Jul 312018
 
 July 31, 2018  Posted by at 8:46 am Finance Tagged with: , , , , , , , , , ,  


René Magritte The son of man 1946

 

‘Prophet Of Doom’ Predicts Stock Market Will Plunge More Than 50% (MW)
Prepare For Biggest Stock-Market Selloff In Months – Morgan Stanley (MW)
US Treasury Raises 2018 Borrowing Need To $1.33 Trillion (ZH)
QE Turns Ten (Stephen Roach)
Fruits of the Great 2017 GOP Tax Cut Scam (Lendman)
Britain’s Borrowing Binge Continues As Brexit Looms (Ind.)
Brexit: UK Warns EU Of Tit-For-Tat Measures Over Financial Services (G.)
Trump Offer To Meet Iran President Rouhani Dismissed By Both Sides (G.)
The Ubiquity of Evil (Craig Murray)
World’s Largest King Penguin Colony Has Declined By 90% (G.)
Charities Damned For ‘Abject Failure’ In Tackling Sexual Abuse (G.)

 

 

We take John Hussman seriously.

‘Prophet Of Doom’ Predicts Stock Market Will Plunge More Than 50% (MW)

John Hussman, president of Hussman Investment Trust, describes himself as an economist, a philanthropist, and a “realist optimist often viewed as a prophet of doom” on his Twitter profile. That last bit may be the one investors care about on Monday as the stock market shows signs of unraveling on the back of the tech sector’s stumble. Hussman’s claim to fame includes forecasting the market collapses of 2000 and 2007-2008. Since then, however, he’s also become known as a permabear for his repeated calls for sharp stock market declines and his oft-repeated mantra of “overbought, overvalued, overbullish” as the bull market continues into its ninth year by some measures. Hussman says he’s learned from and addressed past errors.

In his most recent call, he argued that measured “from their highs of early-2018, we presently estimate that the completion of the current cycle will result in market losses on the order of -64% for the S&P 500 index, -57% for the Nasdaq-100 Index, -68% for the Russell 2000 index, and nearly -69% for the Dow Jones Industrial Average.” He admits the numbers seem extreme but says they are backed up what he refers to as the “Iron Law of Valuation.” “The higher the price investors pay for a given set of expected future cash flows, the lower the long-term investment returns they should expect. As a result, it’s precisely when past investment returns look most glorious that future investment returns are likely to be most dismal, and vice versa,” he writes.

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Tech.

Prepare For Biggest Stock-Market Selloff In Months – Morgan Stanley (MW)

The U.S. stock market has been partying all throughout July, and a hangover is coming. That is according to analysts at Morgan Stanley, who said that Wall Street’s rally is showing signs of “exhaustion,” and that with major positive catalysts for trading now in the rearview mirror, there’s little that could continue to propel equities higher. “With Amazon’s strong quarter out of the way, and a very strong 2Q GDP number on the tape, investors were finally faced with the proverbial question of ’what do I have to look forward to now?’ The selling started slowly, built steadily, and left the biggest winners of the year down the most. The bottom line for us is that we think the selling has just begun and this correction will be biggest since the one we experienced in February,” the investment bank wrote to clients.

The decline “could very well have a greater negative impact on the average portfolio if it’s centered on tech, consumer discretionary and small-caps, as we expect.” A correction is technically defined as a decline of at least 10% from a recent peak. Both the Dow Jones Industrial Average DJIA and the S&P 500 corrected in early February, on concerns that inflation was returning to markets. While the Dow remains in correction territory—meaning it hasn’t yet risen 10% from its low of the pullback—the S&P exited just last week, following its longest stint in correction territory since 1984. The Nasdaq Composite Index never fell into correction.

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Infinity and beyond.

US Treasury Raises 2018 Borrowing Need To $1.33 Trillion (ZH)

America’s funding needs are starting to grow at a dangerous pace. Even before the NYT reported of Trump’s startling suggestion of a further $100 billion tax cut in the form of an inflation-adjusted capital gains tax cost basis which mostly benefits the wealthy, earlier today the U.S. Treasury said it expects to borrow $56 billion more during the third quarter than previously estimated, while market participants expect shorter-dated Treasuries to absorb the brunt of the new supply as the Trump administration grapples with a mushrooming budget deficit.

In the Treasury’s latest quarterly Sources and Uses table, it revealed that it expects to issue $329 billion in net marketable debt from July through September, and $56 billion more than the $273 billion estimated three months ago, in April. assuming an end-of-September cash balance of $350 billion, matching its previous estimate. It also forecast $440 billion of borrowing in the final three months of the year, with a $390 billion cash balance on December 31. The borrowing estimate for the third quarter is the highest since the same period in 2010 and the fourth largest on record for the July-September quarter, according to Reuters. In the second quarter, net borrowing totaled $72 billion, slightly below the earlier prediction of $75 billion.

The US fiscal picture continues to darken as a result of rising social security costs, military spending and debt service expenses while corporate tax income is declining after last year’s tax reforms. As a result, the federal budget deficit is expected to reach $833 billion this year, up from $666 billion in the budget year ended last September, a number that is well below the net funding demands for the US Treasury. The new projections put total net borrowing at $769 billion for the second half of 2018 and a whopping $1.33 trillion for the whole year.

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The Fed has been granted far too much power. We’re going to regret that.

QE Turns Ten (Stephen Roach)

November 2018 will mark the tenth anniversary of quantitative easing (QE) — undoubtedly the boldest policy experiment in the modern history of central banking. The only thing comparable to QE was the US Federal Reserve’s anti-inflation campaign of 1979-1980, orchestrated by the Fed’s then-chair, Paul Volcker. But that earlier effort entailed a major adjustment in interest rates via conventional monetary policy. By contrast, the Fed’s QE balance-sheet adjustments were unconventional and, therefore, untested from the start.

[..] The most important lesson pertains to traction — the link between Fed policy and its congressionally mandated objectives of maximum employment and price stability. On this count, the verdict on QE is mixed: The first tranche (QE1) was very successful in arresting a wrenching financial crisis in 2009. But the subsequent rounds (QE2 and QE3) were far less effective. The Fed mistakenly believed that what worked during the crisis would work equally well afterwards. An unprecedentedly weak economic recovery – roughly 2% annual growth over the past nine-plus years, versus a 4% norm in earlier cycles – says otherwise. Whatever the reason for the anemic recovery – a Japanese-like post-crisis balance-sheet recession or a 1930s style liquidity trap – the QE payback was disappointing.

From September 2008 to November 2014, successive QE programs added $3.6 trillion to the Fed’s balance sheet, nearly 25% more than the $2.9 trillion expansion of nominal GDP over the same period. A comparable assessment of disappointing interest-rate effects is reflected in recent “event studies” research that calls into question the link between QE and ten-year Treasury yields. A second lesson speaks to addiction – namely, a real economy that became overly reliant on QE’s support of asset markets. The excess liquidity spawned by the Fed’s balance-sheet expansion not only spilled over into equity markets, but also provided support for the bond market. As such, monetary policy, rather than market-based fundamentals, increasingly shaped asset prices.

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QE, tax cuts, it’s all just a great wealth transfer.

Fruits of the Great 2017 GOP Tax Cut Scam (Lendman)

David Stockman estimates the great GOP tax cut heist will increase the federal debt to around $35 trillion by 2028. Most discretionary US spending goes for militarism, war-making, corporate welfare, and police state harshness. According to Americans for Tax Fairness (ATF), the fruits of last year’s great GOP tax cut heist were as follows: 4.3% of workers got wage hikes or bonuses – 6.7 million out of 155 million. Only a handful of employers provided them so far – 407 out of 5.9 million. Corporate predators are getting 11-fold as much in tax breaks as they’re giving workers in extra pay and bonuses – $77 billion v. $7 billion.

Corporate predators are spending 88 times the amount on stock buybacks as on worker wage hikes and bonuses – $7 billion v. $617 billion. Trump’s highly touted “middle class miracle” was a colossal Big Lie. It’s been a bonanza for corporate predators, high net-worth households, and real estate tycoons like himself – a scam for ordinary Americans. It’s ballooning the deficit, social benefits being slashed to help pay for it, a clearly transparent wealth transfer scheme. Economists know tax cuts don’t create jobs and stimulate growth unless benefits help workers substantially. When money is in the pockets of ordinary people, they spend it, best accomplished through higher wages, at least keeping pace with inflation.

Post-9/11, America has been thirdworldized to benefit corporate predators and high net-worth individuals at the expense of working households. Ordinary Americans have been scammed to make privileged ones richer. Separately, according to Americans for Tax Fairness (ATF), healthcare insurers intend instituting huge premium increases in 2019. They’ll range from around 12% to a whopping 91% requested by a Maryland insurer.

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Credit Cards ‘R’ Us.

Britain’s Borrowing Binge Continues As Brexit Looms (Ind.)

Britain’s credit card fuelled spending binge continues apace, according to the latest figures from the Bank of England. Lending via plastic rose by an annualised 9.5 in June, outpacing other forms of unsecured credit (8.5 per cent). Mortgage lending, by contrast, ticked up by a more modest 3.2 per cent. The release of the figures followed a report by the Office for National Statistics that last week found UK consumers collectively spent more than they earned in 2017, the first time that has happened in almost 30 years. It looks like we’re due a repeat this year. How much of a worry is this? Regulators say most people can afford to repay what they have borrowed.

However, the Prudential Regulatory Authority, that oversees institutions’ financial soundness, last year undertook a review of consumer lending that resulted in what could be read as a shot across the industry’s bows. The Financial Conduct Authority, meanwhile, tweaked its rules in July, making it clear that it wanted lenders to asses not just whether consumers can repay what they have borrowed but whether they can do so “affordably and without this significantly affecting their wider financial situation”. It follows a speech in March by Jonathan Davidson, the watchdog’s director of supervision, in which he said that “a firm whose business model is predicated on selling products to customers who can’t afford to repay them is not acceptable, nor is it a sustainable long-term strategy”.

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Yeah, the UK is really in a position to utter threats.

Brexit: UK Warns EU Of Tit-For-Tat Measures Over Financial Services (G.)

UK negotiators have told their counterparts in Brussels that about 7,000 European-based investment funds that rely on British clients for their cash and profits will be hit by regulators unless the EU changes its position on the City of London after Brexit. As frustration grows within Whitehall at what is seen as a dogmatic position taken by the EU’s chief negotiator, Michel Barnier, the British side has upped the ante by making an implicit threat to EU interests. A section of a UK presentation made to the European commission’s negotiators last week, and seen by the Guardian, says that unless Brussels allows all UK sectors of the City of London to continue to operate after Brexit as they do today, at least initially, obstacles to European financial interests operating in the UK could also be put in place.

The British government says the EU’s “equivalence regime”, under which UK providers would have the right to offer financial services in the European economic area after Brexit, does not cover enough sectors or provide adequate assurances to UK-based banks and fund managers. The UK also wants equivalence decisions to be made collaboratively between Brussels and Whitehall on whether parts of the financial sector will be able to continue to operate across the Channel as regulations diverge after Brexit. As it stands, a declaration of equivalencecan be easily revoked with only 30 days’ notice under existing EU legislation. The EU is resisting, and insists it will not offer a bespoke deal on financial services. It says that what works for US financial services providers will have to work for the UK.

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Peace with Russia, peace with Iran, that’s not the playbook, Donald.

Trump Offer To Meet Iran President Rouhani Dismissed By Both Sides (G.)

Donald Trump has said he would “certainly meet” Iranian president Hassan Rouhani without preconditions, a move that was later rejected by Trump’s own administration and one of Rouhani’s advisers. Speaking during a joint news conference with Italy’s prime minister, Giuseppe Conte, Trump said he would meet Iran “anytime they want to”. “I’ll meet with anybody,” he said. “There’s nothing wrong with meeting.” Asked whether he would set any preconditions, Trump was clear. “No preconditions, no. If they want to meet, I’ll meet any time they want,” he said. “Good for the country, good for them, good for us and good for the world. No preconditions. If they want to meet, I’ll meet.”

Trump’s apparently spontaneous overture marked a significant shift in tone and follows escalating rhetoric in the wake of his dumping in May of the landmark Iran nuclear accord. The administration is set next month to begin reimposing sanctions that had been lifted under the 2015 deal and has been ratcheting up a pressure campaign on the Islamic republic that many suspect is aimed at regime change. After the comment, secretary of state Mike Pompeo appeared to contradict Trump, listing preconditions that had to be met first. He told CNBC on Monday: “If the Iranians demonstrate a commitment to make fundamental changes in how they treat their own people, reduce their malign behaviour, can agree that it’s worthwhile to enter in a nuclear agreement that actually prevents proliferation, then the president said he’s prepared to sit down and have a conversation with him,” he said.

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Murray on his time as a UK diplomat.

The Ubiquity of Evil (Craig Murray)

I had served as First Secretary in the British Embassy in Poland, and bumped up startlingly against the history of the Holocaust in that time, including through involvement with organising the commemoration of the 50th anniversary of the liberation of Auschwitz. What had struck me most forcibly was the sheer scale of the Holocaust operation, the tens of thousands of people who had been complicit in administering it. I could never understand how that could happen – until I saw ordinary, decent people in the FCO facilitate extraordinary rendition and torture. Then I understood, for the first time, the banality of evil or, perhaps more precisely, the ubiquity of evil. Of course, I am not comparing the scale of what happened to the Holocaust – but evil can operate on different scales.

I believe I see it again today. I do not believe that the majority of journalists in the BBC, who pump out a continual stream of “Corbyn is an anti-semite” propaganda, believe in their hearts that Corbyn is a racist at all. They are just doing their job, which is to help the BBC avert the prospect of a radical government in the UK threatening the massive wealth share of the global elite. They would argue that they are just reporting what others say; but it is of course the selection of what they report and how they report it which reflect their agenda.

The truth, of which I am certain, is this. If there genuinely was the claimed existential threat to Jews in Britain, of the type which engulfed Europe’s Jews in the 1930’s, Jeremy Corbyn, Billy Bragg, Roger Waters and I may humbly add myself would be among the few who would die alongside them on the barricades, resisting. Yet these are today loudly called “anti-semites” for supporting the right to oppose the oppression of the Palestinians. The journalists currently promoting those accusations, if it came to the crunch, would be polishing state propaganda and the civil servants writing railway dockets. That is how it works. I have seen it. Close up.

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Bye my friends. I’m going to miss you. Something bad.

World’s Largest King Penguin Colony Has Declined By 90% (G.)

The planet’s largest colony of king penguins has declined by nearly 90% in three decades, researchers have warned. The last time scientists set foot on France’s remote Île aux Cochons – roughly half way between the tip of Africa and Antarctica – the island was blanketed by 2m of the penguins, which stand about a metre tall. But recent satellite images and photos taken from helicopters show the population has collapsed, with barely 200,000 remaining, according to a study published in Antarctic Science. Why the colony on Île aux Cochons has been so decimated remains a mystery.

“It is completely unexpected, and particularly significant since this colony represented nearly one third of the king penguins in the world,” said lead author Henri Weimerskirch, an ecologist at the Centre for Biological Studies in Chize, France, who first set eyes on the colony in 1982. Climate change may play a role. In 1997, a particularly strong El Niño weather event warmed the southern Indian Ocean, temporarily pushing the fish and squid on which king penguins depend south, beyond their foraging range. “This resulted in population decline and poor breeding success for all the king penguin colonies in the region,” Weimerskirch said.

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This goes back to 2002. Nothing has changed.

Charities Damned For ‘Abject Failure’ In Tackling Sexual Abuse (G.)

Charities have shown “complacency verging on complicity” in responding to sexual abuse that is endemic across the sector, according to a damning report by MPs. In the report, the international development committee (IDC) said the aid sector had a record of “abject failure” in dealing with longstanding concerns about exploitation by its own personnel and appeared more concerned for their reputations than for victims. The response to abuse claims has been reactionary and superficial, it added. MPs called for the establishment of an independent aid ombudsman to support survivors and for a global register of aid workers to prevent abusers moving through the system.

Stephen Twigg, the committee chairman, said the sector’s failure to deal with the issue had left victims at the mercy of those who sought to use power to abuse others. The report, published on Tuesday, also criticised the UN, which it said had failed to display sustained leadership in tackling abuse, and said the historical response of the UK’s Department for International Development (DfID) was disappointing. The committee launched its inquiry into sexual exploitation and abuse after revelations that Oxfam covered up claims that its staff had used sex workers while working in the aftermath of the 2010 Haiti earthquake. The sector has faced intense scrutiny, with further allegations of sexual misconduct emerging at Save the Children.

Twigg said the aid sector was first made aware of concerns in 2002, when a report by the UN agency for refugees (UNHCR) and Save the Children documented cases of abuse. Despite this, and a series of other warnings, little action was taken. “There are so many reports that go back over this period of 16 years and the system has failed to respond anything close to adequately over the period,” the Labour MP said. “This is 16 years of failure by the entire international system of governments, the UN and the aid sector.”

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May 262018
 
 May 26, 2018  Posted by at 9:25 am Finance Tagged with: , , , , , , , , , , ,  


Louise Dahl-Wolfe Looking at Matisse, Museum of Modern Art 1939

 

S&P 500 Companies Return $1 Trillion To Shareholders In Tax-Cut Surge (R.)
The 2020s Might Be The Worst Decade In US History (Mauldin)
Moody’s Warns Of ‘Particularly Large’ Wave Of Junk Bond Defaults Ahead (CNBC)
Moody’s Puts Italy On Downgrade Review, Junk Rating Possible (ZH)
UK Economy Posts Worst Quarterly GDP Figures For Five Years (G.)
Prospects of US-North Korea Summit Brighten (R.)
The Real ‘Constitutional Crisis’ (Strassel)
A Mendacious Exercise In Manufacturing Paranoia (Jim Kunstler)
Tesla Seeks To Dismiss Securities Fraud Lawsuit (R.)
Madrid Takes Its Car Ban to the Next Level (CityLab)

 

 

Oh, that’s what the tax cuts are for?!

S&P 500 Companies Return $1 Trillion To Shareholders In Tax-Cut Surge (R.)

S&P 500 companies have returned a record $1 trillion to shareholders over the past year, helped by a recent surge in dividends and stock buybacks following sweeping corporate tax cuts introduced by Republicans, a report on Friday showed. In the 12 months through March, S&P 500 companies paid out $428 billion in dividends and bought up $573 billion of their own shares, according to S&P Dow Jones Indices analyst Howard Silverblatt. That compares to combined dividends and buybacks worth $939 billion during the year through March 2017, Silverblatt said in a research note. Earnings per share of S&P 500 companies surged 26 percent in the March quarter, boosted by the Tax Cuts and Jobs Act passed by Republican lawmakers in December.

Companies have been returning much of that profit windfall to shareholders via share buybacks and increased dividends at never before seen amounts, highlighted by Apple’s record $23.5 billion worth of shares repurchased in the first quarter. S&P 500 companies have also plowed some of the windfall from lower taxes into investments toward growth or becoming more efficient. First-quarter capital expenditures totaled at least $159 billion, up more than 21 percent from the year before, according to S&P Dow Jones Indices. The biggest overhaul of the U.S. tax code in over 30 years, the new law slashes the corporate income tax rate to 21 percent from 35 percent, and charges multinationals a one-time tax on profits held overseas.

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Mauldin turns dark side.

The 2020s Might Be The Worst Decade In US History (Mauldin)

I recently wrote about a looming credit crisis that’s stemming from high-yield junk bonds. The crisis itself will have massive consequences for investors. But that’s not the worst part. The crisis will create a domino effect and trigger global financial contagion, which I usually refer to as “The Great Reset.” The collapse of high-yield bonds will hit stocks and bonds. Rising defaults will force banks to reduce their lending exposure, drying up capital for previously creditworthy businesses. This will put pressure on earnings and reduce economic activity. A recession will follow. This will not be just a U.S. headache, either. It will surely spill over into Europe (and may even start there) and then into the rest of the world.

The U.S. and/or European recession will become a global recession, as happened in 2008. Europe has its own set of economic woes and multiple potential triggers. It is quite possible Europe will be in recession before the ECB finishes this tightening cycle. As always, a U.S. recession will spark higher federal spending and reduce tax revenue. So I expect the on-budget deficit to quickly reach $2 trillion or more. Within four years of the recession’s onset, total government debt will be at least $30 trillion. This will further constrain the private capital markets and likely raise tax burdens for everyone—not just the rich.

Meanwhile, job automation will intensify, with businesses desperate to cut costs. The effect we already see on labor markets will double or triple. Worse, it will start reaching deep into the service sector. The technology is improving fast. The working-class population will not like this and it has the power to vote. “Safety net” programs and unemployment benefit expenditures will skyrocket. Studies show that the ratio of workers covered by unemployment insurance is at its lowest level in 45 years. What happens when millions of freelancers lose their incomes?

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We’re talking trillions. Poof!

Moody’s Warns Of ‘Particularly Large’ Wave Of Junk Bond Defaults Ahead (CNBC)

With corporate debt hitting its highest levels since before the financial crisis, Moody’s is warning that substantial trouble is ahead for junk bonds when the next downturn hits. The ratings agency said low interest rates and investor appetite for yield has pushed companies into issuing mounds of debt that offer comparatively low levels of protection for investors. While the near-term outlook for credit is “benign,” that won’t be the case when economic conditions worsen. The “prolonged environment of low growth and low interest rates has been a catalyst for striking changes in nonfinancial corporate credit quality,” Mariarosa Verde, Moody’s senior credit officer, said in a report.

“The record number of highly leveraged companies has set the stage for a particularly large wave of defaults when the next period of broad economic stress eventually arrives.” Though the current default rate is just 3 percent for speculative-grade credit, that has been predicated on favorable conditions that may not last. Since 2009, the level of global nonfinancial companies rated as speculative, or junk, has surged by 58 percent, to the highest ever, with 40 percent rated B1 or lower, the point that Moody’s considers “highly speculative,” as opposed to “non-investment grade speculative.” In dollar terms, that translates to $3.7 trillion in total junk debt outstanding, $2 trillion of which is in the B1 or lower category.

“Strong investor demand for higher yields continues to allow all but the weakest issuers to avoid default by refinancing maturing debt,” Verde wrote. “A number of very weak issuers are living on borrowed time while benign conditions last.” The level of speculative-grade issuance peaked in the U.S. in 2013, at $334.5 billion, according to the Securities Industry and Financial Markets Association. American companies have $8.8 trillion in total outstanding debt, a 49 percent increase since the Great Recession ended in 2009.

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President Mattarella has refused to accept the nominee for finance minister, Savona. He’s a euroskeptic.

Meanwhile, if Italian bonds are downgraded further, Europe has a massive problem.

Moody’s Puts Italy On Downgrade Review, Junk Rating Possible (ZH)

In a quite direct ‘threat’ to the newly formed Italian coalition, Moody’s warned that Italy will face a downgrade from its current Baa2 rating (potentially more than one notch to junk status) due to the lack of fiscal restraint in the new “contract” and the potential for delays to Italy’s structural reforms. While Italy’s current rating is Baa2, and a downgrade would leave it at Baa3 (still investment grade), one look at Italian debt markets this week and one can be forgiven for thinking it is pricing in a multiple-notch downgrade to junk… and thus potentially making things awkward for its ECB bond-buying-benefactor and its banking system’s massive holdings of sovereign bonds.

Full Moody’s Report: Moody’s Investors Service has today placed the Government of Italy’s ratings on review for possible downgrade. Ratings placed under review are the Baa2 long-term issuer and senior unsecured bond ratings as well as the (P) Baa2 medium-term MTN programme, the (P)Baa2 senior unsecured shelf, the Commercial Paper and other short-term ratings of Prime-2/(P) Prime-2 respectively. The key drivers for today’s initiation of the review for downgrade are as follows: 1. The significant risk of a material weakening in Italy’s fiscal strength, given the fiscal plans of the new coalition government; and 2. The risk that the structural reform effort stalls, and that past reforms such as the pension reforms implemented in 2011 are reversed.

Moody’s will use the review period to assess the impact of the fiscal and economic policy platform of the new government on Italy’s credit profile, with a particular focus on the effect on the deficit and debt trajectories in the coming years. The review will also allow Moody’s to assess further whether the new government intends to continue to pursue growth-enhancing structural reforms, or conversely to reverse earlier reforms, such as the 2011 pension reform, as well as other economic policy initiatives in the coming months that may have an incidence on the country’s growth potential over the coming years.

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What do you mean we can’t blame the weather?

UK Economy Posts Worst Quarterly GDP Figures For Five Years (G.)

The weakest household spending for three years and falling levels of business investment dragged the economy to the worst quarter for five years, official statisticians have said. The Office for National Statistics confirmed its previous estimate that GDP growth slumped to 0.1% in the first quarter, while sticking to its view that the “beast from the east” had little impact. The latest figures will further stoke concerns over the strength of the UK economy, amid increasing signals for deteriorating growth as Britain prepares to leave the EU next year. Some economists, including officials at the Bank of England, thought the growth rate would be revised higher as more data became available.

Threadneedle Street delayed raising interest rates earlier this month after the weak first GDP estimate, despite arguing that the negative hit to the economy from heavy snowfall in late February and early March had probably been overblown. Instead the ONS said it had seen a longer-term pattern of slowing growth in the first three months of the year. Rob Kent-Smith of the ONS said: “Overall, the economy performed poorly in the first quarter, with manufacturing growth slowing and weak consumer-facing services.” While admitting bad weather will have had some impact, particularly for firms in the construction industry and some areas of the retail business, statisticians said the overall effect was limited, with increased online sales and heightened energy production during the cold snap.

The figures show the services industries contributed the most to GDP growth, with an increase of 0.3% in the first quarter, while household spending grew at a meagre 0.2%. The construction industry declined by 2.7% and business investment fell by 0.2%.

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“..an advance team of 30 White House and State Department officials was preparing to leave for Singapore later this weekend..”

Prospects of US-North Korea Summit Brighten (R.)

Prospects that the United States and North Korea would hold a summit brightened after U.S. President Donald Trump said late on Friday Washington was having “productive talks” with Pyongyang about reinstating the June 12 meeting in Singapore. Politico magazine reported that an advance team of 30 White House and State Department officials was preparing to leave for Singapore later this weekend. Reuters reported earlier this week the team was scheduled to discuss the agenda and logistics for the summit with North Korean officials. The delegation was to include White House Deputy Chief of Staff Joseph Hagin and deputy national security adviser Mira Ricardel, U.S. officials said, speaking on condition of anonymity.

Trump said in a Twitter post late on Friday: “We are having very productive talks about reinstating the Summit which, if it does happen, will likely remain in Singapore on the same date, June 12th., and, if necessary, will be extended beyond that date.” Trump had earlier indicated the summit could be salvaged after welcoming a conciliatory statement from North Korea saying it remained open to talks. “It was a very nice statement they put out,” Trump told reporters at the White House. “We’ll see what happens – it could even be the 12th.” “We’re talking to them now. They very much want to do it. We’d like to do it,” he said.

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Through Kimberley Strassel, the Wall Street Journal distances itself ever more from the MSM.

The Real ‘Constitutional Crisis’ (Strassel)

Democrats and their media allies are again shouting “constitutional crisis,” this time claiming President Trump has waded too far into the Russia investigation. The howls are a diversion from the actual crisis: the Justice Department’s unprecedented contempt for duly elected representatives, and the lasting harm it is doing to law enforcement and to the department’s relationship with Congress. The conceit of those claiming Mr. Trump has crossed some line in ordering the Justice Department to comply with oversight is that “investigators” are beyond question. We are meant to take them at their word that they did everything appropriately. Never mind that the revelations of warrants and spies and dirty dossiers and biased text messages already show otherwise.

We are told that Mr. Trump cannot be allowed to have any say over the Justice Department’s actions, since this might make him privy to sensitive details about an investigation into himself. We are also told that Congress – a separate branch of government, a primary duty of which is oversight – cannot be allowed to access Justice Department material. House Intelligence Committee Chairman Devin Nunes can’t be trusted to view classified information – something every intelligence chairman has done – since he might blow a source or method, or tip off the president. That’s a political judgment, but it holds no authority. The Constitution set up Congress to act as a check on the executive branch—and it’s got more than enough cause to do some checking here.

Yet the Justice Department and Federal Bureau of Investigation have spent a year disrespecting Congress—flouting subpoenas, ignoring requests, hiding witnesses, blacking out information, and leaking accusations. Senate Judiciary Chairman Chuck Grassley has not been allowed to question a single current or former Justice or FBI official involved in this affair. Not one. He’s also more than a year into his demand for the transcript of former national security adviser Mike Flynn’s infamous call with the Russian ambassador, as well as reports from the FBI agents who interviewed Mr. Flynn. And still nothing.

[..] Mr. Trump has an even quicker way to bring the hostility to an end. He can – and should – declassify everything possible, letting Congress and the public see the truth. That would put an end to the daily spin and conspiracy theories. It would puncture Democratic arguments that the administration is seeking to gain this information only for itself, to “undermine” an investigation. And it would end the Justice Department’s campaign of secrecy, which has done such harm to its reputation with the public and with Congress.

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“..a malevolent secret police operation..”

A Mendacious Exercise In Manufacturing Paranoia (Jim Kunstler)

After many months, the gaslight is losing its mojo and a clearer picture has emerged of just what happened during and after the 2016 election: the FBI, CIA, and the Obama White House colluded and meddled to tilt the outcome and, having failed spectacularly, then labored frantically to cover up their misdeeds with further misdeeds. The real election year crimes for which there is actual evidence point to American officials not Russian gremlins. Having attempted to incriminate Trump at all costs, these tragic figures now scramble to keep their asses out of jail.

I say “tragic” because they — McCabe, Comey, Rosenstein, Strzok, Page, Ohr, et al — probably think they were acting heroically and patriotically to save the country from a monster, and I predict that is exactly how they will throw themselves to the mercy of the jury when they are called to answer for these activities in a court of law. Of course, they have stained the institutional honor of the FBI and its parent Department of Justice, but it is probably a healthier thing for the US public to maintain an extremely skeptical attitude about what has evolved into a malevolent secret police operation.

The more pressing question is how all this huggermugger gets adjudicated in a timely manner. Congress has the right to impeach agency executives like Rod Rosenstein and remove them from office. That would take a lot of time and ceremony. They can also charge them with contempt-of-congress and jail them until they comply with committee requests for documents. Mr. Trump is entitled to fire the whole lot of the ones who remain. But, finally, all this has to be sorted out in federal court, with referrals made to the very Department of Justice that has been a main actor in this tale.

The most mysterious figure in the cast is the MIA Attorney General, Jeff Sessions, who has become the amazing invisible man. It’s hard to see how his recusal in the Russia matter prevents him from acting in any way whatsoever to clean the DOJ house and restore something like operational norms — e.g. complying with congressional oversight — especially as the Russia matter itself resolves as a completely fabricated dodge. The story is moving very fast now. The Pequod is whirling around in the maelstrom, awaiting the final blow from the white whale’s mighty flukes.

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Gullible?

Tesla Seeks To Dismiss Securities Fraud Lawsuit (R.)

Tesla Inc on Friday asked a court to dismiss a securities fraud lawsuit by shareholders who said the electric vehicle maker gave false public statements about the progress of producing its new Model 3 sedan. In a filing in federal court in San Francisco, Tesla said that its statements about the challenges the company faced with Model 3 were “frank and in plain language,” including repeated disclosures by Chief Executive Elon Musk of “production hell.” Tesla did not seek to hide the truth, its motion to dismiss said. The company says its Model 3 has experienced numerous “bottlenecks” from problems with Tesla’s battery module process at its Nevada Gigafactory to general assembly at its Fremont plant.

Tesla is under pressure to deliver the Model 3 to reap revenue and stem massive spending that has put Tesla’s finances in the red. The ramp of the Model 3, Tesla said in the court filing, was “the first of its kind,” with difficulties likely to crop up after it got underway. The lawsuit filed last October seeks class action status for shareholders who bought Tesla stock between May 4, 2016 through October 6, 2017, inclusive. It said shareholders bought “artificially inflated” shares because Musk and other executives misled them with their statements. Tesla made such statements during the lead-up to, and early production of, its Model 3 sedan and failed to disclose that the company was “woefully unprepared” for the vehicle’s production, the lawsuit said.

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Good on ’em! Cars don’t belong in cities.

Madrid Takes Its Car Ban to the Next Level (CityLab)

The days when cars could drive unhindered through central Madrid are coming to a close. Following an announcement this week, the Spanish capital confirmed that, starting in November, all non-resident vehicles will be barred from a zone that covers the entirety of Madrid’s center. The only vehicles that will be allowed in this zone are cars that belong to residents who live there, zero-emissions delivery vehicles, taxis, and public transit. Even on a continent where many cities are scaling back car access, the plan is drastic. While much of central Madrid consists of narrow streets that were never suitable to motor vehicles in the first place, this central zone also includes broad avenues such as Gran Via, and wide squares that have been islands in a sea of surging traffic for decades.

The plan is thus not just about making busy central streets more pleasant, but about creating a situation where people simply no longer think of bringing their cars downtown. This might come as a shock to some drivers, but the wind has been blowing this way for more than a decade. Madrid set up the first of what it calls Residential Priority Zones in 2005, in the historic, densely packed Las Letras neighborhood. Since then, a modest checkerboard of three other similar zones have been installed across central Madrid. The new area will be a sort of all-encompassing zone that abolishes once and for all the role of downtown streets as through-routes across the city.

To get people used to the idea, implementation of the non-local car ban will be staggered. In November, manual controls by police around the zone’s edge will begin. Cars that are breaching the new rules will be warned of the fine they face in the future—€90 per occurrence—without actually being charged then. In January, a fully automated system with cameras will be put in place, and from February, the €90 will be actively enforced against any cars found breaking the rules.

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 December 1, 2016  Posted by at 10:40 am Finance Tagged with: , , , , , , , ,  


NPC K & W Tire Co. Rainier truck, Washington, DC 1919

Oil Price Surges As OPEC Agrees First Output Cut Since 2008 (G.)
Preet Bharara to Stay On as Manhattan US Attorney Under Trump (WSJ)
Trump’s Tax Cut Means Billion-Dollar Writedowns for US Banks (BBG)
6 Million Americans Are Delinquent On Auto Loans (MW)
‘Classic Ponzi Scheme’: Sydney House Prices 12 Times Annual Income (SMH)
Melbourne Apartment Prices Drop by Most Since 2014 (BBG)
Greece Isn’t ‘Crying Wolf’ on Debt Relief (BBG)
Angry Mobs Lock Up Indian Bankers As Cash Chaos Soars (ZH)
The Pillars Of The New World Order (Pieraccini)
More Than 250,000 People Are Homeless In England (BBC)
Climate Change Will Stir ‘Unimaginable’ Refugee Crisis, Says Military (G.)

 

 

How long will the illusion last?

Oil Price Surges As OPEC Agrees First Output Cut Since 2008 (G.)

The price of oil has surged by 8% after the 14-nation cartel Opec agreed to its first cut in production in eight years. Confounding critics who said the club of oil-producing nations was too riven with political infighting to agree a deal, Opec announced it was trimming output by 1.2m barrels per day (bpd) from 1 January. The deal is contingent on securing the agreement of non-Opec producers to lower production by 600,000m barrels per day. But the Qatari oil minister, Mohammed bin Saleh al-Sada, said he was confident that the key non-Opec player – Russia – would sign up to a 300,000 bpd cut. Russia’s oil minister, Alexander Novak, welcomed the Opec move but said his country would only be able to cut production gradually due to “technical issues”. A meeting with non-Opec countries in Moscow on 9 December has been pencilled in.

Al-Sada said the deal was a great success and a “major step forward”, but the news that Saudi Arabia had effectively admitted defeat in its long-running attempt to drive US shale producers out of business was enough to send the price of crude sharply higher on the world’s commodity markets. Brent crude was trading at just over $50 a barrel following the completion of the Opec meeting in Vienna – an increase of almost $4 on the day. Saudi Arabia will bear the brunt of Opec’s production curbs, having agreed to a reduction in output of just under 500,000 bpd. Iraq has agreed to a 210,000 bpd cut, followed by the United Arab Emirates (-139,000), Kuwait (-131,000) and Venezuela (-95,000). Smaller countries are also reducing output, but Iran – which has only recently returned to the global oil market after the lifting of international sanctions – has been allowed to continue raising output.

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Let’s say that the jury’s out.

Preet Bharara to Stay On as Manhattan US Attorney Under Trump (WSJ)

Preet Bharara, the Manhattan U.S. attorney, has agreed to stay in his current role under the Trump administration, a surprise move that could signal the president-elect is serious about cracking down on Wall Street wrongdoing. Mr. Bharara, famous for his aggressive prosecutions of insider trading and corruption in New York, met with President-elect Donald Trump in Trump Tower on Wednesday. Afterward, Mr. Bharara told reporters that Mr. Trump asked whether he was prepared to remain as U.S. attorney, and Mr. Bharara said he was. “We had a good meeting,” Mr. Bharara said. “I agreed to stay on.” Since 2009, Mr. Bharara has served as the U.S. Attorney for the Southern District of New York, one of the highest-profile U.S. attorney’s offices in the country.

An appointee of President Barack Obama, he rose to prominence after pursuing dozens of insider-trading cases, leading to his moniker as the “sheriff of Wall Street.” The office is also seen as a leader in public corruption, cybercrime and terrorism prosecutions. His office has brought corruption charges against a dozen state lawmakers in New York and convicted the leaders of both legislative houses. Keeping Mr. Bharara appears to be at odds with other picks Mr. Trump has made. Despite campaigning against Wall Street excesses and the largest banks, Mr. Trump has tapped Wall Street investors for key positions in his cabinet, including a former Goldman Sachs executive, Steven Mnuchin, for Treasury Secretary and a billionaire private-equity investor, Wilbur Ross, to run the Commerce Department.

Partly as a result, financial services executives have quickly warmed to the prospect of a Trump presidency. His team has promised to roll back parts of the 2010 Dodd-Frank financial overhaul law enacted in the wake of the financial crisis, saying it has cut back on lending. But the decision to keep Mr. Bharara is likely to temper speculation that a Trump administration might focus less on corporate wrongdoing, white-collar lawyers said.

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“In one fell swoop, a significant part of their net worth goes up in smoke.”

Trump’s Tax Cut Means Billion-Dollar Writedowns for US Banks (BBG)

Donald Trump’s planned U.S. corporate tax cuts could translate to a big one-time earnings hit for many of the biggest U.S. banks, thanks to tax benefits they generated during the 2008 financial crisis. Citigroup would take the deepest earnings hit – perhaps $12 billion or more, according to recent estimates by the bank’s chief financial officer and several banking analysts. Others, including Bank of America and Wells Fargo could face multibillion-dollar writedowns. The banks might have to write down deferred tax assets, which often pile up when a company loses money and can’t immediately enjoy the tax benefits of those losses.

Any writedowns won’t have much impact on capital levels for the banks for regulatory purposes, and lower taxes will allow for higher earnings in the long run. But a one-time hit to earnings can make for a bruising quarter – and even year – for a bank’s results. “It’s a traumatic experience for companies with large” amounts of such assets, said Robert Willens, an independent tax and accounting expert in New York. “In one fell swoop, a significant part of their net worth goes up in smoke.” Deferred tax assets, as disclosed in securities filings, consist of benefits that companies expect to use to cut their future tax bills.

For most companies, the bulk of their value is tied to the current U.S. corporate tax rate of 35%. (Assets stemming from, say, state tax bills are tied to state tax rates.) The assets include unused credits for foreign taxes companies have paid; deductions they’re allowed to take in future years for prior losses; and future tax advantages that stem from so-called “timing differences” – or gaps between when income or expenses are reported to shareholders and to the Internal Revenue Service. Analysts say that calculating the value of assets associated with timing differences can be as much an art as a science.

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America without a car.

6 Million Americans Are Delinquent On Auto Loans (MW)

The number of subprime auto loans sinking into delinquency hit their highest level since 2010 in the third quarter, with roughly 6 million individuals at least 90 days late on their car-loan payments. It’s behavior much like that seen in the months heading into the 2007-2009 recession, according to data from Federal Reserve Bank of New York researchers. “The worsening in the delinquency rate of subprime auto loans is pronounced, with a notable increase during the past few years,” the researchers, led by Andrew Haughwout, said Wednesday in a blog on their Liberty Street Economics site. Weakness among the lowest-rated borrowers plays out against a robustly growing vehicle lending market.

Originations of auto loans have continued at a brisk pace over the past few years, with 2016 shaping up to be the strongest of any year within the NY Fed’s data, which began in 1999. It’s worth noting that the majority of auto loans are still performing well—it’s the subprime loans, those with associated credit scores below 620, that heavily influence the delinquency rates, the researchers said. Consequently, auto finance companies that specialize in subprime lending, as well as some banks with higher subprime exposure are likely to have experienced declining performance in their auto loan portfolios. Credit officials have stressed that the contagion risk to the financial system from poor auto loans isn’t like the risk posed when subprime mortgage lending pushed the U.S. into the Great Recession.

That’s in large part because repossessed cars are easier to resell than bank-owned homes. Cars can’t sink whole neighborhoods with foreclosure blight. Subprime mortgage lending remains at very low levels since the financial crisis. But as the financial system has recovered, subprime auto lending has ramped up with little hesitation. New auto loans to borrowers with credit scores below 660 have nearly tripled since the end of 2009. So far in 2016, about $50 billion of new auto loans per quarter have gone to those borrowers and about $30 billion each quarter has gone to borrowers with scores below 620, according to data the Fed provided, citing credit-score tracker Equifax.

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WHAT? “Property experts disagree furiously about whether prices are in a bubble..”

‘Classic Ponzi Scheme’: Sydney House Prices 12 Times Annual Income (SMH)

Sydney houses now cost 12 times the annual income, up from four times when Gough Whitlam was dismissed. As many first time buyers turn to the bank of mum and dad to top up their deposits, a new report “Parental guidance not recommended” warns Australians are being caught up in a classic “Ponzi scheme”. The report by economic consultancy LF Economics – which has previously sensationally warned of a “bloodbath” when Sydney’s property bubble bursts – estimates it will now take the average first time buyer in Sydney nine years to save a deposit, up from three years in 1975. Baby boomers, who have benefited from skyrocketing prices, are increasingly able to fast track their children’s path to property ownership by either stumping up part of the deposit or putting up their own homes as collateral.

LF Economics, founded by Lindsay David and Philip Soos, warns this may be helping a new generation to over-leverage into mortgages they can’t afford, leaving their parents’ homes exposed. “Unfortunately, this loan guarantee strategy in a rising housing market for securing ever-larger amounts of debt is essentially pyramid or Ponzi finance. This leaves many parents in a dangerous predicament should their children experience difficulties making loan payments, let alone defaulting and suffering foreclosure.” “In reality, many parents – the Baby Boomer cohort – are asset-rich but income-poor. The blunt fact is few parents have enough savings and other liquid assets on hand to meet their legal obligations without selling their home if their children default,” the report warns.

Property experts disagree furiously about whether prices are in a bubble and about the best measure of housing affordability. Treasury secretary John Fraser has said that Sydney house prices are in a “bubble”. But many economists remain wary of the term and point out that supply constraints and strong population growth will underpin prices, even if slower wages growth inhibits further price gains. LF Economics argues that price gains have outstripped the fundamental worth of properties. “Financial regulators have ignored the Ponzi lending practices by lenders, believing the RBA will have the adequate ability to bail them out at taxpayers’ expense the day this classic Ponzi lending scheme breaks down.”

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Bailout?

Melbourne Apartment Prices Drop by Most Since 2014 (BBG)

Apartment prices in Melbourne fell at the fastest pace in more than two years in November, reinforcing concerns about a looming oversupply of units in Australia’s second-largest city. The 3.2% month-on-month drop is the largest such decline since May 2014, according to figures from data provider CoreLogic Inc. This dragged down the overall increase in dwelling values across the nation’s state capitals to 0.2%, the smallest rise since March this year. Record low interest rates put in place by the Reserve Bank of Australia to help ease the economy’s shift away from mining investment and combat low inflation have helped to spur a housing boom in the nation’s biggest centers and the central bank has repeatedly voiced concern that apartment gluts are developing in central Melbourne and Brisbane.

“Risks around the projected large increases in supply in some inner-city apartment markets are coming to the fore,” the RBA said in its quarterly financial stability review in October. Shayne Elliott, CEO of Australia and New Zealand Bank, said Wednesday that the lender had become increasingly cautious about parts of the housing market. He warned about pockets of over-building, particularly in the small apartments segment. “There are emerging signs of stress” in the economy, the head of Australia’s third-biggest bank told a Reuters event in Sydney. The difficulty for both the RBA and commercial lenders in judging the state of the market is that in other areas house prices have been accelerating. In Sydney, where auction clearance rates have been around the 80% mark for the past three months, the median dwelling price has risen to A$845,000 ($625,000).

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Schäuble invites in the vultures.

Greece Isn’t ‘Crying Wolf’ on Debt Relief (BBG)

Paul Kazarian says he’s spent “tens of millions of dollars” mobilizing a team of a hundred analysts to scrutinize Greece’s assets and liabilities. According to him, everyone else – including the IMF, the credit-rating agencies, the EU and the Greek government itself — is massively overstating the problem of the nation’s debt burden relative to economic output. The problem is, the more he tries to convince the world to accept his version of the numbers, the harder it may get for Greece to win the additional debt relief that most economic observers agree is vital to its recovery. Kazarian, an alumnus of (where else) Goldman Sachs, says the investment firm he founded in 1988, Japonica Partners, is the largest private holder of Greek government debt.

Since he first made his interest known about four years ago, he’s declined to be specific about how much he’s invested, or what prices he paid, or whether he’s up or down or sideways on the trade. This isn’t just your standard tale of a bondholder trying to boost the value of his investments by talking his book. What Kazarian has tried to do for the past four years is treat the sovereign nation of Greece the same way he might a private company he’d taken over: by detailing its assets and liabilities, looking for ways to enhance asset value while reducing liabilities, and, most importantly, seeking to install his own managers to take charge. The more you reflect on that latter notion, the more disturbing Kazarian’s larger-than-life presence on the Greek financial scene becomes.

As the keynote speaker at a conference organized by the American-Hellenic Chamber of Commerce in Athens on Monday, the bespectacled, straight-talking American succeeded in turning the afternoon into The Paul Kazarian Show, berating his audience and his fellow speakers with an odd combination of derision and self-effacing charm and dominating the proceedings by sheer force of personality. (In a previous existence, he gained notoriety for firing BB guns into the empty executive chairs in the boardroom of a company he’d seized control of, accompanying the shots with shouts of “Die!”) Presenting a selection of gems from a presentation that runs to more than 110 slides (Kazarian clearly knows them all by heart), the financier leveled a damning accusation against his hosts: Greece, he said, is “crying wolf for debt relief.”

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Payday coming up.

Angry Mobs Lock Up Indian Bankers As Cash Chaos Soars (ZH)

India’s demonetization campaign is not going as expected. Overnight, banks played down expectations of a dramatic improvement in currency availability, raising the prospect of queues lengthening as salaries get paid and people look to withdraw money from their accounts the Economic Times reported. While much of India has become habituated to the sight of people lining up at banks and cash dispensers since the November 8 demonetisation announcement, bank officials said the message from the Reserve Bank of India is that supplies may not get any easier in the near future and that they should push digital transactions. “We had sought a hearing with RBI as we were not allocated enough cash, but we were told that rationing of cash may continue for some time,” said a banker who was present at one of several meetings with central bank officials.

“Reserve Bank has asked us to push the use of digital channels to all our customers and ensure that we bring down use of cash in the economy,” said a banker. This confirms a previous report according to which the demonstization campaign has been a not so subtle attempt to impose digital currency on the entire population. Bankers have been making several trips to the central bank’s headquarters in Mumbai to get a sense of whether currency availability will improve. Some automated teller machines haven’t been filled even once since the old Rs 500 and Rs 1,000 notes ceased to be legal tender, they said. Typically, households pay milkmen, domestic helps, drivers, etc, at the start of the month in cash. The idea is that all these payments should become electronic, using computers or mobiles.

This strategy however, appears to not have been conveyed to the public, and as Bloomberg adds, “bankers are bracing for long hours and angry mobs as pay day approaches in India.” “Already people who are frustrated are locking branches from outside in Uttar Pradesh, Bihar and Tamil Nadu and abusing staff as enough cash is not available,” said CH Venkatachalam, general secretary of the All India Bank Employees’ Association. The group has sought police protection at bank branches for the next 10 days, he added. Joining many others who have slammed Modi’s decision, the banker said that “this is the fallout of one of the worst planned and executed government decisions in decades.”

He estimates that about 20 million people – almost twice the population of Greece – will queue up at bank branches and ATMs over the coming week, when most employers in India pay their staff. In an economy where 98% of consumer payments are in cash, banks are functioning with about half the amount of currency they need. As Bloomberg notes, retaining public support is crucial for Modi before key state elections next year and a national contest in 2019, however it appears he is starting to lose it. “We are bracing ourselves for payday and fearing the worst,” said Parthasarathi Mukherjee, CEO at Laxmi Vilas Bank. “If we run out of cash we will have to approach the Reserve Bank of India for more. It is tough.”

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It’s kind of funny that Trump is seen as the end of a 70-year era.

The Pillars Of The New World Order (Pieraccini)

Looking at US history over a fairly long period of time, it is easy to see the destructive path that has accompanied the expansion of the American empire over the last seventy years. While World War II was still raging, US strategists were already planning their next steps in the international arena. The new target was immediately identified in the assault and the dismemberment of the Soviet empire. With the collapse of the Berlin Wall and the end of the Soviet economic model as an alternative to the capitalist system, the West found itself faced with what was defined as ‘the end of’ history, and proceeded to act accordingly. The delicate transition from bipolarity, the world-order system based on the United States and the Soviet Union occupying opposing poles, to a unipolar world order with Washington as the only superpower, was entrusted to George H. W. Bush.

The main purpose was to reassure with special care the former Soviet empire, even as the Soviet Union plunged into chaos and poverty while the West preyed on her resources. Not surprisingly, the 90’s represented a phase of major economic growth for the United States. Predictably, on that occasion, the national elite favored the election of a president, Bill Clinton, who was more attentive to domestic issues over international affairs. The American financial oligarchy sought to consolidate their economic fortunes by expanding as far as possible the Western financial model, especially with new virgin territory in the former Soviet republics yet to be conquered and exploited. With the disintegration of the USSR, the United States had a decade to aspire to the utopia of global hegemony. Reviewing with the passage of time the convulsive period of the 90’s, the goal seemed one step away, almost within reach.

The means of conquest and expansion of the American empire generally consist of three domains: cultural, economic and military. With the end of the Soviet empire, there was no alternative left for the American imperialist capitalist system. From the point of view of cultural expansion, Washington had now no adversaries and could focus on the destruction of other countries thanks to the globalization of products like McDonald’s and Coca Cola in every corner of the planet. Of course the consequences of an enlargement of the sphere of cultural influence led to the increased power of the economic system. In this sense, Washington’s domination in international financial institutions complemented the imposition of the American way of life on other countries. Due to the mechanisms of austerity arising from trap-loans issued by the IMF or World Bank, countries in serious economic difficulties have ended up being swallowed up by debt.

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Not surprised. A country that needs to refind itself.

More Than 250,000 People Are Homeless In England (BBC)

More than a quarter of a million people are homeless in England, an analysis of the latest official figures suggests. Researchers from charity Shelter used data from four sets of official 2016 statistics to compile what it describes as a “conservative” total. The figures show homelessness hotspots outside London, with high rates in Birmingham, Brighton and Luton. The government says it does not recognise the figures, but is investing more than £500m on homelessness. For the very first time, Shelter has totted up the official statistics from four different forms of recorded homelessness. These were: • national government statistics on rough sleepers • statistics on those in temporary accommodation • the number of people housed in hostels * the number of people waiting to be housed by social services departments (obtained through Freedom of Information requests).

The charity insists the overall figure, 254,514, released to mark 50 years since its founding, is a “robust lower-end estimate”. It has been adjusted down to account for any possible overlap and no estimates have been added in where information was not available. Charity chief executive Campbell Robb said: “Shelter’s founding shone a light on hidden homelessness in the 1960s slums. “But while those troubled times have faded into memory, 50 years on a modern-day housing crisis is tightening its grip on our country. “Hundreds of thousands of people will face the trauma of waking up homeless this Christmas.

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Just in case you thought things are bad now.

Climate Change Will Stir ‘Unimaginable’ Refugee Crisis, Says Military (G.)

Climate change is set to cause a refugee crisis of “unimaginable scale”, according to senior military figures, who warn that global warming is the greatest security threat of the 21st century and that mass migration will become the “new normal”. The generals said the impacts of climate change were already factors in the conflicts driving a current crisis of migration into Europe, having been linked to the Arab Spring, the war in Syria and the Boko Haram terrorist insurgency. Military leaders have long warned that global warming could multiply and accelerate security threats around the world by provoking conflicts and migration. They are now warning that immediate action is required.

“Climate change is the greatest security threat of the 21st century,” said Maj Gen Munir Muniruzzaman, chairman of the Global Military Advisory Council on climate change and a former military adviser to the president of Bangladesh. He said one metre of sea level rise will flood 20% of his nation. “We’re going to see refugee problems on an unimaginable scale, potentially above 30 million people.” Previously, Bangladesh’s finance minister, Abul Maal Abdul Muhith, called on Britain and other wealthy countries to accept millions of displaced people.

Brig Gen Stephen Cheney, a member of the US Department of State’s foreign affairs policy board and CEO of the American Security Project, said: “Climate change could lead to a humanitarian crisis of epic proportions. We’re already seeing migration of large numbers of people around the world because of food scarcity, water insecurity and extreme weather, and this is set to become the new normal. “Climate change impacts are also acting as an accelerant of instability in parts of the world on Europe’s doorstep, including the Middle East and Africa,” Cheney said. “There are direct links to climate change in the Arab Spring, the war in Syria, and the Boko Haram terrorist insurgency in sub-Saharan Africa.”

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