Feb 152017
 
 February 15, 2017  Posted by at 10:34 am Finance Tagged with: , , , , , , , , ,  Comments Off on Debt Rattle February 15 2017
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Times Square New York City, 1958

 


The Political Assassination of Michael Flynn (BBG)
Kucinich Pins Flynn Leak on Intel Community, Warns of Another Cold War (Fox)
America’s Spies Anonymously Took Down Flynn. That Is Deeply Worrying (Week)
Russian Foreign Ministry Says Crimea Will Not Be Returned To Ukraine (R.)
China Credit Surging to Record Underscores PBOC Shift to Tighten (BBG)
China Should Prudently Manage Deleveraging Process – PBOC (R.)
Nigel Farage – You’re In For a Bigger Shock in 2017 (TNTV)
Germany’s Burden: The Euro Is The Most Crisis-Ridden Currency (MW)
Greece Defies Creditors Over More Cuts As Economy Shrinks Unexpectedly (G.)
‘Fed Up’ Exposes The Elite Rot Inside The Federal Reserve (MW)
Why “Everyone Wins” When Housing Is More Expensive (AS)
Who Will Be Blamed if the Oroville Dam Fails? (McMaken)
The Technosphere: You Are Not In Control (Dmitry Orlov)
Greece’s Frozen Children: What Will Happen To Young Refugees? (NS)

 

 

So many diffferent angles. This one from Eli Lake is bearable. “Nunes told me Monday night that this will not end well. “First it’s Flynn, next it will be Kellyanne Conway, then it will be Steve Bannon, then it will be Reince Priebus,” he said. Put another way, Flynn is only the appetizer. Trump is the entree.”

The Political Assassination of Michael Flynn (BBG)

Representative Devin Nunes, the Republican chairman of the House Permanent Select Committee on Intelligence, told me Monday that he saw the leaks about Flynn’s conversations with Kislyak as part of a pattern. “There does appear to be a well orchestrated effort to attack Flynn and others in the administration,” he said. “From the leaking of phone calls between the president and foreign leaders to what appears to be high-level FISA Court information, to the leaking of American citizens being denied security clearances, it looks like a pattern.” Nunes said he was going to bring this up with the FBI, and ask the agency to investigate the leak and find out whether Flynn himself is a target of a law enforcement investigation. The Washington Post reported last month that Flynn was not the target of an FBI probe.

The background here is important. Three people once affiliated with Trump’s presidential campaign – Carter Page, Paul Manafort and Roger Stone – are being investigated by the FBI and the intelligence community for their contacts with the Russian government. This is part of a wider inquiry into Russia’s role in hacking and distributing emails of leading Democrats before the election. Flynn himself traveled in 2015 to Russia to attend a conference put on by the country’s propaganda network, RT. He has acknowledged he was paid through his speaker’s bureau for his appearance. That doesn’t look good, but it’s also not illegal in and of itself. All of this is to say there are many unanswered questions about Trump’s and his administration’s ties to Russia. But that’s all these allegations are at this point: unanswered questions.

It’s possible that Flynn has more ties to Russia that he had kept from the public and his colleagues. It’s also possible that a group of national security bureaucrats and former Obama officials are selectively leaking highly sensitive law enforcement information to undermine the elected government. Flynn was a fat target for the national security state. He has cultivated a reputation as a reformer and a fierce critic of the intelligence community leaders he once served with when he was the director the Defense Intelligence Agency under President Barack Obama. Flynn was working to reform the intelligence-industrial complex, something that threatened the bureaucratic prerogatives of his rivals. He was also a fat target for Democrats. Remember Flynn’s breakout national moment last summer was when he joined the crowd at the Republican National Convention from the dais calling for Hillary Clinton to be jailed.

In normal times, the idea that U.S. officials entrusted with our most sensitive secrets would selectively disclose them to undermine the White House would alarm those worried about creeping authoritarianism. Imagine if intercepts of a call between Obama’s incoming national security adviser and Iran’s foreign minister leaked to the press before the nuclear negotiations began? The howls of indignation would be deafening. In the end, it was Trump’s decision to cut Flynn loose. In doing this he caved in to his political and bureaucratic opposition. Nunes told me Monday night that this will not end well. “First it’s Flynn, next it will be Kellyanne Conway, then it will be Steve Bannon, then it will be Reince Priebus,” he said. Put another way, Flynn is only the appetizer. Trump is the entree.

Read more …

Interesting 8-minute, very clear take from Kucinich: “This is like the electronic version of Mad magazine; Spy vs Spy..”

Kucinich Pins Flynn Leak on Intel Community, Warns of Another Cold War (Fox)

During an interview on the FOX Business Network’s Mornings with Maria, former Democratic presidential candidate Dennis Kucinich said the intelligence community was responsible for leaking information that Trump’s national security advisor, Mike Flynn, had secretly discussed sanctions with Russian officials before the inauguration and argued their goal was to spoil the relationship between the U.S. and Russia. “What’s at the core of this is an effort by some in the intelligence community to upend any positive relationship between the U.S. and Russia,” Kucinich said.

And in his opinion, there is a big money motive behind it. “And I tell you there’s a marching band and Chowder Society out there. There’s gold in them there hills,” he said. “There are people trying to separate the U.S. and Russia so that this military industrial intel axis can cash in.” Kucinich added the intelligence community could start a war to succeed. “There’s a game going on inside the intelligence community where there are those who want to separate the U.S. from Russia in a way that would reignite the Cold War,” he said.

Read more …

Many on both the left and the right have these worries.

America’s Spies Anonymously Took Down Flynn. That Is Deeply Worrying (Week)

The United States is much better off without Michael Flynn serving as national security adviser. But no one should be cheering the way he was brought down. The whole episode is evidence of the precipitous and ongoing collapse of America’s democratic institutions — not a sign of their resiliency. Flynn’s ouster was a soft coup (or political assassination) engineered by anonymous intelligence community bureaucrats. The results might be salutary, but this isn’t the way a liberal democracy is supposed to function. Unelected intelligence analysts work for the president, not the other way around. Far too many Trump critics appear not to care that these intelligence agents leaked highly sensitive information to the press — mostly because Trump critics are pleased with the result.

“Finally,” they say, “someone took a stand to expose collusion between the Russians and a senior aide to the president!” It is indeed important that someone took such a stand. But it matters greatly who that someone is and how they take their stand. Members of the unelected, unaccountable intelligence community are not the right someone, especially when they target a senior aide to the president by leaking anonymously to newspapers the content of classified phone intercepts, where the unverified, unsubstantiated information can inflict politically fatal damage almost instantaneously.

President Trump was roundly mocked among liberals for that tweet. But he is, in many ways, correct. These leaks are an enormous problem. And in a less polarized context, they would be recognized immediately for what they clearly are: an effort to manipulate public opinion for the sake of achieving a desired political outcome. It’s weaponized spin. This doesn’t mean the outcome was wrong. I have no interest in defending Flynn, who appears to be an atrocious manager prone to favoring absurd conspiracy theories over more traditional forms of intelligence. He is just about the last person who should be giving the president advice about foreign policy. And for all I know, Flynn did exactly what the anonymous intelligence community leakers allege — promised the Russian ambassador during the transition that the incoming Trump administration would back off on sanctions proposed by the outgoing Obama administration.

Read more …

Silly idea. The New Cold War.

Russian Foreign Ministry Says Crimea Will Not Be Returned To Ukraine (R.)

Russia will not hand back control of Crimea to Ukraine, Russia’s foreign ministry said on Wednesday, responding to comments from the White House that the United States expected the Black Sea peninsula to be returned. “We don’t give back our own territory. Crimea is territory belonging to the Russian Federation,” Maria Zakharova, spokeswoman for the Russian Foreign Ministry, told a news briefing. On Tuesday, the White House said U.S. President Donald Trump had made it clear that he expects Russia to relinquish control of the territory. Russia annexed Crimea in 2014, prompting the United States and the European Union to impose sanctions on Russia, plunging Western relations with the Kremlin to their worst level since the end of the Cold War.

Read more …

Shadow banking resurgence? It was never gone.

China Credit Surging to Record Underscores PBOC Shift to Tighten (BBG)

China added more credit last month than the equivalent of Swedish or Polish economic output, revving up growth and supporting prices but also fueling concerns about the sustainability of such a spree. Aggregate financing, the broadest measure of new credit, climbed to a record 3.74 trillion yuan ($545 billion) in January, exceeding the median estimate of 3 trillion yuan in a Bloomberg survey. New yuan loans rose to a one-year high of 2.03 trillion yuan, less than the 2.44 trillion yuan estimate. The credit surge highlights the challenges facing Chinese policy makers as they seek to balance ensuring steady growth with curbing excess leverage in the financial system. The PBOC recently moved to tighten monetary policy by raising the interest rates it charges in open-market operations and on funds lent via its Standing Lending Facility.

“China is learning what other central banks realized decades ago: trying to control monetary aggregates in a modern financial system is next to impossible,” said James Laurenceson, deputy director of the Australia-China Relations Institute in Sydney. “I expect the PBOC will focus more on interest rates and prudential regulation and supervision going forward.” China’s major state-backed banks tend to splurge at the start of the year as they seek to maximize their profits on lending. The main categories of shadow finance all increased significantly. Bankers acceptances – a bank-backed guarantee for future payment – soared to 613.1 billion yuan from 158.9 billion yuan the prior month. “The PBOC is restraining loans but allowing private credit to flow through shadow banks,” said Andrew Collier, an independent analyst and former president of Bank of China International USA. “This is not a policy designed to conquer China’s debt burden.”

Read more …

Yeah, well, it does nothing of the kind.

China Should Prudently Manage Deleveraging Process – PBOC (R.)

China should prudently manage the country’s debt deleveraging process and seek to avoid a liquidity crisis and asset bubbles, according to a central bank working paper published on Wednesday. While overall debt ratios in the world’s second-largest economy were still not high relative to many other countries, the pace of increase has been rapid in recent years, the paper said. China’s debt to GDP ratio rose to 277% at the end of 2016 from 254% the previous year, with an increasing share of new credit being used to pay debt servicing costs, UBS analysts said in a recent note.

China’s top leaders have pledged to focus on addressing rising financial risks and asset bubbles this year. The People’s Bank of China has moved to a moderate tightening bias, raising some key primary money rates this year, which analysts said was part of a bid to control risks from rising leverage. The working paper said China should avoid the negative consequences of both increases in leverage and rapid deleveraging. China should let market forces play a decisive role in the deleveraging process, including allowing defaults, the paper published on the People’s Bank of China website said.

Read more …

h/t Mish. “The people want less Europe. We see this again and again when people have referendums and they reject aspects of EU membership. But something more fundamental is going on out there.”

Nigel Farage – You’re In For a Bigger Shock in 2017 (TNTV)

I feel like I am attending a meeting of a religious sect here this morning. It’s as if the global revolution of 2016, Brexit, Trump, the Italian rejection of the referendum, has completely bypassed you. You can’t face up to the fact that this bandwagon is going to roll across Europe in these elections in 2017. A lot of citizens now recognize this form of centralized government simply doesn’t work. … At the heart of it is a fundamental point: Mr. Verhofstadt this morning said, the people want more Europe. They don’t. The people want less Europe. We see this again and again when people have referendums and they reject aspects of EU membership. But something more fundamental is going on out there. ….

No doubt, many of you here will probably despise your own voters for what I am about to say because just last week, Chatham House, the reputable group, published a massive survey from 10 Europen states, and only 20% of people want immigration from Muslim countries to continue. Just 20%. … Which means your voters have a harder line position on this than Donald Trump, or myself, or frankly any party sitting in this Parliament. I simply cannot believe you are blind to the fact that even Mrs. Merkel has now made a u-turn and wants to send people back. Even Mr. Schulz thinks it is a good idea. And the fact is, the Europen Union has no future at all in its current form. And I suspect you are in for as big a shock in 2017 as you were in 2016.

Read more …

Throw this into the German election campaign and see what happens.

Germany’s Burden: The Euro Is The Most Crisis-Ridden Currency (MW)

Target-2 occupies a central place. According to latest Bundesbank figures, the German central bank’s claims under the system rose to €796 billion at the end of January, from €754 billion at the end of December, well above the previous record €751 billion in August 2012. The Bundesbank’s ECB claims make up more than half of Germany’s net foreign assets of €1.5 trillion, which have themselves increased enormously since the euro was launched in 1999. If the eurozone broke up, or euro members redenominated their liabilities in a new, lower valued currency, Germany would relinquish a large part of these assets — a loss of German savings that would rival the country’s forced write-downs after the first and second world wars.

Both the ECB and the Bundesbank are playing down the renewed Target-2 increase, saying it reflects technical reasons linked to cross-border payments stemming from the ECB’s asset purchase program. On the one hand, these facts would argue for Germany keeping the system going. On the other, they would suggest that the Germans should try to renegotiate the Target-2 arrangements. At the present rate of increase, the Target-2 balances could be close to €1 trillion by the German elections in seven months. Target was developed during the 1990s as a technical transfer mechanism for facilitating payments within the eurozone. The innocuous name — Trans-European automated real-time gross settlement express transfer — signals its original arcane purpose.

According to Helmut Schlesinger, former Bundesbank president, the system was expected to advance credit simply for overnight settlement. Two decades later, as Schlesinger explains, it has become an overdraft system under which Germany, through its central bank, extends interest-free credit without any repayment date and without economic conditions to the central banks of heavily indebted nations.

Read more …

Paradox: BECAUSE the economy shrinks, more cuts ‘reforms’ will be demanded. The IMF wants more pension cuts. But that’s what half the population lives on.

Greece Defies Creditors Over More Cuts As Economy Shrinks Unexpectedly (G.)

The standoff between Greece and its creditors has escalated, with the embattled Athens government vowing it will not give in to demands for further cuts as data showed the country’s economy unexpectedly contracting. As thousands of protesting farmers rallied in Athens over spiralling costs and unpopular reforms, the Hellenic statistical authority revealed that Greek GDP shrank by 0.4% in the last three months of 2016. After growth of 0.9% in the previous three-month period the fall was steep and unforeseen. On Monday the European commission announced that the eurozone’s weakest member was on course to achieving a surplus on its budget of 2.3% after exceeding its 2016 fiscal targets “significantly”.

The setback came as prime minister Alexis Tsipras’ lefist-led coalition said it would not consent to additional austerity beyond the cuts the country had already agreed to administer under its third, EU-led bailout programme. Speaking on state TV, the digital policy minister Nikos Pappas, Tsipras’ closest confidant, insisted that ongoing differences between the EU and IMF over how to put the debt-stricken state back on the road to recovery were squarely to blame for the failure to conclude a compliance review at the heart of the standoff. The IMF has argued vigorously that extra measures worth 2% of GDP will have to be enforced with immediate effect if Greece is to achieve a high post-programme primary surplus of more than 1.5%. “The negotiations should have ended. Greece has done everything that it was asked to do,” he said and added there would be “no more measures”.

The future of the €86bn financial aid programme is contingent on Athens implementing agreed economic reforms. The IMF has repeatedly said it will not sign up to the programme unless the crisis-plagued country is given more generous debt relief in the form of a substantial write-down. With Greece facing a €7bn debt repayment to the ECB in July, fears of a Greek default have once again hit markets with shares falling and interest rates on Greek debt rising. But Tsipras is also under pressure from back-benchers in his fragile two-party administration. After seven years of adopting grueling austerity in return for emergency bailout aid many are openly questioning the wisdom of applying yet more measures that have already put Greece in a permanent debt deflationary cycle.

Read more …

Yellen was “oblivious as the housing market in her region imploded on multiple fronts.”

‘Fed Up’ Exposes The Elite Rot Inside The Federal Reserve (MW)

She came armed with an M.B.A., not a Ph.D., which made her suspect in the eyes of staff economists as she gradually worked her way up to Class I Clearance, with access to all policy-related material and briefings. In her columns, DiMartino Booth had warned about lax mortgage-lending standards, a housing bubble and escalating systemic risk. Once ensconced at the Fed, she was left to wonder why so many “highly educated and well-paid economists” were “oblivious as the worst financial crisis since the Great Depression was about to break over their heads.” (One of the main reasons is the Fed’s reliance on econometric models that don’t include anything related to the financial system, such as debt or credit.) It wasn’t just the staff economists who were blind to what was going on in the real world.

Neither former Fed chairman Alan Greenspan, who can boast of two bubbles on his watch, nor his successor Ben Bernanke saw the train wreck coming. Greenspan said a national housing bubble was “unlikely” while Bernanke expected any fallout from the subprime mortgage crisis to be “contained.” Janet Yellen, the current Fed chairwoman, is subject to withering criticism in the book. From 2004-2010, Yellen was president of the San Francisco Fed, whose district encompasses nine Western states and was ground zero for the housing bubble and subsequent bust. DiMartino Booth portrays Yellen as an uber-dove and devout Keynesian, someone who was “oblivious as the housing market in her region imploded on multiple fronts.”

Read more …

Why bubbles are blown.

Why “Everyone Wins” When Housing Is More Expensive (AS)

The perceived creditworthiness of a nation is largely dependent on market sentiment of that nation insofar as that the volume and indeed the acceleration of capital flow from that nation towards traditionally hedge instruments is indicative of their realisation of mania and is often known as the Minsky moment. Human nature inherently creates inefficiencies in markets as the incentives for those involved continue to grow, and it is that immutable fact that creates opportunities for those that see the market as being overwhelmingly influenced by self interest. The housing market is a fantastic example of this incentivised self interest. There are layers of self interest that largely go ignored as driving factors for housing price growth and poor risk modelling.

On the lowest level, buyers see property as a safe investment, and most of the time they seek to either make a return on their investment either through rental that exceeds the cost of the mortgage repayments (positive gearing) or to make money by a perceived increase in market value of the property that they can realise once they resell the property, or in many cases a combination of both. There are also people who seek to reduce their tax payment by charging less for rent than they pay in mortgage repayments, however these losses are eventually passed on to tax payers as the government thinks this is a suitable method for reducing rental costs for low income earners and that it reduces overall rental costs. The next level up from this is a combination of brokers, people employed to undertake property valuations and real estate agents, all of whom receive commission as a percentage of the sale price of the property.

There exists such a thing as home equity loans wherein banks and borrowers agree upon a valuation of the property which allows mortgagees or property owners to take on debt based on the perceived value of the property, which extends further credit than the initial loan. This feature of home equity lends itself to false market valuations by appraisers, real estate agents and brokers, in particular because it means that they are incentivised to originate additional loans that then pay commissions based on the appreciation of the previous property investment. Even if the current broker, appraiser or real estate agent is not used by the borrower for financing further property purchases, the industry wide practice almost certainly means that these people will continue to receive additional income as a direct result of the availability of credit in the form of home equity for property purchases.

Read more …

Maintenance is far less sexy than building.

Who Will Be Blamed if the Oroville Dam Fails? (McMaken)

While everyone likes to see a shiny new dam or railroad or bridge, the problem with infrastructure projects is that they require maintenance. Unfortunately, while it’s fun to build new dams and promise cheap water to many voters and powerful special interests, maintaining those projects is less exciting. As The Mercury News has reported, 12 years ago, both California and federal officials refused to consider a demand that California heighten precautions and maintenance standards at the Oroville Dam. In response to the demands, the Federal Energy Regulatory Commission (FERC) said the dam’s emergency features were perfectly fine and that the emergency spillway “was designed to handle 350,000 cubic feet per second and the concerns were overblown.”

But, in a development reminiscent of the Army Corp of Engineers’ failure in New Orleans, state officials began ordering evacuations when flows over the spillway reached a mere “6,000 to 12,000 cubic feet per second” or “5% of the rate that FERC said was safe.” Basically, thanks to poorly maintained spillways — and perhaps other oversights — the dam itself is being eroded away, and may soon face total failure. If it does fail, the dam will have failed less than 50 years after its initial — and very, very expensive — construction. The “experts” assure us that this sort of thing has never happened before, of course, and it’s the fault of global warming or it’s just a fluke. But, it’s not as if the dam has never been under strain before. As Reisner recounted in 1987:

“In February of 1980, in the midst of a long spell of wet Pacific fronts, Oroville Reservoir, despite its capacity of something like a trillion gallons, was full, and the dam was spilling — 70,000 cubic feet per second, the Hudson River in full flood, roaring down the spillway at forty miles per hour, sending a plume of mist a thousand feet in the air.” At the time, the dam was only 12 years old. Today, the now-49-year old dam isn’t looking nearly as robust.

Read more …

Excellent Dmitry: “..there are at least 5.8 billion people alive in the world who don’t own a car. How can something be considered a necessity if 82% of us don’t seem to need it?”

The Technosphere: You Are Not In Control (Dmitry Orlov)

A good example of how the technosphere controls our tastes is the personal automobile. Many people regard it as a symbol of freedom and see their car as an extension of their personalities. The freedom to be car-free is not generally regarded as important, while the freedoms bestowed by car ownership are rather questionable. It is the freedom to make car payments, pay for repairs, insurance, parking, towing and gasoline. It is the freedom to pay tolls, traffic tickets, title fees and excise taxes. It is the freedom to spend countless hours stuck in traffic jams and to suffer injuries in car accidents. It is the freedom to bring up neurologically damaged children by subjecting them to unsafe carbon monoxide levels (you are encouraged to have a CO detector in your house, but not in your car—because it would be going off all the time). It is the freedom to suffer indignities when pulled over by police, especially if you’ve been drinking. In terms of a harm/benefit analysis, private car ownership makes no sense at all.

It is often argued that a car is a necessity, although the facts tell a different story. Worldwide, there are 1.2 billion vehicles on the road. The population of the planet is over 7 billion. Therefore, there are at least 5.8 billion people alive in the world who don’t own a car. How can something be considered a necessity if 82% of us don’t seem to need it? In fact, owning a car becomes necessary only in a certain specific set of circumstances. Here are some of the key ingredients: a landscape that is impassable except by motor vehicle, single-use zoning that segregates land by residential, commercial, agricultural and industrial uses, a lifestyle that requires a daily commute, and a deficit of public transportation. In turn, widespread private car ownership is what enables these key ingredients: without it, situations in which private car ownership becomes a necessity simply would not arise.

Now, moving people about the landscape is not a productive activity: it is a waste of time and energy. If you can live, send your children to school, shop and work all without leaving the confines of a small neighborhood, you are bound to be more efficient than someone who has to drive between these four locations on a daily basis. But the technosphere is rational to a fault and is all about achieving efficiencies. And so, an obvious question to ask is, What is it about the car-dependent living arrangement, and the landscape it enables, that the technosphere finds to be efficient? The surprising answer is that the technosphere strives to optimize the burning of gasoline; everything else is just a byproduct of this optimization.

Read more …

Not the strongest effort, but at the same time, children should always receive our protection.

Greece’s Frozen Children: What Will Happen To Young Refugees? (NS)

The snow-covered tents were an ugly spectacle around the island of Lesbos as this harsh winter gripped Greece. It was in this same area that an accident involving a gas heater had killed a mother and child in late November, when their tent – and others near it – went up in flames. It was pure luck that there weren’t more victims. The incident served as a stark reminder that there are numerous children living in these miserable conditions and that sometimes they die as a result. I had visited the camp just days earlier, hoping to talk to some of the approximately 80 unaccompanied minors who live there. Facilities for refugees around Greece can look anything from decent to shabby, but none resembles a prison as much as the Moria camp on Lesbos. It looks the last place you would host vulnerable children, some of whom are as young as 13.

Yet more than 5,000 children have arrived in Greece without their parents and, like everyone else, they have to be sorted through “hot spots” such as Moria. About 2,500 are still in Greece, and some of them have to live in places like this. While adults and children accompanied by their parents can leave the camp, unaccompanied children, who are placed formally under the guardianship of the district attorney, cannot. The facility, guarded by police in full riot gear and surrounded by concrete walls topped with barbed wire, is both home and prison. It takes nine months on average for an unaccompanied child to be reunited with family in another country – if indeed the child has one. The alternative is that they remain in Greece until they turn 18, when they can try to claim asylum. If a child’s application is rejected, he is then deported back to the country he left years earlier as a child.

Read more …

Nov 162016
 
 November 16, 2016  Posted by at 10:03 am Finance Tagged with: , , , , , , , ,  1 Response »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Unknown Wharf, Federal artillery, and schooners, City Point, Virginia 1865


Trump Won’t Start A Trade War; He’ll Finish It (MW)
Trump Digs In For Major US Trade Reset With The World (CNBC)
Panic In Housing Market As Trump Effect Pushes Mortgage Rates To 4% (CNBC)
The Bond Vigilantes Are Back, And Trump Better Be Careful (CNBC)
Elizabeth Warren Criticizes Trump Transition Team’s Wall Street Ties (WSJ)
What Now? (Jim Kunstler)
GOP Rushes To Embrace Trump (Hill)
Rickards: Financial Crisis Coming Soon, Will Be Different (BBG)
Another Financial Warning Sign Is Flashing in China (BBG)
India’s Great Rupee Fail (BBG)
Lack Of New Building Not To Blame For Soaring House Prices (Ind.)
Fate Of Controversial US Oil Pipeline Heads Back To Court (AFP)
Assange Optimistic Sweden Will End Probe Into Rape Claim (SMH)
The Technosphere Hiccups (Dmitry Orlov)
One Quarter Of Children in Toronto, Montreal Live In Poverty (CP)

 

 

Don’t know about you, but I find it refreshing to see actual discussion going on, based on something else than pre-conceived notions.

Trump Won’t Start A Trade War; He’ll Finish It (MW)

[..] In deriding Trump for everything that comes out of his mouth, mainstream media have been quick to dismiss his repeated claims about his prowess in negotiating. These same media acknowledged early in Obama’s tenure that this former community organizer could not negotiate his way out of a paper bag, starting talks where he wanted to end them and giving up more than he intended. Now, however, anti-Trump voices want to take his threat of 45% tariffs against China as a fait accompli and paint a doomsday scenario of what that will mean for American consumers and the global economy. These critics claim Trump will start a trade war. Newsflash: We are already in a trade war started by the Chinese and others who have traditionally kept their currency devalued to flood our market with their goods while protecting their own.

And we are losing. This was precisely the point made last summer by Dan DiMicco, the former steel executive Trump has charged with managing trade issues during his transition. “Hillary Clinton has claimed Trump’s trade policies will start a ‘Trade War,’ but what she fails to recognize is we are already in one,” he wrote in his blog. “Trump clearly sees it and he will work to put an end to China’s ‘Mercantilist Trade War’! A war it has been waging against us for nearly two decades!” And hard-nosed bargaining will be the way Trump ends this war, DiMicco added. “He will do this by negotiating from a position of strength, not condescending weakness. China respects strength but takes full advantage of weakness. In the end it will be in China’s best interest to stop cheating on trade.”

China needs trade with the U.S. at least as much as we do. The idea, for instance, that China would retaliate against U.S. tariffs on some manufactured goods by blocking agricultural imports from the U.S. ignores the fact that China’s massive population has to eat. China is the focus for unfair trade practices, but let’s not forget there are many others. Germany, for instance, manipulates its currency in a much more subtle fashion. By tying it to lower performing economies to keep the value of the euro low, Germany prospers while driving other euro countries to ruin. Trade pacts with insufficient protections exacerbate this situation, as does a World Trade Organization with unenforceable restrictions. Trump is exposing this charade for what it is. Solutions may not come easy, but you can’t solve the problem if you don’t first figure out what it is.

Read more …

“When we negotiate free trade agreements, we are lousy at it [..] They are dominated by folks that have a predominant benefit from getting more exports into the world as opposed to having balanced trade, which is good for all Americans.”

Trump Digs In For Major US Trade Reset With The World (CNBC)

Donald Trump got some of his loudest campaign cheers with a simple pledge to “get tough on trade.” Now the president-elect and his supporters will find out how complex that goal will be. [..] One early indication of where a Trump administration would steer U.S. trade policy came this summer with the appointment of Dan DiMicco, former CEO of Nucor Corporation, as his trade advisor. Nucor, the largest U.S. steel producer, is a scrappy survivor of the massive consolidation of the American steel industry that shed millions of jobs in the 1970s and 1980s as the nation’s backbone supplier of postwar manufacturing fell into decline. That industry was born in the geographic intersection of rich deposits of steel’s two main ingredients: Pennsylvania coal and Michigan iron ore.

Those two states sent Trump to the White House on Election Day. Today, the fiery forges that once melted raw iron to build U.S. skyscrapers, consumer appliances and family station wagons have largely gone cold. Under CEO DiMicco, Nucor, now North America’s largest recycler, survived the decline of Big Steel by building a business melting down scrap steel produced by others — some 17 million tons last year. Last month, Trump promised to restore the Midwest as the “manufacturing hub of the world again” and “fight for steel businesses that have been taken away.” “We’re going to bring back steel,” he told a cheering crowd. “Your steel has been stolen from you.”

In DiMicco, the president-elect has chosen an outspoken advisor – and potential appointee – who shares his belief that restoring industries like steel manufacturing means getting “tough” with global competitors. “When we negotiate free trade agreements, we are lousy at it,” DiMicco told CNBC a year ago. “They are dominated by folks that have a predominant benefit from getting more exports into the world as opposed to having balanced trade, which is good for all Americans.” With DiMicco as one of the architects, the Trump campaign has sketched out initial plans for reforming U.S. trade relations with the rest of the world. In a heavily footnoted position paper in June, Trump laid out a seven-step plan to “change our failed trade policy – quickly” and “bring back our jobs.”

Read more …

The sooner credit card rates go back to ‘normal’, the better.

Panic In Housing Market As Trump Effect Pushes Mortgage Rates To 4% (CNBC)

More selling in U.S. bond markets Monday pushed mortgage rates to a psychological breaking point. The average contract rate on the popular 30-year fixed mortgage hit 4%, according to Mortgage News Daily, a level most didn’t expect to see until the middle of next year. Rates have now moved nearly a half a%age point higher since Donald Trump was elected president. “The situation on the ground is panicked. Damage control,” said Matthew Graham, chief operating officer of Mortgage News Daily. “People were trying to lock loans quickly last week and are now facing a tough choice to lock today or hope for a bounce. Many hoped for a bounce last week heading into the long weekend and we obviously didn’t get it.”

Mortgage rates follow loosely the yield on the 10-year Treasury bond. That yield on Monday hit the highest level since December, as investors flooded the stock market and pulled out of the bond markets. The runup on stocks is backed by a belief that the Trump administration will be a boon to the economy overall and the banking sector specifically. Higher mortgage rates, however, will throw a wrench into an already shaky housing recovery. Home prices have been rising dramatically in the past few months, largely due to a lack of homes for sale. During housing’s recovery from the worst crash in history, historically low mortgage rates allowed prices to gain quickly and, more recently, to rise far faster than both income and employment growth.

Read more …

“The chances are elevated that Trump starts his presidency off with a recession.”

The Bond Vigilantes Are Back, And Trump Better Be Careful (CNBC)

[..] the Federal Reserve has kept its short-term rate target anchored for the past eight years, raising just once – a quarter-point increase in December 2015 – and perhaps once more next month. The Fed had been an aggressive buyer in the Treasury market, ballooning its balance sheet to $4.5 trillion in three rounds of quantitative easing. In the meantime, investors continue to fret over a bond bull market that has been ongoing for more than three decades. Each predicted end of the fixed income rally has been wrong. But Trump’s plans for aggressive fiscal policy, the likes of which hasn’t been since before the Great Recession, have renewed fears.

“When you have inflation and growth, or the prospect for more growth, that slams smack into a bond bubble, it’s a very dangerous cocktail,” said Michael Pento, head of Pento Portfolio Strategies. Pento worries that the combination of market factors could stop the president-elect before he gets started. “There’s a lot of bad stuff that’s already occurred,” he said. “If you put them on a ledger, on the good side there’s hoped-for growth policies in 2017. On the bad side, you already have a spiking dollar, spiking interest rates. The chances are elevated that Trump starts his presidency off with a recession.”

However, if the bond vigilantes do swoop in, they could find themselves with a formidable opponent, namely the Fed and other central banks, which could adopt a whatever-it-takes approach to keeping yields in check and thwarting an economic downturn. The Fed has been at the global forefront for ambitious and unconventional monetary policies, but the Bank of Japan’s recent move to target its 10-year note yield at zero took the game to a new level. Should troubles erupt in the bond market, more action would be likely by the Fed. “Consider a scenario where a large fiscal stimulus (or the expectation of such stimulus) pushes up bond yields so sharply that risk assets and the economy suffer,” Joachim Fels, global economic adviser at bond giant Pimco, said in a note Tuesday.

“To prevent a bond tantrum, the central bank may want to limit the rise in yields by intervening in the bond market directly. The cleanest way to do this is to announce a cap on yields and stand ready to buy unlimited amounts to preserve the cap if needed.” That would be over the long term, though. In a shorter time frame, Kroll’s Whalen said he thinks a recent prediction by Jeff Gundlach at DoubleLine that the U.S. 10-year yield could hit 6% in five years is “conservative.”

Read more …

Even Warren gets back to making some sense. What she doesn’t get is that this is exactly what Trump wants her to do. If she would want to irk him, she’d stay silent and let the selection process create its own swamp. By speaking out, she helps The Donald select his crew. Because the transition team is not in disarray, as I see 1000 voices claim; it’s simply a different process. They put a name out there with the express goal of seeing what the reactions are. And in typical Trump style, the first ones are extreme (Bannon), so he has room to climb down.

Elizabeth Warren Criticizes Trump Transition Team’s Wall Street Ties (WSJ)

Sen. Elizabeth Warren warned President-elect Donald Trump against choosing “Wall Street insiders” for top financial posts, likely previewing the confirmation battles to come in the Senate. In a letter to the president-elect dated Tuesday, the Massachusetts Democrat specifically noted three members of the Trump transition team with ties to Wall Street and “demonstrated records of failure during the 2008 financial crisis” whom she would find unacceptable for top positions: David Malpass,Paul Atkins and Steve Mnuchin. Mr. Malpass, a former Bear Stearns chief economist, is working on shaping Mr. Trump’s Treasury Department, which Mr. Mnuchin is a leading candidate to lead. Mr. Atkins, a former SEC commissioner during the George W. Bush administration, is working to fill the ranks of financial regulatory agencies in the Trump administration.

Read more …

“In case you were wondering, I was not jumping up and down cheering the Trump victory, amazing as it was. I figured the good news was that Hillary lost and the bad news was that Trump won. Now, we just have to roll with it.”

What Now? (Jim Kunstler)

The USA is squandering its vitality trying to maintain a half-assed global empire of supposed interests, economic, ideological, and existential. Lately, this hapless project has only resulted in wars with no end in places we don’t belong. It includes reckless experiments such as the promotion of regime change (Iraq, Libya, Ukraine, Egypt, Syria), and senseless, provocative exercises such as the use of NATO forces to run war games near Russia’s border. The monetary cost of all this is off the hook, of course, redounding to the financial mess. Reigning in these imperial impulses could be on the Trump agenda, but his own gold-plated imperial pretensions suggest that he might actually make the situation worse by conflating a reduction of our empire with a loss of the very “greatness” he wants to reclaim.

[..] The great project awaiting this country is how we might redistribute our people into re-scaled walkable communities with re-localized economies, including re-scaled agriculture. It’s going to happen whether we like it or not. It’s only a matter of how disorderly the process may be. Obviously all the suburban crapola out there also represents a tremendous load of presumed wealth. The vested “value” in suburban houses alone is the underlayment of structured finance. There is almost no conscious political awareness in any party — including the Greens – as to how we might attempt to work this out. But, for example, and for a start, Mr. Trump might consider the effect that national chain “Big Box” shopping has had on Main Street America. It literally destroyed local commercial economies all over the land, and with it numberless vocational niches and social roles in communities.

[..] The chatter this week has been all about the upcoming “infrastructure” orgy that Trump will undertake. That depends first of all on how badly the financial sector cracks up. I hope we do not squander more of our dwindling capital on the accessories of car dependence, because that addiction is on the way out. One thing Mr. Trump might get behind is restoring the passenger railroads of America so that we can at least get around the continental nation when the Happy Motoring fiesta grinds to a halt. It would put an awful lot of people to work on something with real long-term benefit – it ties into the restoration of Main Street towns and their economies – and it is a do-able project that might give us the needed encouragement to get on with the many other necessary projects awaiting our attention.

Read more …

Imagine having to lick up to Trump.

GOP Rushes To Embrace Trump (Hill)

Republican lawmakers spent the past year keeping Donald Trump at arm’s length. Now they’re tripping over themselves to embrace him. Returning to Washington for the first time since Trump’s presidential victory, GOP leaders handed out “Make America Great Again” hats at their weekly conference meeting on Tuesday. Speaker Paul Ryan (R-Wis.) named a top Trump ally, Rep. Chris Collins (R-N.Y.), as the congressional liaison to the presidential transition team. At one point Tuesday, Ryan referred to the president-elect by his first name, “Donald.” In past months, Ryan wouldn’t even dare mention his name, often calling him only “the nominee.” This all would have been unimaginable even a month ago. Some Republicans acknowledged there had been a sea change since Trump surprised Democrats and some in his own party by defeating Hillary Clinton.

Republicans on Capitol Hill “are so excited. People are coming up to me, telling me they’ve been with Trump since day one,” Collins explained to reporters. “And I kind of look and say, ‘Well, OK, if you say so.’ “Donald Trump has accomplished for us something no one thought possible. … Everything is red, and we’ve got four solid years to get this right.” After winning the GOP nomination to be Speaker for the next two years, Ryan gave yet another shout-out to Trump – the second of the day. “This leadership team is unified. This entire House Republican Conference is unified,” said Ryan, flanked by his leadership team. “And we are so eager to get to work with our new president-elect to fix America’s pressing problems.” Never mind when Trump called Ryan a “very weak and ineffective leader” last month, after the Speaker announced he’d no longer try to defend or campaign with him.

Read more …

“They’re going to lock down the system.”

Rickards: Financial Crisis Coming Soon, Will Be Different (BBG)

Jim Rickards, West Shore Group’s chief global strategist and author of “The Road to Ruin,” discusses the possibility of another financial crisis with Bloomberg’s Vonnie Quinn and David Gura on “Bloomberg Markets.”

Read more …

It’s troubling that the Chinese have started borrowing to buy everything, holding up a mirror to us westerners. It’s more troubling that it turns banks into outlets for the shadow banking system.

Another Financial Warning Sign Is Flashing in China (BBG)

Add another credit indicator to the financial warning signs flashing in China. The adjusted loan-to-deposit ratio, which includes a range of off-balance sheet items and is an indicator of the banking system’s ability to weather stress, climbed to 80% as of June 30, according to S&P Global Ratings. For some smaller lenders, the ratio has already topped 100%, S&P estimates. S&P’s adjusted measure is rising much faster than the official loan-to-deposit ratio as banks pile into off-balance sheet lending, sidestepping government efforts to rein in credit. At the current pace, overall credit could surpass deposits on an adjusted basis within a few years – a level that would give China little leeway to stave off financial turmoil, S&P says.

“The next two to three years is a crucial window for China to rein in the ratio, or we will be in serious trouble,” said S&P’s Beijing-based director Liao Qiang. “Reaching 100% doesn’t mean a crisis will ensue immediately, but it shows China’s entire deposit base is used up and any loss of confidence from savers will severely destabilize the banking system.” Even after S&P’s adjustments, the ratio in China remains lower than in many other countries. Yet the country’s rapid loan growth, diminishing return on credit and rising bad debts combine to make deposits a particularly important buffer against future financial distress, according to Liao. Deposit-taking has formed a cornerstone of China’s banking system as it expanded in tandem with the economy, providing lenders with a stable, low-cost funding base to fuel credit growth.

Chinese households and companies hold $22 trillion of bank deposits, more than anywhere else in the world. That cushion has made lenders less dependent on short-term wholesale funding than banks elsewhere. For two decades, China imposed a cap that limited loans to a maximum 75% of deposits as part of measures to contain risks. That ceiling was abolished in October 2015, in part because it was seen as a blunt tool that encouraged illicit deposit-hoarding and moving loans off balance sheets. The official loan-to-deposit ratio among Chinese lenders stood at 67% at the end of September, up only slightly from 66% when the cap was lifted. But that measure has become less relevant as Chinese banks – especially small and mid-sized ones – have stepped up shadow lending and sales of savings-like offerings called wealth management products, which don’t get carried on their balance sheets.

Read more …

This could yet get out of control in sinister ways. Fishing industries collapse, farmers can’t buy seeds.

India’s Great Rupee Fail (BBG)

One week after India’s sudden declaration that 500- and 1,000-rupee notes were no longer legal tender, the economy is in chaos. And that’s perhaps because the policy was designed as much to shock and awe observers with the government’s command of the Indian economy as to control India’s “black money” problem. What seemed at first to be a masterstroke by Prime Minister Narendra Modi now looks like a grave miscalculation. Modi is beginning to sound like he may agree. His recent speeches on the subject have been frankly bizarre. In one, he seemed to laugh at those inconvenienced by the ban; in another, he broke down while speaking of the “sacrifices” he’d made for India, and warned that he might be assassinated by “forces” desperate to protect their “loot.”

What’s changed in a week? Well, for one, it’s become clear that the government was simply too cavalier in its planning. Now that 86% of India’s currency is no longer valid, the central bank has struggled to print replacement denominations – and the new notes are the wrong size for existing ATMs. Modi’s asked people to be patient for 50 days, but the process could take as long as four months. You have to wonder if Modi truly sought expert advice, or relied once again on a small and trusted set of politicians to determine policy. India’s simply too big and complex for shock and awe. Large parts of the rural economy use cash for 80% of transactions and have been hard-hit. In seafood-mad West Bengal, for example, the fishing industry is in a state of near-collapse; in the wheat-growing states of the northwest, farmers halfway through the sowing season have run out of cash to buy seeds.

Few villagers have access to an ATM. Most have to trek to a bank branch to change their cash, which means losing out on crucial days of labor. Many Indians, particularly women, still don’t have an active bank account. Finance Minister Arun Jaitley wondered aloud how many poor people would even have 1,000-rupee notes – probably a rhetorical question, but surely it shouldn’t have been. Someone should’ve sought the answer before shutting down India’s financial system. Among India’s middle class, Modi’s “surgical strike on black money” still appears to be popular. It’s the old “vegan fallacy” – if something tastes terrible, it must be good for you. Enough Indians are suffering that they believe it must be in a greater cause. It’s a moral project, not an economic one. Stand in line, we’re told, and you honor our brave soldiers at the border.

But will that support last? The government’s plan is likely to be ineffective in the long term. Economists agree it will have no effect on the generation of black money through corruption. Meanwhile, estimates of the amount of black money that will eventually be recovered vary widely. The optimists (wrongly) think enough cash will be destroyed by hoarders that the central bank will be able to pay a hefty dividend to the government. Others point out that a very small fraction of black money tends to be held as cash and that there are a dozen ways still available to launder that fraction.

Read more …

And anyone who ever thought otherwise was a fool to do so.

Lack Of New Building Not To Blame For Soaring House Prices (Ind.)

Soaring house prices and plummeting home ownership rates in the UK have not been driven by a lack of new housing construction, a Labour party-commissioned review has found, contradicting conventional wisdom on the nature of the housing crisis. The Redfern Review, published today, states, instead, that the biggest drivers of the large increase in house prices over the past two decades have been rising incomes, falling interest rates and, more recently, a lack of mortgage finance availability for first-time buyers and the weakness of this group’s income growth. It also warns that even substantially increasing the supply of new homes will not directly improve the home ownership rate in the near term.

“New household formation and supply have been broadly in balance over the last 20 years and therefore the significant increases in house prices over that period have not been driven primarily by supply constraints,” it concludes. It finds that tougher rules on how much first time buyers can borrow for a mortgage has been the biggest downward force on the home ownership rate since 2008, followed by rapid increase in house prices. It said that the third biggest driver was a 10 per cent fall in the incomes of young people aged 28-30 relative to those aged over 40 since the financial crisis.

Read more …

It’s high time to put the issue to rest, and show native Americans that treaties will be respected.

Fate Of Controversial US Oil Pipeline Heads Back To Court (AFP)

The operators of a North Dakota oil pipeline struck back at the US government Tuesday, asking a court to stop regulators from further delaying the contentious project opposed by Native Americans. The move by Energy Transfer Partners and Sunoco Logistics Partners came after the US Army Corps of Engineers on Monday effectively put the brakes on the four-state long Dakota Access Pipeline by calling for more analysis and discussion. The companies responded by asking a federal district court in Washington, the US capital, to declare that they had the right to complete their project without the need for more approvals from regulators.

“The Dakota Access Pipeline has waited long enough,” Kelcy Warren, chief executive of Energy Transfer Partners, said in a statement. “It is time for the Courts to end this political interference and remove whatever legal cloud that may exist.” The decision by the Corps, whose permission is required for the pipeline to be built under the Missouri River and the man-made Lake Oahe in North Dakota, was a victory for the Standing Rock Sioux Tribe. The waterways are the tribe’s drinking water source, and it has objected to building the 1,172-mile pipeline underneath the river and lake, for fear that it might leak. “The Army continues to welcome any input that the Tribe believes is relevant to the proposed pipeline crossing,” the Corps said.

The tribe, which now believes it has the momentum in its battle against the companies, wants the pipeline’s route altered away from lands near its reservation. It also claims those lands contain sacred historic artifacts. “They are wrong and the lawsuit will not succeed,” the tribe’s chairman Dave Archambault said Tuesday in a statement responding to the companies’ action. He claimed that the pipeline’s operators are in a rush to complete the project before the end of the year, or risk losing shipping contracts that would jeopardize its viability. “They made bad decisions and are now facing the consequences. The tide is turning against this project. We thank all of our water protectors who have raised their voices against it. You are being heard,” Archambault said.

Read more …

He may ask Trump to end US investigation. That would be a bold move.

Assange Optimistic Sweden Will End Probe Into Rape Claim (SMH)

Julian Assange is optimistic that Swedish prosecutors will drop their investigation into rape allegations after he spent a day and a half being questioned in London, his lawyer says. And his team will write to the new Trump administration asking that the US end its investigation of Assange over Wikileaks’ publication of leaked classified material. Swedish assistant prosecutor Ingrid Isgren was present at the interview, which was conducted by an Ecuadorian prosecutor. After Assange gave a day-long statement on Monday, Tuesday was a question-and-answer session lasting about four hours. The results of the interview will be reported from Ecuador to the Swedish prosecutors in a written statement. The prosecutors will then decide whether to continue or end their investigation.

In a brief statement, the Swedish Prosecution Authority said the investigation and the interview at the embassy were “subject to confidentiality”. Assange’s lawyer Jennifer Robinson said on Tuesday evening she was unable to give details of the day’s questioning, including whether her client was asked for a DNA sample – as the Swedish prosecutors had said they intended. [..] Wikileaks played a crucial role during the presidential election, releasing emails hacked from Democratic Party servers which linked Hillary Clinton to big business and pulled the curtain from the political machinations behind her campaign. Asked if Donald Trump would return the favour by ending the investigation into Assange, Ms Robinson said “we would always be open to a conversation about closing it down”. “We’ll have to discuss that with our US counsel but we’ve written to the Obama administration and no doubt we will write to future US administrations until this is resolved.”

Read more …

Color revolution passes from Ukraine to America.

The Technosphere Hiccups (Dmitry Orlov)

[..] it would appear that the technosphere has suffered a setback. But it will not give up so easily, and the next step for it is to deploy political technologies to, if at all possible, invalidate and nullify the results of its electoral defeat. Indeed, this has already started: Bill and Hillary Clinton have recently shown up for a meeting with another ectoplasmic emanation of the technosphere, the predatory billionaire George Soros, clad in accents of Roman imperial purple. The rationale they gave for displaying the colors of the emperor’s toga is that it is a mixture of red and blue, and thus represents compromise. However, compromise, in their case, would be to exit from public life, for both of them are too old to ever run for any office again.

No, this display of imperial colors is just that: a signal that the empire is getting ready to strike back: we should look forward to another attempt at a Color Revolution—the Purple Revolution—this time in the United States, financed by the very same George Soros. This mixed-up signaling is typical: after the Russian election, in which Putin was again elected president, the same Color Revolution syndicate organized and financed protests there, featuring little white ribbons—which, as it happens, were worn by Nazi collaborators during World War II. This nuance was not lost on the Russians, and the protests came to naught. The technosphere is powerful, but is not all-powerful or infallible, and the world is developing effective antibodies against it generally, and against its political technologies, and the technology of the Color Revolution Syndicate in particular.

Here’s an example: the US spent some $5 billion on destabilizing the Ukraine politically and turning it into an enemy of Russia. For a while people in Kiev could earn more in a day by protesting than in a month by working a job. End result: in a recent opinion survey, 84% (34,900) Ukrainians said that the person they want to be the president of the Ukraine is… Vladimir Putin, with the current president, hand-picked by the US State Department, lost somewhere in the margin of error. [..] there now exists an anti-technology for dealing with the technology of Color Revolution, and all it takes to put it into action is a few groups of patriots. To remind: patriots are not nationalists; nationalists are people who hate other nations; patriots are people who love their land, and their people, more than any other, and are willing to lay down their lives in defense of it.

Read more …

One of the world’s richest nations. Shame on you, Justin.

One Quarter Of Children in Toronto, Montreal Live In Poverty (CP)

A new report says Toronto has the highest percentage of children living in poverty of any large city in Canada – 27% – and that the closest runner-up is Montreal. In Montreal, 25% of children were living in poverty in 2014. At 24%, Winnipeg was third on a list of Canadian cities with a population higher than 500,000. The report, titled Divided City: Life in Canada’s Child Poverty Capital, says 133,000 children in Toronto were living in low-income families in 2014, the year the data were collected.

A coalition of groups including the Children’s Aid Society of Toronto issued the report as that city weighs up to $600 million in cuts to such programs and services as community housing, transit and student nutrition. It says racialized families, new immigrant families, single-parent families and families with disabilities are up to three times more likely to live in poverty. Only half of children in families with an annual income of less than $30,000 were found to participate in out-of-school art or sports programs, compared with 93% of students in families with an income of $100,000 or more.

Read more …