Jul 262018
 
 July 26, 2018  Posted by at 7:36 am Finance Tagged with: , , , , , , , , , ,  


Roy Lichtenstein Forget it! Forget me! 1962

 

Trump Says Agreed With EU To Work To Lower Trade Barriers (R.)
Republicans Begin Impeachment Proceedings Against Rosenstein (ZH)
The Gray Lady Thinks Twice About Assange’s Prosecution (McGovern)
Facebook Stock Drops 24%, $132 Billion In Lost Market Value (MW)
China Pulls Approval For Facebook’s Planned Venture (R.)
This Stock Market Isn’t As Strong As You Think – Rosenberg (CNBC)
US Household Wealth Is In A Bubble – Part 2 (Colombo)
Prepare for a Chinese Maxi-Devaluation (Rickards)
A Weak US Dollar Will Not Make America Great (Lacalle)
Britain Is Hoarding Food, Medicines And Blood In Case Of No-Deal Brexit (Ind.)
There Is No Majority In UK Parliament For Any Brexit Deal (Ind.)
US Lawmaker Pranked By Sacha Baron Cohen To Resign (AFP)
Gene-Edited Plants And Animals Are GMO Foods – EU Top Court (G.)

 

 

What a good glass of wine can accomplish.

Trump Says Agreed With EU To Work To Lower Trade Barriers (R.)

U.S. President Donald Trump said on Wednesday the United States and the European Union were kicking off talks aimed at lowering trade barriers as officials looked to head off a brewing trade war. “This was a very big day for free and fair trade, a very big day indeed,” Trump told reporters at the White House after meeting with European Commission President Jean-Claude Juncker. “We are starting the negotiation right now but we know very much where it’s going,” Trump said. Speaking with Juncker at his side, Trump said they had agreed in talks to “work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods.”

“We will also work to reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans; soybeans is a big deal,” he said, adding that Europe would also step up purchases of liquefied natural gas from the United States. “They are going to be a massive buyer of LNG,” Trump said. Trump said the talks would “resolve” both the hefty tariffs the United States had placed on imports of steel and aluminum from the EU and the tariffs Europe had slapped on U.S. goods in response. It was not clear whether the two sides made any progress on the contentious issue of possible U.S. tariffs on imports of automobiles from Europe. But Juncker said they had agreed not to impose any new tariffs while talks were taking place.

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More to fight over.

Republicans Begin Impeachment Proceedings Against Rosenstein (ZH)

House GOP members led by Freedom Caucus Chairman Mark Meadows (NC) have filed formal articles of impeachment against Deputy Attorney General Rod Rosenstein, according to a late Wednesday announcement by Meadows over Twitter. News of the resolution comes after weeks of frustration by Congressional investigators, who have repeatedly accused Rosenstein and the DOJ of “slow walking” documents related to their investigations. Lawmakers say they’ve been given the runaround – while Rosenstein and the rest of the DOJ have maintained that handing over vital documents would compromise ongoing investigations. Not even last week’s heavily redacted release of the FBI’s FISA surveillance application on former Trump campaign Carter Page was enough to dissuade the GOP lawmakers from their efforts to impeach Rosenstein.

In fact, its release may have sealed Rosenstein’s fate after it was revealed that the FISA application and subsequent renewals – at least one of which Rosenstein signed off on, relied heavily on the salacious and largely unproven Steele dossier. In late June, Rosenstein along with FBI Director Christopher Wray clashed with House Republicans during a fiery hearing over an internal DOJ report criticizing the FBI’s handling of the Hillary Clinton email investigation by special agents who harbored extreme animus towards Donald Trump while expressing support for Clinton. Republicans on the panel grilled a defiant Rosenstein on the Trump-Russia investigation which has yet to prove any collusion between the Trump campaign and the Kremlin. “This country is being hurt by it. We are being divided,” Rep. Trey Gowdy (R-SC) said of Mueller’s investigation. “Whatever you got,” Gowdy added, “Finish it the hell up because this country is being torn apart.”

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Waking up?

The Gray Lady Thinks Twice About Assange’s Prosecution (McGovern)

Well, lordy be. A lawyer for The New York Times has figured out that prosecuting WikiLeaks publisher Julian Assange might gore the ox of The Gray Lady herself. The Times’s deputy general counsel, David McCraw, told a group of judges on the West Coast on Tuesday that such prosecution would be a gut punch to free speech, according to Maria Dinzeo, writing for the Courthouse News Service. Curiously, as of this writing, McCraw’s words have found no mention in the Times itself. In recent years, the newspaper has shown a marked proclivity to avoid printing anything that might risk its front row seat at the government trough.

Stating the obvious, McCraw noted that the “prosecution of him [Assange] would be a very, very bad precedent for publishers … he’s sort of in a classic publisher’s position and I think the law would have a very hard time drawing a distinction between The New York Times and WikiLeaks.” That’s because, for one thing, the Times itself published many stories based on classified information revealed by WikiLeaks and other sources. The paper decisively turned against Assange once WikiLeaks published the DNC and Podesta emails. More broadly, no journalist in America since John Peter Zenger in Colonial days has been indicted or imprisoned for their work.

Unless American prosecutors could prove that Assange personally took part in the theft of classified material or someone’s emails, rather than just receiving and publishing them, prosecuting him merely for his publications would be a first since the British Governor General of New York, William Cosby, imprisoned Zenger in 1734 for ten months for printing articles critical of Cosby. Zenger was acquitted by a jury because what he had printed was proven to be factual—a claim WikiLeaks can also make. McCraw went on to emphasize that, “Assange should be afforded the same protections as a traditional journalist.”

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Talk about waking up.

Facebook Stock Drops 24%, $132 Billion In Lost Market Value (MW)

Facebook Inc. is evidently not bulletproof. The social-media behemoth’s stock lost roughly one-fifth of its value in the extended session Wednesday after its earnings report missed expectations on revenue and showed slowing user growth. Weak guidance also rattled investors. Facebook stock dropped about 7% immediately after the earnings report was released, then plummeted to a loss of more than 20% as a conference call with analysts progressed. Close to 34 million shares changed hands in the extended session, well above the average volume of 17 million shares for a regular trading session over the past month. Should the losses hold into Thursday’s regular session, Facebook would lose more than $100 billion in market capitalization and lose the stock’s gains for the year thus far.

As the after-hours session wrapped up, Facebook was trading at $173.50, down 20%. Facebook stock had recovered from a decline earlier this year in the wake of the Cambridge Analytica scandal, one of several controversies and warning signs that the company had managed to weather with little damage to its stock. But declining revenue and user growth, topped by a warning from executives that it will continue, seemed to end that run. “The guidance, it’s nightmare guidance,” GBH Insights head of technology research Daniel Ives said. “If you look at their forecast for the second half of the year in terms of user growth, and the expense profile, it refuels the fundamental worries about Facebook post-Cambridge Analytica.”

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Why would Facebook want to be in China? To help Beijing spy?

China Pulls Approval For Facebook’s Planned Venture (R.)

China has withdrawn its approval for Facebook Inc’s plan to open a new venture in the eastern province of Zhejiang, the New York Times reported on Wednesday, citing a person familiar with the matter. A Chinese government database showed that Facebook had gained approval to open a subsidiary, but the registration has since disappeared, according to checks made by Reuters. The move is a setback for Facebook, which has been struggling to gain a foothold in China, the most populous country in the world, where its website and messaging app Whatsapp remain blocked.

The incident also illustrates how difficult it can be for a U.S. company to navigate the government bureaucracy in a country where so many technology firms have tried and failed. “Terms like ‘The Great Firewall’” often gives outsiders the impression that the Chinese government is totally united on technology policy,” said Matt Sheehan, an expert on China-California relations and fellow at The Paulson Institute think tank. “In reality, within that Firewall are lots of competing fiefdoms and ongoing turf wars.” China’s decision comes amid escalating tensions with the United States after the world’s two largest economies imposed tariffs on each other’s imports.

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It’s just 6 stocks.

This Stock Market Isn’t As Strong As You Think – Rosenberg (CNBC)

Don’t be fooled. This market is weaker than it seems, according to David Rosenberg, chief economist and strategist at Gluskin Sheff. The S&P 500 is up more than 5% in 2018, recovering from a correction earlier in the year. The broad index was also just 1.9% removed from an all-time high reached in late January as of Tuesday’s close. However, Rosenberg notes that while momentum stocks are lifting the market, “many subsectors are well off their highs: Homebuilders. Autos. Banks. Insurance. Consumer products. Telecom. Media. Transports. Utilities. Pharma. And many more.” The S&P automobiles and components industry group is nearly 20% below its 52-week high, while insurance stocks are down 10.8% from their one-year high. The Dow transports index, meanwhile, is 6.5% below its one-year high.

“What has kept the market near record terrain are a mere six stocks — Alphabet, Apple, Amazon, Netflix, Microsoft and Facebook,” Rosenberg said in a note to clients Wednesday. “Strip out these six flashy stocks, and the overall market has done practically nothing year-to-date.” Through mid-July, Alphabet, Apple, Amazon, Netflix, Microsoft and Facebook had contributed nearly 80% to the S&P 500’s gains. These six names have been on fire this year. Netflix and Amazon are up 86% and 57% in 2018, respectively. Microsoft and Facebook have both risen more than 20% while Alphabet and Apple have jumped 19.8% and 14%, respectively. Rosenberg said such concentration in the stock market has not been seen since the late 1990s, just before the dot-com bubble burst. “We know from history how these cycles typically end.”

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Jesse! So many graphs!

US Household Wealth Is In A Bubble – Part 2 (Colombo)

While above-average corporate profitability may sound like a good thing when taken at face value, I view it as another worrisome sign because it’s further evidence of an economy and financial markets that are being juiced by cheap credit and financial engineering. Ultra-low interest rates help to boost corporate profitability by reducing borrowing costs. Cheap credit also gives consumer spending a strong boost, which has a significant effect on our economy that is heavily driven by consumer spending. Low interest rate environments allow the government (federal, state, and local) to borrow more cheaply in the bond market and use it to boost spending, which gives the overall economy a shot in the arm. In addition, artificially-inflated financial markets boost the profitability of the financial sector.

A major risk for the stock market is the mean reversion of corporate profitability, which is a nightmarish prospect when considering how overpriced stocks currently are relative to earnings. This mean reversion is likely to occur as the result of the ending of ultra-cheap credit conditions (when corporate bonds fall back to earth) and through increased competition, which is what Milton Friedman warned about. (Note: critics may try to rebut my assertions by claiming that U.S. corporate profitability is unusually high due to corporations earning a higher percentage of earnings overseas. I’ve accounted for this by using gross national product as the denominator instead of the more commonly used GDP.)

What is particularly alarming about the current U.S. stock market bubble is the fact that it’s driven by a very narrow group of stocks, which means that there isn’t a healthy breadth, or broad strength, behind the bull market. In general, tech stocks have been leading the way – in particular, a group of stocks known as FAANG, which is an acronym for Facebook, Apple, Amazon, Netflix, and Google. The chart below compares the performance of the FAANG stocks to the S&P 500 during the bull market that began in March 2009. While the S&P 500 is up approximately 300%, the FAANGs are up significantly more, with Apple rising by over 1,000%, Amazon rising more than 2,000%, and Netflix surging by over 6,000%.

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Xi is cornered.

Prepare for a Chinese Maxi-Devaluation (Rickards)

If Trump imposes 25% tariffs on Chinese goods, China could simply devalue their currency by 25%. That would make Chinese goods cheaper for U.S. buyers by the same amount as the tariff. The net effect on price would be unchanged and Americans could keep buying Chinese goods at the same price in dollars. The impact of such a massive devaluation would not be limited to the trade war. A cheaper yuan exports deflation from China to the U.S. and makes it harder for the Fed to meet its inflation target. Also, the last two times China tried to devalue its currency, August 2015 and December 2015, U.S. stock markets crashed by over 11% in a matter of a few weeks.

So, if the trade war escalates as I expect, don’t worry about China dumping Treasuries or imposing tariffs. Watch the currency. That’s where China will strike back. When they do, U.S. stock markets will be the first victims. Maybe you think that’s unlikely because it would be such an extreme reaction by China. But you have to put yourself in the shoes of China’s leadership. These aren’t academic issues to China’s leaders. They go to the heart of the government’s very legitimacy. China’s economy is not just about providing jobs, goods and services. It is about regime survival for a Chinese Communist Party that faces an existential crisis if it fails to deliver. The overriding imperative of the Chinese leadership is to avoid societal unrest.

If China encounters a financial crisis, Xi could quickly lose what the Chinese call, “The Mandate of Heaven.” That’s a term that describes the intangible goodwill and popular support needed by emperors to rule China for the past 3,000 years. If The Mandate of Heaven is lost, a ruler can fall quickly. Up to half of China’s investment is a complete waste. It does produce jobs and utilize inputs like cement, steel, copper and glass. But the finished product, whether a city, train station or sports arena, is often a white elephant that will remain unused. Chinese growth has been reported in recent years as 6.5–10% but is actually closer to 5% or lower once an adjustment is made for the waste.

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The US is not export-driven.

A Weak US Dollar Will Not Make America Great (Lacalle)

The US dollar has become the safest asset in the face of mounting evidence that the “beggar thy neighbor” policy and drowning structural problems in liquidity is coming to a close. The reality is that the US dollar is strengthening because of the evidence of a deeper slowdown in China and the massive imbalances built by some emerging economies in the past -large fiscal and trade deficits financed with the cheap inflow of dollars-. As the US economy improves and others face the saturation of past stimuli, it is only logical that the United States sees a high inflow of funds from abroad. And that is good. Keeps US treasury yields low, a high demand for bonds and equities, and a steady increase in capital investment into the US economy.

There are many who think that the US economy will not accept a strong dollar. Allow me to doubt it. The US only exports around 10% of GDP and less than 30% of the profits of the S & P 500 come from exports. In the past nine years, devaluing and lowering rates has hurt the middle class, savers, workers, and high productivity companies. Those that voted for the current administration to make a drastic change on the past mistakes. A devaluation policy hurts more Americans than it helps. Devaluation is simply stealing from your citizens’ savings and disposable income. A strong US dollar reduces inflationary pressures and keeps interest rates low. Both effects are positive for savers, workers, and families as the economy strengthens and wages improve.

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Keep calm and….

Britain Is Hoarding Food, Medicines And Blood In Case Of No-Deal Brexit (Ind.)

Theresa May has urged voters not to worry about Brexit, despite her government setting out plans to stockpile food, blood and medicine in case it goes badly. She said people should take “reassurance and comfort” from news of the plans, to be implemented if the UK crashes out of the EU without an agreement in March next year. The scenario is looking increasingly likely given deep divisions in the Conservatives over Ms May’s approach, her wafer thin commons majority and the EU’s on-going resistance to what the prime minister is proposing. It comes as The Independent launched a campaign to give the British people a Final Say in a referendum on whatever is proposed at the end of Brexit negotiations, with thousands flocking to sign a petition supporting the cause.

Ireland’s deputy prime minister accused the PM of “bravado” in talking up the dangers of a no-deal Brexit, while Tory insiders claim the PM is doing so to warn her rebellious MPs of the consequence of failing to back her unpopular Brexit plans. Ms May confirmed in a TV interview that plans for stocking up on essential goods are underway, in case imports from the EU are cut off by clogged ports or regulatory disputes. But, asked if it was “alarming” for people, the prime minister told Channel 5: “Far from being worried about preparations that we are making, I would say that people should take reassurance and comfort from the fact that the government is saying we are in a negotiation, we are working for a good deal. “I believe we can get a good deal, but, it’s right that we say – because we don’t know what the outcome is going to be – let’s prepare for every eventuality.”

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Inevitable: a general election, a leadership challenge or a people’s vote.

There Is No Majority In UK Parliament For Any Brexit Deal (Ind.)

Imagine you’re back at school and you can’t be bothered to do any work for the most important exams of your entire academic career. Alarmed by your indifference, your parents ask what you propose to do. Imagine how they would react if you told them you were thinking of having an extended summer holiday, to put off the moment of reckoning for as long as possible. Quite frankly, this is where our government now is in the Brexit negotiations. A longer than usual summer recess seems to be the best these great minds can come up with. The problem is we are not in school, Brexit is not homework and the bullies will do more than give us a bloody nose.

The EU is like the strict exam board of governors and appears to have no time for excuses or interest in making Theresa May’s sloppy government look good. It is a measure of May’s desperation that she said in Belfast last week that the EU was trying to achieve an “economic and constitutional dislocation” of our country. That kind of talk may play well with the hard-right Brexiteers who are too painfully holding her and her government hostage, but it doesn’t impress Brussels. May needs to realise that we can all see she is now merely playing for time and there are only a finite number of options open to her: a general election, a leadership challenge or a people’s vote.

[..] The plain truth is that there is no majority in parliament for any deal. The EU thinks the prime minister’s Chequers plan is too favourable to the UK, and the Brexiteers think it’s too favourable to Brussels. A Norway deal would mean accepting free movement and paying large amounts to Brussels; a Canada-style deal means the prospect of a hard border returning to the line on the map that separates Eire and Northern Ireland. Viewed through the lens of May’s parliamentary party, there is no consensus, no coming together on any of these options. Brexit is collapsing under the weight of its own contradictions.

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“he exposed himself and shouted racial slurs..”

US Lawmaker Pranked By Sacha Baron Cohen To Resign (AFP)

A US state lawmaker is resigning after a humiliating appearance on comedian Sacha Baron Cohen’s television show during which he exposed himself and shouted racial slurs. Jason Spencer, a Republican member of the Georgia House of Representatives, had been under pressure from his own party to step down following the embarrassing appearance on Cohen’s series “Who Is America?” Spencer, 43, finally announced on Wednesday that he planned to resign on July 31. He had already lost a primary in May but he could have remained in office until November. Spencer was one of several Republican figures pranked by Cohen on the Showtime series.

Others included former vice president Dick Cheney, who signed a “waterboarding kit” and former Republican vice presidential nominee Sarah Palin. In the episode of “Who Is America” with Spencer, Cohen pretends to be an Israeli anti-terrorism expert, Colonel Erran Morad, offering self-defense training. At one point, Spencer is persuaded to expose his buttocks and chase Cohen while yelling “USA” and racial slurs. Spencer, in a statement this week to The Washington Post, said Cohen “took advantage of my paralyzing fear that my family would be attacked.” Spencer told the Post he had received death threats after introducing a bill that would ban Muslim women from publicly wearing burqas. Palin, the former governor of Alaska, denounced the show as “evil, exploitive, sick ‘humor.'”

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This has been a 10-year debate.

Gene-Edited Plants And Animals Are GMO Foods – EU Top Court (G.)

Plants and animals created by innovative gene-editing technology have been genetically modified and should be regulated as such, the EU’s top court has ruled. The landmark decision ends 10 years of debate in Europe about what is – and is not – a GM food, with a victory for environmentalists, and a bitter blow to Europe’s biotech industry. It also marks a setback for UK scientists who took advantage of a legal grey area to of gene edited camelina crops, augmented with Omega-3 fish oils. Greenpeace said that the ruling meant the British government – along with Belgium, Sweden and Finland – was now obliged to “revoke” the green light for the trials until appropriate precautions had been taken.

In their ruling, the EU judges said: “Organisms obtained by mutagenesis are GMOs [genetically modified organisms] … It follows that those organisms come, in principle, within the scope of the GMO directive and are subject to the obligations laid down [therein].” The court sided with the French agricultural trades union, Confédération Paysanne, which brought the case, arguing that new and unconventional in vitro mutagenesis techniques were likely to be used to produce herbicide-resistant plants, with potential health risks. A study published in the journal Nature last week found that the gene-editing technology Crispr-Cas9 can cause significantly greater genetic distortions than expected, with potential “pathogenic consequences”. Gene editing alters the genomes of a living species by slicing genome strands in a bid to remove undesirable traits, without inserting foreign DNA.

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Jul 252018
 
 July 25, 2018  Posted by at 12:59 pm Finance Tagged with: , , , , , , , , , , ,  


René Magritte Empire of light 1950

 

There’s not a shade of a doubt that I’m not an expert on tariffs, trade barriers and subsidies, and I’d be the last to suggest any such thing. But I can read. Still, do correct me if I’m wrong anywhere. The whole field is so complicated -no doubt often on purpose- that there’s always the possibility that there are side issues involved for which one would need to actually be an expert.

But still. Now that EU chief Jean-Claude -‘When it becomes serious, you have to lie’- Juncker is due to arrive at the White House soon, I looked at some of the items involved. Last night Trump said that all tariffs, barriers and subsidies should be dropped between the EU and US. Why the TTiP doesn’t come anywhere close to that is anyone’s guess. Too complicated for the boys and girls?

In at least some major fields, Trump does seem to have a point or two. The US has a 2.5% tariff on European cars, while the EU slaps a 10% tariff on American cars. That’s 4x as much, or a 300% difference. Whoever said yes to that? Sure, the US has a 25% tariff on EU pickups, but nobody in Europe drives pickups, hence they don’t produce them, so that’s not consequential.

So what had Trump done? He’s threatened a 20% tariff on Beemers and Mercs, and added -for entertainment value only- that he doesn’t want to see any of them in on Fifth Avenue anymore. Cue EU carmakers warning about the cost to American customers.

That’s all fine and well, but those tariffs on personal cars are still 300% higher. So push your European government to make them equal. Easy as -American- pie. How about zero? I can see where Trump’s coming from. Issuing warnings to the American public about BMW’s getting more expensive doesn’t look entirely on the up and up.

 

Also, I was looking at agriculture. Now, I grew up in Europe, and I do have an idea about EU farm subsidies (they’re notorious even inside the EU, going all the way back to the 1950s-60s). There was a point where they were over 70% of the total EU budget. They’re 30% or even somewhat below that now, but that’s not because subsidies have gone down, it’s because the EU budget has grown exponentially.

US farm subsidies were some $23 billion last year, and a year ago the Trump administration proposed a $4.8 billion cut to that. Now that Trump has initiated a one-time $12 billion for farmers to make up for the effects of his tariff proposals, one half of America -Conservatives- cry foul because: “that’s Soviet-style politics”, and no doubt the EU will cry right with them.

But look: under the EU’s Common Agriculture Policy (CAP), EU farm subsidies for the 2021-2027 period will fall a whole 5% to ‘only’ $420 billion. And that’s just a proposal, and already France, the main beneficiary of the subsidies, has declared that such a cut is unacceptable. Soviet style?

The meeting of tee-totaller Trump and wine-totaller Juncker is interesting enough in and of itself, and you bet the Donald knows what and who Juncker is, but unless Jean-Claude comes with something very substantial, the numbers I cited above would seem to be very clear. And that’s without steel, aluminum etc etc.

If your side gives its farmers almost 20 times as much as the other side, what are you going to say? You may ask for some time to adapt, but that would seem to be it. However, Juncker could never sell egalization of subsidies ‘at home’. France and others would shave his head and ass and apply tar and feathers. And Macron would fear the same fate if he gives in. As Merkel would on the car issue.

Juncker has no room to wiggle on the whole shebang. All he can do is damage control and a good glass of wine (wonder if Trump instructed his staff not to give him any, or merely cut him off after the first bottle). It’s just that Trump has noticed the policy damage, and doesn‘t like it. And you have to wonder, who ever accepted those terms, and signed treaties like that TTiP that they are engraved in?

 

If you ask me, communities and countries should always make sure they remain in control of all their basic necessities. And food is certainly one of them. Also. if any politician near you ever proposes selling the rights to your drinking water to some foreign party, tar and feathers is your reply. Let Americans make their own cars, And German and French theirs. It’s not of the same importance as food, water, shelter and clothing, but you get the drift.

Schlepping food halfway across the planet is a dangerous thing once you become dependent on it to feed your children and your community (schlepping it halfway through Europe is as well). Selling your local water rights is even worse. That’s downright insane.

But if you’re going to trade, and once you’ve excluded basic necessities, zero tariffs or at least equal tariffs seems the way to go. Just wait till Trump starts that discussion with China for real. That conversation is largely about barriers, it’s different from Europe, though -hidden- subsidies feature ‘bigly’ as well.

 

Still, summarized, though I’m far from a Trumponado, I can see his point(s). I find it much harder to see what earlier US administrations were thinking when they agreed to all this stuff. And sure, his approach is brusque and perhaps brutal, but the country he’s, for better or for worse, president of, does seem to have gotten the short end of an very extensive array of sticks.

But by all means, don’t listen to me, listen to the experts. Then again, also look at the numbers.

 

 

Jul 222018
 
 July 22, 2018  Posted by at 8:44 am Finance Tagged with: , , , , , , , ,  


Paul Gauguin The Vision after the Sermon (Jacob wrestling with the Angel) 1888

 

Ecuador Will Imminently Withdraw Asylum for Julian Assange (Greenwald)
In Historic First, DOJ Releases Carter Page FISA Application (ZH)
Breannan And The 2016 Spy Scandal (Strassel)
UK To Refuse To Pay Brexit Bill Without Trade Deal (AFP)
Warning On Australia’s Looming Interest-Only Crisis (SMH)
German Industry Groups Warn US On Tariffs Ahead Of EU-US Meeting (R.)
NATO: Doomed To Destruction By Its Own Growth (SCF)
Hundreds of Syrian ‘White Helmets’ Evacuated By Israel to Jordan (R.)
Our Vanishingly Pleasant Land (McCarthy)

 

 

This is physically sickening. Checked front web pages of BBC, Guardian and Independent today: not a word. Hence: another gag order. Yes, there are journalists who don’t like Assange, but it’s not about liking him. It’s about your own freedom to speak. Guess that’s already gone then. I feel sick to my stomach.

Ecuador Will Imminently Withdraw Asylum for Julian Assange (Greenwald)

Ecuador’s president Lenin Moreno traveled to London on Friday for the ostensible purpose of speaking at the 2018 Global Disabilities Summit (Moreno has been using a wheelchair since being shot in a 1998 robbery attempt). The concealed, actual purpose of the President’s trip is to meet with British officials to finalize an agreement under which Ecuador will withdraw its asylum protection of Julian Assange, in place since 2012, eject him from the Ecuadorian Embassy in London, and then hand over the WikiLeaks founder to British authorities. Moreno’s itinerary also notably includes a trip to Madrid, where he will meet with Spanish officials still seething over Assange’s denunciation of human rights abuses perpetrated by Spain’s central government against protesters marching for Catalonia independence.

Almost three months ago, Ecuador blocked Assange from accessing the internet, and Assange has not been able to communicate with the outside world ever since. The primary factor in Ecuador’s decision to silence him was Spanish anger over Assange’s tweets about Catalonia. A source close to the Ecuadorian Foreign Ministry and the President’s office, unauthorized to speak publicly, has confirmed to the Intercept that Moreno is close to finalizing, if he has not already finalized, an agreement to hand over Assange to the UK within the next several weeks. The withdrawal of asylum and physical ejection of Assange could come as early as this week. On Friday, RT reported that Ecuador was preparing to enter into such an agreement.

The consequences of such an agreement depend in part on the concessions Ecuador extracts in exchange for withdrawing Assange’s asylum. But as former Ecuadorian President Rafael Correa told the Intercept in an interview in May, Moreno’s government has returned Ecuador to a highly “subservient” and “submissive” posture toward western governments.

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The only thing left on the menu is nothingburgers.

In Historic First, DOJ Releases Carter Page FISA Application (ZH)

The Department of Justice late Friday released via the FBI’s FOIA Vault a redacted copy of the Carter Page FISA warrant application and several renewals, which accuse Page of being a Russian spy, as summarized by the New York Times – which obtained a copy of the materials through a Freedom of Information Act (FOIA) lawsuit. Of note, in the nearly two years since the application was filed, Page hasn’t been charged with any of the allegations contained within it. The previously top-secret document is the first such release by the DOJ in the 40 years since the surveillance law was enacted. In April, the DOJ said they were “processing for potential redaction and release certain [Foreign Intelligence Surveillance Act] materials related to Carter Page,” after watchdog group Judicial Watch and several other organizations filed similar lawsuits.

The application reads in part: “Identity of the target The target of this application is Carter W. Page, a U.S. person, and an agent of a foreign power, described in detail below.” “The F.B.I. believes Page has been the subject of targeted recruitment by the Russian government,” the warrant application continues. A line was then redacted, and then it picked up with “undermine and influence the outcome of the 2016 U.S. presidential election in violation of U.S. criminal law. Mr. Page is a former foreign policy adviser to a candidate for U.S. president.” -NYT. The document then concludes that Page was allegedly “collaborating and conspiring with the Russian government,” which they viewed as probably cause to spy on him – and again, which Page has never been charged with.

Page – who has repeatedly denied being a Russian spy, said in April that the FISA application was “beyond words,” and a “Joke,” while claiming that he has never served as an agent for a foreign government. We would also note that he hasn’t been charged as one. Page was targeted months earlier by FBI informant Stefan Halper, who formed a relationship with Page and several other Trump aides as part of the Obama administration’s active counterintelligence operation on the Trump campaign. While President Trump has characterized the entire counterintelligence operation as a “witch hunt,” an increasing chorus of frustrated GOP lawmakers have begun to echo his sentiment, as we are now in month 18 of post-inaugural investigation by the Department of Justice.

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When intelligence becomes partisan political, that’s a big problem.

Breannan And The 2016 Spy Scandal (Strassel)

Mr. Comey stands accused of flouting the rules, breaking the chain of command, abusing investigatory powers. Yet it seems far likelier that the FBI’s Trump investigation was a function of arrogance and overconfidence than some partisan plot. No such case can be made for Mr. Brennan. Before his nomination as CIA director, he served as a close Obama adviser. And the record shows he went on to use his position—as head of the most powerful spy agency in the world—to assist Hillary Clinton’s campaign (and keep his job).

Mr. Brennan has taken credit for launching the Trump investigation. At a House Intelligence Committee hearing in May 2017, he explained that he became “aware of intelligence and information about contacts between Russian officials and U.S. persons.” The CIA can’t investigate U.S. citizens, but he made sure that “every information and bit of intelligence” was “shared with the bureau,” meaning the FBI. This information, he said, “served as the basis for the FBI investigation.” My sources suggest Mr. Brennan was overstating his initial role, but either way, by his own testimony, he was an Obama-Clinton partisan was pushing information to the FBI and pressuring it to act.

More notable, Mr. Brennan then took the lead on shaping the narrative that Russia was interfering in the election specifically to help Mr. Trump – which quickly evolved into the Trump-collusion narrative. Team Clinton was eager to make the claim, especially in light of the Democratic National Committee server hack. Numerous reports show Mr. Brennan aggressively pushing the same line internally. Their problem was that as of July 2016 even then-Director of National Intelligence James Clapper didn’t buy it. He publicly refused to say who was responsible for the hack, or ascribe motivation. Mr. Brennan also couldn’t get the FBI to sign on to the view; the bureau continued to believe Russian cyberattacks were aimed at disrupting the U.S. political system generally, not aiding Mr. Trump.

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The UK already agreed to pay it.

UK To Refuse To Pay Brexit Bill Without Trade Deal (AFP)

Britain will only pay its EU divorce bill if the bloc agrees the framework for a future trade deal, the new Brexit Secretary warned in an interview published Sunday. Dominic Raab, who replaced David Davis after he quit the role earlier this month in protest over the government’s Brexit strategy, said “some conditionality between the two” was needed. He added that the Article 50 mechanism used to trigger Britain’s imminent exit from the European Union provided for new deal details. “Article 50 requires, as we negotiate the withdrawal agreement, that there’s a future framework for our new relationship going forward, so the two are linked,” Raab told the Sunday Telegraph.

“You can’t have one side fulfilling its side of the bargain and the other side not, or going slow, or failing to commit on its side. “So I think we do need to make sure that there’s some conditionality between the two.” The British government has sent mixed signals so far on the divorce bill. Prime Minister Theresa May agreed in December to a financial settlement totalling £35 to £39 billion ($46-51 billion, 39-44 billion euros) that ministers said depended on agreeing future trade ties. But cabinet members have since cast doubt on the position. Finance minister Philip Hammond said shortly afterwards he found it “inconceivable” Britain would not pay its bill, which he described as “not a credible scenario”.

The country is set to leave the bloc on March 30, but the two sides want to strike a divorce agreement by late October in order to give parliament enough time to endorse a deal. Raab met the EU’s top negotiator Michel Barnier for the first time on Friday, where he heard doubts over May’s new Brexit blueprint for the future relationship. But Barnier noted the priority in talks should be on finalising the initial divorce deal. A hardline stance by the British government on the financial settlement could complicate progress, with Raab insisting on the link with the bill and a future agreement. “Certainly it needs to go into the arrangements we have at international level with our EU partners,” he told the Telegraph. “We need to make it clear that the two are linked.”

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Australia’s bad, but not the only country with an interest-only problem.

Warning On Australia’s Looming Interest-Only Crisis (SMH)

Australia’s version of the sub-prime crisis that ushered in the global financial crisis could be looming, with a significant number of the 1.5 million households with interest-only loans likely to struggle with higher repayments, experts warn. Martin North, the principal at consultancy Digital Finance Analytics, said interest-only loans account for about $700 billion of the $1.7 trillion in Australian mortgage lending and it was “our version of the GFC”. “My view is we’re in somewhat similar territory to where the US was in 2006 before the GFC,” Mr North said.

Craig Morgan, managing director of Independent Mortgage Planners, said one in five people who took a loan two or three years ago would not qualify for the same loan now, because of the crackdown on lending by the regulator and ongoing fallout from the Royal Commission into financial services. “In the last six months lenders have had this lightbulb moment of what ‘responsible lending’ means,” Mr Morgan said. One of the triggers for the GFC was rising defaults from over-leveraged borrowers who were unable to refinance when their honeymoon rates ended. However, the sub-prime lending in the United States before the GFC included large mortgages being given to people without jobs or on minimum wage.

“This is absolutely not ‘sub-prime’ in the US definition but there were people [in Australia] who were being encouraged to get very big loans on the fact that principal & interest was impossible to service but they could service interest-only,” Mr North said. “We also know that some interest-only loans were not investors but they are actually first-home buyers encouraged to go in at the top of the market.” The Reserve Bank has previously warned $500 billion in interest-only loans are set to expire in the next four years, causing a significant jump in repayments of 30-40 per cent when borrowers are forced to start paying back the principal.

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The car industry may be too complex for simple tariffs.

German Industry Groups Warn US On Tariffs Ahead Of EU-US Meeting (R.)

German industry groups warned on Sunday, ahead of a meeting between European Commission President Jean-Claude Juncker and U.S. President Donald Trump, that tariffs the United States has recently imposed or threatened risk harming the U.S. itself. The U.S. imposed tariffs on EU steel and aluminum on June 1 and Trump is threatening to extend them to EU cars and car parts. Juncker will discuss trade with Trump at a meeting on Wednesday. Dieter Kempf, head of Germany’s BDI industry association, told the Welt am Sonntag newspaper it was wise for the European Union and United States to continue their discussions.

“The tariffs under the guise of national security should be abolished,” Kempf said, adding that Juncker needed to make clear to Trump that the United States would harm itself with tariffs on cars and car parts. He added that the German auto industry employed more than 118,000 people in the United States and 60 percent of what they produced was exported to other countries from the U.S. “Europe should not let itself be blackmailed and should put in a confident appearance in the United States,” he added. EU officials have sought to lower expectations about what Juncker can achieve, and downplayed suggestions that he will arrive in Washington with a novel plan to restore good relations.

Eric Schweitzer, president of the DIHK Chambers of Commerce, told Welt am Sonntag he welcomed Juncker’s attempt to persuade the U.S. government not to impose tariffs on cars. “All arguments in favor of such tariffs are … ultimately far-fetched,” he said.

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Pentagon just delivered $200 million in deadly weapons to Ukraine. Madness.

NATO: Doomed To Destruction By Its Own Growth (SCF)

In the 1960s, Marvel Comics writer Stan Lee and artist/co-plotter Jack Kirby in the United States created a superhero with a novel twist. He was called Giant-Man, and the bigger he got, the weaker he became. Today that character is a prophetic parable about the future of the post- Cold War “super-NATO” that has expanded to include 29 nations compromising more than 880 million people. First it absorbed all the former Warsaw Pact member states in Central Europe. Then it absorbed the three tiny and virulently anti-Russian Baltic states of Lithuania, Latvia. Now NATO is looking to embrace former Soviet Georgia and Ukraine.

As if all this was not enough, some genius at NATO Supreme Headquarters in Brussels came up with the idea of calling the alliance’s June 2016 military exercises in Eastern Europe ANACONDA. An anaconda is a gigantic carnivorous snake in the Amazon rain forest that first encircles its victims, crushes them to death and then devours them. What message was Russia meant to take from such tasteless nomenclature? However, it will not happen. Far from burying Russia, the US-led NATO alliance has been burying itself instead through its reckless, unending and remorseless growth. The curse of Giant Man is upon it. When the comic book hero Giant Man grew to 50 or 60 feet tall, he collapsed under his own weight. Such a fate is already happening to NATO.

The fundamental problem of the NATO alliance is that it is simultaneously too big and too diverse. The bigger it gets, the weaker it gets. This is because, with every state that joins the Alliance, the only militarily significant power within it, the United States, takes on an additional commitment to defend it. What does the United States get in return for its reckless bestowal of such earth shaking commitments? It gets nothing at all. When a tiny nation like Lithuania or Estonia boasts about meeting the 2 percent of GDP defense spending requirement of NATO this is ludicrous. The armed forces and GDP’s of such countries are so small as to be nonexistent. The much larger nations in the Alliance in Western Europe make no pretense of coming remotely close to their two percent defense spending pledge.

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No, not a daring escape, as I read somewhere. Negotiated by Russia.

Hundreds of Syrian ‘White Helmets’ Evacuated By Israel to Jordan (R.)

About 800 members of Syria’s White Helmets civil defense group and their families were evacuated via Israel to Jordan on Sunday from southwest Syria, where a Russian-backed Syrian government offensive is under way, media said. In a statement, the Israeli military said it had completed “a humanitarian effort to rescue members of a Syrian civil organization and their families … due to an immediate threat to their lives”. It said they were transferred to a neighboring country, which it did not identify, and that the evacuation came at the request of the United States and several European countries.

Israeli media identified the Syrians as belonging to the White Helmets organization. Officially called the Syrian Civil Defense but known by their distinctive white helmets, the group has operated a rescue service in rebel-held parts of Syria. Jordan’s official Petra news agency said on its website the kingdom “authorized the United Nations to organize the passage of about 800 Syrian citizens through Jordan for resettlement in Western countries”. The agency identified the Syrians as civil defense workers who fled areas controlled by the Syrian opposition after attacks there by the Syrian army. Petra said they would remain in a closed area in Jordan and that Britain, Germany and Canada had agreed to resettle them within three months.

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Poison to feed ourselves.

Our Vanishingly Pleasant Land (McCarthy)

It’s bizarre: in what seems like a display of obtuseness on a nationwide scale, it is still not generally realised or admitted that across huge swathes of the land, the biodiversity that at the end of the second world war was giving animation and vibrant life to the countryside as it had always done has simply vanished. By the government’s own admission, farmland birds have declined by 56% just since 1970; and the wild flowers have gone, and the butterflies have disappeared in their turn. Farewell to the spotted flycatcher, adios to the corncockle, goodbye to the high brown fritillary: what remains may be green, at least in spring, but that is mainly the pesticide-saturated crops; in wildlife terms, the landscape is now grossly impoverished, beyond any other one in Europe.

In his important new book, Cocker, one of our leading Nature writers, tackles head-on this remarkable twin phenomenon of destruction and ignorance, and he does so on an ambitious scale, seeking to explain and understand it by looking back in detail over a century of growing conservation efforts by individuals, charities, quangos and governments. How have they failed? In particular he is preoccupied with a paradox: how can our Nature have been so devastated, when there are more people who are members of green organisations in Britain than anywhere else? How can it have happened at the very moment in history that saw the rise of a new popular philosophy, environmentalism?

The simple answer is that this moment in history also saw the rise of intensive farming, a juggernaut beyond the power of green groups to control – and indeed beyond the power of individual governments once the Common Agricultural Policy of the European Union was fixed in place. It is modern industrial agriculture, above all by its immense reliance on poisons to boost crop yields, that has wiped out the wildlife of our countryside on a scarcely believable scale.

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Jul 212018
 
 July 21, 2018  Posted by at 9:22 am Finance Tagged with: , , , , , , , , , ,  


Roy Lichtenstein Hopeless 1963

 

Ecuador President Arrives In UK; Assange’s Fate Hangs In The Balance (Cogan)
Be Prepared To Shake The Earth If Julian Assange Is Arrested (CJ)
One FBI Text Message In Russia Probe That Should Alarm Every American (Hill)
Anatomy of a Displacement-Projection Syndrome (Kunstler)
Trump ‘Ready’ To Put Tariffs On All $505 Billion Of Chinese Imports (CNBC)
EU Rips Up Theresa May’s Chequers Plan (Ind.)
May’s Brexit Proposals Died In Brussels In Eight Short Minutes (Ind.)
Australia’s Property Boom Is Well and Truly Over (MM)
US Loses Bid To End Children’s Climate Change Lawsuit (R.)
Judge Praises US Efforts In Reuniting Migrant Families (R.)

 

 

New UK Foreign minister says Assange faces ‘serious charges’. But “Under UK law any theoretical future bail charge would be a textbook minor charge (under three months). UK law defines “serious charge” one carrying over three years of imprisonment.”

Ecuador President Arrives In UK; Assange’s Fate Hangs In The Balance (Cogan)

Ecuador’s President Lenín Moreno arrives in London today, with his administration seeking to force WikiLeaks editor and Australian citizen Julian Assange out of the Ecuadorian embassy there, where he sought and was granted political asylum in 2012. If Assange leaves the embassy he will be imprisoned by Britain for breaching bail and almost certainly face an application to extradite him to the United States to stand trial on manufactured charges of espionage. On the Moreno government’s orders, the Ecuadorian embassy in London has deprived Assange of all external communication, and all visitors apart from his lawyers, since March 28.

After six years of confinement due to the British threat of immediate arrest if he sets foot outside the small building, Assange’s health has been seriously compromised. The deprivation of communication is a vindictive attempt to add immense psychological pressure on him to leave the embassy, as well as to silence him while lurid accusations permeate the American and international media that WikiLeaks was part of a nefarious Russian conspiracy to “interfere” in the 2016 US presidential election. Ahead of Moreno’s visit to London, his national secretary of political management, Paul Granda, asserted on July 19 that “there is no specific meeting planned on Assange.” The same day, acting Ecuadorian foreign minister, Andres Teran, claimed that Moreno’s government is “not in talks with the United States” over the WikiLeaks editor.

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The silence remains eery.

Be Prepared To Shake The Earth If Julian Assange Is Arrested (CJ)

“The above report that UK and Ecuador are preparing to turn Assange over to UK appears to be true,” commented journalist Glenn Greenwald on Simonyan’s statement. “Big question is whether the US will indict him and seek his extradition, the way Sessions and Pompeo vowed they would. Can’t wait to see how many fake press freedom defenders support that.” How many indeed? For all the viral, click-friendly wailing and rending of garments about Donald Trump’s “war on the press” because he says “fake news” and picks on Jim Acosta, does anyone expect the so-called free press to rush to the defense of a journalist who is being actively and aggressively persecuted with the full might of the western empire for publishing authentic documents about that very same empire?

We are about to find out if this is the part of the movie where the empire rips off the mask of freedom and democracy and reveals its true tyranny. Assange is a soft target, a controversial figure who has been on the receiving end of wildly successful smear campaigns marketed to every major political faction across the western world. He is the logical place to begin a crackdown on press freedoms and make a public example of what happens to those who shine the light of truth upon Big Brother. If we allow them to imprison Julian Assange for practicing journalism, that’s it. It’s over. We might as well all stop caring what happens to the world and sit on our hands while the oligarchs drive us to ecological disaster, nuclear annihilation or Orwellian dystopia.

If we, the many, don’t have the spine to stand up against the few and say “No, we get to find out facts about you bastards and use it to inform our worldview, you don’t get to criminalize that,” then we certainly don’t have the spine it will take to wrest control of this world away from the hands of sociopathic plutocrats and take our fate into our own hands. The arrest of Julian Assange would be the fork in the road. It would be where we collectively decide as a species whether we want to survive into the future, and if we deserve to.

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“A few minutes later Strzok texted his own handicap of the Russia evidence: “You and I both know the odds are nothing. If I thought it was likely, I’d be there no question. I hesitate in part because of my gut sense and concern there’s no big there there.

One FBI Text Message In Russia Probe That Should Alarm Every American (Hill)

Lisa Page and Peter Strzok, the reported FBI lovebirds, are the poster children for the next “Don’t Text and Investigate” public service ads airing soon at an FBI office near you. Their extraordinary texting affair on their government phones has given the FBI a black eye, laying bare a raw political bias brought into the workplace that agents are supposed to check at the door when they strap on their guns and badges. It is no longer in dispute that they held animus for Donald Trump, who was a subject of their Russia probe, or that they openly discussed using the powers of their office to “stop” Trump from becoming president. The only question is whether any official acts they took in the Russia collusion probe were driven by those sentiments.

The Justice Department’s inspector general is endeavoring to answer that question. For any American who wants an answer sooner, there are just five words, among the thousands of suggestive texts Page and Strzok exchanged, that you should read. That passage was transmitted on May 19, 2017. “There’s no big there there,” Strzok texted. The date of the text long has intrigued investigators: It is two days after Deputy Attorney General Rod Rosenstein named special counsel Robert Mueller to oversee an investigation into alleged collusion between Trump and the Russia campaign. Since the text was turned over to Congress, investigators wondered whether it referred to the evidence against the Trump campaign.

This month, they finally got the chance to ask. Strzok declined to say — but Page, during a closed-door interview with lawmakers, confirmed in the most pained and contorted way that the message in fact referred to the quality of the Russia case, according to multiple eyewitnesses. The admission is deeply consequential. It means Rosenstein unleashed the most awesome powers of a special counsel to investigate an allegation that the key FBI officials, driving the investigation for 10 months beforehand, did not think was “there.”

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The US meddles more than anyone else.

Anatomy of a Displacement-Projection Syndrome (Kunstler)

“For more than a decade, Russia has meddled in elections around the world, supported brutal dictators and invaded sovereign nations — all to the detriment of United States interests.” — The New York Times

The Resistance sure got a case of the vapors this week over Mr. Trump’s failure to throttle America’s arch-enemy, the murderous thug V. Putin of Russia, onstage in Helsinki, as any genuine Marvel Comix hero is expected to do when facing consummate evil. Instead, the Golden Golem of Greatness voiced some doubts about the veracity of our “intelligence community” — as the shape-shifting Moloch of black ops likes to call itself, as if it were a kindly service organization in Mr. Rogers neighborhood, collecting dimes for victims of childhood cancer. If I may be frank, the US Intel community looks like a much bigger threat to American life and values than anything Mr. Putin is doing, for instance his alleged “meddling” in US elections.

This word, meddling, absolutely pervades the captive Resistance news outlets these days. It has a thrilling vagueness about it, intimating all kinds of dark deeds without specifying anything, as consorting with Satan once did in our history. The reason: the only specific acts associated with this meddling include the disclosure of incriminating emails among the Democratic National Committee leadership, and a tiny gang of Facebook trolls making sport of profoundly idiotic and dysfunctional American electoral politics. The brief against Russia also contains vague accusations of “aggression.” It is hard to discern what is meant by that — though it apparently warms the heart of American war hawks and their paymasters in the warfare industries.

They allege that Russia “stole” Crimea from Ukraine. Consider: Crimea had been a province of Russia since the 1700s. Ukraine itself was a province of the USSR when Nikita Khrushchev put Crimea under Ukraine’s administrative control in 1956, a relationship which became obviously problematic after the breakup of the soviet mega-state in 1990 — and became even more of a problem when the US State Department and our CIA stage-managed a coup against the Russia-leaning Ukrainian president Viktor Yanukovych in 2014. Crimea is the site of Russia’s only warm water naval bases. Do you suppose that even an experience American CIA analyst might understand that Russia would under no circumstances give up those assets? Please, grow up.

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China will have to move.

Trump ‘Ready’ To Put Tariffs On All $505 Billion Of Chinese Imports (CNBC)

President Donald Trump has indicated that he is willing to slap tariffs on every Chinese good imported to the U.S. should the need arise. “I’m ready to go to 500,” the president told CNBC’s Joe Kernen in a “Squawk Box” interview aired Friday. The reference is to the dollar amount of Chinese imports the U.S. accepted in 2017 — $505.5 billion to be exact, compared with the $129.9 billion the U.S. exported to China, according to Census Bureau data. Thus far in the burgeoning trade war, the U.S. has slapped tariffs on just $34 billion of Chinese products, which China met with retaliatory duties. By sheer dollar volume, the Chinese won’t be able to come close to the U.S. in a tit-for-tat battle.

Trump’s comments point to a willingness to push the envelope as far as the U.S. needs to get Chinese tariff concessions, along with a pledge to stop allegedly stealing American technology. “I’m not doing this for politics, I’m doing this to do the right thing for our country,” Trump said. “We have been ripped off by China for a long time.” Trump said the U.S. is “being taken advantage of” on a number of fronts, including trade and monetary policy. Yet he said he has not pushed the tariffs out of any ill will toward China. “I don’t want them to be scared. I want them to do well,” he said. “I really like President Xi a lot, but it was very unfair.”

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As we all knew they would.

EU Rips Up Theresa May’s Chequers Plan (Ind.)

Prospects for a Brexit deal have been dealt a severe blow after the European Union’s chief negotiator took apart Theresa May’s latest proposals – just hours after she ruled out further compromise on her side. Speaking in Brussels after a meeting with EU national ministers, Michel Barnier raised a wide variety of serious concerns about the Chequers white paper plan for customs control and single market regulation for goods. Mr Barnier said Ms May’s complicated proposal for customs would likely create huge amounts of new paperwork, warning: “Brexit cannot and will not justify additional bureaucracy.” The chief negotiator, who said he had told member states to prepare for a no-deal scenario, also raised concerns about the PM’s plan to keep the UK following a “common rulebook” of single market regulations for goods.

The intervention emphasises the deadlock between the two sides, with Tory eurosceptics not allowing the embattled prime minister much room for manoeuvre in Westminster in order to meet Mr Barnier’s concerns. The PM had hoped her white paper proposals would allow frictionless trade with the EU, but Mr Barnier said a plan to exclude UK services from following EU rules could give a “significant competitive advantage” to Britain and that agreeing to such a policy might not be in the EU’s own best interests. Mr Barnier also suggested it would be unreasonable to exempt some goods such as animal feed from having to follow the rules, as proposed by Ms May, stating: “We have a duty of care to protect consumers in the single market, and on which basis could we accept the free circulation of goods?”

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How will history look back on this incredible mess?

May’s Brexit Proposals Died In Brussels In Eight Short Minutes (Ind.)

The Brexit “negotiations” have always been best understood as the kind of negotiations that occur between a particularly irritating toddler and its wearied parent. So it came as a surprise to no one when on Friday morning Britain, having stood around doing not very much for two years, the car now almost fully loaded, finally decided that actually it did want to go to the toilet after all, it was met with a firm “no”. You will know, traditionally, what happens next in such matters. The Brexit journey will not smell nice for anyone, but it will be Britain that suffers the most.

That, via a speech in Belfast, just over two years on from the referendum and with six meaningful weeks of negotiating time left, Theresa May finally put some concrete proposals to the EU and Michel Barnier immediately came out of his office in Brussels to reject them is, of course, laughable. Not least as the proposals that have taken two years for her government to “agree” on have only been “agreed” in the sense that her brexit secretary and foreign secretary didn’t agree with them, and so left the government – from which point on the “agreement” has disintegrated in plain sight.

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Said it before: the Aussie houding bubble is so big it threatens the entire economy.

Australia’s Property Boom Is Well and Truly Over (MM)

House prices in Australian capital cities have been booming for the better half of the last two decades. With our capital cities expanding at lightning rates thanks to international and state migration, it seemed like the boom would never end. The extent of our booming economy has been so incredible, it has become the norm for us in Australia. Australians aren’t really conditioned to expect stock market or real estate falls or depressions. But like all things, what goes up must come down. As reported by The Sydney Morning Herald earlier this week: ‘Only half the properties that went to auction in Sydney and Melbourne on the weekend found buyers. ‘Australian property owners are waking up to the mother of all housing debt hangovers. That’s what happens, you see, when you go on an unprecedented credit binge, fuelled by cheap credit and loose lending standards.’

The Australian Financial Review also confirmed that our debt-fuelled housing boom was coming to an end: ‘Generally the wider market [in Sydney] has cooled with transaction numbers falling, selling periods extending and prices declining.’ ‘Melbourne has eclipsed Sydney as the nation’s worst-performing capital with prices falling by about 5 per cent in recent months, according to recent analysis by investment bank Morgan Stanley.’ For years your Money Morning editors have been warning that Australia’s real estate has been looking more and more like a bubble. Only recently have mainstream economists and newspapers started to agree.

[..] This is a controversial view as it has the potential to undermine the stability of our whole nation’s economy. Our banking sector is built on a foundation of housing mortgages, and the banks make up a massive proportion of our stock market (around 30% of the ASX). However, with Australian property prices having boomed for so many years, it’s no surprise a correction is on the horizon. Now, if the housing boom is actually over, that doesn’t mean your house is suddenly worthless. If you own your home, you can still live in it just as happily as before. But investors with too much debt, overly dependent on rising prices, may be in trouble. The trouble is, with so much debt in the system, it could be difficult to correct or even slow down the housing bubble without triggering a full-on crash. One that could have disastrous effects for the wider economy.

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Case originated in 2015.

US Loses Bid To End Children’s Climate Change Lawsuit (R.)

A federal appeals court in San Francisco on Friday rejected the Trump administration’s renewed bid to dismiss a lawsuit by young activists who say the U.S. government is ignoring the perils of climate change. By a 3-0 vote, the 9th U.S. Circuit Court of Appeals said the government fell short of the “high bar” needed to dismiss the Oregon case, originally brought in 2015 against the administration of President Barack Obama. Twenty-one children and young adults, ages 11 to 22, accused federal officials and oil industry executives of violating their due process rights by knowing for decades that carbon pollution poisons the environment, but doing nothing about it.

The government contended that letting the case proceed would be too burdensome, unconstitutionally pit the courts against the executive branch, and require improper “agency decision-making” by forcing officials to answer questions about climate change. But the appeals court said the issues raised “are better addressed through the ordinary course of litigation.” A trial is scheduled for Oct. 29 in the federal court in Eugene, Oregon. President Donald Trump’s administration also has asked the U.S. Supreme Court to dismiss the lawsuit or put it on hold, and is awaiting a ruling. Its earlier bid to end the lawsuit failed in March.

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And bars deportation of reunified families.

Judge Praises US Efforts In Reuniting Migrant Families (R.)

A federal judge said on Friday the U.S. government had made “very promising” progress toward reuniting some 2,500 immigrant children separated from their parents at the U.S.-Mexico border as part of a crackdown on illegal immigration. The government has six days left to comply with the reunification order by U.S. District Judge Dana Sabraw, who summoned government attorneys to appear in his San Diego courtroom to update him on efforts made in bringing families back together. “I’m very impressed with the effort being made,” said Sabraw at the end of the brief hearing. Lawyers for U.S. Immigration and Customs Enforcement reported in a court filing late Thursday that 364 children aged 5 and older had been reunited since Sabraw’s order was issued more than three weeks ago.

The number was updated to 450 today, an ACLU spokesperson said. Younger children were reunited last week. In Thursday’s status report, filed as part of an American Civil Liberties Union lawsuit challenging parent-child separations at the border, the government did not say how many reunifications were likely before the July 26 deadline. Nearly 850 parents had been interviewed and cleared for reunification as of Thursday and another 229 parents had been deemed ineligible because of criminal records, or because they “waived” reunification or for other reasons, the report said. The rest are pending review.

More than 850 parents are facing final deportation orders, government lawyers told the court on Friday. The ACLU has asked Sabraw to give those parents at least a week after being reunited with their children before deportation so they have adequate time to obtain legal counsel and consider options. Sabraw has temporarily barred deportations of reunified families pending a final decision.

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Jul 182018
 
 July 18, 2018  Posted by at 9:31 am Finance Tagged with: , , , , , , , , , , ,  


Paul Gauguin Van Gogh painting sunflowers 1888

 

Russia Dumped Most/All Of Its US Treasury Holdings, Disappeared from List (WS)
Japan, EU Sign Trade Deal To Eliminate Nearly All Tariffs (AP)
Going, Going Gone For Australia’s House Price Boom (R.)
Australia’s Expensive Real Estate Problem Remains A Dirty Little Secret (D.)
Right Now, We Are In A New Cold War – Stephen Cohen (Fox)
Is President Trump A Traitor Because He Wants Peace With Russia? (PCR)
A Walk On The Wild Side As Trump Meets Putin At Finland Station (Escobar)
Trump Haters Don’t Get the “Art of the Deal” (Jim Rickards)
Twelve Ham Sandwiches with Russian Dressing (Kunstler)
The EU’s New Data Protection Rules Are Already Hurting Europeans (Mises)
Dear Europe, Follow Ireland, Not France (Lacalle)
Balding Out (Christopher Balding)

 

 

Russia goes for gold.

Russia Dumped Most/All Of Its US Treasury Holdings, Disappeared from List (WS)

It’s a good thing Russia never held as many US Treasury securities as China and Japan. The scenario would have been different. The “grand total” of US Treasury bonds, notes, and bills held by official foreign investors (central banks, governments, etc.) and non-official foreign investors rose by $44.6 billion to $6.17 trillion at the end of May, according to the Treasury Department’s TIC data released Tuesday afternoon. This is in the middle of the range of the past 12 months. But Russia stands out by its sudden absence.

Russia was never a large holder of US Treasuries, compared to China and Japan. In March it was in 16th place with $96.1 billion in Treasury holdings. In April, it liquidated $47.4 billion of its holdings, and ended the month with $48.7 billion. That was down 69% from May 2013 ($153 billion). It knocked Russia into 22nd place behind the UAE and Thailand. And in May, Russia liquidated more of its holdings and disappeared entirely from the TIC’s list of the 33 largest foreign holders of Treasuries. The smallest one on the list was Chile, with $30.2 billion. Russia’s holdings must have fallen below that amount, and I can imagine to zero:

If there was a message in Russia’s liquidation of US Treasuries, it was a pitch in the water: The 10-year Treasury sell-off that had started last September peaked with the 10-year yield at 3.11% on May 17. Since then, the 10-year Treasury has rallied under heavy demand, and the yield has fallen – hence the handwringing about the inverted yield curve. The largest holder of US Treasuries is China, a position it had lost briefly during its era of peak capital-flight from October 2016 through March 2017. Its holdings in May ticked up by $1.2 billion to $1.183 trillion. Its holdings have remained within the same range since August 2017, despite escalating threats of a “trade war.” Japan had been systematically reducing its Treasury holdings. In April its holdings had dropped to $1.031 trillion, the lowest since October 2011. But in May, it increased its holdings by $17.6 billion to $1.049 trillion:

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99% of tariffs to be lifted.

Japan, EU Sign Trade Deal To Eliminate Nearly All Tariffs (AP)

The European Union and Japan signed a landmark deal on Tuesday that will eliminate nearly all tariffs on products they trade. The ambitious pact signed in Tokyo runs counter to President Donald Trump’s moves to hike tariffs on imports from many U.S. trading partners. It covers a third of the global economy and markets of more than 600 million people. “The EU and Japan showed an undeterred determination to lead the world as flag-bearers for free trade,” Abe said at a joint news conference with European Council President Donald Tusk and European Commission President Jean-Claude Juncker.

Tusk praised the deal as “the largest bilateral trade deal ever.” He said the partnership is being strengthened in various other areas, including defense, climate change and human exchange, and is “sending a clear message” against protectionism. The leaders did not mention Trump by name, but they did little to mask what was on their minds — highlighting how Europe and Japan have been pushed closer by Trump’s actions. [..] The deal eliminates about 99 percent of the tariffs on Japanese goods sold to the EU. About 94 percent of the tariffs on European exports to Japan will be lifted, rising to 99 percent in the future. The difference reflects exceptions on such products as rice, which enjoys strong political protection from imports in Japan.

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China’s clampdown.

Going, Going Gone For Australia’s House Price Boom (R.)

It’s a winter weekend in Sydney’s bustling northern suburb of Chatswood and a three-bedroom family house sporting an endless garden is up for auction. It’s priced to sell at A$1.88 million ($1.4 million) but no buyers bite and the sale is abandoned. On the same day, in the heart of the harbor-hugging city a two-bedroom apartment with panoramic views fails to sell as no bidders turn up. Auctions are a bellwether of demand in property-obsessed Australia, where attending sales is almost a national pastime. It is therefore telling that only just over half were successful the weekend last month a Reuters reporter visited some of Sydney’s auctions, compared to more than two-thirds for all of last year.

And while that week was the worst since 2012, it wasn’t a one off. Auction clearance rates have averaged in the mid-to-low 50 percent range for each of the past nine weeks. The recent weakness in the Australian housing market, which has been one of the drivers of an economy that has now grown for 27 years without a downturn, has some economists warning of heightened risks of a recession and even a financial crisis. In anticipation, some hedge funds are shorting the nation’s financial assets and some significant investors are heavily underweight Australia compared to regional benchmarks.

The slack has been partly engineered by the authorities. Curbs on lending to foreigners, foreign buyer taxes and a clampdown on capital flows by Beijing have hurt bubbling demand from Chinese investors, who have been important contributors to the housing boom of recent years. There are signs of a similar fall in Chinese investment in Vancouver, Canada – which has also been a red hot market in recent years and where the authorities have also intervened by raising taxes on foreign buyers. But a decline in Vancouver’s sales is yet to translate into price declines.

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Laundromat.

Australia’s Expensive Real Estate Problem Remains A Dirty Little Secret (D.)

Nobody knows how many billions of dollars in dirty money is pouring into Australia’s housing market, but global authorities describe local real estate as a prime target for money laundering – and you may have paid more for your house because of it. The likelihood of cashed up crooks increasing house prices is much greater than many people realise, given the hidden nature of the problem, a lack of regulation in the Australian real estate industry and the staggering sums involved. AMP chief economist Shane Oliver says criminals willing to pay extra to wash illicit funds have probably already had an impact on the high end of the housing market. “Even one transaction can have a huge effect that pulls the whole lot up.”

Real estate agents say corrupt money can also influence average house prices, because criminals paying more than market value for one house are likely to encourage higher asking prices for similar properties in the same street. “To the extent that money laundering may well have played a role in making houses unaffordable to the average Australian, even if it’s marginal, there’s a case to investigate that,” Mr Oliver says. Estimates vary, however an International Monetary Fund calculation converted to local currency shows up to $5 trillion in corrupt money – more than three times Australia’s GDP – flowing into global financial systems last year. Only 0.2 per cent of the illegal transfers were likely to be seized or frozen, according to a UN report.

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I know, I know, it’s Fox and Tucker Carlson. But this is Stephen Cohen.

Right Now, We Are In A New Cold War – Stephen Cohen (Fox)

NYU Russian studies Professor Emeritus Stephen Cohen says President Trump had no choice but to meet with Putin, blasts ‘pornography passing as analysis’ in the news coverage of Trump.

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“Russian weapons are so superior to the junk produced by the waste-filled US military/security complex that lives high off the hog on the insouciant American taxpayer that it is questionable if the US is even a second class military power.”

Is President Trump A Traitor Because He Wants Peace With Russia? (PCR)

The US Democratic Party is determined to take the world to thermo-nuclear war rather than to admit that Hillary Clinton lost the presidential election fair and square. The Democratic Party was totally corrupted by the Clinton Regime, and now it is totally insane. Leaders of the Democratic Party, such as Nancy Pelosi and Chuck Schumer, my former co-author in the New York Times, have responded in a non-Democratic way to the first step President Trump has taken to reduce the extremely dangerous tensions with Russia that the Clinton, George W. Bush, and Obama regimes created between the two superpowers.

Yes, Russia is a superpower. Russian weapons are so superior to the junk produced by the waste-filled US military/security complex that lives high off the hog on the insouciant American taxpayer that it is questionable if the US is even a second class military power. If the insane neoconservatives, such as Max Boot, William Kristol, and the rest of the neocon scum get their way, the US, the UK, and Europe will be a radioactive ruin for thousands of years.

House Democratic leader Nancy Pelosi (CA), Minority Leader of the US House of Representatives, declared that out of fear of some undefined retribution from Putin, a dossier on Trump perhaps, the President of the United States sold out the American people to Russia because he wants to make peace: “It begs the question, what does Vladimir Putin, what do the Russians have on Donald Trump—personally, politically and financially that he should behave in such a manner?” The “such a manner” Pelosi is speaking about is making peace instead of war.

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“Russophobia is a 24/7 industry..”

A Walk On The Wild Side As Trump Meets Putin At Finland Station (Escobar)

“The Cold War is a thing of the past.” By the time President Putin said as much during preliminary remarks at his joint press conference with President Trump in Helsinki, it was clear this would not stand. Not after so much investment by American conservatives in Cold War 2.0. Russophobia is a 24/7 industry, and all concerned, including its media vassals, remain absolutely livid with the “disgraceful” Trump-Putin presser. Trump has “colluded with Russia.” How could the President of the United States promote “moral equivalence” with a “world-class thug”? Multiple opportunities for apoplectic outrage were in order. Trump: “Our relationship has never been worse than it is now. However, that changed. As of about four hours ago.”

Putin: “The United States could be more decisive in nudging Ukrainian leadership.” Trump: “There was no collusion… I beat Hillary Clinton easily.” Putin: “We should be guided by facts. Can you name a single fact that would definitively prove collusion? This is nonsense.” Then, the clincher: the Russian president calls [Special Counsel] Robert Mueller’s ‘bluff’, offering to interrogate the Russians indicted for alleged election meddling in the US if Mueller makes an official request to Moscow. But in exchange, Russia would expect the US to question Americans on whether Moscow should face charges for illegal actions. Trump hits it out of the park when asked whether he believes US intelligence, which concluded that Russia did meddle in the election, or Putin, who strongly denies it. “President Putin says it’s not Russia. I don’t see any reason why it would be.”

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How it works.

Trump Haters Don’t Get the “Art of the Deal” (Jim Rickards)

I’m continually amazed at the legions of politicos, pundits and so-called “experts” who don’t understand President Trump or how he conducts policy. These elites have a mental model of how a president is supposed to behave and how the policymaking process is supposed to be carried out. Obviously, Trump does not fit their model. Instead of trying to grasp the model that Trump does use, they continually berate and disparage Trump for not living up to their expectations. A more thoughtful group would say, “Well, he’s different, so why don’t we try to understand the differences and analyze the new model?” Really, these people need to get out of Washington, New York and Hollywood more and get away from their screens.

If they knew more everyday Americans, they would come a lot closer to understanding how Trump gets things done. It’s not chaos; it’s just a little different and more down to earth. This is because of Trump’s “art of the deal” style described in his best-selling book by that name. Bush 43 and Obama were totally process-driven. You could see events coming a mile away as they wound their way through the West Wing and Capitol Hill deliberative processes. All you had to do was understand the process and you could forecast big developments in a relatively straightforward way. With Trump, there is a process, but it does not adhere to a timeline or existing template. Trump seems to be the only process participant most of the time.

Here’s the Trump process: 1) Identify a big goal (tax cuts, balanced trade, the wall, etc.). 2) Identify your leverage points versus anyone who stands in your way (elections, tariffs, jobs, etc.). 3) Announce some extreme threat against your opponent that uses your leverage. 4) If the opponent backs down, mitigate the threat, declare victory and go home with a win. 5) If the opponent fires back, double down. If Trump declares tariffs on $50 billion of good from China,and China shoots back with tariffs on $50 billion of goods from the U.S., Trump doubles down with tariffs on $100 billion of goods, etc. Trump will keep escalating until he wins. 6) Eventually, the escalation process can lead to negotiations with at least the perception of a victory for Trump (North Korea) — even if the victory is more visual than real.

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“..the entire exercise is a joke and a fraud..”

Twelve Ham Sandwiches with Russian Dressing (Kunstler)

After two years of Trump-inspired hysteria, it’s pretty obvious what went on in the bungled Obama-Hillary power handoff of 2016 and afterward: the indictable shenanigans of candidate Hillary and her captive DNC prompted a campaign of agit-prop by the US Intel “community” to gaslight the public with a Russian meddling story that morphed uncontrollably into a crusade to make it impossible for Mr. Trump to govern. And what’s followed for many months is an equally bungled effort to conceal, deceive, and confuse the issues in the case by Democratic Party partisans still in high places. It was very likely begun with the tacit knowledge of President Obama, though he remained protected by a shield of plausible deniability.

And it was carried out by high-ranking officials who turned out to be shockingly unprofessional, and whose activities have been disclosed through an electronic data evidence trail. Mr. Trump’s visit to confer with Russian President Putin in Helsinki seems to have provoked a kind of last-gasp effort to keep the increasingly idiotic Russian election meddling story alive — with Robert Mueller’s ballyhooed indictment of twelve “Russian intel agents” alleged to have “hacked” emails and computer files of the DNC and Hillary’s campaign chairman John Podesta. The gaping holes in that part of the tale have long been unearthed so I’ll summarize as briefly as possible:

1) the bandwidth required to transfer the files has been proven to be greater than an internet hack might have conceivably managed in the time allowed and points rather to a direct download into a flash drive device. 2) the DNC computer hard drives, said to be the source of the alleged hacking, disappeared while in the custody of the US Intel Community (including the FBI). 3) the authenticity of the purloined emails by Mr. Podesta and others has never been disputed, and they revealed a lot of potentially criminal behavior by them. 4) Mr. Mueller must know he will never get twelve Russian intel agents into a US courtroom, so the entire exercise is a joke and a fraud. In effect, he’s indicted twelve ham sandwiches with Russian dressing.

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When anti-spam leads to more spam.

The EU’s New Data Protection Rules Are Already Hurting Europeans (Mises)

It’s finally over: the flood of e-mails that every single human being who possesses an inbox has received in the last few weeks thanks to the new data protection rules by the EU. These rules, called GDPR, have caused havoc even before becoming effective on May 25, and have probably caused the greatest spam wave of all time – all in the name of fighting against spam of course. The GDPR rules were designed to protect European consumers from data violations by big tech companies (Brussels thinks that Facebook, Google and Co. are abusing the rights of its people), and include – just as a best of – a “right to be forgotten” (meaning that Europeans can ask companies to delete all their data), “consent” (meaning that the data being processed by a company has to be consented to by the individual – though what “consent” means is still disputed), an obligation to hire a data protection officer if you are a bigger company, and above all else, hefty fines for infringements.

Those infringements shall “be subject to administrative fines up to €20,000,000, or in the case of an undertaking, up to 4 percent of the total worldwide annual turnover of the preceding financial year, whichever is higher.” What has been the result of these data protection rules after a little over a month? Summing it up in one word would probably be: chaos. As the trillions of e-mails that were sent around the globe showed, no one really understands what the rules are all about – or what to do about it.

On the day the rules came into effect, several US pages panickingly switched off their platforms in EU countries, among them the Los Angeles Times, the Chicago Tribune, New York Daily News, and Orlando Sentinel. But not only newspapers have blocked Europeans ever since: the list also includesShoes.com,Instapaper, and the History Channel. Meanwhile, ad companies, being hit the most by the new rules, have pulled out of the EU altogether, including Drawbridge and Verve , citing the GDPR as the reason that they can’t continue their business on the Continent anymore. Those staying have had to incur gigantic costs: British companies have reportedly sunk 1.1 billion dollars, and Americans 7.8 billion in preparation for GDPR.

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There’s always some miracle nation in the EU.

Dear Europe, Follow Ireland, Not France (Lacalle)

Whenever we talk about tax cuts and growth-oriented tax programs in Europe, many tell us that it is not possible and that the European Union does not allow it. However, it is false. Attractive, growth-oriented tax systems are not only possible in the European Union, but those countries that implement them have higher economic growth rates, less unemployment, and a first-class welfare state. To deceive us, we are forced to ignore Ireland, The Netherlands or Luxembourg as well as most of the technology and job creation leaders. Lower taxes and greater liberalization than in the rest of the Eurozone means higher growth, better wealth and greater social welfare. The economic miracle of Ireland is not statism.

Its secret is to put budgetary stability, investment attraction, private initiative and maximize disposable income of citizens as the pillars of its economic policy. Ireland has a corporate tax of 12.5% and a rate of 6.25% on income from patents and intellectual property, a key factor to attract technology companies. Its minimum salary is almost double that of Spain, Portugal and other Eurozone countries, the average pension is higher as well and its health and education systems are of the highest quality, with nine universities among the best in the world according to the Best Global Universities Ranking 2018. Ireland’s debt to GDP is 73%, unemployment is 5.1% (youth unemployment at 11.4%), public deficit is just 0.7% of GDP.

Only a few years ago, Ireland was close to the edge financially, and its 10-year bond yield rose to 14%. Ireland was considered one of the highest risk of default countries with Spain, Portugal, Greece or Italy. Since then, low taxes, budget control and reforms oriented at attracting capital have made Ireland become the fastest-growing European economy, with an unemployment rate that is less than half that of Spain, for example. Deficits have been slashed, debt is under control, the economy is expected to grow 5.1% in 2018, and the economy is expected to reach full employment in 2019.

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Economist Christopher Balding is leaving China after 9 years. Great farewell.

Balding Out (Christopher Balding)

One of my biggest fears living in China has always been that I would be detained. Though I happily pointed out the absurdity of the rapidly encroaching authoritarianism, a fact which continues to elude so many experts not living in China, I tried to make sure I knew where the line was and did not cross it. There is a profound sense of relief to be leaving safely knowing others, Chinese or foreigners, who have had significantly greater difficulties than myself. There are many cases which resulted in significantly more problems for them. I know I am blessed to make it out.

I leave China profoundly worried about the future of China and US China relations. Most attention here has focused on the Thucydides Trap where conflict results from an established and a rising power. This leaves out probably the most important variable not just the distinction between an established and a rising power but the values inherent within each state and the system they want to project defining relations between states and the citizenry to the state.

The United States under Trump and the GOP is facing a significant test and re-evaluation of its principles. However, I remain decidedly confident in the US to handle those tests. The self correction nature of democracy is on clear display. The best case scenario for the Trump administration is to minimize congressional losses with the very real possibility of losing control of the house. President Trump has lost more in the courts than he has won and is under investigations by law enforcement headed by registered Republicans. His own party has been unable to pass consequential legislation except for a tax cut. While none of this confronts the international challenges facing the United States, it speaks to the evolutionary, self corrective nature of US democracy.

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Jul 122018
 

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Russell Lee Gas station, Edcouch, Texas 1939

Ilargi: Someone linked to this almost 8 year old article from Nicole (July 19 2010), on Twitter. And yes, it’s even more relevant now than it was when she wrote it. So here’s a re-run:

 

… the Smoot-Hawley Tariff Act of 1930 in the US, which drastically raised tariffs on imports, lead to retaliation by trading partners, and the resulting trade war dropped global trade by 66% between 1929 and 1934.

One more comment from me: Trump may be on to something with some of his tariff actions, but he risks having the US run headfirst into the brittleness of just-in-time supply lines.

 

 

Nicole Foss: As the world has become a smaller and smaller place over the last few decades, we think less about the differences between locations. Global trade has allowed us to circumvent many local constraints, evening out surpluses and shortages in a more homogenized world.

We have a just-in-time world built on comparative advantage, in the name of economic efficiency. Under this economic principle, every location should specialize in whatever activity it executes most efficiently and the resulting products from all areas would then be traded. The idea is that all will then be better off than they would have been had they attempted to cover all bases themselves for reasons of self-sufficiency.

Where countries had been inclined towards more expensive self-sufficiency, market forces have often made this approach untenable, as large cost differences can make countries or industries uncompetitive. Local production has been progressively out-sourced as a result.

By ‘better off’, economists mean that goods will be cheaper for all, thanks to global wage arbitrage and economies of scale. Globalization has indeed delivered falling prices for many consumer goods, particularly electronics. In an era of massive credit expansion (effectively inflation), such as we have lived through for decades, one would normally have expected prices to rise, as a lagging indicator of money supply expansion, but prices do not always follow money supply changes where other major complicating factors exist.

In recent years, the major complicating factors have been the ability to produce goods in places where wages are exceptionally low, the ability to transport those goods to consumer markets extremely cheaply and ready access to letters of credit.

For nominal prices (unadjusted for changes in the money supply) to fall during an inflationary period, real (inflation adjusted) prices must be going through the floor. This has been the effect of trade as we have known it, and it is all many of us have known. What we are not generally aware of is the vulnerability of the global trade system, due to the fragility of the critical factors underpinning it.

 

By producing goods, particularly essential goods, in distant locations, we create long and potentially precarious supply lines. While relative stability reigns, this vulnerability does not cause trouble and we enjoy cheap and plentiful goods. However, if these supply lines are disrupted, critical shortages could result. In a very complex just-in-time system, this may not take very long at all. Such as system is very brittle, as it has almost no redundancy, and therefore almost no resilience. When Jim Kunstler refers to efficiency as “the straightest path to hell”, it is this brittleness he is referring to.

The most ephemeral critical factor for trade is the availability of letters of credit. These became scarce during the first phase of the credit crunch in 2008, and the result was goods stuck in port even though there was robust demand for them elsewhere. Goods simply do not move without letters of credit, and these can dry up extremely quickly as a systemic loss of confidence results in a systemic loss of liquidity. In a very real way, confidence IS liquidity.

The Baltic Dry shipping index fell 96% in 2008 as a result, meaning that shipping companies were suffering. Although the index has recovered slightly during the recent long rally, it is still very depressed in comparison with its previous heights. Now that the rally appears to be over, on the balance of probabilities, letters of credit for shipping will come under renewed pressure, and goods will once again have difficulty moving. As demand also starts to fall, due to the loss of purchasing power in the depressionary era we are moving into, this will get far worse.

 

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In a depression, trade is very adversely affected. One reason for this a highly protectionist beggar-thy-neighbour economic policies. For instance, the Smoot-Hawley Tariff Act of 1930 in the US, which drastically raised tariffs on imports, lead to retaliation by trading partners, and the resulting trade war dropped global trade by 66% between 1929 and 1934.

 

alt

 

Thanks to globalization, we are much more dependent on trade than people were in the 1930s. The combination of credit drying up on the one hand and global trade wars on the other is an extreme threat to our vulnerable supply lines. Add to that the general upheaval created by severe economic disruption, which can easily lead to increased physical risks to transporting goods, and the longer term potential for much higher energy prices, and we could see an outright collapse of global trade in the approaching years.

The benefits of self-sufficiency will be seen in places where it still exists. So long as the whole supply chain is local, localized production means being able to maintain access to essential goods at a time when obtaining them from overseas may be difficult or impossible. It is currently more expensive, but the relative security it can provide can be priceless in a dangerous world. The ability to produce locally does not arise overnight however, especially where there are no stockpiles of components. In places where it has been lost, it will take time to regain. There is no time to lose.

We will be returning to a world of much greater diversity as we lose the homogenizing effect of trade. That means the existing disparities between areas will matter far more in the future than they have in the recent past. We will need to think again about the pros and cons of our local regions – what they can provide and what they cannot, and for how many people. Some areas will be in a great deal of trouble when they lose the ability to compensate for deficiencies through trade. As the global village ceases to exist, the world will once again be a very large and variable place.

 

 

Jul 112018
 
 July 11, 2018  Posted by at 9:24 am Finance Tagged with: , , , , , , , , , ,  


Edward Hopper The camel’s hump 1931

 

As Global Debt Hits A Record $247 Trillion, The IIF Issues A Warning (ZH)
US To Slap Tariffs On Extra $200 Billion Of Chinese Imports (R.)
Has the Fed Permanently Inflated Home Prices? (Whalen)
Trump Forced To Reinstate ‘Catch And Release’ After Court Defeats (G.)
40% Of Mexican Territory Is Paralyzed By Violence (G.)
EU Negotiator Michel Barnier Says 80% Of Brexit Deal Is Agreed (G.)
UK Government Draws Up Secret Plans To Stockpile Processed Food (Sun)
Red Cross Tells UK: End Damaging Immigration Detention (Ind.)
I’m A Doctor In Lampedusa. We Can’t Let These Migrant Deaths Go On (Bartolo)
US Judge Allows Lawsuits Over Monsanto’s Roundup To Proceed To Trial (R.)
Thailand Water Pumps Failed Just After Last Boy Escaped (G.)

 

 

Madness.

As Global Debt Hits A Record $247 Trillion, The IIF Issues A Warning (ZH)

Every quarter the Institute of International Finance publishes a new number of the total amount of global debt outstanding, and every quarter the result is the same: a new record high Today was no exception: according to the IIF’s latest Global Debt Monitor, the amount of debt held in the world rose by the biggest amount in two years during the first quarter of 2018, when it grew by $8 trillion to hit a new all time high of $247 trillion, up from $238 trillion as of Dec. 31, 2017 and up by $30 trillion from the end of 2016. In other words, there is now a quarter quadrillion dollars in global debt, and it represents 318% of global GDP.

More concerning is that this was the first time since Q3 2016 that global debt to GDP increased, suggesting that the marginal utility of debt is once again below 1. This is how the debt is broken down as of Q1 2018 and compared to Q1 2013: • Non-financial corporate debt: $74 trillion, up from $58 trillion in 5 years • Government debt: $67 trillion, up from $56 trillion • Financial debt: $61 trillion, up from $56 trillion • Household debt: $47 trillion, up from $40 trillion. [..] What was surprising about the report – certainly not the latest all time high debt numbers, those are now standard – is that the IIF voiced a strongly negative opinion of recent developments in the debt arena.

“The pace is indeed a cause for concern,” warned IIF’s Managing Director Hung Tran during a call with reporters. “The problem with the pace and speed is if you borrow or if you lend very quickly, the quality of the credit tends to suffer.” It also means more governments, businesses and individuals have been borrowing that could have trouble paying the money back, or merely paying interest on it as rates rise. “The quality of creditworthiness has declined sharply,” Tran added ominously, echoing what Moody’s said at the end of May.

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“Tariffs are taxes, plain and simple..”

US To Slap Tariffs On Extra $200 Billion Of Chinese Imports (R.)

The Trump administration raised the stakes in its trade war with China on Tuesday, saying it would slap 10 percent tariffs on an extra $200 billion worth of Chinese imports. U.S. officials released a list of thousands of Chinese imports the administration wants to hit with the tariffs, including hundreds of food products as well as tobacco, chemicals, coal, steel and aluminum. It also includes consumer goods ranging from car tires, , furniture, wood products, handbags and suitcases, to dog and cat food, baseball gloves, carpets, doors, bicycles, skis, golf bags, toilet paper and beauty products. “For over a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition,” U.S. Trade Representative Robert Lighthizer said in announcing the proposed tariffs.

“Rather than address our legitimate concerns, China has begun to retaliate against U.S. products … There is no justification for such action,” he said in a statement. Last week, Washington imposed 25 percent tariffs on $34 billion of Chinese imports, and Beijing responded immediately with matching tariffs on the same amount of U.S. exports to China. Investors fear an escalating trade war between the world’s two biggest economies could hit global growth. President Donald Trump has said he may ultimately impose tariffs on more than $500 billion worth of Chinese goods – roughly the total amount of U.S. imports from China last year. The new list published on Tuesday targets many more consumer goods than those covered under the tariffs imposed last week, raising the direct threat to consumers and retail firms.

The tariffs will not be imposed until after a two-month period of public comment on the proposed list, but some U.S. business groups and senior lawmakers were quick to criticize the move. Senate Finance Committee Chairman Orrin Hatch, a senior member of Trump’s Republican Party, said the announcement “appears reckless and is not a targeted approach.” The U.S. Chamber of Commerce has supported Trump’s domestic tax cuts and efforts to reduce regulation of businesses, but it has been critical of Trump’s aggressive tariff policies. “Tariffs are taxes, plain and simple. Imposing taxes on another $200 billion worth of products will raise the costs of every day goods for American families, farmers, ranchers, workers, and job creators. It will also result in retaliatory tariffs, further hurting American workers,” a Chamber spokeswoman said.

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No.

Has the Fed Permanently Inflated Home Prices? (Whalen)

The importance of the fact that US bank credit metrics are showing essentially zero cost in residential lending from portfolio loans is that it begs the question as to home price valuations and thus loan-to-value (LTV) ratios. A number of analysts have predicted an imminent reset in terms of home prices, but this has not happened for several reasons. The chart below shows the Case-Shiller average for US home price appreciation. First, real estate is a local market, so generalizations such as Case-Shiller are dangerous. New York City has been slumping for the past two years, but other markets around the country such as Denver remain hot.

The work of Weiss Residential Research clearly shows a turn in some major urban markets that have been moving higher since 2012 and before. But these moves seem more a function of buyer exhaustion than a permanent move to a buyers market. They key factor is cheap money chasing a limited supply of homes. Second, the US home market is in a classic supply squeeze. Referring to the work of Laurie Goodman at Urban Institute, the US is adding less than 1 million new units per year net of attrition of obsolete homes. Basically, new household formation is 50% higher than the growth in new housing units. More, the Fed’s manipulation of interest rates and credit spreads encouraged Wall Street to allocate capital to buying residential homes as rental properties, further limiting supply of homes available for sale.

Net, net, Millennials have been priced out of the housing market because the omniscient souls on the Federal Open Market Committee think that boosting asset prices will lead to more spending and job creation. Instead, low interest rates and help from the GSES (Fannie, Freddie and Ginnie) have driven up home prices beyond the reach of many home owners in major metro areas.

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Stop. It.

Trump Forced To Reinstate ‘Catch And Release’ After Court Defeats (G.)

Donald Trump’s administration has said it will release some migrant families from detention with ankle monitors, marking a return to the so-called “catch-and-release” policy the president vehemently denounced. The announcement comes as the US government scrambles to reunite thousands of migrant children who were separated from their parents at the border under the Trump administration’s “zero tolerance” immigration policy. “Parents of children under the age of five are being reunified with their children, then released and enrolled into an alternative to detention (ATD) program, meaning they will be placed on an ankle monitor and released into the community,” said Matthew Albence, a senior official with US Immigration and Customs Enforcement.

The Trump administration was left with few options after a series of court orders. A federal judge last month ordered the reunification of children under five by 10 July. That deadline was not met, officials acknowledged, while noting plans were under way on Tuesday to reunite up to 54 migrant children under five with their parents. There are an estimated 102 migrant children under five in federal custody, with a limited number of cases not qualifying for reunification due to the parents’ criminal background or signs of child abuse. The administration additionally lost in an attempt to overturn a 1997 court precedent that says minors cannot be held for more than 20 days.

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What a job the new government has.

40% Of Mexican Territory Is Paralyzed By Violence (G.)

As much as 40% of Mexican territory is prisoner to chronic insecurity and violence, the future chief of staff of Andrés Manuel López Obrador, the incoming president, has claimed. Alfonso Romo, a prominent entrepreneur who was part of the leftist’s watershed election triumph last week, made the assertion during a summit of business leaders on Monday in Mexico City. “Veracruz is paralyzed. Tamaulipas, paralyzed; Michoacán, paralyzed. Guerrero, paralyzed,” Romo said, referring to four of the most notoriously violent states in a country that last year suffered a record 29,000 murders.

“I won’t go on, so I don’t scare you,” Romo added, according to the newspaper Unomásuno which splashed the widely-reported claim onto its front page under the bright red headline: “Paralyzed by Insecurity”. López Obrador, or Amlo as he is widely known, made cutting violence a key prong of his third presidential bid and his promise to “pacify” Mexico helped him secure more than 30 million votes. Amlo has vowed to rethink Mexico’s devastating and highly militarized war on drugs – which experts blame for at least 200,000 deaths since 2006 – and be tough on the social causes of crime.

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Hard to believe.

EU Negotiator Michel Barnier Says 80% Of Brexit Deal Is Agreed (G.)

The chief Brexit negotiator for the European Union has declared that 80% of a deal with the UK has been agreed, in a change of narrative that suggests a full agreement can be sealed before October’s deadline. Speaking in New York on Tuesday, Michel Barnier said: “After 12 months of negotiations we have agreed on 80% of the negotiations.” He added that he was determined to negotiate a deal on the remaining 20%. The declaration that four-fifths of the deal is done is a significant change of tone from the EU after months of protests that it could not negotiate because the UK had not put its own proposals on the table.

Speaking at the Council on Foreign Relations in New York, Barnier said he looked forward to a “constructive discussion” with the UK after the white paper on Brexit is published on Thursday. But he warned: “We need clarity for these negotiations to move forward for the time is very short.” Barnier said he had never been shown how Brexit provided added value when the world faced challenges from terrorism and climate change to migration, poverty and financial instability. “It will be clear, crystal clear at the end of this negotiation that the best situation, the best relationship with the EU, will be to remain a member,” he said. Barnier added: “No deal is the worst solution for everybody. It would be a huge economic problem for the UK and also for the EU. I’m not working for that deal, I’m working for a deal.”

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Fun with the Sun.

UK Government Draws Up Secret Plans To Stockpile Processed Food (Sun)

Ministers have drawn up secret plans to stockpile processed food in the event of EU divorce talks collapsing – to show Brussels that “no deal” is not a bluff. Theresa May has ordered “no deal” planning “to step up” — with the government poised to start unveiling some of the 300 contingency measures in the coming weeks. At last week’s Chequers summit, Brexiteer ministers demanded more be done to prepare for Britain leaving the EU out without a new arrangement in place. The Sun can reveal that includes emergency measures to keep Britain’s massive food and drinks industry afloat – including stockpiling ahead of exit day on 29 March next year.

More than £22 billion worth of processed food and drinks are imported in to the UK – 97 per cent from the EU – in an industry that keeps 400,000 workers employed in the UK. Similar stockpiles are also being prepared for medical supplies amid fears of chaos at British ports next year. Brexit department insiders also claim plans have also been “wargamed” to ease pressure on Calais, including importing and exporting more goods through Holland, Belgium and directly from Spain. Last night Downing Street said “no deal preparation work is to be stepped up” and led by new Brexit Secretary Dominic Raab. Yesterday the Cabinet newbie briefed fellow ministers on measures Britain is taking, with No10 saying: “It’s sensible to make preparations for all scenarios and that includes No Deal.”

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Humanity.

Red Cross Tells UK: End Damaging Immigration Detention (Ind.)

The British Red Cross has called for an overhaul of the UK’s immigration detention system. Conditions are such that detainees suffer mental health problems which sometimes lead to suicide attempts, according to the charity. Thousands of innocent asylum seekers – often fleeing war and torture – are detained each year and locked up indefinitely with no support, the charity warned. In the first intervention of its kind by a major charity, the Red Cross calls for significant reforms including a 28-day limit on detention. It found cases of asylum-seekers being detained for as long as two years and seven months. Five of the 26 detainees interviewed for the report had attempted suicide while they were detained, and just 25 of them said they had been given no access to mental health support services.

Pregnant women continue to be “needlessly detained” in breach of the Home Office’s own guidance – with 47 pregnant women detained in the year to June 2017. The charity said the “overly onerous and traumatic” experience of attending immigration reporting centres – which many are required to do every every two weeks – should be overhauled by banning the practice of detaining people when they turn up. Mike Adamson, chief executive of the British Red Cross, said: “Most of the people in the UK asylum process have fled conflict or persecution to find a place of safety. They have already experienced more trauma and anguish than the rest of us could possibly imagine.

“The threat of detention without notice hangs over many people going through the asylum process in the UK. Our research shows that not knowing whether this week will be the week they are detained again, can make the process of having to report regularly extremely distressing. “This can exacerbate existing mental health issues and mean people never truly feel free.”

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More humanity.

I’m A Doctor In Lampedusa. We Can’t Let These Migrant Deaths Go On (Bartolo)

For a long time, I was proud of my country. I work as a doctor on the small island of Lampedusa in the middle of the Mediterranean, a place that is something of a symbolic gateway between Africa and Europe. In recent decades, Italy showed how it could honour humanity, giving the word “welcome” a new meaning, without ever building walls or putting up barbed wire along its borders. These acts of openness were recognised by other countries, by the EU, and by the gratitude of the thousands of people whose lives we saved over the years. But I stopped feeling proud to be Italian from the moment our government, denying all that had previously been done, decided to establish an agreement with Libyan groups in Tripoli – which meant, directly or indirectly, with people smugglers.

I still remember how in 2016 my country had vigorously joined the outrage triggered by Europe’s decision to bankroll Turkey’s President Erdogan with €6bn so he’d ignore or stop the migration flows from Syria. Italy’s position was then sacrosanct. It has since been somehow inexplicably disavowed in deeds. There is only one dramatic difference between what Europe did with Turkey then and what Italy is doing with Libya today. Refugee camps set up in Turkey are more or less efficient; in Libya, people are detained in horror camps where they are raped, tortured and killed. Instead of the wall that Italy did not build on its own territory, we’ve erected two walls elsewhere. The one in Libya has allowed us to cut the number of arrivals on our shores by 70%; the other, within ourselves, allows us to pretend we don’t see what is being done to the 70%.

Well, I can tell you what’s being done to these people. From my workplace, the Lampedusa clinic, their fate is clear to see. They are tortured daily, atrociously, for years on end. Those brought to us, by helicopter or motorboat, are close to death, with burns, serious injuries from blows, electric currents applied to the head or genitals, gunshot wounds, and razor-blade cuts. They are almost always dehydrated, in a state of hypothermia, and so underfed they are on the brink of collapse. They bring to mind the suffering of a concentration camp – yes, a concentration camp.

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There will always be scientists willing to claim it’s not cancerous.

US Judge Allows Lawsuits Over Monsanto’s Roundup To Proceed To Trial (R.)

Hundreds of lawsuits against Monsanto by cancer survivors or families of those who died can proceed to trial, a federal judge ruled on Tuesday, finding there was sufficient evidence for a jury to hear the cases that blame the company’s glyphosate-containing weed-killer for the disease. The decision by U.S. District Judge Vince Chhabria in San Francisco followed years of litigation and weeks of hearings about the controversial science surrounding the safety of the chemical glyphosate, the key ingredient in Monsanto’s top-selling weed-killer. Monsanto is now a unit of Bayer, following a $62.5 billion takeover of the U.S. seed major which closed in June. The U.S. Environmental Protection Agency last September concluded glyphosate is likely not carcinogenic to humans.

But the World Health Organization in 2015 classified glyphosate as “probably carcinogenic to humans.” Chhabria called the plaintiffs’ expert opinions “shaky” and entirely excluded the opinions of two scientists. But he said a reasonable jury could conclude, based on the findings of four experts he allowed, that glyphosate can cause cancer in humans. The plaintiffs will next have to prove Roundup caused cancer in specific people whose cases will be selected for test trials, a phase Chhabria in his Tuesday opinion called a “daunting challenge.” Lawsuits by more than 400 farmers, landscapers and consumers who claim Roundup caused them to develop non-Hodgkin’s Lymphoma, a type of blood cell cancer, have been consolidated before Chhabria.

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Good read on what went down. Amazing people. All the equipment that was brought in. All the mud that was removed. Wow.

Thailand Water Pumps Failed Just After Last Boy Escaped (G.)

The rescue operation to free the last of the 12 boys and their football coach from a Thailand cave could have been a disaster, divers have revealed, with water pumps draining the area failing just hours after the last boy had been evacuated. Divers and rescue workers were still more than 1.5km inside the cave clearing up equipment when the main pump failed, leading water levels to rapidly increase, three Australian divers involved in the operation told the Guardian on Wednesday, in the first detailed account of the mission to be published. The trio, stationed at “chamber three”, a base inside the cave, said they heard screaming and saw a rush of head torches from deeper inside the tunnel as workers scrambled to reach dry ground. Everyone, including the last three Thai navy Seals and medic who had spent much of the past week keeping vigil with the trapped boys, was out of the cave a short time later.

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Jul 062018
 
 July 6, 2018  Posted by at 8:55 am Finance Tagged with: , , , , , , , , , , , ,  


Henri Matisse Reading woman in violet dress 1898

 

China Imposes Tariffs, Says US Launching ‘Largest Trade War In History’ (CNBC)
Trump Says China Could Face More Than $500 Billion In US Tariffs (CNBC)
Merkel Open To Reducing EU Tariffs On American Cars (NC5)
US Labor Shortage Is Reaching A Critical Point (CNBC)
Theresa May’s New Customs Plan ‘Dead On Arrival’ In EU (Ind.)
Theresa May Battles To See Off Revolt Ahead Of Key Brexit Summit (G.)
The Dark Cloud Of Global Debt (GT)
“People Assume That Stocks Always Rise Over Time. They’re Wrong” (Eric Peters)
Most Dangerous Market Ever – Michael Pento (USAW)
Moscow Using UK As Dumping Ground For Poison, Says Sajid Javid (G.)
If The Novichok Was Planted By Russia, Where’s The Evidence? (G.)
Seehofer Tells Merkel, Italy And Greece To Solve Migration Row (EUO)
European Parliament Rejects Controversial Copyright Rules (Ind.)

 

 

Act like grown-ups.

China Imposes Tariffs, Says US Launching ‘Largest Trade War In History’ (CNBC)

China implemented retaliatory tariffs on some imports from the U.S. Friday, state media reported, immediately after new U.S. duties had taken effect. The move signals the start of a full-blown trade war between the world’s two largest economies, after President Donald Trump’s administration had initially made good on threats to impose steep tariffs on Chinese goods. At midnight Washington time, the U.S. imposed new tariffs on $34 billion of annual imports from China. This prompted Beijing to respond in kind with levy tariffs on 545 items of U.S. imports — also worth $34 billion, state-run newspaper The China Daily reported Friday.

A spokesperson at China’s ministry of commerce said that while the Asian giant had refused to “fire the first shot,” it was being forced to respond after the U.S. had “launched the largest trade war in economic history.” “This act is typical trade bullying,” the spokesperson said, before adding: “It seriously jeopardizes the global industrial chain … Hinders the pace of global economic recovery, triggers global market turmoil and will affect more innocent multinational companies, general companies and consumers.”

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China has already retaliated.

Trump Says China Could Face More Than $500 Billion In US Tariffs (CNBC)

President Donald Trump said on Thursday he would consider imposing additional tariffs on $500 billion in Chinese goods, should Beijing retaliate. U.S. tariffs on $34 billion worth of Chinese goods kicked in on Friday. Another $16 billion are expected to go into effect in two weeks and potentially another $500 billion, Trump told reports aboard Air Force One on his way to a rally in Montana before the tariffs kicked in. China implemented retaliatory tariffs on some imports from the U.S., state media reported about two hours later, after new U.S. duties had taken effect.

First “34, and then you have another 16 in two weeks and then as you know we have 200 billion in abeyance and then after the 200 billion we have 300 billion in abeyance. Ok? So we have 50 plus 200 plus almost 300,” Trump said. “It’s only on China,” he added. Trump’s statements reinforce earlier threats that he would escalate the trade conflict. The dispute with China has roiled financial markets worldwide, including stocks, currencies and the global trade of commodities from soybeans to coal.

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Was that so hard?

Merkel Open To Reducing EU Tariffs On American Cars (NC5)

In the midst of trade tension between the European Union and the U.S., German Chancellor Angela Merkel said she’s open to lowering tariffs on American car imports. According to Reuters, Merkel said Europe would have to first agree upon a reduction in tariffs. In addition, she cited World Trade Organization rules that state lowering U.S. auto tariffs would mean doing the same for other countries as well. Merkel’s comments come after President Donald Trump imposed steel and aluminum tariffs on U.S. allies, including the EU, and threatened to put a 20 percent tax on European car imports.

The German chancellor warned Trump on Wednesday not to implement auto tariffs to avoid inciting an all-out trade war. Auto industry experts have suggested that if the Trump administration follows through on that threat, the move would negatively affect American autoworkers’ jobs and raise car prices. Trump is scheduled to travel to Brussels next week for the NATO summit, his first big meeting with European leaders together since last month’s G-7 summit.

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With 95 million still out of the labor force.

US Labor Shortage Is Reaching A Critical Point (CNBC)

America’s labor shortage is approaching epidemic proportions, and it could be employers who end up paying. A report Thursday from ADP and Moody’s Analytics cast an even brighter light on what is becoming one of the most important economic stories of 2018: the difficulty employers are having in finding qualified employees to fill a record 6.7 million job openings. Truck drivers are in perilously low supply, Silicon Valley continues to struggle to fill vacancies, and employers across the grid are coping with a skills mismatch as the economy edges ever closer to full employment. “Business’ number one problem is finding qualified workers. At the current pace of job growth, if sustained, this problem is set to get much worse,” Mark Zandi, chief economist at Moody’s Analytics, said in a statement.

“These labor shortages will only intensify across all industries and company sizes.” Private payrolls grew by 177,000 in June, a respectable number but below market expectations. It was the fourth month in a row that the ADP/Moody’s count fell short of 200,000 after four months at or above that level. The reason for the tick down in hiring certainly isn’t because there aren’t enough jobs. The Bureau of Labor Statistics reported that April closed with 6.7 million job openings. May ended with just over 6 million people the BLS classifies as unemployed, continuing a trend this year that has seen openings eclipse the labor pool for the first time. At some point that gap will have to close. Economists expect that employers are going to have to start doing more to entice workers, likely through pay raises, training and other incentives.

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“We have been telling the UK for two years that we would not accept a single market a la carte. “What do they come with? – A single market a la carte.”

Theresa May’s New Customs Plan ‘Dead On Arrival’ In EU (Ind.)

Theresa May’s new plan for future relations with the EU will be “dead on arrival”, senior figures in Brussels have told The Independent. EU officials said any hint that the UK wants to be part of the single market on goods, but not services will be rejected. It is a blow for the prime minister who has spent the last week in meetings with EU leaders, including Angela Merkel, in a bid to prevent Europe dismissing her plans out of hand when they are published next week. Ms May is expected to push her cabinet to agree to a plan at Chequers on Friday, which would see Britain remaining in full regulatory alignment with the EU on goods, but not on services.

The meeting has also been preceded by threats and warnings from the Brexiteer wing of the Conservatives that the proposals mooted by the prime minister will not be accepted by them in the UK because they keep Britain too closely tied to the EU’s rules and regulations. But before her ministers have even agreed to the deal, EU officials told The Independent the white paper would be “dead on arrival” in Brussels if, as expected, it proposes that the UK remain in the EU’s single market for goods, but not services. They claimed they had repeatedly warned UK negotiators that this option would not work. They said it had been widely discussed among EU ministers and rejected – including, crucially, by the EU’s two most powerful players, France and Germany.

One Brussels source said: “We have been telling the UK for two years that we would not accept a single market a la carte. “What do they come with? – A single market a la carte.”

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Who will be left standing by Saturday?

Theresa May Battles To See Off Revolt Ahead Of Key Brexit Summit (G.)

Theresa May was battling to see off a revolt on the eve of a critical cabinet summit, as Boris Johnson convened a meeting of pro-Brexit ministers to discuss their options amid an atmosphere of tension and recrimination. The government was forced to deny “selective leaks” that appeared to suggest that the UK could struggle to strike a trade deal with the US in the future. No 10 insisted that paperwork released to ministers ahead of Friday’s crunch Brexit meeting at Chequers said just the opposite – as a caucus of seven cabinet members including Johnson, Michael Gove, Liam Fox and David Davis met at the Foreign Office to discuss their concerns.

An early leak suggested that the UK should “maintain a common rulebook” with the European Union on food and farming standards and that could make striking a trade deal with the more free market-oriented US more difficult as a result. That prompted a series of complaints from backbench Tory MPs and led to the Thursday evening meeting at the Foreign Office hosted by Johnson, the foreign secretary. Sources at No 10 said there had been selective leaks from the paperwork and the controversial passage appeared on page 15 out of 50 from one of several documents sent to all members of the cabinet.

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It’s corporations this time around.

The Dark Cloud Of Global Debt (GT)

While everyone is debating the effects of possible trade sanctions on the global economy, few are paying attention to a far more serious issue. Enormous global debt, combined with low-interest rates, have set the stage for a global recession that has the potential for economic chaos. The combination of enormous debt and artificially low-interest rates were at the center of the 2008 credit bubble. One would expect central banks to be aware of this and show more concern. However, the overall silence has been astonishing. An exception to this is the Bank for International Settlements (BIS), which has been making loud noises about the toxic level of global debt and the anticipated bubble.

It recently reported that the global debt of 2008 was $60 trillion, small when compared to the current debt of $170 trillion. To make matters worse, today’s global debt is 40 percent higher in relation to GDP than it was in 2008, just prior to the Lehman Bros. downfall. To add to the current headache are the rising debt levels of emerging markets and corporate debts. According to McKinsey & Company, a global consulting firm, two-thirds of U.S. corporate debt are from corporations that pose a high default risk. Countries such as Brazil, India, and China have been busy issuing questionable credit. This dubious credit being issued in many emerging markets has come with extremely low-interest rates.

If the borrowers’ default, the lenders won’t be looking at enough compensation to recoup their loses. Low-interest rates have become an overall global problem, including the rates in the U.S. high-yield bond market. Central banks around the world have been keeping interest rates artificially low while printing money with abandon. The current global debt is the direct result of this policy. $2 trillion in corporate debt will be maturing annually through 2022. A considerable amount of this debt may default and cause debt repricing. The damage caused by central banks and their policy of easy credit has been done, and there is little that can be done at this point to stem the tide. It can only be hoped that they are more aware now than they were in 2008.

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Central banks don’t really matter anymore.

“People Assume That Stocks Always Rise Over Time. They’re Wrong” (Eric Peters)

We’ve all looked at the stats, and we’re now at an unemployment rate in the US of sub-4% – 3.8%–3.7%. I think what a lot of people focus on is if the participation rate were back where it was pre-2008 you’d end up with an unemployment rate that had an 8 handle or something like that. So that’s what people are referring to. But making comparisons like that is difficult because a lot of things are changing. The US labor force is shrinking because people are getting older. There is the opioid issue. And this disability issue. Which are difficult to really handicap in terms of how big an impact that’s having on the US labor force.

If the central banks have been the ones who have gotten us here, they just – by definition – they’re not the ones that are going to get us out of here. So I think – look, we’re always going to look at what central banks are doing, they will be important. But I think that they’re no longer going to be dominant. What’s going to be dominant are the politicians. You’re seeing that in the US right now. I know that everyone loves to hang on every word that Powell speaks. And they look at the Fed statement. And people are still trained to look at the Fed dot plots (which are probably going to go away). People are trained to look at all of these things because that’s what they’ve done their whole careers.

But they just are not going to matter that much anymore. Whether the Fed’s terminal rate is 2.25 or 2.5 or 2.75 – we’re not talking about much. What are we going to do in terms of immigration policy? What are we going to do in terms of trade policy? How is that going to impact all of the major corporations’ global supply chains? These are the things that are really going to matter.

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“It is a confluence of events coming in October ..”

Most Dangerous Market Ever – Michael Pento (USAW)

Money manager Michael Pento is sounding the alarm because we are getting very close to something called a “yield curve inversion.” Pento explains, “Why do I care if the yield curve inverts? Because 9 out of the last 10 times the yield curve inverted, we had a recession. . . . The spread with the yield curve is the narrowest it has been since outside of the start of the Great Recession that commenced in December of 2007. . . . The last two times the yield curve inverted, we had a stock market drop of 50%. The market dropped, and the S&P 500 lost 50% of its value.” Can we keep partying in the markets like it’s 1999 or is there an expiration date for the good times?

Pento says, “Well, I have put a check on the calendar for October because of the fact the rate of quantitative easing goes to $15 billion per year, because the trade war will reach a crescendo, then because I believe, unfortunately because I am conservative, the Republicans lose the House of Representatives, because the Chinese credit boom will be in full reverse by October. It is a confluence of events coming in October . . . we’ve already entered into the beginnings of a bear market around the world. The top 22 banks in the world are in a bear market. There are many, many examples of banks around the world that are in a bear market. You have a bear market in Chinese shares. 20% of the S&P 500 is in a bear market. This is an incipient bear market that is already beginning. I believe it manifests clearly to even the people on CNBC by October.”

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None of this makes any sense.

Moscow Using UK As Dumping Ground For Poison, Says Sajid Javid (G.)

Britain will consult its allies about a possible response to Russia over the latest poisonings in Wiltshire as it emerged that the couple taken critically ill had handled an item contaminated with the nerve agent novichok. The home secretary, Sajid Javid, accused Moscow of using the UK as a “dumping ground” for poison and urged Russia to explain “exactly what has gone on”. In Salisbury, public health and council chiefs warned people not to pick up unidentified objects but dismissed the idea of making a general sweep of the city for novichok, although they said they could not rule out the possibility that more of the nerve agent was present.

The Guardian understands that the novichok that harmed them may have been in a sealed container left following the attack on the former Russian spy Sergei Skripal and his daughter, Yulia, in March. Sources close to the investigation dropped a hint that they may now know the identity of the would-be killers who targeted the Skripals. The Metropolitan police confirmed on Thursday evening that the couple taken ill, Dawn Sturgess, 44, from Salisbury, and Charlie Rowley, 45, of Amesbury, collapsed after picking up a contaminated item.

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Even the Guardian allows itself to publish out right criticism. Putin has a really successful World Cup going. Brexit splits Britain. 1+1=2

If The Novichok Was Planted By Russia, Where’s The Evidence? (G.)

I seem to be the only person alive with no clue as to who has poisoned four people in Wiltshire. I am told that only Russians have access to the poison, known as novichok – though the British research station of Porton Down, located ominously nearby, clearly knows a lot about it. Otherwise, I repeat, I have no clue. I suppose I can see why the Kremlin might want to kill an ex-spy such as Sergei Skripal and his daughter, so as to deter others from defecting. But why wait so long after he has fled, and why during the build-up to so highly politicised an event as a World Cup in Russia? Four months on from the crime, the Skripals have been incommunicado in a “secure location”. Barely a word has been heard from them.

Theresa May has persistently blamed Russia. She has called the incident “brazen and despicable”, and MI5 condemned “flagrant breaches of international rules”. But I cannot see the diplomatic or other purchase in prejudging the case, when no one can offer a clue. As to why the same person or persons should want to kill a couple, unconnected to the Skripals, on an Amesbury housing development, the questions are even more baffling. It seems a funny sort of carelessness. Did the couple pick up the infecting agent nearer the original site, eight miles away? Might the new poisoning be an attempt to divert attention from the earlier one? Could it be a devious plot, to make it seem that novichok is available on every street corner, from your friendly neighbourhood drug dealer?

Or perhaps one of the victims, Charlie Rowley, has mates in Porton Down? Perhaps someone is showing off, or panicking, or behaving like a complete idiot. Who knows? Since I have not a smidgen of an answer to any of these questions, I feel no need to capitulate to the politics of terror and fear. I can open my front door without cleaning my hand. I can visit Wiltshire in peace and safety and marvel at the spire of Salisbury Cathedral. I can revel in the remains of the bronze age Amesbury archer – whose death from bone disease has finally been resolved by the scientists. Where knowledge is nonexistent, ignorance is bliss.

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NIMBY on steroids.

Seehofer Tells Merkel, Italy And Greece To Solve Migration Row (EUO)

German interior minister Horst Seehofer defused tensions with Austria on Thursday (5 July) but increased political pressure on his boss, chancellor Angela Merkel, as well as on Italy and Greece, to find a way how Germany can reject asylum seekers without closing its border with Austria. “There will be no measures taken by Germany at the expense of Austria,” Austrian chancellor Sebastian Kurz said after meeting Seehofer in Vienna. Under a plan agreed on Monday between Merkel’s centre-right CDU party and Seehofer’s CSU, its Bavarian conservative sister party, asylum seekers would be sent back to the EU country where they were first registered, or to Austria.

Kurz had warned that in reaction, Austria would consider closing its own border with Italy and Slovenia in order to prevent migrants from coming in. This, Vienna had warned, would lead to a “domino effect” of closing borders and imperil the free-movement Schengen area. But Seehofer assured Kurz that Austria would have to take no specific measures, and that it would be up to Italy and Greece, where three-quarters of asylum seekers come from, to take them back. The Bavarian politician has been trying for almost a month to impose his plan on Merkel, who first refused to unilaterally reject asylum seekers. She advocated instead a “European solution” to be agreed with other member states, who would accept taking refugees from Germany.

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It’s not defeated yet.

European Parliament Rejects Controversial Copyright Rules (Ind.)

The European Parliament has voted against an incredibly controversial new set of copyright rules that campaigners claim could “ban memes”. The law will now be sent for a full reconsideration and debate inside the parliament, during which activists will try and remove the controversial Article 11 and 13. Article 11 has been referred to by campaigners as instituting a “link tax”, by forcing tech companies like Google and Facebook to pay to use snippets of content on their own sites. Article 13 adds rules that make tech companies responsible for ensuring any copyrighted material is not spread over their platforms. Those rules could force technology companies to scan through everything their users post and check it doesn’t include copyrighted material.

If it is found, the post will be forced to be removed, which campaigners claim could destroy the kind of memes and remixes that spread across the internet. The revamp has triggered strong criticism from Wikipedia founder Jimmy Wales, World Wide Web inventor Tim Berners-Lee, net neutrality expert Tim Wu, internet pioneer Vint Cerf and others. Copyright campaigners claim that the rules are necessary to ensure that material isn’t illegally spread across the internet. Europe’s broadcasters, publishers and artists including Paul McCartney backed the rules, arguing the controversial Article 13 would protect the music industry.

A total of 318 law makers voted against opening talks with EU countries based on the committee’s proposal while 278 voted in favour, and 31 abstained. In practice, the vote only delays the final decision on the rules and gives the European Parliament more time to deliberate on them. Another decision will be taken in September.

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Jul 052018
 
 July 5, 2018  Posted by at 8:15 am Finance Tagged with: , , , , , , , , , , ,  


Vincent van Gogh Ravine 1889

 

China Warns US ‘Opening Fire’ On World With Tariff Threats (R.)
China Denies It Will Be First To Impose Tariffs On $34bn Of US Goods (G.)
Europe Turns Down Chinese Offer For Grand Alliance Against The US (ZH)
EU Reportedly Considering International Talks To Cut Car Tariffs (CNBC)
Germany’s Massive Trade Surplus ‘Is Becoming Toxic,’ Ifo Director Says (CNBC)
Tories ‘Toast’ If They Don’t Deliver On Brexit, Theresa May Warned (Sky)
There Is Only Option On The Table: Soft Brexit (G.)
UK Home Office Separating Scores Of Children From Parents (Ind.)
Bank of Japan Takes Away Punch Bowl, Balance Sheet Declines (WS)
India Is Emerging As Ground Zero Of The World’s Biggest NPL Crisis (ZH)
Kim Dotcom Loses New Zealand Extradition Appeal (AFP)
Babies (CJ)

 

 

Negotiate!

China Warns US ‘Opening Fire’ On World With Tariff Threats (R.)

The United States is “opening fire” on the world with its threatened tariffs, the Chinese government warned on Thursday, saying Beijing will respond the instant U.S. measures go into effect as the two locked horns in a bitter trade war. The Trump administration’s tariffs on $34 billion of Chinese imports are due to go into effect at 12.01 am eastern time on Friday (0401 GMT Friday), which is just after midday on Friday Beijing time. U.S. President Donald Trump has threatened to escalate the trade conflict with tariffs on as much as a total of $450 billion in Chinese goods if Beijing retaliates, with the row roiling financial markets including stocks, currencies and global trade of commodities from soy beans to coal.

China has said it will not “fire the first shot”, but its customs agency said on Thursday in a short statement that Chinese tariffs on U.S. goods will take effect immediately after Washington’s tariffs on Chinese goods kick in. Speaking at a weekly news conference, Chinese Commerce Ministry spokesman Gao Feng warned the proposed U.S. tariffs would hit international supply chains, including foreign companies in the world’s second-largest economy. “If the U.S. implements tariffs, they will actually be adding tariffs on companies from all countries, including Chinese and U.S. companies,” Gao said. “U.S. measures are essentially attacking global supply and value chains. To put it simply, the U.S. is opening fire on the entire world, including itself,” he said.

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Well, obviously.

China Denies It Will Be First To Impose Tariffs On $34bn Of US Goods (G.)

China has denied it will fire the opening salvo in an escalating trade dispute with the US, insisting that it would not bring in 25% tariffs on $34bn (£26bn) of American goods before a move from Washington. Both sides have threatened to impose similarly sized tariffs on 6 July, but because of the 12-hour time difference, it was thought the Chinese tariffs on US imports ranging from soybean to stainless steel pipes could take effect earlier. However, China’s finance ministry issued a statement on Wednesday saying that it would not be the first to levy tariffs.

“The Chinese government’s position has been stated many times. We absolutely will not fire the first shot, and will not implement tariff measures ahead of the United States doing so.” The US will implement a 25% tariff on $34bn of Chinese imports – 818 product lines ranging from cars to vaporisers and “smart home” devices – on Friday. There had been hopes the US and China might step away from the measures, but neither side has backed down. Economists have warned that the tariffs will damage economic growth and cost jobs, and could escalate into a full-blown trade war between the world’s two largest economies.

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Nonstarter.

Europe Turns Down Chinese Offer For Grand Alliance Against The US (ZH)

Publicizing its growing exasperation in dealing with president Donald Trump who refuses to halt the tit-for-tat retaliation in the growing trade war with China – which is set to officially begin on Friday when the US slaps $34 billion in Chinese exports with 25% tariffs – but has a habit of doubling down the threatened US reaction to every Chinese trade counteroffer (after all the US imports far more Chinese goods than vice versa)…China has proposed a novel idea: to form an alliance with the EU – the world’s largest trading block – against the US, while promising to open up more of China’s economy to European corporations.

The idea was reportedly floated in meetings in Brussels, Berlin and Beijing, between senior Chinese officials, including Vice Premier Liu He and the Chinese government’s top diplomat, State Councillor Wang Yi, according to Reuters. Willing to use either a carrot or a stick to achieve its goals, in these meetings China has been putting pressure on the European Union to issue a strong joint statement against President Donald Trump’s trade policies at a summit later this month. However, perhaps because China’s veneer of the leader of the free trade world is so laughably shallow – China was and remains a pure mercantilist power, whose grand total of protectionist policies put both the US and Europe to shame – the European Union has outright rejected any idea of allying with Beijing against Washington ahead of a Sino-European summit in Beijing on July 16-17.

Instead, in the tradition of every grand, if ultimately worthless meeting of the G-X nations, the summit is expected to produce a “modest communique”, which affirms the commitment of both sides to the multilateral trading system and promises to set up a working group on modernizing the WTO. Incidentally, the past two summits, in 2016 and 2017, ended without a statement due to disagreements over the South China Sea and trade. Then there is China’s “free-trade” reputation: a recent Rhodium Group report showed that Chinese restrictions on foreign investment are higher in every single sector save real estate, compared to the European Union, while many of the big Chinese takeovers in the bloc would not have been possible for EU companies in China. And while China has promised to open up, EU officials expect any moves to be more symbolic than substantive.

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Caving.

EU Reportedly Considering International Talks To Cut Car Tariffs (CNBC)

European officials are considering holding talks on a tariff-cutting deal between the world’s largest car exporters to prevent an all-out trade war with the U.S., according to the Financial Times who cited diplomats briefed on the matter. The proposal is being looked at by officials in Brussels, the administrative heartland of the European Union, ahead of a meeting between Jean-Claude Juncker, the president of the European Commission, and President Donald Trump in Washington later in July, the report published Wednesday said.

The FT reported that three diplomats, which it did not name, said the European Commission “is studying whether it would be feasible to negotiate a deal with other big car exporters such as the U.S., South Korea and Japan.” Such a move could address Trump’s complaint that the U.S. sector is unfairly treated, while reducing export costs for other participating countries’ auto sectors. “Under such a deal, participants would reduce tariffs to agreed levels for a specified set of products — a concept in international trade known as a ‘plurilateral agreement’ that lets countries strike deals on tariffs without including the entire membership of the WTO,” the FT said.

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Even Italy has a big surplus.

Germany’s Massive Trade Surplus ‘Is Becoming Toxic,’ Ifo Director Says (CNBC)

Germany exporting more than it imports is becoming a big problem for its economy, a director from the country’s closely-watched Ifo Institute said Wednesday. “(The trade surplus) is turning out to be an increasing issue, not just with the U.S. but with other trade partners as well, and also within the European Union,” Gabriel Felbermayr, the director of the Ifo Center for International Economics at the Munich-based institute, told CNBC’s “Squawk Box Europe. “The surplus is becoming toxic, and also within Germany many argue now that we need to do something about it with the purpose of lowering it. It turns out to be a liability rather than an asset.”

Germany’s export-orientated, manufacturing economy and its resulting trade surplus — the value of its exports exceeding that of its imports — has long been a subject of criticism and Berlin has been pressured to encourage more domestic spending and boost imports. Trade surpluses are viewed as encouraging trade protectionism and worsening the economic problems of other countries. Germany’s trade surplus fell in 2017 for the first time since 2009, shrinking to $300.9 billion, data published in February by the country’s Federal Statistics Office showed. Still, its trade surplus with the U.S. was $64 billion.

[..] Eric Lonergan, macro fund manager at M&G, told CNBC on Wednesday that Trump might be mollified by European countries promising to address their current account surpluses. A current account surplus is a broader measure of the trade surplus, plus earnings from foreign investments and transfer payments. “(Regarding the trade surplus) the truth is it’s not just Germany anymore — central and eastern Europe, if you look at Hungary, Poland, the Czech Republic and take them as an aggregate, were running a big current account deficit before, now they’re running a big current account surplus,” he said. “Italy’s running a big current account surplus, the periphery is — so it’s the ‘Germanification’ of the whole of greater Europe.”

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Rumor has it that Boris Johnson will resign. Maybe he’ll wait until after England lose to Sweden in the World Cup.

Tories ‘Toast’ If They Don’t Deliver On Brexit, Theresa May Warned (Sky)

Theresa May has been warned the Tories will be “toast” if they fail to deliver on their Brexit promises, as eurosceptic MPs maintain the pressure on the prime minister ahead of a crunch meeting of her top team. As the PM prepares to gather ministers at her country retreat of Chequers on Friday, she has been put on notice by the European Research Group (ERG) of Conservative backbenchers. Around 40 members of the ERG met with chief whip Julian Smith on Wednesday, reports Sky’s senior political correspondent Beth Rigby. Our correspondent said that they told Mr Smith the party will be “toast” if it “welches” on its previous Brexit promises, adding that the roughly £40bn “divorce bill” should only be paid to Brussels on condition of getting a deal.

After the meeting, Jacob Rees-Mogg, who chairs the ERG, told Sky News that Mr Smith “doesn’t determine policies” and so backbench Brexiteers remain in the dark over the government’s plans beyond media reports. Asked about suggestions the PM could propose a UK-EU deal that keeps regulatory alignment with Brussels for goods, as well as keeping the same level of tariffs as the EU, Mr Rees-Mogg warned such an agreement is “not Brexit”. He insisted continued regulatory alignment would mean the UK “cannot do trade deals with the rest of the world” and would mean “we haven’t really left the EU”. “Indeed, worse than that, we’re a vassal state because we take the EU’s rules and have no say over them,” the Leave supporter added.

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Not for the diehards.

There Is Only Option On The Table: Soft Brexit (G.)

The proverbial can has been kicked down the proverbial road ever since Britain voted to leave the European Union in 2016. Don’t get me wrong. Can-kicking has a necessary place in politics. Theresa May has often had little choice but to resort to it. But the road and the can-kicking must end at Chequers on Friday. That’s when the prime minister and her divided cabinet must finally decide what kind of relationship they seek with the EU after Brexit. In the end, May’s government faces the same two choices at Chequers that it has faced throughout all the twists and turns of the Brexit negotiations.

Either the government must embrace a form of soft Brexit that it can then persuade the rest of Europe to accept as a proper basis for good future relations – the option that May herself and the chancellor, Philip Hammond, both prefer and will put forward – or it must reject that option and prepare for a no-deal Brexit, in which all of Britain’s economic and political relations with Europe and the rest of the world become matters of pure conjecture. There are no other choices on the table. If Brexit is to go ahead, it is simply one or the other. This means, therefore, that only the first of the two choices is in fact a serious option.

If the cabinet rejects May’s and Hammond’s approach and adopts a no-deal option as government policy, there would be both a parliamentary and an extra-parliamentary revolt against it. Large businesses such as British Airways might relocate to Europe. Labour might even find an explicit anti-Brexit voice. One way or another, the no-deal approach would therefore explode on the launch pad. And Brexit might even not take place. Most ministers are neither idiots nor wreckers, so the no-deal option is not going to happen. It is even questionable as to whether any of the no-dealers will resign. The much more serious question, though, is whether the soft Brexit package that May wants to sell to the cabinet is much of a runner either.

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If they’re capable of Windrush, they can do this too.

UK Home Office Separating Scores Of Children From Parents (Ind.)

The Home Office is separating scores of children from their parents as part of its immigration detention regime – in some cases forcing them into care in breach of government policy. Schools, the NHS and social services have written letters to the department begging them to release parents from detention because of the damaging impact it is having on their children. Bail for Immigration Detainees (Bid), a charity that supports people in detention, said they have seen 170 children separated from their parents by the Home Office in the past year – and believes there are likely to be many more.While usually the youngsters remain in the care of their other parent, the charity has seen a number of cases where children are taken into local authority care as a result of the detention.

Case workers highlight that this is in breach of Home Office guidelines, which state that a child “must not be separated from both adults if the consequence of that decision is that the child is taken into care”. In one case, three young children were taken into care for several days after their dad was detained earlier this year – an experience that left them traumatised and fearful that he will be “taken away” again. Kenneth Oranyendu, 46, was detained in March while his wife was abroad for her father’s funeral. Despite the Home Office being aware of this, they kept him in detention and his four young children were forced to go into care.

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Japan’s toast without the punch bowl.

Bank of Japan Takes Away Punch Bowl, Balance Sheet Declines (WS)

In June, total assets on the Bank of Japan’s balance sheet dropped by ¥3.79 trillion yen ($34 billion) from May, to ¥537 trillion ($4.87 trillion). It was the third month-over-month drop in seven months, and the first such drops since late 2012, when the Abenomics-designed blistering “QQE” (Qualitative and Quantitative Easing) kicked off. So has the “QQE Unwind” commenced? This chart shows the month-to-month changes of the total balance sheet. Note the trend over the past 16 months and the three “QQE unwind” episodes (red):

But this sporadic balance sheet reduction and the overall “tapering” of its growth contradict the official rhetoric. Bank of Japan Governor Haruhiko Kuroda along with most of his colleagues keep insisting that the BOJ would “patiently” maintain its ultra-easy monetary policy and that it would “keep expanding the monetary base until inflation is above 2%.” The blistering asset purchases would add about ¥80 trillion ($725 billion) to the balance sheet every year. And the BOJ has repeatedly affirmed its short-term interest-rate target of a negative -0.1%.

[..][ Under QQE, the BOJ has been buying mostly Japanese government securities (JGBs and short-term bills); it also purchased corporate bonds, Japanese REITs, and equity ETFs. But now, the party appears to be ending, despite the speeches to the contrary. From the distance, however, the flattening out (tapering) of the BOJ’s assets is barely noticeable, given the magnitude of the whole pile that amounts to about 96% of Japan’s GDP (the Fed’s balance sheet amounted to about 23% of US GDP at the peak):

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I’d say China is much worse than the graph indicates.

India Is Emerging As Ground Zero Of The World’s Biggest NPL Crisis (ZH)

While bad loans in the Italian banking system have received a ton of attention from investors who fear that the Italians could inadvertently blow up the European banking union, it’s not the only financial landmine lurking among the world’s ten largest economies. To wit, while Italy has the largest percentage of non-performing loans among the world’s largest economies, India isn’t far behind and India’s economic recovery is built on an even shakier foundation. According to Bloomberg, India’s $1.7 trillion formal banking sector is presently struggling with $210 billion in bad loans, most of which are concentrated within its state-owned banks. During the 2018 fiscal year, growth slowed to 6.7%, down from the previous year’s 7.1%, back to its levels from 2014, before Modi came to power.

The state banks have been so badly mismanaged that some analysts say the country’s banking crisis is an opportunity for private sector banks, as CNBC reported. “If you take a 10-year view, currently the private sector banks’ market share is 30 percent. Probably it will become 60 percent,” Sukumar Rajah, senior managing director at Franklin Templeton Emerging Markets Equity, told CNBC. As a result, he said, “the overall health of the banking system will improve because the better banks will be a bigger portion of the market and the weaker banks will become a smaller portion of the market.”

Some also see opportunities for investment bankers looking to underwrite corporate bond issuance in the country.. “My view is that, incrementally, a lot of long-term financing of corporate India can also be met by the corporate bond market, which has developed reasonably well,” he said. “Between the corporate bond market and the private banks, I think most of the requirements can be met as far as corporate India is concerned.” When it comes to lending directly to individuals, Prasad said that is mostly done by the private banks and non-banking financial companies.

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Can’t extradite someone who has broken none of your laws.

Kim Dotcom Loses New Zealand Extradition Appeal (AFP)

Megaupload founder Kim Dotcom suffered a major setback in his epic legal battle against online piracy charges Thursday when New Zealand’s Court of Appeal ruled he was eligible for extradition to the United States. The German national, who is accused of netting millions from his file sharing Megaupload empire, faces charges of racketeering, fraud and money laundering in the US, carrying jail terms of up to 20 years. Dotcom had asked the court to overturn two previous rulings that the Internet mogul and his three co-accused be sent to America to face charges. Instead, a panel of three judges backed the FBI-led case, which began with a raid on Dotcom’s Auckland mansion in January 2012 and has dragged on for more than six years.

The court said US authorities had “a clear prima facie case to support the allegations that the appellants conspired to, and did, breach copyright wilfully and on a massive scale for commercial gain”. Dotcom is accused of industrial-scale online piracy via Megaupload, which US authorities shut down when the raid took place. They allege Megaupload netted more than US$175 million in criminal proceeds and cost copyright owners US$500 million-plus by offering pirated content including films and music. “We are disappointed with today’s judgment by the NZ Court of Appeal in the Kim Dotcom case,” his lawyer Ira Rothken tweeted, indicating there would be an appeal to the Supreme Court.

“We have now been to three courts each with a different legal analysis – one of which thought that there was no copyright infringement at all.” Dotcom and his co-accused – Finn Batato, Mathias Ortmann, Bram van der Kolk – have denied any wrongdoing and say Megaupload was simply a case of established interests being threatened by online innovation. The website was an early example of cloud computing, allowing users to upload large files onto a server so others could easily download them without clogging up their email systems. At its height in 2011, Megaupload claimed to have 50 million daily users and account for 4% of the world’s internet traffic.

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How people are made.

Babies (CJ)

When a baby is born, its parents teach it how to eat solid foods and walk and talk, which generally works out fine. Then they start teaching the baby all the lies their parents taught them, and things start to get messy. When the baby is old enough, they send it to school, where it spends twelve years being taught lies about how the world works so that one day it will be able to watch CNN and say “Yes, this makes perfect sense” instead of “This is ridiculous” or “Why does this whole entire thing seem completely fake?” or “I want to punch Chris Cuomo in the throat.” The baby is taught history, which is the study of the ancient, leftover propaganda from whichever civilization happened to win the wars in a given place at a given time.

The baby is taught geography, so that later on when its country begins bombing another country, the baby’s country won’t be embarrassed if its citizens cannot find that country on a globe. The baby is taught obedience, and the importance of performing meaningless tasks in a timely manner. This prepares the baby for the half century of pointless gear-turning it will be expected to undertake after graduation. The baby is taught that it lives in a free country, with a legitimate electoral system which facilitates meaningful elections of actual representatives in a real government. It is never taught that those elections, representatives and government are all owned and operated by the very rich, who use them to ensure policies which make them even richer while keeping everyone else as poor as possible so that they won’t have to share political power.

It is never taught that highly secretive intelligence and defense agencies form alliances with those rich people to advance murderous and exploitative agendas for profit and power. It is never taught that the things it sees on television are mostly lies. The baby is smoothly, seamlessly funneled from uterus to full-time employment through this system, often with a little religion mixed in to really drive home the importance of obedience and meekness and the nobility of poverty.

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Waiting for my man

Jul 022018
 
 July 2, 2018  Posted by at 9:07 am Finance Tagged with: , , , , , , , , , , , ,  


Roy Lichtenstein Woman in Bath 1963

 

When Politics Trumps Economics (Roach)
Update on Deflating Property Bubbles in Sydney & Melbourne (WS)
EU Warns US Of $294 Billion Hit If Car Tariffs Imposed (R.)
Key Merkel Ally Seehofer ‘Announces Intention To Resign’ Over Migration (G.)
Competing Visions Of Europe Are Threatening To Tear The Union Apart (G.)
Leftist ‘AMLO’ Sweeps To Mexican Presidency (AFP)
Axios Leaks Trump Bill To Blow Up World Trade Organization (ZH)
UK To Announce Third Post-Brexit Customs Model (BBC)
The Supreme Court Has Already Reshaped America (G.)
Australian Plastic Bag Ban Sparks Abuse, Violence From Angry Shoppers (Ind.)
New Zealand Most Perilous Place For Seabirds Due To Plastic Pollution (G.)

 

 

All economics is politics.

When Politics Trumps Economics (Roach)

With each passing day, it becomes increasingly evident that US President Donald Trump’s administration cares less about economics and more about the aggressive exercise of political power. This is obviously a source of enormous frustration for those of us who practice the art and science of economics. But by now, the verdict is self-evident: Trump and his team continue to flaunt virtually every principle of conventional economics. Trade policy is an obvious and essential case in point. Showing no appreciation of the time-honored linkage between trade deficits and macroeconomic saving-investment imbalances, the president continues to fixate on bilateral solutions to a multilateral problem – in effect, blaming China for America’s merchandise trade deficits with 102 countries.

Similarly, his refusal to sign the recent G7 communiqué was couched in the claim that the US is like a “piggy bank that everybody is robbing” through unfair trading practices. But piggy banks are for saving, and in the first quarter of this year, America’s net domestic saving rate was just 1.5% of national income. Not much to rob there! The same can be said of fiscal policy. Trump’s deficit-busting tax cuts and increases in government spending make no sense for an economy nearing a business-cycle peak and with an unemployment rate of 3.8%. Moreover, the feedback loop through the saving channel only exacerbates the very trade problems that Trump claims to be solving.

With the Congressional Budget Office projecting that federal budget deficits will average 4.2% of GDP from now until 2023, domestic saving will come under further pressure, fueling increased demand for surplus saving from abroad and even bigger trade deficits in order to fill the void. Yet Trump now ups the ante on tariffs – in effect, biting the very hand that feeds the US economy.

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A real threat to the entire Aussie economy.

Update on Deflating Property Bubbles in Sydney & Melbourne (WS)

In Sydney, Australia’s largest property market and Petri dish for one of the world’s biggest housing bubbles, home prices fell 4.6% in June compared to a year ago, with house prices down 6.2%, and prices of condos (“units” as they’re called) down 0.7%, according to CoreLogic. The most expensive sector got hit the hardest: in the top quartile of home sales, prices fell 7.3%. In the nine months since the peak in September, the overall Daily Home Value Index has fallen 5.0%. But it had been one heck of a boom in Sydney, where home prices had jumped over 80% from the end of 2009 through the peak in September last year. Even during the big-bad Global Financial Crisis, they’d only dipped 4.6%.

So the market is changing, and the denying has stopped. Australian banks are getting put through the wringer by the Royal Commission with ongoing revelations of an ever longer list of misdeeds, particularly in the mortgage sector. The Australian Prudential Regulation Authority (ARPA), which is supposed to regulate the financial services industry, put in place some macroprodential measures to tamp down on the housing bubble, and they’re finally having an impact. Banks are suddenly focusing on borrowers’ debt-to-income ratios and other specifics, rather than just the assurance that home prices will always rise. They’re under investigation, and they’re tightening credit. And investors – a huge force in the market – have suddenly lost their appetite for property speculation, and banks have lost their appetite for funding them.

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Just make all tariffs the same.

EU Warns US Of $294 Billion Hit If Car Tariffs Imposed (R.)

The European Union has warned the United States that imposing import tariffs on cars and car parts would harm its own automotive industry and likely lead to counter-measures by its trading partners on $294 billion of U.S. exports. In a 10-page submission to the United States Commerce Department sent last Friday, the European Union said tariffs on cars and car parts were unjustifiable and did not make economic sense. he Commerce Department launched its investigation, on grounds of national security, on May 23 under instruction from President Donald Trump, who has repeatedly criticised the EU over its trade surplus with the United States and for having higher import duties on cars. The EU has a 10% levy, compared to 2.5% for cars entering the United States.

Trump said last week that the government was completing its study and suggested the United States would take action soon, having earlier threatened to impose a 20% tariff on all EU-assembled cars. The bloc exported 37.4 billion euros (33.10 billion pounds) of cars to the United States in 2017, while 6.2 billion euros worth of cars went the other way. The European Union says that for some goods, such as trucks, U.S. import duties are higher. In its submission, the EU said that EU companies make close to 2.9 million cars in the United States, supporting 120,000 jobs – or 420,000 if cars dealerships and car parts retailers are included. [..] Assuming counter-measures along the lines of those taken in response to existing U.S. import tariffs on steel and aluminium, up to $294 billion of U.S. exports – 19% of overall U.S. exports – could be affected, the submission said.

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One last chance for Merkel.

Key Merkel Ally Seehofer ‘Announces Intention To Resign’ Over Migration (G.)

The future of Germany’s coalition government is hanging in the balance after the country’s interior minister reportedly announced his intention to resign over a migration showdown with Angela Merkel. Horst Seehofer, who is also leader of the Christian Social Union, on Sunday night offered to step down from his ministerial role and party leadership in a closed-door meeting in which he and fellow CSU leaders had debated the merits of the migration deal Merkel hammered out with fellow European Union leaders in Brussels. But with CSU hardliners believed to have tried to talk the combative interior minister into staying, a press conference was postponed until Monday, with Seehofer seeking to go back to Merkel in search of a final compromise.

At a 2am media conference, Seehofer said he had agreed to meet again with Merkel’s party before he made his decision final. “We’ll have more talks today with the CDU in Berlin with the hope that we can come to an agreement,” Seehofer said. “After that, then we will see.” In the short term, Seehofer’s resignation would appear to be a let-up for a beleaguered Merkel, removing a politician who has become the chancellor’s biggest nemesis inside her own government since taking up his post at the interior ministry in March. But if Seehofer were to resign and his replacement continue an adversarial approach, it would threaten to bring an end to the historic alliance between Merkel’s party, the Christian Democratic Union, and the Bavarian CSU, pushing the chancellor’s coalition government to the brink of collapse.

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Germany has dictated policies far too long.

Competing Visions Of Europe Are Threatening To Tear The Union Apart (G.)

[..] three competing visions have emerged. The first is Merkel’s idea of a “competitive” Europe. Under her “leadership” since the euro crisis began in 2010, the EU has increasingly become a vehicle for imposing market discipline on member states. It is in the name of this idea of a competitive Europe that, led by Germany, austerity has been imposed on debtor countries in the eurozone. In other words, although it is expressed in pro-European terms and involves further integration, it is essentially a neoliberal vision.

The second vision is the French president Emmanuel Macron’s idea of a “Europe qui protège”, a Europe that protects. Macron envisages an EU in which there would be greater solidarity between citizens and between member states. In practice, this means more redistribution and risk-sharing in the eurozone – the “transfer union” that Germany and other creditor countries fear. This is a centre-left vision of Europe – although in France, because Macron has implemented structural reforms in an attempt to gain credibility in Berlin, he is himself increasingly perceived as neoliberal.

The third vision is the Hungarian prime minister Viktor Orbán’s idea of a “Christian” Europe of sovereign states. His vision first emerged in response to the attempt, led by Germany, to force EU member states to accept mandatory quotas of refugees in 2015, but it has developed into a broader critique of the European project. Orbán defines himself as an “illiberal democrat” in opposition to what he sees as the undemocratic liberalism of the EU. His vision is shared not just by the Law and Justice party government in Poland but also by far-right parties in other EU member states.

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Good luck. Mexico is such a mess. But they might beat Brazil today in the World Cup.

Leftist ‘AMLO’ Sweeps To Mexican Presidency (AFP)

Anti-establishment leftist Andres Manuel Lopez Obrador swept to victory in Mexico’s presidential election Sunday, in a political sea change driven by voters’ anger over endemic corruption and brutal violence. The sharp-tongued, silver-haired politician known as “AMLO” won 53% of the vote, according to an official projection of the results. It is the first time in Mexico’s modern history a candidate has won more than half the vote in a competitive election, and a resounding rejection of the two parties that have governed the country for nearly a century. “This is a historic day, and it will be a memorable night,” Lopez Obrador said in a victory speech in Mexico City’s Alameda park, as thousands of ecstatic supporters flooded the capital’s central district, chanting “Yes we did!” and partying to mariachi music.

Lopez Obrador, 64, sought to downplay fears of radicalism, after critics branded him a “tropical Messiah” who would install Venezuela-style policies that could wreck Latin America’s second-largest economy. “Our new national project seeks an authentic democracy. We are not looking to construct a dictatorship, either open or hidden,” he told cheering supporters, promising to safeguard freedoms, respect the private sector and work to reconcile a divided nation. He also vowed to pursue a relationship of “friendship and cooperation” with the United States, Mexico’s key trading partner – a change in tone from some comments during the campaign, when he said he would put US President Donald Trump “in his place.”

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Better to reorganize it?!

Axios Leaks Trump Bill To Blow Up World Trade Organization (ZH)

Following the close of a second quarter that will be best remembered by President Trump’s vacillations on trade, Axios has dropped a Sunday night bombshell that may spook markets hoping for a respite from the daily escalating trade war rhetoric as the second half of the year begins: White House reporter Jonathan Swan has obtained a copy of a draft bill, purportedly ordered by Trump himself, that would allow the US to “walk away” from its commitments to the World Trade Organization. If passed, the bill (entitled the “United States Fair and Reciprocal Tariff Act”) would effectively blow up the WTO, an organization that the US helped create back in the 90s, by allowing Trump to unilaterally ignore the two most important principles:

The “Most Favored Nation” (MFN) principle that countries can’t set different tariff rates for different countries outside of free trade agreements; “Bound tariff rates” — the tariff ceilings that each WTO country has already agreed to in previous negotiations. “It would be the equivalent of walking away from the WTO and our commitments there without us actually notifying our withdrawal,” one anonymous source reportedly told Axios. The bill asks Congress to hand over to Trump unilateral power to ignore WTO rules and negotiate unilateral trade agreements. The leak of the draft bill follows another WTO-related scoop from Axios, published last week, where Swan reported that Trump has repeatedly badgered his aides about pulling the US out of the WTO, which the president has famously criticized as a “disaster”.

The bill’s chances of making it through Congress are extremely low. However, if Trump has taught us anything about his trade agenda, it’s never say never. “The good news is Congress would never give this authority to the president,” the source added, describing the bill as “insane.” “It’s not implementable at the border,” given it would create potentially tens of thousands of new tariff rates on products. “And it would completely remove us from the set of global trade rules.”

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Another nonstarter.

UK To Announce Third Post-Brexit Customs Model (BBC)

Downing Street has produced a third model for handling customs after the UK leaves the EU, the BBC understands. Details of the new plan have not been revealed publicly but senior ministers will discuss it at Chequers, the prime minister’s country retreat, on Friday. Ministers have been involved in heated discussions recently as they tried to choose between two earlier models. Tory backbencher Jacob Rees-Mogg says the PM risks a revolt if the type of Brexit she promised is not delivered. Theresa May hopes to resolve cabinet splits on the shape of Brexit at this week’s cabinet meeting. The prime minister has said the UK will then publish a White Paper setting out “in more detail what strong partnership the United Kingdom wants to see with the European Union in the future”.

It follows last week’s summit in Brussels where European Council president Donald Tusk issued a “last call” for the UK to agree its position on Brexit, saying the “most difficult” issues were unresolved and “quick progress” was needed if agreement was to be reached by the next meeting in October. BBC political correspondent Chris Mason says Downing Street hopes it has now found its way out of a bind on customs, the issue central to the practicalities of the UK’s future trading relationship with the EU, and a significant part of finding a solution to maintaining an open border with the Republic of Ireland.

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Highest courts in every nation MUST be independent.

The Supreme Court Has Already Reshaped America (G.)

“It’s not just that justice Kennedy’s successor is likely going to move the court to the right,” Vladeck said. “It’s that knowing that there are five conservative justices surely emboldens states and conservative interest groups to bring to the supreme court legal theories that they might have been reluctant to leave in justice Kennedy’s hands.” If that picture of the country’s jurisprudential future has left liberals distraught, it has also raised questions about the court’s increasingly politicized nature, its power to shape society and the erosion of its independence as one branch of government meant to balance the other two – Congress and the presidency – and to be checked in turn itself.

While past courts have had liberal or conservative bents, since the Bush v Gore decision that decided the 2000 election, the court has taken on a more explicitly political feel. “People say the founders would roll over in their graves – I think the founders would hang themselves”, said Mickey Edwards, vice-president of the Aspen Institute think-tank and formerly a congressman for 16 years. “The whole idea of the court being a separate and independent branch has totally disappeared. It is now a third branch of the policymaking process.” Extreme partisanship in Congress has led the legislature to relinquish its power to the presidency and the court, Edwards said.

“We now have become so accustomed to thinking of things – whether it’s foreign policy or trade policy or other things that the Congress has constitutional authority over – we now look at them all as presidential powers,” Edwards said. “So the presidency has grown much stronger. “I would also say that the supreme court has grown stronger and it’s become more partisan, which is very disturbing.”

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Portrait of a nation.

Australian Plastic Bag Ban Sparks Abuse, Violence From Angry Shoppers (Ind.)

Supermarket staff in Australia have faced abuse and violence from shoppers angry at the removal of plastic bags as a ban comes into force. Customers rebelling against the end of free single-use bags have taken out their frustration on staff, prompting warnings to them to be considerate. In Western Australia, a shopper put his hands around the throat of an employee at Woolworths, which had stopped giving out free plastic bags days before the ban came into force. It was one of dozens of cases of shop staff being abused as Australia moves to reduce the amount of non-decomposing synthetic materials going into rivers and seas.

In a survey of supermarket workers this week, out of 132 who responded, 57 (43 per cent) said they had suffered abuse because of the plastic bag ban. “I work at Woolies and have already been abused countless times; it’s not our fault,” staff member Lauren McGowan told News.com.au. There have also been reports of customers stealing handfuls of bags before the ban. As of today, major retailers in Western Australia and Queensland face fines if they supply single-use plastic bags – which are already banned in Tasmania, South Australia, the Northern Territory and the Australian Capital Territory.

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Because there are so many birds.

New Zealand Most Perilous Place For Seabirds Due To Plastic Pollution (G.)

Seabirds are more at risk of dying due to plastic in New Zealand than anywhere else in the world, new research presented to parliament has shown. New Zealand is considered “the seabird capital of the world”, according to the country’s Department of Conservation, with the northern royal albatross raising their chicks on the Otago Peninsula, unique species of oystercatchers on the Chatham Islands and more penguin species than any country in the world. There are 36 seabird species that breed only in New Zealand. Mexico is a distant second with just five. More than a third of all seabird species are known to spend time in New Zealand’s waters.

Karen Baird from conservation group Forest & Bird, which produced the report, said: “Rubbish that ends up in our seas has a far worse effect on seabird species than anywhere else in the world.” “Even though we don’t have the most plastic pollution, we are unique in the world in having so many seabirds species. We also have the most threatened seabird species, many of which are found nowhere else.” Seabirds are particularly vulnerable to eating plastic because they are surface feeders, spotting food from the air and swooping down on it, scooping it up and swallowing it before the mistake is realised. Seabird chicks and adults face starvation when their stomachs fill up with plastic rather than food.

Forest & Bird called on the government to ban single-use plastic bags and commit to further research into how marine life is affected by plastic in New Zealand waters. One in three turtles that are found sick or dead in the country are caused by the animals eating plastic, Forest & Bird found, with marine mammals such as seals and sea lions also at risk. In neighbouring Australia, nine out of 10 fledglings in some shearwater colonies surveyed had eaten significant quantities of plastic, Baird said. New Zealand’s 10 shearwater species could be in for the same fate if plastic pollution wasn’t urgently addressed, Baird said.

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