas. In late April, a Bloomberg study found that the Bank of Japan (BOJ), through its purchases of ETFs, had become a top 10 shareholder in about 90% of companies that comprise the Nikkei 225.

At the time, based on “estimates gleaned from publicly available central bank records, regulatory filings by companies and ETF managers, and statistics from the Investment Trusts Association of Japan,” Bloomberg assumed the BOJ was buying about 3 trillion yen ($27.2 billion) of ETFs every year. The rate of buying has likely accelerated since then. In fact, this week ZeroHedge reported, via Matt King of Citibank, that net global central bank asset purchases had surged to their highest since 2013. This seems to explain why, even with investors pulling money out of equity funds for 17 consecutive weeks, and at a pace that suggests a full flight to safety, stock markets are trading at all-time highs. In short, central banks are pumping “liquidity” into stock markets faster than investors are pulling their money out.

The main culprits, at the moment, are the BOJ and the ECB. Similar efforts may soon come from a central banker near you. Other than attempting to, somehow, boost the economy by levitating the stock market, the objective of this explicit central banking intervention is unclear. The popular theory seems to be that the “wealth effect” of inflated asset prices stimulates demand in the economy. The premise, as we understand it, is supposed to play out along the following narrative…or a derivative thereof. An economic boom ensues. [..].. we must recognize and attempt to fully appreciate that global central banks are on a collective suicide mission. They think that printing money and buying stocks will save us from ourselves. In practice, this means that before stocks melt down we could be treated to the grand spectacle of an epic melt up; a historical measurement of the insanity of central bankers.

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Elvira Nabiullina is an actual central banker, who tries to do what’s best for the country.

Russia Purges Its Banking Industry (BBG)

After felling more than a quarter of its banks, Russia wants to make sure the survivors get more than a slap on the wrist for flouting the rules. As part of its campaign against money laundering, the Bank of Russia is taking a page from the playbooks of regulators in the U.S. and Europe. It’s now planning to reduce the reporting requirements on lenders while increasing the punishment for getting caught, Deputy Governor Dmitry Skobelkin said in an interview in Moscow. “We are prepared to reconsider that approach,” Skobelkin said. “But in that case we need to raise responsibility proportionally.”

Unlike the billions of dollars in penalties imposed for infractions on U.S. and European banks, Russia hasn’t leaned heavily on fines during an unsparing purge of the industry by Governor Elvira Nabiullina. Even after reducing what it calls illegal capital flight to 64 billion rubles ($1 billion) in the first quarter, less than than half the level a year earlier, the Bank of Russia is asking lenders to commit to cutting operations that have hallmarks of money laundering by 20% every quarter, according to Skobelkin. The financial industry is fighting a crisis as asset quality worsens during the second year of recession, the longest since President Vladimir Putin came to power.

Regulators have been hunting down banks deemed mismanaged or under-capitalized, with Nabiullina shutting down more than 250 banks since her appointment in 2013 to restore the system to health. With the closures, the number of banks suspected of a large share of dubious transactions has fallen to five at the end of the first quarter from 150 in mid-2013, Skobelkin said. The regulator defines “dubious operations” as fake trades or loans used to move money abroad.

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China will struggle, period.

China Will Struggle To Maintain Growth Pace For Wages (R.)

Wages in China kept pace with economic growth in the first half of 2016 but maintaining that will be difficult, the country’s statistics bureau said on Sunday. It cited issues such as overcapacity in China’s coal and steel sectors as well as some declining agricultural prices as taking a toll on salaries. Maintaining the relationship between the pace of growth and that of wage increases is a challenge requiring “close attention”, Wang Pingping, head of the National Bureau of Statistics’ (NBS) household survey office said, according to the bureau’s website. Disposable household income, adjusted for inflation, rose 6.5% in the first half of the year, compared with economic growth of 6.7%, the statistics bureau reported on July 15.

Economic growth in the second quarter was faster than expected as a government spending spree and housing boom boosted industrial activity, but a slump in private investment growth points to a loss of momentum later this year. Several Chinese provinces have slowed or halted increases to minimum wages, as companies face pressure from rising expenses and weakening demand. China’s human resources vice minister this month called for a slowdown in wage increases in order to maintain competitiveness. China plans to allocate 100 billion yuan ($14.96 billion) to help local authorities and state-owned firms finance layoffs in the steel and coal sectors this year and in 2017.

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More struggle, but of a different kind.

Homebuilders Struggle To Keep Up With Canada Boom (R.)

The housing boom in Canada’s hottest cities has spilled over into the suburbs, where builders say they are working as fast as they can to meet soaring demand and get homes to market before a much-feared housing bust. With the supply of existing homes at a six-year low and the average price up 11.2% from a year ago, according to data released on Friday, new developments have become the next frontier in a what some fear is a housing bubble. Canadian new home prices rose 0.7% in May, the largest monthly increase since 2007, Statistics Canada said on Thursday. Builders with decades of experience say they have not seen anything like it, and are eager to build while the boom lasts.

“It’s definitely ‘Build as quickly as possible and get your pre-sales out,'” said Robert de Wit, chief executive of the Greater Vancouver Home Builders’ Association. But with land prices rising as quickly as home prices, builders are paying a lot of money now for land that may not have a house on it to sell for two years. “They are gambling. They are taking a calculated risk. They are buying the land at prices that anticipate future prices going up,” de Wit said. Builders say it is a challenge to find enough skilled tradespeople to do the work, while entire developments sell out within days of being advertised – months before construction even begins. “It’s scary to try to figure out what’s going on with the marketplace,” said Heather Weeks, marketing manager at Rosehaven Homes, which builds in the outskirts of Toronto.

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What you get when a government relies on bubbles to look good.

Bank of Mum and Dad Is Now Paying The Rent, Too (Ob.)

The Bank of Mum and Dad – the lender of last resort for their grown-up children unable to afford a deposit to buy a home – has moved into the private rentals market. The country’s housing crisis has become so acute that parents are now having to subsidise their children’s rent to the tune of £1bn a year. Research by the housing charity Shelter says that 450,000 adults need help from their parents to keep them in their rented home. An analysis of almost 4,000 adult people who rent carried out by YouGov suggests that more than one in 20 have either borrowed or received money from their parents this year to pay their rent or help them with moving costs.

Younger people are particularly reliant on their parents for help, with 11% of those aged 18-24, and 8% of those aged 25-34, receiving financial support. Shelter estimates that this amounts to about £850m a year on rent and £150m a year on moving costs. “With housing costs sky high it’s not surprising that the Bank of Mum and Dad is no longer just relied on for help with buying a home, but renting costs too,” said Campbell Robb, Shelter’s chief executive. “We know that the majority of private renters are forking out huge proportions of their income to cover the rent each month, and that’s not even taking into account the extortionate deposits and fees that need to be paid.”

Almost 150,000 renting households in England were at risk of losing their home in the past year – some 350,000 people, says Shelter. “For those who aren’t lucky enough to receive help from parents, expensive and unstable private renting leaves many struggling,” Robb said. “We hear from people every day who simply can’t keep up with rising rents on where to live.” [..] The problem is particularly serious in London, where Shelter claims 54% of private renters are struggling to pay. Government figures show rents rose by 19% in London in the past five years. And while the average for a two-bedroom flat in the capital is now more than £1,600 a month, wages have not kept pace.

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Wonderful. Hudson always is.

A Travesty of Financial History (Michael Hudson)

Debt mounts up faster than the means to pay. Yet there is widespread lack of awareness regarding what this debt dynamic implies. From Mesopotamia in the third millennium BC to the modern world, the way in which society has dealt with the buildup of debt has been the main force transforming political relations. Financial textbook writers tell happy-face fables that depict loans only as being productive and helping debtors, not as threatening social stability. Government intervention to promote economic growth and solvency by writing down debts and protecting debtors at creditors’ expense is accused of causing an economic crisis (defined as bankers and bondholders not making as much money as they thought they would).

Creditor lobbyists are not eager to save indebted consumers, businesses and governments from bankruptcy and foreclosure. The result is a biased body of analysis, which some extremists project back throughout history. The most recent such travesty is William Goetzmann’s Money Changes Everything, widely praised in the financial press for its celebration of finance through the ages. A Professor of Finance and Management at the Yale School of Management, he credits “monetization of the Athenian economy” – the takeoff of debt – as playing “a central role in the transition to … democracy”, and assures his readers that finance is inherently democratic, not oligarchic: “The golden age of Athens owes as much to financial litigation as it does to Socrates”.

That litigation consisted mainly of creditors foreclosing on the property of debtors. Goetzmann makes no mention of how Solon freed Athenians from debt bondage with his seisachtheia (“shaking off of burdens”) in 594. Also airbrushed out of history is the subsequent buildup of financial oligarchies throughout the Mediterranean. Cities of the Achaean League called on Rome for military intervention to prevent Sparta’s kings Agis, Cleomenes and Nabis from cancelling debts late in the third century BC.

Violence has often turned public policy in favor of debtors, despite what philosophers and indeed most people believed to be fair, just and stable. Rome’s own Social War opened with the murder of supporters of the pro-debtor Gracchi brothers in 133 BC. By the time Augustus was crowned emperor in 29 BC, the die was cast. Creditor elites ended up stifling prosperity, reducing at least 15% (formerly estimated as a quarter) of the Empire’s population to bondage. The Roman legal principle placing creditor rights above the property rights of debtors has been bequeathed to the modern world.

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Hope they don’t conclude it’s about money.

One of India’s Poorest States Just Created a Happiness Ministry (BBG)

A central Indian state that ranks among the nation’s least developed will set aside 38 million rupees ($567,000) to study how to make its people happy. The cabinet in Madhya Pradesh – home to India’s famous Khajuraho temples and the national park where Rudyard Kipling set his Jungle Book – on Friday approved setting up the department. It will conduct research and prepare plans to measure and enhance its citizens’ wellbeing, according to the government’s website. Increasing growth and prosperity among India’s poorest states – which hold the bulk of the nation’s population – is crucial for Prime Minister Narendra Modi to retain power with elections due 2019. India ranks 118 of 156 in the World Happiness Report 2016, behind Pakistan, Serbia and Ethiopia.

“The largest regional drop was in South Asia, in which India has by far the largest population share,” the report stated. Five input variables – per capita income, life expectancy, freedom to make life choices, generosity, and freedom from corruption – improved for India but were offset by a fall in social support. With analysts questioning the credibility of statistics in the world’s fastest-growing big economy, social indicators stand to be increasingly used to measure progress. Madhya Pradesh, which calls itself the heart of India, was ranked among the bottom three in social indicators by a panel appointed by the federal government in 2013. Its per capita income is among the lowest for an Indian state.

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May 112016
 
 May 11, 2016  Posted by at 3:39 pm Finance Tagged with: , , , , ,  10 Responses »


Irving Underhill Irving Trust Building, Trinity Church, Wall Street, New York 1931

Last night, I made it back to Athens, still half a cripple, but there must be someone in this city who knows how to stick needles in the appropriate muscles, right?!, paid the rent for the Social Kitchen big house/nerve center late this morning, a tough 1 mile walk for my leg muscles -they kill me!-, still, that’s done, and hoping to get back to writing articles very soon, but having an ouzo right now just to make sure I blend in with the Romans. One can never be too sure.

Ergo: first here is, once again, our dearly beloved New England-raised friend from New Zealand, Nelson Lebo III, touching on a theme that will be found to have legs once the world sees Janet Yellen has no clothes on (and I DO understand the problem with that visual) :

Nelson Lebo: “Our already horrendous suicide rate hit a new record high last year.” The news of New Zealand’s suicide rate did not surprise me when I heard it on the radio earlier this week. Anyone who pays attention to global trends could see this coming. “Psychotherapists say we need a wide-ranging review into the mental health system before there are more preventable deaths” reported Newstalk ZB.

At lighter moments I joke that the best thing about living in New Zealand is that you can see worldwide trends that are heading this way, but the worst part is that no-one believes you. This is not a lighter moment. Suicide is a serious issue and one that is growing dramatically among my peer group: white middle-aged men.

The first people to notice the emerging pattern in the United States were Princeton economists Angus Deaton and Anne Case. The New York Times reported on 2nd November, 2015 that the researchers had uncovered a surprising shift in life expectancy among middle-aged white Americans – what traditionally would have been considered the most privileged demographic group on the planet.

The researchers analyzed mountains of data from the Centers for Disease Control and Prevention as well as other sources. As reported by the Times, “they concluded that rising annual death rates among this group are being driven not by the big killers like heart disease and diabetes but by an epidemic of suicides and afflictions stemming from substance abuse: alcoholic liver disease and overdoses of heroin and prescription opioids. The mortality rate for whites 45 to 54 years old with no more than a high school education increased by 134 deaths per 100,000 people from 1999 to 2014.”

The most amazing thing about this discovery is that the Princeton researchers stumbled across these findings while looking into other issues of health and disability. But as we hear so often, everything is connected. A month before releasing this finding Dr. Deaton was awarded the Nobel Prize in Economics based on a long career researching wealth and income inequality, health and well-being, and consumption patterns.

The Royal Swedish Academy of Sciences credited Dr. Deaton for contributing significantly to policy planning that has the potential to reduce rather than aggravate wealth inequality. In other words, to make good decisions policy writers need good research based on good data. Too often this is not the case. “To design economic policy that promotes welfare and reduces poverty, we must first understand individual consumption choices. More than anyone else, Angus Deaton has enhanced this understanding.”

Days before hearing the news about New Zealand’s rising suicide rate I learned of another major finding from demographic researchers in the United States. For the first time in history the life expectancy of white American women had decreased, due primarily to drug overdose, suicide and alcoholism. This point is worth repeating as it marks a watershed moment for white American women. After seeing life expectancies continually extend throughout the history of the nation, the trend has not only slowed but reversed. Data show the slip is only one month, but the fact that it’s a decrease instead of another increase should be taken as significant milestone.

Please note that the following sentence is not meant in the least to make light of the situation, but is simply stating a fact. The demographic groups that are experiencing the highest rates of drug overdose, suicide and alcoholism are also the most likely to be supporters of Donald Trump in his campaign for the U.S. Presidency. It does not take a Nobel Laureate to observe a high level of distress among white middle-class Americans. Trump simply taps into that angst.

As reported by CBS News, “The fabulously rich candidate becomes the hero of working-class people by identifying with their economic distress. That formula worked for Franklin D. Roosevelt in the 1930s. Today, Donald Trump’s campaign benefits from a similar populist appeal to beleaguered, white, blue-collar voters – his key constituency.”

I don’t blame most Americans for being angry. That the very architects of the global financial crisis have only become richer and more powerful since they crashed the world economy in 2008 is unforgivable. The gap between rich and poor continues to widen and the chasm has now engulfed white middle-aged workers. As the Pope consistently tells us, wealth and income inequality is the greatest threat to humanity alongside climate change.

Instead of going down the Trump track for the rest of this piece, I’d rather wrap it up by bringing the issue back to Aotearoa (New Zealand) and my small provincial city of Whanganui. To provide some background for international readers, the NZ economy relies significantly on dairy exports and many dairy farmers hold large debts. Dairy prices are known for their volatility, and recently the payouts have dropped below break-even points for many farmers.

Earlier this month Primary Industries Minister Nathan Guy announced that the government would invest $175,000 to study innovative, low cost, high performing farming systems already in place in New Zealand. Stuff.co.nz reported, “The government is set to pick the brains of New Zealand’s top dairy farmers in an effort to help those struggling with the low dairy payout.”

That is great news, but the government’s investment in researching the best of the best farmers is a pittance when compared with what is spent addressing issues of depression and suicide prevention among Kiwi farmers. Isn’t this a case of putting the cart ahead of the horse, or treating symptoms instead of causes?

Research shows that financial stress contributes significantly to the increasing suicide rates here and abroad. We know that innovative farmers who use low-input/high-performance systems are more profitable that their conventional farming brethren. Would it then be a stretch to conclude that depression and suicide is much lower among these innovative and profitable farmers? At the same time, research shows that wealth and income inequality in our more urban centres contribute to anti-social behaviours such as crime, domestic abuse and illegal drug usage.

Angus Deaton, the Nobel-winning economist, would argue that in order for policy planners to address these issues effectively they must understand the underlying causes and resultant costs. Thankfully, we do see glimmers of that from central government instead of the usual neoliberal claptrap. Credit must be given to Finance Minister Bill English for his actuarial approach to some social issues rather than the inaccurate dogmatic position often adopted by the right.

But closer to home for me, such enlightened policy planning has yet to reach our city by the awa (river). To start off, the Council’s rates structure is stunningly regressive, clearly taking significantly higher proportions of household wealth from low-income families than from high-income families. If we believe the research in this field (ie, The Spirit Level, etc) wouldn’t we expect the widening gap between rich and poor to result in even more anti-social behavior in our city that already suffers from reputation problems nationwide?

Secondly, the council’s vision documents and long-term plan are nearly devoid of intelligent strategies to address the underlying issues of anti-social behaviour, depression, poor health, and domestic problems that afflict our community. The Council pours mountains of money into an art gallery and arts events while providing token services and events for low-income families.

Will it take our own Trump or Sanders running for office to stimulate a populist revolt against regressive policies that potentially do more harm than good to our community? What will it take for us to finally get it? I first wrote about these issues in our city’s newspaper, the Chronicle, two and a half years ago… but, apparently, no one believed me. Welcome to provincial New Zealand!

Apr 132016
 
 April 13, 2016  Posted by at 9:47 am Finance Tagged with: , , , , , , , , , , ,  3 Responses »


Lewis Wickes Hine Child labor at Gorenflo Canning Co., Biloxi, Mississippi 1911

What in the World’s Going on with Banks this Week? (WS)
The “Independent” Fed Is About to Become Partisan (JR)
IMF Cuts World Growth Forecast, Warns Over Brexit (AFP)
Don’t Trust Ben Bernanke On Helicopter Money (Steve Keen)
Bundesbank’s Weidmann Rebukes Draghi Critics In Berlin (FT)
China Rail Freight Volume Plunges 10.5%, and The Economy Still Grows 6.9%? (WS)
Peabody, World’s Top Private Coal Miner, Files For Bankruptcy (Reuters)
IMF Says Greek Debt ‘Highly Unsustainable’, Debt Relief ‘Essential’ (R.)
Pro-EU Leaflets Spark ‘Return To Sender’ Revolt In Britain (AFP)
Why Younger People Can’t Afford A House: Money Became Too Cheap (G.)
Iceland Shocked By Elite’s Love Of Offshore Holdings (AFP)
Swiss Banker Whistleblower: CIA Behind Panama Papers (CNBC)
Australia Issues The Most Hideous Banknote In History (SMH)
Canadian First Nation Suicide Epidemic Has Been Generations In The Making (G.)
Brussels Gives Greece Two Weeks To Tighten Borders (Kath.)
Refugees Become Smugglers Following EU-Turkey Deal (MEE)
Greek Coast Guard Rescues 120 Refugees Off Lesvos, Samos (Kath.)

Obama meets with Biden and Yellen. Hadn’t happened since Truman?!

What in the World’s Going on with Banks this Week? (WS)

Just about every major banker and finance minister in the world is meeting in Washington, D.C., this week, following two rushed, secretive meetings of the Federal Reserve and another instantaneous and rare meeting between the Fed Chair and the president of the United States. These and other emergency bank meetings around the world cause one to wonder what is going down. Let’s start with a bullet list of the week’s big-bank events:
• The Federal Reserve Board of Governors just held an “expedited special meeting” on Monday in closed-door session.
• The White House made an immediate announcement that the president was going to meet with Fed Chair Janet Yellen right after Monday’s special meeting and that Vice President Biden would be joining them.
• The Federal Reserve very shortly posted an announcement of another expedited closed-door meeting for Tuesday for the specific purpose of “bank supervision.”
• A G-20 meeting of finance ministers and central-bank heads starts in Washington, D.C., on Tuesday, too, and continues through Wednesday.
• Then on Thursday the World Bank and the International Monetary Fund meet in Washington.
• The Federal Reserve Bank of Atlanta just revised US GDP growth for the first quarter to the precipice of recession at 0.1%.
• US banks are expected this coming week to report their worst quarter financially since the start of the Great Recession.
• The press stated that the German government will sue the European Central Bank if it launches a more aggressive and populist form of quantitative easing, often called “helicopter money.”
• The European Union’s new “bail-in” procedures for failing banks were employed for the first time with Austrian bank Heta Asset Resolution AG.
• Italy’s minister of finance called an emergency meeting of Italian bankers to engage “last resort” measures for dealing with €360 billion of bad loans in banks that have only €50 billion in capital.

It is rare for presidents to meet with the chair of the Federal Reserve. The last time President Obama met with Janet Yellen was in November of 2014, a year and a half ago. It is even more rare for the vice president of the United States to join them. In fact, I’ve heard but haven’t verified that it has never happened in a suddenly called meeting with the Fed before. For security reasons, the president and vice president don’t regularly attend the same events. There are, of course, many planning sessions or emergency meetings where they do get together, but not with the head of the Federal Reserve. Emergency meetings where the VP is included in the planning session would include situations related to dire national security in case the VP winds up having to take over.

In fact the meeting with the prez and vice prez is so rare that the White House is bending over backwards to assure the entire nation that the president is not meeting with Yellen to try to influence the Fed, which is required to act independently of politics (so they say). According to the White House, President Obama is meeting with the Fed chair and Biden to discuss the nation’s “longer-term economic outlook,” even though Yellen just told the entire nation that the economy was strong and had arrived nearly back at “full health.” The president says they will be “comparing notes.” Do their notes about the nation’s outlook disagree?

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Clinton and Cameron: monsters under the bed.

The “Independent” Fed Is About to Become Partisan (JR)

Late last night it was revealed that President Obama has summoned Janet Yellen to the White House today. There’s nothing unusual in itself about the president meeting with the Chair of the Federal Reserve over lunch to discuss policy. Bush 43, for example, frequently met with Alan Greenspan to discuss the economy. But this meeting is different… This isn’t a casual lunch. It’s a high-profile, last-minute meeting Obama orchestrated. The last time something like this happened was in 1951, when Harry Truman summoned the entire Federal Reserve Board of Governors to the White House. Since this is something that hasn’t happened in almost 70 years, today’s meeting is a fairly extraordinary event. Why did Obama order the meeting? There are a few factors to consider… Number one, Obama does not want the Fed to raise rates.

If the Fed remains on its path of interest rate hikes this year, it would give the Republicans the strongest chance at the White House in this fall’s election. That’s because rate hikes would likely lead to recession, and that would bode poorly for the Democrats. Obama is deeply concerned about his legacy, which the Republicans would like to reverse. So the best chance the Democrats have in the upcoming presidential election is if rates stay low. Janet Yellen herself is a Democrat, with a background as a labor economist and a career at U.C. Berkeley. She’s not necessarily hostile to Obama’s message. By bringing her to the White House, Obama is sending Yellen a highly visible public message. Don’t raise rates. You can consider this meeting more like an implied threat. There are two openings on the Fed’s Board of Governors. Obama could nominate two of Yellen’s biggest policy opponents if he wanted to play hardball with her.

Those two opponents could fight Yellen at every turn and threaten her control. Or, Obama could no nothing if she confirms and let her maintain control of the board. He’s very cleverly held the vacancies open, which he can use as leverage to influence Yellen’s course of action. He can nominate her worst opponents if she doesn’t follow his wishes. There’s also another factor at play: The Democrats are as afraid of Bernie Sanders as Republicans are of Donald Trump. Sanders has won seven straight primaries and caucuses. One of his biggest weapons is his bashing of the big banks, Wall Street and his criticism of Hillary Clinton for being in their pocket. Sanders has demanded that Hillary release the transcripts of her three speeches to Goldman Sachs, for which she received $675,000. She has refused to release those transcripts. That’s the Achilles heel of the Clinton campaign, and Sanders is making the most of it.

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No credibility.

IMF Cuts World Growth Forecast, Warns Over Brexit (AFP)

The IMF said Tuesday that the global economy faces wide-ranging threats from weak growth and rising protectionism, warning of possible “severe” damage should Britain quit the EU. The Fund cut its global forecast for the third straight quarter, saying economic activity has been “too slow for too long,” and stressed the need for immediate action by the world’s economic powers to shore up growth. It said intensifying financial and political risks around the world, from volatile financial markets to the Syria conflict to global warming, had left the economy “increasingly fragile” and vulnerable to recession. The IMF raised concerns over “fraying” unity in the European Union under pressure from the migration crisis and the “Brexit” possibility.

And it pointed to the contractions in large emerging market economies, most notably Brazil, where the economic downturn has been accompanied by deep political crisis that has President Dilma Rousseff facing impeachment. Seeing a broad fall in trade and investment, the IMF cut its forecast for world growth this year to a sluggish 3.2%, 0.2 percentage points down from its January outlook and down from the 3.8% pace expected last July. That reflects a glummer view of growth in both developed and emerging economies, with the forecasts for Japan and oil-dependent Russia and Nigeria all sharply lowered. Growth expectations for most leading economies were pared back by 0.2 percentage points. The outlook for the United States – hit by the impact of the strong dollar – was trimmed to 2.4% this year, from 2.6% in January.

Only the pictures in China and developing eastern Europe were better. But at a slightly upgraded pace of 6.5% growth, China was still on track for a significant slowdown from last year. The growth downgrade was expected but the tone of the IMF message was more dire than in recent months. It came as an increasing number of countries are approaching the IMF and World Bank for financial support. Last week Angola, its finances devastated by the crash in oil prices, asked the IMF for a three-year bailout program. And the World Bank said requests for loan support had reached levels seen only during financial crises. IMF chief economist Maurice Obstfeld said there was a risk of a full stall in global growth without efforts to boost investment and demand. “The weaker is growth, the greater the chance that the preceding risks, if some materialize, pull the world economy below stalling speed,” he said.

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It’s too late for helicopter money. It would evaporate before touching the ground.

Don’t Trust Ben Bernanke On Helicopter Money (Steve Keen)

Ben Bernanke earned the sobriquet “Helicopter Ben” for his observations in a 2002 speech that “the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost”, that the existence of this technology means that “sufficient injections of money will ultimately always reverse a deflation”, and that using this technology to finance a tax cut is “essentially equivalent to Milton Friedman’s famous “helicopter drop” of money.” But just because he’s called “Helicopter Ben” doesn’t mean that he knows how “Helicopter Money” would actually work.

His column “What tools does the Fed have left? Part 3: Helicopter money” discusses both the nuts and bolts of actually implementing a “Helicopter Drop” (or as he more accurately describes it, “an expansionary fiscal policy—an increase in public spending or a tax cut—financed by a permanent increase in the money stock”) and also discusses how such a policy might affect the real economy. While his discussion of the nuts and bolts is realistic, his discussion of how it would work is fantasy. The nuts and bolts are straightforward (and Bernanke has a good practical suggestion for how to implement it too, which I’ll discuss at the end of this post). “Helicopter money” (or as he excitingly renames it, “a Money-Financed Fiscal Program, or MFFP”) is a direct injection of money from the government into people’s bank accounts, which is financed by a loan from the Federal Reserve to the Treasury. This differs from the standard way that Government spending is financed, which is by issuing Treasury Bonds that are then bought by the public.

The standard method doesn’t put additional money into circulation in the economy, because the increase in some private sector bank accounts caused by the government spending—a tax rebate, for example—is completely offset by the fall in other private sector bank accounts as they buy the Treasury Bonds that financed the tax rebate. But with “MFFP”, the tax rebate is financed by new money created by the Federal Reserve “at essentially no cost”. It thus directly increases the money supply, and this is where Friedman’s “Helicopter” analogy comes from. In the private sector economy, the money supply is increased when private banks lend to the public. Money created by private bank lending also goes by the nickname of “inside money”, since it is created by institutions that are “inside” the private sector—private banks.

Government-created money, which is what a tax rebate financed by a direct loan from the Federal Reserve to the Treasury would be, is “outside money”, because it comes from outside the private sector. Friedman’s analogy likened it to a helicopter flying over an economy and dropping new dollar bills from the sky. So how does “Helicopter Money” differ in impact from the standard way of financing government spending? Here’s where Bernanke passes from the practical nuts and bolts to the fantasy world of mainstream economics. According to Ben, the Helicopter flies, so to speak, because it causes “a temporary increase in expected inflation,” and because it “does not increase future tax burdens.”

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Best friends?!

Bundesbank’s Weidmann Rebukes Draghi Critics In Berlin (FT)

Bundesbank president Jens Weidmann has rebuked German politicians for attempting to pressure European Central Bank chief Mario Draghi over his easy money policies, suggesting their criticism was interfering with the bank’s independence. “It’s not unusual for politicians to have opinions on monetary policy, but we are independent,” Mr Weidmann told the Financial Times last Thursday. “The ECB has to deliver on its price stability mandate and thus an expansionary monetary policy stance is appropriate at this juncture regardless of different views about specific measures.” The head of Germany’s central bank and his counterpart at the ECB have often been at odds over how to respond to the threat of falling prices, with Mr Weidmann frequently raising objections to measures tabled by Mr Draghi.

But they have emerged as unlikely allies at a time when monetary policymakers around the world are facing mounting criticism over record-low interest rates, including the decision by some central banks – among them the ECB – to cut rates below zero and into negative territory to counter the threat of a vicious bout of deflation. The policy has been deeply unpopular in Germany, prompting criticism from senior politicians, led by finance minister Wolfgang Schäuble, that the central bank’s low interest rates are expropriating savings from the German public and fuelling the rise of rightwing populism.

While the ECB targets inflation of just below 2%, the latest reading was minus 0.1%. Mr Weidmann also said the German debate on the ECB is focused too narrowly on the consequences of low interest rates for savers. “The debate does not focus enough on the broader macroeconomic consequences of monetary policy. People are not just savers: they’re also employees, taxpayers, and debtors, as such benefiting from the low level of interest rates,” he explained. The Bundesbank built its reputation on its independence from politics, frequently falling out with German lawmakers in the 1970s and 1980s over the central bank’s use of high interest rates to tackle inflation. But Mr Weidmann faces a more sensitive challenge: defending an EU institution from criticism from within Germany at a time of acute unease fuelled by the refugee crisis.

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Riddle me this.

China Rail Freight Volume Plunges 10.5%, and The Economy Still Grows 6.9%? (WS)

Rail freight volumes are an indicator of China’s goods-producing and goods-consuming economy, not just manufacturing, construction, agriculture, and the like, but also consumer goods. Thus they’re also an indication of consumer spending on goods. Alas, rail freight volume is collapsing: the first quarter this year puts volume for the whole year on track to revisit levels not seen since 2007. While China’s economy was strong, rail freight volumes were soaring. For example, in 2010, when China was pump-priming its economy, rail freight volume jumped 10.8% from a year earlier. In 2011, it rose 6.9%. It had soared 44% from 2005 to 2011! But 2011 was the peak. In 2012, volume in trillion ton-kilometers declined one notch and in 2013 stagnated. But in 2014, volume skidded 5.8%.

And in 2015, volume plunged 10.5% to 3.4 billion tons, according to Caixin, citing figures from the National Railway Administration. It was the largest annual decline ever booked in China. It was a year that the People’s Daily, the official paper of the Communist Party, described in this elegant manner: “Dragged by a housing slowdown, softening domestic demand, and unsteady exports, China’s economy expanded 6.9% year on year in 2015, the weakest reading in around a quarter of a century.” Which is precisely where things stop making sense: rail freight volume plunges 10.5% in 2015, and the economy still increases 6.9%? I mean, come on. At the time, Caixin said that China’s central planners aimed to increase rail freight volumes to 4.2 billion tons by 2020. This would assume an average annual growth rate of 4.3%.

So these declines are not part of the planned transition to a consumption-based economy. They’re totally against that plan or any other plan. They’re very inconvenient for the rosy scenario! Then came the first quarter of 2016. Rail freight volume plunged 9.4% year-over-year to 788 million tons, according to data from China Railway Corporation, cited today by the People’s Daily. At this rate, rail freight volume for 2016 will be down 20% from 2014, which had already been a down year! At this rate, volume in 2016 will end up where it had been in 2007! China — hobbled by soggy domestic demand, perhaps even soggier demand overseas, rampant factory overcapacity, cooling investment, an insurmountable mountain of bad debt, and a million other domestic problems — may be trying to transition from a manufacturing-based economy to an economy based on consumption.

But even consumer goods must be transported, even those purchased online! Only services don’t require much transportation. But we doubt that service sales have jumped in two years to the extent that they would even halfway make up for the crashing demand for goods transported by rail. The World Bank just figured that China’s economy would grow 6.7% in 2016, the IMF pegs it at 6.5%, both kowtowing to the GDP declarations issued by the Chinese government. Whose Kool-Aid have they been drinking? This would make 2016 another year when rail freight plunges by a dismal 10% or so while economic growth soars nearly 7% – which would make China one of the fastest growing economies in the world. So something in this convoluted, government-imposed math doesn’t add up here.

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Demand destruction and debt deflation.

Peabody, World’s Top Private Coal Miner, Files For Bankruptcy (Reuters)

Peabody Energy, the world’s largest privately owned coal producer, filed for U.S. bankruptcy protection on Wednesday in the wake of a sharp fall in coal prices that left it unable to service a recent debt-fueled expansion into Australia. The company listed both assets and liabilities in the range of $10 billion to $50 billion. Falling global coal demand, stricter environmental controls and a glut of natural gas have pushed big miners, including the second largest U.S. coal producer, Arch Coal, into bankruptcy protection over the past year.

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It’s cruel game that EU and IMF enjoy far too much.

IMF Says Greek Debt ‘Highly Unsustainable’, Debt Relief ‘Essential’ (R.)

The IMF wants Greece’s European partners to grant Athens substantial relief on its debt which it sees remaining “highly unsustainable”, according to a draft IMF memorandum seen by Reuters. Earlier on Tuesday, Greece and inspectors from its EU/IMF lenders adjourned talks on a crucial bailout review, mainly due to a rift among the lenders over a projected fiscal gap by 2018 and over Athens’ resistance to unpopular reforms. They will resume the review after this week’s IMF spring meetings in Washington, where the lenders are also expected to discuss Greek reforms and debt., Greek Finance Minister Euclid Tsakalotos and German Finance Minister Wolfgang Schaeuble, who told Reuters on Tuesday that he saw no need for debt restructuring, will also be there.

“Despite generous concessional official financing and further reform plans … debt dynamics are projected to remain highly unsustainable,” the IMF draft said. “To restore debt sustainability, in addition to our reform efforts, decisive action by our European partners to grant further official debt relief will be essential.” EU institutions expect Greece to have a fiscal shorfall equivalent to 3% of economic output in 2018, while the IMF projects a 4.5% shortfall. The EU institutions also believe Athens can reach a primary surplus – the budget balance before debt-servicing costs – of 3.5% of GDP by 2018, as targeted in its latest financial bailout.

But the IMF’s draft Memorandum of Financial and Economic Policies (MFEP), which is compiled during the review, projected a primary deficit of 0.5% this year, a surplus of 0.25% in 2017 and a primary surplus of just 1.5% in 2018. It said these figures reflected reform fatigue after five years of adjustments and social pressures in Greece due to high unemployment, which rose to 24.4% in January. The draft projected an average rate of economic growth of 1.25% for the long term, which is lower than its previous forecast. The targets, which it called “ambitious, yet realistic”, could be underpinned by implementing measures that would save the equivalent of 2.5% of GDP by 2018, including reforms to its pension system, income tax, value-added tax and the public sector wage bill.

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If Cameron stays on, Brexit is here.

Pro-EU Leaflets Spark ‘Return To Sender’ Revolt In Britain (AFP)

Britons who want to leave the EU in June’s referendum are sending the government’s pro-Europe leaflets back to Downing Street in a furious protest against a campaign critics have slammed as scaremongering. The “Post It Back” campaign on Facebook and Twitter has attracted support from hundreds of people who do not appreciate the taxpayer-funded, pro-European Union leaflets being delivered to their homes this week. Kirsty Stubbs posted a picture of her leaflet on Facebook defaced with slogans including “What scaremongering rubbish” and “Vote Leave!” before sending it back. Alex Armstrong sent his leaflet back to a freepost address for Prime Minister David Cameron’s Conservatives with an added special package in the hope of lumbering the party with a large bill for postage.

“Just sent back the propaganda leaflet to the freepost address with a suitably heavy attachment – a lump of concrete,” he wrote on Facebook. Others burnt their leaflets or said they would use them as toilet paper, coffee mats or cat litter. Eurosceptic MPs are also angry that Cameron’s government has spent over £9 million on the leaflets, which will eventually go to every home in Britain. They forced a debate on the issue in the House of Commons on Monday. “It is bad enough getting junk mail, but to have Juncker mail sent to us with our own taxes is the final straw,” said Liam Fox, a senior Conservative, punning on the name of European Commission head Jean-Claude Juncker. Another Conservative, Nigel Evans, spoke of his work as an election monitor and compared ministers’ campaign tactics to those in Zimbabwe.

“If in any of the countries I visit I witnessed the sort of spiv (racketeer) Robert Mugabe antics that I have seen carried out by this government, I would condemn the conduct of that election as not fair,” he said. More than 200,000 people have signed a petition on parliament’s website opposing the use of taxpayers’ money to pay for the “biased” leaflet, forcing MPs to schedule another debate on the issue for May 9. The glossy, 16-page leaflet makes a series of claims including that leaving the EU would “create years of uncertainty and potential disruption” and that EU membership “makes it easier to keep criminals and terrorists out of the UK”. The main pro and anti-EU campaigns will each be entitled to send a publicly-funded leaflet to all households or electors, worth up to £15 million each, in the run-up to the June 23 vote. But opponents say that by spending £9 million on this extra leaflet before the formal campaign period begins on Friday, the government is getting an unfair advantage.

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Housing bubbles save governments.

Why Younger People Can’t Afford A House: Money Became Too Cheap (G.)

House prices have risen by 10% in the last year, the Halifax announced last week. Whoopeedoo. What that means is that the intergenerational wealth divide just rose by another 10% – and anyone born after 1985 is going to find it 10% harder to ever buy a home. There is perhaps no greater manifestation of the wealth gap in this country than who owns a house and who doesn’t, and yet it’s so unnecessary. Ignoring land prices for the moment, houses do not cost a lot of money to build – a quick search online shows you can buy the materials for a three-bed timber-framed house for less than £30,000; in China a 3D printer can build a basic home for less than £3,000 – and the building cost of the houses we already have has long since been paid. How can it be that, in the liberal, peaceful, educated society that is 21st-century Britain, a generation is priced out?

These are not times of war, nor are they, for the most part, periods of national emergency, so why should one couple be able to settle down and start a family and another not, by virtue of the fact that one was born 15 years earlier than the other? There has been a failure in both the media and government to properly diagnose the cause of high house prices. Until the causes – our systems of money and planning – are properly understood, we cannot hope to fix the problem. The standard solution is: “we need to build more”, but this is not a simple supply-and-demand issue. Between 1997 and 2007 the housing stock grew by 10%, but the population only grew by 5%. If house prices were a function of supply and demand, they should have fallen slightly over this period. They didn’t. They rose by more than 300%. The cause of house price rises is the unrestrained supply of something else: money.

Mortgage lending over the same period went up by 370%, thinktank Positive Money’s research shows. It was newly created debt that pushed up prices in a decade of extraordinarily loose lending, which gave birth to a national obsession. Houses were no longer places to live, but financial assets. Property owners became immensely wealthy without actually doing anything. And this great, unearned wealth saw the rise of a new rentier class: the buy-to-let landlord. When you have runaway inflation such as this, the Bank of England has a responsibility to quash it, usually by putting up interest rates. But – and here is the great sleight of hand – the Bank has seen fit not to include house prices in its measures of inflation. So, throughout the 90s and 00s, they could then “prove” inflation was low or moderate and interest rates meandered lower. Meanwhile, more and more mortgages were issued, and so more and more money was created, and it pushed up prices. The government didn’t mind.

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Hilarious.

Iceland Shocked By Elite’s Love Of Offshore Holdings (AFP)

Cabinet ministers, bankers and CEOs: the offshore companies at the heart of the leaked Panama Papers have drawn large numbers of Iceland’s elite into a scandal that has already brought down the country’s premier. The documents from the Panama-based law firm Mossack Fonseca, obtained by the International Consortium of Investigative Journalists (ICIJ), revealed just how many Icelanders had holdings hidden away in tax havens.That number is astounding: some 600 Icelanders are named in the documents, in a country of just 320,000. That’s the highest per capita number for any country, according to Johannes Kristjansson, an independent Icelandic journalist who worked with the Consortium. In the streets of Reykjavik, people are disgusted.

“It’s a small clique, and even after the 2008 (financial) crisis they wouldn’t let go. It just confirms that money made during the boom years didn’t disappear into thin air,” a 50-year-old resident, Kolbrun Elfa Sigurdardottir, told AFP. “Who are the people who benefited from this system? We all want to know,” asked Alli Thor Olafsson, 32. The offshore companies are part of the legacy from the euphoria that was rampant in Iceland’s financial sector in the early 2000s when the country’s banks borrowed beyond their means to fund aggressive investments abroad, ultimately causing the 2008 collapse of the three main banks. According to Sigrun Davidsdottir, a journalist at public television RUV who has been investigating offshore holdings since the 2008 crisis, Iceland’s financial advisors were quick to suggest to all and sundry that their money should be placed offshore.

“During the heady years up to 2008, a source said to me that you just weren’t anyone unless you owned an offshore company,” she wrote on her blog. By now, the best-known case is that of ousted prime minister Sigmundur David Gunnlaugsson. In 2007, his then-future wife, Anna Sigurlaug Palsdottir, placed her inheritance from her wealthy businessman father in an offshore tax haven, the British Virgin Islands, via the Credit Suisse bank. Gunnlaugsson owned 50% of the offshore company, named Wintris, a fact he neglected to disclose as required in April 2009 when he was elected to parliament. He resigned last week after massive public protests. Offshore accounts were so well-known in Iceland that the expression “Tortola company” – referring to the most populated island in the British Virgin Islands – had been widespread in Icelandic media, though not the extent to which they were used and by whom.

Gunnlaugsson was definitely not the only government official to own an offshore company. Finance Minister Bjarni Benediktsson owns a company in the Seychelles, while Interior Minister Olof Nordal has one in Panama. Both have so far managed to hold onto their cabinet posts despite the scandal. A former central bank governor and ex-industry minister, Finnur Ingolfsson, the head of pharmaceutical group Alvogen, Robert Wessman, as well as journalist Eggert Skulason of the daily DV are all known to be on the Panama Papers list of offshore account holders.

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All files should be transferred to a Wiki-style open source server.

Swiss Banker Whistleblower: CIA Behind Panama Papers (CNBC)

Bradley Birkenfeld is the most significant financial whistleblower of all time, so you might think he’d be cheering on the disclosures in the new Panama Papers leaks. But today, Birkenfeld is raising questions about the source of the information that is shaking political regimes around the world. Birkenfeld, an American citizen, was a banker working at UBS in Switzerland when he approached the U.S. government with information on massive amounts of tax evasion by Americans with secret accounts in Switzerland. By the end of his whistleblowing career, Birkenfeld had served more than two years in a U.S. federal prison, been awarded $104 million by the IRS for his information and shattered the foundations of more than a century of Swiss banking secrecy.

In an exclusive interview Tuesday from Munich, Birkenfeld said he doesn’t think the source of the 11 million documents stolen from a Panamanian law firm should automatically be considered a whistleblower like himself. Instead, he said, the hacking of the Panama City-based firm, called Mossack Fonseca, could have been done by a U.S. intelligence agency. “The CIA I’m sure is behind this, in my opinion,” Birkenfeld said. Birkenfeld pointed to the fact that the political uproar created by the disclosures have mainly impacted countries with tense relationships with the United States. “The very fact that we see all these names surface that are the direct quote-unquote enemies of the United States, Russia, China, Pakistan, Argentina and we don’t see one U.S. name. Why is that?” Birkenfeld said. “Quite frankly, my feeling is that this is certainly an intelligence agency operation.”

Asked why the U.S. would leak information that has also been damaging to U.K. Prime Minister David Cameron, a major American ally, Birkenfeld said the British leader was likely collateral damage in a larger intelligence operation. “If you’ve got NSA and CIA spying on foreign governments they can certainly get into a law firm like this,” Birkenfeld said. “But they selectively bring the information to the public domain that doesn’t hurt the U.S. in any shape or form. That’s wrong. And there’s something seriously sinister here behind this.” Birkenfeld also said that during his time as a Swiss banker, Mossack Fonseca was known as one piece of the vast offshore maze used by bankers and lawyers to hide money from tax authorities. But he also said that the firm that is at the center of the global scandal was also seen as a relatively small player in the overall offshore tax evasion business.

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Ha!

Australia Issues The Most Hideous Banknote In History (SMH)

The new $5 note continues Australia’s proud history of monetary innovation. When the British founded the convict colony of NSW in 1788, Governor Arthur Phillip embarked on a unique social experiment. He would establish a society without money, as having it around would only give the convicts something else to steal. Rum became the currency of choice, with the pound making way for the pint and the shilling swapped for the shot. In 1814, Governor Lachlan Macquarie decided he could not run a colony on a currency prone to spillage and evaporation. He bought 40,000 Spanish pieces of eight, the currency more pirates prefer, and cut the centre out of each piece, creating two coins, the holey dollar and the dump. In a moment of Scottish fiscal genius, Macquarie declared the two new coins would have a combined value of one-and-a-quarter pieces of eight, generating a tidy profit for his government.

Australia’s first banknote was printed by the Bank of NSW in 1817. The bank, established by convicted criminals, was commonly known as the Convict’s Bank and is now known as Westpac. In 1988, Australia celebrated its bicentenary by revolutionising banknote design, issuing the world’s first polymer note, the brainchild of Australia’s CSIRO. The organisation was so good at the science of making money that this is now the only science the Australian government will let it do. And now, with the new $5 note, Australia is again leading the world in banknote design. The Reserve Bank is proud to announce it has designed, possibly, the most hideous banknote in history. This is the start of a campaign to make our currency so nauseatingly unappealing that people will switch to electronic payments (saving the Australian government printing costs).

The new wattle motif, designed to look like anthrax spores, will stop old people sending money by mail (saving the Australian government postage costs). The government must have retained the designer of Australia’s 1984 Olympic uniforms to come up with a startling combination of off-pink and bilious yellow, before giving the Reserve Bank’s gibbon the keys to the inkjet. Blind people will love the new banknote for its revolutionary tactile features, but mainly because they won’t be able to see it. The worst thing about the new $5 note, however, is that it dispenses with one of the greatest Australians ever, Catherine Helen Spence – who was commemorated in 2001 for the note issued to celebrate the centenary of federation.

Spence was the first Australian woman novelist to write about Australian issues, the mother of the Australian foster care system, the leading campaigner for proportional representation in government, a hero of the women’s suffrage movement, and Australia’s first female political candidate. And those are but a few of her achievements. Spence has been forced to make way for a lump of neo-brutalist architecture – our Parliament House –topped by a giant Australian flag. A non-Australian, the Queen retains pride of place on the new note.

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Canada, US, Australia and more.

Canadian First Nation Suicide Epidemic Has Been Generations In The Making (G.)

The Attawapiskat First Nation, or the people of the parting rocks, as they are known in their indigenous Swampy Cree language, number roughly 2,000 souls. They live on a small Indian reserve 600 miles north of the Canadian capital of Ottawa, at the mouth of James Bay’s Attawapiskat River. This subarctic First Nation declared a state of emergency after 11 community members tried to take their own lives Saturday night. Since last September, more than 100 Attawapiskat people have attempted suicide in what local MP Charlie Angus has described as a “rolling nightmare” of a winter. The ghastly toll reveals a grim reality with which a nation in the midst of a process of truth and reconciliation now must reckon.

Suicide does not merely roll in like a hurricane to uproot homes and families, and drown out neighborhoods before receding from where it came. No, this has been an emergency generations in the making, tacitly supported by a Canada fully willing to mine natural resources, proselytize and brutalize generations of children in residential schools, and then leave with basic housing, education systems and healthcare in a state of disrepair. In 2011, Attawapiskat declared a state of emergency due to a “severe housing shortage”. In 2014, the community opened the first proper elementary school to serve Attawapiskat’s children in 14 years. At the same time, the De Beers mining company pulled $392m worth of diamonds out of their Victor Lake mine on lands taken from the Attawapiskat First Nation through an extension of Treaty 9 in 1930.

This is how First Nations live in the Bantustans of Canada’s north. Broke and broken people with little to no opportunities live in cold, run-down homes and suffer from generations of sexual, physical and psychological abuse. They look on as hundreds of millions of dollars worth of resources are mined from their ancestral homelands. This is not an emergency – a catastrophe for which Canada was unprepared and never saw coming. No, this is and always has been part of the design and devastation that colonization wrought. In order to take the land, Canadian settlers needed to eliminate First Nations and their prior and legitimate political claims to territories. In the late 19th and early 20th centuries, infectious diseases and state-supported starvation gave way to the institutional violence of Indian reserves and residential schools, where more than 150,000 First Nations children were taken from 1876 to 1996.

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No more Schengen.

Brussels Gives Greece Two Weeks To Tighten Borders (Kath.)

The European Commission on Tuesday gave Greece two weeks to determine how it plans to tighten control of its borders, noting that although progress has been made, the process of registering thousands of migrants streaming through the country remained inadequate. The Commission criticized an action plan submitted by Athens, noting that it lacked “detailed time frames” for fixing problems. It also demanded guarantees that EU funding for migration will be used properly. “The Commission requests that Greece provide the additional elements and clarifications by 26 April,” it said in a statement which acknowledged Athens had made “significant progress.” If Greece fails to take remedial action, Brussels could authorize other EU member-states to extend border controls in the Schengen passport-free area for up to two years instead of the normal six months. Such a scenario would effectively suspend Greece’s participation in the Schengen zone.

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Can’t stop this.

Refugees Become Smugglers Following EU-Turkey Deal (MEE)

Refugees and migrants in Greece have begun joining smuggling networks in growing numbers in a desperate bid to earn enough cash to pay for their own journeys north since an agreement between the EU and Turkey has made it more difficult for people to make it to places like Germany. In Idomeni, the northern border between Greece and Macedonia where more than 11,000 people have been stuck for weeks, the smugglers have been out in full force since the controversial deal officially – slated as a major blow to smuggling rings in Turkey and Europe – began to be implemented and the first migrants sent back. In contrast to the stated aim of cutting down on smuggling, smugglers can be seen in parking lots of hotels and abandoned gas stations, nor are the locals working alone.

In their bid to earn enough cash to make it north, some of the refugees and migrants stranded in Greece have started working as “fixers” for the smugglers, while smaller groups, mostly from Afghanistan, have started to self-organise and develop their own smuggling routes through parts of the Balkans. While the development is not altogether new, and some new arrivals have long stayed on with smugglers, the practice appears to be accelerating and is happening more in the open than ever before. [..] Despite the dangers, growing numbers of people feel they have no choice as border closures and barbed wire fences have made paying smugglers even more expensive. Karam, a Syrian refugee who paid smugglers to get to Germany last year and has now returned to Greece as a volunteer, says that prices have gone up and that he only paid $2,700 to make it all the way to Germany, significantly less than the journey would cost today.

“When I travelled to Germany, the smugglers did not see us as people but as commodities. We were often in risky situations during the trip and they didn’t care much. The only thing important to them was to transfer us as quickly as possible and return back for a new tour of people. I suppose they treat people even worse now,” said Karam. “I think that today, in this situation, I would apply to stay in Greece.”

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And the beat goes on and on.

Greek Coast Guard Rescues 120 Refugees Off Lesvos, Samos (Kath.)

Greek coast guard officers rescued 120 refugees and migrants in three separate incidents off Lesvos and Samos, authorities said on Wednesday morning. Officials said that between Tuesday and Wednesday morning there had been 101 arrivals on the Aegean islands. There are currently 3,644 people at the Lesvos hotspot, 1,827 in Chios and 516 on Samos, according to authorities.

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Apr 082016
 
 April 8, 2016  Posted by at 9:30 am Finance Tagged with: , , , , , , , , ,  1 Response »


Wyland Stanley Golden Gate Bridge under construction 1935

US Braces for Worst Earnings Season Since 2009 (BBG)
Albert Edwards: Coming ‘Tidal Wave’ Will Throw The US Into Recession (BI)
Asian Shares Drop As Banks Come Under Pressure (Reuters)
KKR’s Chilling Message about the ‘End of the Credit Cycle’ (WS)
China Steel Exports Will Stay At High Levels For Years (BBG)
US Politics Is Closing The Door On Free Trade (FT)
VW Managers ‘Refuse To Forego Bonuses’ (AFP)
It’s Time To Start Worrying About The Health Of European Banks (BBG)
More Than 40% of Student Borrowers Aren’t Making Payments (WSJ)
UK’s Cameron Admits He Profited From Father’s Offshore Fund (AFP)
European Bankers Step Down as Panama Papers Pile on Pressure
Pirate Party Backed By Almost Half Of Iceland’s Voters (Ind.)
Turkey Will Ditch Migrant Deal If EU Breaks Promises: Erdogan (AFP)
Amnesty: ‘Serious Flaws’ Mar Greek Side Of EU-Turkey Migrants’ Deal (Reuters)
Questions Mount Over EU’s Role In Processing Greece Asylum Requests (IT)
Greece Ferries Second Boat Of Migrants To Turkey Under EU Pact (Reuters)
Refugees In Greece Warn Of Suicides (G.)

See under ‘Recovery’ in your dictionary.

US Braces for Worst Earnings Season Since 2009 (BBG)

U.S. corporate profits are expected to drop the most in 6 1/2 years in the first quarter, led by a wipeout in the embattled energy sector. Earnings for companies in the Standard & Poor’s 500 Index will fall 9.8% year-over-year, which would be the sharpest decline since the third quarter of 2009 and a fourth consecutive quarter of contraction, according to Bloomberg data. Results will be insufficient to justify current stock valuations, says Alex Bellefleur, head of global macro strategy and research at Pavilion Global Markets.

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“The US is in for a full-blown end to the economic cycle.”

Albert Edwards: Coming ‘Tidal Wave’ Will Throw The US Into Recession (BI)

A tidal wave is coming to the US economy, according to Albert Edwards, and when it crashes it’s going to throw the economy into recession. The Societe Generale economist, and noted perma-bear, believes that the profit recession facing American corporations is going to lead to a collapse in corporate credit. “Despite risk assets enjoying a few weeks in the sun our fail-safe recession indicator has stopped flashing amber and turned to red,” wrote Edwards in a note to clients on Thursday. He continued (emphasis added): “Whole economy profits never normally fall this deeply without a recession unfolding. And with the US corporate sector up to its eyes in debt, the one asset class to be avoided — even more so than the ridiculously overvalued equity market — is US corporate debt. The economy will surely be swept away by a tidal wave of corporate default.

Edwards said that many economic researchers discredit profits as a measure of the business cycle, and it is one of the reasons why they are so bad at predicting recessions. Profits are on the decline for two reasons, according to Edwards. On the one hand, they are dropping because of margin pressure from rising labor costs. But this sort of decrease because of higher wages does not always signal a recession, like in 1986. Additionally, much like the mid-1980s decline, an oil-price crash is disproportionately dragging down profits. The second reason is because companies cannot pass on these increasing wage pressures to consumers through prices. In turn, they decrease spending and hiring, and the most vulnerable cannot make debt payments.

Edwards enumerated three reasons why this time around is a recessionary decrease, not a 1986-style aberration. They are:
• “When the oil price slumped in 1986 the economy was steaming ahead at a 4% pace and so withstood the downturn in business investment.”
• “In 1986 Fed Funds were cut from over 8% to less than 6% at a time when the consumer was re-leveraging, i.e. not debt averse as now.”
• “Finally, companies in 1986 were not up to their necks in debt as they currently are, and their solvency now is far more vulnerable to a profits downturn.”

So this time will not be a quick, oil-driven recovery. The US is in for a full-blown end to the economic cycle. Edwards did include some advice to investors on how to weather the coming wave, though. “And if I had to pick one asset class to avoid it would be US corporate bonds, for which sky high default rates will shock investors,” he wrote. You’ve been warned.

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This will only lead to more stimulus until and unless financial markets start applying serious pressure.

Asian Shares Drop As Banks Come Under Pressure (Reuters)

Asian shares extended losses to three-week lows on Friday, while the yen soared to a 17-month high against the dollar as investors bet Japan would be hard pressed to drive down its currency in the face of widespread foreign opposition. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5%, heading for a weekly drop of 1.8%. Japan’s Nikkei pared earlier losses to near-two-month lows to trade 0.6% lower, with financials under pressure. It’s on track for a decline of 3.1% for the week. China’s Shanghai Composite slid 0.9%, poised for a similar drop for the week. The CSI 300 was down 0.8%, set for a 1.2% weekly decline. Hong Kong’s Hang Seng slipped 0.7%, headed for 1.9% loss for the week.

Bank shares led losses in Europe and the U.S. markets on Thursday, amid talk of more layoffs and cutbacks planned by Europe’s major lenders as they struggle with zero rates. The U.S. S&P 500 lost 1.2%, with financial shares falling 1.9%. In Europe, the FTSE closed down 0.8%, hurt by a drop of more than 2% in financials. “When bank shares are making big falls and their CDS spreads are rising like this, obviously you would think something is afoot. If they keep falling in today’s session, that is going to be really worrying,” said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank. U.S. stock futures slipped about 0.1% further in Asian trade after Federal Reserve Chair Janet Yellen, in a conversation with former Fed chairmen, said the U.S. economy is on a solid course and still on track to warrant further interest rate hikes.

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All vultures all the way.

KKR’s Chilling Message about the ‘End of the Credit Cycle’ (WS)

After seven years of “emergency” monetary policies that allowed companies to borrow cheaply even if they didn’t have the cash flow to service their debts, other than by borrowing even more, has created the beginnings of a tsunami of defaults. The number of corporate defaults in the fourth quarter 2015 was the fifth highest on record. Three of the other four quarters were in 2009, during the Financial Crisis. At stake? $8.2 trillion in corporate bonds outstanding, up 77% from ten years ago! On top of nearly $2 trillion in commercial and industrial loans outstanding, up over 100% from ten years ago. Debt everywhere! Of these bonds, about $1.8 trillion are junk-rated, according to JP Morgan data. Standard & Poor’s warned that the average credit rating of US corporate borrowers, at “BB,” and thus in junk territory, hit a record low, even “below the average we recorded in the aftermath of the 2008-2009 credit crisis.”

The risks? A company with a credit rating of B- has a 1-in-10 chance of defaulting within 12 months! In total, $4.1 trillion in bonds will mature over the next five years. If companies cannot get new funds at affordable rates, they might not be able to redeem their bonds. Even before then, some will run out of cash to make interest payments. A bunch of these companies are outside the energy sector. They have viable businesses that throw off plenty of cash, but not enough cash to service their mountains of debts! Among them are brick-and-mortar retailers that have been bought out by private equity firms and have since been loaded up with debt. And they include over-indebted companies like iHeart Communications, Sprint, or Univsion.

The “end of the credit cycle” has dawned upon the markets. As credit tightens, companies that can’t service their debts from operating cash flows may be denied new credit with which to service existing debts. The recipe of new creditors’ bailing out existing creditors worked like a charm for the past seven years. But it isn’t working so well anymore. What follows is a debt restructuring — either in bankruptcy court or otherwise. Money is now piling up in funds run by private equity firms, to be deployed at the right moment to profit from this. But not by playing the entire market, or to bail out existing investors. No way. This money will be deployed at the expense of existing investors. One of the biggest players is PE firm KKR, which just raised $3.35 billion to take advantage of opportunities in “distressed assets.” Existing investors, brace yourself!

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The west doesn’t stand a chance without protectionism.

China Steel Exports Will Stay At High Levels For Years (BBG)

Exports of steel from China will remain at high levels as local demand shrinks for years, according to Li Xinchuang, president of the country’s Metallurgical Planning Institute, who said mills in developed markets including the U.K. are struggling because their competitiveness is weak. While export volumes won’t increase from last year’s record, they won’t decline significantly either, Li said. Steel overcapacity is a global problem and China is already playing its part with proposals to close as much as 150 million tons that will put more than half a million people out of work, Li said, speaking in an interview and at a conference. Steel shipments from China surged in 2015 as Asia’s largest economy slowed and domestic demand shrank, with the flood of cargoes boosting global competition, hurting prices and squeezing profits. Britain faces an industry crisis after India’s Tata Steel said last week it was considering selling its unprofitable U.K. division, jeopardizing about 15,000 jobs.

Some steelmakers in the U.K. and U.S. “can’t meet local demand and they can’t compete globally,” Li said on Wednesday, rejecting claims that shipments from China are traded unfairly. “China is competitive for three reasons: good price, good service, good quality.” Tata Steel’s plan to sell its British plants has led to U.K. calls for tougher trade measures against China, which accounts for half of global output. China is prepared to defend itself at the World Trade Organization, according to Li, who’s also deputy secretary general of the China Iron & Steel Association. Fortescue CEO Nev Power sees the country becoming more competitive. “The new steel mills that are being built in China are very efficient, very energy-efficient, very productive,” he said in a Bloomberg TV interview on Thursday. “China is setting itself up to be a very competitive supplier to other emerging economies throughout Asia.”

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Sign of the times.

US Politics Is Closing The Door On Free Trade (FT)

Donald Trump wants to slap punitive tariffs on China. Hillary Clinton opposes the 12-nation Trans-Pacific Partnership she once hailed as a gold standard for a new generation of free trade deals. Republicans are embracing Democrat demands for “fair” trade. The US, the architect of the open global system, is turning inwards. The rest of the world should sit up. This is about more than the raw political emotions stirred by a US presidential race. The WTO’s failed Doha Round saw the end of the multilateral trade liberalisation that gave us the globalised economy. The failure of the TPP would read the rites over the big plurilateral deals that promised an alternative. Free trade has been a powerful source of prosperity. It has lost political legitimacy. And not only in the US: European populists of left and right share the Trumpian disposition to throw up the barricades.

Optimists hope the protectionist turn in the US is cyclical. Things will get back to normal once the cacophony of the presidential contest subsides. Freed from the primary challenge of Bernie Sanders, Mrs Clinton, the most likely successor to President Barack Obama, will find a way to change her mind again. The TPP could yet be smuggled through Congress during the lame-duck interlude after November’s elections. Such is the line from Mr Obama’s White House and from a diminishing band of Republicans true to their free trade heritage. All the evidence points the other way. Globalisation has gone out of fashion. Shrewd Washington observers have concluded that, as one puts it, “ there is not a chance in hell” of the next president or the next Congress – of whatever colour – backing the TPP.

As for the mooted, and now being negotiated, Transatlantic Trade and Investment Partnership (TTIP) designed to integrate the US and European economies, dream on. Mr Trump has struck a powerful chord among his core constituency in blaming foreigners for America’s economic ills. The backlash against free trade, though, runs deeper than cheap populism. The middle classes have seen scant evidence of the gains once promised for past deals. Republicans, fearful that they have already lost the presidency, do not want to risk handing Congress to fair-trade Democrats. Some problems are specific to the TPP. The prospective wins for the US are heavily tilted towards technology businesses on the west coast.

Manufacturing America thinks it secures little in the way of better access to Asian markets and complains that the deal leaves US companies vulnerable to currency manipulation by overseas competitors. Many more Americans than would ever gift their votes to Mr Trump question whether they get anything out of trade deals. Free trade has always created losers, but now they seem to outnumber the winners. There is nothing populist about noticing that globalisation has seen the top 1% grab an ever-larger share of national wealth.

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Time for shareholders.

VW Managers ‘Refuse To Forego Bonuses’ (AFP)

Top executives at Volkswagen are refusing to forego their bonuses this year, despite prescribing belt-tightening for the carmaker’s workforce in the wake of the massive emissions-cheating scandal, the weekly magazine Der Spiegel reported on Thursday. Without naming its sources, the magazine said that shortly before a supervisory board decision that executive board members had made it clear they were willing to “accept a cut in their bonuses, but not forego them entirely”, even though they have repeatedly told the workforce that the crisis threatens the group’s very existence. VW’s former chief executive Martin Winterkorn received a bonus of more than €3 million a year ago. A company spokesman told AFP that the board pay would be published in VW’s annual report on April 28.

“The management board is determined to set an example when it comes to the adjustment in the bonuses,” he said, dismissing the Spiegel article as “pure speculation.” Winterkorn’s successor Matthias Mueller was parachuted in last year to steer the carmaker out of its deepest-ever crisis which erupted when VW was exposed as having installed emissions-cheating software into 11 million diesel engines worldwide. At the time, Mueller told the workforce that there would have to be “belt-tightening at all levels” from management down to the workers. But according to Der Spiegel, the former finance chief Hans-Dieter Poetsch, who was appointed to the head of the supervisory board in October, pocketed nearly €10 million as “compensation” for the lower pay he would receive as a result.

The scandal is expected to cost VW still incalculable billions of euros in fines and possible legal costs. Unions are concerned that the belt-tightening needed to cope with the fallout from the engine-rigging scandal could lead to job cuts. “We have the impression that the diesel engine scandal could be used as a backdoor for job cuts that weren’t up for discussion until a couple of months ago,” the works council wrote in a letter to the management of VW’s own brand and published on the website of the powerful IG Metall labour union.

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“.. 90% of the world’s banks will have disappeared in the next 20 years..”

It’s Time To Start Worrying About The Health Of European Banks (BBG)

European banks have lost their mojo. A toxic combination of negative interest rates, comatose economies and a regulatory backdrop that might euphemistically be described as challenging is wreaking havoc with bank business models. Their collective market value has dropped by a quarter so far this year. The smoke signals emanating from the European Central Bank in recent weeks suggest regulators aren’t blind to this. Daniele Nouy, who chairs the ECB’s bank supervisory board, said earlier this week that the central bank “is aware that the low-interest-rate environment is putting pressure on the profitability of European banks.” Regulators may respond by going easier when drafting new rules.

Bank-failure rules to prescribe how banks design their balance sheets to absorb potential losses may be eased, according to a European Commission discussion paper prepared last month. Meanwhile, a global panel of regulators will hold a meeting in London this month to let banks give additional feedback on proposed rules about how much capital they must set aside to back their trading activities. This comes none too soon. The drop in industry capitalization, which reflects investor unease about future profitability, is rearranging the pecking order in European finance. Deutsche Bank, for example, was the most active manager of European bond sales in 2014 with a market share approaching 6.5%; last year it slipped to third, and so far this year it ranks fourth. At the end of 2015 the German lender was Europe’s 14th biggest bank; now it’s 20th:

Deutsche Bank Chief Executive Officer John Cryan said last month that, burdened by restructuring and legal costs, he doesn’t expect his firm to be profitable this year. It’s far from the only one struggling; on Tuesday, Barclays warned that its first-quarter investment banking income will be worse than it was last year. In Italy, officials are scrambling to create a state-backed fund to prop up an industry burdened by more than €200 billion of the €1.2 trillion of bad loans hampering the euro zone’s recovery. No wonder ECB President Mario Draghi spent much of his press conference a month ago answering questions about the damage negative interest rates are doing to banks. They have to pay for the privilege of holding cash on deposit at the central bank, but can’t pass those costs onto their own depositors.

The current structure of the banking system is “unfeasible,” and 90% of the world’s banks will have disappeared in the next 20 years, Banco Bilbao Vizcaya Argentaria SA Chairman Francisco Gonzalez said in an interview published by El Pais newspaper last week. Banks that can’t cover their cost of capital aren’t viable, making industry consolidation inevitable, he said.

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Subprime revisited. The weight will shift from borrowers to lenders.

More Than 40% of Student Borrowers Aren’t Making Payments (WSJ)

More than 40% of Americans who borrowed from the government’s main student-loan program aren’t making payments or are behind on more than $200 billion owed, raising worries that millions of them may never repay. The new figures represent the fallout of a decadelong borrowing boom as record numbers of students enrolled in trade schools, universities and graduate schools. While most have since left school and joined the workforce, 43% of the roughly 22 million Americans with federal student loans weren’t making payments as of Jan. 1, according to a quarterly snapshot of the Education Department’s $1.2 trillion student-loan portfolio. About 1 in 6 borrowers, or 3.6 million, were in default on $56 billion in student debt, meaning they had gone at least a year without making a payment.

Three million more owing roughly $66 billion were at least a month behind. Meantime, another three million owing almost $110 billion were in “forbearance” or “deferment,” meaning they had received permission to temporarily halt payments due to a financial emergency, such as unemployment. The figures exclude borrowers still in school and those with government-guaranteed private loans. The situation improved slightly from a year earlier, when the nonpayment rate was 46%, but that progress largely reflected a surge in those entering a program for distressed borrowers to lower their payments. Enrollment in those plans, which slash monthly bills by tying them to a small%age of a borrower’s income, jumped 48% over the year to 4.6 million borrowers as of Jan. 1.

Advocacy groups, some members of Congress and the federal Consumer Financial Protection Bureau fault loan servicers—companies the government hires to collect debt—for not doing enough to reach troubled borrowers to offer such payment options. “The servicers aren’t quite promoting them in the way they should be—I think some of it’s information failure,” said Rachel Goodman, a staff attorney at the American Civil Liberties Union.

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Foot. Mouth.

UK’s Cameron Admits He Profited From Father’s Offshore Fund (AFP)

British Prime Minister David Cameron admitted Thursday he had held a £30,000 stake in an offshore fund set up by his father, after days of pressure following publication of the so-called Panama Papers. Cameron sold the stake in the Bahamas-based trust in 2010, four months before he became prime minister, he said in an interview with television channel ITV. Downing Street have issued four statements on the affair this week following Sunday’s publication of the leaked Panama Papers, which showed how Panama-based law firm Mossack Fonseca had helped firms and wealthy individuals set up offshore companies. “We owned 5,000 units in Blairmore Investment Trust, which we sold in January 2010. That was worth something like £30,000,” Cameron said.

“I sold them all in 2010, because if I was going to become prime minister I didn’t want anyone to say you have other agendas, vested interests.” He insisted he had paid income tax on the dividends from the sale of the units, which he bought in 1997. Downing Street first dismissed the story as a private matter on Monday before saying Cameron had no offshore funds, then saying he and his wife and children did not benefit from any offshore funds. It later added that Cameron would not benefit from such funds in the future. The row is the latest headache for Cameron, who faces a tight race to ensure Britain stays in the European Union in a referendum due to be held on June 23.

The prime minister has been under intense pressure from the main opposition Labour party and media this week to come clean over his financial arrangements past and present. Labour’s deputy leader Tom Watson told Sky News that, while it was too early to say whether Cameron should quit, “he may have to resign over this but we need to know a lot more about what his financial arrangements have been”.

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A wave of lost jobs.

European Bankers Step Down as Panama Papers Pile on Pressure

European regulators pressed the region’s banks for details of their offshore business dealings, as two senior bankers resigned over allegations arising from the Panama document leak. Britain’s financial watchdog sent out letters asking banks and other financial companies to disclose any ties to Panama law firm Mossack Fonseca, said a person with knowledge of the situation. Swiss regulator Finma said it would also investigate “suspicious” connections unearthed by the Panama Papers. “The leaked database from Panama is just the latest proof of how money flows like water through multiple jurisdictions, sometimes for legitimate purposes, sometimes not,” Finma director Mark Branson told reporters in Bern on Thursday.

Media reports this week based on millions of documents leaked from Mossack Fonseca revealed how its lawyers, including a Geneva team, worked with Credit Suisse, UBS and other banks to create offshore shell companies for world leaders, athletes and other rich clients. On Thursday, ABN Amro announced the resignation of supervisory board member Bert Meerstadt after his name appeared in the leaked records. He said in a statement that he had already planned to leave but was now resigning immediately “to prevent any detrimental effects to the bank.” Meerstadt was a shareholder of a British Virgin Island-based entity in March 2001, Dutch newspaper Het Financieele Dagblad reported Thursday. ABN Amro CEO Gerrit Zalm said he had never heard of Mossack Fonseca before the leak and that he doesn’t know the facts of the case but considers it a private matter. In Austria, the chief executive officer of Vorarlberger Landes- und Hypothekenbank, resigned after the province-owned bank was mentioned in reports about offshore companies.

Michael Grahammer cited “biased” local media reports about offshore accounts linked to Gennady Timchenko, a Russian billionaire targeted by U.S. sanctions since 2014. “I’m still 100 percent convinced that the bank has at no time violated laws or sanctions,” Grahammer said. “At the end of the day, the media bias against Hypo Vorarlberg and myself that showed in the last few days was the main reason for me to take this step.” In its letters, the U.K. Financial Conduct Authority gave firms an April 15 deadline to disclose any connections to Mossack Fonseca. In Sweden, the government will consider tightening laws against money laundering and tax evasion. Financial Markets Minister Per Bolund said. He said authorities are investigating allegations that Nordea Bank, the biggest bank in Scandinavia, helped clients evade tax through shell companies in low-tax countries.

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More signs of the times.

Pirate Party Backed By Almost Half Of Iceland’s Voters (Ind.)

The Pirate Party would receive nearly half of voters’ support if Iceland held a general election now, new statistics have revealed. The anti-establishment party received 43% of the vote according to research by Icelandic media organisations Frettabladid, Stod 2 and Visir. The Progressive Party, currently in a coalition with the Independence Party, would only receive 7.9% support, Iceland Monitor reports. The rising popularity of the Pirate Party, which campaigns in favour of transparency and direct democracy, among people in Iceland is in response to the leak of the Panama Papers. The documents from Panamanian law firm Mossack Fonseca reportedly revealed that Sigmundur David Gunnlaugsson, who stood aside as Prime Minister for an unspecified amount of time earlier this week, owned an offshore company in the British Virgin Islands with his wife.

Mr Gunnlaugsson did not declare Wintris, which held millions in the bonds of failed Icelandic banks, when he entered parliament, according to the International Consortium of Journalists. He has denied any wrongdoing and says he sold his shares in the company to his wife. But MPs in the opposition have said it is a conflict of interest with his duties. The government has named Fisheries Minister Sigurdur Ingi Johannsson as Prime Minister and he is due to meet Iceland’s president Olafur Ragnar Grimsson on Thursday. However the opposition in planning on pursuing a vote of no confidence in the government in parliament. Earlier, Pirate Party member Helgi Hrafn Gunnarsson said: We will still push forward for a proposal to dissolve parliament and hold earlier elections. Elections have now been brought forward to autumn.

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The EU will cause the deaths of many more people.

Turkey Will Ditch Migrant Deal If EU Breaks Promises: Erdogan (AFP)

Turkish President Recep Tayyip Erdogan on Thursday warned the European Union that Ankara would not implement a key deal on reducing the flow of migrants if Brussels failed to fulfil its side of the bargain. Erdogan’s typically combative comments indicated that Ankara would not sit still if the EU fell short on a number of promises in the deal, including visa-free travel to Europe for Turks by this summer. Meanwhile, the Vatican confirmed that the pope would next week make a brief, unprecedented trip to the Greek island of Lesbos where thousands of migrants are facing potential deportation to Turkey under the deal. “There are precise conditions. If the European Union does not take the necessary steps, then Turkey will not implement the agreement,” Erdogan said in a speech at his presidential palace in Ankara.

The March 18 accord sets out measures for reducing Europe’s worst migration crisis since World War II, including stepped-up checks by Turkey and the shipping back to Turkish territory of migrants who land on the Greek islands. In return, Turkey is slated to receive benefits including visa-free travel for its citizens to Europe, promised “at the latest” by June 2016. Turkey is also to receive a total of €6 billion in financial aid up to the end of 2018 for the 2.7 million Syrian refugees it is hosting. Marc Pierini, visiting scholar at Carnegie Europe, described the visa-free regime as one of the “biggest benefits for Turkey” in the migrant deal. He told AFP that Turkey still has to fulfil 72 conditions on its side to gain visa-free travel to Europe’s passport-free Schengen zone and that the move would also have to be approved by EU interior ministers.

“We shall see if that is a realistic prospect,” he said. Turkey’s long-stalled accession process to join the EU is also supposed to be re-energised under the deal. But Pierini said there were many conditions still to be fulfilled here. “The worst reading of the EU-Turkey deal would be to imagine that Turkey is about to get a ‘discount’ on EU membership conditions just because of the refugees,” he said. Erdogan argued Turkey deserved something in return for its commitment to Syrian refugees, on whom it has spent some $10 billion since the Syrian conflict began in 2011. “Some three million people are being fed on our budget,” the president said. “There have been promises but nothing has come for the moment,” he added.

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Europe’s true character is being revealed.

Amnesty: ‘Serious Flaws’ Mar Greek Side Of EU-Turkey Migrants’ Deal (Reuters)

Migrants held on the Greek islands Lesbos and Chios live in “appalling” conditions with little access to legal aid or information about their fate under a European Union agreement that will send some back to Turkey, Amnesty International said on Thursday. Under a deal between the EU and Ankara in place since March 20, undocumented migrants who cross to Greek islands will be kept in holding centers until their asylum claims are processed. Those who do not qualify will be returned to Turkey. The first group of 202 migrants to be returned, most of them from Pakistan and Afghanistan, were sent back to Turkey on Monday.

“People detained on Lesbos and Chios have virtually no access to legal aid, limited access to services and support, and hardly any information about their current status or possible fate,” said Amnesty Deputy Director for Europe Gauri van Gulik. “The fear and desperation are palpable,” she said. In a report published Thursday, Amnesty said among those held in the centers are a small baby with complications after an attack in Syria, heavily pregnant women, people unable to walk, and a young girl with a developmental disability. Many refugees spoke about the lack of access to doctors or medical staff. Legal aid is scarce and inaccessible to the vast majority, and asylum procedures are expected to be rushed, it said. Refugees told Amnesty that they did not get enough information about what the asylum process will entail. Many have received no or incomplete documentation of their registration.

“It is likely that thousands of asylum seekers will be returned to Turkey despite it being manifestly unsafe for them,” Amnesty wrote. Monitors visited the islands this week. One Syrian woman told Amnesty she and her family signed several documents despite not having an interpreter present, and were not provided with copies. “I don’t need food, I need to know what is happening,” the woman was quoted as saying. “Serious and immediate steps must be taken to address the glaring gaps we’ve documented in Lesbos and Chios,” Amnesty’s van Gulik said. “They show that in addition to Turkey not being safe for refugees at the moment, there are also serious flaws on the Greek side of the EU-Turkey deal. Until both are fully resolved, no further returns should take place.”

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Chaos is the MO.

Questions Mount Over EU’s Role In Processing Greece Asylum Requests (IT)

Four days after the deportation by the EU border agency Frontex of the first group of migrants from Greece to Turkey following the signing of the EU-Ankara deal, questions are mounting as to the EU’s role in processing asylum applications from the thousands of people who have arrived on Greece’s islands since March 20th, when the agreement came into force. While no more deportations have taken place since Monday, almost 5,500 people are now in detention on four Greek islands, 3,100 of them in the Moria hotspot on Lesbos alone, including women, children and other vulnerable groups. According to Boris Cheshirkov of the UN’s refugee agency, the UNHCR, “close to everyone” in Moria has submitted an asylum application.

Under the new regime created by the EU-Turkey agreement, asylum applications from island detainees must be processed within two weeks, in a fast-tracked time frame that includes the appeal process. Previously, the Greek asylum service took an average of three months to adjudicate on each application. A key aspect sees the European Asylum Support Office (Easo), another EU agency, advise overburdened Greek asylum officials on the “admissibility” of each asylum seeker at the initial stage of processing. Easo spokesman Jean Pierre Schembri told the BBC: “This is a relatively short process involving our experts … accessing every applicant on his or her own merits. We then issue an opinion and the Greek authorities then issue the final decision.”

But human rights organisations fear the outcome of this truncated, two-step process, where Greek officials will essentially sign off on Easo recommendations, is predetermined to result in most applicants being returned to Turkey, a “safe third country” according to the agreement. Referring to Syrians, Schembri said Turkey “for one may be safe, but for the other it might not be”. Groups such as Amnesty International say that far too many questions remain about how Easo will make its recommendations. “You can’t have confusion or doubt around these procedures before you kick it off,” said Gauri van Gulik, Amnesty’s deputy director for Europe.

“The biggest question for us is what information and which criteria will be used to decide whether someone is or isn’t at risk in Turkey . . . In some cases, it is quite random how some people are targeted, so it’s not about the individual’s experience or how long they’ve lived in Turkey, alone. It’s also about Afghans not getting any status legally in Turkey if they go back. “The bottom line is that here is no permanent protection for anyone [in Turkey]. There’s only temporary protection status for Syrians and then there’s the practice of certain groups being tolerated for a certain while, which is very different to having protection, access to work and access to social services.”

Read more …

After saying yesterday nothing would happen for 2 weeks…

Greece Ferries Second Boat Of Migrants To Turkey Under EU Pact (Reuters)

A ferry carrying 45 migrants left the Greek island of Lesbos for Turkey on Friday, the second such journey carried out under a controversial EU deal to stem mass irregular migration to Europe. A second boat carrying a larger group was scheduled to leave the island later in the morning, state TV reported. Those who left early on Friday were from Pakistan, it said. The first group of 202 migrants to be returned, most of them from Pakistan and Afghanistan, were sent back to Turkey on Monday. At the port of Mytilene, at least two activists jumped into the water close to the small ferry, dangling from the heavy chain of the anchor and flashing the ‘v’ sign for victory. They were hoisted out of the water by the Greek coastguard.

The first group of 202 migrants to be returned, most of them from Pakistan and Afghanistan, were sent back to Turkey on Monday. Under the EU-Turkey deal, Ankara will take back all migrants and refugees, including Syrians, who enter Greece through irregular routes in return for the EU taking in thousands of Syrian refugees directly from Turkey and rewarding it with more money, early visa-free travel and progress in its EU membership negotiations.

Read more …

No decency, no mercy, no nothing.

Refugees In Greece Warn Of Suicides (G.)

Syrians and Afghans threatened with deportation from the Greek islands of Lesbos and Chios have said they would rather take their own lives than be expelled from the EU under its migration deal with Turkey. On Monday, 202 migrants were forcibly returned from Lesbos and Chios to the Turkish coast under the landmark deal aimed at halting “irregular” migration to Europe. But Souaob Nouri from Kabul, who is held in the high-security camp in Chios, said: “If they deport us, we will kill ourselves. We will not go back.” A man next to him warned of “terrible scenes” if Greek authorities insisted on pursuing policies that have already caused alarm among human rights groups.

“We are not terrorists,” said the man, who gave his name as Akimi. “We are refugees. The conditions here are very bad. There is no water. They hit pregnant women. Why do they treat us like this? All we want is asylum.” Similar threats of self harm were echoed on Lesbos this week. In a letter passed to the Guardian by aid volunteers on the island, inmates held in the Moria detention centre wrote that they would rather “accept death” than be deported to Turkey. “We will accept death but not return back,” the letter said, adding: “We will all commit suicide if they deport us.” The expulsions have been fraught with controversy.

Thirteen of the 66 deportees who were sent back across the Aegean Sea from Chios under armed guard are believed to have “expressed intent” to apply for asylum – enough, say UN officials, to have kept them in Greece until their requests were examined. “Between 20 March when the deal came into effect and 1 April when it was voted into legislation [by Greek MPs] we have seen limits in the ability of authorities to process claims,” said Katerina Kitidi with the UN refugee agency on Chios, an east Aegean island south of Lesbos. “There has been a definite lack of clarity.” The uncertainty has quickly fuelled tensions on the island. More than 800 inmates broke out of the vastly overcrowded detention facility last week in violent scenes that ultimately saw men, women and children march into Chios town.

Read more …

Apr 222015
 
 April 22, 2015  Posted by at 11:08 am Finance Tagged with: , , , , , , , , ,  6 Responses »


Jack Delano AT&SF Railroad locomotive shops, San Bernardino, CA 1943

Appalled doesn’t cover it. Disgusted won’t do either. Angry doesn’t come close. Maybe I have yet to learn of a word that would express my feelings on the following topic. There’s a disease, an epidemic, that spreads through out the western world. We are all turning into accomplices to murder. And I still believe we are better than that. Just perhaps not all of us.

The US, and the rest of the west, have made plenty enemies already without needing to create their own out of thin air – as if there were ever a need to create enemies. But that’s still what we’ve been doing in many places in the world, including Ukraine. And there’s an entire multi-billion machine working just to make us think what someone else wants us to think about these ‘enemies’.

These days, when you call someone ‘pro-Russian’, that’s about on on the same level as ‘murderer’, rapist, things like that. And that must be why the western press once again resorts to ‘pro-Russian’ as a swear word, or even curse, in reporting on the murders of at least 10 people in Ukraine over the past 3 months. As far as we can see, all were considered ‘allies’ of former President Yanukovych (whatever ‘allies’ may mean in this context) and 2 were journalists (of whom at least 1 was also a historian).

Yanukovych was (or is, actually) not a saint. He was the utterly corrupt president of a country that has been utterly corrupt for a very long time. It still is today, and it’s getting worse, fast. Whereas Russia didn’t feel it had the right or need to interfere in the country, the west did. Its interference culminated in the ouster of Yanukovych in late February 2014, and the introduction of a ‘government’ that is extremely pro-western and extremely anti-anything-‘that has anything to do’-with Russia (including the language).

First, we saw the US install its puppet Yatsenyuk as PM (we know about this through leaked tapes of US Dep. Secretary Victoria Nuland). ‘Yats’ to this day has never been elected to office by ‘his’ people (or any other people, for that matter) . A few months later came oligarch Poroshenko as president, who was.

Both men have been instrumental in waging a very bloody and deadly war against a significant segment (a third) of their own population, in east Ukraine. This warfare has coincided with an ever more blatant propaganda war against anything-‘that has anything to do’-with Russia, both in Ukraine and across the west. Need I repeat not one of the accusations against Russia has, still to date, ever been substantiated, despite the best spy satellites etc. equipment in human history?

Whereas someone who cannot be accused of anything worse than being pro-Russian is merely equal to a murderer or rapist, being – labeled as – pro-Putin is several levels worse than that. Meanwhile, Russian President Putin himself has been compared to the biggest mass-murderers in human history, amongst others by US presidential candidate Hillary Clinton.

And lest we forget, Yatsenyuk has labeled all east Ukrainians ‘subhuman’. Let’s see any other prime minster in any other country in the world do that and remain in office.

So far, nothing new. Why then get back to this? Because of all those people who are being killed. The Kiev regime for quite a while attempted to label them all ‘suicides’ (something that was eagerly quoted in western media), hindered in this ‘policy’ only by facts getting in the way.

And when these facts get in the way, they blame Russia for the murders. The ‘rationale’ being that Moscow sought to prevent all these now deceased Ukrainians from divulging details about ‘anti-Maidan’ protests they may have been involved in (can’t have that in a democracy).

One western ‘news source’ even quoted an ‘expert’ just the other day as claiming Putin had ordered two of the murders to coincide with his latest yearly phone-in TV show last week: “political analyst Volodymyr Fesenko said the fact that the killings coincided with Vladimir Putin’s annual phone-in “aroused great suspicion”.

What remains most galling – well, other than us supporting cold blooded murder – is the extent to which western media blindly keep reporting whatever Kiev says, despite the fact that it should be clear to every single reporter that neither Poroshenko nor Yatsenyuk has ever been caught saying anything of substance that proved to be true.

Putin did mention the murder of journalist and historian Oles Buzina last week briefly on that show, and added there has been a series of murders recently in Ukraine, which are not being (or don’t seem to be) properly investigated by Kiev. “”This is not the first political assassination. Ukraine is dealing with a whole string of such murders..”

‘The difference with Russia, Vladimir Putin said, was that killings such as that of opposition figure Boris Nemtsov got properly investigated, leading to arrests. “In Ukraine, which pretends to be a democratic state and wants to be part of a democratic Europe, nothing like that is happening. Where are the murderers of these people? They are simply not there, neither those who carried them out nor those who ordered them, But Europe and North America prefer not to notice.“’

While the killing spree is ongoing, US troops arrived last week to ‘train’ the Ukraine government (and oligarchs) army. The British have had ‘instructors’ there for a long time. We know Blackwater aka XE aka Academi has boots on the ground. We also know that Right Sector leader Dmitro Yarosh (known for various photographs with his ‘troops’ which feature swastikas), was appointed to a high post in that same Ukraine army. Yarosh is also an MP. Nice assembly.

And ‘we’ support this? By we, I mean not only the US, Europe is just as hungry for a fight, and just as blind when it comes to facts vs fiction. But what on earth are we doing paying for all this? Have we all completely lost our heads, hearts and minds? We’re supposed to support democracies, not death squads!

Here’s a list of the victims, largely taken from a piece by Justin Raimondo last week, with a few additions on my part. As you can see, most of them would be considered intellectuals. The ‘cream’ of what was left in Ukraine and did not support Poroshenko, Yatsenyuk and their supporters abroad, in the west, is systemically being eradicated and may now be gone.

• January 26 – Nikolai Sergienko, former deputy chief of Ukrainian Railways and a supporter of Viktor Yanukoych’s Party of Regions, reportedly shot himself with a hunting rifle. The windows were all locked from inside, and no note was found.

• January 29 – Aleksey Kolesnik, the former chairman of the Kharkov regional government and a prominent supporter of the now-banned Party of Regions, supposedly hung himself. There was no suicide note.

• February 24 – Stanislav Melnik, another former Party of Regions member of parliament, was found dead in his bathroom: he is said to have shot himself with a hunting rifle. We are told he left a suicide note of “apologies,” but what he was apologizing for has never been revealed, since the note has not been released.

• February 25 – Sergey Valter, former Party of Regions activist and Mayor of Melitopol, was found hanged hours before his trial on charges of “abuse of office” was set to begin. Whoever was responsible neglected to leave a “suicide” note.

• February 26 – Aleksandr Bordyuga, Valter’s lawyer and former deputy chief of Melitopol police, was found in his garage, dead, another “suicide.”

• February 26 – Oleksandr Peklushenko, a former Party of Regions member of parliament and chairman of Zaporozhye Regional State Administration, was found dead in the street with a gun wound to his neck. Officially declared a “suicide.”

• February 28 – Mikhail Chechetov, a professor of economics and engineering, former member of parliament from the Party of Regions, and former head of the privatization board, supposedly jumped from the seventeenth floor window of his Kiev apartment. Another “suicide”!

• March 14 – Sergey Melnichuk, a prosecutor and Party of Regions loyalist, “fell” from the ninth floor window of an apartment building in Odessa. Or was he pushed?

• April 15 – Oleg Kalashnikov, yet another prominent Party of Regions leader, died of a gunshot wound – the eighth since the beginning of the year.

• April 16 – Oles Buzina, historian and journalist, shot dead.

• April 16 – Serhiy Sukhobok, journalist, shot dead.

• April 17? – Olga Moroz, editor-in-chief of the Neteshinskiy Vestnik, found dead in her home. Her body showed ‘signs of violent death’.

Moreover, in a perhaps separate incident, on March 22, Yanukovych’s 33-year-old son Viktor Jr., a former Ukraine MP, died after his car ‘apparently fell through ice on Russia’s Lake Baikal’.

There are also an unknown number of people who simply disappeared. This happened for instance on April 15 with Dr. Skorokhodov Vitali and ‘militiaman’ Alexey Astanin. There may be many more. Which reminds me of an interview that Patrick Smith posted a few days ago in Salon, with Stephen F. Cohen, arguably America’s top expert on Russia. One of the things Cohen said – more of him later – puts a major question mark behind official – UN – numbers of Ukraine civil war casualties:

The horror of this has been Kiev’s use of its artillery, mortars and even its airplanes, until recently, to bombard large residential cities, not only Donetsk and Luhansk, but other cities. These are cities of 500,000, I imagine, or 2 million to 3 million. This is against the law. These are war crimes, unless we assume the rebels were bombing their mothers and grandmothers and fathers and sisters.

This was Kiev, backed by the United States. So the United States has been deeply complicit in the destruction of these eastern cities and peoples. When Nuland tells Congress there are 5,000 to 6,000 dead, that’s the U.N. number. That’s just a count of bodies they found in the morgues. Lots of bodies are never found. German intelligence says 50,000.

We haven’t seen the German data Cohen cites, but we see no reason to doubt him either. It would place the entire matter in a whole different light, however.

There are some details behind the murder spree coming to the surface. There’s a site called ‘Peacemaker’ (psb4ukr.org), supported by Ukraine MP and government advisor Anton Gerashchenko, who has said: “Information from the website of the “Peacemaker” center has long enjoyed the Ministry of Internal Affairs, security service, intelligence, border service to collect information to open criminal cases and obtaining a court decision on the detention and arrest of separatists and terrorists.”. Gerashenko is also involved in financing the operation.

“Peacemaker”
RESEARCH CENTRE FEATURES OF CRIMES AGAINST UKRAINE’S NATIONAL SECURITY, PEACE, SECURITY AND HUMANITY international law
Information for law enforcement authorities and special services about pro-Russian terrorists, separatists, mercenaries, war criminals, and murderers.

The site apparently has a list to download with some 7,700 names of “saboteurs” and “terrorists”. People are invited to post personal information, including addresses and phone numbers, of people deemed hostile to the Kiev regime. Such information for Buzina and Kalashnikov was posted on the site less than 48 hours before they were murdered.

A few people in the west have done some further digging into the site’s origins (with ‘traceroutes’, ‘nslookup’, ‘reverse nslookup’ etc.), and they claim to have found links to Dallas, Texas and Calgary, Alberta, as well as one to a NATO server – located in Dallas. You can find further details at Moon of Alabama and Niqnaq.

Meanwhile, the murders were claimed by a group that calls itself Ukrainian Insurgent Army, quoted by the BBC as having written: “We are unleashing a ruthless insurgency against the anti-Ukrainian regime of traitors and Moscow’s lackeys. From now on, we will only speak to them using the language of weapons, all the way to their elimination.”

As far as I can tell, nobody has been arrested for any of the murders to date.

And yes, we are all involved in this. You, me, all of us. How did we get there? Perhaps the second quote from that interview with Stephen F. Cohen serves to explain how we did:

Stephen F. Cohen on the U.S./Russia/Ukraine History the Media Won’t Tell You
(The New York Times “basically rewrites whatever the Kiev authorities say”)

I wrote an article in, I think, 2012 called the “The Demonization of Putin,” arguing that there is very little basis for many of the allegations made against Putin, and that the net result was to make rational analysis in Washington on Russian affairs at home and abroad impossible, because it was all filtered through this demonization. If we didn’t stop, I argued, it was only going to get worse to the point where we would become like heroin addicts at fix time, unable to think about anything except our obsession with Putin. We couldn’t think about other issues. This has now happened fully. The article was turned down by the New York Times, and an editor I knew at Reuters published it on Reuters.com.

The history of how this came about [begins] when Putin came to power, promoted by Yeltsin and the people around Yeltsin, who were all connected in Washington. These people in Moscow included Anatoly Chubais, who had overseen the privatizations, had relations with the IMF and had fostered a lot of the corruption. He came to United States to assure us that Putin was a democrat, even though he had been at the KGB.

When he came to power, both the Times and the Post wrote that Putin was a democrat and, better yet, he was sober, unlike Yeltsin. How we got from 2000 to now, when he’s Hitler, Saddam, Stalin, Gaddafi, everybody that we have to get rid of, whom we know killed Boris Nemtsov because from the bridge where Nemtsov was killed [on February 27] you can see the Kremlin…. Well, remember, Sarah Palin could see Russia from Alaska! It’s preposterous. But the demonization of Putin has become an institution in America. It is literally a political institution that prevents the kind of discussion that you and I are having.

Kissinger had the same thought. He wrote, last year, I think, “The demonization of Putin is not a policy. It’s an alibi for not having a policy.” That’s half correct. It’s much worse now, because they did have a policy. I think the “policy” growing in some minds was how to get rid of Putin. The question is, “Do they have the capacity to make decisions?” I didn’t think so, but now I’m not so sure, because in a lot of what comes out of Washington, including the State Department, the implication is that Putin has to go.

I asked a question rhetorically several years ago of these regime changers: Have you thought about what would happen in Russia in the event of regime change? If what you say is true, if Putin is the pivot of the whole system, you remove Putin the whole system collapses. Russia has every known weapon of mass destruction in vast quantities. What would be the consequence of that conceit on your part—that we’re going to get rid of Putin—for the rest of the world?

So this Putin phenomenon has to be explained. How did he go from a democrat for sure, now to maybe the worst Russian leader since Ivan the Terrible. How do you explain it? Does that tell us more about Putin or more about us?

I guess the main question is not ‘How did we get here?’, but ‘How do we get out?’.

Here’s the now unfortunately no longer among us Oles’ Buzina talking about the history of Ukraine (don’t forget to turn on subtitles/CC)