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The recent collapse in world trade volume is the worst since the financial crisis and as dangerous as during the dot-com bubble of the early 2000s, according to The Telegraph. Data from the CPB Netherlands Bureau for Economic Policy Analysis revealed that world trade volume dropped 1.8% in the three months to January compared to the preceding three months as a synchronized global downturn gained momentum. “An industrial slump has been triggered by a perfect storm of factors, including China’s slowdown, the car industry downturn, Brexit paralysis and Donald Trump’s attempt to upend the international trade system with tariffs on European and Chinese goods,” explained The Telegraph.

A further escalation of the trade war between the U.S. and China could spark a world trade recession. Already, Washington has imposed steep tariffs on Chinese imports worth $250bn in a tit-for-tat battle with industrial centers in Asia and Germany experiencing sharp drops in trade in recent months. The Telegraph describes the sudden loss in trade momentum is equivalent to the months after the dot com bubble imploded in 2001 when trade volumes sank as much as 2.2%. Today’s current move is the biggest fall since the financial crisis of 2007–2008 when global trade plummeted, diving as much as 12.7%. The IMF warned last week that this is a “delicate moment” for the global economy as many countries are in the midst of a severe slowdown.

“We” are losing to Iran all over again.

• Iran Parliament Declares US Central Command A ‘Terrorist Organization’ (RT)

The US Central Command (CENTCOM) has been designated as a “terrorist organization” by the Iranian parliament, in a mirror response to Washington’s blacklisting of Tehran’s Revolutionary Guard. All organizations, institutions and forces under CENTCOM command were acknowledged to be “terrorists” by the overwhelming majority of the Iranian MPs, who approved the contents of the bill, which also condemns the US move to blacklist the IRGC, an official military branch of the Islamic Republic of Iran’s Armed Forces. “The Islamic Republic of Iran’s government and Armed Forces are required to adopt preventive actions and preemptive defensive measures whenever necessary, to deter any hostile US forces’ use of any possibilities against the Islamic Republic of Iran’s interests,” the bill states, according to Fars news.

Anyone offering military, intelligence, financial, or any other support to CENTCOM and its affiliate forces will be considered supporters of terrorism. The 13-article legislation also mandates the general staff to begin gathering intelligence about CENTCOM activities so that the material can be used in Iranian courts to prosecute specific individuals. The bill, however, does not mention the exact mechanisms through which Americans are expected to be brought to justice under Iranian laws. Last week the US, for the first time ever, designated an official foreign military institution –the IRGC– as a terrorist organization, as tensions between the states were pushed to the limit following President Donald Trump’s unilateral withdrawal from the Iranian Nuclear deal (JCPOA) and the reintroduction of sanctions that followed.

Ducks and babies. We kid you not.

• CIA Director Used Fake Skripal Incident Photos To Manipulate Trump (MoA)

An ass kissing portrait of Gina Haspel, torture queen and director of the CIA, reveals that she lied to Trump to push for more aggression against Russia. In March 2018 the British government asserted, without providing any evidence, that the alleged ‘Novichok’ poisoning of Sergej and Yulia Skripal was the fault of Russia. It urged its allies to expel Russian officials from their countries. The U.S. alone expelled 60 Russian officials. Trump was furious when he learned that EU countries expelled less than 60 in total. The expulsion marked a turn in the Trump administration’s relation with Russia: “The incident reflects a tension at the core of the Trump administration s increasingly hard-nosed stance on Russia: The president instinctually opposes many of the punitive measures pushed by his Cabinet that have crippled his ability to forge a close relationship with Russian President Vladimir Putin. “

Today the New York Times portraits Gina Haspel’s relation with Trump. The writers seem sympathetic to her and the CIA’s position. They include an anecdote of the Skripal expulsion decision that is supposed to let her shine in a good light. But it only proves that the CIA manipulated the president for its own purpose: “Last March, top national security officials gathered inside the White House to discuss with Mr. Trump how to respond to the nerve agent attack in Britain on Sergei V. Skripal, the former Russian intelligence agent. London was pushing for the White House to expel dozens of suspected Russian operatives, but Mr. Trump was skeptical. …

[..] During the discussion, Ms. Haspel, then deputy C.I.A. director, turned toward Mr. Trump. She outlined possible responses in a quiet but firm voice, then leaned forward and told the president that the strong option was to expel 60 diplomats. Ms. Haspel showed pictures the British government had supplied her of young children hospitalized after being sickened by the Novichok nerve agent that poisoned the Skripals. She then showed a photograph of ducks that British officials said were inadvertently killed by the sloppy work of the Russian operatives. Ms Haspel was not the first to use emotional images to appeal to the president, but pairing it with her hard-nosed realism proved effective: Mr. Trump fixated on the pictures of the sickened children and the dead ducks. At the end of the briefing, he embraced the strong option.

Can we throw in Pol Pot next? I’ll see your Bin Laden and raise you a Stalin.

• Affidavit Tries To Put WikiLeaks In Cahoots With The Taliban (ZH)

The document uses maximal and hyped language to describe “one of the largest compromises of classified information in the history of the United States,” yet struggles to ascertain whether “illegal agreement that Assange and Manning reached” specifically led to the release of the document trove (obviously crucial for charges against Assange to hold up). Concerning a potential extradition to the US, “probable cause” is cited to be the hundreds of messages sent between Manning and Assange on the Jabber platform. The argument is that Assange and Manning understood that it “would cause injury to the United States,” especially with US forces active on the ground in Afghanistan.

But on this point of whether the leaks did actual harm and damage to US efforts, the document is left reaching, trying to spin and insinuate a narrative that puts WikiLeaks and terrorist groups like the Taliban and al-Qaeda in cahoots. It starts by claiming that “after the release of the Afghanistan War Reports, a member of the Taliban contacted the New York Times.” The supposed Taliban member said, “We are studying the report… If they are US spies, then we will know how to punish them.” This strange and somewhat comical example is meant to support the notion that Assange ultimately aided America’s enemies with the leaks. [..] Worse, the affidavit makes Osama bin Laden — killed in a 2011 raid by US Navy Seals while living comfortably in an Abbottabad, Pakistan compound — out to be a WikiLeaks fan, given letters had been found instructing an al-Qaeda member to “gather” the publicly available material leaked by Manning.

Somehow this is meant to imply WikiLeaks in a round-about way assisted al-Qaeda’s mission. The FBI is perhaps left grasping with this “bin Laden benefited” theory given the relative flimsiness of evidence to support the original “conspiracy to commit computer intrusion” aspect on which the case originated.

This video is the most important thing you can watch when it comes to WikiLeaks and Assange: pic.twitter.com/h8liwZsQws

— Cassandra Fairbanks (@CassandraRules) April 14, 2019

Brilliant argument: “The question is not whether Julian is a journalist, the question is whether THEY are journalists.”

• Suzie Dawson on Julian Assange’s Mistreatment (Unity4J)

Suzie Dawson powerfully expresses her feelings of righteous indignation on witnessing Julian Assange being dragged from the Ecuadorean Embassy, and reflects on his mistreatment by the establishment and their propaganda arm, the complicit corporate media.

So let that Pope of yours stand up for Julian. Do something useful with the $600 million already donated for the Notre Dame. THAT is what your Jesus would have done.

• Jesus Christ, Julian Assange: When Dissidents Become Enemies Of The State (JW)

And then there was Jesus Christ, an itinerant preacher and revolutionary activist, who not only died challenging the police state of his day—namely, the Roman Empire—but provided a blueprint for civil disobedience that would be followed by those, religious and otherwise, who came after him. Indeed, it is fitting that we remember that Jesus Christ—the religious figure worshipped by Christians for his death on the cross and subsequent resurrection—paid the ultimate price for speaking out against the police state of his day. A radical nonconformist who challenged authority at every turn, Jesus was a far cry from the watered-down, corporatized, simplified, gentrified, sissified vision of a meek creature holding a lamb that most modern churches peddle.

In fact, he spent his adult life speaking truth to power, challenging the status quo of his day, and pushing back against the abuses of the Roman Empire. Much like the American Empire today, the Roman Empire of Jesus’ day had all of the characteristics of a police state: secrecy, surveillance, a widespread police presence, a citizenry treated like suspects with little recourse against the police state, perpetual wars, a military empire, martial law, and political retribution against those who dared to challenge the power of the state. For all the accolades poured out upon Jesus, little is said about the harsh realities of the police state in which he lived and its similarities to modern-day America, and yet they are striking.

Yanis has this completely upside down, like so many other well-meaning people:

“Let’s join forces to block #Assange’s extradition from any European country to the #US so that he can travel to Stockholm & give his accusers an opportunity to be heard”.

The accusers, if they are real, which is by no means clear, have been silenced by the Swedish government for a reason. And to say now that you can’t speak on the allegations because you too are a man, only reinforces that reason.

Assange has offered for years to talk, and for his accusers to be heard. That never needed to take place in Stockholm, and it does not now. It wouldn’t help anyone.

• First They Came For Assange (Varoufakis)

My meetings with WikiLeaks founder Julian Assange all took place in the same small room. As the intelligence services of a variety of countries know, I visited Assange in Ecuador’s London embassy many times between the fall of 2015 and December 2018. What these snoops do not know is the relief I felt every time I left. I wanted to meet Assange because of my deep appreciation of the original WikiLeaks concept. As a teenager reading George Orwell’s Nineteen Eighty-Four, I, too, was troubled by the prospect of a high-tech surveillance state and its likely effect on human relations. Assange’s early writings – particularly his idea of using states’ own technology to create a huge digital mirror that could show everyone what they were up to – filled me with hope that we might collectively defeat Big Brother.

By the time I met Assange, that early hope had faded. Surrounded by bookcases featuring Ecuadorian literature and government publications, we would sit and chat late into the night. A device on top of a bookshelf emitted mind-numbing white noise to counter listening devices. As time passed, the claustrophobic living room, the badly hidden ceiling-mounted camera pointing at me, the white noise, and the stale air made me want to run out into the street. Assange’s detractors have been saying for years that his confinement was self-inflicted: he hid in Ecuador’s embassy because he jumped bail in the United Kingdom to avoid answering sexual assault allegations in Sweden. As a man, I feel I have no right to express an opinion regarding those allegations. Women must be heard when reporting assault.

Only the violence that men have inflicted upon women for millennia is viler than the disrespect and denigration to which women are subjected when they speak up. I recall saying to Julian that, had it been me, I would want to confront my accusers, and listen to them carefully and respectfully, regardless of whether official charges had been brought. He replied that he, too, wanted that. “But, Yanis,” he said, “if I were to go to Stockholm, they would throw me in solitary and, before I got a chance to answer any allegations, I would be bundled into a plane heading for a US supermax prison.” To drive the point home, he showed me his lawyers’ offer to Swedish authorities to go to Stockholm if they guaranteed that he would not be extradited to the United States on espionage charges. Sweden never considered the proposal.

During Assange’s years in Ecuador’s embassy, in circumstances that the United Nations deemed “arbitrary detention,” many friends and colleagues mocked his fear – and lambasted me for believing him. Last September, the historian and feminist intellectual Germaine Greer summed up that belief on Australian public radio: “He won’t be extradited to the United States,” she said derisively, blaming Julian’s lawyers for misleading him into fearing such an extradition while collecting his book’s royalties.

Make that 50. Jesus himself would have to help. Alternatively, we can see this as a sign that Macron doesn’t expect to last as president for 5 years.

• Macron Commits To Rebuilding Notre Dame Within Five Years (Ind.)

French president Emmanuel Macron promised that Notre Dame will be renovated within five years and will be “even better than before” after the devastating fire that ravaged much of the building. Investigators have already begun assessing the damage and questioning people to try to establish what started the blaze that consumed the roof and spire of the 850-year-old Gothic masterpiece. More then €600m has already been raised for rebuilding and restoration and the UK has said it stands ready to help. Firefighters battled for 14 hours to extinguish the flames, as onlookers feared the entire structure would be wrecked. But Parisians breathed a sigh of relief when it became clear the twin medieval bell towers had been spared and later when fire investigators revealed that “most precious” treasures have been saved.

They included the Crown of Thorns, a relic venerated by Christians and believed to have been worn by Jesus Christ, as well as the cathedral’s 18th-century organ and a number of artworks. European Council president Donald Tusk called on the European Union’s member countries to help, saying the site in central Paris is a symbol of what binds Europe together. The fire, which began on Monday evening, is thought to have been caused by an accident rather than arson, the Paris public prosecutor said. Architects warned repairs could take decades but in a televised address to the nation Mr Macron said: “We will rebuild Notre Dame even more beautifully, and I want it to be completed in five years, we can do it.”

“..experts have concluded..”

• May Has ‘No Chance’ Of Avoiding EU Elections (Ind.)

Theresa May has “no chance” of passing her Brexit deal in time to pull the UK out of the European parliament elections and avoid a likely devastating defeat, experts have concluded. Time has already effectively run out on attempts to ratify the agreement by 22 May, they say – despite the prime minister insisting talks with Labour can still deliver a compromise before the deadline. The verdict puts the Conservatives on course to lose most of their MEPs, polls suggest, as Leave voters protest at the failure to deliver Brexit, a disastrous result that would trigger huge pressure on Ms May to resign. The staging of the elections will also be a personal humiliation for the prime minister, who repeatedly told MPs they should not take place, three years after the Brexit referendum.

More talks with Labour are planned, as No 10 claims the complex (Withdrawal Agreement) Bill – required to ratify EU withdrawal – can clear parliament before voters go to the polls on 23 May. But two respected think tanks have told The Independent the timetable is a fantasy, with one suggesting it will take “several months” to approve the legislation, which could involve up to 100 votes. Unlike the simple meaningful vote, the full legislation will trigger lengthy and gruelling parliamentary trench warfare, with echoes of the bitter battles over the Maastricht and Lisbon treaties. Approval of Maastricht took 41 days in 1993, while Lisbon required 25 days in 2008 – but there are only 17 sitting days planned before 22 May.

There is no way they could ever agree.

• Tory Deregulation Agenda Is Stalling Brexit Talks – Corbyn (G.)

Jeremy Corbyn has said Brexit talks with the government are stalling because of a Tory desire for post-withdrawal deregulation, including as part of a US trade deal. Corbyn said Labour had been putting forward a robust case for a customs union during the talks over the past week but suggested he feared the two sides would not find common ground. “There has to be access to European markets and above all there has to be a dynamic relationship to protect the conditions and rights that we’ve got for environment and consumer workplace rights,” he said. “We’ve put those cases very robustly to the government and there’s no agreement as yet.”

Meetings are scheduled this week between ministers and shadow ministers on environmental protections, security and workers’ rights, which Corbyn described as “quite interesting, quite long technical discussions, particularly on environment regulations”. However, there will be no discussion before Easter on the big issues of a customs union or a confirmatory referendum. Corbyn underlined again that an agreement could only be reached if Theresa May was prepared to accept Labour’s central demand for a common external tariff policy with the EU. “The government doesn’t appear to be shifting the red lines because they’ve got a big pressure in the Tory party that actually wants to turn this country into a deregulated, low-tax society which will do a deal with Trump. I don’t want to do that,” he said.

The Delusional Party.

• Not In It To Win It: The Dirty Little Secret Of The Democrats’ 2020 Battle (G.)

Political scientists are quick to point out two reasons why a record number of candidates is running for president on the Democratic side in 2020. One: the Republican president, Donald Trump, is vulnerable with a low-40s approval rating, so the Democratic nominee has a good shot at winning the White House. Two: there’s no bigfoot candidate this time around – no incumbent, no Hillary Clinton – to dissuade other potential candidates from running. Those conditions have lured 15 major candidates so far into the race for the Democratic nomination, with as many as half a dozen more potentially getting in, including former vice-president Joe Biden, who has yet to officially declare. The previous record for major candidates in a presidential primary field was 17, on the Republican side in 2016.

But analysts also nod to a third factor inflating the gigantic 2020 Democratic field, a not-quite-dirty little secret about presidential politics. The fact is, not all of the people running for president are actually running for president. “There is almost always at least a few candidates in these kinds of fields that are either there to push an issue agenda, or these are candidates who are interested in building their name recognition, building their stature and status within the party,” said John Sides, professor of political science at George Washington University and editor-in-chief of The Monkey Cage politics analysis site.

How much plastic is inside of you?

• Six-Decade Plankton Study Charts Rise Of Ocean Plastic Waste (G.)

A trove of data showing when the Atlantic began choking with plastic has been uncovered in the handwritten logbooks of a little-known but doggedly persistent plankton study dating back to the middle of the last century. From fishing twine found in the ocean in the 50s, then a first carrier bag in 1965, it reflects how the marine refuse problem grew from small, largely ignored incidents to become a matter of global concern. The unique dataset, published in Nature Communications, is based on records from the continuous plankton recorder, a torpedo-shaped marine sampling device that has been towed across more than 6.5m nautical miles of ocean over the past 60 years.

Bryozoans, nudibranchs, crabs, and barnacles live on a clear plastic bottle in the ocean. Photograph: Justin Hofman/Greenpeace/PA

Based firstly in Hull, then Edinburgh and Plymouth, the long-running programme was initially designed to collect pelagic plankton, which are an indicator of water quality and also a source of food for whales and other marine life. But the operators have also kept a chart-and-counter track of entanglements that disrupted their work: what snared the equipment, where it happened and when. This has proved a valuable source of data on plastic waste, according to contemporary researchers. “This consistent time series provides some of the earliest records of plastic entanglement, and is the first to confirm a significant increase in open ocean plastics in recent decades,” the paper notes.

The start of the problem was so slow it was barely noticed. The log shows strands of fishing twine found off the east coast of Iceland in 1957, then a carrier bag in waters to the north-west of Ireland eight years later. The paper states this was a couple of years before the first reports of turtles and seabirds becoming ensnared in plastic. Over the following decades the problem grew steadily. In the 50s, 60s and 70s, fewer than 1% of tows were disrupted by entanglements with synthetic materials. By the 90s it was almost 2%, and in the first decade of this century the increase “was of an order of magnitude”, according to the paper. The figure is now hovering somewhere between 3% and 4%.

Note: if you find yourself agreeing with Carney, and you fail to see the absurdity in this, seek treatment. Carney is a full-time douche. He’s saying going green is a profit opportunity.

• Mark Carney Tells Global Banks They Cannot Ignore Climate Change (G.)

The global financial system faces an existential threat from climate change and must take urgent steps to reform, the governors of the Bank of England and France’s central bank have warned, writing in the Guardian. In an article published in the Guardian on Wednesday aimed at the international financial community, Mark Carney, the Bank’s governor, and Villeroy de Galhau, the governor of the Banque de France, said financial regulators, banks and insurers around the world had to “raise the bar” to avoid catastrophe. They said: “As financial policymakers and prudential supervisors we cannot ignore the obvious physical risks before our eyes. Climate change is a global problem, which requires global solutions, in which the whole financial sector has a central role to play.”

The warning comes as concern over the impact of climate change and the lack of urgent action is increasing, reflected in the Extinction Rebellion protests and schoolchildren’s strikes across the world. The heads of two of the world’s most influential central banks urged other financial regulators around the world to carry out climate change stress tests to spot any risks in the system, while also calling for more collaboration between nations on the issue. They warned that a “massive reallocation of capital” was necessary to prevent global warming above the 2°C maximum target set by the Paris climate agreement, with the banking system required to play a pivotal role. “If some companies and industries fail to adjust to this new world, they will fail to exist,” Carney and De Galhau said.

Debt Rattle April 13 2019

Apr 132019

April 13, 2019 Posted by Raúl Ilargi Meijer at 9:30 am Finance Tagged with: Assange, Brexit, Chelsea Manning, conspiracy, Correa, Ecuador, extradition, Labour, Moreno, pensions, Sweden, Uber 4 Responses »

Pablo Picasso Standing nude 1928

• The Assange Arrest Is a Warning From History (John Pilger)

• The 7 Years Of Lies About Assange Won’t Stop Now (Cook)

• UK MPs Want Assange Extradited To Sweden (G.)

• Labour Urges PM To Block Julian Assange Extradition To US (G.)

• Assange’s ‘Conspiracy’ to Expose War Crimes Has Already Been Punished (Fair)

• Cascading Cat Litter (Jim Kunstler)

• Is Julian Assange Another Pentagon Papers case? (Alan Dershowitz)

• Facebook Removes Page of Rafael Correa on Same Day as Assange’s Arrest (MU)

• Second Brexit Referendum Vote ‘Very Likely’ – Philip Hammond (Ind.)

• What Went Wrong With Pensions And Why The Whole World Must Be Worried (Rubino)

• Italy’s Fiscal Health Is Once Again In Serious Decline (DQ)

• Uber Discloses 3-Yr $10-Billion Loss from Operations (WS)

“Imagine Tony Blair dragged from his multi-million pound Georgian home in Connaught Square, London, in handcuffs [..] Blair’s “paramount crime” is the deaths of a million Iraqis.”

• The Assange Arrest Is a Warning From History (John Pilger)

The glimpse of Julian Assange being dragged from the Ecuadorean embassy in London is an emblem of the times. Might against right. Muscle against the law. Indecency against courage. Six policemen manhandled a sick journalist, his eyes wincing against his first natural light in almost seven years. That this outrage happened in the heart of London, in the land of Magna Carta, ought to shame and anger all who fear for “democratic” societies. Assange is a political refugee protected by international law, the recipient of asylum under a strict covenant to which Britain is a signatory. The United Nations made this clear in the legal ruling of its Working Party on Arbitrary Detention.

But to hell with that. Let the thugs go in. Directed by the quasi fascists in Trump’s Washington, in league with Ecuador’s Lenin Moreno, a Latin American Judas and liar seeking to disguise his rancid regime, the British elite abandoned its last imperial myth: that of fairness and justice. Imagine Tony Blair dragged from his multi-million pound Georgian home in Connaught Square, London, in handcuffs, for onward dispatch to the dock in The Hague. By the standard of Nuremberg, Blair’s “paramount crime” is the deaths of a million Iraqis. Assange’s crime is journalism: holding the rapacious to account, exposing their lies and empowering people all over the world with truth.

The shocking arrest of Assange carries a warning for all who, as Oscar Wilde wrote, “sew the seeds of discontent [without which] there would be no advance towards civilisation”. The warning is explicit towards journalists. What happened to the founder and editor of WikiLeaks can happen to you on a newspaper, you in a TV studio, you on radio, you running a podcast. Assange’s principal media tormentor, the Guardian, a collaborator with the secret state, displayed its nervousness this week with an editorial that scaled new weasel heights. The Guardian has exploited the work of Assange and WikiLeaks in what its previous editor called “the greatest scoop of the last 30 years”. The paper creamed off WikiLeaks’ revelations and claimed the accolades and riches that came with them.

With not a penny going to Julian Assange or to WikiLeaks, a hyped Guardian book led to a lucrative Hollywood movie. The book’s authors, Luke Harding and David Leigh, turned on their source, abused him and disclosed the secret password Assange had given the paper in confidence, which was designed to protect a digital file containing leaked US embassy cables. With Assange now trapped in the Ecuadorean embassy, Harding joined the police outside and gloated on his blog that “Scotland Yard may get the last laugh”. The Guardian has since published a series of falsehoods about Assange, not least a discredited claim that a group of Russians and Trump’s man, Paul Manafort, had visited Assange in the embassy. The meetings never happened; it was fake.

We just get more. But it’s what NOT being said that reveals more.

• The 7 Years Of Lies About Assange Won’t Stop Now (Cook)

For seven years, from the moment Julian Assange first sought refuge in the Ecuadorean embassy in London, they have been telling us we were wrong, that we were paranoid conspiracy theorists. We were told there was no real threat of Assange’s extradition to the United States, that it was all in our fevered imaginations. For seven years, we have had to listen to a chorus of journalists, politicians and “experts” telling us that Assange was nothing more than a fugitive from justice, and that the British and Swedish legal systems could be relied on to handle his case in full accordance with the law. Barely a “mainstream” voice was raised in his defence in all that time.

From the moment he sought asylum, Assange was cast as an outlaw. His work as the founder of Wikileaks – a digital platform that for the first time in history gave ordinary people a glimpse into the darkest recesses of the most secure vaults in the deepest of Deep States – was erased from the record. Assange was reduced from one of the few towering figures of our time – a man who will have a central place in history books, if we as a species live long enough to write those books – to nothing more than a sex pest, and a scruffy bail-skipper. The political and media class crafted a narrative of half-truths about the sex charges Assange was under investigation for in Sweden.

They overlooked the fact that Assange had been allowed to leave Sweden by the original investigator, who dropped the inquiry, only for it to be revived by another investigator with a well-documented political agenda. They failed to mention that Assange was always willing to be questioned by Swedish prosecutors in London, as had occurred in dozens of other cases involving extradition proceedings to Sweden. It was almost as if Swedish officials did not want to test the evidence they claimed to have in their possession. [..] It was a freedom of information request by an ally of Assange, not a media outlet, that unearthed documents showing that Swedish investigators had, in fact, wanted to drop the case against Assange back in 2013. The UK, however, insisted that they carry on with the charade so that Assange could remain locked up. A British official emailed the Swedes: “Don’t you dare get cold feet!!!”

There’s some confusion here. Some say because Sweden dropped charges, the US is now first in line. Others deny this.

• UK MPs Want Assange Extradited To Sweden (G.)

Political pressure is mounting on Sajid Javid to prioritise action that would allow Julian Assange to be extradited to Sweden, amid concerns that US charges relating to Wikileaks’ activities risked overshadowing longstanding allegations of rape. More than 70 MPs and peers have written to Javid and the shadow home secretary, Diane Abbott, urging them to focus attention on the earlier Swedish investigations that Assange would face should the case be resumed at the alleged victim’s request.

In a letter coordinated by Labour’s Stella Creasy and Jess Phillips and seen by the Guardian, the MPs declare: “We do not presume guilt, of course, but we believe due process should be followed and the [Swedish] complainant should see justice be done.” They call on Javid and Abbott to “champion action” to ensure that extradition is a possibility should Swedish authorities choose to pursue it. Assange first entered the Ecuadorian embassy in 2012 in order to avoid extradition to Sweden over sexual assault allegations, which he has always denied. While the statute of limitations on one of the allegations has expired, the other will not be reached until August 2020.

May did it before in 2012, but I understand laws have changed since. Labour better make sure that block counts.

• Labour Urges PM To Block Julian Assange Extradition To US (G.)

The shadow home secretary, Diane Abbott, has urged Theresa May to block the extradition of Julian Assange to the US in the same way she intervened in the case of the computer hacker Gary McKinnon. In 2012, as home secretary, May halted McKinnon’s extradition on human rights grounds after doctors warned he was at risk of suicide if sent to face trial in the US. Abbott said similar grounds should be used to block Assange’s extradition. On Thursday, the Wikileaks founder was arrested on behalf of the US authorities, who have charged him with involvement in a computer hacking conspiracy.

The 47-year-old faces up to 12 months in a British prison after he was found guilty of breaching his bail conditions. The US charge could attract a maximum jail sentence of five years, according to the US Department of Justice. Speaking on BBC Radio 4’s Today programme on Friday, Abbott said: “If you remember the Gary McKinnon case, the Americans insisted on extraditing him. He had done this massive computer hack, but his real crime was to have embarrassed the American military and security service. “In the end the then home secretary, Theresa May, blocked his extradition on what she said were human rights grounds. We think there may be human rights grounds in relation to Assange.”

Abbott described the allegations facing Assange from two women in Sweden as “serious”, but said charges were never brought. She said: “If the Swedish government wants to come forward with those charges I believe that Assange should face the criminal justice system.” But she added: “It is not the rape charges, serious as they are, it is about WikiLeaks and all of that embarrassing information about the activities of the American military and security services that was made public. “He is at the very least a whistleblower and much of the information that he brought into the public domain, it could be argued, was very much in the public interest.”

[..] “It is this whistleblowing into illegal wars, mass murder, murder of civilians and corruption on a grand scale, that has put Julian Assange in the crosshairs of the US administration. “It is for this reason that they have once more issued an extradition warrant against Mr Assange.” In response, the home secretary, Sajid Javid, said: “Why is it whenever someone has a track record of undermining the UK and our allies and the values we stand for, you can almost guarantee that the leadership of the party opposite will support those who intend to do us harm? You can always guarantee that from the party opposite.”

“The point of journalism is to expose horrific crimes like this so that the powerful people who order them pay legal consequences, not the ones who expose them.”

• Assange’s ‘Conspiracy’ to Expose War Crimes Has Already Been Punished (Fair)

In 2010, the Guardian, like the New York Times and a few other corporate newspapers, briefly partnered with WikiLeaks to publish the contents of thousands of confidential US diplomatic cables, known as Cablegate. That year, WikiLeaks released other confidential US government information as well: the Afghanistan War Logs, the Iraq War Logs, the infamous “Collateral Murder” video. The material exposed atrocities perpetrated by the US military, as well as other disgraceful acts—like US diplomats strategizing on how to undermine elected governments out of favor with Washington, spying on official US allies and bullying poor countries into paying wildly exorbitant prices for life-saving drugs.

One US soldier involved in the “collateral murder” airstrike that Manning and Assange exposed, Ethan McCord, was threatened and reprimanded by a superior officer for requesting psychiatric help after the atrocity. (“Get the sand out of your vagina,” he was reportedly told.) McCord had tended to wounded children during the massacre. He was soon expelled from the military, apparently now “unsuited” for it. The point of journalism is to expose horrific crimes like this so that the powerful people who order them pay legal consequences, not the ones who expose them. Presumably that is why “press freedom” is considered important, and why it’s guaranteed by the First Amendment.

The law should have protected Manning from punishment, the same way it protects somebody who uses violence in justifiable self-defense or in defense of others. In Manning’s case, that was especially true, because she exposed grave crimes while stationed in Iraq, as the US perpetrated an even higher-level crime—a war of aggression based on a fraudulent pretext. If the law should have protected Manning, who was at the very heart of the “conspiracy” to expose gruesome crimes, then it obviously should protect Assange, and any of the outlets that worked with him.

“I’d like to see The New York Times’s front page headline on that story: Russian Colluder Wins Nobel Prize, Put on Trial in Federal Court.”

• Cascading Cat Litter (Jim Kunstler)

And so now Julian Assange of Wikileaks has been dragged out of his sanctuary in the London embassy of Ecuador for failing to clean his cat’s litter box. Have you ever cleaned a litter box? The way we always did it was to spread some newspaper — say, The New York Times — on the floor, transfer the used cat litter onto it, wrap it into a compact package, and put it in the trash. It was interesting to scan the Comments section of The Times’s stories about the Assange arrest: Times readers uniformly presented themselves as a lynch mob out for Mr. Assange’s blood. So much for the spirit of liberalism and The Old Gray Lady who had published The Pentagon Papers purloined by Daniel Ellsberg lo so many years ago.

Reading between the lines in that once-venerable newspaper — by which I mean gleaning their slant on the news — one surmises that The Times has actually come out against freedom of the press, a curious attitude, but consistent with the neo-Jacobin zeitgeist in “blue” America these days. Anyway, how could anyone expect Mr. Assange to clean his cat’s litter box when he was unable to go outside his sanctuary to buy a fresh bag of litter, and was denied newspapers this past year, as well as any other contact with the outside world? US government prosecutors had better tread lightly in bringing Mr. Assange to the sort of justice demanded by readers of The New York Times — which is to say: lock him up in some SuperMax solitary hellhole and throw away the key. The show trial of Julian Assange on US soil, when it comes to pass, may end up being the straw that stirs America’s Mickey Finn as a legitimate republic.

The bloodthirsty hysteria among New York Times readers is a symptom of the mass confusion sown by agencies of the US government itself when its own agents ventured to meddle in the national election of 2016 and then blame it on “the Russians.” As you will learn in the months ahead, it was The Times itself, and other corporate news organizations, who colluded with officers of the FBI, the Department of Justice, the CIA, and the Obama White House to concoct a phony narrative about Mr. Trump being in cahoots with Vladimir Putin, thus depriving Hillary Clinton of her “turn” in the White House; and then to join those agencies, and the grotesquely dishonest two-year investigation of Special Counsel Robert Mueller, in a cover-your-ass operation to hide their nefarious and criminal acts.

In the meantime, Mr. Assange may receive a Nobel Prize as a symbol of a lone conscience standing up against the despotic deceits of the world’s deep states. Wouldn’t that gum up the works nicely? I’d like to see The New York Times’s front page headline on that story: Russian Colluder Wins Nobel Prize, Put on Trial in Federal Court. By then, the United States of America will be so completely gaslighted that it will pulsate in the darkness like a death star about to explode.

Michael Malice on Twitter: “Let’s be clear: Julian Assange is not a journalist.
He uncovered and released information that the political establishment and government wanted to stay hidden.
Does that sound like the work of a journalist?”

• Is Julian Assange Another Pentagon Papers case? (Alan Dershowitz)

Before WikiLeaks founder Julian Assange gained asylum in the Ecuadorian embassy in London in 2012, he and his British legal team asked me to fly to London to provide legal advice about United States law relating to espionage and press freedom. I cannot disclose what advice I gave them, but I can say that I believed then, and still believe now, that there is no constitutional difference between WikiLeaks and the New York Times. If the New York Times, in 1971, could lawfully publish the Pentagon Papers knowing they included classified documents stolen by Rand Corporation military analyst Daniel Ellsberg from our federal government, then indeed WikiLeaks was entitled, under the First Amendment, to publish classified material that Assange knew was stolen by former United States Army intelligence analyst Chelsea Manning from our federal government.

So if prosecutors were to charge Assange with espionage or any other crime for merely publishing the Manning material, this would be another Pentagon Papers case with the same likely outcome. Many people have misunderstood the actual Supreme Court ruling in 1971. It did not say that the newspapers planning to publish the Pentagon Papers could not be prosecuted if they published classified material. It only said that they could not be restrained, or stopped in advance, from publishing them. Well, they did publish, and they were not prosecuted.

[..] the problem with the current effort is that, while it might be legally strong, it seems on the face of the indictment to be factually weak. It alleges that “Assange encouraged Manning to provide information and records” from federal government agencies, that “Manning provided Assange with part of a password,” and that “Assange requested more information.” It goes on to say that Assange was “trying to crack the password” but had “no luck so far.” Not the strongest set of facts here!

Nice going, Zuck.

• Facebook Removes Page of Rafael Correa on Same Day as Assange’s Arrest (MU)

Facebook has unpublished the page of Ecuador’s former president, Rafael Correa, the social media giant confirmed on Thursday, claiming that the popular leftist leader violated the company’s security policies.[..] In March, WikiLeaks published a tranche of documents dubbed the INA Papers linking President Lenin Moreno to the INA Investment Corporation, an offshore shell company used by Moreno to procure furniture, property, and various luxury items. The account number for the offshore account allegedly used by the president to launder money was shared across Ecuadorean social networks by netizens of all political stripes, including by Correa – who had about 1.5 million followers and whose Facebook page enjoyed more interactions and attention than that of President Moreno himself.

[..] The removal of Correa’s page for violating Facebook’s “community standards” is an unprecedented move, and the former statesman is the most high-profile public political figure to ever be removed from the social platform–placing the economist and icon of Latin American “socialism of the 21st century” in the same unlikely category as right-wing conspiracy theorist and broadcaster Alex Jones.

What would that solve?

• Second Brexit Referendum Vote ‘Very Likely’ – Philip Hammond (Ind.)

A second referendum on Brexit is “very likely” to be put before parliament, Philip Hammond has said. Speaking in Washington on Friday, the chancellor said a fresh public vote was a “proposition that could and, on all the evidence, is very likely to be put to parliament at some stage”. However, he also said about six months would be needed to hold a referendum, and that there would not be enough time before Britain is due to leave the EU on the new deadline of 31 October. Mr Hammond also stressed that the government was still opposed to a second referendum, although he said other Labour demands – such as a customs union with the EU – were up for debate.

“The government’s position has not changed,” he said. “The government is opposed to a confirmatory referendum and therefore we would not be supporting it.” The idea of a new referendum was among several Brexit alternatives to Theresa May’s deal that were put to lawmakers in the last month – but which all fell short of a majority in parliament. The prime minister has so far failed to get her own party behind the Brexit divorce deal she agreed with other European Union leaders last year. She was forced to ask the bloc for a delay and to start talks with Labour about how to break the impasse in parliament.

It says a lot about the human attention span that this doesn’t receive a lot more scrutiny.

This is where Fed policies will be found to have hurt people most.

• What Went Wrong With Pensions And Why The Whole World Must Be Worried (Rubino)

As baby boomer teachers, police and firefighters retire, the required pension payouts are soaring. Combine this with inadequate contributions, and the liabilities of major U.S. public pensions are up 64% since 2007 while assets are up only 30%. This math is simple enough for even a politician or fund trustee to grasp, but because there’s no immediate penalty for underfunding a pension system, it has become normal practice in a long list of places. Another, related problem is also mathematical, but it’s harder to manage in a boom-and-bust world: When pension plans suffer a big loss, as they tend to do in bear markets, the next few years’ returns have to go towards making up that loss before plan assets can start growing again. The following chart, from a recent Wall Street Journal article, shows pension fund assets falling behind in the past two bear markets and having increasing trouble catching up with steadily-growing liabilities.

In some cases this puts funds permanently behind the curve and can only be fixed with massive infusions of taxpayer cash or draconian benefit cuts, neither of which are feasible in a system that punishes hard choices. The next chart shows how much more the worst offenders would have to contribute to their plans to get by with honest future return assumptions. For Illinois, Kentucky and New Jersey this will never happen.

What does all this mean? A few things: In the next bear market the pension funds that are already wildly underfunded will fall into a financial black hole from which they’ll never be able to escape. Those states and cities – many of which are issuing bonds to cover their day-to-day expenses – will be exposed as junk credits (as Chicago was recently) and will have to either pay way up to borrow or enact some combination of tax increases (politically almost impossible) or pension benefit cuts (legally impossible in many places) which will cause chaos without fixing the underlying problem. The weakest cities and the states in which they reside will be forced to default on some of their obligations, stiffing suppliers, creditors, and/or employees.

This will throw the municipal bond market into chaos as investors, worried that the next Chicago is lurking in their portfolios, dump the whole muni sector. Faced with a cascade failure of a crucial part of the fixed income universe, the federal government will react the way it did when the mortgage market imploded in 2008, with a massive taxpayer funded bailout. At which point there’s a good chance of the crisis spreading from pensions to currencies, as the world finally realizes that the bailouts are just beginning, with US states and cities soon to be followed by student loans, emerging markets, and European failed states.

Drip. Drip.

• Italy’s Fiscal Health Is Once Again In Serious Decline (DQ)

On Wednesday, Italy’s coalition government slashed its growth forecast for the Italian economy in 2019 to 0.2% – the weakest forecast in the Eurozone – from a previous forecast of 1%. Italy is already in a technical recession after chalking up two straight quarters of negative GDP growth in the second half of 2018. The government’s budget for this year was based on the assumption that the economy would expand by 1% this year. Now, it seems the economy may not grow at all; it could even shrink. One direct result of this is that Italy’s current account deficit for 2019 will be substantially higher than the 2.04% of GDP Italy’s government pledged to stick to late last year. And that can mean only thing: another standoff between Rome and Brussels over the direction of fiscal policy is in the offing.

Italy already boasts the largest public debt pile in Europe in nominal terms, clocking in at €2.14 trillion, as well as the second largest in relative terms after Greece’s twice bailed out economy. Rome just forecast that public debt would hit a new record high of 132.6% of GDP this year. That record is unlikely to last very long given Italy’s stagnating economy and the government’s determination to cut taxes, reduce the retirement age and introduce a citizens’ basic income.

The biggest problem with Italy’s economy is that many of its problems are chronic and deep seated. Many of them date back to the adoption of the euro, in 2000, or in the case of Rome’s massive addiction to public debt, to the 1980s. As the OECD points out, real GDP in Italy is still well below its pre-crisis peak. Italy is also the only OECD country where incomes (as measured by GDP per capita) are no higher than in 2000. By contrast, in France, Spain, the UK and Germany they have risen during the same period by 13%, 17%, 21% and 23 respectively.

Now imagine this WITHOUT interest rates at record lows. What was once a market has now turned into a slot machine.

• Uber Discloses 3-Yr $10-Billion Loss from Operations (WS)

Uber Technologies’ IPO filing was made public today. The 330-page or so S-1 filing disclosed all kinds of goodies, including detailed but still unaudited pro-forma financial statements as of December 31, 2018, huge losses from operations, big tax benefits, large gains from the sale of some operations, stagnating rideshare revenues, and an enormous list of chilling “Risk Factors” that go beyond the usual CYA. The filing, however, didn’t disclose the share price, the IPO valuation, and how much money the IPO will raise for Uber. On Tuesday, “people familiar with the matter” had told Reuters that Uber plans to raise $10 billion in the IPO. Most of the IPO shares would be sold by the company to raise funds, and a smaller amount would be sold by investors cashing out, the sources said.

The filing did not confirm this and instead left blanks or used placeholder amounts. But if true, $10 billion in shares sold would make this IPO one of the biggest tech IPOs. And the rumored $90 billion to $100 billion valuation would make it the biggest since Alibaba’s $169 billion IPO. Uber will need every dime it raises in the IPO going forward because it’s got a little cash-burn situation in its operations that persists going forward, as it admitted in its “Risk Factors,” and it will need to raise more money, and if it cannot raise more money, it might not make it. Uber is upfront about this. The company has already raised – and mostly burned through – over $20 billion so far in its 10 years of existence. This includes $15 billion in equity funding and over $6 billion in debt.

I Am Still Julian Assange

Apr 112019

April 11, 2019 Posted by Raúl Ilargi Meijer at 10:35 am Primers Tagged with: Chelsea Manning, DNC, Edward Snowden, Guardian, Julian Assange, Kim Dotcom, Moreno, Podesta, Putin, Russia, Sweden, Wikileaks 4 Responses »

Carl Spitzweg The raven 1845

In light of the horrible news that Julian Assange was arrested by British police inside the Ecuadorian embassy this morning, what is there to say that we haven’t already said?

We originally published this essay on May 16 2018.

Julian Assange appears to be painfully close to being unceremoniously thrown out of the Ecuadorian embassy in London. If that happens, the consequences for journalism, for freedom of speech, and for press freedom, will resound around the world for a very long time. It is very unwise for anyone who values truth and freedom to underestimate the repercussions of this.

In essence, Assange is not different from any journalist working for a major paper or news channel. The difference is he published what they will not because they want to stay in power. The Washington Post today would never do an investigation such as Watergate, and that’s where WikiLeaks came in.

It filled a void left by the media that betrayed their own history and their own field. Betrayed the countless journalists throughout history, and today, who risked their lives and limbs, and far too often lost them, to tell the truth about what powers that be do when they think nobody’s looking or listening.

Julian is not wanted because he’s a spy, or even because he published a number of documents whose publication was inconvenient for certain people. He is wanted because he is so damn smart, which makes him very good and terribly effective at what he does. He’s on a most wanted list not for what he’s already published, but for what he might yet publish in the future.

He built up WikiLeaks into an organization that acquired the ultimate trust of many people who had access to documents they felt should be made public. They knew he would never betray their trust. WikiLeaks has to date never published any documents that were later found out to be false. It never gave up a source. No documents were ever changed or manipulated for purposes other than protecting sources and other individuals.

Julian Assange built an ’empire’ based on trust. To do that he knew he could never lie. Even the smallest lie would break what he had spent so much time and effort to construct. He was a highly accomplished hacker from a very young age, which enabled him to build computer networks that nobody managed to hack. He knew how to make everything safe. And keep it that way.

Since authorities were never able to get their hands on WikiLeaks, its sources, or its leader, a giant smear campaign was started around rape charges in Sweden (the country and all its citizens carry a heavy blame for what happened) and connections to America’s favorite enemy, Russia. The rape charges were never substantiated, Julian was never even interrogated by any Swedish law enforcement personnel, but that is no surprise.

It was clear from the get-go what was happening. First of all, for Assange himself. And if there’s one thing you could say he’s done wrong, it’s that he didn’t see the full impact from the campaign against him, sooner. But if you have the world’s largest and most powerful intelligence services against you, and they manage to find both individuals and media organizations willing to spread blatant lies about you, chances are you will not last forever.

If and when you have such forces running against you, you need protection. From politicians and from -fellow- media. Assange didn’t get that, or not nearly enough. Ecuador offered him protection, but as soon as another president was elected, they turned against him. So have news organizations who were once all too eager to profit from material Assange managed to obtain from his sources.

That the Guardian today published not just one, not two, but three what can only be labeled as hit pieces on Julian Assange, should perhaps not surprise us; they fell out a long time ago. Still, the sheer amount of hollow innuendo and outright lies in the articles is astonishing. How dare you? Have you no shame, do you not care at all about your credibility? At least the Guardian makes painfully clear why WikiLeaks was needed.

No, Sweden didn’t “drop its investigation into alleged sexual offences because it was unable to question Assange”. The Swedes simply refused to interview him in the Ecuador embassy in London, the only place where he knew he was safe. They refused this for years. And when the rape charges had lost all credibility, Britain asked Sweden to not drop the charges, but keep the pressure on.

No, there is no proof of links from Assange to Russian hackers and/or to the Russian government. No, there is no proof that DNC computers were hacked by Russians to get to John Podesta’s emails. In fact there is no proof they were hacked at all. No, Ecuador didn’t get tired of Julian; their new president, Moreno, decided to sell him out “at the first pressure from the United States”. Just as his predecessor, Correa, said he would.

Julian Assange has been condemned by Sweden, Britain, the US and now Ecuador to solitary confinement with no access to daylight or to medical care. Without a trial, without a sentence, and on the basis of mere allegations, most of which have already turned out to be trumped up and false. This violates so many national and international laws it’s futile to try and count or name them.

It also condemns any and all subsequent truth tellers to the prospect of being treated in the same way that Julian is. Forget about courts, forget about justice. You’ll be on a wanted list. I still have a bit of hope left that Vladimir Putin will step in and save Assange from the gross injustice he’s been exposed to for far too many years. Putin gets 100 times the lies and innuendo Assange gets, but he has a powerful nation behind him. Assange, in the end, only has us.

What’s perhaps the saddest part of all this is that people like Chelsea Manning, Kim Dotcom, Edward Snowden and Julian Assange are among the smartest people our world has to offer. We should be cherishing the combination of intelligence, courage and integrity they display at their own risk and peril, but instead we let them be harassed by our governments because they unveil inconvenient truths about them.

And pretty soon there will be nobody left to tell these truths, or tell any truth at all. Dark days. By allowing the smartest and bravest amongst us, who are experts in new technologies, to be silenced, we are allowing these technologies to be used against us.

We’re not far removed from being extras in our own lives, with all significant decisions taken not by us, but for us. America’s Founding Fathers are turning in their graves as we speak. They would have understood the importance of protecting Julian Assange.

To say that we are all Julian Assange is not just a slogan.

Debt Rattle May 27 2018

May 272018

May 27, 2018 Posted by Raúl Ilargi Meijer at 9:03 am Finance Tagged with: Assange, crisis, Daimler, emissions, Erdogan, FBI, Italy, Korea, lira, prosecutors, Putin, Rajoy, self deception, Sweden 2 Responses »

Edvard Munch Separation 1896

• The ECB Is Preventing An Italian Rerun Of The Euro Crisis – For Now (MW)

• Italy President Under Pressure To Accept Eurosceptic Minister (R.)

• We’re Engaging In Self-Deception And Unsupported Hopefulness (Ron Paul)

• Putin Warns “US Sanctions Hurt Trust In Dollar As Reserve Currency” (ZH)

• Erdogan Calls On Turks To Convert Dollar, Euros Into Lira (R.)

• Spain’s Ciudadanos Party Open To Alternative Candidate To Oust PM Rajoy (R.)

• Daimler Threatened With Recall Of Over 600,000 Diesel Models (R.)

• British Arms Exports To Israel Reach Record Level (G.)

• Koreas Discuss Non-Aggression Pledge, Peace Treaty Ahead Of Summit (R.)

• How Did The Swedish Matter End? (Justice4Assange)

Draghi must save Italy. Even if he doesn’t like its government.

• The ECB Is Preventing An Italian Rerun Of The Euro Crisis – For Now (MW)

As a result of the ECB’s purchases, only 32% of Italian government bonds are still held by foreign investors, Solveen noted, and only a third of those are held outside the eurozone. That compares with more than 40% before the sovereign debt crisis. [..] The ECB’s deposit rate stands at negative 0.4%, while its key lending rate stands at 0%. Rates wont’ rise soon, Solveen notes, and that’s curbing the rise of short-term bond yields. It also means Italy will be able to issue new bonds with low coupons, at least in the two-to-three-year maturity range, he said, which should also anchor long-end yields.

And since the average duration of Italian bonds has risen significantly in recent years, Italy’s Treasury can shift its issuance back toward shorter-dater maturities if needed. But it’s weakness at the short end of the yield curve—the line plotting yields across all debt maturities—that might be most troubling for investors right now. “Strong selling pressure at the short end is noteworthy…, while there have been a few other such episodes since the start of QE, this is the strongest one,” said Luca Cazzulani, deputy head of fixed income at UniCredit, in Milan (see chart below).

An important near-term test looms Monday when the Treasury is due to sell 2-year zero-coupon notes and inflation-indexed BTPs. The auction round “will be closely watched and results are likely to drive BTPs more than usual,” Cazzulani said, in a note. “Considering the still fragile market environment, pressure ahead of the auction should not come as a surprise.” Both auctions are smaller than usual, which should help keep supply pressures low, he said. Solveen said that while the new government’s policies are unlikely to trigger a new sovereign debt crisis, the situation underlines the fundamental differences in economic policy thinking within the eurozone.

“The ECB’s very expansionary monetary policy and the resulting cyclical economic recovery can conceal this fact to some extent but, at the next recession at the latest, the difference could become very apparent again and prove a real test for the monetary union,” he said.

Power games. The establishment protests.

• Italy President Under Pressure To Accept Eurosceptic Minister (R.)

Italy’s would-be coalition parties turned up the pressure on President Sergio Mattarella on Saturday to endorse their eurosceptic pick as economy minister, saying the only other option may be a new election. Mattarella has held up formation of a government, which would end more than 80 days of political deadlock, over concern about the far-right League and anti-establishment 5-Star Movement’s desire to make the 81-year-old economist Paolo Savona economy minister. Savona has been a vocal critic of the euro and the European Union, but he has distinguished credentials, including in a former role as an industry minister. Formally, Prime Minister-designate Giuseppe Conte presents his cabinet to the president, who must endorse it.

Conte, a little-known law professor with no political experiences, met the president on Friday without resolving the deadlock. “I hope no one has already decided ‘no’,” League leader Matteo Salvini shouted to supporters in northern Italy. “Either the government gets off the ground and starts working in the coming hours, or we might as well go back to elections,” Salvini said. Later 5-Star leader Luigi Di Maio said he expected there to be a decision on whether the president would back the government within 24 hours. 5-Star also defended Savona’s nomination. “It is a political choice … Blocking a ministerial choice is beyond (the president’s) role,” Alessandro Di Battista, a top 5-Star politician, said.

“Everybody’s practically euphoric and Trump is a good cheerleader. But, there is a lot of weakness behind the numbers..”

• We’re Engaging In Self-Deception And Unsupported Hopefulness (Ron Paul)

When you think about it, I was born in 1935, in the middle of the Depression. I remember my early life. I remember when I was 3 years old and 5 years old and the Depression lasted through World War II and the conditions were such as I remember very clearly, but it wasn’t a big deal for me even though we lived in close quarters and we didn’t have a lot of shoes and were just skimping by. So, we went through a Depression and World War II. Those were pretty tough times and since that time — since the war issue’s always been a big issue with me — I remember the tragedies of World War II. We had relatives in Germany, so it always caught my attention. Then we had the Korean War. I could remember my mother saying, “another war this soon?”

We just got over one, so she was negative on that and then we had the Vietnam War and I knew that I probably would be drafted and that was one of the reasons that helped me move toward medicine. So, those were pretty bad times. Think of the people that were dying over those first 30 or 40 years. Things weren’t great economically either. In America, we were not even allowed to own gold. Those were conditions that existed that changed for the better to some degree. Philosophically, I think, we’re still on the wrong track overall, although some things have improved. Once again, we’re able to own gold. The United States government and I pushed it along when I was in Congress to mint gold coins again and talk about monetary policy.

Philosophically, we are making progress in some areas, though, and I give a lot of credit to the institutions that do this, like the Mises Institute and FEE. And of course, I want to participate in changing foreign policy and we keep working on that through the Ron Paul Institute. But, on the downside of all this, I see we’re on a disastrous course even though the official economic indicators look great and wonderful. Everybody’s practically euphoric and Trump is a good cheerleader. But, there is a lot of weakness behind the numbers, and we’re engaging in self-deception and unsupported hopefulness that things will be all good, there will be no inflation or high unemployment, and there’ll be no major war. I think when I look at the seeds that have been sown, the future looks rather bleak in many ways, even compared to what it was like as we finished World War II and Vietnam.

“Breaking the rules is becoming the new rule..”

• Putin Warns “US Sanctions Hurt Trust In Dollar As Reserve Currency” (ZH)

Despite his absence from Vladimir Putin’s annual economic showcase – which included such US allied luminaries as Japanese Prime Minister Shinzo Abe, French President Emmanuel Macron, China’s Vice President Wang Qishan and IMF chief Christine Lagarde – the conversation kept coming back to President Trump. Led by an unusually outspoken Putin, Macron – who seemed more enamored with Putin than the rest, agreed with the Russian president’s concerns over the erosion of trust and the specter of a global crisis brought on by Washington’s disruptions. “The free market and fair competition are being squeezed by confiscations, restrictions, sanctions,” Putin said. “There are various terms but the meaning is the same – they’ve become an official part of the trade policy of certain countries.”

The “spiral” of U.S. penalties is targeting “an ever larger number of countries and companies,” undermining “the current world order,” he said. Macron replied: “I fully share your point of view.” Such warnings only confirm Mr Putin’s world view. Without mentioning the US, he complained that the multilateral economic world order was being “crushed” by a proliferation of exceptions, restrictions and sanctions. The “darkest cloud” on the economic horizon is the “determination of some to actually rock the system,” Lagarde said, prompting Wang, a new point-man for Chinese foreign policy, to agree. “Politicizing economic and trade issues, and brandishing economic sanctions, are bound to damage the trust of others,” he said.

[..] The global economy is facing a threat of a spiraling protectionist measures that can lead to a devastating crisis, Vladimir Putin warned. Nations must find a way to prevent this and establish rules on how the economy should work. The Russian president spoke out against the growing trend of using unilateral restrictions to achieve economic advantage, as he addressed guests of the St. Petersburg International Economic Forum (SPIEF) on Friday. “The system of multilateral cooperation, which took years to build, is no longer allowed to evolve. It is being broken in a very crude way. Breaking the rules is becoming the new rule,” he said. Putin sharply criticized the sanctions, saying they signal “not just erosion but the dismantling of a system of multilateral cooperation that took decades to build.”

Which will cause them to do the exact opposite.

• Erdogan Calls On Turks To Convert Dollar, Euros Into Lira (R.)

Turkish President Tayyip Erdogan called on Turks on Saturday to convert their dollar and euro savings into lira, as he sought to bolster the ailing currency which has lost some 20 percent of its value against the U.S. currency this year. “My brothers who have dollars or euros under their pillow. Go and convert your money into lira. We will thwart this game together,” Erdogan said at a rally in the eastern city of Erzurum ahead of parliamentary and presidential elections on June 24.

One moment they claim to have gotten it done, the next they start all over again..

• Spain’s Ciudadanos Party Open To Alternative Candidate To Oust PM Rajoy (R.)

Spain’s center-right Ciudadanos party said on Saturday it would be willing to back an unspecified neutral candidate to oust Prime Minister Mariano Rajoy over a far-reaching graft case engulfing members of his People’s Party (PP). Jose Manuel Villegas, secretary-general of Ciudadanos, told a news conference his party could work with the opposition Socialists to support an alternative candidate in a no-confidence vote to unseat its former ally Rajoy, who leads a minority government beset by numerous corruption scandals. Rajoy said on Friday he would fight the no-confidence vote and finish his four-year term, ruling out early elections.

Pro-business Ciudadanos (meaning Citizens in English) declined to support the no-confidence motion put forward by Socialist leader Pedro Sanchez earlier that day. But Villegas said on Saturday his party could back a “practical candidate” who was neither Sanchez nor Ciudadanos leader Albert Rivera. To succeed, the two parties would need to agree a joint candidate to replace Rajoy and on other questions such as calling a snap election. They would also need the backing of leftist party Podemos. A no-confidence vote requires the candidate to gather 176 or more votes in Spain’s lower house, a difficult task in the fragmented parliament where nationalists, among them two Catalan separatist parties, could be decisive if the larger parties cannot reach an agreement.

Speaking to Cope radio on Saturday, Socialist Secretary General Jose Luis Abalos said the party would not work with Catalan separatist parties and called on Ciudadanos to support Sanchez’s bid to replace Rajoy as PM in exchange for a promise to call snap elections soon after taking office. [..] The graft case, which relates to the use of a slush fund by the PP in the 1990s and early 2000s to illegally finance campaigns, has plagued Rajoy since he took office in 2011. He has always denied wrongdoing. 29 people related to the PP, including a former treasurer and other senior members, were convicted on Thursday of offences including falsifying accounts, influence-peddling and tax crimes. They were sentenced to a combined 351 years behind bars.

They just keep at it. Jail time is required.

• Daimler Threatened With Recall Of Over 600,000 Diesel Models (R.)

Daimler faces a recall order for more than 600,000 diesel-engine vehicles including C-Class and G-Class models because of suspected emissions manipulation, German magazine Der Spiegel reported on Friday. Germany’s KBA vehicle authority is probing concrete suspicions that the affected cars were fitted with illicit defeat devices designed to manipulate emissions levels, the magazine said, without citing sources. Daimler said on Friday it had not received a formal summons from KBA regarding its C-Class and G-Class models, a precursor to a recall, but declined to comment in detail on the Spiegel report.

The report comes a day after the KBA ordered Daimler to recall the Mercedes Vito van model fitted with 1.6 liter diesel Euro-6 engines because of engine control features to reduce exhaust emissions which KBA said breached regulations. Daimler has said it is appealing the KBA findings on the Vito and will go to court if necessary. Since rival Volkswagen admitted in 2015 to cheating U.S. emissions tests, German carmakers including VW, Daimler and BMW have faced a backlash against diesel technology in which they have invested billions of euros.

And that calls for a royal visit…

• British Arms Exports To Israel Reach Record Level (G.)

British defence contractors are selling record amounts of arms to Israel, new figures reveal, just days after it was confirmed that Prince William will represent the UK government on a visit to the country next month. Figures from the Campaign Against Arms Trade reveal that last year the UK issued £221m worth of arms licences to defence companies exporting to Israel. This made Israel the UK’s eighth largest market for UK arms companies, a huge increase on the previous year’s figure of £86m, itself a substantial rise on the £20m worth of arms licensed in 2015. In total, over the past five years, Israel has bought more than £350m worth of UK military hardware.

Licences issued to UK defence contractors exporting to Israel last year include those for targeting equipment, small arms ammunition, missiles, weapon sights and sniper rifles. In 2016 the UK issued licences for anti-armour ammunition, gun mountings, components for air-to-air missiles, targeting equipment, components for assault rifles, components for grenade-launchers and anti-riot shields. Human rights groups have questioned the wisdom of sending a senior royal to a country whose use of lethal force last month has been the subject of concern from the UK government.

“After the appallingly excessive response of the Israeli security forces at the Gaza border, tensions in the occupied Palestinian territories are likely to be close to boiling point when Prince William makes this historic visit,” said Kerry Moscogiuri, Amnesty International UK’s campaigns director.

Kim makes a call, and they meet less than 24 hours after. That is a big change all by itself.

• Koreas Discuss Non-Aggression Pledge, Peace Treaty Ahead Of Summit (R.)

North and South Korea are discussing a possible non-aggression pledge by the United States to the North and a start of peace treaty talks to address Pyongyang’s security concerns before a North Korea-U.S. summit, a senior South Korean official said on Sunday. South Korean President Moon Jae-in and North Korean leader Kim Jong Un held a surprise second meeting on Saturday after U.S. President Donald Trump called off his talks, set for June 12 in Singapore, before floating a reinstatement of the plan.

“For the success of the North Korea-U.S. summit, we’re exploring various ways of clearing North Korea’s security concerns at the working level,” the senior South Korean presidential official told reporters. “That includes an end to hostile relations, mutual non-aggression pledge, a launch of peace treaty talks to replace the current armistice,” the official said. The two Koreas are also in talks over a three-way declaration of the end to 1950-53 Korean War but there has not been any agreement yet over a tripartite summit, the official said.

Everyone’s deleting emails. The FBI is all over this. Assange was framed. If prosecutors are not independent, this is what you get. And she’s a lousy liar to boot.

• How Did The Swedish Matter End? (Justice4Assange)

The extradition warrant from Sweden was revoked on 19 May 2017, when the prosecutor also closed the entire underlying investigation. Having obtained Mr. Assange’s testimony, the prosecutor decided it would be disproportionate to proceed. The investigation had already been found to be baseless by Stockholm’s senior prosecutor, Eva Finne, who found that the conduct alleged by the police “disclosed no crime at all”. SMS messages from the alleged complainant made public in 2015 showed that she “did not want to accuse Assange of anything”, that she felt “railroaded by police and others around her”, and “police made up the charges”.

The UK’s role in the Swedish affair was exposed in emails obtained under Freedom of Information Act which revealed that Sweden moved to drop the investigation in 2013, but the UK Crown Prosecution Service persuaded Sweden to keep it alive. Emails show the UK advised Sweden not to interview Mr. Assange in the UK in 2011 and 2012. UK prosecutors admitted to deleting key emails concerning Assange and engaged in elaborate attempts to keep correspondence from the public record. The Swedish prosecutor admitted to deleting an email from an FBI agent about Assange which she received in 2017, and claimed it could no longer be recovered (Video in English and Swedish):

Debt Rattle May 22 2018

May 222018

May 22, 2018 Posted by Raúl Ilargi Meijer at 9:28 am Finance Tagged with: Baltics, China, cold war, debt, default, dying planet, Iran, Italy, NATO, Pompeo, Russia, Sweden, Trump 12 Responses »

Pablo Picasso Femme au Béret et à la Robe Quadrillée (Marie-Thérèse Walter) 1937

• ‘Who Are You?’ Iran Hits Back At US Demands (AlJ)

• Trumpism Folds into Netanyahu-ism, or ‘Neo-Americanism’ (Alastair Crooke)

• Swedes Told To Prepare For Conflict In Cold War-Style Booklet (R.)

• Baltic States Ask the US for Bigger Military Presence on Their Soil (SCF)

• Italy on Verge of Inducing a Fresh European Crisis (Cudmore)

• Goldman Sachs: The Fiscal Outlook For The US ‘Is Not Good’ (CNBC)

• The US is Shackled by Historic Debt (GT)

• US Consumer Debt Set To Reach $4 Trillion By The End Of 2018 (CNBC)

• Learning from America’s Forgotten Default (PS)

• You Think It’s All About Guns? (Jim Kunstler)

• Human Race Just 0.01% Of All Life But Eradicated Most Other Living Things (G.)

“The era of the US making decisions for the rest of the world is over”. That’s what Russia and China think, too.

• ‘Who Are You?’ Iran Hits Back At US Demands (AlJ)

Iranian President Hassan Rouhani has said the world would “not accept” US unilateralism just hours after Washington laid out a series of tough demands to be included in a potential new nuclear treaty with Iran. In remarks carried by Iran’s ILNA news agency on Monday, Rouhani said the era of the United States making decisions for the rest of the world was “over”. “Countries are independent … We will continue our path with the support of our nation,” Rouhani said. “Who are you to decide for Iran and the world?”

[..] In announcing the new US strategy towards Iran, Secretary of State Mike Pompeo on Monday warned that Washington “will apply unprecedented financial pressure on the Iranian regime” unless it complied with a list of 12 conditions, which must be met before any new deal can be reached. The demands include giving the International Atomic Energy Agency (IAEA) a full account of the country’s former nuclear military programme, withdrawing its forces from Syria and ending what Pompeo described as Iran’s “threatening behaviour” towards its neighbours.

Also responding to Pompeo, Iranian Foreign Minister Mohammed Javad Zarif accused the US of a “regression to old habits”, saying Washington’s diplomatic efforts were a “sham”. “It repeats the same wrong choices and will thus reap the same ill rewards. Iran, meanwhile, is working with partners for post-US JCPOA solutions,” Zarif said in a tweet on Monday.

Regime change always leads to chaos.

• Trumpism Folds into Netanyahu-ism, or ‘Neo-Americanism’ (Alastair Crooke)

The 8 May US Presidential declaration (on exiting JCPOA) requires of us fundamentally to revise our understanding of Trumpism. At the outset to his term of office, Trumpism was widely understood to be based on three key pillars: That the costs incurred by the US in upholding the full panoply of Empire (i.e. policing the American, rules-based, global order) were just too onerous and unfair (especially in the provision of the defence umbrella) – and that others must be coerced into sharing its cost. Secondly, that American jobs had been, as it were, stolen from America, and would have to be recovered through forced changes to the terms of trade. And thirdly, that these changes would be effected, through applying the tactics of the Art of the Deal.

That seemed, at least, to be clear, (if not necessarily a wholly feasible blueprint). But mostly we thought that the Art of the Deal was about threatening, blustering, and hiking leverage on ‘whatever the counterparty’ – raising tensions to explosive levels – before, at the very eleventh hour, at the very climax of crisis, offering ‘the deal’. And that was the point (then): Yes, Trump would toss verbal grenades intended to upend conventional expectations, take actions to force an issue – but the objective (as generally understood), was to get a deal: One that would tilt towards America’s mercantile and political interests, but a deal, nonetheless.

Maybe we misread Trump’s build-up of America’s already super-sized military. It seemed that it was about potential leverage: something to be offered (in terms of an umbrella to compliant states), or withdrawn from those who would not put their hand in their pocket deeply enough. But everything changed with Trump’s 8 May statement. It was not just an American ‘exit’ that was mooted, it was full court financial war that was declared against Iran (with ‘terms of surrender’ couched in terms of regime change, and total submission to the US). But this is no longer about how to reach a ‘fairer’, better deal for the US; how to make it more money. Rather the financial system was to be leveraged to destroy another state’s currency and economy. The US military are being super-sized further, to be used: to be able to rain down ‘fire and fury’ on non-compliant states.

Sweden is no longer an independent country.

• Swedes Told To Prepare For Conflict In Cold War-Style Booklet (R.)

Sweden will send out instructions to its citizens next week on how to cope with an outbreak of war, as the country faces an assertive Russia across the Baltic Sea. The 20-page pamphlet titled “If Crisis or War Comes” gives advice on getting clean water, spotting propaganda and finding a bomb shelter, in the first public awareness campaign of its kind since the days of the Cold War. It also tells Swedes they have a duty to act if their country is threatened. “If Sweden is attacked by another country, we will never give up,” the booklet says. “All information to the effect that resistance is to cease is false.” The leaflet’s publisher, the Swedish Civil Contingencies Agency, did not spell out where an attack might come from.

“Even if Sweden is safer than most countries, threats do exist,” agency head Dan Eliasson told journalists. But Sweden and other countries in the region have been on high alert since Russia’s annexation of Ukraine’s Crimea peninsula in March, 2014. They have also accused Russia of repeated violations of their airspace – assertions that Moscow has either dismissed or not responded to. The Kremlin has in the past insisted that it does not interfere in the domestic affairs of other countries and has accused Western powers of stoking “Russophobia”. Stockholm has repeatedly cited Russian aggression as the reason for a series of security measures including the reintroduction of conscription this year and the stationing of troops on the Baltic island of Gotland.

The Swedish government decided to start increasing military spending from 2016, reversing years of declines. The booklet on its way to Sweden’s 4.8 million households warns that supplies of food, medicine and gasoline could run short during a crisis. It also lists oat milk, tins of Bolognese sauce and salmon balls as examples of food that people should store in case of an emergency along with tortillas and sardines. The publication describes what an air raid warning sounds like in the first such publication handed out since 1961. Sweden has not been at war with anyone for more than 200 years, not since its war with Norway in 1814. It was officially neutral during World War Two.

NATO.

• Baltic States Ask the US for Bigger Military Presence on Their Soil (SCF)

The foreign ministers (FMs) of the Baltic states have wound up their May 16-18 visit to Washington. They asked National Security Adviser John Bolton to reinforce the NATO battalions that have been deployed to their countries with air and naval units. They also want their air-defense capability enhanced. Lithuanian FM Linas Linkevicius emphasized that it’s not just the numbers that are important, but also training exercises, visits, the distribution of equipment, and the establishment of new military facilities. [..] NATO is ratcheting up tensions by holding an increasing number of large-scale exercises right on Russia’s borders. This greatly elevates the risk of inadvertent escalation. For instance, three major exercises are scheduled to be held in the Baltic region this summer.

On June 3-15, the Saber Strike exercise organized by the US Army Europe will encompass the three Baltic states and Poland, involving over 18,000 troops from 19 countries. About 3,000 American soldiers and over 1,500 combat vehicles will travel from Germany to Latvia and Lithuania. Public roads will be used to move heavy equipment. On June 12-13, the soldiers of the US 2nd Cavalry Regiment will construct a bridge in order to cross the Neman River in Lithuania (in the Kaunas district). Their main mission is to ensure that the forces are ready to rapidly advance, not to merely defend their positions. Eight thousand American airborne troops will land in Latvia during the Swift Response exercise, in order to train alongside Lithuanian and Polish troops.

Namejs 2018 will be held from August 20 to September 2 and will involve over 9,200 Latvian forces, including the military, police, border guards, volunteer reservists, and other state institutions. They will be joined by 650 troops from the US, Lithuania, Estonia, Poland, and the Czech Republic. All these large-scale intensive training activities will take place in the background of the planning for Trident Juncture 2018, the largest NATO exercise involving about 40,000 troops, 70 ships, and about 130 aircraft from over 30 nations, which will be deployed to central and northern Norway in October for the live portion of the event. A command post phase will be conducted in Italy. Norway does not have a shoreline in the Baltic Sea but it is a member of the Council of the Baltic Sea States.

“..while the policy platform doesn’t explicitly state an intention to leave the euro, the new government plan, if instituted as is, makes that the inevitable end-game…”

• Italy on Verge of Inducing a Fresh European Crisis (Cudmore)

It may be time to move on from rising Treasury yields and trade wars. An Italian-led euro crisis is on the verge of becoming the dominant theme for markets. It turns out that the euro break-up trade isn’t dead — it’s just been hibernating and is likely to return with a vengeance in the months ahead if the populists get their way. Their proposed economic policies make no attempt at debt sustainability. Italy already has the largest absolute debt pile in the EU and the second-largest, after Greece, as a percentage of GDP, at 132%. The coalition’s plan sends the signal that it has no intention of ever paying back its debt. Things could spiral quickly because its fiscal promises will send BTP yields much higher, adding to refinancing costs and making the budgetary situation worse.

That creates a dilemma for the EU. Either fund Italy’s largesse at the expense of every other member country, or kick Italy out of the euro. The first option isn’t sustainable. This isn’t a relatively containable problem like Greece. Italy’s economy is almost ten times the size of Greece’s and the third-largest in the euro zone. The PIIGS — Portugal, Italy, Ireland, Greece and Spain — were only ever a problem as a group because of concerns that the contagion would infect Italy. And this isn’t just a sovereign debt problem. Italy’s banks have by far the most non-performing loans in the euro zone, more than a quarter of the total. A section of the plan makes it harder for banks to repossess collateral, further deteriorating the value of those loans.

So while the policy platform doesn’t explicitly state an intention to leave the euro, the new government plan, if instituted as is, makes that the inevitable end-game. Fortunately, the Italian constitution forbids an excessive budget deficit, so may act as a limiting force. However, the concern is whether they can circumvent those restrictions by selecting favorable economic projections. The proposal already seems to be stealthily planning for euro departure with a plan to issue short-term debt contracts to pay back arrears. As my colleague Ferdinando Giugliano suggested on Friday, that’s the first step toward a parallel currency. So Italy’s prospective rulers seem to be fully aware of the end-game and are already planning for it. Investors will soon need to catch up.

“..debt could equal GDP within a decade..”

• Goldman Sachs: The Fiscal Outlook For The US ‘Is Not Good’ (CNBC)

The fiscal outlook for the United States “is not good,” according to Goldman Sachs, and could pose a threat to the country’s economic security during the next recession. According to forecasts from the bank’s chief economist, the federal deficit will increase from $825 billion (or 4.1% of GDP) to $1.25 trillion (5.5% of GDP) by 2021. And by 2028, the bank expects the number to balloon to $2.05 trillion (7% of GDP). “An expanding deficit and debt level is likely to put upward pressure on interest rates, expanding the deficit further,” Jan Hatzius — Goldman’s chief economist — wrote Sunday. “While we do not believe that the U.S. faces a risk to its ability to borrow or repay, the rising debt level could nevertheless have three consequences long before debt sustainability becomes a major obstacle.”

Legislators passed a package of corporate and individual tax cuts in December, a two-year budget deal in February and a massive spending bill in March that boosted government expenditures on both domestic and military programs. In light of the big spending and easier tax burden, the Congressional Budget Office – Capitol Hill’s nonpartisan financial scorekeeper – in April projected that debt could equal GDP within a decade if Congress extends the tax cuts, a level not seen since World War II. Economic growth should jump above 3% in 2018 thanks to the stimuli, the CBO said, but the acceleration will likely prove brief, and debt held by the public will soar to $28.7 trillion by the end of fiscal 2028.

That could create a precarious situation for Congress if the economy faces an economic downturn in the near term, Hatzius wrote, hampering legislators’ ability provide additional fiscal stimulus. “Lawmakers might hesitate to approve fiscal stimulus in the next downturn in light of the already substantial budget deficit,” the economist said. “While we would expect some additional loosening of fiscal policy during the next downturn, there is a good chance in our view that it would be less aggressive than it was in the last few recessions.”

“Is the Federal Reserve playing politics?”

• The US is Shackled by Historic Debt (GT)

Do you feel as if you’re drowning in debt? It’s worse than you think. The U.S. government reached a new milestone when our country’s debt topped $21 trillion for the first time. The national debt grows by an average of $17,000 every second – more than some people earn in an entire year. That’s only an average, and During the past eight months, the national debt grew by $52,000 per second. And the trend toward bigger and higher spending is only getting worse. The ratio of national debt to GDP is at 105%, larger than the economy as a whole. In 1981, the national debt comprised a mere 31% of GDP. We are not moving in the right direction. The Treasury Department has plans to borrow $1 trillion this year, an 84% jump from last year.

When individuals borrow, they can use the money wisely to increase their wealth. That’s what happens when people make good investments. What does the government do with all this money? While some of it may be put to good use, the National Science Foundation’s spending $856,000 on having mountain lions run on treadmills can’t be termed prudent spending. Nor can the $2 billion spent on former President Obama’s healthcare website. In 2017, Brooklyn, NY spent $2 million on a 400 square feet restroom in a public park. Flushing money down the toilet?

Why is the government raising interest rates at a time consumer prices and wages are rising only marginally? During Obama’s administration, prices rose 14.6%, and the Federal Reserve kept interest rates low. Inflation is up by a mere 2.2% since Trump took office, and interests rates keep rising. Is the Federal Reserve playing politics? While the rate of inflation was somewhat higher during the Obama years, the Federal Reserve didn’t get aggressive in handling the problem until Trump came to office. If it’s politics, what game is being played?

“Americans owe more than 26% of their annual income to this debt.”

• US Consumer Debt Set To Reach $4 Trillion By The End Of 2018 (CNBC)

Americans are in a borrowing mood, and their total tab for consumer debt could reach a record $4 trillion by the end of 2018. That’s according to LendingTree, a loan comparison website, which analyzed data from the Federal Reserve on nonmortgage debts including credit cards, and auto, personal and student loans. Americans owe more than 26% of their annual income to this debt. That’s up from 22% in 2010. It’s also higher than debt levels during the mid-2000s when credit availability soared.

Debts on auto loans and credit cards are climbing by more than 7% annually, while housing debt is rising at a little more than 2%. Consumer credit has been rising by 5% to 6% for about two years. LendingTree projects total consumer debt will top $4 trillion by the end of 2018.

That kind of growth is not surprising, according to LendingTree chief economist Tendayi Kapfidze, and is in keeping with the growth of consumer debt that has been happening since 2012. At these levels, consumers are spending about 10% of their income paying these debts each month, Kapfidze said. From 2000 to 2008, that averaged about 12% to 13%, he said. Still, credit card delinquency rates, which are at 2.4%, are low.

We’ve seen this movie before.

• Learning from America’s Forgotten Default (PS)

One of the most pervasive myths about the United States is that the federal government has never defaulted on its debts. Every time the debt ceiling is debated in Congress, politicians and journalists dust off a common trope: the US doesn’t stiff its creditors. There’s just one problem: it’s not true. There was a time, decades ago, when the US behaved more like a “banana republic” than an advanced economy, restructuring debts unilaterally and retroactively. And, while few people remember this critical period in economic history, it holds valuable lessons for leaders today.

In April 1933, in an effort to help the US escape the Great Depression, President Franklin Roosevelt announced plans to take the US off the gold standard and devalue the dollar. But this would not be as easy as FDR calculated. Most debt contracts at the time included a “gold clause,” which stated that the debtor must pay in “gold coin” or “gold equivalent.” These clauses were introduced during the Civil War as a way to protect investors against a possible inflationary surge. For FDR, however, the gold clause was an obstacle to devaluation. If the currency were devalued without addressing the contractual issue, the dollar value of debts would automatically increase to offset the weaker exchange rate, resulting in massive bankruptcies and huge increases in public debt.

To solve this problem, Congress passed a joint resolution on June 5, 1933, annulling all gold clauses in past and future contracts. The door was opened for devaluation – and for a political fight. Republicans were dismayed that the country’s reputation was being put at risk, while the Roosevelt administration argued that the resolution didn’t amount to “a repudiation of contracts.” On January 30, 1934, the dollar was officially devalued. The price of gold went from $20.67 an ounce – a price in effect since 1834 – to $35 an ounce. Not surprisingly, those holding securities protected by the gold clause claimed that the abrogation was unconstitutional. Lawsuits were filed, and four of them eventually reached the Supreme Court; in January 1935, justices heard two cases that referred to private debts, and two concerning government obligations.

The underlying question in each case was essentially the same: did Congress have the authority to alter contracts retroactively? On February 18, 1935, the Supreme Court announced its decisions. In each case, justices ruled 5-4 in favor of the government – and against investors seeking compensation. According to the majority opinion, the Roosevelt administration could invoke “necessity” as a justification for annulling contracts if it would help free the economy from the Great Depression.

“..a bewildering clown culture wrapped in a Potemkin economy..”

• You Think It’s All About Guns? (Jim Kunstler)

Is it possible that we Americans only pretend not to notice the conditions that produce an epidemic of school shootings, or is the public just too dumbed-down to connect the dots? Look at the schools themselves. We called them “facilities” because they hardly qualify as buildings: sprawling, one-story, tilt-up, flat-roofed boxes isolated among the parking lagoons out on the six-lane highway strip, disconnected from anything civic, isolated archipelagoes where inchoate teenage emotion festers and rules while the few adults on the scene are regarded as impotent clowns representing a bewildering clown culture wrapped in a Potemkin economy that has nothing to offer young people except a lifetime of debt and “bullshit jobs” — to borrow a phrase from David Graeber.

The world of teens has been exquisitely engineered to steal every opportunity for colonizing the chemical reward centers of their brains to provoke endorphin hits, especially the cell-phone realm of social media, which is almost entirely about status competition, much of which revolves around the wild hormonal promptings of teen sexual development — at the same time they are bombarded with commercial messages designed to prey on their fantasies, longings, and perceived inadequacies. All of this produces immersive and incessant melodrama along with untold grievance, envy, frustration, confusion, and rage. And, of course, where the cell-phone universe leaves off, the world of video games begins, so that boys (especially) get to act-out in “play” the extermination of their competitors and foes.

The planet is dying.

• Human Race Just 0.01% Of All Life But Eradicated Most Other Living Things (G.)

Humankind is revealed as simultaneously insignificant and utterly dominant in the grand scheme of life on Earth by a groundbreaking new assessment of all life on the planet. The world’s 7.6 billion people represent just 0.01% of all living things, according to the study. Yet since the dawn of civilisation, humanity has caused the loss of 83% of all wild mammals and half of plants, while livestock kept by humans abounds. The new work is the first comprehensive estimate of the weight of every class of living creature and overturns some long-held assumptions. Bacteria are indeed a major life form – 13% of everything – but plants overshadow everything, representing 82% of all living matter. All other creatures, from insects to fungi, to fish and animals, make up just 5% of the world’s biomass.

Another surprise is that the teeming life revealed in the oceans by the recent BBC television series Blue Planet II turns out to represent just 1% of all biomass. The vast majority of life is land-based and a large chunk – an eighth – is bacteria buried deep below the surface. “I was shocked to find there wasn’t already a comprehensive, holistic estimate of all the different components of biomass,” said Prof Ron Milo, at the Weizmann Institute of Science in Israel, who led the work, published in the Proceedings of the National Academy of Sciences. “I would hope this gives people a perspective on the very dominant role that humanity now plays on Earth,” he said, adding that he now chooses to eat less meat due to the huge environmental impact of livestock.

[..] The transformation of the planet by human activity has led scientists to the brink of declaring a new geological era – the Anthropocene. One suggested marker for this change are the bones of the domestic chicken, now ubiquitous across the globe. The new work reveals that farmed poultry today makes up 70% of all birds on the planet, with just 30% being wild. The picture is even more stark for mammals – 60% of all mammals on Earth are livestock, mostly cattle and pigs, 36% are human and just 4% are wild animals.

I Am Julian Assange

May 162018

May 16, 2018 Posted by Raúl Ilargi Meijer at 1:09 pm Finance Tagged with: Chelsea Manning, DNC, Edward Snowden, Guardian, Julian Assange, Kim Dotcom, Moreno, Podesta, Putin, Russia, Sweden, Wikileaks 10 Responses »

Carl Spitzweg The raven 1845

To say that we are all Julian Assange is not just a slogan.

Debt Rattle December 12 2017

Dec 122017

December 12, 2017 Posted by Raúl Ilargi Meijer at 10:28 am Finance Tagged with: Apple, bitcoin, crypto, Exxon, Greece, moon, NASA, Obamacare, petrodollar, quota, rate hike, refugees, Sweden, Trump 3 Responses »

Wassily Kandinsky Clear connection 1925

• How Fed Rate Hikes Impact US Debt Slaves (WS)

• Why Obamacare Is Locked In An Inescapable Death Spiral (ZH)

• Sitting Closer To The Exit (Roberts)

• Oil Producers Turning to Crypto to Solve Sanctions Problems (Luongo)

• Peak Bitcoin Media Mania Yet? (WS)

• Bitcoin – Millennials’ “Fake Gold” (Katsenelson)

• Next Bank of Japan Governor Faces a ‘Job From Hell’ (BBG)

• Sweden: More Signs The World’s Biggest Housing Bubble Is Cracking (ZH)

• Trump Tells NASA to Send Americans to the Moon (AFP)

• Exxon To Provide Details On Climate Change Impact To Its Business (R.)

• Apple Aims To Block Climate, Rights Using SEC Guidance (R.)

• EU Could ‘Scrap Refugee Quota Scheme’ (G.)

• Lesvos Authorities Block Ship With Container Homes For Refugees (AP)

• Germany Rejects Additional Winter Aid For Refugees On Greek Islands (KTG)

“If the average interest rate on this debt is 20%, credit-cart interest payments alone add $233 a month to their household expenditures.”

• How Fed Rate Hikes Impact US Debt Slaves (WS)

Revolving credit outstanding of $1 trillion, spread over 117.72 million households, would amount to $8,300 per household. But many households do not carry interest-bearing credit card debt; they pay their cards off in full every month. Finance charges are concentrated on households that use this form of debt to finance their spending and that cannot pay off their balances every month. Many of these households are already strung out and are among the least able to afford higher interest payments. Consumer credit bureau TransUnion shed some light on this in its Q3 2017 Industry Insights Report, according to which 195.9 million consumers had a revolving credit balance at the end of Q3, with total account balances of $1.35 trillion. This equals $6,892 per person with revolving credit balances.

If there are two people with balances in a household, this would amount to nearly $14,000 of this high-cost debt. If the average interest rate on this debt is 20%, credit-cart interest payments alone add $233 a month to their household expenditures. What is next for these folks? For now, the Fed has penciled in, and economists expect, three hikes next year. But recent developments – particularly the expected tax cuts and what the Fed calls “elevated asset prices” – suggest that the Fed might “surprise” the markets with its hawkishness in 2018. The Fed is currently pegging the “neutral” rate – the rate at which the federal funds rate is neither stimulating nor slowing the economy – at somewhere near 2.5% to 2.75%, so about five or six more rates hikes from today’s target range.

Interest rates on credit cards would follow in lockstep. These rate hikes to “neutral” would extract another $8 billion or so a year, on top of the additional $7.5 billion from the prior rate hikes. But that’s not all. Credit card balances continue to rise as our brave consumers are trying to prop up US consumer spending and thus the global economy by borrowing more and more. Thus, rising credit card balances combined with rising interest rates on those balances conspire to produce sharply higher interest costs. Since consumers with high-interest credit-card balances already don’t have enough money to pay off their costly debt, these additional interest payments will further curtail their efforts at making principal payments and thus inflate their credit card balances further.

And if/when you manage to pay off your credit cards, there’s the next challenge…

• Why Obamacare Is Locked In An Inescapable Death Spiral (ZH)

Ever since it was signed into law in 2010, defenders of Obamacare have dismissed staggering surges in annual premiums by highlighting only the rates paid by those fortunate enough to receive subsidies. In fact, last year we wrote about Marjorie Connolly’s, from Obama’s Department of Health and Human Services, response to the Tennessee insurance commissioner’s fear that the exchanges in his state were “very near collapse” after a staggering 59% premium surge: “Consumers in Tennessee will continue to have affordable coverage options in 2017. Last year, the average monthly premium for people with Marketplace coverage getting tax credits increased just $2, from $102 to $104 per month, despite headlines suggesting double digit increases,” said Marjorie Connolly, HHS spokeswoman, in a statement.

We’re unsure whether Connolly’s comment was just propaganda intended to defend a failing piece of legislation or an intentional, blatant admission that the Department of Health and Human Services just doesn’t care about the majority of Americans, the so-called 1%’ers, who are facing debilitating increases in healthcare costs simply because they manage to live above the poverty line. We’ll let you decide on that one. Be that as it may, as the Miami Herald points out this morning, roughly half of all Obamacare participants, nearly 9 million people in aggregate, don’t qualify for the subsidies that Connolly praised and have been forced to absorb debilitating premium increases for the past several years.

[..] As open enrollment for Affordable Care Act coverage nears the deadline of Dec. 15, and Florida once again leads all states using the federal exchange at healthcare.gov, Heidi and Richard Reiter sit at the kitchen table at their Davie home and struggle to piece together the family’s health insurance for 2018. The Reiters buy their own coverage, but they earn too much to qualify for financial aid to lower their monthly premiums. For 2017, they bought a plan off the exchange and paid $26,000 in premiums for family coverage, including their two sons, ages 21 and 17. Keeping the same coverage for 2018 would have cost the Reiters $40,000 in premiums, a 54% increase. So they selected a lower-priced plan that covers less but costs $29,000 in premiums. “That’s more than a lot of people’s mortgage payments,” Richard Reiter said. “For me, it’s a crisis situation.”

The odds of a correction (reversion).

• Sitting Closer To The Exit (Roberts)

While valuation risk is certainly concerning, it is the extreme deviations of other measures to which attention should be paid. When long-term indicators have previously been this overbought, further gains in the market have been hard to achieve. However, the problem comes, as identified by the vertical lines, is understanding when these indicators reverse course. The subsequent “reversions” have not been forgiving. The chart below brings this idea of reversion into a bit clearer focus. I have overlaid the real, inflation-adjusted, S&P 500 index over the cyclically-adjusted P/E ratio. Historically, we find that when both valuations and prices have extended well beyond their intrinsic long-term trendlines, subsequent reversions beyond those trend lines have ensued. Every. Single. Time.

Importantly, these reversions have wiped out a decade, or more, in investor gains. As noted, if the next correction began in 2018, and ONLY reverts back to the long-term trendline, which historically has never been the case, investors would reset portfolios back to levels not seen since 1997. Two decades of gains lost. With everyone crowded into the “ETF Theater,” the “exit” problem should be of serious concern. “Over the next several weeks, or even months, the markets can certainly extend the current deviations from long-term mean even further. But that is the nature of every bull market peak, and bubble, throughout history as the seeming impervious advance lures the last of the stock market ‘holdouts’ back into the markets.”

“..the petrodollar is not the source of the U.S. dollar’s power around the world, but rather the U.S.’s main fulcrum by which to keep competition out of the markets..”

• Oil Producers Turning to Crypto to Solve Sanctions Problems (Luongo)

Last week, Venezuela announced it would develop a national cryptocurrency backed by its oil reserves, the Petro. Now there is a report that Russia is considering the same thing. Iran will likely follow suit. As of right now this is just a rumor, but it makes some sense. So, let’s treat this rumor as fact for the sake of argument and see where it leads us. The U.S. continues to sanction and threaten all of these countries for daring to challenge the global status quo. There is no denying this. [..] at the heart of this is the petrodollar. Contrary to what many believe, the petrodollar is not the source of the U.S. dollar’s power around the world, but rather the U.S.’s main fulcrum by which to keep competition out of the markets. It is a secondary effect of the dollar’s dominance in global finance today. But it is not the main driver.

Financial market are simply too big relative to the size any one commodity market for it to be the fulcrum on which everything hinges. It was that way in the past. But it is not now. That said, however, getting out from underneath the petrodollar gives a country independence to begin building financial architecture that can be levered up over time to threaten the institutional control it helped create. U.S. foreign policy defends the petrodollar along with other systems in place – the IMF, the World Bank, SWIFT, LIBOR and the central banks themselves – to maintain its control. The main oil producers, however, can escape this control simply by selling their oil in currencies other than the U.S. dollar. That’s not enough to dethrone the dollar, but, like I just said, it is where the process has to start. Therefore, any and all means must be employed to defend the dollar empire by keeping everyone inside that system.

[..] The problem with backing any currency with physical reserves is the fluctuations in value of those reserves. It’s not like oil is a low-beta commodity or anything. But, like everything else in the commodity space, price movements are supposed to be smoothed out by the futures markets helping to coordinate price with time. But the bigger problem is the estimation of those reserves the coin’s value is based on. First, how do you accurately quantify them? Can holders of Petro or Neft-coin trust the Russian or Venezuelan governments to provide accurate assessments of their reserves? Second, there is the ability of the country to pull it out of the ground and sell it into the market at anything close to a fair price. This isn’t a concern for Russia, the world’s 2nd largest supplier of oil and very stable government but Venezuela is the opposite. And, its “Petro” would probably trade at quite a discount early on to the dollar price of oil.

I doubt it. If only because as Taleb said, you can’t actually short BTC, and they should have introduced options along with futures. They didn’t. This story is far from over.

• Peak Bitcoin Media Mania Yet? (WS)

Bitcoin mania is now everywhere. It’s hard to have a conversation with regular people without sooner or later getting into bitcoin. Some of this is just for fun. Manias breed amazement. Miracles are wonderful to behold. But some of it is pretty serious. “We’ve seen mortgages being taken out to buy bitcoin,” said Joseph Borg, president of the North American Securities Administrators Association and director of the Alabama Securities Commission, on CNBC’s Power Lunch today. “People do credit cards, equity lines,” he said. Bitcoin futures trading started Sunday night on the Cboe futures exchange. Next week, the CME will offer trading in bitcoin futures.

This way, speculators can bet with unlimited derivatives on an unregulated digital entity that is backed by nothing and whose cash trading takes place in unregulated opaque and easily hacked exchanges around the world. But Borg doesn’t think that futures contracts legitimize bitcoin. Innovation and technology always outrun regulation, he said. “You’re on this mania curve. At some point in time there’s got to be a leveling off,” he said. “Cryptocurrency is here to stay. Blockchain is here to stay. Whether it is bitcoin or not, I don’t know.” And so the media mania over bitcoin has become deafening.

But there’s definitely a media bubble, even if there’s no BTC one yet.

• Bitcoin – Millennials’ “Fake Gold” (Katsenelson)

If you cannot value an asset you cannot be rational. With Bitcoin at $11,000 today, it is crystal clear to me, with the benefit of hindsight, that I should have bought Bitcoin at 28 cents. But you only get hindsight in hindsight. Let’s mentally (only mentally) buy Bitcoin today at $11,000. If it goes up 5% a day like a clock and gets to $110,000 – you don’t need rationality. Just buy and gloat. But what do you do if the price goes down to $8,000? You’ll probably say, “No big deal, I believe in cryptocurrencies.” What if it then goes to $5,500? Half of your hard-earned money is gone. Do you buy more? Trust me, at that point in time the celebratory articles you are reading today will have vanished. The awesome stories of a plumber becoming an overnight millionaire with the help of Bitcoin will not be gracing the social media.

The moral support – which is really peer pressure – that drives you to own Bitcoin will be gone, too. Then you’ll be reading stories about other suckers like you who bought it at what – in hindsight – turned out to be the all-time high and who got sucked into the potential for future riches. And then Bitcoin will tumble to $2,000 and then to $100. Since you have no idea what this crypto thing is worth, there is no center of gravity to guide you or anyone else to make rational decisions. With Coke or another real business that generates actual cash flows, we can at least have an intelligent conversation about what the company is worth. We can’t have one with Bitcoin. The X times Y = Z math will be reapplied by Wall Street as it moves on to something else.

People who are buying Bitcoin today are doing it for one simple reason: FOMO – fear of missing out. Yes, this behavior is so predominant in our society that we even have an acronym for it. Bitcoin is priced today at $11,000 because the fool who bought it for $11,000 is hoping that there is another, greater fool who will pay $12,000 for it tomorrow. This game of greater fools is not new. The Dutch played it with tulips in the 1600s– it did not end well. Americans took the game to a new level with dotcoms in the late 1990s – that round ended in tears, too. And now millennials and millennial-wannabes are playing it with Bitcoin and few hundred other competing cryptocurrencies.

The counterargument to everything I have said so far is that those dollar bills you have in your wallet or that digitally reside in your bank account are as fictional as Bitcoin. True. Currencies, like most things in our lives, are stories that we all have (mostly) unconsciously bought into. Of course, society and, even more importantly, governments have agreed that these fiat currencies are going to be the means of exchange. Also, taxation by the government turns the dollar bill “story” into a very physical reality: If you don’t pay taxes in dollars, you go to jail. (The US government will not accept Bitcoins, gold, chunks of granite, or even British pounds).

Compared to Japan, all other central banks are wimps and pussies.

• Next Bank of Japan Governor Faces a ‘Job From Hell’ (BBG)

The next governor of the Bank of Japan faces a “job from hell.” That’s according to Takeshi Fujimaki, a banker-turned-lawmaker who sees any attempt by Japan’s central bank to exit its program of unprecedented easing as triggering a Greek-like debt crisis. “This is the calm before the battle,” Fujimaki, an opposition Japan Innovation Party politician who once served briefly as an adviser to George Soros, said in an interview at his Tokyo office on Monday. BOJ Governor Haruhiko Kuroda’s five-year term runs out in April, with recent praise from Prime Minister Shinzo Abe strengthening expectations that the 73-year-old will stay on for a second stint. His massive easing program has weakened the yen, bolstered exports and helped stock prices to more than double. But inflation is still short of the government’s 2% target, and critics say the BOJ’s swollen balance sheet is unsustainable.

Fujimaki, 67, said he agreed with the view expressed by Kuroda’s predecessor Masaaki Shirakawa in his 2013 resignation press conference, when he said no judgment could be made on non-traditional monetary easing in Japan and in other developed economies until exits had been completed. Last week, Kuroda said the BOJ can take the appropriate steps to exit when the time comes, but talking specifics of an exit now would end up confusing markets. Even so, Fujimaki said Kuroda should stay on to oversee an exit from the policies he introduced. “Because Mr. Kuroda has taken it this far, he should carry on until the end,” Fujimaki said. “Just taking the good part and running away would be unfair.”

“(SEB) says 63% of households in Stockholm now expect prices to decline in the coming year while only 21% expect an increase; that’s “a dramatic shift compared with only two months’ ago..”

• Sweden: More Signs The World’s Biggest Housing Bubble Is Cracking (ZH)

We like to highlight that although Sweden’s property bubble is not the longest running (that accolade goes to Australia at 55 years), it is probably the world’s biggest, even though it gets relatively little coverage in the mainstream financial media. A month ago, we noted that SEB’s housing price indicator suffered its second biggest ever drop, falling by 39 points, only lagging a steeper fall from ten years earlier. This month the indicator, which shows the balance between households forecasting rising or falling prices, fell into negative territory, dropping to -5 from +11 in November. Households expecting prices to rise has almost halved from 66% In October, to 43% in November and 36% this month. The percentage of households expecting prices to fall has risen from 16% in October, to 32% in November and 41% this month.

After the housing price indicator was published, the Swedish krona fell as much as 0.7% versus the Euro to 10.0118, its lowest level since 5 December 2017. Not surprisingly, the focal point of Sweden’s property boom has been Stockholm, where the decline in the housing price indicator in December 2017 was precipitous. According to Bloomberg. “SEB says sharp drop in home-price expectations in Stockholm was main culprit behind the decline in its Swedish home-price indicator, with the indicator falling to -42 in the Swedish capital in Dec. from -6 in Nov. That means the Stockholm indicator is now close to the record low of -47 that was reached in Dec. 2008, at the height of the global financial crisis. (SEB) says 63% of households in Stockholm now expect prices to decline in the coming year while only 21% expect an increase; that’s “a dramatic shift compared with only two months’ ago..”

Given the disproportionate rate of decline in December in Stockholm, SEB was minded to ask whether special factors are at work “rather than general drivers such as fears over rising interest rates or a weak business cycle”. Indeed, aside from south-eastern Sweden, the outlook in all other regions remains positive. With regard to Stockholm, the bank notes that a large increase in new supply of expensive residential property and what it terms “very negative media reporting” have had an impact. Whether that’s a fair assessment, or whether it’s realist reporting of a monumental asset bubble is a moot point. What is indisputable is that the number of Swedish homes for sale has surged in November 2017 compared with the same month last year.

After talking to Musk and Bezos. Who target billions in profits from the bridges to nowhere on steroids.

• Trump Tells NASA to Send Americans to the Moon (AFP)

US President Donald Trump directed NASA on Monday to send Americans to the Moon for the first time since 1972, in order to prepare for future trips to Mars. “This time we will not only plant our flag and leave our footprint,” Trump said at a White House ceremony as he signed the new space policy directive. “We will establish a foundation for an eventual mission to Mars and perhaps someday to many worlds beyond.” The directive calls on NASA to ramp up its efforts to send people to deep space, a policy that unites politicians on both sides of the aisle in the United States. However, it steered clear of the most divisive and thorny issues in space exploration: budgets and timelines.

Space policy experts agree that any attempt to send people to Mars, which lies an average of 140 million miles (225 million kilometers) from Earth, would require immense technical prowess and a massive wallet. The last time US astronauts visited the Moon was during the Apollo missions of the 1960s and 1970s. Trump, who signed the directive in the presence of Harrison Schmitt, one of the last Americans to walk on the Moon 45 years ago, said “today, we pledge that he will not be the last.” The better known Buzz Aldrin, the second man on the Moon after Armstrong and a fervent advocate of future space missions, was also present at the ceremony but not mentioned by Trump during his speech.

[..] Trump vowed his new directive “will refocus the space program on human exploration and discovery,” and “marks an important step in returning American astronauts to the Moon for the first time since 1972.” The goal of the new Moon missions would include “long-term exploration and use” of its surface. “We’re dreaming big,” Trump said. His administration has previously held several meetings with SpaceX boss Elon Musk and Amazon owner Jeff Bezos, who also owns Blue Origin.

The article has two authors, and at least one editor (Reuters), and still it says this: “world temperatures are likely to rise by more than 2 degrees Celsius (35.6°F) this century..

• Exxon To Provide Details On Climate Change Impact To Its Business (R.)

Exxon Mobil on Monday said it would publish new details about how climate change could affect its business in a move aimed at appeasing critics and forestalling another proxy fight next year. The largest U.S. oil and gas producer said in a filing to U.S. securities regulators that its board agreed to provide shareholders with information on “energy demand sensitivities, implications of two degree Celsius scenarios, and positioning for a lower-carbon future.” Scientists have warned that world temperatures are likely to rise by more than 2 degrees Celsius (35.6°F) this century, surpassing a “tipping point” that a global climate deal aims to avert. Exxon’s statement, which came three days before the deadline for its 2018 annual meeting resolution submissions, said additional information would be released in the near future, but did not provide details.

The company’s board originally opposed providing shareholders with a report outlining the potential impact of global warming on Exxon’s long-term outlook. Thomas P. DiNapoli, New York state’s comptroller, heads one the two lead sponsors of a shareholder resolution calling for Exxon to issue a climate-impact report. He called Monday’s decision “a win for shareholders and for the company’s ability to manage risk.” However, another sponsor noted the lack of specificity in the company’s statement. “This is giving no detail,” said Tim Smith, who leads shareholder engagement efforts at Walden Asset Management, a co-filer of last spring’s resolution. He said Exxon’s statement “needs to be expanded to assure shareowners that they’re responsive to last year’s request.”

Apple, Exxon, everybody seeks to escape their own shareholders.

• Apple Aims To Block Climate, Rights Using SEC Guidance (R.)

Apple is pushing back on shareholder proposals on climate issue and human rights concerns, an effort activists worry could sharply restrict investor rights. In letters to the U.S. Securities and Exchange Commission last month, an attorney for the California computer maker argued at least four shareholder proposals relate to “ordinary business” and therefore can be left off the proxy Apple is expected to publish early next year, ahead of its annual meeting. The attorney, Gene Levoff, cited guidance issued by the SEC on Nov. 1 saying that company boards are generally best positioned to decide if a resolution raises significant policy issues worth putting to a vote.

While companies routinely seek permission to skip shareholder proposals, Apple’s application of the new SEC guidance shows how it could be used to ignore many investor proposals by claiming boards routinely review those areas, said Sanford Lewis, a Massachusetts attorney representing Apple shareholders who had filed two of the resolutions. Were the SEC to side with Apple, “this would be an incredibly dangerous precedent that would essentially say a great many proposals could be omitted,” Lewis said. [..] Often seen as distractions in the past, shareholder measures have taken on new significance as big asset managers increasingly back those on areas like climate change or board diversity.

Apple cited the SEC’s new guidance among other things in seeking to omit the shareholder measures from its proxy, according to letters Apple sent to the SEC. These include calls for Apple to take steps such as establishing a “human rights committee” to address concerns on topics like censorship, and for Apple to report on its ability to cut greenhouse gas emissions.

Tusk against the rest. Couldn’t be because he’s Polish, could it? And looking at big jobs back home?!

• EU Could ‘Scrap Refugee Quota Scheme’ (G.)

The EU could scrap a divisive scheme that compels member states to accept quotas of refugees, one of the bloc’s most senior leaders will say this week. The president of the European council, Donald Tusk, will tell EU leaders at a summit on Thursday that mandatory quotas have been divisive and ineffective, in a clear sign that he is ready to abandon the policy that has created bitter splits across the continent. Tusk will set a six-month deadline for EU leaders to reach unanimous agreement on reforms to the European asylum system, but will propose alternatives if there is no consensus. “If there is no solution … including on the issue of mandatory quotas, the president of the European council will present a way forward,” states a draft letter from Tusk to national capitals, seen by the Guardian.

In effect this means scrapping mandatory quotas, because Hungary, Poland and Czech Republic are fiercely opposed to the idea of dispersing refugees around the bloc based on a formula drawn up in Brussels. Tusk is likely to face opposition, however, from other EU bodies, including the European commission. EU leaders introduced compulsory quotas in 2015 at the height of the migration crisis, as thousands of people arrived daily on Europe’s shores, many of whom were refugees from Syria, Iraq and Eritrea. Hungary, Slovakia, Romania and the Czech Republic voted against the move, but the policy was forced through by a majority vote. Hungary and Poland have defied the rest of the EU by not taking a single refugee under the scheme, which aimed to relocate about 120,000 refugees, mainly Syrians. The Czech republic has taken in only 12. All three countries were referred to the European court of justice last week for failing to implement the policy, the usual procedure for flouting EU rules.

All refugees living on Lesbos should be evacuated.

• Lesvos Authorities Block Ship With Container Homes For Refugees (AP)

Authorities on the Greek island of Lesvos say they have blocked a ship carrying container homes for refugees and other migrants in protest at the refusal of the government and the European Union to move more people to Greece’s mainland. A government-chartered ship carrying the containers remained anchored at Mytilene, the island’s main town, on Monday after municipal vehicles were used to block port facilities. The island’s municipal board was due to meet later on Monday to decide on whether to lift the blockade following talks with the government, state-run TV ERT said. The mayors of five Greek islands facing the coast of Turkey are demanding that the government and EU end a policy of containment for migrants – introduced last year as a deterrent against illegal migration – because living facilities are severely overcrowded.

Merkel, the story of a great and bitter failure.

• Germany Rejects Additional Winter Aid For Refugees On Greek Islands (KTG)

The German Foreign Ministry has made it clear that it will not provide additional winter assistance to refugees on the Aegean islands. In a related question from German newspapers, the foreign ministry replied that “responsibility for accommodating and feeding refugees falls under the jurisdiction of each country.” According to dpa, the Foreign Ministry recalled that Berlin recently funded the installation of 135 heated containers for a total of 800 people in two camps in the Thessaloniki region and that the EU has allocated up to now 1.4 billion euros to tackle the refugee crisis in Greece.

Meanwhile, there is media report that Greece has persuaded Turkey to accept migrant returns from the mainland in order to reduce critical overcrowding in its refugee camps. The Kathimerini daily said the agreement came during a strained two-day state visit by Turkish President Recep Tayyip Erdogan this week, during which he angered his hosts with talk of revising borders and complaints about Greece’s treatment of its Muslim minority. The deal is in addition to Turkey’s existing agreement to take back migrants from Aegean island camps, under the terms of an EU-Turkey pact.

Debt Rattle November 15 2017

Nov 152017

November 15, 2017 Posted by Raúl Ilargi Meijer at 8:53 am Finance Tagged with: Airbnb, bubble, delinquencies, deposits, ISIS, Mueller, subprime, Sweden, Syria, Zimbabwe 7 Responses »

Arkady Shaikhet Express 1939

• Richest 1% Own 50% Of Global Wealth, Poorest 50% Own 1% (BI)

• US Auto-Loan Subprime Blows Up Lehman-Moment-Like (WS)

• Household Debt Rises By $116 Billion As Credit-Card Delinquencies Pile Up (MW)

• Sweden’s Housing Market Shock is Hitting Its Currency (BBG)

• ECB Seeks Power To Freeze Bank Deposits (BBG)

• What History Teaches About Interest Rates (DR)

• Deus ex Mueller isn’t Coming (CJ)

• Raqqa’s Dirty Secret (BBC)

• How Western Imperial Power Set Out To Destroy Syria (Ren.)

• US Directly Supports ISIS Terrorists In Syria – Russia (Tass)

• Zimbabwe’s Military Seizes Power (BBG)

• Airbnb Puts Automatic Rental Cap On Central Paris Offers (R.)

• Airbnb Refuses To Disclose Financial Data To Greece’s Finance Ministry (KTG)

How do we do it? What an achievement!

• Richest 1% Own 50% Of Global Wealth, Poorest 50% Own 1% (BI)

The world’s richest 1% of families and individuals hold over half of global wealth, according to a new report from Credit Suisse. The report suggests inequality is still worsening some eight years after the worst global recession in decades. The release of the Paradise Papers, a trove of leaked documents uncovered by investigative journalists detailing the offshore tax holdings of the world’s super wealthy, has reinforced just how rampant the problem of wealth inequality has become. “The bottom half of adults collectively own less than 1% of total wealth, the richest decile (top 10% of adults) owns 88% of global assets, and the top percentile alone accounts for half of total household wealth,” the Credit Suisse report said.

Put another way: “The top 1% own 50.1% of all household wealth in the world.” This handy pyramid chart, which shows the relative number of people at different wealth levels and how much of the world’s assets each bracket controls, speaks volumes about the level of income concentration, which by some measures has not been seen since the early 20th century:

In most countries, including the United States, a large wealth gap translates into those at the top accruing political power, which in turn can lead to policies that reinforce benefits for the wealthy. President Donald Trump’s tax cut plan, for instance, has been widely criticized for favoring corporations and the wealthy over working families. Measured overall, Credit Suisse found total global wealth rose 6.4% in the year between mid-2016 and mid-2017 to $280.3 trillion. Stock market gains helped add $8.5 trillion to US household wealth during that period, a 10.1% rise. US inequality is considerably worse than in its more developed-country peers.

You really have to check the dates, to make sure this is not 10 year old news. The key word here is ‘surge’.

• US Auto-Loan Subprime Blows Up Lehman-Moment-Like (WS)

Given Americans’ ceaseless urge to borrow and spend, household debt in the third quarter surged by $610 billion, or 5%, from the third quarter last year, to a new record of $13 trillion, according to the New York Fed. If the word “surged” appears a lot, it’s because that’s the kind of debt environment we now have: Mortgage debt surged 4.2% year-over-year, to $9.19 trillion, still shy of the all-time record of $10 trillion in 2008 before it all collapsed. Student loans surged by 6.25% year-over-year to a record of $1.36 trillion. Credit card debt surged 8% to $810 billion. “Other” surged 5.4% to $390 billion. And auto loans surged 6.1% to a record $1.21 trillion. And given how the US economy depends on consumer borrowing for life support, that’s all good.

However, there are some big ugly flies in that ointment: Delinquencies – not everywhere, but in credit cards, and particularly in subprime auto loans, where serious delinquencies have reached Lehman Moment proportions. Of the $1.2 trillion in auto loans outstanding, $282 billion (24%) were granted to borrowers with a subprime credit score (below 620). Of all auto loans outstanding, 2.4% were 90+ days (“seriously”) delinquent, up from 2.3% in the prior quarter. But delinquencies are concentrated in the subprime segment – that $282 billion – and all hell is breaking lose there. Subprime auto lending has attracted specialty lenders, such as Santander Consumer USA. They feel they can handle the risks, and they off-loaded some of the risks to investors via subprime auto-loan-backed securities. They want to cash in on the fat profits often obtained in subprime lending via extraordinarily high interest rates.

Oh well.

• Household Debt Rises By $116 Billion As Credit-Card Delinquencies Pile Up (MW)

The numbers: Household debt rose by $116 billion, or 0.9%, to $12.96 trillion in the third quarter, the New York Fed said Tuesday. Credit-card debt rose by 3.1% while home equity lines of credit, or HELOC, balances fell by 0.9%. There were small gains in mortgage, student and auto debt. Flows into credit-card and auto loans delinquencies rose, with 4.6% of credit card debt 90 days or more delinquent, up from 4.4% in the second quarter, and 2.4% of auto loan debt seriously delinquent, up from 2.3%. That’s still nowhere near the 9.6% of student loan debt that is delinquent, which itself is understated because about half of those loans are currently in deferment, grace periods or in forbearance.

What happened: U.S. households aren’t aggressively leveraging up, and the ones that are did so had better credit. The higher level of auto loan originations was mainly to prime borrowers, and the median credit score to individuals originating new mortgages ticked up to 760 from 754. [..] Auto loans have grown for 26 straight quarters. But there are some worries as subprime auto loan performance continues to deteriorate — the delinquency rate for auto finance companies have grown by more than 2 percentage points since 2014, the New York Fed said.

World’s biggest housing bubble?

• Sweden’s Housing Market Shock is Hitting Its Currency (BBG)

Can a central bank steer the housing market? Not so long ago, Sweden’s Riksbank decided: no. Now, there’s a risk that decision may backfire as the biggest property market in Scandinavia risks sinking into a correction. The evidence of price declines was so worrying on Tuesday that it contributed to a 1.5 percent slump in the krona against the euro. A weak currency puts the Riksbank’s inflation target at risk. So should it be looking at the housing market more closely? Developments in Sweden’s housing market “could spark some doubts at the Riksbank as it may affect the overall economic outlook and inflation,” Nordea analyst Andreas Wallstrom said in a note. Sweden’s Riksbank has thrown all its energy into fighting deflation and, earlier this year, finally regained credibility on its inflation mandate.

Policy makers now say they may be ready to start raising rates in the middle of next year. At the same time, the Riksbank may extend a bond purchase program due to end this year. But in the minutes of the Riksbank’s latest rate meeting, Deputy Governor Cecilia Skingsley suggested that monetary policy, “under certain circumstances, can be used to combat the effects of major household debt.” She also said the housing market “must be carefully monitored,” given the latest developments. Nordea’s Wallstrom says the central bank will probably need to see a “sharp drop” in house prices with a direct impact on the real economy before it will look into adding significant stimulus. But the bank might decided to signal rates will stay where they are for even longer.

Which would cause panic and bank runs.

• ECB Seeks Power To Freeze Bank Deposits (BBG)

The European Central Bank intensified its push for a tool that would hand authorities the power to stop deposit withdrawals when a bank is on the verge of failing. ECB executive board member Sabine Lautenschlaeger said that bank resolution cases this year showed that a so-called moratorium tool, which would temporarily freeze a bank’s liabilities to buy time for crucial decisions, is needed. Her comment comes as policy makers in Brussels debate how such measures should be designed, and just days after the ECB officially called for the moratorium to extend to deposits as well. “If we have a long list of exemptions and we have a moratorium that doesn’t work, I do not want to have a moratorium tool,” Lautenschlaeger told a conference in Frankfurt on Tuesday. “Then you will never use it.”

EU member states appear ready to heed the request, according to a Nov. 6 paper that develops their stance on a bank-failure bill proposed by the European Commission. They suggest giving authorities the power to cap deposit withdrawals as part of a stay on payments only after an institution has been declared “failing or likely to fail.” The power to install a moratorium “can in principle apply to eligible deposits,” the paper reads. “However, resolution authority should carefully assess the opportunity to extend the suspension also to covered deposits, especially covered deposits held by natural persons and micro, small and medium sized enterprises, in case application of suspension on such deposits would severely disrupt the functioning of financial markets.”

Low interst rates = low growth economies. The chicken and the egg.

• What History Teaches About Interest Rates (DR)

“At no point in the history of the world has the interest on money been so low as it is now.” Who can dispute the good Sen. Henry M. Teller of Colorado? For lo eight years, the Federal Reserve has waged a ceaseless warfare upon interest rates. Economic law, history, logic itself, stagger under the onslaughts. We suspect that economic reality will one day prevail. This fear haunts our days… and poisons our nights. But let us check the date on the senator’s declaration… Kind heaven, can it be? We are reliably informed that Sen. Teller’s comment entered the congressional minutes on Jan. 12… 1895. 1895 — some 19 years before the Federal Reserve drew its first ghastly breath! Were interest rates 122 years ago the lowest in world history? And are low interest rates the historical norm… rather than the exception?

Today we rise above the daily churn… canvass the broad sweep of history… and pursue the grail of truth. The chart below — giving 5,000 years of interest rate history — shows the justice in Teller’s argument. Please direct your attention to anno Domini 1895: Rates had never been lower in all of history. They would only sink lower on two subsequent occasions — the dark, depressed days of the early 1930s — and the present day, dark and depressed in its own right. A closer inspection of the chart reveals another capital fact… Absent one instance at the beginning of the 20th century and a roaring exception during the mid-to-late 20th century, long-term interest rates have trended lower for the better part of 500 years.

Paul Schmelzing professes economics at Harvard. He’s also a visiting scholar at the Bank of England, for whom he conducted a study of interest rates throughout history. Could the sharply steepening interest rates that began in the late 1940s be a historical one-off… an Everest set among the plains? Analyst Lance Roberts argues that periods of sharply rising interest rates like this are history’s exceptions — lovely exceptions. Why lovely? Roberts: Interest rates are a function of strong, organic, economic growth that leads to a rising demand for capital over time. In this view, rates rose steeply at the dawn of the 20th century because rapid industrialization and dizzying technological advances had entered the scenery.

Likewise, Roberts argues the massive post-World War II economic expansion resulted in the second great spike in interest rates: There have been two previous periods in history that have had the necessary ingredients to support rising interest rates. The first was during the turn of the previous century as the country became more accessible via railroads and automobiles, production ramped up for World War I and America began the shift from an agricultural to industrial economy. The second period occurred post-World War II as America became the “last man standing”… It was here that America found its strongest run of economic growth in its history as the “boys of war” returned home to start rebuilding the countries that they had just destroyed.

“If you attribute all your problems to Trump, you’re guaranteeing more Trumps after him..”

• Deus ex Mueller isn’t Coming (CJ)

We know from the Snowden leaks on the NSA, the CIA files released by WikiLeaks, and the ongoing controversies regarding FBI surveillance that the US intelligence community has the most expansive, most sophisticated and most intrusive surveillance network in the history of human civilisation. Following the presidential election last year, anonymous sources from within the intelligence community were haemorrhaging leaks to the press on a regular basis that were damaging to the incoming administration. If there was any evidence to be found that Donald Trump colluded with the Russian government to steal the 2016 election using hackers and propaganda, the US intelligence community would have found it and leaked it to the New York Times or the Washington Post last year.

Mueller isn’t going to find anything in 2017 that these vast, sprawling networks wouldn’t have found in 2016. He’s not going to find anything by “following the money” that couldn’t be found infinitely more efficaciously via Orwellian espionage. The factions within the intelligence community that were working to sabotage the incoming administration last year would have leaked proof of collusion if they’d had it. They did not have it then, and they do not have it now. Mueller will continue finding evidence of corruption throughout his investigation, since corruption is to DC insiders as water is to fish, but he will not find evidence of collusion to win the 2016 election that will lead to Trump’s impeachment. It will not happen. This sits on top of all the many, many, many reasons to be extremely suspicious of the Russiagate narrative in the first place.

[..] If you attribute all your problems to Trump, you’re guaranteeing more Trumps after him, because you’re not addressing the disease which created him, you’re just addressing the symptom. The problem is not Trump. The problem is that America is ruled by an unelected power establishment which maintains its rule by sabotaging democracy, exacerbating economic injustice and expanding the US war machine. Stop listening to the lies that they pipe into your echo chambers and turn to face your real demons.

“IS may have been homicidal psychopaths, but they’re always correct with the money.” Says Abu Fawzi with a smile.

• Raqqa’s Dirty Secret (BBC)

Lorry driver Abu Fawzi thought it was going to be just another job. He drives an 18-wheeler across some of the most dangerous territory in northern Syria. Bombed-out bridges, deep desert sand, even government forces and so-called Islamic State fighters don’t stand in the way of a delivery. But this time, his load was to be human cargo. The Syrian Democratic Forces (SDF), an alliance of Kurdish and Arab fighters opposed to IS, wanted him to lead a convoy that would take hundreds of families displaced by fighting from the town of Tabqa on the Euphrates river to a camp further north. The job would take six hours, maximum – or at least that’s what he was told. But when he and his fellow drivers assembled their convoy early on 12 October, they realised they had been lied to. Instead, it would take three days of hard driving, carrying a deadly cargo – hundreds of IS fighters, their families and tonnes of weapons and ammunition.

Abu Fawzi and dozens of other drivers were promised thousands of dollars for the task but it had to remain secret. The deal to let IS fighters escape from Raqqa – de facto capital of their self-declared caliphate – had been arranged by local officials. It came after four months of fighting that left the city obliterated and almost devoid of people. It would spare lives and bring fighting to an end. The lives of the Arab, Kurdish and other fighters opposing IS would be spared. But it also enabled many hundreds of IS fighters to escape from the city. At the time, neither the US and British-led coalition, nor the SDF, which it backs, wanted to admit their part. Has the pact, which stood as Raqqa’s dirty secret, unleashed a threat to the outside world – one that has enabled militants to spread far and wide across Syria and beyond?

Narratives are starting to move.

• How Western Imperial Power Set Out To Destroy Syria (Ren.)

Virtually unknown among large swaths the general public both in Britain and the U.S is the fact that Bashar-al Assad’s secular government won the first contested presidential election in Ba’athist Syria’s history on July 16, 2014, which was reported as having been open, fair and transparent. American Peace Council delegate, Joe Jamison, who was allowed unhindered travel throughout Syria, stated: “By contrast to the medieval Wahhabist ideology, Syria promotes a socially inclusive and pluralistic form of Islam. We [the USPC] met these people. They are humane and democratically minded…. The [Syrian] government is popular and recognised as being legitimate by the UN. It contests and wins elections which are monitored. There’s a parliament which contains opposition parties – we met them. There is a significant non-violent opposition which is trying to work constructively for its own social vision.”

Jamison added: “Our delegation came to Syria with political views and assumptions, but we were determined to be sceptics and to follow the facts wherever they led us”, he said. “I concluded that the motive of the US war is to destroy an independent, Arab, secular state. It’s the last of this kind of state standing.” The notion that the United States government and its allies and proxies, want to see the destruction of Syria’s pluralistic state under Assad destroyed, is hardly a secret. Indeed, one of Washington’s key allies in the region, Israel, has conceded as much. The claim by Israel’s defence minister, Avigdor Lieberman, that Assad’s removal is the empires “ultimate goal”, would appear to be consistent with the notion that the aim of the U.S government is to stymie the non-violent opposition inside Syria. Washington has been engaged in this strategy since early 2012 after having deliberately helped scupper Kofi Annan’s six point peace plan.

Members of the Syrian opposition within a newly reformed constitution who wanted to participate in democratic politics have instead been encouraged by the Western axis – as a result of bribing government forces to defect and through funding the Free Syrian Army – to overthrow the Assad government by violent means. As commentator Dan Glazebrook put it: “Within days of Annan’s peace plan gaining a positive response from both sides in late March, the imperial powers openly pledged, for the first time, millions of dollars for the Free Syrian Army; for military equipment, to provide salaries to its soldiers and to bribe government forces to defect. In other words, terrified that the civil war is starting to die down, they are setting about institutionalising it.”

Now proven by the BBC. What’s next?

• US Directly Supports ISIS Terrorists In Syria – Russia (Tass)

The Russian Defense Ministry has said it has obtained evidence the US-led coalition provides support for the terrorist group Islamic State (outlawed in Russia). “The Abu Kamal liberation operation conducted by the Syrian government army with air cover by the Russian Aerospace Force at the end of the last week revealed facts of direct cooperation and support for ISIS terrorists by the US-led ‘international coalition,’” the Russian Defense Ministry said. The ministry showed photo shoots made by Russian unmanned aircraft on November 9 which show kilometers-long convoys of IS armed groups leaving Abu Kamal towards the Wadi es-Sabha passage on the Syrian-Iraqi border to avoid strikes by the Russian aviation and the government army.

The US refused to conduct airstrikes over the leaving IS convoy. “Americans peremptorily rejected to conduct airstrikes over the ISIS terrorists on the pretext of the fact that, according to their information, militants are yielding themselves prisoners to them and now are subject to the provisions of the Convention relative to the Treatment of Prisoners of War,” the Russian Defense Ministry said. The Defense Ministry specified that “the Russian force grouping command twice addressed the command of the US-led ‘international coalition’ with a proposal to carry out joint actions to destroy the retreating ISIS convoys on the eastern bank of the Euphrates.” The Americans failed to answer the Russian side’s question on why IS militants leaving in combat vehicles heavily equipped are regrouping in the area controlled by the international coalition to conduct new strikes over the Syrian army near Abu Kamal, the Russian Defense Ministry stressed.

Mugabe under house arrest and according to South African media ‘planning to step down’. Rumors that Emmerson Mnangagwa, the vice-president Mugabe fired recently, will be interim president. Which in turn would confirm that the army acted because it doesn’t want Grace Mugabe in power.

• Zimbabwe’s Military Seizes Power (BBG)

The armed forces seized power in Zimbabwe after a week of confrontation with President Robert Mugabe’s government and said the action was needed to stave off violent conflict in the southern African nation that he’s ruled since 1980. The Zimbabwe Defense Forces will guarantee the safety of Mugabe, 93, and his family and is only “targeting criminals around him who are committing crimes that are causing social and economic suffering in the country in order to bring them to justice,” Major-General Sibusiso Moyo said in a televised address in Harare, the capital. All military leave has been canceled, he said. Denying that the action was a military coup, Moyo said “as soon as we have accomplished our mission we expect the situation to return to normalcy.” He urged the other security services to cooperate and warned that “any provocation will be met with an appropriate response.”

The action came a day after armed forces commander Constantine Chiwenga announced that the military would stop “those bent on hijacking the revolution.” As several armored vehicles appeared in the capital on Tuesday, Mugabe’s Zimbabwe African National Union-Patriotic Front described Chiwenga’s statements as “treasonable” and intended to incite insurrection. Later in the day, several explosions were heard in the city. The military intervention followed a week-long political crisis sparked by Mugabe’s decision to fire his long-time ally Emmerson Mnangagwa as vice president in a move that paved the way for his wife Grace, 52, and her supporters to gain effective control over the ruling party. Nicknamed “Gucci Grace” in Zimbabwe for her extravagant lifestyle, she said on Nov. 5 that she would be prepared to succeed her husband.

65,000 homes in Paris alone.

• Airbnb Puts Automatic Rental Cap On Central Paris Offers (R.)

Short-term rental website Airbnb, which has been challenging traditional hotel operators such as Accor and Marriott, said it would automatically cap the number of days its hosts can rent their property each year in central Paris. The decision, which goes into effect in January and mirrors initiatives already in place in London and Amsterdam, will force hosts to effectively comply with France’s official limit on short-term rentals of 120 days a year for a main residence. It comes as Airbnb, similar to its taxi-hailing peer Uber, is facing a growing crackdown from legislators worldwide – triggered in part by lobbying from the hotel industry, which sees the rental service as providing unfair competition. Airbnb and other rental platforms have also been criticized for driving up property prices and contributing to a housing shortage in some cities such as Paris or Berlin.

Airbnb, which has denied having a significant impact on housing shortages, has been trying to placate local authorities. “Paris is Airbnb number one city worldwide and we want to insure our community of hosts expands in a responsible and sustainable manner,” said Emmanuel Marill, Airbnb general manager for France. In Paris, the automatic rental cap will apply only to the city’s first four districts (“arrondissements”) unless the property owner has proper authorization. These districts include tourist hotspots such as the Marais, and landmarks such as the Louvre and the place de la Concorde square. Airbnb is implementing the cap as the Paris city council has made it mandatory from December for people renting their apartments on short-term rental websites to register their property with the town hall.

Ian Brossat, the housing advisor to the Paris Mayor, told Reuters that the cap should extend to the whole of Paris. “Under the law, websites must withdraw listings that do not comply with the law throughout Paris. One cannot accept that a website complies with the law only in the first four arrondissements of Paris,” said Brossat. With over 400,000 listings, France is Airbnb’s second-largest market after the United States. Paris, which is the most visited city in the world, is Airbnb’s biggest single market, with 65,000 homes.

Fine them until they do?! Half the city of Athens will turn into Airbnb if they don’t.

• Airbnb Refuses To Disclose Financial Data To Greece’s Finance Ministry (KTG)

Airbnb refused to provide the Greek Finance Ministry with information on property rentals thus delaying the launch of an online platform where owners should register the rental transactions and pay the necessary taxes. According to information obtained by economic news website economy365.gr, the Finance Ministry has tried for five months to get in touch with executives of the company in California as well as of other companies (Novasol etc). However, the companies showed no intention to cooperate with Greek authorities who have requested that the tax number of property owner is being registered to every property at the Airbnb platform. Owner’s tax number would facilitate the imposition of taxes on rentals via Airbnb. The tax legislation on short-term leases through digital platform like Airbnb was voted last year. The law foresees taxes of 15%-45% and a limited number of rentals per year.

Registration is mandatory. Authorities will provide the property owner with a certification number that has to be declared on any website and social media advert, including, of course, the Airbnb platform. Fines can reach up to 5,000 euros, if a property owner does not register on the Greek authorities registration platform and tries to evade taxes from short-term rentals. The state has estimated that revenues from Airbnb rentals could reach 48 million euros per year. According to the Finance Ministry property owners try to bypass the 3% commission to Airbnb and upcoming taxes by direct contact to customers via messenger or telephone. The payments are done cash at the arrival and not through the platform. In this way, property owners can bypass not only the commission but also registration of the rentals and future taxes. Just in case and even if one day, the Airbnb decides to hand over its Greek data to the tax authorities. For the time being it looks as the Greek goal to tax Airbnb properties has to be postponed.

Debt Rattle November 9 2014

Nov 092014

November 9, 2014 Posted by Raúl Ilargi Meijer at 12:23 pm Finance Tagged with: birds, corruption, earnings, Fed, Gorbachev, household debt, polar vortex, Spain, Sweden, volatility 3 Responses »

DPC League Island Navy Yard, Philadelphia. USS Brooklyn spar deck 1898

• Fed to Markets: Brace for Volatility (WSJ)

• Central Banks Warn of Possible Bumpy Ride for Markets (Bloomberg)

• US Earnings Outlook Might Be Less Rosy Than Investors Think (Reuters)

• Gorbachev Warns US, Allies Put World On ‘The Brink Of A New Cold War’ (FT)

• Hungary Under ‘Great Pressure’ From US Over Its Energy Deals With Russia (RT)

• Kuroda Sprang Easing Surprise To Head Off Damaging Inflation Forecast (Reuters)

• It’s a Bad Time to Be a Saver in Europe (Bloomberg)

• We Can Control Risks Facing The Economy, Says China’s Xi Jinping (Reuters)

• Sweden Grapples With Massive Household Debt As Rates Hit Zero (Reuters)

• UK Condemned Over Arms Sales To Repressive States (Observer)

• It’s Official: Spain is Unraveling (Don Quijones)

• Catalans Prepare to Open the Polls in Defiance of Spain (Bloomberg)

• The Albanian World Cup Gambler Who Robbed The National Vault (Reuters)

• Prepare For An Invasion From The North: “Polar Vortex, The Sequel” (CBS)

• Harsh Winter Outlook Made More Dire by Siberia Snow (Bloomberg)

• Bird Decline Poses Loss Not Just For Environment, But Human Soul (Guardian)

As rate hikes come.

• Fed to Markets: Brace for Volatility (WSJ)

Federal Reserve officials are warning investors and foreign central bankers to brace for market turbulence as the Fed prepares to raise short-term interest rates next year. In a speech to central bankers Friday in Paris, Fed Chairwoman Janet Yellen said rate increases, when they materialize in advanced economies, “could lead to some heightened financial volatility.” New York Fed President William Dudley, at the same conference, issued a more detailed alert. “This shift in policy will undoubtedly be accompanied by some degree of market turbulence,” he said of future rate increases in the U.S. “Moreover, it could create significant challenges for those emerging market economies that have been the beneficiaries of large capital inflows in recent years.”

They offered their warnings as the Labor Department released new data showing the U.S. job market is improving faster than the Fed expects. The unemployment rate, at 5.8% in October, was below the 6.3% to 6.6% range the Fed projected last December for the end of 2014. In September, the Fed revised that projection to 5.9%-6.0%, still higher than the October rate. Other metrics being watched closely by the Fed showed continued gains. For instance, the percentage of the U.S. population that is employed rose to 59.2%, its highest level since July 2009. This employment-to-population ratio increased one percentage point from a year earlier, its largest one-year gain since March 1995. The Fed is eyeing rate increases as unemployment declines and slack in the economy slowly diminishes. Higher rates will be aimed at preventing the economy from overheating.

“Normalization could lead to some heightened financial volatility .. ”

• Central Banks Warn of Possible Bumpy Ride for Markets (Bloomberg)

Global central bankers said financial markets could suffer a bout of turbulence – again – when they begin to withdraw monetary stimulus. Janet Yellen and William Dudley of the Fed, Mexico’s Agustin Carstens and Bank of England Governor Mark Carney were among those to use a Paris conference of policy makers yesterday to talk about potential fallout from the eventual shift from record-low interest rates used to revive growth since the global financial crisis in 2008. “Normalization could lead to some heightened financial volatility,” Yellen told the gathering convened by the Bank of France. Carney said “the transition could be bumpy.” The comments suggest central bankers are trying to prepare better for the global effects of any withdrawal than in 2013, when then-Chairman Ben S. Bernanke unexpectedly signaled the Fed could soon start reducing bond purchases. That pushed up yields and rattled investors worldwide in the so-called taper tantrum.

Fed Chair Yellen and Dudley, president of the Fed Bank of New York, recognized the importance of U.S. officials being clear in their plans. “The Federal Reserve will strive to clearly and transparently communicate its monetary policy strategy in order to minimize the likelihood of surprises that could disrupt financial markets,” Yellen said. [..] Given a likely increase in U.S. rates next year will “undoubtedly be accompanied by some degree of market turbulence,” Dudley said the central bank has an obligation to provide global stability. “It is clear in retrospect that our attempts in the spring of 2013 to provide guidance about the potential timing and pace of tapering confused market participants,” Dudley said. With that episode in mind, Carstens said there is a “potential for financial market disruption” amid the unwinding of unconventional monetary policy.

They’re hot air.

• US Earnings Outlook Might Be Less Rosy Than Investors Think (Reuters)

With the U.S. Q3 earnings season almost at an end, many investors are breathing a sigh of relief as more companies surpassed profit expectations than in any quarter since 2010. But some analysts say investors may be brushing off their worries about corporate profits a little too soon. While most S&P 500 companies beat analysts’ expectations for third-quarter earnings, many just barely topped estimates, said Pankaj Patel at Evercore ISI in New York. Of the S&P 500 companies that had reported results as of early this week, 66% exceeded expectations, according to Evercore’s data analysis. But that figure falls to just 43% after stripping away companies that beat expectations by 5% or less, Patel’s research shows. The figure excluding beats of 5% or less is also well below the%age of beats according to data based on Thomson Reuters polls of analysts. On that data, 74% of S&P 500 companies so far have exceeded analysts’ expectations, which is the highest for any quarter since the second quarter of 2010.

Results have come in from 88% of the S&P 500. The results could mean that an increasing number of companies are trying to “manage their beat rate,” possibly to mask profit weakness, Patel said, noting that companies that exceed expectations by 5% or less typically see their share prices decline in the three days following results. “The beat rate is artificially high, but people still watch that %,” Patel said. “They keep buying and the market goes higher.” The S&P 500 has risen more than 3% since Oct. 8, roughly when this earnings season began. The index is up 9.1% from its Oct. 15 low. In addition, analysts’ keep trimming their profit forecasts. Estimates for fourth-quarter earnings are down from the start of the quarter, along with estimates for the first part of 2015. Earnings growth for the fourth quarter now is estimated at 7.6% compared with an Oct. 1 forecast for 11.1% growth, Thomson Reuters data showed. For the 2015 first quarter, profit growth is seen at 8.8%, down from an Oct. 1 forecast for 11.5% growth.

Moreover, the magnitude by which Q4 estimates are falling has increased compared with the previous quarter, said Nick Raich, chief executive officer of The Earnings Scout, a research firm specializing in earnings trends. In outlooks given by companies themselves – done by only a minority of companies – the news is not good. Negative outlooks outnumber positive ones for Q4 so far by a ratio of 3.9 to 1, up from the third quarter’s ratio of 3.3 to 1, Thomson Reuters data showed. “That’s a worsening trend,” Raich said. “The outlooks have gotten a little bit worse this quarter.” Outlooks could become even dimmer if lackluster demand overseas translates into weak results for the fourth quarter. “The United States clearly is the bright spot in the world,” said Uri Landesman, president of Platinum Partners in New York. “The rest of the world isn’t nearly as strong, so demand coming from certain places is weaker, and the currency is going to have an enormous impact going forward.”

How many western officials have you seen trying to address Gorby’s accusations?

• Gorbachev Warns US, Allies Put World On ‘The Brink Of A New Cold War’ (FT)

Former Soviet Union leader Mikhail Gorbachev warned on Saturday that the Ukraine crisis had brought the world to “the brink of a new Cold War”. “The world is on the brink of a new Cold War. Some say it has already begun, ” said the 83-year-old former Kremlin chief in a sombre speech delivered in Berlin at an event to mark the 25th anniversary of the fall of the Berlin Wall this weekend. He was speaking as reports from eastern Ukraine suggested that Kiev’s troops and the Russia-backed rebels may be preparing for renewed fighting. Agency reporters in eastern Ukraine said they saw more than 80 unmarked military vehicles on the move on Saturday in rebel-controlled areas of eastern Ukraine. The apparent escalation threatens the fragile ceasefire agreed in Minsk in early September and increases the danger of further pressure on east-west relations.

Speaking at a conference within a few metres of the iconic Brandenburg Gate, Mr Gorbachev accused the west, led by the US, of “triumphalism” after the fall of the Berlin Wall ended Soviet dominance in eastern Europe. Trust between Russia and the west had “collapsed” in the last few months, he said, highlighting the damage done by the Ukraine crisis. He called for new initiatives to restore trust, including a lifting of personal sanctions imposed by the US and the EU on top Russian officials in response to Moscow’s actions in Ukraine. Mr Gorbachev clearly sees the west as the culprit in the crisis, having given his unequivocal backing to Mr Putin last week. He said, before arriving in Germany, that he was “absolutely convinced that Putin protects Russia’s interests better than anyone else.”

Hungary PM Orban is an interesting man. The country is doing quite well, relatively.

• Hungary Under ‘Great Pressure’ From US Over Its Energy Deals With Russia (RT)

Washington is exerting heavy pressure on Hungary over the country’s decision to give a green light for the construction of the South Stream gas pipeline and expedite the construction by allowing companies without licenses to participate in the project. “The US is putting Hungary under great pressure fearing Moscow’s rapprochement with Budapest,”Hungarian media cited Prime Minister Viktor Orban saying in Munich, Germany after a meeting with Bavarian state premier Horst Seehofer. Orban said that Hungary’s relations with Russia have become “entangled in geopolitical and military and security policy issues,” AFP reports. The PM said that US is retaliating for Budapest’s willingness to endorse the South Stream gas pipeline development as well as a deal that would see Russia’s Rosatom expand Hungary’s nuclear power.

Under a deal worth up to €10 billion Rosatom will build a 2,000 megawatt addition to Hungary’s state-owned nuclear power plant MVM Paksi Atomeromu. Russia is Hungary’s largest trade partner outside of the EU, with exports worth $3.4 billion in 2013. Also it is highly dependent on Russian energy. “We don’t want to get close to anyone, and we don’t intend to move away from anybody,” Orban said.“We are not pursuing a pro-Russian policy but a pro-Hungarian policy,” as expansion of the nuclear plant was the “only possible means” to lower dependence on external energy resources. The PM remained firm that “cheap energy is key in strengthening Hungary’s competitiveness” as he also defended the law which gave a green light for the construction of the South Stream pipeline that would bypass Ukraine as a transit nation in EU gas supply chain. It “ensures Hungary gas supplies by eliminating risks posed by situation in Ukraine,” Orban said.“Even if South Stream does not diversify gas sources, it diversifies delivery routes.”

A forecast based on slumping oil prices.

• Kuroda Sprang Easing Surprise To Head Off Damaging Inflation Forecast (Reuters)

The Bank of Japan Governor not only surprised the markets with his latest splurge of monetary easing. He sprang it on his own board members just two days earlier, jolted into action to stop them making a low-ball forecast that might have sunk his flagship inflation target. To achieve maximum effect for the shock decision, Haruhiko Kuroda and right-hand man Masayoshi Amamiya kept only a handful of elite central bank bureaucrats in the loop as they laid the ground for the expansion of their quantitative and qualitative easing (QQE) program. They didn’t even give the usual forewarning to senior bureaucrats at the Ministry of Finance, according to interviews with nearly a dozen insiders and government sources with knowledge of the bank’s deliberations.

No leaks reached the media, and the announcement at the Oct. 31 policy meeting pushed the Nikkei stock average to seven-year highs and the yen to seven-year lows against the dollar. The market reaction will have been welcome news to Kuroda, but the impact he wanted above all was to alter inflation expectations in a country that has struggled with crippling deflation for two decades. Timing was critical – and not of his choosing. At the policy meeting the board would also issue a new consumer inflation forecast for the next fiscal year, based on the median estimate from the nine members. But two days before publication, the preliminary estimate was only around 1.5%, three of the sources said. That was well below the 1.9% forecast made in July, and if published could have been fatal to his key goal of hitting 2% from April next year.

Since price expectations play a key role in the consumer behaviours that ultimately determine prices, doubts about the target could be self-fulfilling. There were other triggers for action, including October’s plunge in oil prices and the fact that an easing burst would have more market impact in the week the U.S. Federal Reserve decided to turn its own liquidity taps off. But it was the inflation forecast that convinced Kuroda and his aides to go for another burst of stimulus, three sources said. Board members would then have to revisit their estimates in light of the new action.

“If you’re a central bank, it’s not a good sign when institutions actively seek to deter customers from owning your currency.”

• It’s a Bad Time to Be a Saver in Europe (Bloomberg)

In the post-crisis economic environment, with record-low interest rates in many countries, it’s better to be a borrower than a lender, despite Shakespeare’s admonition to be neither. These days, however, it’s even worse to be a saver. Since the European Central Bank in June sought to prod banks to lend more – by imposing negative interest rates on banks’ ECB deposits – savers are discovering that banks aren’t the only ones paying for the privilege of having cash on hand. At least three banks – State Street Corp., Bank of New York Mellon, and Deutsche Skatbank – have introduced negative rates for large euro deposits. It makes financial sense for the banks: If the ECB is charging them 0.2% for holding their cash, banks have a fiduciary duty to try to recoup that cost.

The result is that depositors suffer the consequences of the ECB’s interest-rate tyranny. They would do better to stash their money in mattresses. The ECB addressed the implications of its monetary-policy shift on its website after it cut its deposit rate below zero. It asked the question: “Do I now have to pay my bank to keep my savings for me? What is the effect of this negative deposit rate on my savings?” And then it answered itself:

There will be no direct impact on your savings. Only banks that deposit money in certain accounts at the ECB have to pay. Commercial banks may of course choose to lower interest rates for savers. The ECB’s interest rate decisions will in fact benefit savers in the end because they support growth and thus create a climate in which interest rates can gradually return to higher levels.

So the first sentence turned out to be incorrect. And the final sentence provides scant comfort to a depositor whose hard-earned cash is dribbling away and is too pessimistic about the future of the European economy to find more productive uses for the money, such as spending it or investing it. We’ve been here before, including in 2012 when depositors fled the euro and piled into other currencies. Credit Suisse imposed negative rates on Swiss franc cash balances, for example, and said it would “invite our customers to keep cash balances as low as possible to avoid negative credit charges.” State Street also imposed negative rates on Danish kroner deposits. If you’re a central bank, it’s not a good sign when institutions actively seek to deter customers from owning your currency.

Sure.

• We Can Control Risks Facing The Economy, Says China’s Xi Jinping (Reuters)

The risks faced by China’s economy are “not so scary” and the government is confident it can head off the dangers, president Xi Jinping told global business leaders on Sunday to dispel worries about the world’s second-largest economy. In a speech to chief executives at the Asia Pacific Economic Cooperation (Apec) CEO summit, Xi said even if China’s economy were to grow 7%, that would still rank it at the forefront of the world’s economies. China’s economy, the world’s second-largest, has had a rocky year. Growth slid to a low not seen since the 2008/09 global financial crisis in the third quarter dragged by a housing slowdown, softening domestic demand and unsteady exports. “Some people worry that China’s economic growth will fall further, can it climb over the ridge?” Xi said. “There are indeed risks, but it’s not so scary.

“Even at growth of around 7%, regardless of speed or volume, (we) are among the best in the world,” he said, noting that China’s economy remained “stable”. The remarks from Xi came a day after data showed annual growth in Chinese exports and imports cooled in October, in another sign of fragility in the economy that could prompt policymakers to take further action to stoke growth. To shore up activity, policymakers have loosened monetary and fiscal policies since April to ensure that the economy can grow by around 7.5% this year. A marked slowdown in growth would hit countries all over the world, but especially commodity producers such as Australia, Indonesia and Brazil that have benefited from strong Chinese demand.

This will not end well. There are limits.

• Sweden Grapples With Massive Household Debt As Rates Hit Zero (Reuters)

Sweden’s new center-left government and its financial authorities are under huge pressure when they meet on Tuesday to tackle a mountain of household debt that is casting a long shadow over one of Europe’s few economic bright spots. Having slashed rates to zero to fight the risk of deflation, top Swedish officials are now in a quandary over how to rein in borrowing and house price rises without sending the real estate market into a downward spiral. The country’s AAA-rated economy is still one of Europe’s strongest, with low public debt, sound state finances and banks among the best capitalized and most profitable in Europe. But consumers, barely touched by the financial crisis, have loaded up on cheap mortgages and caused Swedish property prices to triple over the last 20 years, prompting a warning from the IMF that the market is 20% overvalued. Adding to the problem: Sweden has built too few houses for the last 20 years and its capital Stockholm is one of Europe’s fastest growing cities.

Critics say the former center-right government added fuel to the fire by slashing real estate taxes and leaving 30% mortgage tax relief untouched. Meanwhile, Sweden’s household debt-to-income ratio has risen to above 170% – among Europe’s highest. The worry is that private consumption, nearly half of GDP, would suffer if rates rose or property prices fell. “The longer we wait, the bigger the imbalances are,” said Bengt Hansson, analyst at the Swedish National Board of Housing Planning and Building. “We already have a bubble, but we will avoid an even bigger bubble.” It will be hard to dissuade bullish Swedish consumers. In Stockholm’s frenzied housing market, buyers make multi-million crown offers to snap up flats they may only have seen in photographs. And cranes and scaffolding are common sights in suburbia as householders take advantage of generous tax breaks for home improvements.

“We don’t think it will crash badly,” said Peter, a 47 year-old investment advisor, who with his wife Maria has just bought a house in Stockholm for around 12 million Swedish crowns ($1.62 million). “It might stop going up for a while, but over the longer term we expect it to go up,” he added, suggesting the lack of housing and population growth in Stockholm would support prices. Attempts by regulators so far to slow credit growth – squeezing banks by making them put aside more capital and draw up voluntary mortgage pay-down plans – have not worked because interest rates have continued to fall. Last week the central bank cut rates to zero in an attempt to answer criticism that it is not doing enough to tackle another economic risk – deflation – even while it acknowledged the problem that would create in containing household debt. “There is a fairly large consensus that household debt is a concern,” Swedish central bank chairman Stefan Ingves said after the cut. “If households continue to borrow, we could end up with very big problems later on, and this is what we want to avoid.”

They all do it. We have no morals left.

• UK Condemned Over Arms Sales To Repressive States (Observer)

The government has been accused of dishonesty over arms sales as new figures reveal that the value of British weapons sales to “countries of concern” has already hit £60m this year. Former Tory defence minister Sir John Stanley, who chairs the Commons committees on arms export controls, says ministers failed to come clean on a “significant change in policy” that makes it easier to export arms to countries with a poor human rights record. He said in a recent parliamentary debate that the government has not acknowledged that such a change has taken place, and it “should consider most carefully whether they should now offer an apology to the committees”.

The government used to reject arms export licences where there was concern they might be used for “internal repression”, but now a licence will be refused only if there is a “clear risk” that military equipment might be used in violation of international law. Former Foreign Office minister Peter Hain, who established the strict criteria on arms sales, last night demanded that the government be transparent about the change and called for parliament to be allowed a vote. He said: “The present government has run a coach and horses through our arms export controls, circumventing the legislation we put in place by putting a particular spin on it. It has enabled them to sell arms to countries and for purposes that should not be allowed under the legislation.

“There is a clear policy in the legislation that arms should only be sold to countries for defensive purposes and not for internal suppression or external aggression. In the case of Gaza over the summer, that has clearly been flouted. Bahrain is another example.” Data from the Department for Business, Innovation and Skills reveals that in the first six months of 2014 the UK granted licences worth £63.2m of arms sales to 18 of the 28 states on its official blacklist, countries about which the Foreign Office has the “most serious wide-ranging human rights concerns”. Israel, Saudi Arabia, the Central African Republic, Sri Lanka and Russia were among the countries that Britain approved military equipment for.

How much corruption can one government shake off?

• It’s Official: Spain is Unraveling (Don Quijones)

Since taking office in late 2011, Rajoy’s government has been embroiled in one sordid political scandal after another. In the latest episode, the Punica Affair, more than 100 politicians have been arrested and charged with varying acts of white collar crime, including taking kick backs from private sector companies. Payment often came in the form of cash-stuffed envelopes although, as El Confidencial reports, it could also include completely free-of-charge construction work on a politicians’ property, luxury holidays, hunting trips and even an intimate evening or two with a high-class prostitute. Most of the politicians involved in the scandal are – or at least were – members of the governing Popular Party. The rest belong – or at least belonged – to the other partner in Spain’s (until now) two-party system, the not-really-socialist-at-all party, the PSOE.

The good news is that some of Spain’s corrupt politicians and business figures are finally seeing the sharp (or at least not entirely blunt) end of the law. Scores have been arrested and some are even going down. The bad news is that Rajoy’s scandal-tarnished government of self.serving mediocrities still stands, albeit more precariously than ever. In El Pais‘ latest poll of voters’ intentions in next year’s general election, the Popular Party (PP) was, for the first time in decades, relegated to third place. Indeed, the two incumbent parties – the PP and PSOE – were unable to muster 50% of the vote between them. The most popular party in the poll was Podemos, a stridently left-wing political movement founded just at the beginning of this year. In May’s European elections the party picked up five seats; now, six months later, it is apparently the hottest contender for the spoils in next year’s general election, picking up 27% of the votes polled – 6%% more than PP and one more than PSOE.

Lead by Pablo Iglesias, a firebrand (or as the right-wing media like to call him “demagogic”) 35-year-old professor of political science, Podemos has masterfully exploited the general public’s disaffection with a political establishment that serves no one’s interests but its own – and, of course, those of the country’s biggest businesses and banks. The political establishment is quite rightly blamed for stoking and feeding the country’s biggest ever real estate bubble. Thanks to a change in the property laws enacted in 1997 by the Aznar government, local and regional administrations were encouraged to part-finance themselves through granting authorization for ever larger public and private construction projects, many of which turned out to be white elephants (empty toll roads, high-speed train stations planted slap bang in the middle of nowhere, ghost airports…).

That same corrupt government demands the moral high road when it comes to Catalunya.

• Catalans Prepare to Open the Polls in Defiance of Spain (Bloomberg)

In more than 900 towns across Catalonia, an army of volunteers is preparing to open polling stations today and offer compatriots a vote on independence in defiance of Spain’s central government and its highest court. The informal ballot, stripped of legal validity by a Constitutional Court ruling in September, poses two questions: Do you want Catalonia to be a state? And should that state be independent? Separatists led by regional president Artur Mas aim to win a majority in favor of breaking up Spain and use that mandate to force Prime Minister Mariano Rajoy to negotiate. The runup to the vote has been marked by legal salvos: Rajoy’s government reminded public officials in Catalonia of their obligation to respect the Constitutional Court ban as Mas had an appeal to that ruling thrown out by the Supreme Court.

The Catalan government talked of filing a lawsuit against Spain in an international court while an activist group in Madrid responded with its own suit to state prosecutors demanding police halt the balloting. “The Spanish government is being really short-sighted,” said Alex Quiroga, a lecturer in Spanish history at Newcastle University in England. “Continually saying ‘no’ and appealing to the Constitutional Court doesn’t help. It’s clear that only through negotiation can they solve the problem.” Spain’s prosecutor’s office in Catalonia asked regional police to report on any public-sector premises such as schools being used for the vote and to gather information about the persons responsible for allowing their use, according to an e-mailed statement from the prosecutor. It also requested Catalonia’s Education Department to explain whether it asked principals to allow the schools to be used for the vote.

Great story. “All three keys needed to access the vault were kept in his personal safe.”

• The Albanian World Cup Gambler Who Robbed The National Vault (Reuters)

In the end, it wasn’t the security cameras or the audit inspections in the vault of Albania’s central bank that brought down Ardian Bitraj. It was the high blood pressure and lack of sleep, the burden of a multi-million-dollar secret. Sitting down with his boss this July, Bitraj confessed his deception: over a four-year period he had stolen the equivalent of $6.5 million from the vault, covering his tracks by stuffing the empty cash boxes with books and balls of string. The revelation brought down the central bank governor, led to the arrest of 18 employees and tarnished the reputation of an institution once lauded for its professionalism. And all for the sake of a gambling habit that led to massive losses, culminating in a series of fatal bets on the soccer World Cup.

The full story of the Balkan bank heist is only just emerging, gleaned by Reuters in interviews with bankers, investigators and others involved, and from legal documents including a transcript of Bitraj’s confession. It started in May 2010, when Bitraj, who had risen to become head of the cash processing department at the bank, first opened the metal and plastic clasps to the wooden boxes that hold its cash reserves in the cryptically named X Building on the outskirts of the capital Tirana. Bitraj, 45, had a penchant for placing bets on soccer matches, so roughly once a month he would wait for his co-workers to leave the room and swipe up to 2 million leks, roughly $18,000, according to the confession.

Choosing carefully how he returned the boxes, Bitraj would make sure those he had tampered with were not in line for delivery to Albania’s commercial banks, nor likely to be picked on in the regular random audit of the vault. As the thefts mounted, he would stuff the boxes with packaging, balls of string and books to replace the weight of the cash. All three keys needed to access the vault were kept in his personal safe. In statements to police, bank employees said they had not received any directive on how or where to store the keys. Bitraj says auditors checked only 2% of the cash boxes in the vault. Fired governor Ardian Fullani says it was 5%, maintaining that checks in the former communist country were comparable with other central banks in Europe.

Beware the US economy, or rather the reports and excuses that will be written on the cold.

• Prepare For An Invasion From The North: “Polar Vortex, The Sequel” (CBS)

Prepare yourself for an invasion from the north. A blast of polar air is about to send temperatures plunging in the heart of America. It’s the return of the polar vortex that brought misery a year ago. A mass of whirling cold air will dip southward this weekend, sending the mercury plunging. As the cold air moves south and east, it has the potential to affect as many as 243 million people with wind chills in the single digits in some places and snow. It’s all triggered by a Super Typhoon named Nuri. Images from the European Space Station show that Nuri is a growing meteorological bomb blanketing the Bering Sea. The 50-foot waves and 100 mile-an-hour winds will make conditions similar to those we had two years ago, and could make Nuri the biggest storm of the year.

But it would be wrong to think that it will affect only Alaska’s far-flung Aleutian Islands or those famous fishermen who work in the North Pacific. WBBM’s meteorologist Megan Glaros in Chicago explains. “The remnants of Super Typhoon Nuri will create a big buckle in the jet stream,” Glaros says. “And in several days time, it’s going to mean a big dip in the jet which will connect us with a big mass of Arctic air – taking temperatures east of the Rockies down to 10 to 30 degrees below average.” Say “a big mass of arctic air” to anyone who lives in the Midwest and it conjures painful memories of the dreaded polar vortex that hit the region last winter.

“A rapid advance of Eurasian snow cover during the month of October favors that the upcoming winter will be cold across the Northern Hemisphere …”

• Harsh Winter Outlook Made More Dire by Siberia Snow (Bloomberg)

Remember how evidence was mounting last month that early snowfall was accumulating across Siberia? And remember how there’s a theory that says this snowfall signals a cold winter? So in the two and a half weeks since, the news for the winter-haters has, unfortunately, only gotten worse. About 14.1 million square kilometers of snow blanketed Siberia at the end of October, the second most in records going back to 1967, according to Rutgers University’s Global Snow Lab. The record was in 1976, which broke a streak of mild winters in the eastern U.S. In addition, the speed at which snow has covered the region is the fastest since at least 1998. Taken together they signal greater chances for frigid air to spill out of the Arctic into more temperate regions of North America, Europe and Asia, said Judah Cohen, director of seasonal forecasting at Atmospheric and Environmental Research in Lexington, Massachusetts, who developed the theory linking Siberian snow with winter weather.

“A rapid advance of Eurasian snow cover during the month of October favors that the upcoming winter will be cold across the Northern Hemisphere,” Cohen said in an interview yesterday. “This past October the signal was quite robust.” There are a few steps to get from the snows of Siberia to the chills in New York City. Cold air builds over the expanse of snow, strengthening the pressure system known as a Siberian high. The high weakens the winds that circle the North Pole, allowing the cold air to leak into the lower latitudes. The term Polar Vortex actually refers to those winds, not the frigid weather.

The connection between our souls and our living world was lost in our heads long ago. 147 million fewer sparrows, a drop of 62% of their total population, since 1980; starling numbers have fallen by 45 million or 53%; skylarks are down by 37 million (46%).

• Bird Decline Poses Loss Not Just For Environment, But Human Soul (Guardian)

‘That’s a buzzard!” says Richard Gregory, gesturing at a tall birch tree stump 50 metres or so away, from which a flapping streak of brown and white has just disappeared. “That was a buzzard. That’s one of the ones I was telling you about. It’s back.” When Gregory was a young child, toddling around the green bits of Cheshire with a monocular, a glimpse of a buzzard made for a thrilling day out – though he was mad about birds by the age of four, he was in his teens before he ticked the large raptor off his list. Now, though, thanks to reintroduction projects and legal protections, its number and that of several other birds of prey is on the up in Britain.

We glimpse another one, as it happens, a few minutes later, and while I suppose there is just a possibility it was the same bird on a second swoop, I’m counting that as a double sighting. The recovery in recent decades of Britain’s raptor population is welcome for a number of reasons. Firstly, it means I was right after all that time I spotted a red kite while driving up the A1 and everyone else in the car said I was talking rubbish. Secondly, it’s a snatch of good news in what could otherwise seem an unrelentingly grim picture. These are bad days to be a bird. A study released this week found that the most common birds in Europe are declining at an alarming rate, and that is not an idle term.

By studying 30 years of data across 25 countries, conservationists estimated that there are now a brain-boggling 421 million fewer birds flapping across the continent’s skies than were around in 1980. House sparrows alone account for a third of that decline, with 147 million fewer birds, a drop of 62% of their total population; starling numbers have fallen by 45 million or 53%; skylarks are down by 37 million (46%). Yes, the marsh harrier has recovered a bit, and feral pigeons and ring necked parakeets are doing well in cities, but overall, concluded the report, “global biodiversity is undergoing unprecedented decline”, and some of the species taking the hardest hit are birds which were once, not so long ago, abundant in our skies.

Debt Rattle Apr 23 2014: QE Is A Fraud Perpetrated By Made Men

Apr 232014

April 23, 2014 Posted by Raúl Ilargi Meijer at 2:12 pm Finance Tagged with: Fraud, Japan, Krugman, QE, Sweden 3 Responses »

Arthur Rothstein Planting beans near Belle Glade, Florida January 1937

QE Is A Fraud Perpetrated By Made Men

A lot of words are being spent again these days on deflation and the QE measures that are supposed to “cure” it. Paul Krugman, who when it comes to stimulus is a hammer seeing nails only, now has it in for Sweden’s central bank, which he labels monetary sadists for not opening the spigots. But it’s all a hugely deceptive false flag; it’s not an issue of whether you launch QE or not. There’s a third, and much more valid, way of looking at this.

First of all, one should wonder if QE is the right kind of stimulus, if growth and recovery in the real economy is the objective. Which in present circumstances is a very big IF ,that is surprisingly, hardly ever questioned. But if the real economy is the target area, it’s highly likely that something like Steve Keen’s version of a debt jubilee, where every citizen receives an X amount, first to be used to pay off any debts, would be far more effective. Or the Positive Money ideal, in which central banks, not commercial banks, have the ability to create fresh credit.

However that may be, what everybody should realize is that QE or another form of stimulus MIGHT work, but only if they’re executed in the proper fashion, that is, if debts are restructured at the same time stimulus is unleashed, i.e. the financial system is purged, which is the only way to restore trust and confidence. Debt restructuring must be a core element of any stimulus, and if it’s not, wherever you live, you know you’re being screwed.

In essence, what central banks have done so far, first in Japan, then in the US and EU, is to cordon off the debts residing in their banks (e.g. in the form of swaps and not-so-securities), and then flood these same banks with money/credit, in order to make them look healthy. Since all these nations’ banks have the same debt issues, they all agreed to ignore each other’s obvious sleight of hand. And anyone can understand that if these banks are still sitting on huge amounts of debt, any and all stimulus must and will at some point disappear into a bottomless black hole, albeit only after first having pumped up asset markets to new bubble heights and creating a temporary and entirely false impression of growth and recovery, with one more round of fat profits for the zombified financial system, and eventually leaving behind an economic landscape for which the term scorched earth would be sheer flattery.

If one thing should be clear, it’s that this does nothing to either fight deflation, induce growth or launch a recovery. It paints rosy pictures on a shiny and alluring screen, behind which present and future generations are being robbed blind. And even if it might be too much to ask, it would be good if it also became clear that QE has never been intended to heal the real economy, other than perhaps as a secondary side-effect. The purpose of QE is, and always has been, to keep banking systems standing as long as is deemed desirable, after which point the insiders clear out with their gains and the public at large will be left with the losses. QE is merely another way to transfer losses from “them” to you.

A stinging rebuttal of Krugman and his ilk comes, via Tyler Durden, from Phoenix Capital Research, where Kool-Aid is not a favorite in the vending machine.

Japan Has Proven That Central Banks Cannot Generate Growth With QE

The Keynesian economists managing or advising the world’s Central Banks have always averred that they could pull us out of the weakest recovery in the post-WWII era if they were allowed to have their way. Their “way” involves rampant debt monetization, also called Quantitative Easing or QE. Indeed, the primary argument from the Keynesians as to why QE has thus far failed to generate a rip-roaring recovery is that none of the QE programs in place were large enough. Japan is where the Keynesian economic model rubber hit the road. In April 2013, the Bank of Japan announced a staggering $1.4 trillion QE program. In today’s world of Central Banking madness, $1.4 trillion no longer sounds like an insane amount. So let me put this number into perspective… $1.4 trillion is…

The equivalent of 24% of Japan’s total annual economic output.

Enough to fly every human being in Japan to California for a 2-week vacation.

The equivalent of writing a check for $11,200 to every man, woman, and child in Japan.

Moreover, with $1.4 trillion, you could…

Buy Australia’s entire economy for a year.

Fund NASA for the next 82 years.

Treat every person on the planet to a $200 five star dinner at one of New York’s top restaurants.

For the US to engage in an equivalent amount of QE, it would have to announce a $3.7 trillion QE program. If Europe engaged in a QE program of this magnitude, it could buy back ALL of Spain and Greece’s debt outstanding. Suffice to say, Japan’s QE was large enough that no one, not even the most stark raving mad Keynesian on the planet, could argue that it wasn’t big enough. Which is why the results are extremely disconcerting for Central Bankers at large.

[..] Abenomics has failed to revitalize Japan. Just as importantly, this failure [..] is costing Abe his popularity (his ratings have fallen from 75% at re-election to roughly 50% now). Thus, the Bank of Japan’s massive QE campaign has revealed:

That QE does not generate economic growth

There will be political consequences for its failure

As much as I appreciate Phoenix Capital’s input, I also find some crucial points missing in this analysis. While I’m no fan of either Krugman or his Keynesianism on steroids, I don’t think they irrevocably refute the potential of QE as a ways to stimulate an economy. I’ve already said that I don’t think QE is the best way to accomplish that, but I think it’s more important to note that QE without debt restructuring cannot possibly work, because A) the debt is likely to swallow up all QE and more, and B) no confidence is restored. And what I find yet more important than that is that QE as it has been executed thus far is not a failure, as Phoenix contends, but a multi-trillion dollar fraud. Because central bankers are very aware of both points A) and B).

Racking up deficits and balance sheets for governments and central banks in order to prop up the zombified corpses of financial institutions that have wagered big and lost bigger, without making sure the debts and losses are purged that made them need the stimulus in the first place, is nothing but the biggest heist in human history. Moreover, if you could fight deflation with stimulus, this certainly wouldn’t be the way to go. If Japan, instead of handing it to its banks, would simply actually have given $11,200 to every man, woman, and child in Japan, the chances of raising the velocity of money, a crucial element of in/deflation, would have been much higher.

And I’m supposed to think that central bankers don’t understand this? I’m sorry, but that’s something I can’t get through my head. From where I’m sitting, people like Greenspan and Bernanke and Kuroda look far more like wise guys or made men than they look like oracles or wise old academic types who unfortunately got things wrong on occasion.

And before I forget, the fact that QE has been implemented as it has doesn’t only tell us something about the political power of the financial system, which can do this simply because they can, it also gives an indication of how vast the losses truly are, how foul the smell emanating from the paper hidden in the bank vaults truly is by now, 7-odd years into this Kabuki meets ancient tragedy performance for which ticket prices keep rising exponentially.

Yeah, the US economy is doing oh so great, isn’t it?

• America’s Consumers Are Dropping, Not Shopping (Alhambra)

McDonald’s latest results confirm that something is very much amiss on the consumer side. Total global revenue grew only 1% Y/Y, including new store launches and acquisitions. However, as has been the pattern since 2012, US comparable store sales lagged markedly. The rate of contraction in Q1 was actually the worst in more than a decade.

Even if you believe that the cold and snow of January and February played a role, it could not have explained that comparison. There is simply no way that anything other than consumer exhaustion can create the chart above. One need only glance at the revenue history of companies in the S&P 500 to see that in full effect. If McDonald s persistent travails are limited to the company, or even the fast food industry, there is no way that the revenue pattern for MCD would so match closely that of the entire S&P 500. The commonality screams macro.

Current projections for the first quarter add up to about 2.5% revenue expansion across S&P 500 companies, but, as last quarter showed, that is likely overly optimistic (fourth quarter revenue was believed to be expanding at near 3% at the outset of earnings season in January 2014, only to be revised lower to almost 0%).

I think they already figured that out.

• The American Middle Class Is No Longer the World’s Richest (NY Times)

The American middle class, long the most affluent in the world, has lost that distinction. While the wealthiest Americans are outpacing many of their global peers, a New York Times analysis shows that across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades. After-tax middle-class incomes in Canada — substantially behind in 2000 — now appear to be higher than in the United States. The poor in much of Europe earn more than poor Americans. The numbers, based on surveys conducted over the past 35 years, offer some of the most detailed publicly available comparisonsfor different income groups in different countries over time.

They suggest that most American families are paying a steep price for high and rising income inequality. Although economic growth in the United States continues to be as strong as in many other countries, or stronger, a small percentage of American households is fully benefiting from it. Median income in Canada pulled into a tie with median United States income in 2010 and has most likely surpassed it since then. Median incomes in Western European countries still trail those in the United States, but the gap in several — including Britain, the Netherlands and Sweden — is much smaller than it was a decade ago.

The weather?

• Sales of Existing U.S. Homes Fall for a Third Month (Bloomberg)

Sales of previously owned homes fell in March for a third consecutive month as rising prices and a lack of inventory discouraged would-be buyers. Closings, which usually take place a month or two after a contract is signed, fell 0.2% to a 4.59 million annual rate, the lowest level since July 2012, the National Association of Realtors reported today in Washington. Purchases were down 8.5% compared with the same month last year before adjusting for seasonal patterns. Property values have climbed faster than wages, putting ownership out of reach for some Americans. Harsh winter weather in January and February also probably kept some properties off the market, contributing to a lack of supply that has further stoked price increases.

David Stockman is on the right track.

• America’s Housing Fiasco Is On You, Alan Greenspan (Stockman)

In truth, America’s baby-boom generation was robbing its own future retirement years, but the Maestro was oblivious. Instead, he was busy tracking the quarterly rate of MEW (“mortgage equity withdrawal”) and crowing about how it was contributing to unprecedented prosperity on Main Street. It ended up in a conflagration of exploitive lending, fraud, default and trillions of financial losses, of course, but not until $5 trillion of cumulative MEW during the decade through 2007 had ruined the financial well-being of America’s middle class for a generation to come.

Under a regime of free market interest rates $5 trillion of MEW—that is, robbing from the future to party today—could not have happened. Long before the 2003-2006 blow-off top, mortgage interest rates would have soared to double digit levels, causing monthly debt service requirements to double or triple. Moreover, in an environment of market-set interest rates there would have been no Greenspan Put or ultra cheap wholesale financing that enabled Wall Street to fund mortgage boiler shops with warehouse credit lines and buyers of its toxic securitization products with cheap repo.

In short, free market interest rates are the vital check and balance mechanism which prevents runaway spirals of debt issuance and frenzied bidding-up of asset prices. Yet it was Greenspan’s “wealth effects” doctrine that destroyed the mechanism of honest price discovery once and for all. The carnage that has ensued in the nation’s credit and housing markets, therefore, is on you, Alan Greenspan.

“More Policy” is needed?

• China Factory Activity Shrinks For Fourth Month

China’s factory activity shrank for the fourth straight month in April, signaling economic weakness into the second quarter, a preliminary survey showed on Wednesday, although the pace of decline eased helped by policy steps to arrest the slowdown. Analysts see initial signs of stabilization in the economy due to the government’s targeted measures to underpin growth, but believe more policy support may be needed as structural reforms put additional pressure on activity. The HSBC/Markit flash Purchasing Managers Index (PMI) for April rose to 48.3 from March’s final reading of 48.0, but was still below the 50 line separating expansion from contraction.

Wham! Don’t miss the video.

• China ‘A Ticking Time Bomb And A Big Shock’s Coming’ (Saxo Bank)

(Roll over for video)

Markets are massively underestimating the deflationary fallout that’s going to come from a big decline in China and other emerging markets. That’s according to Michael Ingram, Market Strategist at BGC Partners. China’s manufacturing sector continues to shrink. On Tuesday, the HSBC PMI index for April came in at 48.3. Anything below 50 shows a contraction. China’s yuan hit a 16-month low on the news. Michael says China’s efforts to re-balance its economy is taking its toll and he’s not sure it can be managed effectively. He says that we’re not seeing “risk off” right now, we’re seeing “growth off”. Any suggestion that emerging markets have decoupled from developed economies is “nonsense”, according to Michael and China’s a “ticking time bomb” that’s about to explode.

I like Shilling, but seeing him quote Lagarde to get his point across makes me queasy.

• Deflation Is About to Wallop Europe (A. Gary Shilling)

The euro has been defying gravity for years. Europe’s Teutonic North and Club Med South were joined under one monetary policy. But the 18-member euro area has no common fiscal policy and probably never will, given its vast cultural and economic differences. This hardly makes the euro a safe-haven currency. After dropping from 1.60 per U.S. dollar to 1.20 during the global recession, the euro has risen to 1.38. And that’s despite Europe’s follow-on recession, which began in the fourth quarter of 2011 and lasted six quarters. Real gross domestic product growth since then has averaged only 0.9% annually, well below the 2.3% in the U.S. Does the euro really deserve to be strong against the greenback?

It is true that the financial crisis has abated since European Central Bank President Mario Draghi said in July 2012 that the central bank was “ready to do whatever it takes” to preserve the euro. Since then, the yield on 10-year Spanish government issues dropped from a junk-bond level of 7.6% to 3.1%, close to the 2.6% yield on the 10-year U.S. Treasury note. Italian sovereigns, meanwhile, have fallen from a 6.6% yield to 3.1%. The days of euro strength may be numbered, however, because of mushrooming fears of deflation in Europe.

Average house prices in the euro area have dropped 5% since the second quarter of 2011. More important, inflation increased a mere 0.5% in March from a year earlier. Since January 2013, inflation has been below the ECB’s target of “just under 2.0%.” In the 28-country European Union, inflation was just 0.6% in March versus a year earlier. Bankers and policy makers worldwide are deeply worried about trivial inflation in the euro area turning into chronic deflation. Christine Lagarde, the chairman of the International Monetary Fund, said in a January speech: “We see rising risks of deflation, which could prove disastrous for the recovery. If inflation is the genie, then deflation is the ogre that must be fought decisively.”

All roads lead to ruin.

• QE From ECB? May Not Be The Panacea Many Hope (CNBC)

Amid hopes that the ECB will undertake a move to stimulate the economy that will revive sluggish growth and low inflation levels, while simultaneously easing the euro’s stubborn strength and boosting equity and bond prices, Capital Economics said there are potential routes it could take if easing takes on the form of QE. “If the main concern is that the weakness of the banking sector is holding back economic growth, it would make sense to focus additional purchases on private sector assets,” said Jessop. This option, the economist said, would have the largest positive impact on the euro zone equity and corporate debt prices. However, it could have the undesirable impact of strengthening the euro as the relative strength of the region’s riskier financial assets increase, which would be negative for core government debt.

A second option would involve the ECB specifically targeting the risk of deflation by boosting the money supply. This could prompt the ECB to focus on the purchase of government bonds. However, this could have the adverse effect of strengthening the euro if it undermines the fiscal discipline of the Southern European countries where yields have already fallen to levels hard to justify in terms of the outlook for public finances, Jessop pointed out. The third scenario would involve the purchases of higher-rated German or French bonds, which Jessop said might go furthest in weakening the euro. But the impact could be limited as yields on these instruments are already very low as investors have priced in the risk of deflation.

• Krugman Slamming Riksbank Fuels Deflation Anxiety (Bloomberg)

The Riksbank, the world’s oldest central bank, has become a sadist in its use of monetary policy, according to Nobel Laureate Paul Krugman. He says the Stockholm-based central bank’s bias toward tight policy during the financial crisis was a “terrible mistake” that now risks creating a Japan-style deflationary spiral. The criticism has the potential to weaken the exchange rate as international investors “question the Swedish economic development,” according to SEB AB, the Nordic region’s biggest currency trader. Krugman’s comments go to the heart of a debate that’s splitting policy makers at Sweden’s central bank.

Governor Stefan Ingves has consistently warned that low rates risk fueling a credit bubble. The bank’s pro-easing lobby – two of its six board members – argue too-tight policy is keeping people out of work and making the 2% inflation target harder to reach. Some economists even warn that Ingves risks undermining his debt fight if prices continue to fall. “The closer you get to deflation, the worse the debt problems get, unless you lower rates,” Par Magnusson, an economist at Royal Bank of Scotland Group Plc in Stockholm, said in a phone interview. “That is fatal. Then you have to do everything in your power to get inflation going, because that’s the only thing that can hollow out the debt and help households pay off their loans.”

Ingves, who is also chairman of the Basel Committee on Banking Supervision that Krugman describes as a “sadomonetarist stronghold,” said in an interview this month he expects inflation to return. Yet he was soon wrong-footed by a report that showed prices fell 0.6% in March from a year earlier, twice as much as the bank had predicted. “Whatever their motives, sadomonetarists have already done a lot of damage,” Krugman wrote in his April 21 New York Times column. “In Sweden they have extracted defeat from the jaws of victory, turning an economic success story into a tale of stagnation and deflation as far as the eye can see.”

Leave it to the Telegraph to miss already in the headline.

• Swedish Lessons Show Even Deflation Can’t Cure The Housing Bubble (Guardian)

Last week Sweden became the first northern European country to report that it had fallen into outright price deflation, a state of affairs that worries economists because if consumers and companies expect falling prices, they tend to postpone purchases, investment and hiring, potentially leading to a downward spiral in demand. The reason Stockholm’s plight is attracting more attention than the rest of Europe, where eight countries are now in price deflation, is because Sweden came through the financial crisis relatively unscathed. Unlike others, it also still has its own currency and therefore retains control over monetary policy.

Yet, despite these apparent advantages, Sweden now finds itself in much the same boat as the depressed periphery countries of the eurozone, at least in terms of price inflation. How did this come about and what lessons does it hold for Britain, where some of the pressures on monetary policy – including fast inflating house prices and relatively high levels of household indebtedness – look remarkably similar to those of Sweden? The standard script goes something like this. Having had its own very deep banking and economic crisis back in the early 1990s, Sweden was much better prepared for the latest one than most other European countries. In the early stages of the crisis, it also did many of the right things.

• Draghi Gauges Ukraine Effect as ECB Tackles Low Inflation (Bloomberg)

Mario Draghi can look for clues from euro-area companies this week on whether the region needs more stimulus to counter economic risks from low inflation to geopolitical tension. Purchasing managers’ indexes tomorrow are forecast to show growth in manufacturing activity holding at the weakest pace this year. Figures the following day may show declining business confidence in Germany, the region’s biggest economy, in a survey published shortly before the European Central Bank president speaks in Amsterdam.

A territorial dispute between Russia and Ukraine, which supply much of Europe’s energy, is undermining confidence in a recovery already threatened by a strengthening currency and subdued pricing power. That raises the prospect of ECB officials being called on their promise to ease monetary policy if needed, including with unconventional tools such as quantitative easing. Tension in eastern Europe “could easily spark turbulences big enough to temporarily halt the euro-zone recovery,” said Christian Schulz, senior economist at Berenberg Bank in London. “It is the biggest risk to our optimistic growth forecasts for the euro zone at the moment.”

• Japan Has Proven That Central Banks Cannot Generate Growth With QE (Phoenix)

The Keynesian economists managing or advising the world’s Central Banks have always averred that they could pull us out of the weakest recovery in the post-WWII era if they were allowed to have their way. Their “way” involves rampant debt monetization, also called Quantitative Easing or QE. Indeed, the primary argument from the Keynesians as to why QE has thus far failed to generate a rip-roaring recovery is that none of the QE programs in place were large enough.

Japan is where the Keynesian economic model rubber hit the road. In April 2013, the Bank of Japan announced a staggering $1.4 trillion QE program. In today’s world of Central Banking madness, $1.4 trillion no longer sounds like an insane amount. So let me put this number into perspective… $1.4 trillion is…

1) The equivalent of 24% of Japan’s total annual economic output.
2) Enough to fly every human being in Japan to California for a 2-week vacation.
3) The equivalent of writing a check for $11,200 to every man, woman, and child in Japan.

Moreover, with $1.4 trillion, you could…

1) Buy Australia’s entire economy for a year.
2) Fund NASA for the next 82 years.
3) Treat every person on the planet to a $200 five star dinner at one of New York’s top restaurants.

For the US to engage in an equivalent amount of QE, it would have to announce a $3.7 trillion QE program. If Europe engaged in a QE program of this magnitude, it could buy back ALL of Spain and Greece’s debt outstanding. Suffice to say, Japan’s QE was large enough that no one, not even the most stark raving mad Keynesian on the planet, could argue that it wasn’t big enough. Which is why the results are extremely disconcerting for Central Bankers at large. To whit, since announcing this program Japan has seen:

1) GDP growth accelerate for only two quarters before turning down again.
2) Prices rise for nine straight months… pushing Japan’s cost of living to a five year high.
3) Household spending crater 2.5% year over year in real terms.
4) The Yen lose an astounding 25% of its purchasing power.
5) Multiple new record trade deficits, with January being the worst ever January on record… ditto for October, November and December last year.
6) Over 77% of Japanese citizens not feeling as though Japan’s economy is improving.

In simple terms, Abenomics has failed to revitalize Japan. Just as importantly, this failure is being noticed by the press (articles regarding the failure of Abenomics have emerged in Forbes, the Financial Times, and CNBC) and is costing Abe his popularity (his ratings have fallen from 75% at re-election to roughly 50% now). Thus, the Bank of Japan’s massive QE campaign has revealed:

1) That QE does not generate economic growth
2) There will be political consequences for its failure

Now, Central Bankers will never openly admit that they or their policies have failed. But Japan has proved that they have. It’s only a matter of time before the world catches on.

Hussman’s a good analyst but he sees the Fed as a charity organization.

• The Federal Reserve’s Two Legged Stool (John Hussman)

In her first public speech on monetary policy, Janet Yellen made it clear that the Fed intends to pursue a more rules-based, less discretionary policy. This is good news. The bad news, however, is that Yellen focused only on employment and inflation. In that same speech, not a single word was said about attending to speculative risks or financial instability (which are inherent in Fed-induced, yield-seeking speculation). Without attending to that third leg, the Fed is resting the fate of the U.S. economy on a two-legged stool.

The problem is this. In viewing the Fed’s mandate as a tradeoff only between inflation and unemployment, Chair Yellen seems to overlook the feature of economic dynamics that has been most punishing for the U.S. economy over the past decade. That feature is repeated malinvestment, yield-seeking speculation, and ultimately financial instability, largely enabled by the Federal Reserve’s own actions. To overlook yield-seeking speculation as a central element connected to the Federal Reserve’s mandate is to invite a repeat of dismal economic consequences over and over again.

The Fed’s mandate need not explicitly refer to financial stability – it is enough to recognize that the failure to take speculation, malinvestment, and financial stability seriously has been one of the primary causes of economic and financial crises that prevent the Fed from achieving that mandate. Indeed, the Fed has again baked such consequences into the cake as a result of its policy of quantitative easing, and an associated lack of appreciation for how equity valuations work (particularly the need to consider valuation multiples and profit margins jointly, whenever one uses earnings-based measures). Nearly every argument that stocks are not in a “bubble” begin with an appeal to 2000, as if the most extreme valuations in history should be a upside objective, below which anything else is acceptable. As long as conditions are not as extreme as 2000, the word “bubble” presumably cannot be applied.

Thing is, Bill, will the US be first to blow up? If not, how will that change outstanding bets?

• America’s Empire And Credit Bubble Are Reaching Their “Sell-By” Date (Bonner)

We made an observation last week: The US empire and its credit bubble will probably come to an end at the same time. Each depends on the other. If the US were not so big and powerful, it could not impose its money as the world’s reserve currency. Without its position as the issuer of the world’s reserve currency (dollars instead of gold), the US wouldn’t be able to flood the world with its cash. Without the rest of the world’s need for dollars, the credit bubble couldn’t continue growing. And without the credit growth there would be no way to pay the expense of maintaining a worldwide empire. This does not explain the miracle of “growth without savings” we discussed last week, but it gives us a hint as to what will happen when the trick no longer works.

All bubbles… and all empires… eventually blow up. An empire that depends on a credit bubble is doubly explosive. All it takes is a turn in the credit cycle, and the fuse is lit. We wrote a book on the subject, along with co-author Addison Wiggin, in 2006. From the invasion of the Philippines to the Vietnam War… the US empire was financed by the rich, productive power of the US economy. But as the war in Vietnam was winding down, the source of imperial finance changed from current output to future output. The US switched to a purely paper money system… and turned to borrowing to finance its military adventures.

Today’s blockhead puffs out his chest and enjoys feeling like a big shot. He passes the bill on to tomorrow’s taxpayer. The argument for heavy security spending collapsed between 1979 (when China took the capitalist road) and 1989 (when Russia abandoned communism). But by then, the “military-industrial complex” (or the military-industrial-congressional complex) President Eisenhower warned us about was already firmly in control of Washington. Presidents – Democrat and Republican – came and went. Nothing nor nobody could keep resources from the security industry.

“Enrollment in the plans – which allow students to rack up big debts and then forgive the unpaid balance after a set period – has surged nearly 40% in just six months”. Wow.

• US Student-Debt Forgiveness Plans, Costs, Skyrocket (WSJ)

Government officials are trying to rein in increasingly popular federal programs that forgive some student debt, amid rising concerns over the plans’ costs and the possibility they could encourage colleges to push tuition even higher. Enrollment in the plans—which allow students to rack up big debts and then forgive the unpaid balance after a set period—has surged nearly 40% in just six months, to include at least 1.3 million Americans owing around $72 billion, U.S. Education Department records show. The popularity of the programs comes as top law schools are now advertising their own plans that offer to cover a graduate’s federal loan repayments until outstanding debt is forgiven.

The school aid opens the way for free or greatly subsidized degrees at taxpayer expense. At issue are two federal loan repayment plans created by Congress, originally to help students with big debt loads and to promote work in lower-paying jobs outside the private sector. The fastest-growing plan, revamped by President Barack Obama in 2011, requires borrowers to pay 10% a year of their discretionary income—annual income above 150% of the poverty level—in monthly installments. Under the plan, the unpaid balances for those working in the public sector or for nonprofits are then forgiven after 10 years.

Private-sector workers also see their debts wiped clean—after a longer period of 20 years—reflecting a government aim to have no one, wherever they work, paying down student debt their entire working life. An independent study estimates the future cost of the 2011 program, known as Pay As You Earn, could hit $14 billion a year. The Obama administration has proposed in its latest budget released last month to cap debt eligible for forgiveness at $57,500 per student. There is currently no limit on such debt.

In California, this is truly sad. In Guatemala, it’s life.

• Number Of Middle Age Californians Living With Their Parents Soars (LA Times)

At a time when the still sluggish economy has sent a flood of jobless young adults back home, older people are quietly moving in with their parents at twice the rate of their younger counterparts. For seven years through 2012, the number of Californians aged 50 to 64 who live in their parents’ homes swelled 67.6% to about 194,000, according to the UCLA Center for Health Policy Research and the Insight Center for Community Economic Development. The jump is almost exclusively the result of financial hardship caused by the recession rather than for other reasons, such as the need to care for aging parents, said Steven P. Wallace, a UCLA professor of public health who crunched the data.

“The numbers are pretty amazing,” Wallace said. “It’s an age group that you normally think of as pretty financially stable. They’re mid-career. They may be thinking ahead toward retirement. They’ve got a nest egg going. And then all of a sudden you see this huge push back into their parents’ homes.” Many more young adults live with their parents than those in their 50s and early 60s live with theirs. Among 18- to 29-year-olds, 1.6 million Californians have taken up residence in their childhood bedrooms, according to the data. Though that’s a 33% jump from 2006, the pace is half that of the 50 to 64 age group. The surge in middle-aged people moving in with parents reflects the grim economic reality that has taken hold in the aftermath of the Great Recession.

That only voice in America that goes against the grain. What if he’s no longer there?

• Ron Paul 2008 Speech On Disbanding NATO (Ron Paul)

Mr. Speaker, I rise in opposition to this resolution calling for the further expansion of NATO to the borders of Russia. NATO is an organization whose purpose ended with the end of its Warsaw Pact adversary. When NATO struggled to define its future after the Cold War, it settled on attacking a sovereign state, Yugoslavia, which had neither invaded nor threatened any NATO member state. This current round of NATO expansion is a political reward to governments in Georgia and Ukraine that came to power as a result of US-supported revolutions, the so-called Orange Revolution and Rose Revolution.

The governments that arose from these street protests were eager to please their US sponsor and the US, in turn, turned a blind eye to the numerous political and human rights abuses that took place under the new regimes. Thus the US policy of “exporting democracy” has only succeeding in exporting more misery to the countries it has targeted. NATO expansion only benefits the US military industrial complex, which stands to profit from expanded arms sales to new NATO members. The “modernization” of former Soviet militaries in Ukraine and Georgia will mean tens of millions in sales to US and European military contractors.

The US taxpayer will be left holding the bill, as the US government will subsidize most of the transactions. Providing US military guarantees to Ukraine and Georgia can only further strain our military. This NATO expansion may well involve the US military in conflicts as unrelated to our national interest as the breakaway regions of South Ossetia and Abkhazia in Georgia. The idea that American troops might be forced to fight and die to prevent a small section of Georgia from seceding is absurd and disturbing. Mr. Speaker, NATO should be disbanded, not expanded.

Sort of good, but …

• Russia Postpones Planting Of GMO Seeds By 3 Years (RT)

Russia will not start certifying GM seeds for at least three more years due to delays in creating the necessary infrastructure, Prime Minister Dmitry Medvedev told MPs. Earlier Russia had expected to allow planting such seeds from June. The delay comes amid the general GMO-skeptic mood that the Russian government adopted recently. The country may even ban the cultivation and import of genetically modified foodstuffs. Last year, the government allowed the planting of GM seeds starting July 2014 as part of Russia’s accession to the World Trade Organization. Now the deadline will have to change, Medvedev told Russian MPs.

“The government decree will be amended. Not because it was wrong, but because the deadline stipulated in it was too optimistic,” he said, explaining that at the moment there are not enough gene laboratories to meet the demand for certification in Russia. “But even if the certification starts in three years or after some time, it doesn’t mean that we will allow the use of genetically modified material,” Medvedev said. He added that the labs and the entire system of certification will still be needed, considering that even with strict regulation of the sale of GM seeds, some of them have found their way into Russia. “The problem is that GM material is already everywhere,” Medvedev said. “We need to know where and how it is being used. The labs’ task would be to do that. That’s what we are planning to invest in.”

China’s undoubtedly the worst environmental nightmare in history. We ain’t seen nothing yet.

• Even China’s Dirt Is Dirty (Bloomberg)

Even the most choking of Beijing smogs eventually gives way to blue skies. The very impermanence of air pollution encourages optimism that it can be solved one day. The poisoning of China’s land and water is another matter altogether. Unlike smog, which can be seen the moment it leaves a smokestack, chemicals leaking from pipes into China’s soil and rivers may not be discovered for years or decades. By then, the damage may be incalculable and permanent. Last week’s release of data collected during a nearly nine-year national soil survey finally gave Chinese a chance to evaluate the devastating toll that 30 years of rapid industrial development has had on them, their food supply, and their country.

The numbers are astonishing. More than 16% of China’s 3.7 million square miles of soil is contaminated. Even worse, nearly a fifth of the country’s arable land is polluted. While the report doesn’t specify how badly, hints exist. In December, a senior Chinese official conceded that 2% of China’s arable land – an area the size of Belgium – had become too polluted to grow crops at all. According to the report, the most common soil pollutants are inorganic in nature. They include nickel, arsenic, and highly toxic cadmium – all metals associated with industrial activity. Unfortunately, the report doesn’t reveal the benchmarks used to decide whether a soil sample qualifies as “polluted,” so it’s impossible to perform a comparative analysis with soil contamination in other countries.

Nonetheless, the fact that the Chinese government was willing to publicize these numbers is significant. As recently as last spring the Ministry of Environmental Protection denied a request to release the very same data to the public. No doubt authorities were concerned about how ordinary Chinese might react to the data, given already rampant fears about the safety of Chinese crops. They may also have feared that the real situation could be worse than that documented in the survey, which built its data set by taking one sample per every 6,400 hectares of land. Needless to say, it’s easy to miss contamination hot spots using such a methodology (likewise, it’s possible to oversample).

Unfortunately, the government’s change of heart only has only gone so far. The report does not reveal the specific locations of the many thousands of pollution hotspots identified over the last eight-and-a-half years. That’s the kind of information that can help an individual or community make life-extending decisions. Instead authorities have only offered broad stroke data that starts a conversation about soil pollution, but doesn’t offer any immediate benefit to anyone except local bureaucrats, who might otherwise be vilified for having allowed their districts to be polluted.

You need 100,000 of these guys.

• Spain’s ‘Robin Hood’ Swindled Banks To Help Fight Capitalism (Guardian)

They call him the Robin Hood of the banks, a man who took out dozens of loans worth almost half a million euros with no intention of ever paying them back. Instead, Enric Duran farmed the money out to projects that created and promoted alternatives to capitalism. After 14 months in hiding, Duran is unapologetic even though his activities could land him in jail. “I’m proud of this action,” he said in an interview by Skype from an undisclosed location. The money, he said, had created opportunities. “It generated a movement that allowed us to push forward with the construction of alternatives. And it allowed us to build a powerful network that groups together these initiatives.”

From 2006 to 2008, Duran took out 68 commercial and personal loans from 39 banks in Spain. He farmed the money out to social activists, funding speaking tours against capitalism and TV cameras for a media network. “I saw that on one side, these social movements were building alternatives but that they lacked resources and communication capacities,” he said. “Meanwhile, our reliance on perpetual growth was creating a system that created money out of nothing.” The loans he swindled from banks were his way of regulating and denouncing this situation, he said. He started slowly. “I filled out a few credit applications with my real details. They denied me, but I just wanted to get a feel for what they were asking for.”

From there, the former table tennis coach began to weave an intricate web of accounts, payments and transfers. “I was learning constantly.” By the summer of 2007, he had discovered how to make the system work, applying for loans under the name of a false television production company. “Then I managed to get a lot.” €492,000 (£407,000), to be exact. [..] His actions, he said, were at the vanguard of a worldwide debate on the economic crisis. The timing pushed the anti-capitalist movement into the light, just as many Spaniards were seeking alternatives to a system that had wreaked havoc on their lives.

When David Hughes and Art Berman pop up at Bloomberg, you know something is moving.

• Is the U.S. Shale Boom Going Bust? (Bloomberg)

It’s not surprising that a survey of energy professionals attending the 2014 North American Prospect Expo overwhelmingly identified “U.S. energy independence” as the trend most likely to gain momentum this year. Like any number of politicians and pundits, these experts are riding high on the shale boom — that catch-all colloquialism for the rise of hydraulic fracturing and horizontal drilling that have unleashed a torrent of hydrocarbons from previously inaccessible layers of rock. But this optimism belies an increasingly important question: How long will it all last?

Among drilling critics and the press, contentious talk of a “shale bubble” and the threat of a sudden collapse of America’s oil and gas boom have been percolating for some time. While the most dire of these warnings are probably overstated, a host of geological and economic realitiesincreasingly suggest that the party might not last as long as most Americans think. For the better part of two centuries, the American oil and gas industry drew its treasure from porous underground formations where hydrocarbons moved comparatively easily to the surface. The best of those resources began to dry up in the 1970’s and imports began to rise. Enter hydraulic fracturing and horizontal drilling, technologies that allow developers to extract oil and gas from much deeper, tighter and far-less-porous rock formations, including shale.

The problems arise when you look at how quickly production from these new, unconventional wells dries up. David Hughes — a 32-year veteran with the Geological Survey of Canada and a now research fellow with the Post Carbon Institute, a sustainability think-tank in California — notes that the average decline of the world’s conventional oil fields is about 5% per year. By comparison, the average decline of oil wells in North Dakota’s booming Bakken shale oil field is 44% per year. Individual wells can see production declines of 70% or more in the first year.

Shale gas wells face similarly swift depletion rates, so drillers need to keep plumbing new wells to make up for the shortfall at those that have gone anemic. This creates what Hughes and other critics consider an unsustainable treadmill of ever-higher, billion-dollar capital expenditures chasing a shifting equilibrium. “The best locations are usually drilled first,” Hughes said, “so as time goes by, drilling must move into areas of lower quality rock. The wells cost the same, but they produce less, so you need more of them just to offset decline.”

Canada’s native peoples have views that are so different from predatory capitalism you need to fear for their safety and their futures.

• Canadian Aboriginals See No Compromise On Oil Sands Pipeline (Reuters)

Just a few miles from the spot where Enbridge Inc plans to build a massive marine terminal for its Northern Gateway oil pipeline, Gerald Amos checks crab traps and explains why no concession from the company could win his support for the project. Amos, the former chief of the Haisla Nation on the northern coast of British Columbia and a community leader, has argued for years that the risk – no matter how small – of an oil spill in these waters outweighs any reward the controversial project might offer. That resolve is shared by many in the aboriginal communities along the proposed pipeline and marine shipping route who see the streams, rivers and oceans in their traditional territories as the lifeblood of their culture.

“Our connection to this place that we call home is really important,” says Amos as he pulls three Dungeness crabs from his trap, tossing two in a bucket and holding the third up for his two young granddaughters, who shriek and giggle as the crustacean wriggles its legs. “If these little ones can’t witness us doing what we’ve done for generations now, if we sever that tie to the land and the ocean, we’re no longer Haisla.” The Northern Gateway pipeline would carry diluted bitumen 1,177 kilometers (731 miles) from Alberta’s oil sands to the deepwater port in Kitimat, in northwest British Columbia, where it would be loaded on supertankers and shipped to Asia. It is expected to cost C$7.9 billion ($7.17 billion).

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