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Turkey and Russia have agreed on a proposal toward a general ceasefire in Syria, Turkey’s state-run Anadolu Agency said on Wednesday, and will aim to put it into effect by midnight. Anadolu, citing sources, said the two countries have reached a consensus that will be presented to participants in the conflict on expanding the ceasefire that was established in Aleppo earlier this month. Russia, Iran and Turkey said last week they were ready to help broker a peace deal after holding talks in Moscow where they adopted a declaration setting out the principles any agreement should adhere to. Arrangements for the talks, which would not include the United States and be distinct from separate intermittent U.N.-brokered negotiations, remain hazy, but Moscow has said they would take place in Kazakhstan, a close ally. Russia’s foreign minister on Tuesday said the Syrian government was consulting with the opposition ahead of possible peace talks, while a Saudi-backed opposition group said it knew nothing of the negotiations but supported a ceasefire.

Accuse the accuser.

• Erdogan Says He Has Evidence US-Led Coalition Has Given Support To ISIS (Ind.)

The Turkish President Recep Tayyip Erdogan says he has uncovered evidence that US-led coalition forces have helped support terrorists in Syria – including Isis. American-led forces have been working alongside Syrian rebels fighting President Bashar al-Assad but have attempted to avoid helping Isis and other Islamist militant groups. However, speaking on Tuesday in the Turkish capital, Ankara, he said he believed they had given support to a variety of militant groups, including Isis Kurdish outfits YPG and PYD. “They were accusing us of supporting Daesh [Islamic State],” he told a press conference, according to Reuters. “Now they give support to terrorist groups including Daesh, YPG, PYD. It’s very clear. We have confirmed evidence, with pictures, photos and videos.”

So Turkey is accused of aiding ISIS, now accuses the US of doing just that, and wants known ISIS backers to join peace talks. Enter Putin stage left.

• Turkey Says Saudis, Qatar Should Attend Syria Peace Talks (AP)

Turkish President Recep Tayyip Erdogan says Saudi Arabia and Qatar should join its meeting with Russia and Iran to discuss Syrian peace efforts. Russia, Turkey and Iran, which helped broker the withdrawal of civilians and militants from the Syrian city of Aleppo, have agreed to hold talks on Syria in Kazakhstan next month. Erdogan said Tuesday the meeting of foreign ministers should include Saudi Arabia and Qatar, saying they had “shown goodwill and given support” to Syria. Turkey, Saudi Arabia and Qatar are the main backers of rebels seeking to topple Syrian President Bashar Assad, who is closely allied with Moscow and Tehran. Erdogan added, however, that Turkey would not take part if any “terror organizations” are also invited, referring to Syrian Kurdish groups affiliated with Kurdish insurgents in Turkey.

All the US has ever bet on is chaos.

• ‘US Raised Middle East Terrorists & Wants Them To Stay’ – Iran Def Min (RT)

Washington appears unready to play a serious role in fighting Islamic State (IS, formerly ISIS/ISIL), as it has fostered terrorists itself and now wants them to remain in the Middle East, Iranian Defense Minister Hossein Dehghan told RT. “The Western coalition is of a formal nature, they have no real intention to fight neither in Syria nor in Iraq. We don’t see any readiness on their part to play a truly useful and meaningful role in fighting IS, because it’s them who have raised terrorists and they are interested in keeping them there,” Dehghan said. According to the Iranian defense minister, Tehran has never coordinated its operations with the Americans and “will never collaborate with them.”

“Maybe the coalition forces would like to see terrorists weakened, but certainly not destroyed, because those terrorists are their tool for destabilizing this region and some other parts of the world.” He also mentioned Al-Nusra Front (also known as Jabhat Fateh al-Sham) and said that terrorists in Syria receive support from the US, Saudi Arabia and Qatar. He also accused Turkey of supporting terrorists on the ground. “If Iran, Russia and Syria were to reach an agreement with Turkey to end Turkish support for those terrorist groups, particularly IS and Jabhat al-Nusra, and start fighting them, then I think we would see the situation in Syria improve,” he added. According to the minister, any ceasefire in Syria demands guarantees and all parties should agree to fulfill the conditions for a truce.

“We shouldn’t let Islamic State or Al-Nusra groups take part in the ceasefire. All other groups should start a political process and negotiations with the Syrian government.” He added that after the truce comes into force, it is important to separate terrorists and opposition groups ready to negotiate with the Syrian government. All sides should fight IS and Al-Nusra Front, Dehghan stated, adding that everyone should stop supporting terrorists in political, financial and military areas.

That’s a big company to have this happen to.

• Toshiba Shares Fall 20%, Hit Limit, As US Nuclear Writedown Sinks In (AFP)

Toshiba shares dived more than 20% on Wednesday in their second straight double-digit plunge as the company said it may book a one-time loss of several billion dollars over its US nuclear business. Toshiba’s stock price dropped by 20.42% to 311.60 yen, the largest fall allowed for a single day, about 30 minutes after the opening bell, as the company failed to remove investor worries over the potential risk. On Tuesday the Tokyo-based conglomerate said costs linked to the acquisition in 2015 by its US subsidiary of a nuclear service company would possibly come to “several billion US dollars, resulting in a negative impact on Toshiba’s financial results”. The exact figure of the potential writedown was still being worked out, Toshiba president Satoshi Tsunakawa said after the announcement, apologising for “causing concern”.

The company statement suggested the figure would be released soon, citing an end-of-year deadline. Toshiba shares had closed nearly 12% lower on Tuesday on media reports about the potential loss. Analysts said uncertainty was fuelling investor anxiety. “Concerns have yet to be cleared away as they said they didn’t know the figure,” Yukihiko Shimada, senior analyst at SMBC Nikko Securities, told AFP. SMBC Nikko credit analysts Yutaka Ban and Kentaro Harada said in a report that investors “can’t be optimistic about the situation” even though the total writedown may not end up as big as the 500 billion yen (US$4.3bn) reported by local media. Nomura Securities analyst Masaya Yamasaki said in a report issued late on Tuesday that the expected loss “is negative for the company as its financial standing is fragile”.

Tsunakawa answered in the affirmative when asked if Toshiba was considering boosting capital. Its chief financial officer, Masayoshi Hirata, said that after the figure was confirmed the company would “explain and seek support” from financial institutions. Toshiba said the possible loss was related to the valuation of the purchase by subsidiary Westinghouse Electric of the nuclear construction and services business of Chicago Bridge and Iron.

Something’s not right.

• China To Rein In Outward Investment As Domestic Growth Stalls (G.)

Beijing has signalled plans to curb Chinese firms’ investment in foreign assets, after revealing that companies from China are on course to spend 1.12 trillion yuan (£130bn) on everything from British football clubs to a Hollywood film producer in 2016. Companies from China ramped up their spending on overseas assets during the year, as a weakening domestic economy saw investors turn their attention overseas. A diverse array of targets included the maker of Godzilla, Aston Villa Football Club and the pub in which former prime minister David Cameron and Chinese premier Xi Jinping once shared a pint. The spending spree boosted non-financial overseas investment 55% in the first 11 months of 2016, putting Chinese companies on course to spend £130bn this year, compared with £86bn in 2015, said commerce minister Gao Hucheng.

While foreign investment has soared, the amount of money flowing into the country is set to remain broadly flat at £92bn. This means the difference between investments abroad and those coming into China has reached an unprecedented £39bn. The widening gap has triggered concerns about capital flight, where investors send their money out of the country rather than investing it to spur domestic growth. Gao signalled that Beijing would move to address the investment gap by reining in Chinese firms’ overseas spending and making it easier for firms from abroad to access the Chinese economy.

He said the government would “promote the healthy and orderly development of outbound investment and cooperation in 2017”, in remarks at a conference that were published on the commerce ministry’s website. In November it was reported that China was preparing a clampdown on non-Chinese mergers and acquisitions. Separately, the ministry said on its blog that China would sharply reduce restrictions on foreign investment access in 2017 to make it easier for overseas firms to spend their cash in the People’s Republic. No details were given on what restrictions would be changed.

Even worse than in other years, and there’s a reason for that.

• Chinese Interbank Funding Freezes Again As Overnight Repo Hits 33% (ZH)

… when it comes to more traditional unsecured short-term funding markets, like the simple overnight repo, these reflect overall levels of liquidity in the interbank market, or as the case may be, complete absence thereof. And while China is notorious for suffering major liquidity shortages heading into a new year (including the non-lunar variety), what happened overnight in China is worth pointing out because according to Bloomberg data, the overnight repo rate traded on Shanghai Stock Exchange soared as much as 30.87% to 33%, the highest since September 29, before closing at 18.55%.

And while some of the liquidity squeeze was certainly calendar driven, what is more concerning for Chinese markets, where as we reported recently the local authorities, regulators and even press are confirming that the government crackdown on the credit and housing bubble may be serious for once due to fears about “rising social tensions”, much of the overnight repo rate spike was driven by the PBOC which pulled a net 150 billion yuan of funds in open-market operations today, the most since December 7. The result was another brief, but painful, freeze of the interbank lending market. Should the PBOC continue to not only not inject liquidity among banks, but aggressively withdraw it, it is possible that a repeat of the 2013 bank crisis when as a result of the government’s eagerness to delever the economy it almost crushed its financial sector (it ultimately gave up, with Chinese debt/GDP subsequently rising to 300% according to the IIF), should be one of the more notable risk factors for 2017.

How can Beijing NOT devalue?

• No Happy New Year in China as Currency, Liquidity Fears Loom (BBG)

China bulls could be facing a grim New Year’s eve. The first day of 2017 is when an annual $50,000 quota to convert the yuan into foreign exchange resets, stoking concern there will be a rush to sell the local currency. With tax payments and a regulatory assessment also tightening liquidity in the money market toward year-end, January may bring scant relief as lenders prepare for stronger cash demand before Lunar New Year holidays, which are only a month away. China’s markets are seeing renewed pressure this month as the Federal Reserve projects a faster pace of rate increases for 2017 and its Chinese counterpart tightens monetary conditions to spur deleveraging and defend the exchange rate. The declines are capping off a tough year for investors during which bonds, shares and currency all slumped.

“You have Chinese New Year quite early, and because of that one-month window, most of the banks will try to lock the money in a three-month cycle,” said Arthur Lau, Hong Kong-based head of Asia ex-Japan fixed income at PineBridge Investments. “The current situation in the bond market is partly because of year-end and because of Chinese New Year.” The week-long Lunar New Year holidays are traditionally a time when people give out cash gifts and companies pay employee bonuses. China’s 10-year government bond yield has surged 21 basis points in December, poised for its biggest monthly increase since August 2013, and its first annual gain since that same year. The yuan’s 6.6% decline in 2016 puts it on course for its worst year since 1994, while the Shanghai Composite Index is headed for its largest drop in five years.

The three-month interbank rate known as Shibor rose for a 50th day, its longest streak since 2010, to an 18-month high on Wednesday. The overnight repurchase rate on the Shanghai Stock Exchange jumped to as high as 33% the day before, the highest since Sept. 29. As banks become more reluctant to offer cash to other types of institutions, the latter have to turn to the exchange for money, said Xu Hanfei at Guotai Junan Securities in Shanghai. Bond and money markets may stabilize after Lunar New Year holidays – which start Jan. 27 and end Feb. 2 – though they’re unlikely to return to levels before the latest rout owing to yuan weakness and tighter monetary policy, said Lau. The People Bank of China’s yuan position – a gauge of capital flows – dropped the most in 10 months in November amid expectations for faster U.S. rate increases.

The onshore yuan’s surging trading volume suggests outflows are quickening, according to Harrison Hu, chief greater China economist at RBS. The daily average value of transactions in Shanghai climbed to $34 billion in December as of Monday, the highest since at least April 2014, according to data from China Foreign Exchange Trade System. “In the new year, the new foreign-exchange purchase quota starts, so we expect yuan positions in January to drop significantly,” Liu Dongliang at China Merchants Bank wrote in a note this month. “Within the foreseeable future, the market will be pessimistic about funding conditions. It happens to be near year-end now, where money markets are tight, and after New Year’s Day it’s almost Chinese New Year.”

“Happy New Year with fewer taxes!”

• Greek Taxpayers Face €4 Billion Tax Bill By New Year’s Eve (Xinhua)

Greek taxpayers are obliged to pay some €4 billion in taxes by New Year Eve, as outstanding debts to the state have soared to more than €94 billion by November, according to Finance Ministry data. However, some recession-hit taxpayers seem unable to pay the full taxes within deadlines and apply for settlements to pay their debts in more installments. To collect as much as possible to reach bailout targets, the Greek state has launched confiscation procedures for debtors. According to official data, in the first 10 months of 2016, the procedures had been applied onto 108,729 debtors. And another 1.6 million debtors are facing confiscation in early 2017 should they do not immediately settle their debts to the Tax office.

However, some debtors complained about the levies, saying they can not afford any more as they have been struggling to make ends meet amid seven-year austerity. Many financial analysts also warned that Greek society has reached a breaking point due to over-taxation combined with salary, pension cuts and high unemployment rates. Despite the levies, the country’s tax evasion still exists. According to a recent study conducted by the independent Greek research organization diaNEOsis, tax evasion in Greece is estimated range between 6% and 9% of the country’s GDP, which means a loss of some €16 billion in taxes a year. Experts as well as ordinary citizens urge the government to do more to address widespread tax evasion instead of adding more burdens on those who are trying to pay their share.

While mentioning the tax obligations due by Friday, the Hellenic Confederation of Commerce and Entrepreneurship (ESEE), which represents small and medium-sized companies in Greece, wishes in an e-mailed card to its members on Tuesday “Happy New Year with fewer taxes!”

is this just a stunt to get rid of the president, proposing a female Muslim for PM?

• Clash Over New Government Sends Romania Spiraling Toward Crisis (BBG)

Romania tumbled toward a new political crisis after President Klaus Iohannis rejected a prime minister nominee from the Social Democratic Party, which threatened to suspend him after winning a landslide election victory this month. Iohannis called on the party to pick someone else to lead a government after Sevil Shhaideh, a former development minister with little previous political influence, was picked by Social Democrat leader Liviu Dragnea last week. Dragnea, who can’t take the post himself because he was previously convicted of rigging a referendum, called the decision unjustified. He said he’ll consider his options, including potentially starting the procedure to suspend Iohannis, and will announce a decision by Dec. 29.

“It seems the president clearly wants to be suspended,” Dragnea said in a speech in Bucharest on Tuesday. “We’ll weigh our options very carefully, because we don’t want to take emotional decisions. We don’t want to trigger a political crisis for nothing, but if we come to the conclusion that the president must be suspended, I won’t hesitate.” The standoff in the European Union’s second-poorest country raises the risk of returning to the type of crisis that led to months of bickering between top leaders and culminated in Traian Basescu’s suspension from the presidency in 2012. It may also undermine one of the fastest paces of growth in the EU by delaying investment and the tapping of development funds, an area where Romania has ranked last in the 28-member club.

Iohannis has the constitutional right to reject any premier candidate that he doesn’t consider fit for the job. He didn’t give a reason for his decision. The choice of Shhaideh, a member of the mainly Orthodox country’s tiny Muslim minority, had fueled speculation that Dragnea may try to run the government himself from the sidelines.

“..the detractors of Donald Trump, when he was a candidate, failed to realize that [..] there is something respectable in losing a billion dollars, provided it is your own money.

• Inequality and Skin in the Game (Taleb)

There is inequality and inequality. The first is the inequality people tolerate, such as one’s understanding compared to that of people deemed heroes, say Einstein, Michelangelo, or the recluse mathematician Grisha Perelman, in comparison to whom one has no difficulty acknowledging a large surplus. This applies to entrepreneurs, artists, soldiers, heroes, the singer Bob Dylan, Socrates, the current local celebrity chef, some Roman Emperor of good repute, say Marcus Aurelius; in short those for whom one can naturally be a “fan”. You may like to imitate them, you may aspire to be like them; but you don’t resent them.

The second is the inequality people find intolerable because the subject appears to be just a person like you, except that he has been playing the system, and getting himself into rent seeking, acquiring privileges that are not warranted –and although he has something you would not mind having (which may include his Russian girlfriend), he is exactly the type of whom you cannot possibly become a fan. The latter category includes bankers, bureaucrats who get rich, former senators shilling for the evil firm Monsanto, clean-shaven chief executives who wear ties, and talking heads on television making outsized bonuses. You don’t just envy them; you take umbrage at their fame, and the sight of their expensive or even semi-expensive car trigger some feeling of bitterness. They make you feel smaller.

There may be something dissonant in the spectacle of a rich slave. The author Joan Williams, in an insightful article, explains that the working class is impressed by the rich, as role models. Michèle Lamont, the author of The Dignity of Working Men, whom she cites, did a systematic interview of blue collar Americans and found present a resentment of professionals but, unexpectedly, not of the rich. It is safe to accept that the American public –actually all public –despise people who make a lot of money on a salary, or, rather, salarymen who make a lot of money. This is indeed generalized to other countries: a few years ago the Swiss, of all people almost voted a law capping salaries of managers . But the same Swiss hold rich entrepreneurs, and people who have derived their celebrity by other means, in some respect.

In this chapter I will propose that effectively what people resent –or should resent –is the person at the top who has no skin in the game, that is, because he doesn’t bear his allotted risk, is immune to the possibility of falling from his pedestal, exiting the income or wealth bracket, and getting to the soup kitchen. Again, on that account, the detractors of Donald Trump, when he was a candidate, failed to realize that, by advertising his episode of bankruptcy and his personal losses of close to a billion dollars, they removed the resentment (the second type of inequality) one may have towards him. There is something respectable in losing a billion dollars, provided it is your own money.

Many countries use these ‘outlets’, pushing people into programs not intended for them.

• The New Normal ‘Safety Net’: Surging Disability Benefits Claims (ZH)

If you’ve paid into Social Security, become injured or sick, and can no longer earn more than $1,130 a month, you can get a monthly subsidy from the Disability Insurance Trust Fund. As Bloomberg notes, in 1990 fewer than 2.5% of working-age Americans were “on the check;” by 2015 the number stood at 5.2%, with geographical “disability belts” appearing across America. That growth has left the fund in periodic need of rescues by Congress – most recently in 2015, when the Bipartisan Budget Act shifted money from Social Security’s old-age survivors’ fund to extend the solvency of the disability fund to 2023. Something changed in 2000…

“None of us should be surprised that the cost of the program was rising,” says Stephen Goss, Social Security’s chief actuary. He says the program’s growth is mostly a consequence of demographic change. Older workers are more likely to get sick, and as women have entered the workforce, they too have become eligible for benefits.”

In 1956, when the disability insurance fund was created, qualification was based on a list of accepted medical conditions. In 1984, Congress broadened the criteria, giving more weight to chronic pain and mental disorders. The qualification process also became more subjective. Now, rather than check diagnostic conditions against a list, the process determines whether applicants are able to perform work that’s available. It’s not as if you go to the doctor, the doctor says, “I’m sorry, son, you’ve got disability, Autor says. “It’s a social construct, because it’s about whether you can work.”

I’m prety sure it’s worse than this: “..more than 70% of the antibiotics considered medically important for human health sold in the U.S. are actually used in livestock.”

But also: “..half of antibiotic use in humans is unnecessary.”

• The Battle Against The ‘Superbugs’: Transplants, Chemotherapy At Risk (CNBC)

Headlines about antibiotic resistance – the increase in so-called “superbugs” – have been persistent in 2016. The issue of infection-causing bacteria becoming increasingly resistant to the drugs used to fight them poses a pressing risk to public health worldwide, and according to a 2014 report from the World Health Organization, “threatens the achievements of modern medicine.” The Review on Antimicrobial Resistance, commissioned by the U.K. government, estimated that “by 2050, 10 million lives a year and a cumulative $100 trillion of economic output are at risk due to the rise of drug resistant infections.” For perspective, cancer currently kills 8.2 million people annually. In September of this year, the United Nations agreed on a declaration to fight antibiotic resistance.

This was only the fourth time in the organisation’s 71-year history that a health issue has been treated with such gravity, putting antibiotic resistance on par with HIV and ebola. “It’s hard to be too dramatic,” Prof. Michael Gardam, associate professor of medicine at the University of Toronto, told CNBC via telephone. Echoing this severity, Prof. Toby Jenkins, a biophysical chemist at the University of Bath, said that “a Doomsday scenario is that transplant surgery will be impossible, chemotherapy likewise.” “Even a dental abscess could become deadly, or at least very painful,” he added. The overprescription of antibiotics is one cause of the problem, with Gardam saying that it is “becoming the norm to use last line drugs” in treating bacterial infections, and that “just in case” prescriptions should be handled with care. The U.S.-based Centers for Disease Control and Prevention estimates that half of antibiotic use in humans is unnecessary.

But, other contributing factors well integrated into daily life are also to blame. Gardam also criticized antibacterial soap and toothpaste, particularly prevalent in North America. Deeming such products unnecessary, Gardam warned that “your mouth is not meant to be a sterile zone.” He also stressed the importance of “not messing around with the natural flora of the body,” as such consumer products are wont to do. The food industry also plays a significant part in the antibiotic resistance dilemma, with healthy food-producing animals fed drugs to both prevent disease and promote growth. According to 2012 data from the U.S. Food and Drug Administration and research firm IMS Health, more than 70% of the antibiotics considered medically important for human health sold in the U.S. are actually used in livestock.

Debt Rattle December 11 2014

Dec 112014

December 11, 2014 Posted by Raúl Ilargi Meijer at 11:55 am Finance Tagged with: Bush, China, CIA, Draghi, Greece, oil, OPEC, superbugs, torture, yuan 1 Response »

DPC Pine Street below Kearney after the great San Francisco earthquake and fire 1906

• Oil Plunge Rips Through Markets as Investors Seek Bottom (Bloomberg)

• Bank Of America Sees $50 Oil As OPEC Dies (AEP)

• Name That Chart! Oil Supply Or Demand Edition (Zero Hedge)

• Dow Down Triple Digits As Oil Hits Multi-Year Lows (CNBC)

• Steen Jakobsen: The US Could Bail Out Its Own Oil Sector (CNBC)

• China’s Wild Market Swings: This Is Just The Start (CNBC)

• PBOC, Traders Tussle Over Yuan (WSJ)

• Yuan Has Real Shot at IMF Blessing on Reserve Status (Bloomberg)

• How Wal-Mart Made Its Crumbling China Business Look So Good for So Long (BBG)

• ‘Known Unknown’ Dangers Are Lurking In The Stock Market (MarketWatch)

• Britons Are Living Beyond Their Means, Says Government Watchdog (Telegraph)

• Leaked EU Summit Conclusions: Draghi Left Hanging? (FT)

• Greek Left Candidate Willing To Call European Leaders’ Bluff (AEP)

• Superbugs To Kill 10 Million People A Year, Cost $100 Trillion By 2050 (BBC)

• Generation Y Have Every Right To Be Angry At Baby Boomers’ Wealth (Guardian)

• One-Fifth Of Americans Don’t Plan To Pay Off Their Debt (CNBC)

• IMF Finds Another $15 Billion Black Hole In Ukraine’s Finances (CNBC)

• Guantanamo Six ‘Will Enjoy Complete Freedom’ In Uruguay (BBC)

• CIA Torture Report May Set Off Global Prosecutions (Bloomberg)

• President George W. Bush ‘Knew Everything’ About CIA Interrogation (BBC)

“The mantra of ‘lower oil prices are good for the economy’ can only last so long until finally there’s a break in the psychology of investors ..”

• Oil Plunge Rips Through Markets as Investors Seek Bottom (Bloomberg)

Oil’s collapse is rippling through financial markets, broadening a selloff in stocks beyond energy companies and leaving investors with few havens as assets from metals to corporate debt sink. Brent crude fell below $65 for the first time since 2009 as OPEC cut its forecast for 2015 demand, raising concern over the strength of the global economy and leaving investors contemplating when oil’s plunge will reach a bottom. “As great as it feels to pump $2 gasoline at the station, it’s not a healthy environment for financial assets,” Walter Todd, chief investment officer for Greenwood Capital, said. “It’s rare to see commodity prices fall this quickly in a non-recessionary situation. You really need to see some stabilization.” The selloff sent the MSCI All-Country World Index to its biggest drop in two months. The Standard & Poor’s 500 Index lost 1.6%, Canadian stocks plunged to the lowest since February and emerging-market shares fell to an eight-month low.

Traders are almost certain that Venezuela will teeter into default as bonds plunge to a 16-year low and the cost of default protection soars to a record. A measure of risk in the U.S. junk-bond market rose the most in two months. Copper fell 1.2% and gold slipped 0.2%. Investors sought relief in Treasuries as 30-year bond yields fell to a seven-week low, and the yen capped its biggest three-day gain versus the dollar in more than a year. While oil prices have been spiraling downward since June, entering a bear market and dragging down energy shares, the pace of today’s decline spurred selling in S&P 500 groups that helped drive the benchmark gauge to an all-time high on Dec. 5. All 10 major industries in the S&P 500 slumped at least 1% today.

“There’s nothing like human emotion to take over in the short term and fear is taking over, it looks like this really is a slowdown,” Ron Weiner at RDM Financial said. “In this case it really is an oil story, it really is a global slowdown of some sort.” [..] “The mantra of ‘lower oil prices are good for the economy’ can only last so long until finally there’s a break in the psychology of investors,” Jeff Sica at Circle Squared Alternative Investments said. “You start to realize the reason why oil prices are declining is because there’s severe economic weakness that has yet to be acknowledged. It’s bringing down all commodity prices.”

“What is clear is that the world has become addicted to central bank stimulus. Bank of America said 56% of global GDP is currently supported by zero interest rates, and so are 83% of the free-floating equities on global bourses.”

• Bank Of America Sees $50 Oil As OPEC Dies (AEP)

The OPEC oil cartel no longer exists in any meaningful sense and crude prices will slump to $50 a barrel over the coming months as market forces shake out the weakest producers, Bank of America has warned. Revolutionary changes sweeping the world’s energy industry will drive down the price of liquefied natural gas (LNG), creating a “multi-year” glut and a much cheaper source of gas for Europe. Francisco Blanch, the bank’s commodity chief, said OPEC is “effectively dissolved” after it failed to stabilize prices at its last meeting. “The consequences are profound and long-lasting,“ he said. The free market will now set the global cost of oil, leading to a new era of wild price swings and disorderly trading that benefits only the Mid-East petro-states with deepest pockets such as Saudi Arabia. If so, the weaker peripheral members such as Venezuela and Nigeria are being thrown to the wolves.

The bank said in its year-end report that at least 15pc of US shale producers are losing money at current prices, and more than half will be under water if US crude falls below $55. The high-cost producers in the Permian basin will be the first to “feel the pain” and may soon have to cut back on production. The claims pit Bank of America against its arch-rival Citigroup, which insists that the US shale industry is far more resilent than widely supposed, with marginal costs for existing rigs nearer $40, and much of its output hedged on the futures markets. Bank of America said the current slump will choke off shale projects in Argentina and Mexico, and will force retrenchment in Canadian oil sands and some of Russia’s remote fields. The major oil companies will have to cut back on projects with a break-even cost below $80 for Brent crude.

[..] What is clear is that the world has become addicted to central bank stimulus. Bank of America said 56% of global GDP is currently supported by zero interest rates, and so are 83% of the free-floating equities on global bourses. Half of all government bonds in the world yield less that 1pc. Roughly 1.4bn people are experiencing negative rates in one form or another. These are astonishing figures, evidence of a 1930s-style depression, albeit one that is still contained. Nobody knows what will happen as the Fed tries to break out of the stimulus trap, including Fed officials themselves.

That’s some serious charts. “.. if it quacks like a duck, cook it.”

• Name That Chart! Oil Supply Or Demand Edition (Zero Hedge)

While the question of supply vs demand in global oil markets is merely different sides of the same coin, we hope the following “name that chart” image provides some clarifying perspective on what is really dragging oil prices lower…
Nope… they are not the same… one of these is a commodity that is crashing but is believed to be “unequivocally” good for the global economy… the other is the global economy!!

DO NOT LOOK BELOW HERE UNTIL YOU GUESS… DON’T DO IT!!!!

Answer here.

and yes, we know correlation does not imply causation’ but… if it quacks like a duck, cook it.

You decide… steady supply into globally crushed demand…

Come up for air today, dive down again tomorrow?

• Dow Down Triple Digits As Oil Hits Multi-Year Lows (CNBC)

U.S. stocks declined on Wednesday, furthering the week’s losses, as the price of crude fell to multi-year lows and the Organization of Petroleum Exporting Countries cut its demand outlook for next year. “Oil continues to be the concern. Depending on who you talk to and in what time frame on which day of the week, oil may be a leading indicator, so there may be something behind the decline other than we have a lot of oil,” said Paul Nolte, senior vice president, portfolio manager at Kingsview Asset Management. “I don’t know that for sure. I do know, historically at least, energy stocks have tended to lead the market, and that lead time is anything from three months to a year, and we’re now six months into oil under performing the overall market, so we may be in for some rough sledding,” he added.

OPEC reduced its estimate for 2015 by roughly 300,000 barrels a day, with the cartel saying the effect of the 40% drop in prices on supply and demand is uncertain. The CBOE Volatility Index, a measure of investor uncertainty known as the VIX, jumped 9.4% to 16.29. Toll Brothers edged lower after the home builder reported mixed quarterly results; Yum Brands fell after the operator of Taco Bell and other fast-food brands cut is profit outlook for the year for a second time; Costco Wholesale climbed after the warehouse-club operator posted a better-than-expected quarterly profit and GlaxoSmithKline declined after Bank of America Merrill Lynch downgraded its stock to underperform from neutral.

See:

Can The US Bail Out Its Oil Industry?

• Steen Jakobsen: The US Could Bail Out Its Own Oil Sector (CNBC)

An economist who correctly predicted the fall in oil price this year has told CNBC that the U.S. government could look to bail out its energy sector in 2015 as the commodity’s low price starts hitting the country’s economy. “The U.S. energy sector is clearly important,” Steen Jakobsen, the chief economist at Danish investment bank Saxo Bank, told CNBC Wednesday. “They are paramount to the long-term strategic issue that the U.S. will be self-dependent on oil.” Jakobsen is part of team that puts together an annual “outrageous predictions” outlook that has been running for more than a decade. He concedes that these so-called black swan scenarios are “relatively controversial” but says that they could help investors navigate any real-life turmoil that arises. His prediction on a U.S. bailout is his own personal prediction and did not make the formal list that the Copenhagen-based company published on Wednesday morning.

A large number of economists believe the drilling frenzy and huge domestic energy boom has helped the U.S. to recover since the global financial crash of 2008, contributing an estimated 0.3-0.6 percentage points to U.S. gross domestic product. but Jakobsen believes this headwind could soon become a tailwind despite gas becoming cheaper at the pump for U.S. citizens. “It will subtract 0.5% from GDP, bare minimum,” he said. “There’s a precedent here, back in the 80s we also had an oil crisis and that led to bank recoveries.” He added that oil companies are in for a “massive correction,” similar to the downtrend seen in mining stocks, explaining that exploration was getting “hugely expensive” with energy majors having little free cash flow available. The S&P 500 index has clocked gains of around 11% so far this year but the energy sector within the benchmark is currently down nearly 12%. Oil prices are trading at five-year lows with Brent futures losing around 40% in value since June.

What’s worrisome is that many have bought stocks with borrowed funds, and with apartments as collateral.

• China’s Wild Market Swings: This Is Just The Start (CNBC)

The rout in China stocks on Tuesday is a healthy bull-market correction, say strategists, however the wild swings reinforce that the market is not for the faint of heart. The benchmark Shanghai Composite lived up to its notoriously volatile reputation on Wednesday, swinging between gains and losses after the market tanked more than 5% a day earlier – its biggest single-day percentage fall in 5 years. Losses were triggered by the Chinese securities clearing house’s decision late Monday to restrict the use of lower-grade corporate debt as collateral for short-term loans obtained through repurchase agreements. The move follows a surge in margin buying that accompanied the recent stock surge. Strategists, however, don’t believe the latest regulatory move will derail broader momentum in the market that has rallied 35.5% year to date.

“The new regulations were more of a negative catalyst for profit-taking. We see Tuesday’s selloff as a healthy correction,” said Stephen Sheung, head of investment strategy at SHK Private. Sheung says a reduction in leverage is unlikely to have a large impact because on the stock market: “You only need a small amount of money to move from bank deposits or wealth management products into stocks to push the market higher.” Audrey Goh, equity strategist at Standard Chartered also sees the recent market plunge as a pause for breath. “Yesterday’s move was a reaction to the rapid appreciation in the market over the past month,” Goh said. “Sentiment wise, there may be a perception that regulators are tightening up policies. But I think they are going on the right track because historically collateral has not been tightly scrutinized – this is all part of the reform process and shouldn’t have a long-term impact on the market,” she added.

“Investors have been focusing on an almost daily deluge of downbeat economic news about China.”

• PBOC, Traders Tussle Over Yuan (WSJ)

A battle in China’s currency market has emerged in recent days: Traders are pushing the yuan weaker, while the People;s Bank of China has been attempting to guide the tightly-controlled foreign-exchange rate stronger. That tension was on show Wednesday. The yuan began trading 1.1% weaker than the level at which the central bank set the morning reference rate, marking the biggest drop since June. Daily trading is limited to 2% above or below this so-called central parity rate. A slide in the currency has accelerated this month, after the central bank cut interest rates in November. The yuan is now 2% weaker than it was at the start of the year and is on track for its first annual loss since 2009. Investors have been focusing on an almost daily deluge of downbeat economic news about China.

Reports this week showed the rate of inflation slipped to a five-year low in November, while the country’s exports fell well below expectations in the same period. A broadly stronger dollar- the result of a recovering U.S. economy -has also hurt sentiment about the yuan. Volatility in the market has picked up this week, after Beijing curbed risky lending in the bond markets, sparking heavy declines in the stock and bond markets Tuesday. Monday and Tuesday, the yuan recorded its biggest-ever two-day tumble against the dollar. Wednesday, the central parity rate was set at 6.1195 yuan to the dollar, the strongest since March 3. The yuan opened at 6.1894. China’s central bank has been fighting the market, setting the yuan’s reference exchange rate, or “fix,” stronger against the dollar.

Analysts say Beijing appears eager to prevent one-way speculation on the currency and squeeze out those betting that it will decline further. “China doesn’t want to join the currency wars and that explains the fix movement,” said Ju Wang, a currency strategist at HSBC Holdings PLC in Hong Kong, referring to some countries’ efforts to push their currencies lower so that their exporters remain competitive. “But markets see it as China will eventually be dragged into the currency war or just fundamentally, growth and exports will weaken so much that will trigger the markets’ demand for the U.S. dollar.”

Hard to deny.

• Yuan Has Real Shot at IMF Blessing on Reserve Status (Bloomberg)

For the first time, China has a real shot at getting the International Monetary Fund to endorse the yuan as a global reserve currency alongside the dollar and euro. In late 2015, the IMF will conduct its next twice-a-decade review of the basket of currencies its members can count toward their official reserves. Including the yuan in this so-called Special Drawing Rights system would allow the IMF to recognize the ascent of the world’s second-biggest economy while aiding China’s attempts to diminish the dollar’s dominance in global trade and finance. China would need to satisfy the Washington-based lender’s economic benchmarks and get the support of most of the other 187 member countries.

The Asian nation is likely to pass both tests, said Eswar Prasad, who until 2006 worked at the IMF, including spells as heads of its financial studies and China divisions. “It will certainly help China’s objective of making the renminbi a more widely-used currency,” said Prasad, a professor of trade policy at Cornell University and senior fellow at the Brookings Institution. Renminbi is China’s official name for the yuan. Reserve-currency status for the yuan would make central banks, particularly those in developing economies, more eager to hold yuan assets and “diversify at the margin away from dollars,” as well as euros, yen and Swiss francs, Prasad said.

Approval hinges partly on whether the IMF reverses its 2010 decision that the yuan wasn’t “freely usable.” There’s growing evidence that the currency may now pass this test, after already qualifying on the IMF’s other condition of being a large exporter. The proportion of China’s trade that’s settled in yuan has risen to about 20%; the market for yuan-denominated Dim Sum bonds has grown to $72.9 billion from nothing in just seven years; and the government has loosened controls on foreigners’ access to its financial markets. China has also signed agreements to trade the yuan freely in cities from Hong Kong and Singapore to Frankfurt and London.

Shouldn’t investors look at bringing charges?

• How Wal-Mart Made Its Crumbling China Business Look So Good for So Long (BBG)

After years of heralding China as one of its best markets, Wal-Mart in August said its performance there was among the worst in its major countries. A management shake-up and job cuts have followed. Although the reversals seem abrupt, cracks in the foundation of Wal-Mart’s retail business in China have been developing for years, hidden by questionable accounting and unauthorized sales practices, according to employees and internal documents reviewed by Bloomberg. The practices – including bulk sales to other retailers and some sales allegedly booked when no merchandise left the shelves – made business appear strong even as retail transactions slowed and unsold inventory piled up, these people and documents say. Wal-Mart said in August that it was unhappy with inventory growth internationally. Stores in China continue to make bulk sales, sometimes unprofitably and without required management authorizations, according to employees who’ve left the company this past month.

Concerns about bulk sales, raised as far back as 2011 in an internal report, have been the subject of inquiries in China by Wal-Mart’s legal team as recently as May, according to an internal company e-mail and an employee interviewed by lawyers. The report and interviews with current and former employees say Chinese Wal-Mart stores, under pressure to meet earnings targets, resorted to temporary markups of inventory as an accounting move that can burnish profits without any added sales of merchandise. After employees “recognized inventory pricing discrepancies” in 2011, the company’s senior leadership in the U.S. and China ordered an extensive investigation that led to “various leadership changes and disciplinary actions,” strengthened compliance measures, training, and regular audits, Wal-Mart Stores Inc. said in a statement.

“..stock market disasters are much more typically caused by “known unknowns” — the events that have been perking for a while, whose natures are familiar to us and yet whose exact forms and potential dangers remain unclear.”

• ‘Known Unknown’ Dangers Are Lurking In The Stock Market (MarketWatch)

As the S&P 500 Index keeps reaching new highs, investor conversations have shifted from how low it might go (October’s topic) to how high the stock market can possibly climb. When people get that excited, it’s time to think about risks. What could possibly go wrong and arrest this great bull market? Much speculation currently points to the kind of scary, exogenous, low-probability events we call black swans: an Ebola pandemic, say, or a “third world war” due to the Russia/Ukraine conflict or the ISIS threat escalating out of control. Nevertheless, while these and other black swan events may have the potential to cause catastrophic damage to the markets and society, stock market disasters are much more typically caused by “known unknowns” — the events that have been perking for a while, whose natures are familiar to us and yet whose exact forms and potential dangers remain unclear.

Take, for example, the 2008 global financial crisis: It did not happen overnight, and, looking back, there were plenty of signs and warnings, such as the subprime lending meltdown in 2007. Or, think of the dot-com bubble, which burst in 2000, several years after the first warnings of “irrational exuberance” by Federal Reserve Chairman Alan Greenspan in a speech given in 1996. So rather than reaching for sensational “unknown unknowns,” we are focusing on market risks we know and understand. We’ve listed a few here, starting with low probability and ending with high.

• Washington politics: As Republicans won the Senate in the mid-term elections and, thus, have full control of Congress, the government is now truly divided. Early signs indicate that political infighting between the two parties will become even more intense, a distasteful scenario to imagine. To make matters worse, another government funding deadline is looming Dec. 11. We believe that, whereas the political maneuvering may cause market volatility, it’s unlikely to pose a huge threat to the market.

• Rising interest rates: There is little argument that interest rates will go up, eventually, but it is also abundantly clear to many pundits that the rise will be a slow, grinding process rather than a spike. For the stock market, interest rates are, therefore, a long-term concern, and not likely to be an imminent threat. At the current near historic levels, equities are still far more attractive than fixed-income from a valuation standpoint, and rising interest rates will probably not tip the balance. Interest rates jumped in 2013, but the stock market, ironically, performed exceedingly well.

• Slowing growth: This is by far the No. 1 threat to markets and has flared up repeatedly. Just the anticipation of slowing growth can cause companies to slow production and consumers to temper spending, which is quickly reflected in falling stock prices. The most recent September-October market downturn, one of the worst during the past couple years, was caused by concerns about slowing growth.

No, really?!

• Britons Are Living Beyond Their Means, Says Government Watchdog (Telegraph)

Britons are living beyond their means more now than at almost any point over the past two decades, according to the head of the Government’s fiscal watchdog. Robert Chote, the chairman of the Office for Budget Responsibility (OBR), said real consumer spending over the past year had accelerated ahead of inflation-adjusted pay growth at its second fastest rate since the 1990s. “If you look at the relatively robust pace of growth over recent quarters, that has been reflected particularly in terms of the contribution from the consumer, of people running down saving rather than having stronger income growth,” he told the Treasury Select Committee. Mr Chote said this pace of consumption relative to earnings growth was likely to be unsustainable. “We’ve assumed that it is not plausible [that this could continue],” he said. “If you look at the last year, real consumption growth has been running further ahead of real wage growth than in almost any other year over the last 15 or 20 or so.

Therefore, in our forecast the main reason we expect the quarterly pace of growth to slow into next year is that you see consumer spending moving more into line with income growth, and being less driven by [a] decline in saving.” The OBR believes the UK economy will grow by 3pc this year, before slowing to 2.4pc in 2015 and 2.2pc in 2016. Household consumption growth is forecast to strengthen next year to 2.8pc, fuelled by a further decrease in savings. The household saving ratio is projected to fall to 5.4pc in 2015, from 6.6pc this year. However, consumer spending is expected to slow to 2.2pc in 2016 as the saving ratio stabilises. The OBR noted that consumption had grown by 2.1pc in real terms in the first three quarters of 2014, despite limited growth in real wages. Mr Chote also said that there had been a “structural deterioration” in productivity that meant British households would not enjoy the same living standards as they would have done had the financial crisis not occured. He added that rising productivity was essential for stronger pay growth.

In a separate speech, Ian McCafferty, a Bank of England policymaker, said raising interest rates now would help to “support and sustain” Britain’s recovery while ensuring prices rise smoothly in the future. Mr McCafferty said Britain’s “remarkable” recovery over the past 18 months suggested that pay growth was at a “turning point”, and that a sustained increase in wages was within sight. Speaking at the Institute of Directors on Wednesday, Mr McCafferty outlined four reasons for raising Bank Rate from its record low of 0.5pc, and warned that even small miscalculations about the degree of “spare capacity” meant the point at which the economy could start to overheat may arrive sooner than policymakers expect. He said raising rates now would ensure increases were “gradual and limited”.

“Draghi may have to deliver his quo without a eurozone quid. The text makes clear that leaders have no intention of delivering a new blueprint any time soon. According to the draft, a debate on how to proceed will be pushed off until February, and the report itself will come no sooner than June.”

• Leaked EU Summit Conclusions: Draghi Left Hanging? (FT)

The dance had become so routine that we at the Brussels Blog were thinking of giving it a name, the Eurozone Two-Step. Ever since the eurozone crisis first rocked international markets nearly five years ago, European Central Bank chiefs – first Jean-Claude Trichet, then Mario Draghi – sent a very clear message to the currency union’s political leaders: we can only act if you act first. The deal was never explicit, but both sides knew what was required. The ECB’s first sovereign bond purchase programme in May 2010 came only after eurozone leaders created a new €440bn bailout fund; its €1tn in cheap loans to eurozone banks in early 2012 only came after political leaders agreed to a new “fiscal compact” of tough budget rules. But with the markets watching Frankfurt closely for signs Draghi is about to launch another bold move – US-style quantitative easing, purchasing sovereign bonds to halt fears the bloc is headed into a deflationary spiral – there are new indications one of the partners is no longer dancing.

Back in October at a eurozone summit, Draghi was able to get a little-noticed statement out of the assembled leaders committing them to another “Four Presidents Report”, a reference to the blueprint delivered in 2012 that set a path towards further centralisation of eurozone economic policy. The report helped kick-start the EU’s just-completed “banking union.” Progress on that 2012 blueprint has since stalled, however, and at his last summit press conference, then-European Council president Herman Van Rompuy said the new “Four Presidents Report” would be delivered at the December EU summit, which starts next Thursday. Many in Brussels saw this as the quid for Draghi’s quo – once the leaders agreed to another blueprint for eurozone integration, Draghi would have a free hand to launch QE.

But according to a leaked draft of the communiqué for next week’s summit, Draghi may have to deliver his quo without a eurozone quid. The text makes clear that leaders have no intention of delivering a new blueprint any time soon. According to the draft, a debate on how to proceed will be pushed off until February, and the report itself will come no sooner than June.

“There will be US-style food stamps and we will reconnect electricity to homes where it has been cut off. There will have to be debt relief because the debt is simply unpayable. We will ask Germany to renegotiate.”

• Greek Left Candidate Willing To Call European Leaders’ Bluff (AEP)

Events have rudely exposed the illusion that the Greek people will submit quietly to a decade of colonial treatment and debt servitude. As matters stand, it is more likely than not that a defiant Alexis Tsipras will be prime minister of Greece by late January. His Syriza alliance vows to overthrow the EU-IMF Troika regime, refusing to implement the key demands. A view has taken hold in EU capitals and the City of London that Mr Tsipras has resiled from these positions and will ultimately stick to the Troika Memorandum, a text of economic vandalism that pushed Greece into seven years of depression, with a 25.9pc fall in GDP, longer and deeper than Europe’s worst episodes in the 1930s. Mr Tsipras is a polished performer on the EU circuit. He can no longer be caricatured as motorbike Maoist. But the fact remains that he told Greek voters as recently as last week that his government would cease to enforce the bail-out demands “from its first day in office”.

The logical implication is that Greece will be forced out of the euro in short order, unless the EU institutions capitulate. Mr Tsipras knows this. He is gambling that EU leaders – meaning Germany’s Angela Merkel – will yield. His calculation is that they will not dare to blow up monetary union at this late stage, and over a relative pittance. Too much political capital has been invested. The EU-IMF loans have already reached €245bn (£194bn), the biggest indenture package in history. To let it fall apart would expose failure of Mrs Merkel’s EMU crisis management. Yet the reality is that Greece must repay €6.7bn to the European Central Bank in July and August. The ECB will not roll it over because that would be monetary financing of a government. The capital markets are shut. Mr Tsipras knows that he is likely to receive a call from the ECB within weeks of taking office, reminding him that Greece owes some €40bn in emergency support (ELAs) for the banking system, a threat to cut off funding as occurred in Ireland and Cyprus.

I am reliably informed that his answer to the EU authorities will be “do your worst”. “We are not going to crumble at the first hurdle,” said one of his close advisers. “A freshly elected government cannot allow itself to be intimidated by threats of Armageddon.” Markets are taking fright. The Athens bourse fell 13pc on Tuesday, the biggest one-day drop since the 1987 crash. The yield curve on three-year Greek debt has exploded by almost 300 basis points to 9.52pc in two days and is higher than 10-year yields, a violent inversion of the yield curve unseen since default scares of the EMU crisis. The Syriza roadshow in the City last month went horribly wrong. “Everybody coming out of the meeting wants to sell everything Greek,” said a leaked memo by Capital Group’s Jorg Sponer.

The reported shopping list was: a haircut for creditors; free electricity, food, shelter, and health care for all who need it; tax cuts for the all but the rich; a rise in the minimum wage and pensions to €750 a month; a moratorium on private debt payments to banks above 20pc of disposable incomes; and demand for a 62pc debt forgiveness on the grounds that this is what Germany received in 1952. “The programme is worse than communism. This will be total chaos,” said Mr Sponer. “It was a disaster,” said Prof Yanis Varoufakis from Athens University, a man tipped to play a key role in any Syriza-led government. The reality is more prosaic. “We are not going to go on a spending spree. We will aim to achieve a modest primary surplus, and we will liberalise the labour market,” he said. “Greece faces a humanitarian crisis and we will spend €1.3bn to alleviate abject poverty. There will be US-style food stamps and we will reconnect electricity to homes where it has been cut off. There will have to be debt relief because the debt is simply unpayable. We will ask Germany to renegotiate.”

Attention long overdue.

• Superbugs To Kill 10 Million People A Year, Cost $100 Trillion By 2050 (BBC)

Drug resistant infections will kill an extra 10 million people a year worldwide – more than currently die from cancer – by 2050 unless action is taken, a study says. They are currently implicated in 700,000 deaths each year. The analysis, presented by the economist Jim O’Neill, said the costs would spiral to $100tn (£63tn). He was appointed by Prime Minister David Cameron in July to head a review of antimicrobial resistance. Mr O’Neill told the BBC: “To put that in context, the annual GDP [gross domestic product] of the UK is about $3tn, so this would be the equivalent of around 35 years without the UK contribution to the global economy.” The reduction in population and the impact on ill-health would reduce world economic output by between 2% and 3.5%. The analysis was based on scenarios modelled by researchers Rand Europe and auditors KPMG.

They found that drug resistant E. coli, malaria and tuberculosis (TB) would have the biggest impact. In Europe and the United States, antimicrobial resistance causes at least 50,000 deaths each year, they said. And left unchecked, deaths would rise more than 10-fold by 2050. Mr O’Neill is best known for his economic analysis of developing nations and their growing importance in global trade. He coined the acronyms Bric (Brazil, Russia, India and China) and more recently Mint (Mexico, Indonesia, Nigeria and Turkey). He said the impact of the would be mostly keenly felt in these countries. “In Nigeria, by 2050, more than one in four deaths would be attributable to drug resistant infections, while India would see an additional two million lives lost every year.”

The review team believes its analysis represents a significant underestimate of the potential impact of failing to tackle drug resistance, as it did not include the effects on healthcare of a world in which antibiotics no longer worked. Joint replacements, Caesarean sections, chemotherapy and transplant surgery are among many treatments that depend on antibiotics being available to prevent infections. The review team estimates that Caesarean sections currently contribute 2% to world GDP, joint replacements 0.65%, cancer drugs 0.75% and organ transplants 0.1%. This is based on the number of lives saved, and ill-health prevented in people of working age. Without effective antibiotics, these procedures would become much riskier and in many cases impossible. The review team concludes that this would cost a further $100tn by 2050.

But what are they going to do about it?

• Generation Y Have Every Right To Be Angry At Baby Boomers’ Wealth (Guardian)

A new study by the Grattan Institute on wealth across generations shows that the older Australians benefitted the most from the strong economic times of the early 2000s, and that by virtue of being effectively shut out of the housing market, members of “Generation Y” may be the first generation to be less wealthy than that of their parents. Whenever younger generations are discussed in the media, invariably comments will be made that Generation Y are unemployable, lazy, spendthrifts who need to learn discipline if they want to get ahead. They’re essentially the same comments that were made 20 years ago about Generation X and 15 or 20 years before that about the various incarnations of the baby boomer generation. Very little changes.

But a new report by the Grattan Institute’s, “The Wealth of Generations” suggests that one aspect of Generation Y is different from previous ones – they are on track to have less wealth than the generation before them. The report makes it abundantly clear that the good economic times of the late 1990s and early 2000s were of benefit mostly to older Australians, and such people “are capturing a growing share of Australia’s wealth, while the wealth of younger Australians has stagnated”. In 2003-04, households whose main earner was under 34 accounted for 6.52% of all household wealth in Australia. By 2011-12 such households only accounted for 4.52%:

The biggest eaters of the wealth pie in that time were those over 55. They now hold 58% of all wealth, up from the 51% held by such households back in 2003-04. But it is not just in the share of the pie that the younger generations lost out, their wealth has also gone down in real terms. The Grattan Institute found that households across all age groups are wealthier now than their comparative aged households were in 2003-04. All that is except for those aged 25-34 years. The wealth of households aged 45-54 years old from 2003-04 to 2011-12 grew by $163,000 (in 2012 dollar terms) – a 23% increase. Those aged 55-64 saw their wealth in that time rise $174,000 (19%), while the wealth of 65-74 year old households rose a staggering $216,000, (27%). The households of 24 to 34-year-olds however lost $10,400 in wealth – a 4% drop:

“Survey respondents who expect to pay off their debts anticipate doing so at an average age of 53. But in addition to the 18% who expect to owe money forever, another 25% expect to be in debt until at least age 61.”

• One-Fifth Of Americans Don’t Plan To Pay Off Their Debt (CNBC)

The golden years are going to feel a bit tarnished for almost one in five Americans. In a personal finance survey published today, 18% of the respondents said they expect to be in debt for the rest of their lives. That is double the percentage who expected that in May 2013, the last time the survey was conducted. Mortgage delinquencies dropped for the eleventh consecutive quarter, to 3.36%, in the third quarter of 2014, and credit card delinquency was at 1.34%, according to TransUnion. Credit card indebtedness has increased moderately since the 2013 CreditCards.com survey, Schulz said. In contrast, student loan debt rose from an aggregate of $390 billion at the end of 2005 to $966 billion at the end of 2012, according to data from the Federal Reserve Bank of New York.

Average student loan debt topped $30,000 in six states, according to the Project on Student Debt. “We’ve all seen the student loan debt numbers, and credit card debt is increasing, and even though the job market is improving it’s certainly not humming along, and there is data about people’s salaries not growing quite as quickly as people had hoped,” said Matt Schulz, senior analyst at CreditCards.com. “You just wonder if it has all come together to create this unease.” Survey respondents who expect to pay off their debts anticipate doing so at an average age of 53. But in addition to the 18% who expect to owe money forever, another 25% expect to be in debt until at least age 61.

Older respondents are more likely to believe their debt will be with them forever. Some 31% of those over age 65 expect to be lifelong debtors, compared to 22% of those aged 50 to 64 and just 6% of millennials aged 18 to 29. “The more years you have left, the more likely you are to have a chance to get rid of that debt,” Schulz said. “I think some of that can just be chalked up to the optimism and positivity of youth,” since after all, millennials are the ones most likely to be holding student loans. Schulz speculated that perhaps some older borrowers are assuming responsibility for children’s student loans, and that is adding to their pessimism.

Corruption Inc.

• IMF Finds Another $15 Billion Black Hole In Ukraine’s Finances (CNBC)

A further $15 billion may be needed to bailout struggling Ukraine, which seems ever closer to economic disaster. The International Monetary Fund (IMF) has spotted a shortfall of $15 billion on top of the $17 billion bailout loan package it has worked out for the troubled country, according to reports. This black hole is especially worrisome as the world’s economies are facing slower global growth and so the appetite to help out Ukraine may dwindle – especially as the country’s economy is such trouble. Besieged by conflict in some of its most important economic areas and the collapse of exports to Russia, Ukraine’s economy is expected to shrink by 7% this year, according to its government. Its currency reserves have shrunk, raising concerns that its central bank will not be able to keep propping up the country’s currency, the hryvnia.

If Ukraine’s currency – which has been world’s the worst-performing this year – falls even further, Ukraine could enter the dangerous territory of hyperinflation, where prices rise by more than 50% in a month. Inflation already hit 22% in November. “It is not a question of throwing a few billion bucks at the problem, the program financing as is just does not add up and very significantly,” Tim Ash, head of emerging markets research at Standard Bank, wrote in a research note. He argued that at least the government and its creditors had realized this in time to ramp up the bailout. If the bailout were to collapse, it could trigger worse problems for the recently assembled, Western-backed, government led by Prime Minister Arseny Yatseniuk and President Petro Poroshenko. Ukraine has become an important symbol for both Russia and the West, as relationships between them deteriorate to their worst since the Cold War.

This is how the world sees America, and Americans, these days.

• Guantanamo Six ‘Will Enjoy Complete Freedom’ In Uruguay (BBC)

Six prisoners released from the US detention centre in Guantanamo Bay will enjoy complete freedom in Uruguay, the country’s defence minister says. Eleuterio Huidobro told Reuters news agency that Uruguay had not imposed or accepted any conditions when it agreed to receive the former inmates. The six men arrived in Montevideo on Sunday after being freed by the US. They spent 12 years in jail for alleged ties with al-Qaeda but were never charged. The former inmates – four Syrians, a Palestinian and a Tunisian – were taken to a military hospital for health checks. The Pentagon identified them as Abu Wael Dhiab, Ali Husain Shaaban, Ahmed Adnan Ajuri, and Abdelahdi Faraj, from Syria; Palestinian Mohammed Abdullah Taha Mattan, and Adel bin Muhammad El Ouerghi, from Tunisia. Uruguayan President Jose Mujica said they had been subjected to “an atrocious kidnapping”. Mr Huidobro told Reuters: “They will not be restricted in any way. Their status is that of refugees and immigrants.”

US President Barack Obama has pledged to close the camp in Cuba, which was opened in 2002 as a place to detain enemy combatants in America’s war on terror. About half of the 136 men still in Guantanamo have been cleared for transfer but have nowhere to go because their countries are unstable or unsafe. In Latin America, El Salvador is the only other country to have given Guantanamo prisoners sanctuary, taking two in 2012. One of the former detainees, Abdelahdi Faraj, published an open letter through his lawyer in New York thanking Mr Mujica for his decision. “Were it not for Uruguay, I would still be in the black hole in Cuba today,” he said. “I have no words to express how grateful I am for the immense trust that you, the Uruguayan people, have placed in me and the other prisoners by opening the doors to your country.” Mr Mujica was himself held for over a decade in harsh prison conditions during Uruguay’s period of military rule in the 1970s and 1980s.

“After reviewing this report, we will give consideration to reopening petitions or filing new petitions in European courts under the principles of universal jurisdiction ..”

• CIA Torture Report May Set Off Global Prosecutions (Bloomberg)

The release of the Senate Intelligence Committee’s report on the CIA’s secret prisons roiled Washington Tuesday, but its real impact could be felt in courtrooms across the globe in the months and years to come. Attorneys for human rights organizations are now poring over the 525-page declassified summary of the Senate majority report to find new material that could revive long-dormant and failed civil and criminal lawsuits on behalf of those detained by the Central Intelligence Agency. While many American and international nongovernmental organizations have mounted legal challenges on behalf of people who were detained, transferred and harshly interrogated by the CIA and allied governments, these court challenges have rarely been successful. One reason is that the Justice Department under Presidents George W. Bush and Barack Obama have asserted that almost all details about the CIA program were a state secret.

And while some government reports have been released about the black sites, the Senate committee’s majority report released Tuesday is the most comprehensive and detailed document to date. “One of the tragedies about this is the attempt to find redress,” said Andrea Prasow, the deputy director of the Washington office for Human Rights Watch. “Judges have accepted the state secrets claim. Now it will be much harder to do that when we all have access to a 500-page public report that details a lot of this.” The chances of a U.S. court re-opening civil or criminal charges against U.S. officials involved with the CIA program are slim. The agency and the Justice Department have conducted their own investigations into the CIA’s program and only low-level military officials and one CIA contractor has been prosecuted.

But European courts may be a different story. Some human-rights groups are now seeking to petition European courts to renew efforts to prosecute Bush administration officials under the principle of universal jurisdiction. That principle was established in 1998, when a Spanish court indicted Augosto Pinochet, the dictator of Chile, for his role in the murder and torture of many of his political opposition. When Pinochet was traveling through the U.K. in 1998, he was arrested by order of the Spanish court. (U.K. officials released him back to Chile two years later.) “After reviewing this report, we will give consideration to reopening petitions or filing new petitions in European courts under the principles of universal jurisdiction,” said Baher Azmy, the legal director of the Center for Constitutional Rights, a group that has represented Guantanamo detainees including Majid Khan and Abu Zubaydah, two detainees who went through the CIA’s black-site prisons.

Did anyone doubt that?

• President George W. Bush ‘Knew Everything’ About CIA Interrogation (BBC)

Former US President George W Bush was “fully informed” about CIA interrogation techniques condemned in a Senate report, his vice-president says. Speaking to Fox News, Dick Cheney said Mr Bush “knew everything he needed to know” about the programme, and the report was “full of crap”. The CIA has defended its use of methods such as waterboarding on terror suspects after the 9/11 attacks. The Senate report said the agency misled politicians about the programme. But the former Republican vice-president dismissed this, saying: “The notion that the committee is trying to peddle that somehow the agency was operating on a rogue basis and that we weren’t being told – that the president wasn’t being told – is a flat-out lie.”

In the interview on Thursday, Mr Cheney said the report was “deeply flawed” and a “terrible piece of work”, although he admitted he had not read the whole document. President Bush “knew everything he needed to know, and wanted to know” about CIA interrogation, he said. “He knew the techniques … there was no effort on my part to keep it from him. “He was fully informed.” Mr Bush led the charge against the report ahead of its release on Tuesday, defending the CIA on US TV. “We’re fortunate to have men and women who work hard at the CIA serving on our behalf,” he told CNN on Sunday. A summary of the larger classified report says that the CIA carried out “brutal” and “ineffective” interrogations of al-Qaeda suspects in the years after the 9/11 attacks on the US and misled other officials about what it was doing.

The information the CIA collected using “enhanced interrogation techniques” failed to secure information that foiled any threats, the report said. But Mr Cheney said the interrogation programme saved lives, and that the agency deserved “credit not condemnation”. “It did in fact produce actionable intelligence that was vital in the success of keeping the country safe from further attacks,” he said. The UN and human rights groups have called for the prosecution of US officials involved in the 2001-2007 programme. “As a matter of international law, the US is legally obliged to bring those responsible to justice,” Ben Emmerson, UN Special Rapporteur on Human Rights and Counter-Terrorism, said in a statement made from Geneva. He said there had been a “clear policy orchestrated at a high level”.