Feb 172017
 
 February 17, 2017  Posted by at 11:00 am Finance Tagged with: , , , , , , , , ,  2 Responses »
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John Collier Workmen at emergency office construction job, Washington, DC Dec 1941

 


Global Growth is All About China…Nothing but China (Econimica)
US Household Debt Is Dangerously Close To 2008 Levels (CNN)
“Seriously Delinquent” US Auto Loans Surge (WS)
3 Reasons The US Could Be Headed For A Fresh Debt Crisis (MW)
Fed President Says US Banks Have “Half The Equity They Need” (Black)
Harward Turns Down National Security Adviser Job Over Staffing Dispute (CBS)
The Swamp Strikes Back (Escobar)
Who’s Sucking Up All the World’s Safest Bonds? (WSJ)
Mary Jo White Seriously Misled the US Senate to Become SEC Chair (Martens)
European Financial Centres After Brexit (E.)
Putin Orders Russian Media To “Cut Back” On Positive Trump Coverage (ZH)
‘Bank Run’ under Capital Controls: Greeks withdraw €2.5bn in 45 days (KTG)

 

 

Let this sink in. Then realize how reliable Chinese numbers are. And that’s where all the ‘growth’ is in the world.

Global Growth is All About China…Nothing but China (Econimica)

Since 2000, China has been the nearly singular force for growth in global energy consumption and economic activity. However, this article will make it plain and simple why China is exiting the spotlight and unfortunately, for global economic growth, there is no one else to take center stage. To put things into perspective I’ll show this using four very inter-related variables…(1) total energy consumption, (2) core population (25-54yr/olds) size and growth, (3) GDP (flawed as it is), and (4) debt. First off, the chart below shows total global energy consumption (all fossil fuels, nuclear, hydro, renewable, etc…data from US EIA) from 1980 through 2014, and the change per period. The growth in global energy consumption from ’00-’08 was astounding and an absolute aberration, nearly 50% greater than any previous period.

Of that growth in energy consumption, the chart below breaks down the sources of that growth among China (red), India/Africa (gold) and the rest of the world (blue). It’s plain to see the growth of Chinese energy consumption, the decelerating growth among the rest of the world, and the stagnant growth among India / Africa.

But here is the money chart, pointing out that the growth in energy consumption (by period) has shifted away from “the world” squarely to China. From 2008 through 2014 (most recent data available), 2/3rds or 66% of global energy consumption growth was China. Also very noteworthy is that India nor Africa have taken any more relevance, from a growth perspective, over time. The fate of global economic growth rests solely upon China’s shoulders.

The chart below shows China’s core population (annual change) again against total debt, GDP, and energy consumption. The reliance on debt creation as the core population growth decelerated is really hard not to see. This shrinking base of consumption will destroy the meme that a surging Chinese middle class will drive domestic and global consumption…but I expect this misconception will continue to be peddled for some time.

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Fewer delinquencies, says the Fed. But then look at the next article: “Seriously Delinquent” US Auto Loans Surge

US Household Debt Is Dangerously Close To 2008 Levels (CNN)

Total household debt climbed to $12.58 trillion at the end of 2016, an increase of $266 billion from the third quarter, according to a report from the Federal Reserve Bank of New York. For the year, household debt ballooned by $460 billion — the largest increase in almost a decade. That means the debt loads of Americans are flirting with 2008 levels, when total consumer debt reached a record high of $12.68 trillion. Rising debt hints that banks are extending more credit. Mortgage originations increased to the highest level since the Great Recession. Mortgage balances make up the bulk of household debt and ended the year at $8.48 trillion. However, growth in non-housing debt – which includes credit card debt and student and auto loans – are key factors fueling the rebound in debt.

Student loan debt balances rose by $31 billion in the fourth quarter to a total of $1.31 trillion, according to the report. Auto loans jumped by $22 billion as new auto loan originations for the year climbed to a record high. Credit card debts rose by $32 billion to hit $779 billion. At these rates, the New York Fed expects household debt to reach its previous 2008 peak sometime this year. But while that may sound alarming, there is one big difference between now and 2008, according to the Fed: Fewer delinquencies. At the end of 2016, 4.8% of debts were delinquent, compared to 8.5% of total household debt in the third quarter of 2008. There were also less bankruptcy filings – a little more than 200,000 consumers had a bankruptcy added to their credit report in the final quarter of last year, a 4% drop from the same quarter in 2015.

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“There’s nothing like loading up consumers with debt to make central bankers outright giddy.”

“Seriously Delinquent” US Auto Loans Surge (WS)

Bank regulators have been warning, now it’s happening. The New York Fed, in its Household Debt and Credit Report for the fourth quarter 2016, put it this way today: “Household debt increases substantially, approaching previous peak.” It jumped by $226 billion in the quarter, or 1.8%, to the glorious level of $12.58 trillion, “only $99 billion shy of its 2008 third quarter peak.” Yes! Almost there! Keep at it! There’s nothing like loading up consumers with debt to make central bankers outright giddy. Auto loan balances in 2016 surged at the fastest pace in the 18-year history of the data series, the report said, driven by the highest originations of loans ever. Alas, what the auto industry has been dreading is now happening: Delinquencies have begun to surge.

This chart – based on data from the Federal Reserve Board of Governors, which varies slightly from the New York Fed’s data – shows how rapidly auto loan balances have ballooned since the Great Recession. At $1.112 trillion (or $1.16 trillion according to the New York Fed), they’re now 35% higher than they’d been during the crazy peak of the prior bubble. Note that during the $93 billion increase in auto loan balances in 2016, new vehicle sales were essentially flat. No way that this is an auto loan bubble. Not this time. It’s sustainable. Or at least containable when it’s not sustainable, or whatever. These ballooning loans have made the auto sales boom possible.

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Not a new topic, but some useful numbers.

3 Reasons The US Could Be Headed For A Fresh Debt Crisis (MW)

Subprime car loansThe amount of total open car loans just topped $1 trillion, according to credit ratings firm Experian. But is that a sign of consumer confidence … or a cause for alarm? According to the latest data, from the third quarter of 2016, about 1 in 5 car loans are made to subprime borrowers, at an average interest rate of almost 11%. And broadly speaking, the average car loan in the U.S. is for a balance of almost $30,000 and a monthly payment of about $500. With stats like that, it’s no wonder the default rate on car loans is rising. A study by lending analysis firm Lending Times recently found that auto loan delinquencies are up over 21% compared with 2012 levels. A senior vice president at TransUnion, one of the three major credit rating bureaus, recently said he expects “a modest increase in delinquency” for auto loans going forward, too.

Just image what would happen if rates tick a bit higher. After all, if homeowners who were “underwater” on their homes in 2007 could shrug off the impact of a foreclosure on their credit report and simply walk away from a big mortgage, then why in the world would they stick with a double-digit interest rate on a car loan — especially as that car ages or breaks down? The real weight of these loans continues to hit the balance sheets of lenders, with net subprime losses continuing to march upward in December to 8.52%. Standard & Poor’s U.S. Auto Loan Tracker noted that while some of the acceleration was seasonal, “the year-over-year increases indicate that 2017’s losses could surpass last year’s levels.” No wonder the New York Fed called subprime auto debt a “significant concern” at the end of last year.

Student loans Hedge-fund guru Bill Ackman has said “I think that the government’s going to lose hundreds of millions of dollars” on student loans. And while that may sound like hysterics, when you consider that there is roughly $1.4 trillion in outstanding student debt, according to the Federal Reserve, that number doesn’t seem so far-fetched. Most of that is owned by the federal government via subsidized loans, too, with a recent Bloomberg report estimating the government owned some $850 billion in student loan debt as of 2014. Even a modest default rate would quite literally eat up hundreds of millions of dollars in a hurry. The losses for the government are disturbing, but at least can be made up with higher taxes or cuts elsewhere in the budget. There’s no relief for the millions of young Americans who are stuck paying for their college degree instead of spending on consumer goods.

Government-insured mortgagesAfter the collapse of subprime mortgages during the financial crisis, banks learned a hard lesson about these risky home loans. But if you think that means they avoided all loans to less-than-stellar borrowers, think again. The New York Fed recently juxtaposed the rise of government-insured mortgages vis-à-vis the decline in subprime lending to find that “government insurance programs rapidly expanded and more than filled the void.” That mirrors a report from ProPublica back in 2012 that estimated 9 in 10 mortgages issued at the time were being guaranteed by taxpayers via government-sponsored enterprises such as Fannie Mae and Freddie Mac. And while standards are moderately higher for loans with this government backstop than precrisis loans to subprime borrowers, “they are not low-risk loans,” write the New York Fed economists. “The combination of high leverage and low credit scores documented above translates into extremely high default rates.”

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It’s all about political power.

Fed President Says US Banks Have “Half The Equity They Need” (Black)

In a scathing editorial published in the Wall Street Journal today, the president of the Federal Reserve Bank of Minneapolis, Neel Kashkari, blasted US banks, saying that they still lacked sufficient capital to withstand a major crisis. Kashkari makes a great analogy. When you’re applying for a mortgage or business loan, sensible banks are supposed to demand a 20% down payment from their borrowers. If you want to buy a $500,000 home, a conservative bank will loan creditworthy borrowers $400,000. The borrower must be able to scratch together a $100,000 down payment. But when banks make investments and buy assets, they aren’t required to do the same thing. Remember that when you deposit money at a bank, you’re essentially loaning them your savings.

As a bank depositor, you’re the lender. The bank is the borrower. Banks pool together their deposits and make various loans and investments. They buy government bonds, financial commercial trade, and fund real estate purchases. Some of their investment decisions make sense. Others are completely idiotic, as we saw in the 2008 financial meltdown. But the larger point is that banks don’t use their own money to make these investments. They use other people’s money. Your money. A bank’s investment portfolio is almost entirely funded with its customers’ savings. Very little of the bank’s own money is at risk. You can see the stark contrast here. If you as an individual want to borrow money to invest in something, you’re obliged to put down 20%, perhaps even much more depending on the asset.

Your down payment provides a substantial cushion for the bank; if you stop paying the loan, the value of the property could decline 20% before the bank loses any money. But if a bank wants to make an investment, they typically don’t have to put down a single penny. The bank’s lenders, i.e. its depositors, put up all the money for the investment. If the investment does well, the bank keeps all the profits. But if the investment does poorly, the bank hasn’t risked any of its own money. The bank’s lenders (i.e. the depositors) are taking on all the risk. This seems pretty one-sided, especially considering that in exchange for assuming all the risk of a bank’s investment decisions, you are rewarded with a miniscule interest rate that fails to keep up with inflation. (After which the government taxes you on the interest that you receive.) It hardly seems worth it.

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Murky.

Harward Turns Down National Security Adviser Job Over Staffing Dispute (CBS)

Vice Admiral Robert Harward has rejected President Trump’s offer to be the new national security adviser, CBS News’ Major Garrett reports. Sources close to the situation told Garrett Harward and the administration had a dispute over staffing the security council. Two sources close to the situation confirm Harward demanded his own team, and the White House resisted. Specifically, Mr. Trump told Deputy National Security Adviser K. T. McFarland that she could retain her post, even after the ouster of National Security Adviser Michael Flynn. Harward refused to keep McFarland as his deputy, and after a day of negotiations over this and other staffing matters, Harward declined to serve as Flynn’s replacement.

Harward, a 60-year-old former Navy SEAL, served as deputy commander of U.S. Central Command under now-Defense Secretary James Mattis. He previously served as deputy commanding general for operations of Joint Special Operations Command at Fort Bragg in North Carolina. Harward has also commanded troops in both Iraq and Afghanistan for six years after the 9/11 attacks. Under President George W. Bush, he served on the National Security Council as director of strategy and policy for the office of combating terrorism.

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As I said: the New Cold War is being fought INSIDE the US.

The Swamp Strikes Back (Escobar)

The tawdry Michael Flynn soap opera boils down to the CIA hemorrhaging leaks to the company town newspaper, leading to the desired endgame: a resounding victory for hardcore neocon/neoliberalcon US Deep State factions in one particular battle. But the war is not over; in fact it’s just beginning. Even before Flynn’s fall, Russian analysts had been avidly discussing whether President Trump is the new Victor Yanukovich – who failed to stop a color revolution at his doorstep. The Made in USA color revolution by the axis of Deep State neocons, Democratic neoliberalcons and corporate media will be pursued, relentlessly, 24/7. But more than Yanukovich, Trump might actually be remixing Little Helmsman Deng Xiaoping: “crossing the river while feeling the stones”. Rather, crossing the swamp while feeling the crocs.

Flynn out may be interpreted as a Trump tactical retreat. After all Flynn may be back – in the shade, much as Roger Stone. If current deputy national security advisor K T McFarland gets the top job – which is what powerful Trump backers are aiming at – the shadowplay Kissinger balance of power, in its 21st century remix, is even strengthened; after all McFarland is a Kissinger asset. Flynn worked with Special Forces; was head of the Defense Intelligence Agency (DIA); handled highly classified top secret information 24/7. He obviously knew all his conversations on an open, unsecure line were monitored. So he had to have morphed into a compound incarnation of the Three Stooges had he positioned himself to be blackmailed by Moscow.

What Flynn and Russian ambassador Sergey Kislyak certainly discussed was cooperation in the fight against ISIS/ISIL/Daesh, and what Moscow might expect in return: the lifting of sanctions. US corporate media didn’t even flinch when US intel admitted they have a transcript of the multiple phone calls between Flynn and Kislyak. So why not release them? Imagine the inter-galactic scandal if these calls were about Russian intel monitoring the US ambassador in Moscow. No one paid attention to the two key passages conveniently buried in the middle of this US corporate media story. 1) “The intelligence official said there had been no finding inside the government that Flynn did anything illegal.” 2) “…the situation became unsustainable – not because of any issue of being compromised by Russia – but because he [Flynn] has lied to the president and the vice president.” Recap: nothing illegal; and Flynn not compromised by Russia. The “crime” – according to Deep State factions: talking to a Russian diplomat.

Vice-President Mike Pence is a key piece in the puzzle; after all his major role is as insider guarantor – at the heart of the Trump administration – of neocon Deep State interests. The CIA did leak. The CIA most certainly has been spying on all Trump operatives. Flynn though fell on his own sword. Classic hubris; his fatal mistake was to strategize by himself – even before he became national security advisor. “Mad Dog” Mattis, T. Rex Tillerson – both, by the way, very close to Kissinger – and most of all Pence did not like it one bit once they were informed.

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A big way in which central banks distort markets.

Who’s Sucking Up All the World’s Safest Bonds? (WSJ)

The world is running out of safe financial assets. One reason may be regulators’ push to make trading safer. A scarcity of safe collateral can create bouts of volatility in the markets where investors fund their purchases. Economists also worry that a lack of quality public-sector assets leads the private sector to create less reliable and riskier substitutes. Global rules increasingly require that investors deposit cash as security, called margin, when they trade with each other. This money is often left at clearinghouses, which are intermediaries that stand between buyers and sellers and step in if one of the parties won’t make good on a transaction. Regulators are trying to give these clearinghouses more heft to make the financial system safer.

The clearinghouses, in turn, have to do something with the cash, and they frequently take it to repurchase, or “repo,” markets, where they lend it out in exchange for high-quality assets such as German bunds or U.S. Treasurys. That has the effect of vacuuming up safe assets. Paradoxically, cash—at least its electronic form—isn’t ultrasafe: It needs to be left in bank deposits, and even the strongest banks have some risk. Treasurys and bunds don’t. Europe’s dearth of safe assets is especially acute. According to a semiannual survey released Tuesday by the International Capital Market Association, demand for collateral in the eurozone increased significantly in the second half of 2016. The ECB and other central banks across the developed world have been blamed for this safe-asset scarcity because they have bought trillions of dollars worth of government bonds in a bid to boost economic growth.

However, during a speech last month, ECB official Yves Mersch pointed to clearinghouses as a key culprit, and warned that “the requirements for trades to be centrally cleared are still being introduced, so the demand from market infrastructure to exchange cash for collateral will rise.” Data are scarce, but the latest figures from the Bank for International Settlements show that more than half of the notional amount outstanding of derivatives transactions was centrally cleared by the end of 2014, after new regulation was enacted—twice as much as in 2009.

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“Americans will continue to be relegated to the status of dumb tourist in their own country.”

Mary Jo White Seriously Misled the US Senate to Become SEC Chair (Martens)

Less than two weeks after Mary Jo White was nominated to become Chair of the Securities and Exchange Commission by President Barack Obama on January 24, 2013, White filed an ethics disclosure letter advising that she would “retire” from her position representing Wall Street banks at the law firm Debevoise & Plimpton. White wrote on this subject in great detail, stating:

“Upon confirmation, I will retire from the partnership of Debevoise & Plimpton, LLP. Following my retirement, the law firm will not owe me an outstanding partnership share for either 2012 or any part of 2013. As a retired partner, I will be entitled to the use of secretarial services, office space and a blackberry at the firm’s expense. For the duration of my appointment, I will forgo these three benefits, though I may pay for some secretarial services at my own expense. Pursuant to the Debevoise & Plimpton, LLP Partners Retirement Program, I will receive monthly lifetime retirement payments from the firm commencing the month after my retirement. However, within 60 days of my appointment, the firm will make a lump sum payment, in lieu of making monthly retirement payments for the next four years. Within 60 days of my appointment, I also will receive payouts of my interest in the Debevoise & Plimpton LLP Cash Balance Retirement plan and my capital account.”

Yesterday it was widely reported in the business press that Mary Jo White is returning to her former law firm as a partner representing clients who face government investigations. She will also fill the newly created position of Senior Chair of the law firm. This news is highly significant because it would appear that the U.S. Senate was seriously misled by White’s ethics letter in its deliberations to confirm her as the top cop of Wall Street. The news is also highly significant because it will mark the fourth time in four decades that Mary Jo White has spun through the revolving doors of Debevoise & Plimpton (where she represented serial law violators) to government service (prosecuting serial law violators).

[..] Until there is meaningful legislative reform of political campaign financing and revolving door appointments, Americans will continue to be relegated to the status of dumb tourist in their own country.

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Bankers have too much money and too much power.

European Financial Centres After Brexit (E.)

“WHEN the vote took place,” says Valérie Pécresse, “it was an opportunity for us to promote Île de France”, the region around Paris of which she is the elected head. Two advertising campaigns were prepared, depending on the result of Britain’s referendum last June on leaving the European Union. The unused copy ran: “You made one good decision. Make another. Choose Paris region.” Brexit has made Paris bolder. Once Britain leaves Europe’s single market, the many international banks and other firms that have made London their EU home will lose the “passports” that allow them to serve clients in the other 27 states. Possibly, mutual recognition by Britain and the EU of each other’s regulatory regimes will persist. But no one can rely on the transition to Brexit being smooth, rather than a feared “cliff edge”. Best to assume the worst.

Britain is expected to start the two-year process of withdrawal next month. Given the time needed to get approval from regulators, find offices and move (or hire) staff, financial firms have long been weighing their options. London will remain Europe’s leading centre, but other cities are keen to take what they can. The Parisians are pushing hardest, pitching their city as London’s partner and peer. “I don’t see the relationship with London as a rivalry,” says Ms Pécresse. “The rivalry is not with London but with Dublin, Amsterdam, Luxembourg and Frankfurt.” Especially, it seems, Frankfurt. Paris has more big local banks, more big companies and more international schools than its German rival. London apart, say the French team, it is Europe’s only “global city”. When, they smirk, did you last take your partner to Frankfurt for the weekend?

This month the Parisians were in London, briefing 80 executives from banks, asset managers, private-equity firms and fintech companies. They are keen to dispel France’s image as an interventionist, high-tax, work-shy place. The headline corporate-tax rate is 33.3% but due to fall to 28% by 2020. A scheme giving income-tax breaks to high earners who have lived outside France for at least five years will now apply for eight years after arrival or return, not five. The Socialists, who run the city itself, and Ms Pécresse’s Republicans are joined in a business-friendly “sacred union”, says Gérard Mestrallet, president of Paris Europlace, which promotes the financial centre. Ms Pécresse and others play down the risk that Marine Le Pen, of the far-right, Eurosceptic National Front will win the presidential election this spring.

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“Crimea was TAKEN by Russia during the Obama Administration. Was Obama too soft on Russia?” the U.S. president tweeted.

Putin Orders Russian Media To “Cut Back” On Positive Trump Coverage (ZH)

Trump’s honeymoon with capital markets is on the rocks, kept alive only by the occasional soundbite about “massive” or “phenomenal” tax cuts; it now appears that the US president’s – until recently – amicable relationship with Russia is also quickly souring. According to Bloomberg, the Kremlin has ordered Russian state media to cut “way back” on their fawning coverage of President Donald Trump, in what three sources told BBG is a “reflection of growing concern among senior Russian officials that the new U.S. administration will be less friendly than first thought.” The Russian president has defended his decision saying it is the result of declining interest among the Russian viewers in Trump’s rise to power, but Bloomberg adds that some of the most popular TV segments on Trump touched on ideas the Kremlin would rather not promote, such as his pledge to “drain the swamp.”

The suggestion is that since Trump is looking to end governmental corruption, the “authoritarian” Putin should be worried; and yet instead of “draining the swamp” Trump has filled it by surrounded himself with precisely those bankers he used as populist examples of all that is wrong with the government. As such, Putin should greet Trump’s failed “swamp draining” although that part did not make it into the Bloomberg report. Putin’s decree comes at a time of rising anti-Russian sentiment in Washington, where U.S. spy and law-enforcement agencies are conducting multiple investigations to determine the full extent of contacts Trump’s advisers had with Russia during and after the 2016 election campaign.

According to Bloomberg, the order marks a stark turnaround from just a few weeks ago when Russia hailed Trump’s presidential victory as the beginning of a new era of cooperation between the former Cold War foes. “Trump’s campaign was watched with rapture as news anchors gushed over the novelty of hearing an American presidential candidate praise Putin. But the wall-to-wall coverage went too far for the Kremlin’s liking.” In January, Trump reportedly received more mentions in the media than Putin, relegating the Russian leader to the No. 2 spot for the first time since he returned to the Kremlin in 2012 after four years as premier, according to Interfax data.”

That said, there has certainly been a chilling in relations between Trump and Putin. In recent weeks, numerous White House officials, including Trump, have criticized Russia for its annexation of Crimea and the subsequent violence in Ukraine. Trump on Wednesday accused Putin of seizing Crimea from Ukraine in a series of Twitter posts that were delivered amid a flurry of allegations that his team has ties to Russia. “Crimea was TAKEN by Russia during the Obama Administration. Was Obama too soft on Russia?” the U.S. president tweeted. As Bloomberg concludes, Russian officials, who had readily commented to local media on earlier news from Washington, suddenly became less talkative after the Crimea comment. And so, with Trump-Putin relations suddenly in purgatory, and Trump’s domestic “Russia-facing” exposure in chaos, it is now unclear how Trump will pivot away to restore what many had hoped would lead to a restoration in normal relations between the two countries.

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And there we go again.

‘Bank Run’ under Capital Controls: Greeks withdraw €2.5bn in 45 days (KTG)

Delays in the talks between Greece and its lenders have brought back the ghost of Grexit. The grave disagreement between the IMF and the European lenders, Grexit bombshell flying around and Greece’s reluctance to accept additional austerity measures have increase uncertainty among citizens – for one more time. And what do citizens do when they feel political and economical insecurity? The run to banks and withdraw deposits. 2.5 billion euros left Greek banks in the last 45 days. And this despite the capital controls that allow Greeks to withdraw a maximum of just €1,800 per month. However, in better situation are those who brought back cash to the banks. Cash that was largely withdrawn before the capital controls were imposed in July 2015 as a result of a major bank run from November 2014 until end of June 2015.

Those who pulled the cash from under the mattress and brought it to bank are allowed to withdraw money above the €1800 cap. According to newspaper Eidiseis, the cash withdrawal in the last 45 days has set bankers in alert. In addition to cash withdrawals, business loans and mortgage, amounting a total of €500 million, turned red. A sign that the delay in the conclusion of the second review has increased uncertainty among the Greeks, as the daily notes. Speaking to the daily, sources from the Union of Greek Banks said that “time is not working in our favor.” They stressed that the government and the lenders should reach a compromise. Beginning of February, Greek websites for economic news had reported that more than one billion euros was withdrawn in January 2017.

According to a report of November 2015, more than €120 billion left the Greek banks during the years of the crisis. €45 billion left the banks during November 2014 – 2015. 80% of this amount, that is some €36 billion are been kept in homes, company safes or in bank lockers.

Read more …

Nov 262016
 
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Fidel Castro and Che Guevara ca. 1957


Cuban Revolutionary Fidel Castro Dies At 90 (AFP)
Wisconsin Agrees To Statewide Recount In Presidential Race (R.)
Bid To Challenge Brexit Gathers Pace Among Pro-Remain Politicians (G.)
Houses Have Never Been More Expensive To Buyers Who Need A Mortgage (Hanson)
Black Friday: The Death of Department Stores (WS)
US Payday Lenders Seek Emergency Court Help Against Regulators (R.)
When Money Dies (Bhandari)
Here’s What Happened When Ancient Romans Tried To ‘Drain The Swamp’ (Black)
Innovation Is Overvalued. Maintenance Matters More (Aeon)
Australia Eases Limits On Foreign Buyers As Apartment Glut Looms (AFR)
Australia Ceases Multimillion-Dollar Donations To Clinton Foundation (News)
Australia Joins Norway, Cuts Clinton Foundation Donations To $0 (ZH)
New Zealand Media Merger Risks Growth Of ‘Glib, Click-Bait’ Coverage (G.)
Greek Debt Relief Plan Said to Entail $35 Billion Bank Bond Swap (BBG)

 

 

How many people remember it was the US that drove Castro into Russian arms? He visited the US shortly after becoming president. Eisenhower refused to talk. Everything after that is propaganda and fake news.

Cuban Revolutionary Fidel Castro Dies At 90 (AFP)

Guerrilla revolutionary and communist idol, Fidel Castro was a holdout against history who turned tiny Cuba into a thorn in the paw of the mighty capitalist United States. The former Cuban president, who died aged 90 on Friday, said he would never retire from politics. But emergency intestinal surgery in July 2006 drove him to hand power to Raul Castro, who ended his brother’s antagonistic approach to Washington, shocking the world in December 2014 in announcing a rapprochement with US President Barack Obama. Famed for his rumpled olive fatigues, straggly beard and the cigars he reluctantly gave up for health reasons, Fidel Castro kept a tight clamp on dissent at home while defining himself abroad with his defiance of Washington.

In the end, he essentially won the political staring game, even if the Cuban people do continue to live in poverty and the once-touted revolution he led has lost its shine. As he renewed diplomatic ties, Obama acknowledged that decades of US sanctions had failed to bring down the regime – a drive designed to introduce democracy and foster western-style economic reforms – and it was time to try another way to help the Cuban people. A great survivor and a firebrand, if windy orator, Castro dodged all his enemies could throw at him in nearly half a century in power, including assassination plots, a US-backed invasion bid, and tough US economic sanctions.

Born August 13, 1926 to a prosperous Spanish immigrant landowner and a Cuban mother who was the family housekeeper, young Castro was a quick study and a baseball fanatic who dreamed of a golden future playing in the US big leagues. But his young man’s dreams evolved not in sports but politics. He went on to form the guerrilla opposition to the US-backed government of Fulgencio Batista, who seized power in a 1952 coup. That involvement netted the young Fidel Castro two years in jail, and he subsequently went into exile to sow the seeds of a revolt, launched in earnest on December 2, 1956 when he and his band of followers landed in southeastern Cuba on the ship Granma. Twenty-five months later, against great odds, they ousted Batista and Castro was named prime minister.

Once in undisputed power, Castro, a Jesuit-schooled lawyer, aligned himself with the Soviet Union. And the Cold War Eastern Bloc bankrolled his tropi-communism until the Soviet bloc’s own collapse in 1989. Fidel Castro held onto power as 11 US presidents took office and each after the other sought to pressure his regime over the decades following his 1959 revolution, which closed a long era of Washington’s dominance over Cuba dating to the 1898 Spanish-American War.

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How much of the $5 million so far was furnished by Soros?

Wisconsin Agrees To Statewide Recount In Presidential Race (R.)

Wisconsin’s election board agreed on Friday to conduct a statewide recount of votes cast in the presidential race, as requested by a Green Party candidate seeking similar reviews in two other states where Donald Trump scored narrow wins. The recount process, including an examination by hand of the nearly 3 million ballots tabulated in Wisconsin, is expected to begin late next week after Green Party candidate Jill Stein’s campaign has paid the required fee, the Elections Commission said. The state faces a Dec. 13 federal deadline to complete the recount, which may require canvassers in Wisconsin’s 72 counties to work evenings and weekends to finish the job in time, according to the commission. The recount fee has yet to be determined, the agency said in a statement on its website.

Stein said in a Facebook message on Friday that the sum was expected to run to about $1.1 million. She said she has raised at least $5 million from donors since launching her drive on Wednesday for recounts in Wisconsin, Michigan and Pennsylvania – three battleground states where Republican Trump edged out Democratic nominee Hillary Clinton by relatively thin margins. Stein has said her goal is to raise $7 million to cover all fees and legal costs. Her effort may have given a ray of hope to dispirited Clinton supporters, but the chance of overturning the overall result of the Nov. 8 election is considered very slim, even if all three states go along with the recount. The Green Party candidate, who garnered little more than 1 percent of the nationwide popular vote herself, said on Friday that she was seeking to verify the integrity of the U.S. voting system, not to undo Trump’s victory.

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In the same way that life imitates art, UK and US imitate each other.

Bid To Challenge Brexit Gathers Pace Among Pro-Remain Politicians (G.)

A series of informal but concerted efforts by pro-remain politicians to reshape or even derail the Brexit process is under way and gaining momentum, according to people involved. MPs from across the parties had discussed how to push the government into revealing its Brexit plans and to ensure continued single market access, sources said, as a series of senior political figures made public interventions suggesting the result of the EU referendum could be reversed. Tony Blair and John Major both suggested this week that the public should be allowed to vote on or even veto any deal for leaving the EU. However, those connected to efforts by serving pro-remain MPs say the former prime ministers’ views had little support in the Commons.

More significant, they argued, were strategy discussions involving MPs from all parties “caught between their own views and those expressed at the ballot box” in the referendum. “It’s a long process of gradually bringing people round to our way of thinking, on all sides,” said someone who works closely with pro-remain figures. “A lot of people are a bit unsure what to do – they’re caught between their own views and those expressed at the ballot box, often by their own constituents. “There’s a growing realisation that this is a long game. There’s actually very little information out there, and very little substance to get into. It’s hard to coalesce people around particular policy positions when the government has no policy to speak of. That’s quite a challenge.”

Major told a private dinner that there was a “perfectly credible case” for holding a second referendum on the terms of a Brexit deal. He said the views of the 48% of people who voted to remain should be taken into account and warned against the “tyranny of the majority”. Blair, in particular, is known to be sounding out opinion on Brexit as part of his re-emergence into political life. The former Labour prime minister’s office said he had discussed the issue with the former chancellor George Osborne, among “many people”.

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Be careful out there.

Houses Have Never Been More Expensive To Buyers Who Need A Mortgage (Hanson)

Houses have NEVER BEEN MORE EXPENSIVE to end-user, mortgage-needing shelter buyers. The recent rate surge crushed what little affordability remained in US housing. It now it requires 45% more income to buy the average-priced house than just four years ago, as incomes have not kept pace it goes without saying. The spike in rates has taken “UNAFFORDABILITY” to such extremes that prices, rates, and/or credit are now radically out of scope. At these interest rate levels house prices are simply not sustainable even in the lower-end price bands, which were far more stable than the middle-to-higher end bands (have been under significant pressure since spring). [..] The Data (note, for simplicity my models assume best-case 20% down and A-grade credit, which is the “minority” of lower-to-middle end buyers).

1) The average $361k builder house requires nearly $65k in income assuming a 4.5% rate, 20% down, and A-grade credit. Problem is, 20% + A-credit are hard to come by. For buyers with less down or worse credit, far more than $65k is needed. For the past 30-YEARS income required to buy the average priced house has remained relatively consistent, as mortgage rate credit manipulation made houses cheaper. Bottom line: Reversion to the mean will occur through house price declines, credit easing, a mortgage rate plunge to the high 2%’s, or a combination of all three. However, because rates are still historically low and mortgage guidelines historically easy, the path of least resistance is lower house prices.

2) The average $274k builder house requires nearly $53k in income assuming a 4.5% rate, 20% down, and A-grade credit. Problem is, 20% + A-credit are hard to come by. For buyers with less down or worse credit, far more than $53k is needed. For the past 30-YEARS income required to buy the average priced house has remained relatively consistent, as mortgage rate credit manipulation made houses cheaper. Bottom line: Reversion to the mean will occur through house price declines, credit easing, a mortgage rate plunge to the high 2%s, or a combination of all three. However, because rates are still historically low and mortgage guidelines historically easy, the path of least resistance is lower house prices.

3) Bonus Chart … Case-Shiller Coast-to-Coast Bubbles Bottom line: IT’S NEVER DIFFERENT THIS TIME. Easy/cheap/deep credit & liquidity has found its way to real estate yet again. Bubbles are bubbles are bubbles. And as these core housing markets hit a wall they will take the rest of the nation with them; bubbles and busts don’t happen in “isolation.”

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What does this mean for the future of human interaction?

Black Friday: The Death of Department Stores (WS)

There are still four weeks left to pull out the year. And hopes persists that this year will be decent. But online sales are hot, according to Adobe Digital Index, cited by Reuters. Online shoppers blew $1.15 billion on Thanksgiving Day, between midnight and 5 pm ET, according to Adobe Digital Index, up nearly 14% from a year ago. Sales by ecommerce retailers have been sizzling for years, growing consistently between 14% and 16% year-over-year and eating with voracious appetite the stale lunch of brick-and-mortar stores, particularly department stores. The lunch-eating process began in 2001. The chart below shows monthly department store sales, seasonally adjusted, since 1992. Note the surge in sales in the 1990s, driven by population growth, an improving economy, and inflation (retail sales are mercifully not adjusted for inflation). But sales began to flatten out in 1999. The spike in January 2001 (on a seasonally adjusted basis!) marked the end of the great American department store boom.

Even as the US fell into a recession in March 2001, ecommerce took off. But department store sales began their long decline, from nearly $20 billion in January 2001 to just $12.7 billion in October 2016, despite 14% population growth and 36% inflation! The decline of department stores is finding no respite during the holiday season. Not-seasonally-adjusted data spikes in October, November, and December. But these spikes have been shrinking, from their peak in December 2000 of $34.3 billion to $23.4 billion in December 2015, a 32% plunge, despite, once again, 14% population growth and 36% inflation!

In other words: the brick-and-mortar operations of department stores are becoming irrelevant. Ecommerce sales include all kinds of merchandise, not just the merchandise available in department stores. So it’s a broader measure. They have skyrocketed from $4.5 billion in Q4 1999 ($1.5 billion a month on average) to $101 billion in Q3 2016 ($33.7 billion a month on average).

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From the “It’s Just Not Fair!” department.

US Payday Lenders Seek Emergency Court Help Against Regulators (R.)

Payday lenders asked a federal judge in Washington, D.C., for emergency relief to stop what they called a coordinated effort by U.S. regulators to stop banks from doing business with them, threatening their survival. In Wednesday night filings, the Community Financial Services Association of America (CFSA) and payday lender Advance America, Cash Advance Centers Inc said a preliminary injunction was needed to end the “back-room campaign” of coercion by the Federal Reserve, the Federal Deposit Insurance Corp and the Office of the Comptroller of the Currency. Advance America said its own situation became dire after five banks decided in the last month to cut ties, including a 14-year relationship with U.S. Bancorp, putting it “on the verge” of being unable even to hold a bank account.

Payday lenders make small short-term loans that can help tide over cash-strapped borrowers. But critics say fees can drive effective interest rates well into three digits, and trap borrowers into an endless debt cycle in which they use new payday loans to repay older loans. The CFSA said other payday lenders are also losing banking relationships as a result of “Operation Choke Point,” a 2013 Department of Justice initiative meant to block access to payment systems by companies deemed at greater risk of fraud. “Protecting consumers from credit fraud is, of course, a commendable goal,” Charles Cooper, a lawyer for the CFSA, wrote. “But the manner in which the defendant agencies have chosen to pursue that ostensible goal betrays that their true intent has always been to eradicate a disfavored industry.”

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I don’t know to what extent Modi is the psychopath he’s made out to be here, but I do like the decentralization described (fits in with my end of centralization themes). “What a crazy idea it is to have a State monopoly on money..” [..] “In a tribalistic and irrational society, decentralization makes life much safer and makes the market more free, as complex decisions will be taken on the local level, where they belong”

When Money Dies (Bhandari)

Most people — particularly the salaried middle class – still seem to have a favorable opinion of Mr. Modi. They have been indoctrinated – in India’s extremely irrational and superstitious society – to believe that this demonetization will somehow alleviate corruption and that anything but support of Modi’s actions is anti-national and unpatriotic. This gives me pause to reflect. What a crazy idea it is to have a State monopoly on money, particularly a money that carries no inherent value and depends on regulatory edicts. On a deeper level, it makes me reflect on why for the culture of India – which is tribalistic, nativistic, superstitious and irrational – “India” is actually an unnatural entity. Such a society should consist of hundreds of tribes and countries, which is what “India” was before the British consolidated it.

In a tribalistic and irrational society, decentralization makes life much safer and makes the market more free, as complex decisions will be taken on the local level, where they belong . India’s institutions – not just organizations, but larger socio-political beliefs – have begun to decay and crumble after the British left, losing their underlying essence, the reason for which they had been institutionalized in the first place. This degradation is now picking up pace. They must eventually fall apart – including the nation-state of India – to adjust to the underlying culture. Let us consider some of these institutions. Western education implanted in India has mutated. It is making individuals cogs in a big machine, all for the service of one great leader. Public education and the mass-media have become instruments of propaganda.

Complexity and the diversity of options that technology brings make an irrational thinker extremely confused, forcing him to seek sanity in ritualistic religion —hence the increase in religiosity in India and elsewhere in the region. This has happened despite the explosion in information technology. The concept of the nation-state, when it took hold in Europe, was about the values the emergent rational and enlightened societies of Europe shared and had collectively come to believe in, at least among their elites. In India, the idea of the nation-state has morphed into a valueless thread, which binds people together through nothing but a flag and an anthem, symbols completely devoid of any values. It has collectivized tribalistic and irrational people (an irrationality that is amply epitomized by the negative force Islam has become in the last two decades).

In India and many similarly constituted countries, institutions that are not natural to their culture – the nation state, education, monetary system, etc. must eventually face entropy, slowly at first, and then rapidly. India has now entered the rapid phase. The death of money – amid a lack of respect for property rights (which again are a purely European concept that emerged from the intellectual revolutions of the last 800 years) – has been sudden and will very likely be catastrophic. It is a man-made disaster of gargantuan proportions. It will fundamentally change India in a very negative way, particularly if the demonetization effort succeeds, as it will have created the foundations enabling the rapid emergence of a police state.

Read more …

Yeah, expecting peaceful transitions is perhaps a bit much.

Here’s What Happened When Ancient Romans Tried To ‘Drain The Swamp’ (Black)

In late January of the year 98 AD, after decades of turmoil, instability, inflation, and war, Romans welcomed a prominent solider named Trajan as their new Emperor. Prior to Trajan, Romans had suffered immeasurably, from the madness of Nero to the ruthless autocracy of Domitian, to the chaos of 68-69 AD when, in the span of twelve months, Rome saw four separate emperors. Trajan was welcome relief and was generally considered by his contemporaries to be among the finest emperors in Roman history. Trajan’s successors included Hadrian and Marcus Aurelius, both of whom were also were also reputed as highly effective rulers.

But that was pretty much the end of Rome’s good luck. The Roman Empire’s enlightened rulers may have been able to make some positive changes and delay the inevitable, but they could not prevent it. Rome still had far too many systemic problems. The cost of administering such a vast empire was simply too great. There were so many different layers of governments—imperial, provincial, local—and the upkeep was debilitating. Rome had also installed costly infrastructure and created expensive social welfare programs like the alimenta, which provided free grain to the poor. Not to mention, endless wars had taken their toll on public finances. Romans were no longer fighting conventional enemies like Carthage, and its famed General Hannibal bringing elephants across the Alps.

Instead, Rome’s greatest threat had become the Germanic barbarian tribes, peoples viewed as violent and uncivilized who would stop at nothing to destroy Roman way of life. Corruption and destructive bureaucracy were increasingly rampant. And the worse imperial finances became, the more the government tried to “fix” everything by passing debilitating regulation and debasing the currency. In his seminal work The History of the Decline and Fall of the Roman Empire, Edward Gibbon wrote: “The story of its ruin is simple and obvious; and instead of inquiring why the Roman empire was destroyed, we should rather be surprised that it had subsisted so long.”

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Progress as a blind faith. “Critics wondered if Nixon was wise to point to modern appliances such as blenders and dishwashers as the emblems of American superiority.”

Innovation Is Overvalued. Maintenance Matters More (Aeon)

Innovation is a dominant ideology of our era, embraced in America by Silicon Valley, Wall Street, and the Washington DC political elite. As the pursuit of innovation has inspired technologists and capitalists, it has also provoked critics who suspect that the peddlers of innovation radically overvalue innovation. What happens after innovation, they argue, is more important. Maintenance and repair, the building of infrastructures, the mundane labour that goes into sustaining functioning and efficient infrastructures, simply has more impact on people’s daily lives than the vast majority of technological innovations. The fates of nations on opposing sides of the Iron Curtain illustrate good reasons that led to the rise of innovation as a buzzword and organising concept.

Over the course of the 20th century, open societies that celebrated diversity, novelty, and progress performed better than closed societies that defended uniformity and order. In the late 1960s in the face of the Vietnam War, environmental degradation, the Kennedy and King assassinations, and other social and technological disappointments, it grew more difficult for many to have faith in moral and social progress. To take the place of progress, ‘innovation’, a smaller, and morally neutral, concept arose. Innovation provided a way to celebrate the accomplishments of a high-tech age without expecting too much from them in the way of moral and social improvement.

Before the dreams of the New Left had been dashed by massacres at My Lai and Altamont, economists had already turned to technology to explain the economic growth and high standards of living in capitalist democracies. Beginning in the late 1950s, the prominent economists Robert Solow and Kenneth Arrow found that traditional explanations – changes in education and capital, for example – could not account for significant portions of growth. They hypothesised that technological change was the hidden X factor. Their finding fit hand-in-glove with all of the technical marvels that had come out of the Second World War, the Cold War, the post-Sputnik craze for science and technology, and the post-war vision of a material abundance.

Robert Gordon’s important new book, The Rise and Fall of American Growth, offers the most comprehensive history of this golden age in the US economy. As Gordon explains, between 1870 and 1940, the United States experienced an unprecedented – and probably unrepeatable – period of economic growth. That century saw a host of new technologies and new industries produced, including the electrical, chemical, telephone, automobile, radio, television, petroleum, gas and electronics. Demand for a wealth of new home equipment and kitchen appliances, that typically made life easier and more bearable, drove the growth. After the Second World War, Americans treated new consumer technologies as proxies for societal progress – most famously, in the ‘Kitchen Debate’ of 1959 between the US vice-president Richard Nixon and the Soviet premier Nikita Kruschev. Critics wondered if Nixon was wise to point to modern appliances such as blenders and dishwashers as the emblems of American superiority.

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Just wow. No lessons learned from Vancouver, keep digging while in that hole.

Australia Eases Limits On Foreign Buyers As Apartment Glut Looms (AFR)

The federal government has announced it will make it easier for foreigners to buy new apartments amid concerns of a looming glut that will drive down prices. Treasurer Scott Morrison said the government will make changes to the foreign investment framework to allow foreign buyers to buy an off-the-plan dwelling that another foreign buyer has failed to settle as a new dwelling. Previously, on-sale of a purchased off the plan apartment was regarded as a second hand sale, which is not open to foreign buyers. Foreign buyers can only buy new dwellings. The move effectively opens up the pool of buyers who can soak a potential flood of apartments hitting the residential markets due to failed settlements.

“This change addresses industry concerns, and means property developers won’t be left in the lurch when a foreign buyer pulls out of an off-the-plan purchase,” Mr Morrison said in an announcement. “It is common sense that an apartment or house that has just been built, or is still under construction and for which the title has never changed hands, is not considered an established dwelling.” The policy change comes after Mirvac said it experienced a rise in the default rate for the settlement of off-the-plan residential sales, above its historic average of 1%. The changes will apply immediately and regulation change will be made soon to enable developers to acquire “New Dwelling Exemption Certificates” for foreign buyers of these recycled off-the-plan homes.

On top of defaults, the Australian apartment markets – which boomed in the last four years – are facing other fresh risks. On Friday, HSBC said an oversupply of apartments in Melbourne and Brisbane could send unit prices down by as much as 6% in 2017. The apartment building boom, an ongoing concern for the Reserve Bank of Australia, especially in inner city Melbourne is likely to “start showing through” in price drops of between 2% and 6% in that city next year, HSBC chief economist Paul Bloxham said in a note. It’s a similar story in Brisbane where apartment prices are forecast to fall by as much as 4%. “A national apartment building boom, which has been part of the rebalancing act, is likely to deliver some oversupply in the Melbourne and Brisbane apartment markets, which is expected to see apartment price falls in these markets,” Mr Bloxham said.

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No play no pay.

Australia Ceases Multimillion-Dollar Donations To Clinton Foundation (News)

The Clinton Foundation has a rocky past. It was described as “a slush fund”, is still at the centre of an FBI investigation and was revealed to have spent more than $50 million on travel. Despite that, the official website for the charity shows contributions from both AUSAID and the Commonwealth of Australia, each worth between $10 million and $25 million. News.com.au approached the Department of Foreign Affairs and Trade for comment about how much was donated and why the Clinton Foundation was chosen as a recipient. A DFAT spokeswoman said all funding is used “solely for agreed development projects” and Clinton charities have “a proven track record” in helping developing countries. Australia jumping ship is part of a post-US election trend away from the former Secretary of State and presidential candidate’s fundraising ventures.

Norway, one of the Clinton Foundation’s most prolific donors, is reducing its contribution from $20 million annually to almost a quarter of that, Observer reported. One reason for the drop-off could be increased scrutiny on international donors. The International Business Times reported in 2015 on curious links between donors and State Department approval. IBT wrote that the State Department approved massive commercial arms sales for countries which had donated to the Clinton charity. More than $165 billion worth of arms sales were approved by the State Department to 20 nations whose governments gave money to the Clinton Foundation, data shows. The countries buying weapons from the US were the same countries previously condemned for human rights abuses. They included Algeria, Saudi Arabia and Kuwait.

But what does Australia gain from topping up the Clinton coffers? The Australian reported in February that Australia was “the single biggest foreign government source of funds for the Clinton Foundation” but questions remain unanswered about the agreement between the two parties. “It’s not clear why Canberra had to go through an American foundation to deliver aid to Asian countries (including Indonesia, Papua New Guinea and Vietnam). There is now every chance the payments will become embroiled in presidential politics.” The Daily Telegraph wrote in October that “Lo and behold, (Julia Gillard) became chairman (of the Clinton-affiliated Global Partnership for Education) in 2014”, one year after being defeated in a leadership ballot by Kevin Rudd.

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“After contributing $88mm to the Clinton Foundation over the past 10 years, making them one of the Foundation’s largest contributors, Australia has decided to pull all future donations.

But why would they stop funding now that Hillary has so much more free time to focus on her charity work?

Australia Joins Norway, Cuts Clinton Foundation Donations To $0 (ZH)

For months we’ve been told that the Clinton Foundation, and it’s various subsidiaries, were simple, innocent “charitable” organizations, despite the mountain of WikiLeaks evidence suggesting rampant pay-to-play scandals surrounding a uranium deal with Russia and earthquake recovery efforts in Haiti, among others. Well, if that is, in fact, true perhaps the Clintons could explain why wealthy foreign governments, like Australia and Norway, are suddenly slashing their contributions just as Hillary’s schedule has been freed up to focus exclusively on her charity work. Surely, these foreign governments weren’t just contributing to the Clinton Foundation in hopes of currying favor with the future President of the United States, were they? Can’t be, only an useless, “alt-right,” Putin-progranda-pushing, fake news source could possibly draw such a conclusion.

Alas, no matter the cause, according to news.com.au, the fact is that after contributing $88mm to the Clinton Foundation, and its various affiliates, over the past 10 years the country of Australia has decided to cease future donations to the foundation just weeks after Hillary’s stunning loss on November 4th. And just like that, 2 out of the 3 largest foreign contributors to the Clinton Foundation are gone with Saudia Arabia being the last remaining $10-$25mm donor that hasn’t explicitly cut ties or massively scaled by contributions. [..]
News.com.au confirmed Australia’s decision to cut future donations to the Clinton Foundation earlier today. When asked why donations were being cut off now, a Department of Foreign Affairs and Trade official simply said that the Clinton Foundation has “a proven track record” in helping developing countries. While that sounds nice, doesn’t it seem counterintuitive that these countries would pull their funding just as Hillary has been freed up to spend 100% of her time helping people in developing countries?

“Australia has finally ceased pouring millions of dollars into accounts linked to Hillary Clinton’s charities. Which begs the question: Why were we donating to them in the first place? The federal government confirmed to news.com.au it has not renewed any of its partnerships with the scandal-plagued Clinton Foundation, effectively ending 10 years of taxpayer-funded contributions worth more than $88 million. News.com.au approached the Department of Foreign Affairs and Trade for comment about how much was donated and why the Clinton Foundation was chosen as a recipient. A DFAT spokeswoman said all funding is used “solely for agreed development projects” and Clinton charities have “a proven track record” in helping developing countries.”

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Fake News Inc.

New Zealand Media Merger Risks Growth Of ‘Glib, Click-Bait’ Coverage (G.)

A group of distinguished former newspaper editors has launched a scathing attack on plans for New Zealand’s largest print media companies to merge, calling it a threat to democracy which could see a concentration of power exceeded “only in China”. The merger of NZME and Fairfax Media, which was proposed in May, would not be healthy in a country that “already suffers from a dearth of serious content and analysis”, the editors say in a submission to the commerce commission. The group, which includes Suzanne Chetwin, former Dominion chief Richard Long and ex-New Zealand Herald editor Gavin Ellis, also criticise the trend towards “click-bait stories” at a time when television has “all but abandoned current affairs and our public discourse is increasingly glib”.

“The merger would see one organisation controlling nearly 90% of the country’s print media market (and associated websites), the greatest level of concentration in the OECD and one that is exceeded only by China. “That cannot be healthy, particularly in a society like New Zealand’s that has so few checks and balances in its constitutional arrangements.” The submission went on to state the greatest threat to New Zealand media came from off-shore publishers who had “no feel for New Zealand’s social fabric”, and urged the commerce commission to decline the merger. The merger was sold as an attempt by both companies to stem revenue losses and drastic staff and budget cuts, particularly to rural and regional newsrooms.

Dunedin’s The Otago Daily Times would be the only newspaper in the country to remain independent, although it too could be affected as they have content sharing agreements with NZME’s The New Zealand Herald. Radio stations and magazines owned by both companies would also be affected.

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That’s not debt relief, it’s Schauble-friendly creative accounting.

Greek Debt Relief Plan Said to Entail $35 Billion Bank Bond Swap (BBG)

Greece’s battered banks are being asked to swap about 33 billion ($35 billion) euros in floating-rate bonds for 30-year, fixed-rate securities under a euro-area plan to shield Athens from future interest rate increases, three people with knowledge of the matter said. The swap is part of a package of debt-relief proposals for Greece to be presented at a Dec. 5 meeting of euro-area finance ministers, according to the people, who asked not to be named because they weren’t authorized to speak publicly about the matter. The notes were issued by the European Financial Stability Facility, the region’s crisis-fighting fund, to re-capitalize Greek lenders in 2013.

While the current EFSF holdings of Greek banks fall due between 2034 and 2046, the fixed-rate notes will expire in 2047, the people said. That will reduce Greece’s interest rate risk, but it may come at a cost for its four systemically important lenders, which could be left with securities that are more difficult to trade. The technical aspects of the operation are still being hashed out. “There are discussions going on as to proposals which will improve the sustainability of the Greek debt,” Piraeus Bank Chairman George Handjinicolaou said in an interview Thursday. “Part of this proposal is a change in the EFSF bonds for something else, some form of fixed-rate debt, which would improve the predictability of the sustainability of the Greek debt profile.”

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Oct 242016
 
 October 24, 2016  Posted by at 9:09 am Finance Tagged with: , , , , , , , ,  Comments Off on Debt Rattle October 24 2016
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Dorothea Lange Arkansas flood refugee family near Memphis, Texas 1937


Japan Exports Fall 6.9% YoY, Imports Plunge 16.3% (BBG)
China: Soon The Most Visible Victim of Deglobalization (AJ)
China Continues To Buy Up The World (BBG)
German Momentum Grows for Curbs on Chinese Overseas Investment (BBG)
Chinese Money Flowing to Hong Kong Stocks Has Suddenly Dried Up (BBG)
Europe’s Incredibly Safe Banks (BBG)
Unaffordable Australian Housing ‘in Government Sights’ (BBG)
What Is “Impossible” And What Is Inevitable (CH Smith)
Watergate’s Bob Woodward: “Clinton Foundation Is Corrupt, It’s A Scandal” (ZH)
It’s Time To Drain The Swamp: Five-Point Plan For Ethics Reform (Trump)
Trump is America: The Poetic Justice Of The World (Dabashi)
Saudi, Allies ‘Deliberately Targeting Yemen’s Food Industry’, Bomb Cows (Fisk)
NATO Continues To Prepare For War With Russia (Korzun)
Juncker To Face No Confidence Vote In EU Parliament (Exp.)
Wikileaks Status Update on Julian Assange and the US Election (ZH)

 

 

WHAT? “Today’s report confirmed that exports are on the rebound,” said Masaki Kuwahara, senior economist at Nomura.”

Japan Exports Fall 6.9% YoY, Imports Plunge 16.3% (BBG)

Japanese exports fell for a 12th consecutive month in September, rounding out a rough year for manufacturers struggling with a stronger yen and soft global demand. Yet the numbers were better than expected, and export volumes rose last month by the most in nearly two years, prompting some upbeat assessments by economists. “Today’s report confirmed that exports are on the rebound,” said Masaki Kuwahara, senior economist at Nomura. “Manufacturing activities are picking up globally, especially in Asian nations. That bodes well for Japanese exports.” Overseas shipments dropped 6.9% in September from a year earlier, the Ministry of Finance said on Monday. Imports fell 16.3% during the same period, resulting in a trade surplus of 498.3 billion yen ($4.8 billion).

Prime Minister Shinzo Abe has gotten little help from exports recently as he tries to revive Japan’s economy. Net shipments abroad shaved 0.3 percentage point off GDP growth in the second quarter. The yen has gained 16% since the start of the year, and soft global demand has made matters worse. This environment has made companies more reluctant to invest in domestic production, compounding the difficulty of creating economic growth. [..] Exports to the U.S. fell 8.7% from a year earlier. Those to the EU rose 0.7%. Exports to China, Japan’s largest trading partner, dropped 10.6%.

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“..trade and investment peaked in 2007-2008. Since then international trade has declined by roughly half a%. Foreign direct investment, or FDI, has fallen by half. That is not half a percent. That is half.”

China: Soon The Most Visible Victim of Deglobalization (AJ)

Global exports as a percentage of global GDP hit an all-time high of 30.8% in 2008. They fell precipitously during the global financial crisis of 2008-2009 and have since stabilised at just under 30%. These figures cap off a remarkable quarter-century of global export growth that began back in 1973. In that period global GDP roughly doubled, but global export volumes grew by a factor of 5.6 (based on inflation-adjusted data from the World Bank). China played a leading role in that story, but it was the rise in international trade that pulled the Chinese economy along, not the other way around. China rode the coat-tails of a quarter-century of globalisation.

Most people think of globalisation as a process that began in the 1990s with the collapse of the Soviet Union in 1991 and the foundation of the World Trade Organization in 1995. But the roots of today’s global economy really go back to 1973, when the United States went off the gold standard and most countries moved from fixed to floating exchange rates. Floating exchange rates meant that the era of managed trade was over. The global economy moved into a new phase driven by market forces. The oil exporting countries of the Gulf were the first to benefit as the market price for oil quadrupled between 1973 and 1974. China came to the party just a few years later.

Since then the global economy has become more and more open. After the currency liberalisation of 1973 came a huge increase in international trade and then, in the 1990s, in foreign investment. Both trade and investment peaked in 2007-2008. Since then international trade has declined by roughly half a%. Foreign direct investment, or FDI, has fallen by half. That is not half a percent. That is half. Annual global FDI is down roughly 50% from its 2007 peak of just over $3 trillion. It’s still much larger than it was in the 1990s or earlier decades, but global FDI has stabilised at roughly the levels of the early 2000s. Unlike global FDI, foreign investment into China hasn’t fallen in absolute terms. But it too has stabilised and is no longer rising.

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The flipside of deglobalization. Monopoly money.

China Continues To Buy Up The World (BBG)

When a Chinese home-appliance company announced a plan in May to become the largest shareholder in one of Germany’s most advanced robot manufacturers, the backlash was immediate. German politicians and European officials denounced Midea’s offer for Frankfurt-listed Kuka, whose robotic arms assemble Airbus jets and Audi sedans. In a rare public appeal for alternative acquirers, Germany’s economy minister argued that Kuka’s automation technology needed to stay out of Chinese hands. And yet in two months, Midea pulled it off. Thanks to a combination of political courtship, guarantees on jobs and security, and support from influential customers like Daimler CEO Dieter Zetsche, Midea overcame knee-jerk opposition to the deal. By July the appliance maker had secured an 86% stake, valuing Kuka at €4.6 billion.

The experience showed how some Chinese firms are learning to soothe misgivings about the country’s record $207 billion overseas buying spree. While Sinophobia isn’t yet a thing of the past and practices among Chinese buyers vary widely, merger-and-acquisition professionals say a new generation of savvy dealmakers is starting to emerge from the world’s second-largest economy. “Many Chinese companies have become much more adept at navigating international deals in the last few years, and at soothing the concerns stakeholders might have,” said Nicola Mayo, a partner at London law firm Linklaters LLP who specializes in China-Europe transactions. “In many of the larger Chinese companies, you’re dealing with managers who were educated abroad or have worked in international firms. They understand the concerns about China and know they need to move carefully.”


What China’s been buying

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And here’s the backlash..

German Momentum Grows for Curbs on Chinese Overseas Investment (BBG)

Germany is seeking tighter control over foreign investment in European companies, in a sign of a growing protectionist reaction to China’s appetite for overseas acquisitions. Spurred by the purchase of German robot maker Kuka by China’s Midea, Chancellor Angela Merkel’s deputy, Sigmar Gabriel, is calling for EU measures to give national governments expanded powers to block or impose conditions on shareholdings of non-EU companies. He’s found an ally in EU Digital Economy Commissioner Guenther Oettinger, a German who’s a member of Merkel’s party. “It’s absolutely right to initiate this debate at the European level,” Oettinger said in an interview last week. “Everybody has to play by the same rules. Clearly, there are many countries, including big ones such as China, that make market access or corporate takeovers difficult or effectively impossible.”

While Merkel hasn’t publicly backed her vice chancellor’s push, Gabriel’s proposal reflects growing resistance within her government to unfettered Chinese investment in Europe’s biggest economy. In the latest potential Chinese bid, lighting maker Sanan Optoelectronics said it had held talks with Osram Licht on a possible acquisition of the almost century-old German company. The initiative by Gabriel, who also is Germany’s economy minister, calls for allowing EU member states to step in if a non-EU investor seeks to acquire more than 25% of the voting rights in a company [..] Chinese companies have announced or completed acquisitions of German companies worth a record $12.3 billion this year, almost eight times the level of 2015. That includes the purchase of Kuka by Midea, China’s biggest appliance maker, after Gabriel led a failed effort to find an alternative bid by a European suitor.

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“Investors in Shanghai spent more than $8 billion on Hong Kong shares in September [..] Net buying this month through last week was just 7% of that amount..”

Chinese Money Flowing to Hong Kong Stocks Has Suddenly Dried Up (BBG)

Hong Kong’s stock market is suffering from a post-holiday hangover. The flood of Chinese money into the city before the mainland’s National Day celebrations in early October has slowed to a trickle since traders returned from the week-long break. Investors in Shanghai spent more than $8 billion on Hong Kong shares in September, the biggest monthly inflow via the exchange link since it began in 2014. Net buying this month through last week was just 7% of that amount, data compiled by Bloomberg show. The narrowing valuation discount on the city’s dual-listed shares and concern about the Federal Reserve’s impending rate increase may have spurred mainland investors to turn off the taps, according to Hong Kong analysts, who also say they’re perplexed at the speed of the shift.

The change is a headwind for equities after the influx of Chinese money helped drive the Hang Seng Index up 12% last quarter for its best such gain in seven years. “It’s a bit of a mystery as to why this is happening,” said Mohammed Apabhai, head of Asia trading strategy at Citigroup. “Nobody has put forward a convincing explanation about exactly why the southbound flow has dried up and whether it’s a temporary phenomenon. That has removed one of the supports from the Hong Kong equity market.” China International Capital cut its rating on Hong Kong-listed mainland banks last week, citing the dwindling inflows. Trades from Shanghai made up as much as 17% of the total turnover in Hong Kong at one point last month, the highest on record. That ratio dropped to less than 7% on Oct. 20.

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I have an ominous feeling about this.

Europe’s Incredibly Safe Banks (BBG)

Given the parlous state of Europe’s economy, it’s hard to imagine that the investments of the region’s banks are among the safest in the world. Yet that is precisely what they would have regulators and investors believe. The banks’ safety has come into the spotlight as European officials – including German Finance Minister Wolfgang Schaeuble and European Commission financial-services chief Valdis Dombrovskis – battle with global regulators over requirements for capital, the layer of loss-absorbing financing that prevents bad investments from turning into system-wide disasters. The dispute involves risk-weighting, a process in which the largest and most sophisticated banks assess the riskiness of their assets to figure out how much capital they need.

A loan to a struggling company might require a lot, safe government bonds none at all. Less capital means more leverage, which in good times boosts measures of profitability such as return on equity. Hence, banks have an incentive to make their assets look as safe as possible. Europe’s banks have excelled in this minimizing endeavor. On average for eight of the euro area’s most systemically important institutions, risk-weighted assets amounted to just 31% of total unweighted assets at the end of June – as if about seven out of every 10 euros in investments were risk-free. For Germany’s Deutsche Bank, among the world’s most thinly capitalized, the ratio was just 22%. That compares with averages of 35% and 45% for the largest U.K. and U.S. banks, respectively. Here’s how that looks:

To be sure, lower risk weights could mean that Europe’s banks actually do have safer assets. There’s plenty of evidence, though, to suggest this isn’t the case. The IMF estimates that banks in the euro area are sitting on more than $1 trillion in bad loans. Also, markets place a much lower value on each euro of European banks’ book assets than they do on each dollar of U.S. banks’.

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This from a government that relies on soaring housing prices to make its economy appear viable. Australia’s problem is not the extravagant tax perks, or ultra low rates, or Chinese monopoly money pouring in. No, all that’s fine, and all that needs to be done is build build build.

Unaffordable Australian Housing ‘in Government Sights’ (BBG)

Australian states need to remove or simplify residential land planning regulations that have made homes “increasingly unaffordable” in the nation’s biggest cities, Treasurer Scott Morrison said. Insufficient land releases and complex development regulations must be addressed, Morrison said in the text of a speech being given in Sydney Monday. He’ll use a December meeting with his state counterparts to urge a freeing up of housing supply, an issue which will be a key focus of Prime Minister Malcolm Turnbull’s government, he said. “Of all the determinants of house prices in Australia, whether cyclical or structural, the most important factor behind rising prices has been the long running impediments to the supply side of the market,” Morrison said.

While a three-year surge in Australian home prices paused at the end of last year after banks raised mortgage rates, the market has taken off again as a growing population tries to squeeze into too few properties. Dwelling values in Sydney, which have almost doubled since the end of 2008, are up 14% this year through September, compared with a 9% gain across the nation’s other major cities, according to CoreLogic. The recent rise defies an assessment by real-estate listing firm Domain last year that the boom was over, and is posing a potential headache for new central bank Governor Philip Lowe, who said this month that that fewer properties were changing hands and “some markets have strengthened recently.” Housing in Australia’s three biggest cities – Sydney, Melbourne and Brisbane – “is expensive and increasingly unaffordable,” Morrison said.

Other factors contributing to supply-side constraints are the cost and availability of infrastructure, transaction taxes and negative public attitudes toward urban development, he said. Still, Morrison is again ruling out his government stripping back some of the tax perks for landlords and property investors, known as negative gearing, which the Labor opposition blames for inflating house prices. “The key to addressing housing affordability is not to crash the housing market,” Morrison said. “Rather the objective is to have policies that mitigate the artificial inflation of asset prices, ensure that supply is not restricted from responding to genuine demand and that enable home-buyers, through their own efforts, to make more rapid progress to being able to enter the market.’’

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“..the S-curve of “growth” can continue expanding even as the foundation weakens. As the foundations of real growth weaken – productivity, collateral, social mobility, etc. – the system becomes increasingly fragile and brittle.”

What Is “Impossible” And What Is Inevitable (CH Smith)

We are about to start a painful learning process about what is “impossible” and what is inevitable. Two charts illustrate Why Our Status Quo Failed and Is Beyond Reform: this chart of the S-Curve of financialization, leverage, debt, central planning, regulatory capture and globalization – that is, the engines of modern “growth” – depicts the inevitable stagnation and decline of these dynamics as overcapacity, debt saturation and diminishing returns take hold. This chart illustrates the status quo’s insistence on doing more of what has failed spectacularly: since all this worked in the boost phase, the central planning Cargo Cult’s “leadership” is convinced it will all work magically again, if only we do more of it. Alas, this is magical thinking. One might as well paint radio dials on rocks and expect the rock to magically turn into a functioning radio.

The chart of the Seneca Cliff illustrates how the S-curve of “growth” can continue expanding even as the foundation weakens. As the foundations of real growth weaken – productivity, collateral, social mobility, etc. – the system become increasingly fragile and brittle. But this fragility is masked by the appearance of stability until a crisis cracks it wide open. Normalcy crumbles into instability, and people and systems accustomed to stable supply chains and political stability struggle to maintain their grip on income streams and resources as abundance slips into scarcity and dependence on central planning becomes a liability of learned helplessness.

The S-curve:

The Seneca Cliff:

There are two sets of solutions as stability and financialized “growth” slide into instability and DeGrowth. 1. Acquire skills that will be increasingly scarce and a network of collaborators, customers and suppliers who value/make use of these skills. 2. Create a new mode of production that doesn’t rely on central banks, states and global finance to function: in effect, a decentralized, localized networked system that exists in parallel with the centralized hierarchies of the current mode of production which is centralized, industrialized, globalized, financialized, neofeudal, neoliberal, neocolonial, and dependent on ever-expanding leverage, debt, central planning, regulatory capture and fossil fuel consumption.

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Here’s the theme I wrote about in yesterday’s “Ungovernability”: “I think the issue is, what’s going to be the aftermath of this campaign. Can somebody govern…?”

Watergate’s Bob Woodward: “Clinton Foundation Is Corrupt, It’s A Scandal” (ZH)

CHRIS WALLACE, FOX NEWS SUNDAY: Then there are the allegations about the Clinton Foundation and pay to play, which I asked Secretary Clinton about in the debate, and she turned into an attack on the Trump Foundation. But, Bob, I want to go back to the conversation I was having with Robby Mook before. When – when you see what seems to be clear evidence that Clinton Foundation donors were being treated differently than non-donors in terms of access, when you see this new – new revelations about the $12 million deal between Hillary Clinton, the foundation, and the king of Morocco, are voters right to be troubled by this?

BOB WOODWARD, THE WASHINGTON POST: I – yes, it’s a – it’s corrupt. It’s – it’s a scandal. And she didn’t answer your question at all. And she turned to embrace the good work that the Clinton Foundation has done. And she has a case there. But the mixing of speech fees, the Clinton Foundation, and actions by the State Department, which she ran, are all intertwined and it’s corrupt. You know, I mean, you can’t just say it’s unsavory. But there’s no formal investigation going on now, and there are outs that they have. But the election isn’t going to be decided on that. I mean Karl was making the point about this, I’m not going to observe the result of the election. I mean that’s – that’s absurd. I mean it has no consequence. If Trump loses, they’re not going to let him in the White House. He’s not going to have a transition team. And – and to focus on that, I think, is wrong. I think the issue is, what’s going to be the aftermath of this campaign. Can somebody govern…?

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Call him as crazy as you wish, but he does make a lot of sense here.

It’s Time To Drain The Swamp: Five-Point Plan For Ethics Reform (Trump)

I’m proposing a package of ethics reforms to make our government honest once again.

First: I am going to re-institute a 5-year ban on all executive branch officials lobbying the government for 5 years after they leave government service. I am going to ask Congress to pass this ban into law so that it cannot be lifted by executive order.

Second: I am going to ask Congress to institute its own 5-year ban on lobbying by former members of Congress and their staffs.

Third: I am going to expand the definition of lobbyist so we close all the loopholes that former government officials use by labeling themselves consultants and advisors when we all know they are lobbyists.

Fourth: I am going to issue a lifetime ban against senior executive branch officials lobbying on behalf of a foreign government.

Fifth: I am going to ask Congress to pass a campaign finance reform that prevents registered foreign lobbyists from raising money in American elections.

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Prof. Dabashi revels in comparing Trump to Hitler, a weird thing to do for any intellectual, and absolute nonsense. But he’s right in many other aspects.

Trump is America: The Poetic Justice Of The World (Dabashi)

Hours before the scheduled third and final debate between Donald Trump and Hillary Clinton in Las Vegas, The New York Times published an article in which it argued that the Republican presidential nominee in effect has no foreign policy beyond using and abusing global issues to elicit gut fears and hostile fantasies of his domestic followers, that foreign policy has in effect become a matter of domestic fear-mongering. The piece could not have been more timely and poignant – but not in the sense that The New York Times intended it further to discredit the liberal bete noire of this election. In a sense far more serious and accurate. For the World at large, Trump is America and America is Trump. What has now become domestic politics to the US has been its foreign policy for a much longer history.

There are decent Americans who insist Trump is “the worst of America”. But for the world at large and at the receiving end of American military might, Trump is the very quintessence of America because Trump is what America does to the world, and now it has come dangerously close to do unto itself what it has habitually done unto others. Liberal America is now scared that Trump will do to America what America has done to the world. It was just “foreign policy” when America set up lunatic puppet dictators just like Trump to torture, maim, and murder their own people around the globe to protect its “national security interest”. It was just something “Daddy” did at work. When he came home he was all good, kind, and cuddly – just like Obama.

Now the Daddy is about to become a nasty, vicious, domestic abuser – like Trump. Trump is the poetic justice of the world. So long as America was only doing to the world at large what America now fears Trump may do to America, there was no outcry. There was consensus. The world deserved what America did to the world. Now liberal America is up in arms to disown, to exorcise, to dispel this demonic spirit from itself and put it back in a bottle and hand it over to Hillary Clinton so she can continue the habitual exercise of doing it to the world and be a nice, lovely-looking grandma at home, as Ronald Reagan was its grandpa before her.

Hamid Dabashi is the Hagop Kevorkian Professor of Iranian Studies and Comparative Literature at Columbia University.

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“..the Saudis have included in their bombing targets cows..”

Saudi, Allies ‘Deliberately Targeting Yemen’s Food Industry’, Bomb Cows (Fisk)

The Yemen war uniquely combines tragedy, hypocrisy and farce. First come the casualties: around 10,000, almost 4,000 of them civilians. Then come those anonymous British and American advisers who seem quite content to go on “helping” the Saudi onslaughts on funerals, markets and other obviously (to the Brits, I suppose) military targets. Then come the Saudi costs: more than $250m (£200m) a month, according to Standard Chartered Bank – and this for a country that cannot pay its debts to construction companies. But now comes the dark comedy bit: the Saudis have included in their bombing targets cows, farms and sorghum – which can be used for bread or animal fodder – as well as numerous agricultural facilities.

In fact, there is substantial evidence emerging that the Saudis and their “coalition” allies – and, I suppose, those horrid British “advisers” – are deliberately targeting Yemen’s tiny agricultural sector in a campaign which, if successful, would lead a post-war Yemeni nation not just into starvation but total reliance on food imports for survival. Much of this would no doubt come from the Gulf states which are currently bombing the poor country to bits. The fact that Yemen has long been part of Saudi Arabia’s proxy war against Shiites and especially Iran – which has been accused, without evidence, of furnishing weapons to the Shia Houthi in Yemen – is now meekly accepted as part of the Middle East’s current sectarian “narrative” (like the “good” rebels in eastern Aleppo and the “very bad” rebels in Mosul). So, alas, have the outrageous bombings of civilians. But agricultural targets are something altogether different.

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A NATO Schengen zone means foreign soldiers can move into any country the command wishes. If that’s not a recipe for disaster, I don’t know what is. Imagine deplying Turkish troops in Greece, or Polish in Britain, French in Germany.

NATO Continues To Prepare For War With Russia (Korzun)

NATO uses any pretext to accuse Russia of harboring aggressive intentions. It has raised ballyhoo over the recent deployment of Iskander short-range surface-to-surface ballistic missiles to the Kaliningrad region. Time and time again, the alliance reaffirms its bogus Russia narrative. “We see more assertive and stronger Russia that is willing to use force,” concluded NATO General Secretary Jens Stoltenberg speaking at the round table in Passau, Bavaria on October 10. At the same time, NATO is pushing ahead with its military “Schengen zone” in Europe. “We are working to ensure that each individual soldier will not require a decision at the political level to cross the border,” said Estonian Defense Minister Hannes Hanso.

The idea is to do away with travel restrictions on the movement of NATO forces troops and equipment across Europe. There will be no need to ask for permissions to move forces across national borders. It will undermine the sovereignty of member states but facilitate the cross-continent operations instead. The Baltic States and Poland are especially active in promoting the plan. The restrictions in place hinder rapid movement of the 5,000 strong “Very High Readiness Joint Task Force”. Besides being the first response tool, it could be used for preventing Article 4 situations, such as subterfuge, civil unrest or border infractions, from escalating into armed conflict. The troops can move freely in time of war, but introducing a NATO Schengen zone is needed for concentrating forces in forward areas in preparation for an attack across the Russian border.

The formation of the much larger 40 thousand strong NATO Response Force (NRF) is on the way. Meanwhile, the US and Norwegian militaries are discussing the possibility of deploying US troops in Norway – a country which has a 200 km long common border with Russia. The deployment of US servicemen would be part of a rotating arrangement in the country that would fulfil a “long-standing US wish.” Norwegian newspaper Adresseavisen reported on October 10 that 300 combat US Marines could soon be in place at the Værnes military base near Trondheim, about 1,000 kilometres from the Russian-Norwegian frontier. The air station also serves as part of Marine Corps Prepositioning Program-Norway, a program that allows the Corps to store thousands of vehicles and other major pieces of equipment in temperature-controlled caves ready for combat contingency.

Several defence sources told the newspaper that the plans to put US troops at the military base have been underway for some time. According to Military.com, the information that the plans are underway was also confirmed by American Maj. Gen. Niel E. Nelson, the commander of Marine Corps Forces Europe and Africa. 300 Marines can be easily reinforced. The only purpose for the deployment is preparation for an attack against Russia. After all, the Marines Corps is the first strike force. And it’s not Russian Marines being deployed near US national borders, but US Marines deployed in the proximity of Russian borders. The provocative move is taking place at the time the Russia-NATO relationship is at the lowest ebb.

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Not sure how serious to take this, but it’s plenty entertaining. Just look at the woman who’s after Juncker. She’s would scare me too. Already does.

Juncker To Face No Confidence Vote In EU Parliament (Exp.)

Lifelong anti-corruption campaigner Eva Joly has launched a bid to boot out the controversial EU president in yet another blow to his crumbling authority. The French magistrate and politician, who was born in Norway, blasted the eurocrat’s past as president of Luxembourg and vowed to lead an MEPs’ rebellion to “make him fall”. Ms Joly has accused Brussels’ top unelected official of favouring certain multinational corporations for “sweetheart” tax deals when he was head of the tiny European state. Mr Juncker has denied being corrupt, claiming that any decisions related to the tax arrangements of large companies during his time in office were “strictly a matter for the tax administration”. But the damaging row has seriously dented his already battered reputation and has added to the growing calls from across the continent for him to quit.

And Ms Joly, from the Green party, said the escalating scandal could finally finish off the “considerably weakened” Teflon bureaucrat. She said: “Everyone knows that this system was built while he was prime minister. It is a scandal that he leads the Commission. We, the Greens, we do not want it. “At the first opportunity, I will bring a motion [before the the European Parliament] to make him fall.” Such a vote would severely test MEPs’ loyalty towards the Brussels chief at a time when he has become the face and symbol of all Europe’s ills. Mr Juncker is seen as the centrepiece of a federalist European dream which has driven Britain to the exit door and angered many eastern European states, who are already calling for him to quit. He has also apparently lost the support of German leader Angela Merkel over Brussels’ farcical handling of the migrant crisis, making his position at the heart of the Brussels machine ever more tenuous.

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“Concerned speculation about the Ecuadorian embassy exile had risen to such an degree, that overnight Wikileaks announced it would provide a state update on Assange’s current status.”

Wikileaks Status Update on Julian Assange and the US Election (ZH)

On Tuesday, the government of Ecuador issued a statement saying that it had decided to not permit Mr. Assange to use the government of Ecuador’s internet connection during the US election citing its policy of “non interference.” Ecuador’s statement also clarified that it does not seek to interfere with WikiLeaks journalistic work and that it would continue to protect Mr. Assange’s asylum rights. Mr. Assange has asylum at the Ecuadorian embassy in London, where the United Nations has ruled he has been unlawfully deprived of liberty by the United Kingdom and the Kingdom of Sweden for the last six years. He has not been charged. It is the government of Ecuador’s prerogative to decide how to best guard against the misinterpretation of its policies by media groups or states whilst ensuring that it protects Mr. Assange’s human rights.

WikiLeaks is a global, high volume publisher that publishes on average one million documents and associated analyses a year. WikiLeaks publishes its journalistic work from large data centers based in France, Germany, the Netherlands and Norway, among others. Most WikiLeaks staff and lawyers reside in the EU or the US and have not been disrupted. WikiLeaks has never published from jurisdiction of Ecuador and has no plans to do so. Similarly Mr. Assange does not transmit US election related documents from the embassy. WikiLeaks is entirely funded by its readers, book and film sales. Its publications are the result of its significant investigative and technological capacities. WikiLeaks has a perfect, decade long record for publishing only true documents. It has many thousands of sources but does not engage in collaborations with states. Mr. Assange has not endorsed any candidate although he was happy to speak at the Green’s convention due to Dr. Jill Stein’s position [on] whistleblowers, peace and war.

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