Nov 032017
 
 November 3, 2017  Posted by at 8:59 am Finance Tagged with: , , , , , , , , ,  8 Responses »
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Edward S. Curtis Tipi in the snow 1908

 

Social Security Can Never Run Out Of Money – Just Ask Alan Greenspan (BI)
Inside Hillary Clinton’s Secret Takeover of the DNC (Donna Brazile)
Jay Powell – A Quiet Leader (DDMB)
Why Would Anyone Want The Fed Job? (Crudele)
The Borrower Is The Slave To The Lender (Lance Roberts)
US Manufacturing Worker Productivity Crashes Most In 8 Years (ZH)
Bitcoin Is the ‘Very Definition’ of a Bubble – Credit Suisse CEO (BBG)
One Bitcoin Transaction Now Uses as Much Energy as Your House in a Week (MBV)
The Hidden Danger Bulls Are Missing (Rickards)
As Credit Booms, Citi Says Synthetic CDOs May Reach $100 Billion (BBG)
China Issues Guidelines On Overseas Investment Amid Crackdown On Deals (R.)
US Spends $250 Million Per Day For The War On Terror (TeleS)
Barcelona Council Says Catalan Government Legitimate, Independence Is Not (CN)
Kim Dotcom Wins Settlement From New Zeland Police Over 2012 Dawn Raid (NZH)
Monsanto Halts Launch Of Chemical After Farmers Complain Of Rashes (R.)

 

 

“The United States can pay any debt it has because it can always print money to do that, so there is zero probability of default.”

Social Security Can Never Run Out Of Money – Just Ask Alan Greenspan (BI)

I asked Kelton why, given her counterintuitive argument that deficits don’t really matter, Americans should take her word for it. Her reply: Don’t. Instead, listen to what Alan Greenspan, the prominent Republican former Federal Reserve chairman who is a purported deficit hawk, had to say on the matter. In March 2005, he was pressed by a young congressman named Paul Ryan about the need for privatizing Social Security because of the prospect of a looming “entitlements crisis.” Greenspan replied rather bitingly that there was no such thing or even a remote possibility. “I wouldn’t say that the pay-as-you-go benefits are insecure in the sense that there’s nothing to prevent the federal government to create as much money as it wants and pays it to somebody,” Greenspan told an incredulous Ryan. “The question is how do you set up a system that assures that the real assets are created which those benefits are employed to purchase.

So it’s not a question of security — it’s a question of the structure of the financial system.” That’s what Democrats should be saying, rather than regurgitating the old Republican rouse — which even the GOP is willing to abandon when it’s convenient — about a looming government debt crisis that never comes. “Instead of repeating talking points that reinforce the idea that Social Security is somehow financially unsustainable, Democrats should play Greenspan’s remarks on a loop. They should call attention to what Greenspan said — under oath — about the program’s long-term sustainability,” Kelton said. “Instead of accepting the premise that Social Security is in trouble, Democrats should accept Greenspan’s challenge — put forward an agenda that will do more to promote future growth than anything the Republicans are offering.”

The financial crisis was instructive on this count. Many critics of both the federal government’s fiscal stimulus and the Federal Reserve’s bond purchases worried that the country was getting so deep into debt that one of two things was bound to happen: a crisis in the Treasury market or a bout of runaway inflation. Nine years into the recovery, Treasury yields remain near historic lows and inflation is not only contained but remains worryingly low. That last point is key: It’s not that folks like Kelton and Baker believe there is no risk to government spending. They simply argue that the only risks are the misallocation of resources and inflation — not some amorphous “debt crisis” or default of the sort some politicians and market analysts have shouted about.

Unlike Greece, which actually did default on its debt because of a lack of control over its own currency, the US could default only by choice. Trump flirted with that choice once as a candidate — but quickly backed away from the threat after he realized the catastrophic market and economic consequences such a debacle would have. In August 2011, after the US’s credit rating was downgraded for the fist time following a prolonged impasse over the US debt ceiling, Greenspan was asked during a “Meet the Press” interview about the issue of “unfunded liabilities” and “entitlements.” His response again spoke volumes: “The United States can pay any debt it has because it can always print money to do that, so there is zero probability of default.”

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Quite a reversal. Brazile was fired from CNN a year ago when it was discovered she fed the Clinton campaign debate questions. Still, what a mess. Will they clean it up or try to ignore?

Inside Hillary Clinton’s Secret Takeover of the DNC (Donna Brazile)

When I got back from a vacation in Martha’s Vineyard I at last found the document that described it all: the Joint Fund-Raising Agreement between the DNC, the Hillary Victory Fund, and Hillary for America. The agreement—signed by Amy Dacey, the former CEO of the DNC, and Robby Mook with a copy to Marc Elias—specified that in exchange for raising money and investing in the DNC, Hillary would control the party’s finances, strategy, and all the money raised. Her campaign had the right of refusal of who would be the party communications director, and it would make final decisions on all the other staff. The DNC also was required to consult with the campaign about all other staffing, budgeting, data, analytics, and mailings. I had been wondering why it was that I couldn’t write a press release without passing it by Brooklyn. Well, here was the answer.

When the party chooses the nominee, the custom is that the candidate’s team starts to exercise more control over the party. If the party has an incumbent candidate, as was the case with Clinton in 1996 or Obama in 2012, this kind of arrangement is seamless because the party already is under the control of the president. When you have an open contest without an incumbent and competitive primaries, the party comes under the candidate’s control only after the nominee is certain. When I was manager of Gore’s campaign in 2000, we started inserting our people into the DNC in June. This victory fund agreement, however, had been signed in August 2015, just four months after Hillary announced her candidacy and nearly a year before she officially had the nomination.

I had tried to search out any other evidence of internal corruption that would show that the DNC was rigging the system to throw the primary to Hillary, but I could not find any in party affairs or among the staff. I had gone department by department, investigating individual conduct for evidence of skewed decisions, and I was happy to see that I had found none. Then I found this agreement. The funding arrangement with HFA and the victory fund agreement was not illegal, but it sure looked unethical. If the fight had been fair, one campaign would not have control of the party before the voters had decided which one they wanted to lead. This was not a criminal act, but as I saw it, it compromised the party’s integrity.

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We’ll go with Danielle DiMartino Booth for now. Powell’s no PhD, and not a Yellen clone. But he’s been at the Fed for 5 years already, which doesn’t make him an obvious agent for change.

Jay Powell – A Quiet Leader (DDMB)

The sheer breadth of Powell’s experience is refreshing compared to what we’ve had for the past 30 years. Powell has a deep understanding of the law and politics. He worked in the Treasury Department under Nicholas Brady and was confirmed as Undersecretary of the Treasury under George H.W. Bush. His background in politics and the experience he has had at the Fed thus far have prepared him well for his role as liaison to Congress and the White House. Powell’s experience as an investment banker was critical in his carrying out the investigation and sanctioning of Salomon Brothers. Understanding the entirely different type of politics that exists in big banks will bode well for his capacity to regulate the banks. This attribute especially will dilute the power traditionally exerted by the NY Fed in recent years, a District that has a long history of conflicts of interest vis-à-vis the banks it regulates.

A stronger regulator as Fed chair in the years leading up to the financial crisis. At the Carlyle Group, Powell founded and ran the Industrial Group within the Buyout Fund. A separate missing characteristic among Fed leaders for the past 30 years has been a woeful lack of understanding as to how Fed policy effects corporations and the decisions CEOs and CFOs make driven by Fed policy, the most obvious of which has been debt-financed share buybacks at the expense of capital expenditures. Some in the media have questioned Powell’s being the wealthiest individual at the Fed. That is an extremely strong attribute. In his work between 2010 and 2012 at a bipartisan think tank, Powell worked for a salary of $1 per year to carry out his mission to raise the debt ceiling. His wealth affords him the luxury of having no preset agenda. His history of working for his country to its best end exemplifies that he is at the Fed because he truly believes he is doing a greater good in servicing his country.

Powell’s work on Too Big to Fail banks also speaks to his ability to be independent and objective in his approach to regulating big banks with deep-pocketed lobbyists who hold huge sway over politicians. If he is willing to go up against the biggest banks, he will hopefully prove to be a leader cast in the mold of William McChesney Martin, the longest serving Fed Chairman famous for testifying to Congress that it was the Fed’s job to take away the punch bowl just as the party gets going. [..] His experience in the financial markets suggests he will be less apt to keep rates too low for too long as has been the case with his three predecessors. Powell was not in favor of the third round of QE, but voted for its nevertheless. This is his biggest black eye and why market participants perceive him to be as dovish as they do.

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Savings and pensions need higher rates, fast. But…

Why Would Anyone Want The Fed Job? (Crudele)

No matter who is appointed, the next Fed chairman has a problem. Right now, the economy is looking healthy. The stock market is booming. Consumer confidence is high. Home prices are soaring. And some economic indicators seem to say, “Happy days are here again.” Just Wednesday, for instance, the Atlanta Federal Reserve raised its forecast for economic growth in the fourth quarter to a booming 4.5% annual rate. The nation’s gross domestic product, the standard for measuring economic growth, rose at a healthy 3% annual rate in the third quarter. That 3% figure was puzzling because hurricanes should have stunted growth, which means that number might be revised downward once better-quality statistics come in.

Or it could mean that growth is darn good, despite the weather. Nevertheless, the 4.5% estimate for the fourth quarter — on top of the 3% growth in the July to September quarter — is going to force whoever ends up running the Fed to seriously consider raising interest rates faster than usual. But that’s where it gets tricky. Once rates increase, the economy could slow because borrowing costs will rise for both consumers and companies. When the cost of borrowing money increases, people and companies tend to cut back on spending. But there’s another possible twist that could complicate the job of the next Fed boss even more. The relatively impressive growth in the third-quarter GDP and the even better performance in the fourth quarter could turn out to be another fake-out.

The GDP, for instance, rose by a 4.6% annual rate in the second quarter of 2014 and by a 5.2% rate in the third quarter of that year, only to collapse back to subpar growth in the next eight quarters. Also, the New York Fed, which is more influential, doesn’t agree with the Atlanta Fed. It had current GDP at closer to 3%. With all that’s going on, why would anyone want the Fed job?

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When anyone tells you the economy has recovered, show them any of these graphs.

The Borrower Is The Slave To The Lender (Lance Roberts)

Despite the bullish economic optics, the reality for the majority of Americans is they simply have not yet recovered from the financial crisis. As the chart below shows, while savings spiked during the financial crisis, the rising cost of living for the bottom 80% has outpaced the median level of “disposable income” for that same group. As a consequence, the inability to “save” has continued.

I discussed previously the problem of rising debt. Beginning in 1990, the gap between the “standard of living” and real disposable incomes went negative with the resultant “gap” filled through the use of debt. However, since the financial crisis, this has no longer been the case. I modified the previous chart with the savings rate which tells the same story, as the cost of living began outpacing incomes the difference came from savings, and a continuous increase in debt. Again, despite the temporary uptick in the savings rate following the financial crisis, the real cost of living continues to erode the middle class.

You can see the erosion of the savings rate more clearly when you look at the rate of Personal Consumption Expenditure (PCE) growth as compared to debt growth. As spending and debt accelerated, the savings rate declined. More importantly, in 2000 the growth rate of debt sharply accelerated above PCE growth. This debt-fueled consumption, however, has not led to stronger rates of economic growth.

Debt is a negative thing for the borrower. It has been known to be such a thing even in biblical times as quoted in Proverbs 22:7: “The borrower is the slave to the lender.” Debt acts as a “cancer” on an individual’s wealth as it siphons potential savings from income as those funds are diverted to debt service. Rising levels of debt means rising levels of debt service which reduces actual disposable personal incomes that could be saved or reinvested back into the economy. The mirage of consumer wealth has been a function of surging debt levels. “Wealth” is not borrowed but “saved” and as shown in the chart below, this is a lesson that too few individuals have learned. The reality is that since “savings” are the cornerstone of economic growth longer-term, as savings provide for productive investment and lending, it should be of NO surprise that, as shown in the next chart, there is a very high correlation between the savings rate, GDP, and PCE.

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What happens when you don’t make stuff anymore.

US Manufacturing Worker Productivity Crashes Most In 8 Years (ZH)

US worker productivity rose at 3.0% QoQ in Q3 – the best since 2014.

Unit labor costs rose at 0.5% annualized rate in Q3 (est. 0.4%) following 0.3% pace in Q2. Output rose at a 3.8% rate following 3.9%. Hours worked rose at a 0.8% pace after 2.4%. The latest figure compares with a 1.2% average over the period spanning 2007 to 2016. Weak productivity helps explain why companies are reluctant to raise workers’ wages, even as profit margins have improved. However, among manufacturers, productivity crashed 5% QoQ – the biggest drop since Q1 2009, when the economy was in recession – after rising 3.4% in Q2. Let’s hope that is storm-related.

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Insert your opinion here: “From what we can identify, the only reason today to buy or sell bitcoin is to make money, which is the very definition of speculation and the very definition of a bubble,..”

Bitcoin Is the ‘Very Definition’ of a Bubble – Credit Suisse CEO (BBG)

The speculation around bitcoin is the “very definition of a bubble,” Credit Suisse CEO Tidjane Thiam said as the currency exceeded $7,000 for the first time. “From what we can identify, the only reason today to buy or sell bitcoin is to make money, which is the very definition of speculation and the very definition of a bubble,” he said at a news conference in Zurich Thursday. He added that in the history of finance, such speculation has “rarely led to a happy end.” The digital currency got new impetus this week after CME, the world’s largest exchange owner, said it plans to introduce bitcoin futures by the end of the year, citing pent-up demand from clients. That pushes bitcoin closer to the mainstream by making it easier to trade without the hassles of owning bitcoin directly. Other bankers are also sounding warnings about the currency.

JPMorgan Chase CEO Jamie Dimon has called bitcoin “a fraud” that will eventually blow up. UBS Chairman Axel Weber said last month that bitcoin has no “intrinsic value” because it’s not secured by underlying assets. Bankers also are steering clear of bitcoin for fear that criminals could use its anonymity to hide their activities, Thiam said. “Most banks in the current state of regulation have little or no appetite to get involved in a currency which has such anti-money laundering challenges,” he said. While bitcoin remains a no-go with the industry, banks are racing to develop blockchain, the technology underpinning the currency. Thiam said blockchain may have many applications in banking. Credit Suisse is among more than 100 banks are working within the R3, a consortium created to find ways to use blockchain as to track money transfers and other transactions.

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It’s by design, and that remains worrisome.

One Bitcoin Transaction Now Uses as Much Energy as Your House in a Week (MBV)

Bitcoin’s incredible price run to break over $6,000 this year has sent its overall electricity consumption soaring, as people worldwide bring more energy-hungry computers online to mine the digital currency. An index from cryptocurrency analyst Alex de Vries, aka Digiconomist, estimates that with prices the way they are now, it would be profitable for Bitcoin miners to burn through over 24 terawatt-hours of electricity annually as they compete to solve increasingly difficult cryptographic puzzles to “mine” more Bitcoins. That’s about as much as Nigeria, a country of 186 million people, uses in a year. This averages out to a shocking 215 kilowatt-hours (KWh) of juice used by miners for each Bitcoin transaction (there are currently about 300,000 transactions per day).

Since the average American household consumes 901 KWh per month, each Bitcoin transfer represents enough energy to run a comfortable house, and everything in it, for nearly a week. On a larger scale, De Vries’ index shows that bitcoin miners worldwide could be using enough electricity to at any given time to power about 2.26 million American homes. Expressing Bitcoin’s energy use on a per-transaction basis is a useful abstraction. Bitcoin uses x energy in total, and this energy verifies/secures roughly 300k transactions per day. So this measure shows the value we get for all that electricity, since the verified transaction (and our confidence in it) is ultimately the end product. Since 2015, Bitcoin’s electricity consumption has been very high compared to conventional digital payment methods. This is because the dollar price of Bitcoin is directly proportional to the amount of electricity that can profitably be used to mine it.

As the price rises, miners add more computing power to chase new Bitcoins and transaction fees. It’s impossible to know exactly how much electricity the Bitcoin network uses. But we can run a quick calculation of the minimum energy Bitcoin could be using, assuming that all miners are running the most efficient hardware with no efficiency losses due to waste heat. To do this, we’ll use a simple methodology laid out in previous coverage on Motherboard. This would give us a constant total mining draw of just over one gigawatt. That means that, at a minimum, worldwide Bitcoin mining could power the daily needs of 821,940 average American homes. Put another way, global Bitcoin mining represents a minimum of 77KWh of energy consumed per Bitcoin transaction.

Even as an unrealistic lower boundary, this figure is high: As senior economist Teunis Brosens from Dutch bank ING wrote, it’s enough to power his own home in the Netherlands for nearly two weeks. As goes the Bitcoin price, so goes its electricity consumption, and therefore its overall carbon emissions. I asked de Vries whether it was possible for Bitcoin to scale its way out of this problem. “Blockchain is inefficient tech by design, as we create trust by building a system based on distrust. If you only trust yourself and a set of rules (the software), then you have to validate everything that happens against these rules yourself. That is the life of a blockchain node,” he said via direct message.

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“Earnings are likely to fall short of expectations, which can lead to a correction. Once that happens, multiples can shrink as well. Soon you’re in a full-scale bear market with stock prices down 20% or more.”

The Hidden Danger Bulls Are Missing (Rickards)

Bull markets in stocks seem unstoppable right up until the moment they stop. Then comes a rapid crash-and-burn phase. Is there ever any warning that a collapse is about to happen? Of course there is. Analysts warn about it all the time and provide mountains of data and historical evidence to back up their analysis. The problem is that everyone ignores them! You can talk about the dangers represented by CAPE ratios, margin levels, computerized trading, persistent low volatility and complacency all you want, but nothing seems to slow down this bull market. Yet there is one thing that can stop a bull market in its tracks, and that’s corporate earnings. The simplest form of stock market valuation is to project earnings, apply a multiple and, voilà, you have a valuation. Multiples are already near record highs, so there’s not much room for expansion there.

The only variable left is projected earnings and that’s where Wall Street analysts are having a field day ramping up stock prices. Earnings did grow significantly in 2017 on a year-over-year basis, but that’s mainly because earnings were weak in 2016, so the year-over-year growth was relatively easy. Now comes the hard part. How do you expand earnings again in 2018 when 2017 was such a strong year? Wall Street just uses a simple extrapolation and says next year will be like this year, only better! But there is every reason to doubt that extrapolation. This is from a recent Bloomberg article:

“Ominously, Weekly Leading Index growth turned down early this year and is now at a 79-week low. Such cyclical downturns have historically telegraphed [growth-rate cycle] GRC downturns. That shows very clearly that economic growth is about as good as it gets and that a fresh growth slowdown may be on the way… ” “Over time, we find that stock price corrections — big and small — have historically clustered around GRC downturns. In other words, the risk of corrections rises around economic slowdowns… Today, there are rising rates, with quantitative tightening about to begin. This will take place during an economic slowdown, implying a likely downswing in corporate profit growth, delivering a proverbial one-two punch.”

Earnings are likely to fall short of expectations, which can lead to a correction. Once that happens, multiples can shrink as well. Soon you’re in a full-scale bear market with stock prices down 20% or more. That’s without even considering a war with North Korea and all of the dangers others have already mentioned. This may be your last clear chance to lighten up on listed equity exposure before the bubble bursts.

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Complex derivatives. What do they make you remember?

As Credit Booms, Citi Says Synthetic CDOs May Reach $100 Billion (BBG)

The comeback in complex credit derivatives blamed for exacerbating the global financial crisis is picking up pace. That’s according to new research this week from Citigroup, one of the biggest arrangers of so-called synthetic collateralized debt obligations. Sales of the products may jump to as much as $100 billion this year from about $20 billion in 2015, Citigroup analysts wrote in an Oct. 31 report. While investors suffered billions of dollars in losses on similar bets a decade ago, the leverage offered by synthetic CDOs is luring back buyers in an era of low yields and dwindling volatility. “It would seem as if the low spread-low vol environment, similar to back in 2006-2007 (when investors couldn’t get enough of levered synthetic tranches) has revived some interest in portfolio credit risk,” Citigroup analysts led by Aritra Banerjee wrote.

“Investors may not have necessarily wanted to add leverage, but, simply put, they have had to, given the lack of alternatives.” While post-crisis deals are typically tied to corporate credit as opposed to the mortgage debt that helped spur the credit crunch, the return of synthetic CDOs is likely to generate unease among investors who worry that markets are too frothy. The controversial product’s resurgence coincides with a boom in other types of credit wagers, including options on credit derivative indexes and exchange-traded funds that provide quick and easy access to a broad swath of credit. There are some key differences in today’s synthetic CDOs versus the pre-crisis vintage. Citigroup said it has created over 50 “full capital structure” deals in recent years, which vary from the single-tranche bespoke deals that dominated before and just after the crunch.

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“China’s non-financial outbound direct investment (ODI) fell 41.9% in January-September from a year earlier to $78.03 billion. For September alone, it plummeted 42.5% on-year to $9.31 billion..”

China Issues Guidelines On Overseas Investment Amid Crackdown On Deals (R.)

After years of rapid growth, China’s outbound investment has slumped so far in 2017 as authorities crack down on “irrational” overseas deals which are suspected of being used to bypass capital controls and move money offshore, pressuring the yuan currency. The draft regulations, released to the public to solicit feedback until Dec. 3, aim to improve oversight, safeguard national security and increase support, according to a post on the website of the National Development and Reform Commission (NDRC). Some administrative hurdles, such as a rule requiring that Chinese companies investing over $300 million overseas seek approval from the state planner, would be reduced or removed under the new rules, the post said.

At the same time, the new rules would also increase oversight on investments by overseas subsidiaries of Chinese companies, as well as for investments in sensitive sectors and countries, it said. Sensitive projects listed in the rules include those in countries that are at war, that do not have diplomatic ties with China or where investment is restricted by China’s commitments to international treaties, resolutions or requirements. Media organizations, weapons manufacturing, companies involved in multi-national water resources exploitation or those that China’s national macro policies restrict investment in were listed as sensitive sectors. A full list of sensitive areas would be released by the state planner in future, it said.

Punishments for companies that use dishonest measures to invest overseas, engage in unfair competition or damage national security will be increased, the rules said. The statement said that the new draft builds on previous regulations released in 2014. China’s non-financial outbound direct investment (ODI) fell 41.9% in January-September from a year earlier to $78.03 billion. For September alone, it plummeted 42.5% on-year to $9.31 billion, according to Reuters calculations.

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As Americans live paycheck to paycheck. Problem is, both parties support this lunacy.

US Spends $250 Million Per Day For The War On Terror (TeleS)

The Department of Defense’s “cost of war” report suggests that the U.S. has spent $250 million per day for the past 16 years on ‘defense.’ According to a newly published United States Department of Defense (DoD) “cost of war” report, U.S. taxpayers have shelled out $1.46 trillion for war since September 11, 2001, when the War on Terror began. This amounts to around $250 million per day. The report was published by the Federation of American Scientists Secrecy News blog and covers the period of September 11, 2001 to mid-2017. As the report notes, nearly $1.3 trillion of the total cost spent on the Iraq and Afghanistan wars alone. On top of this, continuing operations in Afghanistan and the U.S.-led air campaign in Iraq and Syria has totalled $120 billion.

U.S. President Donald Trump promised to rebuild America’s military which he sees as less extravagant than it ever has been. “Our active-duty armed forces have shrunk from 2 million in 1991 to about 1.3 million today,” he said in a speech. “The Navy has shrunk from over 500 ships to 272 ships during this same period of time. The Air Force is about one-third smaller than 1991. Pilots flying B-52s in combat missions today. These planes are older than virtually everybody in this room.” Part of Trump’s plan to ‘rebuild’ the U.S.’ military is to make sure that the military is “funded beautifully.” The Trump administration has proposed a $603 billion defense budget, which well exceeds the cap of $549 billion, and would require the U.S. Congress to make spending cuts in other areas.

In July, the House of Representatives approved $696.5 billion in defense spending, which includes a base budget of $621.5 billion and $75 billion in ‘Overseas Contingency Operations dollars’, commonly referred to as ‘war money’. Conversely, the Senate passed a $640 billion base defense budget with a $60 billion allocation for war money. Both versions of the budget well exceed the Trump administration’s proposal, making this defense budget, by far, the largest defense budget in U.S. history. While the U.S.’ current and proposed military spending is massive, the DoD’s “cost of war” report did not take into account other collateral costs of war, including veteran’s benefits and other related costs.

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Will Belgium extradite Puidgemont? 8 of his ministers are already in jail.

Barcelona Council Says Catalan Government Legitimate, Independence Is Not (CN)

Barcelona City Council has declared that the government dismissed by Spain after the application of Article 155 is “legitimate,” although it does not recognize Catalonia as an official republic. After meeting on Thursday, the council approved the proposal put forth by pro-independence party Esquerra Republicana (ERC) to “recognize the government that emerged from the polls on September 27 as the legitimate government of Catalonia,” with votes in favour from Barcelona en Comú (BeC), ERC, PDeCAt, and the anti-capitalist party CUP. Votes against came from the Socialists (PSC), the Catalan People’s Party (PP), and Ciutadans (Cs).

CUP also proposed a motion to “recognize the proclamation of the Catalan Republic approved by the Parliament of Catalonia on October 27.” Although this motion received support from ERC, PDeCAT, and the CUP, it received more votes against from BeC, Cs, PSC, and PP. Alfred Bosch, president of ERC warned that “the fact that the Catalan government has been dismissed, and its powers passed on to the Spanish government, will have an effect on Barcelona.” Barcelona’s mayor, Ada Colau, received criticism from CUP representative María José Lecha, who said the mayor cannot be “neutral or equidistant” in the face of the judicial persecution of the October 1 referendum, and that she must side either with “the oppressor or the oppressed.”

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What a story this still is.

Kim Dotcom Wins Settlement From New Zeland Police Over 2012 Dawn Raid (NZH)

Kim Dotcom and his former wife Mona have accepted a confidential settlement from the police over the raid which saw him arrested, saying he did so to protect their children and because the Government “recently changed for the better”. He said that their previous desire to see accountability had been trumped by wanting to “do what was best for our children” by bringing an end to the court case. The settlement came after a damages claim was filed with the High Court over what was considered an “unreasonable” use of force when the anti-terrorism Special Tactics Group raided his $30 million mansion in January 2012. The raid was part of a worldwide FBI operation to take down Dotcom’s Megaupload file-sharing website which was claimed to be at the centre of a massive criminal copyright operation.

Dotcom and three others were arrested and await extradition to the United States on charges which could land them in prison for decades. The NZ Herald has learned earlier settlements were reached between police and others arrested, including Bram van der Kolk and Mathias Ortmann. It was believed their settlements were six-figure sums and it is likely Dotcom would seek more as the main target in the raid. He was also the focus of risk assessments used to justify the use of the anti-terrorism squad which carried out a helicopter assault at dawn. Those assessments included photographs of Dotcom carrying shotguns – pictures taken while clay pigeon shooting – and descriptions of him as violent despite a lack of evidence to support the claim.

The court challenge also questioned “visual surveillance” which had not been authorised by the court. Evidence has emerged in court hearings of police watching the Dotcom Mansion from neighbouring properties, and scouting the mansion interior with a hidden camera carried on to the property by a local police officer on a goodwill meeting the day before the raid.

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Ban it. Ban the whole industry. We cannot afford this to continue. Let’s feed ourselves without poisoning ourselves in the process.

Monsanto Halts Launch Of Chemical After Farmers Complain Of Rashes (R.)

Monsanto put on hold the launch of a chemical designed to be applied to crop seeds on Wednesday following reports it causes rashes on people, in the latest instance of complaints about a company product that was approved by U.S. environmental regulators. Monsanto froze plans for commercial sales of the product called NemaStrike, which can protect corn, soybeans and cotton from worms that reduce yields. The company said it conducted three years of field tests across the United States in preparation for a full launch and that more than 400 people used it this year as part of a trial. The delayed launch of what Monsanto calls a blockbuster product is another setback for the company, which is already battling to keep a new version of a herbicide on the market in the face of complaints that it damaged millions of acres of crops this summer.

“There have been limited cases of skin irritation, including rashes, that appear to be associated with the handling and application of this seed treatment product,” Brian Naber, U.S. commercial operations lead for Monsanto, said in a letter to customers about NemaStrike. Some users who suffered problems may not have followed instructions to wear protective equipment, such as gloves, company spokeswoman Christi Dixon said. The company expected NemaStrike to launch across up to 8 million U.S. crop acres in fiscal year 2018, Chief Executive Hugh Grant said on a conference call last month. The product was “priced at a premium that reflects its consistent yield protection” against worms known as nematodes, he said.

The U.S. Environmental Protection Agency (EPA) did extensive evaluations of the product before approving it for use, according to Monsanto, which has described NemaStrike as “blockbuster technology.” [..] “The technology is effective and can be used safely when following label instructions,” Monsanto said. The EPA last year approved use of Monsanto’s new version of a weed killer using a chemical known as dicamba on crops during the summer growing season.Problems have also emerged with the herbicide since the agency’s approval. Farmers have complained it evaporates and drifts from where it is applied, causing damage to crops that cannot resist it.

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Jun 042017
 
 June 4, 2017  Posted by at 9:28 am Finance Tagged with: , , , , , , , , ,  3 Responses »
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Eugène Delacroix Les femmes d’Alger 1834

 

Theresa May Suppresses Release Of Report On Who Funds Terrorism In UK (Ind.)
‘Sensitive’ UK Terror Funding Inquiry May Never Be Published (G.)
British PM May’s Election Gamble In Doubt As Poll Lead Falls To One Point (R.)
What Young People Think About This Election
The Biggest Real Estate Bubble Of All Time Just Did The Impossible (ZH)
Australia’s Record-Breaking Run Teeters On Edge With ‘Paltry’ Growth (Smh)
Why A $15 Minimum Wage Is Good For Business (MacLeans)
Noam Chomsky: Neoliberalism Is Destroying Our Democracy (Nation)
Clapper Says Russians ‘Genetically Driven’ To Be Untrustworthy (Ryan)
A Moment of Intoxication (K.)
Greece Debt Relief Could Mean Creditors Waiting For Up To €123 Billion (R.)
EU Mulling Secret Plan B For Greece (K.)
Mediterranean Death Rate Doubles As Migrant Crossings Fall (G.)
Far Right Raises £50,000 To Target Boats On Refugee Rescue Missions In Med (G.)

 

 

This is a few days old (Mey 31). Think it’ll get more attention after last night’s attacks? A report, supposed to be out in early 2016, commissioned by Cameron while May was Home Secretary, is ‘disappeared’ now she is PM.

Theresa May Suppresses Release Of Report On Who Funds Terrorism In UK (Ind.)

An investigation into the foreign funding of extremist Islamist groups may never be published, the Home Office has admitted. The inquiry commissioned by David Cameron, was launched as part of a deal with the Liberal Democrats in December 2015, in exchange for the party supporting the extension of British airstrikes against Isis into Syria. But although it was due to be published in the spring of 2016, it has not been completed and may never be made public due to its “sensitive” contents. It is thought to focus on Saudi Arabia, which the UK recently approved £3.5bn worth of arms export licences to. A spokesperson from the Home Office told The Independent a decision on the publication of the report would be taken “after the election by the next government”.

But in a separate interview with The Guardian, a spokesperson said the report may never be published, describing its contents were “very sensitive”. Tom Brake, the Liberal Democrat foreign affairs spokesman, has written a letter to the Prime Minister pressing her on when the report will be published and what steps she proposes to take to address “one of the root causes of violent extremism in the UK”. “You will agree with me that the protection of our country, of the British people, is the most important job of any government,” he wrote. “Certainly, more important than potential trade deals with questionable regimes, which appear to be the only explanation for your reticence. “When will this report be finished and published? And what steps do you propose to take to address one of the root causes of violent extremism in the UK?”

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Same report. I’m doubling up.

‘Sensitive’ UK Terror Funding Inquiry May Never Be Published (G.)

An investigation into the foreign funding and support of jihadi groups that was authorised by David Cameron may never be published, the Home Office has admitted. The inquiry into revenue streams for extremist groups operating in the UK was commissioned by the former prime minister and is thought to focus on Saudi Arabia, which has repeatedly been highlighted by European leaders as a funding source for Islamist jihadis. The investigation was launched as part of a deal with the Liberal Democrats in exchange for the party supporting the extension of British airstrikes against Islamic State into Syria in December 2015. Tom Brake, the Lib Dem foreign affairs spokesman, has written to the prime minister asking her to confirm that the investigation will not be shelved.

The Observer reported in January last year that the Home Office’s extremism analysis unit had been directed by Downing Street to investigate overseas funding of extremist groups in the UK, with findings to be shown to Theresa May, then home secretary, and Cameron. However, 18 months later, the Home Office confirmed the report had not yet been completed and said it would not necessarily be published, calling the contents “very sensitive”. A decision would be taken “after the election by the next government” about the future of the investigation, a Home Office spokesman said. In his letter to May, Brake wrote: “As home secretary at the time, your department was one of those leading on the report. Eighteen months later, and following two horrific terrorist attacks by British-born citizens, that report still remains incomplete and unpublished.

“It is no secret that Saudi Arabia in particular provides funding to hundreds of mosques in the UK, espousing a very hardline Wahhabist interpretation of Islam. It is often in these institutions that British extremism takes root.”

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How can you have an election in these circumstances? Campaigning this time has been suspended only until the end of the day…

British PM May’s Election Gamble In Doubt As Poll Lead Falls To One Point (R.)

British Prime Minister Theresa May’s gamble on a June 8 snap election was thrust into doubt after a Survation poll showed her Conservative Party’s lead had dropped to a new low of just one percentage point. While British pollsters all predict May will win the most seats in Thursday’s election, they have given an array of different numbers for how big her win will be, ranging from a landslide victory to a much more slender win without a majority. Some of the polls indicate the election could be on a knife edge that would throw Britain into political deadlock just days before formal Brexit talks with the European Union are due to begin on June 19.

In a sign of how much her campaign has soured just five days before voting begins, May’s personal rating turned negative for the first time in one of ComRes’s polls since she won the top job in the turmoil following the June 23 Brexit referendum. Survation said the Conservatives were on 40% and Labour on 39%, indicating May’s lead has collapsed by 11 percentage points over two weeks and that her majority was now in doubt. “Prime Minister May’s overall majority now hangs in the balance based on our most recent data,” Survation founder Damian Lyons Lowe told Reuters. “The risk of May not having an overall majority has increased significantly based on our data.”

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The Tories rely on the ‘grey’ vote.

What Young People Think About This Election (HnH)

Nearly two-thirds of young people say that they are certain to vote in Thursday’s General Election, which, if it happens, could see them play a decisive role in many marginal seats and thus, in the final outcome. Of those who are registered and say they are certain to vote, two-thirds (68%) plan to back Labour. That’s according to an exclusive ICM poll commissioned by Hope Not Hate and supported by the National Union of Teachers (NUT). If the turnout is anywhere near the 63% of young people who said that they were “certain” to vote, then this represents a major increase on the 43% who voted in the 2015 General Election.

Living in a key battleground seat could be an important factor in youth turnout, with four out of ten (39%) of 18-24 year-olds saying that living in a marginal constituency would make them more likely to vote. With the latest Lord Ashcroft polling, out yesterday, suggesting that there are 70 constituencies where the two leading parties’ estimated vote shares are within 5% of each other, the turn out rate amongst young people could define the outcome. Among the marginal seats where the youth vote could decide the outcome are Leeds North West, Norwich South, Cambridge, and Cardiff Central. But it is not just the big University seats where the youth vote could make the difference. In Harrow West, for example, Ashcroft’s polling predicts there is only 2% between Labour and Conservatives and according to the 2011 census, there are 9,500 18-24 years in the constituency.

Even if only two-thirds of them are registered, a turnout of 60% could have a major influence on the result. Our poll found huge support for Jeremy Corbyn’s Labour Party, with two-thirds of those who were registered and certain to vote saying they supported Labour (68%), with half (50%) saying Jeremy Corbyn had the right qualities to be Prime Minister (vs 28% for Theresa May).

Trust, or more precisely the lack of it, remains a major issue for young people. Most of them also felt that tabloid newspapers and wealthy individual donors had an unhealthy influence on British politics. The BBC came out as a trusted source of information for 49% of young people, making it the single most trusted news platform. This compares to just 22% who trust newspapers (and 42% distrusted) and 18% social media (and 45% distrusted). Family and friends were trusted by 46%.

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Vancouver doesn’t stop. Not by itself. Do all these people think they’ll be bailed out when the crash comes? The government can hardly afford to bail out the banks.

The Biggest Real Estate Bubble Of All Time Just Did The Impossible (ZH)

One month ago, we said that “the Vancouver housing bubble Is back, and it’s (almost) bigger than ever.” Fast forward to today, when we can scrap the almost part: according to the latest data from the Real Estate Board of Greater Vancouver, nearly a year after British Columbia implemented a 15% property tax targeting foreign buyers, in May the biggest real estate bubble of all time did the impossible and in a testament to the persistence of Chinese oligarchs, criminals, money launderers and pretty much anyone who is desperate to park their cash as far away as possible, after a modest drop following last summer’s tax the Vancouver housing bubble has bounced right back to new all time highs, as prices of detached, attached houses and apartment all surged to new record highs.

The only thing that did fall in May was the number of actual transactions, as residential property sales in the region totaled 4,364 in May 2017, a decrease of 8.5% from the 4,769 sales in May 2016, an all-time record. In other words, all that the 15% surtax achieved was to drastically slowdown the rate of transactions (or perhaps home flipping). Meanwhile, as sellers held out to find more aggressive buyers, they were in luck as the new wave of buyers has emerged, and undeterred by the 15% premium, they have been slowly but surely lifting all available offers. While there is little we can add to this month’s update that we didn’t already say a month ago, below we again put Canada’s housing market, and bubble, in perspective with some of our favorite charts, first showing total Canadian household debt compared to the US. Most of this is in the form of mortgages.

[..] the punchline: indexed home prices in Canada compared to the US. This needs to commentary.

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Slow bursting bubbles are exceedingly rare.

Australia’s Record-Breaking Run Teeters On Edge With ‘Paltry’ Growth (Smh)

Australia is on the brink of hitting a technical recession just as it breaks the record for the longest run of uninterrupted economic growth in the developed world. While Treasurer Scott Morrison has insisted there are “better days ahead,” consumers are suffering from a dual frustration of weak wages and underemployment hitting household budgets, fuelling low levels of growth and restricting how much they are willing to spend. Three of Australia’s major financial institutions are forecasting a “paltry” growth of 0.1% or less, with the National Australia Bank the first to tip negative growth for the three months to March when National Accounts figures are released on Wednesday. Morgan Stanley has predicted negative growth of 0.3%. If it were to happen, it would only be the fourth time since the recession of the early 1990s that Australia had endured a quarter of negative territory.

The sluggish outcomes offer some good news for home owners, with many tipping the Reserve Bank will keep interest rates on hold for the forseeable future, and, when they do move, it will be a cut. The prediction comes after house prices Australia wide fell for the first time in 18 months, also giving some hope to aspiring home owners struggling to get into the market. If Wednesday’s gross domestic product figures reveal a contraction, it would be the second in three quarters, narrowly avoiding the technical recession, defined as two consecutive quarters of negative growth. Analysts say there is a “small possibility of a negative GDP” in the next quarter, due to the impact of Cyclone Debbie, which would take Australia “into technical, but not real, recession”, according to the National Australia Bank. “While some of the contraction has undoubtedly been driven by the weather and other one-offs, the question for next week will be whether the slowdown includes signal as well as noise, and implies a more fundamental economic slowdown,” said NAB Chief Economist Alan Oster.

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There’s one thing missing from here: You have to take into account how much of what’s for sale in a society is produced within it. If too much of it is imported, no minimum wage can save anything, the money will just vanish.

Why A $15 Minimum Wage Is Good For Business (MacLeans)

When higher income households see wage gains, some of it goes to savings. Additional consumption also often flows to vacations and luxury goods, often imported. In other words a non-trivial part leaks out of the local economy. When lower income households see a sustained rise in incomes, they spend virtually all of it. Most goes to food (more nutritious food or eating out), better health care and more education. Sometimes it also goes to rent (moving to a better neighbourhood). Almost all of this spending stays in the local economy. So boost the minimum wage and you boost the economy from the bottom up.

You may be surprised to learn nearly 30% of Ontario’s labour market earned less than $15 an hour in 2016. The nation’s biggest labour market has more people working at low wages than any other big economic engine of Canada (Quebec, B.C., Alberta) While some workers may lose their job after the minimum wage increase (more on that in a minute), a very large number of workers will see an important pay hike, and that will loop back into the economy. Increased consumer spending will grow the top line of businesses, and increase the need for more workers to meet the higher demand for goods and services…and earning better pay. Rising costs will also raise productivity, something virtually every business and economist says we want and need. That’s harder to do if you’re doing things the way you’ve always done them.

Canada has been running a low-wage economy for decades, relatively speaking, according to Statistics Canada. In fact, at last count Canada outpaced the U.S. in the reliance on low-wage work. Within Canada, Ontario has the highest reliance on low-wage work. Boosting wages may knock out some jobs and some marginal businesses. The remaining enterprises that rely on low-wage work will see improved productivity, less absenteeism and turnover, reducing recruitment and training costs. We shouldn’t rue the loss of a few poorly paid jobs, particularly when rising minimum wages also help meet the twin challenges of the early 21st century: constrained revenue growth and higher service needs due to population aging. We’ve got to spur change, and a substantially higher minimum wage will surely spur change.

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Good long interview with Noam. We’re going to miss him something awful when he dies. Societies need thinkers like him, no matter what the political views are.

Noam Chomsky: Neoliberalism Is Destroying Our Democracy (Nation)

I think is if you take a look at recent history since the Second World War, something really remarkable has happened. First, human intelligence created two huge sledgehammers capable of terminating our existence—or at least organized existence—both from the Second World War. One of them is familiar. In fact, both are by now familiar. The Second World War ended with the use of nuclear weapons. It was immediately obvious on August 6, 1945, a day that I remember very well. It was obvious that soon technology would develop to the point where it would lead to terminal disaster. Scientists certainly understood this. In 1947 the Bulletin of Atomic Scientists inaugurated its famous Doomsday Clock. You know, how close the minute hand was to midnight? And it started seven minutes to midnight. By 1953 it had moved to two minutes to midnight.

That was the year when the United States and Soviet Union exploded hydrogen bombs. But it turns out we now understand that at the end of the Second World War the world also entered into a new geological epic. It’s called the Anthropocene, the epic in which humans have a severe, in fact maybe disastrous impact on the environment. It moved again in 2015, again in 2016. Immediately after the Trump election late January this year, the clock was moved again to two and a half minutes to midnight, the closest it’s been since ’53. So there’s the two existential threats that we’ve created—which might in the case of nuclear war maybe wipe us out; in the case of environmental catastrophe, create a severe impact—and then some. A third thing happened. Beginning around the ’70s, human intelligence dedicated itself to eliminating, or at least weakening, the main barrier against these threats. It’s called neoliberalism.

There was a transition at that time from the period of what some people call “regimented capitalism,” the ’50s and ’60s, the great growth period, egalitarian growth, a lot of advances in social justice and so on— Social democracy, yeah. That’s sometimes called “the golden age of modern capitalism.” That changed in the ’70s with the onset of the neoliberal era that we’ve been living in since. And if you ask yourself what this era is, it’s crucial principle is undermining mechanisms of social solidarity and mutual support and popular engagement in determining policy. It’s not called that. What it’s called is “freedom,” but “freedom” means a subordination to the decisions of concentrated, unaccountable, private power. That’s what it means. The institutions of governance—or other kinds of association that could allow people to participate in decision making—those are systematically weakened. Margaret Thatcher said it rather nicely in her aphorism about “there is no society, only individuals.”

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Russiagate is rotting America.

Clapper Says Russians ‘Genetically Driven’ To Be Untrustworthy (Ryan)

The former US Director of National Intelligence James Clapper thinks Russians have some sort of biological predilection to be an untrustworthy bunch. I wish I was making that up, but sadly, I’m not. Clapper said it during last Sunday’s episode of Meet The Press on NBC, during a response to a question about Jared Kushner’s ties to Moscow. The Russians are “typically, almost genetically driven to co-opt, penetrate, gain favor, whatever” — was the exact quote.There’s great irony in that comment by Clapper, with his own record of perjury, implying that an entire ethnicity can’t be trusted. So, of course, widespread outrage followed the blatantly xenophobic comment. Nah, I’m only joking. No one actually noticed or cared.

Chuck Todd, the interviewer, let the comment slide without even acknowledging that Clapper had said something untoward. If there was a debate about Clapper’s comment and it was deemed somehow acceptable, that would be bad enough — but it’s actually worse than that, because anti-Russian sentiment is so deeply ingrained in the American psyche, that no one even notices when a high profile figure like Clapper makes a comment about the “genetics” of Russians in an effort to brand them as inherently devious and conniving. But it shouldn’t be surprising. Unlike any other group of people, it’s been well-established that you can say pretty much whatever you like about Russians with no repercussions or backlash of any kind, particularly if you pass it off as comedy.

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“We want a peaceful Europe, not one where Germany puts itself above all.”

A Moment of Intoxication (K.)

With Donald Trump elected to the office of president of the United States, developments are following their predetermined course, with the relationship between Washington and Berlin being sorely tested. Some had maintained hope that the new president of the US would adjust to the reality that’s been established for years. Trump, however, is battling and trying to overthrow this reality, treating it as something that’s against American interests. The informal NATO summit in Brussels and the G7 have dashed the optimists’ expectations. Trump strongly criticized his European partners, including Germany, for being inconsistent with their financial obligations toward NATO. Germany’s disappointment with this was to be expected, but less so was the audacity that followed.

German Chancellor Angela Merkel’s strong remarks at a Munich beer tent, that Europe cannot rely on its American and British partners and that it should take its fate into its own hands, were the product of arrogance. They represent the beginning of a rupture, even if some attempt to attribute a “strategic depth” to the whole issue – something like an emancipation for the European Union and a fresh impetus for the completion of the EU project. Except that the introduction of the common currency, rather than make Europe more united, has created a two-tiered Europe, divided between north and south, and Chancellor Merkel’s immigration policies have accelerated centrifugal trends. It doesn’t require much intelligence for one to realize the likely outcome of another amateur initiative like a “common European defense” structure without the active participation of the US and the UK.

This would be opportunism with disastrous consequences. It goes without saying that Greece outside the UK/US defense system puts us in grave danger. We haven’t, of course, reached that point just yet. We’ve simply reached a period of typical European babble and confusion. The hope is that it doesn’t last too long. Nevertheless, the cries of German politicians must stop. Of course, Pax Americana has been violently disputed from time to time. We have already had a taste of Germany in a dominant economic role, as implemented by Wolfgang Schaeuble. Let us consider the remarks by Chancellor Merkel as a moment of intoxication at the beer tent. We want a peaceful Europe, not one where Germany puts itself above all.

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Creative accounting as an excuse not to do the obvious. Germany’s power must be clipped or else.

Greece Debt Relief Could Mean Creditors Waiting For Up To €123 Billion (R.)

A Greek debt relief scenario that put back interest payments until 2048 would mean the nation’s eurozone creditors deferring receipt of up to €123 billion, according to a forecast by Germany’s Finance Ministry. The ministry’s calculations, which were contained in a letter to a member of parliament seen by Reuters on Friday, contemplated the various restructuring scenarios laid out by the eurozone bailout fund, the European Stability Mechanism (ESM). “With such an interest deferral, it would de facto be a new loan with a volume that depends on the development of interest rates,” the document said. “The estimated volume of the deferred interest up until 2048 would be around €118-123 billion.”

The IMF says it cannot contribute loans to Greece’s current bailout unless it gets assurances that its debt will be sustainable. The Fund has estimated that the Greek economy will only grew by 1% per year on average and that Greece will return to a primary surplus of 1.5% from 2023 after five years at 3.5%. Greece needs about €7 billion in loans from its €86 billion rescue package to repay debt maturing in July, but the disbursement hinges on its lenders’ assessment of its bailout progress, the conclusion of the so-called second review.

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No IMF.

EU Mulling Secret Plan B For Greece (K.)

In the wake of last week’s Eurogroup impasse, European officials are mulling a plan B for Greece that would sideline the IMF, curb debt relief and reduce the need for austerity after 2019, Kathimerini understands. According to sources, European officials have already started discussing an alternative plan that could be put into effect in the fall, after September elections in Germany, which have made Berlin cautious of any politically contentious moves. The plan being considered would ensure that the IMF is no longer in the “driving seat of the Greek bailout program,” the sources said, adding that it would offer Greece less debt relief than it had hoped for but also less austerity in 2019 onward, after the current bailout has expired.

That would mean Athens could revoke some of the tough austerity measures it pushed through Parliament last month. The pension cuts and tax increases are due to come into effect in 2019 and 2020 respectively. However, a worse deal for Greece as regards debt relief would be a hard sell for the government of Prime Minister Alexis Tsipras, who has basically reneged on all pre-election promises and is keen to deliver something concrete with respect to the country’s debt. His government has already started shifting its narrative away from an insistence on a “comprehensive solution on the debt” to a “solution that will pave the way for accessing the markets.” Athens is still expected to make one last push for a deal at a Eurogroup summit on June 15.

According to sources, Tsipras will aim to broach the issue at a subsequent summit of EU leaders on June 22 if no solution transpires at the Eurogroup, as is expected. The Greek leader has already secured the support of French President Emmanual Macron for such a discussion to take place, sources say. Earlier this week German Finance Minister Wolfgang Schaeuble hit out at Tsipras, claiming the leftist premier has not shifted the burden of austerity away from poorer Greeks as he had pledged and that party influence in the public administration has increased, not decreased, during his time in government. Tsipras did not respond in person but a government source issued a terse response. “The responsibility of Schaeuble in managing the Greek crisis has been recorded historically,” the source said. “There is no point in his ascribing it to others.”

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Merkal won’t lift a finger until her election. Those are the priorities. And no other country can do a thing without her.

Mediterranean Death Rate Doubles As Migrant Crossings Fall (G.)

The death rate among migrants attempting to cross the Mediterranean to enter Europe has almost doubled over the past year. Comparing the first five months of this year with the same period last year, UN agency data reveals that the mortality rate grew from 1.2% to 2.3%. The death rate during all of 2015 was 0.37% – a sixth of its current level. Details of the drownings came as it emerged that far-right activists are planning to send boats to the Mediterranean this summer to disrupt search-and-rescue vessels that are attempting to save the lives of refugees. The new figures prompted calls for the international community to stop turning a blind eye to the unfolding crisis. Aid agencies said the rising death rate was caused by a shortage of search-and-rescue vessels and the increasingly unsafe boats being provided by smugglers and traffickers in Libya.

Last week a Médecins Sans Frontières (MSF) vessel rescued 1,500 people in 10 hours, more than double the boat’s capacity. Vickie Hawkins, executive director of MSF UK, accused world leaders of turning their backs on refugees and choosing to focus on border security instead of adopting a humanitarian approach that would lower the Med’s death toll. “The deterrence policies implemented to keep people away from Europe have little regard for the human consequences. As a result, the Mediterranean has turned into a giant cemetery with over 1,500 missing or dead so far this year and tens of thousands of people detained inside Libya.” Leonard Doyle, chief spokesman for the UN migration agency, the IOM, said it had detected a hardening of attitude towards economic migrants from Africa, who were looking for work as they moved north towards Europe.

“These are impoverished, black, sub-saharan Africans and there’s definitely less interest in them and less warmth towards them than there was towards the refugees coming in from Syria last year, there’s no question about that,” said Doyle. He added: “The rate of deaths has gone sky high. People looking for work are being told to get into a dinghy and they’ll get a job. These are very vulnerable people ending up in exploitative situations.” During the first five months of last year the IOM recorded 205,858 migrants reaching Europe via the Mediterranean with 2,512 deaths. So far this year a far smaller amount – 71,029 – of migrants and refugees have crossed the Med to enter Europe yet the number of deaths stands at 1,650.

Research by the University of Warwick published last week – the first large-scale comparative study of the backgrounds and aspirations of refugees and migrants heading for Europe – challenged the prevailing view that they pick Europe as their destination of choice. Instead, researchers found that many did not even know anything about the EU prior to their arrival and had in fact been manipulated by traffickers who promised them work.

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Inevitable in view of government- and media rhetoric.

Far Right Raises £50,000 To Target Boats On Refugee Rescue Missions In Med (G.)

Far-right activists are planning a sea campaign this summer to disrupt vessels saving refugees in the Mediterranean, after successfully intercepting a rescue mission last month. Members of the anti-Islam and anti-immigrant “Identitarian” movement – largely twentysomethings often described as Europe’s answer to the American alt-right – have raised £56,489 in less than three weeks to enable them to target boats run by aid charities helping to rescue refugees. The money was raised through an anonymous crowdfunding campaign with an initial goal of €50,000 to pay for ships, travel costs and film equipment. On Saturday the group confirmed they had reached their target but were still accepting donations. A French far-right group hired a boat for a trial run last month, disrupting a search-and-rescue vessel as it left the Sicilian port of Catania. They claimed they had slowed the NGO ship until the Italian coastguard intervened.

Figures from the UN’s migration agency, the IOM, reveal that 1,650 refugees have died crossing the Mediterranean so far this year with a further 6,453 migrants rescued off Libya and 228 bodies pulled from the waters. Humanitarian charities operating in the Mediterranean have helped save the lives of thousands of refugees, with women and children making up almost half of those making the crossing. The threat from the far right infuriates charities operating in the Mediterranean. One senior official, who requested anonymity, said politicians had helped create a climate where supporters of the far right felt emboldened to act in such a way. “When the British government and its European counterparts talk about ‘swarms’ of migrants, or perpetuate the myth that rescue operations are a ‘pull factor’ or a ‘taxi service’, that gives fuel to extreme groups such as this. The simple reality is that without rescue operations many more would drown, but people would still attempt the crossing,” the official said.

[..] During the first five months of 2015, no European or NGO search-and-rescue operations took place with 1,800 people drowning trying to make the crossing. In April alone 1,000 lives were lost. All search-and-rescue operations in the Mediterranean are coordinated by the official Maritime Rescue Coordination Centre in Rome in accordance with international maritime law. Yet the European far-right groups have accused NGOs of working with traffickers to bring migrants to Europe and claim that search-and-rescue boats are not carrying out a humanitarian intervention. The central aim of the new wave of far-right groups is preserving national differences in the belief that white Europeans will be replaced by immigrants, a stance that is articulated with anti-migrant, anti-Muslim, anti-media sentiments but repackaged for a younger audience.

The number of far-right groups is difficult to establish, but Génération Identitaire has held demonstrations in France that drew around 500 people, while its Facebook page has 122,662 likes. Its Austrian counterpart, Identitäre Bewegung Österreich, has 37,628 likes on Facebook, although critics warn of increasing links with the US alt-right which helped to propel Donald Trump to the White House. Also on the boat that attempted to obstruct SOS Méditerranée’s vessel last month was the Canadian alt-right journalist Lauren Southern, who has 278,000 Twitter followers and whose presence confirms a transatlantic convergence.

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May 182017
 
 May 18, 2017  Posted by at 9:10 am Finance Tagged with: , , , , , , , , , ,  4 Responses »
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Paul Klee Fire at Full Moon 1933

 

‘Bobby Three Sticks’ Mueller to Probe Russia-Trump imbroglio (R.)
Trump To Announce $350bn Saudi Arabia Arms Deal – One Of Largest Ever (Ind.)
America’s Reign of Terror: A Nation Reaps What It Sows (Whitehead)
Investors Supercharge Bet Amazon Will Destroy US Retail (BBG)
Fed’s Kashkari Says Don’t Use Rate Hikes To Fight Bubbles (R.)
US Banks Tighten Auto Lending as More Borrowers Fall Into Default (BBG)
Canadian Officials Say Housing Risks Are Contained (BBG)
Prosecutor To Label Deutsche Bank An International Criminal Association (BBG)
Germany Asks US For Classified Briefing On Lockheed’s F-35 Fighter (R.)
Brazil: Explosive Recordings Implicate President Michel Temer In Bribery (G.)
Get Ready For The Franco-German Revival (Pol.)
Greek Parliament Committee Finds Salary, Pension Cuts Unconstitutional (GR)
Deal On Greece Is Touch And Go (K.)
Traffickers, Smugglers Exploit Record Rise In Unaccompanied Child Refugees (G.)

 

 

The echo chamber expands. It’s ironic to see how everyone praises Mueller’s independence, yet many are sure he will be Trump’s undoing. What flack will he get when he doesn’t do what the MSM demand?

‘Bobby Three Sticks’ Mueller to Probe Russia-Trump imbroglio (R.)

Former FBI director and prosecutor Robert Mueller, known for his independence in high-profile government investigations, is taking on a new challenge in the midst of a crisis that threatens the presidency of the United States. Mueller, 72, was named on Wednesday by the Justice Department to probe alleged Russian efforts to sway November’s presidential election in favor of Donald Trump and to investigate whether there was any collusion between Trump’s campaign team and Moscow. President Trump said in a statement there was no collusion between his campaign and “any foreign entity.” Mueller is known by some as “Bobby Three Sticks” because of his full name – Robert Mueller III – a moniker that belies the formal bearing and no-nonsense style of the former Marine Corps officer who was decorated during the Vietnam War.

Democrats and Republicans alike praised his appointment and hailed his integrity and reputation. Mueller was named to the post by Deputy Attorney General Rod Rosenstein. His investigation will run in parallel to those being carried out by the FBI and the U.S. Congress. It would be difficult to fire Mueller, and past special counsel appointments have shown that the job comes with independence and autonomy. Chicago federal prosecutor Patrick Fitzgerald was appointed during the George W. Bush administration in 2003 to a similar role to investigate the leak of the identity of Valerie Plame, an undercover CIA officer whose husband had criticized Bush administration policies. Fitzgerald indicted I. Lewis “Scooter” Libby, a top aide to Vice President Dick Cheney. Bush granted Libby clemency from a prison sentence before he left office.

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If you want to protest Trump, protest this….

Trump To Announce $350bn Saudi Arabia Arms Deal – One Of Largest Ever (Ind.)

Donald Trump will use his upcoming Saudi Arabia trip to announce one of the largest arms sales deals in US history – somewhere in the neighbourhood of $98bn to $128bn worth of arms. That could add up to $350bn over ten years. The deal will be what the Washington Post said is a “cornerstone” of the proposal encouraging the Gulf states to form its own alliance like the NATO military alliance, dubbed “Arab Nato.” Nato is comprised of 28 countries including the US. Mr Trump been an outspoken critic of the organisation but after a face-to-face meeting with Nato Secretary General Jens Stollenberg, he said the alliance was “no longer obsolete.” The White House said the president will propose it as a template for an alliance that will fight terrorism and keep Iran in check.

Saudi Crown Prince Mohammed bin Salman began negotiations on this deal shortly after the 2016 US election when he sent a delegation to Trump Tower to meet with the president’s son-in-law Jared Kushner, who is serving as a senior advisor of sorts to Mr Trump. The idea of an Arab Nato is not new. There was talk in 2015 of a “response force” in Egypt, comprised of approximately 40,000 troops from Egypt, Jordan, Morocco, Saudi Arabia, Sudan, and a few other Gulf nations. The “response force” would have had a Nato-like command structure, with soldiers paid for by their own countries and the Gulf Cooperation Council made up of wealthy oil economies finance operations and management of the force.

President Barack Obama’s administration brokered more arms sales than any US administration since World War II – estimated at $200bn. They sold Saudi Arabia alone $60bn in arms, which sparked criticism by Democrats concerned with Saudi Arabia’s alleged human rights violations. Mr Trump benefits by bringing about a more “fair” deal; he has claimed several times that Nato is unfair to the US because of the amount of contributions and support provided by the US compared to countries like Germany. If Arab Nato succeeds, the White House official said the US could shift the responsibility for security to those in the region and create jobs at home through the arms sales.

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…because that Saudi arms deal is a further expansion of this long-term insanity. Military industrial complex.

America’s Reign of Terror: A Nation Reaps What It Sows (Whitehead)

Who designed the malware worm that is now wreaking havoc on tens of thousands of computers internationally by hackers demanding a king’s ransom? The US government. Who is the biggest black market buyer and stockpiler of cyberweapons (weaponized malware that can be used to hack into computer systems, spy on citizens, and destabilize vast computer networks)? The US government. What country has one the deadliest arsenals of weapons of mass destruction? The US government. Who is the largest weapons manufacturer and exporter in the world, such that they are literally arming the world? The US government. Which is the only country to ever use a nuclear weapon in wartime? The United States. How did Saddam Hussein build Iraq’s massive arsenal of tanks, planes, missiles, and chemical weapons during the 1980s? With help from the US government.

Who gave Osama bin Laden and al-Qaida “access to a fortune in covert funding and top-level combat weaponry”? The US government. What country has a pattern and practice of entrapment that involves targeting vulnerable individuals, feeding them with the propaganda, know-how and weapons intended to turn them into terrorists, and then arresting them as part of an elaborately orchestrated counterterrorism sting? The US government. Where did ISIS get many of their deadliest weapons, including assault rifles and tanks to anti-missile defenses? From the US government. Which country has a history of secretly testing out dangerous weapons and technologies on its own citizens? The US government. Are you getting the picture yet? The US government isn’t protecting us from terrorism. The US government is creating the terror. It is, in fact, the source of the terror.

Just think about it for a minute: almost every tyranny being perpetrated against the citizenry—purportedly to keep us safe and the nation secure—has come about as a result of some threat manufactured in one way or another by our own government. Cyberwarfare. Terrorism. Bio-chemical attacks. The nuclear arms race. Surveillance. The drug wars. In almost every instance, the US government has in its typical Machiavellian fashion sown the seeds of terror domestically and internationally in order to expand its own totalitarian powers.

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Let’s celebrate progress.

Investors Supercharge Bet Amazon Will Destroy US Retail (BBG)

Investors who think Amazon.com Inc. is about to destroy the retail industry as we know it have figured out a way to supercharge that bet – by buying the online giant’s stock and pairing it with a short position in the SPDR S&P Retail ETF, symbol XRT, a foundering fund that primarily holds bricks-and-mortar stores. “If you are long Amazon, wouldn’t it make sense to be short the stocks Amazon will look to decimate?” said Ihor Dusaniwsky, head of research for S3 Partners. “It’s going long the ‘best of the breed’ and shorting the ‘worst of the breed.’” Traders are building up short positions in anticipation of XRT dropping to $40 or $41, Dusaniwsky said. The fund, which is down more than 5% this year, closed at $41.74 on Tuesday.

XRT’s top holdings include furniture stores, supermarkets and groceries, electronics chains and media streaming, all areas where Amazon is spending heavily, Dusaniwsky said. “If Amazon succeeds, it will be at the expense of companies like Wayfair, Sprouts Farmers Market, Whole Foods, Best Buy and Netflix,” Dusaniwsky said. These five companies make up around 7% of XRT, which also holds $3.37 million of Amazon stock, making it 1.2% to the portfolio. So far Amazon is holding up its end of the bet. The world’s largest online retailer beat profit and revenue estimates in the first quarter and said sales may top projections in second quarter, according to an April 27 statement. The stock’s up 28% this year, as the company continues to add subscribers to its $99-a-year Prime program, locking in loyalty and building a moat against competitors.

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Is Kashkari denying the existence of bubbles?

Fed’s Kashkari Says Don’t Use Rate Hikes To Fight Bubbles (R.)

Minneapolis Federal Reserve Bank President Neel Kashkari on Wednesday warned against using interest-rate hikes to address unwanted asset bubbles, saying that bubbles are hard to identify and such hikes would likely do more harm than good. Kashkari is a voting member this year on the U.S. central bank’s policy committee, and in March was the lone dissenter on a Fed vote to raise rates for the third time since the Great Recession. He has previously said he opposed the rate hike because he felt keeping rates low would result in more jobs for Americans who want to work. Some Fed officials have worried that keeping rates too low for too long could create asset bubbles that could set the U.S. economy up for another recession.

But the main reason Fed chair Janet Yellen and others have given for raising rates is not to tamp down bubbles, but to keep a now nearly fully employed economy from going into overdrive. Kashkari’s latest essay argues that keeping a sharp eye out for potential bubbles and using supervisory powers to protect banks from failures are better options than raising rates. “Given the challenges of identifying bubbles with any confidence and the costs of making a policy mistake, I believe the odds of circumstances ever making sense to use monetary policy to try to slow asset prices down are very low,” he wrote. “I won’t say never but a whole lot of evidence would have to line up just right for it to be the prudent course of action.”

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Horse. Barn.

US Banks Tighten Auto Lending as More Borrowers Fall Into Default (BBG)

Lenders are tightening the spigot on new auto loans, making it harder for U.S. consumers with weak credit to buy a car, data from the Federal Reserve Bank of New York show. New car loans for subprime borrowers fell in the first quarter to $25.9 billion, the lowest in two years, according to the New York Fed’s quarterly report on household debt and credit. Drivers with credit scores below 620 now comprise less than 20% of new loans, down from almost 30% a decade ago. Borrowers with the highest credit scores – 760 or more – made up nearly a third of new auto loan originations in the first quarter as lenders target the safer deals. Banks including Fifth Third Bank have been trimming their loan books and cutting back on riskier credit as delinquent auto loan balances surge.

The share of auto debt more than 90 days overdue rose to 3.82% in the first quarter, the highest in four years. While caution may be good for banks’ balance sheets, it doesn’t offer much relief for automakers, who relied on cheap credit to fuel a seven-year stretch of booming sales. Now they’re boosting discounts and cutting production to address swelling inventory on dealer lots. Ford said Wednesday it’s cutting 1,400 jobs in North America and Asia to improve profits as the U.S. auto industry recorded a fourth straight drop in monthly sales in April, after eking out a record year in 2016. Tighter credit “is a big impediment to future strength in auto sales,” said Yelena Shulyatyeva, senior U.S. economist for Bloomberg Intelligence. “A lot of this demand was driven by loose lending standards.”

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Not helping.

Canadian Officials Say Housing Risks Are Contained (BBG)

Canadian government officials delivered a vote of confidence in the country’s housing sector and banking system, telling lawmakers that Vancouver and Toronto’s real estate markets are supported by fundamentals that leave risks well-contained. Senior officials from Canada’s Finance Department testified Wednesday evening to the Senate finance committee, fielding questions about the stability of the housing market, risks posed by high household debt levels in Canada and the recent downgrade of banks by Moody’s Investors Service Inc. The hearing came amid questions about the future of Home Capital and any knock-on effect that a potential failure there could have on Canada’s housing sector, particularly in Vancouver and Toronto.

The core message from the officials was Canada’s market was stable and, despite some risks, policy makers’ measures are taking effect. “We don’t think there’s any systemic risk across the country,” said Phil King, a director at the economic and fiscal policy branch at Finance Canada. “There are specific pockets of concern, which seem to have ameliorated somewhat in the very-near term but we’re keeping a very close eye on those.” Vancouver and Toronto have “very, very strong fundamentals” supporting prices including immigration, strong job creation, strong income gains and high wealth, he said. King described a national housing market with distinct regions — surging Toronto and Vancouver, soft markets in energy-producing regions such as Calgary, and other cities like Montreal and Ottawa where policy makers have “no concerns whatsoever.”

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As Goldman Sachs should be for its activities in Greece.

Prosecutor To Label Deutsche Bank An International Criminal Association (BBG)

Deutsche Bank, on trial in Milan for allegedly helping Banca Monte dei Paschi di Siena conceal losses, must face accusations that it was running an international criminal organization at the time. Prosecutors used internal Deutsche Bank documents and emails to persuade a three-judge panel to consider whether there were additional, aggravating circumstances to the charges the German lender already faces related to derivatives transactions. The material included a London trader’s “well done!” message to a banker who is now on trial, evidence seen by Bloomberg shows. Allowing prosecutors to argue that the alleged market manipulation crimes were committed by an organization operating in several countries could lead to higher penalties if they win a conviction.

Giuseppe Iannaccone, a lawyer for Deutsche Bank and some of the defendants, sought to block the move at Tuesday’s hearing, saying there wasn’t a clear connection between the original charge of market manipulation and the alleged aggravating circumstances. “The trial for Deutsche Bank managers becomes more problematic after the judge’s decision,” said Giampiero Biancolella, an attorney specializing in financial crime who isn’t involved in the case. “If proven, the aggravating circumstance may increase the eventual jail sentence for the market manipulation to a maximum of nine years.” The German bank and Nomura went on trial in Milan in December, accused of colluding with Monte Paschi to cover up losses that almost toppled the Italian lender before its current battle for survival. Thirteen former managers of Deutsche Bank, Nomura and Monte Paschi were charged for alleged false accounting and market manipulation.

Deutsche Bank and Nomura are accused of using complex derivative trades to hide losses at the Italian lender, leading to a misrepresentation of its finances between 2008 and 2012. After the deals came to light in a 2013 Bloomberg News report, Monte Paschi restated its accounts and tapped shareholders twice to replenish capital. Deutsche Bank and six current and former managers were indicted in Milan Oct. 1 for allegedly helping falsify the Siena-based lender’s accounts through a deal known as Santorini. The prosecution’s request to label Deutsche Bank an international criminal association hinged on events that occurred in other parts of the globe, including the possible manipulation of an index, which isn’t the subject of charges in the Milan case.

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History’s biggest ever financial boondoggle. And nobody dares stop it.

Germany Asks US For Classified Briefing On Lockheed’s F-35 Fighter (R.)

The German Air Force this month sent the U.S. military a written request for classified data on the Lockheed Martin F-35 fighter jet as it gears up to replace its current fleet of fighter jets from 2025 to 2035. The letter, sent by the Air Force’s planning command and seen by Reuters, makes clear that the German government has not yet authorized a procurement program and is not committed to any particular aircraft to replace its current warplanes. It said the defense ministry would carry out “an in-depth evaluation of market available solutions, including the F-35, later this year,” with a formal “letter of request” to be issued in coming months.

Germany’s interest in the F-35 – the Pentagon’s most advanced warplane and its costliest procurement program – may surprise some given that it is part of the four-nation consortium that developed the fourth-generation Eurofighter Typhoon, which continues to compete for new orders. The Eurofighter is built by Airbus as well as Britain’s BAE Systems and Leonardo of Italy. Germany will need to replace its current fleet of fourth-generation warplanes – Tornadoes in use since 1981 and Eurofighters – between 2025 and 2035. The F-35 is considered a fifth-generation fighter given stealth capabilities that allow it to evade enemy radars.

Berlin’s letter also comes amid growing tensions between the West and Russia over Moscow’s support for separatists in eastern Ukraine, with NATO officials saying that Russian naval activity now exceeds levels seen even during the Cold War. Britain, the Netherlands, Norway, Turkey and Italy – key NATO allies of Germany – are already buying the F-35 fighter jet to replace their current aircraft, and other European countries such as Switzerland, Belgium and Finland are also looking at purchasing the fifth-generation warplane. Germany’s gesture may be aimed at strengthening its hand in negotiations with its European partners over the scale and timing of development of a next generation of European fighters. Any moves to buy a U.S. built warplane could run into political resistance in Germany, which has strong labor unions.

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Just turn parliament into a prison building. Most effective solution.

Brazil: Explosive Recordings Implicate President Michel Temer In Bribery (G.)

Angry crowds and outraged members of Brazil’s congress have demanded the impeachment of President Michel Temer following reports he was secretly recorded discussing hush money pay-offs to a jailed associate. The tapes were presented to prosecutors as part of a plea bargain by Joesley and Wesley Batista, brothers who run the country’s biggest meat-packing firm JBS, according to O Globo newspaper. They are said to contain conversations that incriminate several leading politicians, including the former presidential candidate Aecio Neves and the former finance minister Guido Mantega. Temer is alleged to have talked with Joesley about cash payments to Eduardo Cunha, the former speaker of the House who has been jailed for his role in the sprawling Petrobras corruption scandal.

Cunha is in the same ruling Brazilian Democratic Movement party as Temer and initiated the impeachment of Dilma Rousseff that allowed him to take over the presidency. He has alluded to the many secrets he knows about his former colleagues. In covert recordings made during two conversations in March, Joesley tells Temer he is paying Cunha to keep him quiet, to which the president allegedly replies: “You have to keep it going, OK?” According to Globo, police also have audio and video evidence that Temer’s aide Rocha Loures negotiated bribes worth 500,000 reais (US$160,000) a week for 20 years in return for helping JBS overcome a problem with the fair trade office.

No audio or transcripts were released. The supreme court has refused to comment on the validity of the alleged leak – but the news has enraged the public. Shouts and pot-banging (a traditional form of protest in Latin America) could be heard when the allegations were aired on TV. Crowds also gathered outside the presidential palace chanting “Fora Temer” (Temer out). Two congressmen submitted impeachment motions in the lower house.

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Macron falls in line with what Berlin wants as much as Hollande did. Where’s the difference? Merkel and Schäuble like it, because now no-one will dare speak up anymore.

Get Ready For The Franco-German Revival (Pol.)

With none of the previous three presidents Merkel has sat across from in the past 12 years did the cautious chancellor achieve the deep mutual understanding and political serendipity that powered European integration in the eras of Konrad Adenauer and Charles de Gaulle, Helmut Schmidt and Valéry Giscard d’Estaing, or Helmut Kohl and François Mitterrand. Macron promised to be a “frank, direct and constructive partner” for Berlin. If he can convince Merkel to revive the frequent, unscripted, plain-speaking meetings between French and German leaders of the past, it will be a crucial step toward setting a joint agenda for Europe. July’s joint cabinet session — where both defense and the economy will be on the agenda — will be a first test of the promised Franco-German revival.

Macron has made it clear he intends to use France’s major contribution to European defense and security as a lever to help secure progress in the eurozone. But his influence in Berlin, as he acknowledged, will depend on his ability to break the rigidities in the French labor market and put the country’s young people to work. He will need to overcome deep-seated resistance to eurozone intervention in national budget policies. The last Socialist government was as defiant as its Gaullist predecessors when the European Commission repeatedly criticized France’s excessive deficits, high tax burden on business and employment, and generous welfare and pension systems. But Macron is committed to the right track. Honoring commitments to EU-supervised economic reforms are part of his vision for a more integrated eurozone, he said in Berlin.

[..] When it comes to the eurozone, Germany will have to end its resistance to further risk-sharing to complete the EU’s banking union. And here progress is likely to be difficult. Macron will need Berlin to lift its blockade on common deposit insurance and a joint fiscal backstop for the European bank resolution fund. Finance Minister Wolfgang Schäuble — who has expressed support for some of Macron’s ideas — will hold both steps hostage at least until after the German general election in September. Schäuble is holding out for a very different form of eurozone governance, in which an inter-governmental (i.e. German-controlled) European Monetary Fund, built on the existing European Stability Mechanism, would impose automatic debt restructuring and an austerity program on any eurozone country that needed assistance.

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Can Tsipras impose cuts when they violate his constitution? Can the Troika?

Greek Parliament Committee Finds Salary, Pension Cuts Unconstitutional (GR)

The Parliamentary Scientific Committee in its new report that accompanies the new omnibus bill expressed concern over the constitutionality of the provisions of Law 4387/2016 that calls for new cuts to pensions and special salaries. According to Professor and former SYRIZA lawmaker Alexis Mitropoulos, the report was posted on the parliament site shortly after midnight on Tuesday. Mitropoulos spoke on Ant1 television on Wednesday saying that, “After the recent Court of Audit decision, and following a long meeting, the committee found that the cuts in special wages, pensions and taxation were found to be unconstitutional.”

The new bill includes deep cuts in pensions and slashes in salaries of army and police personnel, sectors where special salary regulations apply. “The proposed reductions disrupt the balance that must exist between, on the one hand, the pension as a personal asset, which is protected by Article 1 and, on the other, of the public interest,” the report says regarding the pension cuts. As for cuts in special salaries, the report argues that, the cuts “are part of a wider fiscal adjustment program containing a package of measures to revive the Greek economy and consolidate public finances” but their implementation “is a necessary but not sufficient condition for the constitutionality of these cuts.”

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A child can tell that this is nonsense:

Growth predicted at “..2.1% this year and 2.5% in 2018, and continuing at a similar pace until 2060(!)..”. While the demanded budget surplus is 3.5% for the next 5 years. Which guarantees the growth predictions won’t be achieved.

Deal On Greece Is Touch And Go (K.)

A senior eurozone official put on Wednesday the chances of a complete agreement on Greece being reached at this Monday’s Eurogroup meeting at 50%, while many issues remain open and the negotiation battle at this stage is mainly between Berlin and the IMF. The official also reiterated that there will be no tranche disbursement without the IMF agreeing to participate in the Greek program. There are three scenarios on the negotiating table, according to two eurozone officials who took part in last Monday’s Euro Working Group. All three provide for the primary budget surplus to remain at 3.5% of GDP until 2022, showing that this is not negotiable anymore.

The main obstacle to an agreement among Greece’s creditors is that they disagree on the rate of Greek growth in the coming years, a key parameter for the extent of Greek debt easing. The first scenario provides for growth to match the European Commission’s estimates for 2.1% this year and 2.5% in 2018, and continuing at a similar pace until 2060. If there is a primary surplus of 2-2.6% of GDP, then the measures agreed last May will suffice to make the Greek debt sustainable. According to the second scenario, growth will be below even the IMF forecast and will not exceed 1% per year in the long term. That should take the primary surplus down to 1.5% of GDP from 2023, and more measures will be needed to render the debt sustainable. The third scenario is similar to the second, but the growth forecast is slightly higher, at 1.25%.

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Forget about hoping Brussels is looking for a solution NOT located in southern Libya. Just imagine what you would do if this was your child.

Traffickers, Smugglers Exploit Record Rise In Unaccompanied Child Refugees (G.)

A record increase in the number of refugee and migrant children travelling alone has left many exposed to sexual abuse and exploitation at the hands of traffickers and opportunists. At least 300,000 unaccompanied and separated children were recorded in 80 countries in 2015-16, a rise of almost 500% on the 66,000 documented in 2010-2011, according to a Unicef report published on Wednesday. The central Mediterranean passage is one of several migration routes identified as particularly dangerous for children. More than 75% of the 1,600 14- to 17-year-olds who arrived in Italy reported being held against their will or forced to work.

“One child moving alone is one too many and yet, today, there are a staggering number of children doing just that – we as adults are failing to protect them,” said Unicef’s deputy executive director, Justin Forsyth. “Ruthless smugglers and traffickers are exploiting their vulnerability for personal gain, helping children to cross borders, only to sell them into slavery and forced prostitution. It is unconscionable that we are not adequately defending children from these predators.” The sheer number of migrant and refugee arrivals has left states struggling to cope, with children often falling through the cracks.

Border closures, aggressive pushback measures, overcrowded shelters, makeshift camps and heavy-handed authorities have only served to exacerbate the risk of child exploitation, encouraging unaccompanied minors to take highly dangerous routes in a desperate bid to reach their destinations. One 17-year-old girl from Nigeria told Unicef that she was trapped in Libya for three months and sexually assaulted by her smuggler-turned-trafficker as she attempted to travel alone to Italy. “Everything [he] said – that we would be treated well and that we would be safe – it was all wrong. It was a lie,” she said of the man who offered to help her. “He said to me if I didn’t sleep with him, he would not bring me to Europe. He raped me.”

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Dec 012015
 
 December 1, 2015  Posted by at 10:19 am Finance Tagged with: , , , , , , , ,  2 Responses »
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John Vachon Hull-Rust-Mahoning, largest open pit iron mine in the world, Hibbing, Minnesota 1941

4 Telltale Signs The Credit Cycle Is Turning Now (Zero Hedge)
This Chart Should Put Stock Investors On High Alert (MarketWatch)
There’s a Big Drop in US Treasury Debt Supply Coming in 2016 (BBG)
Perverse Incentives : Stock Buybacks Blow Up Corporate America (Lebowitz)
IMF Approves Reserve-Currency Status for China’s Yuan (BBG)
Euro to Bear Brunt of Yuan’s Inclusion in Reserve-Currency Club (BBG)
No QE: Easy Money Is The Source Of China’s Problems, Not The Solution (Balding)
China Manufacturing At Three-Year Low (AFP)
The Debt Deadlines Faced By 5 Chinese Firms With Alarming Cash Problems (BBG)
Sydney Home Prices Drop Most in 5 Years (BBG)
Greek Debt Relief Talks To Focus On Net Present Value (Reuters)
The War on Terror is Creating More Terror (Ron Paul)
TPP Clauses That Let Australia Be Sued: Weapons Of Legal Destruction (Guardian)
Why the US Pays More Than Other Countries for Drugs (WSJ)
The Story Line Dissolves (Jim Kunstler)
The Slow Death Of Hope For America’s Loyal Friends In Iraq (FT)
Migrant Blockades Of Train Tracks In Northern Greece Hit Commerce (Kath.)

Otherwise known as deflation.

4 Telltale Signs The Credit Cycle Is Turning Now (Zero Hedge)

Earlier today, the FT wrote an article in which it found that “companies have defaulted on $78bn worth of debt so far this year, according to Standard & Poor’s, with 2015 set to finish with the highest number of worldwide defaults since 2009” which together with a chart we have been showing for the past year, namely the staggering disconnect between junk bond yields and the S&P500… has made many wonder if the credit cycle – a key leading indicator to economic inflection points and in the case of the last credit bubble, the Great Financial Crisis – has already turned. According to a recent analysis by Ellington Management, the answer is a resounding yes. [..] Ellington concludes: “once “fickle investors exit the market, high yield bonds and leveraged loan prices should settle at a supply/demand equilibrium well below today’s levels.”

Telltale Signs the Credit Cycle is Turning Now

We believe that we are now at the end of the “over-investment” phase of the corporate credit cycle in the US that has been playing out since the depths of the GFC. This view is supported by a number of telltale signs of a reversal in the credit cycle:
Worsening Fundamentals – Declining corporate profits, record levels of corporate leverage, and an elevated high yield share of total corporate debt issuance
Defaults/Downgrades – Credit rating downgrades at a pace not seen since 2009
Falling Asset Prices – Price deterioration in the lowest quality loans and the most junior CLO tranches
Tightening Lending Standards – Weak investor appetite for new distressed debt issues, declines in CLO and CCC HY bond issuance, and tightening in domestic bank lending standards

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Similar stocks vs junk bonds data. But do note the differences in the graphs too, in the 2012-14 period.

This Chart Should Put Stock Investors On High Alert (MarketWatch)

The continued downtrend in the high-yield bond market is warning that liquidity is drying up, which could bode very badly for the stock market. When financial markets are flooded with liquidity, investors tend to feel safer about investing in riskier, higher-yielding assets, like noninvestment grade, or “junk,” bonds, and stocks. When the flow of money slows, the appetite for risk tends to decrease as well. That’s why many stock market watchers keep a close eye on the longer-term trends in the high-yield bond market. If money is flowing steadily into junk bonds, investors are likely to be just as willing, if not more willing, to buy equities.

When money is coming out of junk bonds, like the chart below shows, many see that as a warning that investors could start selling stocks. “High yield corporate bonds are thought by many to behave like the rest of the bond market, but they actually behave a lot more like the stock market,” Tom McClellan, publisher of the investment newsletter McClellan Market Report, wrote in a recent note to clients. “And when high-yield bonds start to suffer, that is usually a reliable sign that liquidity is drying up, and bad times are about to come for the stock market.”

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Oh, well, they’ll have to buy the ones China will be selling.

There’s a Big Drop in US Treasury Debt Supply Coming in 2016 (BBG)

Lost in the debate over the U.S. Treasury market’s resilience as the Federal Reserve starts to raise interest rates is one simple fact: supply is falling – and fast. Net issuance of U.S. notes and bonds will tumble 27% next year, according to estimates by primary dealers that are obligated to bid at Treasury debt auctions. The $418 billion of new supply would be the least since 2008. While a narrowing budget deficit is reducing the U.S.’s funding needs, the Treasury has shifted its focus to T-bills as post-crisis regulations prompt investors to demand a larger stock of short-term debt instead. The drop-off in longer-term debt supply may keep a lid on yields, providing another reason to believe Fed Chair Janet Yellen can end an unprecedented era of easy money without causing a jump in borrowing costs that derails the economy.

“Longer-term yields will be slower to move up next year because the Treasury will be funding more with bills,” said Ward McCarthy, the chief financial economist at Jefferies, who has analyzed U.S. debt markets for over three decades and was a senior economist at the Richmond Fed. “There is also a global appetite for Treasuries as U.S. debt is one of the world’s highest-yielding and is among the most liquid markets.” Excluding bills, Jefferies forecasts net issuance of $404 billion in 2016, down from their $607 billion estimate for this year. Of the ten estimates compiled by Bloomberg, the Bank of Montreal was the lone primary dealer calling for an increase in 2016. Net issuance of interest-bearing securities, or those with maturities from two years to 30 years, has fallen every year since the U.S. borrowed a record $1.61 trillion in 2010, data compiled by the Securities Industry and Financial Markets Association show.

After the market for Treasuries more than doubled since the financial crisis to $12.8 trillion as the government ran deficits to bail out banks and support the economy, the U.S. has started to scale back supply. One reason is the narrowing budget gap. With the Fed holding its benchmark rate near zero since December 2008, the jobless rate has fallen by half from its post-crisis peak in 2009, to 5% today. As tax revenue increases, the Congressional Budget Office forecasts the shortfall will narrow to $414 billion in the fiscal year ending Sept. 30, 2016, from $439 billion in the previous 12 months and $483 billion in the prior annual period. To lock in record-low long-term borrowing costs, the government has also lengthened the average maturity of its debt to 5.8 years from 4.1 years at the end of 2008. One consequence is that the Treasury market’s share of bills has shrunk to about 10%, the smallest in Bloomberg data going back to 1996.

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Perverse incentives 101. How corporate America blows itself up.

Perverse Incentives : Stock Buybacks Blow Up Corporate America (Lebowitz)

Vast swaths of the population in the United States are not enjoying the benefits of the so-called post-crisis recovery. Meanwhile, the top executives of major corporations are prospering in a way never before seen. This contrast between the rich becoming ultra-rich and the rest of the population stagnating at best, was a characteristic of the pre-depression “Roaring 20’s” as well. A report issued by the Economic Policy Institute on CEO pay highlights that in 2014 the CEO-to-worker compensation ratio was 303X compared with 58x in 1989 and 20X in 1965. The exponential rise in executive compensation has occurred in both relative and absolute terms. From 1978 to 2014, inflation-adjusted CEO compensation increased 997%, almost double the rise in stock market value.

When compared with other highly paid workers (defined as those earning more than 99.9% of other wage earners), CEO compensation was 5.84 times greater. The rate at which CEO compensation outpaced the top 0.1% of wage earners reflects the power of CEO’s to extract “concessions” rather than an outsized contribution to productivity. The composition of executive pay has gone from one predominately salary based with less than 15% stock and option rewards in the mid-1960’s to one heavily dependent on stock and option rewards averaging well over 80% in 2013. These stock-based incentives make executives highly motivated to keep their stock price elevated at all costs.

The compensation structure in conjunction with the rise in pressure from Wall Street and investors to keep stock prices elevated arguably leads to short-term decision-making that ultimately does not afford proper consideration of the long-term problems those decisions create. One of the most prevalent ways in which executives can carry out such a compensation-maximizing scheme is through share buybacks. Share buybacks as a percentage of corporate use of cash are at near-record levels and rising rapidly. In a market where all major indices and the majority of publicly-traded company shares are near all-time highs, the proper question is, why? As Warren Buffett wrote in his 1999 letter to shareholders, “Managements, however, seem to follow this perverse activity (buy high, sell low) very cheerfully.”

It is vital to give proper consideration to the improper liberties that are being taken by those with “unwarranted influence” and “misplaced power”. Value extraction has replaced value creation in pursuit of short-term, self-serving benefits at the expense of long-term stability and durability of corporate America and therefore the country as a whole.

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It’s going to be interesting to see what happens when China falls into recession. Will the IMF be inclined to pretend to believe Beijing’s ‘official’ numbers because otherwise it would look dumb? Or will it insist on real data and stifle Xi that way?

IMF Approves Reserve-Currency Status for China’s Yuan (BBG)

The IMF will add the yuan to its basket of reserve currencies, an international stamp of approval of the strides China has made integrating into a global economic system dominated for decades by the U.S., Europe and Japan. The IMF’s executive board, which represents the fund’s 188 member nations, decided the yuan meets the standard of being “freely usable” and will join the dollar, euro, pound and yen in its Special Drawing Rights basket, the organization said Monday in a statement. Approval was expected after IMF Managing Director Christine Lagarde announced Nov. 13 that her staff recommended inclusion, a position she supported. It’s the first change in the SDR’s currency composition since 1999, when the euro replaced the deutsche mark and French franc.

It’s also a milestone in a decades-long ascent toward international credibility for the yuan, which was created after World War II and for years could be used only domestically in the Communist-controlled nation. The IMF reviews the composition of the basket every five years and rejected the yuan during the last review, in 2010, saying it didn’t meet the necessary criteria. “The renminbi’s inclusion in the SDR is a clear indication of the reforms that have been implemented and will continue to be implemented and is a clear, stronger representation of the global economy,” Lagarde said Monday during a press briefing at the IMF’s headquarters in Washington. Renminbi is the currency’s official name and means “the people’s currency” in Mandarin; yuan is the unit.

The addition will take effect Oct. 1, 2016, with the yuan having a 10.92% weighting in the basket, the IMF said. Weightings will be 41.73% for the dollar, 30.93% for the euro, 8.33% for the yen and 8.09% for the British pound. The dollar currently accounts for 41.9% of the basket, while the euro accounts for 37.4%, the pound 11.3% and the yen 9.4%.

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Sorry, but that’s not quite true. Sterling loses more, percentage wise. It goes to 8.09% from 11.3%, while the euro moves to 30.93% from 37.4%.

Euro to Bear Brunt of Yuan’s Inclusion in Reserve-Currency Club (BBG)

The euro’s worst year in a decade is looking even grimmer after the Chinese yuan’s inclusion in the IMF’s basket of reserve currencies. The 19-nation currency’s weighting in the IMF’s Special Drawing Rights basket will drop to 30.93%, from 37.4%, the organization said Monday. The yuan will join the dollar, euro, pound and yen in the SDR allocation from Oct. 1, 2016, at a 10.92% weighting. The euro has tumbled 13% against the dollar this year, the most in a decade, and central banks have reduced the proportion of the currency in their reserves to the lowest since 2002. ECB Mario Draghi signaled on Oct. 22 that policy makers are open to boosting stimulus, after embarking on a €1.1 trillion asset-purchase program in March. “The euro will get the most impact from this weight adjustment,” said Douglas Borthwick at New York-based brokerage Chapdelaine. “The IMF is taking from euro to give to China; the other rebalancing amounts are largely negligible.”

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How you can write that without adding that this is true everywhere, I don’t get it. “..[a] yawning gap between capacity and demand is what’s driving the precipitous fall in prices..”

No QE: Easy Money Is The Source Of China’s Problems, Not The Solution (Balding)

The first of the month means one thing in China: more gloomy numbers. On Tuesday, the official purchasing managers’ index fell to its weakest level in three years. If analysts aren’t panicking, that’s partly because the benchmark lending rate still stands at 4.35%. The central bank has plenty of room to juice the economy with rate cuts, as its counterparts in the U.S., Japan and Europe have done for years. That assumption, however, may be flawed. The People’s Bank of China has already slashed rates six times in a year, without producing any uptick in growth. To the contrary, deflationary pressures remain intense: Factory-gate prices have declined for four years running, falling 6% annually. Further easing might actually make the problem worse, not better.

This flies in the face of post-crisis orthodoxy. Since 2009, as inflation rates have converged to zero and growth slowed across the world, central bankers have almost uniformly sought to stimulate their economies using various loose-money policies. The Fed, Bank of Japan and ECB have all lowered interest rates and made more credit available in hopes of spurring investment and demand. Though inflation remains subdued in the major developed economies, the underlying logic behind quantitative easing hasn’t been seriously questioned. The consensus is that without these radical interventions, the world’s biggest economies would be in even worse shape than they are.

China is in a category of its own, however. Its reaction to the financial crisis – much praised at the time – was to launch a credit-fueled investment-and-construction binge. Using borrowed capital to build roads, airports, factories and homes at a frenzied pace has created massive overcapacity throughout the economy. To take just one example, China will install around 14 gigawatts of solar panels in 2015. Yet domestic panel-manufacturing capacity dwarfs this number: According to the Earth Policy Institute, in 2014 Chinese manufacturers produced 34.5 gigawatts of solar panels. The world as a whole only installed 38.7 gigawatts that year. In other words, Chinese manufacturers alone could meet nearly 90% of global demand.

This yawning gap between capacity and demand is what’s driving the precipitous fall in prices. A recent Macquarie report found that the Chinese steel industry is losing around 200 yuan ($31) per ton because its mills are churning out too much steel. One might think manufacturers would scale back production to bring things into balance. But as Macquarie notes, “mills are concerned about losing market share and having to spend fresh capital to resume operation if they stop producing now.” At the same time, Chinese “banks have been pushing mills to stay in the market so they don’t have to admit large bad loans.”

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Not going well.

China Manufacturing At Three-Year Low (AFP)

A key measure of China’s manufacturing activity dropped to its weakest level in more than three years in November, underlining weaknesses in the world’s second-largest economy. The official Purchasing Managers’ Index (PMI), which tracks activity in the crucial factories and workshops sector, fell to 49.6, the government statistics bureau said. It was the fourth consecutive month of decline and the lowest figure since August 2012. Investors closely watch the index as a barometer of the country’s economic health. A reading above 50 signals expanding activity while anything below indicates shrinkage. The statistics bureau blamed the disappointing figure on weak overseas and domestic demand, falling commodity prices and manufacturers’ reluctance to restock.

“Facing downward pressures on the economy, companies’ buying activities slowed and their will to restock was insufficient,” it said. China’s economy expanded 7.3% in 2014, the slowest pace since 1990, the government says, and at 7% in each of the first two quarters of this year. Officials say it decelerated further to 6.9% in the July-September period, its slowest rate since the aftermath of the financial crisis. But those statistics are widely doubted and many analysts believe the real rate of growth could be several percentage points lower. The government has depended on monetary loosening to stimulate growth. In October it cut interest rates for the sixth time in a year and abolished the official cap on interest rates for savers.

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Can Beijing still bail them out now it’s in the SDR basket?

The Debt Deadlines Faced By 5 Chinese Firms With Alarming Cash Problems (BBG)

A chemical producer, chicken processor, a sausage maker, a tin smelter and a coal miner have something in common. Surging losses and high leverage have prompted brokerages to put red flags on their debt. China International Capital, Guotai Junan Securities and Haitong Securities all flagged the five companies’ liquidity risks this month after China Shanshui Cement Group Co. became at least the sixth firm to default in the onshore bond market on Nov. 12. Corporate notes are suffering, with the yield premium for five-year AA- rated debentures over the sovereign widening 19.8 basis points this month, the most this year.

“One of the triggers for a financial crisis in China would be high-profile corporate defaults, which could change a deep-rooted mindset among investors that the government would always stand behind troubled companies,” said Xia Le at Banco Bilbao Vizcaya Argentaria“Then a panic would follow.” Premier Li Keqiang has pledged to weed out zombie companies to help restructure the economy while trying to prevent a hard landing amid the worst slowdown in a quarter century. A Chinese producer of pig iron, Sichuan Shengda Group said on Thursday it may not be able to repay bonds next month if investors demand their early redemption. Fertilizer maker Jiangsu Lvling Runfa Chemical is asking its guarantor to repay debt due Dec. 4. The following is a list of other companies wrestling with high debt and low liquidity, according to CICC, Guotai Junan and Haitong.

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The madness is far from over, though. It could be in a split second, mind you.

Sydney Home Prices Drop Most in 5 Years (BBG)

Sydney home prices fell the most in five years in November as a regulatory crackdown forces banks to tighten lending and increase mortgage rates. Dwelling values in Australia’s largest city dropped 1.4% from a month earlier, data from property researcher CoreLogic Inc. showed on Tuesday. That was the biggest drop since December 2010 and the first decline since May. Prices across the nation’s capital cities declined 1.5%, with Melbourne leading with a 3.5% decrease. “The fact that mortgage rates have risen independently of the cash rate has, in all likelihood, become a contributor to the slowdown in housing market conditions,” Tim Lawless, head of research at the firm, said in an e-mailed statement. “Tighter mortgage servicing criteria across the board and affordability constraints in the Sydney and Melbourne markets are also having an impact on market demand.”

The drop in home prices is yet another indicator of the cooling Sydney property market after mortgage rates close to five-decade lows and buying by foreigners sent prices up 44% in the past three years. Sydney auction clearance rates, a measure of demand, have dropped for nine consecutive weeks and loans to investors climbed at the slowest pace in 14 months as banks raised interest rates to protect themselves from the risks of an overheated market. Buyers are hesitating after the price rise hurt affordability, and a regulatory clampdown prompted banks to raise rates for owner-occupiers for the first time in five years. Economists from Macquarie to Bank of America forecast a decline in prices over the next two years. Values in New South Wales state, where Sydney is the capital, are expected to climb 2.2% in 2016, a survey by National Australia Bank showed Monday.

“Supervisory measures are helping to contain risks that may arise from the housing market,” the Reserve Bank of Australia said Tuesday as it left its benchmark cash rate at a record-low 2%. “The pace of growth in dwelling prices has moderated in Melbourne and Sydney over recent months.” Still, Sydney home prices are up 12.8% in the past 12 months and Australia & New Zealand Banking Group Ltd. said in a note Monday “strong underlying demand” is likely to contain any price declines in the major capital cities to less that 10% in the absence of an economic downturn. On Saturday, 106 of 111 yet-to-be-built apartments worth about A$160 million ($116 million) in Chatswood, 10 kilometers north of Sydney’s business district, were sold in three hours, according to Domain, an online real estate website.

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In other words: no real debt restructuring. But didn’t the IMF label that highly important?

Greek Debt Relief Talks To Focus On Net Present Value (Reuters)

Future talks on debt relief for Greece will focus on the debt’s net present value, Greek deputy central bank governor Ioannis Mourmouras told a business conference on Tuesday. Eurozone governments believe that forgiving Greece part of its debt – a “nominal haircut” – is not necessary, because thanks to very low interest, long maturities and grace periods, the net present value of the debt is manageable. “I estimate that the basis of the discussion will be the net present value of the debt,” Mourmouras said. He also said that once Greece completes reforms agreed with creditors under the first review of its bailout program, it could benefit from the ECB’s bond-buying program. “The participation in the ECB’s QE, after the first review, will be a catalyst for the Greek economy,” he said. “In the beginning the amounts will be minor, something like €3 billion.”

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Michael Moore had it oh-so right: “You can’t declare war on a noun”.

The War on Terror is Creating More Terror (Ron Paul)

The interventionists will do anything to prevent Americans from seeing that their foreign policies are perpetuating terrorism and inspiring others to seek to harm us. The neocons know that when it is understood that blowback is real – that people seek to attack us not because we are good and free but because we bomb and occupy their countries – their stranglehold over foreign policy will begin to slip. That is why each time there is an event like the killings in Paris earlier this month, they rush to the television stations to terrify Americans into agreeing to even more bombing, more occupation, more surveillance at home, and more curtailment of our civil liberties. They tell us we have to do it in order to fight terrorism, but their policies actually increase terrorism. If that sounds harsh, consider the recently-released 2015 Global Terrorism Index report.

The report shows that deaths from terrorism have increased dramatically over the last 15 years – a period coinciding with the “war on terrorism” that was supposed to end terrorism. According to the latest report: “Terrorist activity increased by 80% in 2014 to its highest recorded level. …The number of people who have died from terrorist activity has increased nine-fold since the year 2000.” The world’s two most deadly terrorist organizations, ISIS and Boko Haram, have achieved their prominence as a direct consequence of US interventions. Former director of the Defense Intelligence Agency Michael Flynn was asked last week whether in light of the rise of ISIS he regrets the invasion of Iraq. He replied, “absolutely. …The historic lesson is that it was a strategic failure to go into Iraq.” He added, “instead of asking why they attacked us, we asked where they came from.”

Flynn is no non-interventionist. But he does make the connection between the US invasion of Iraq and the creation of ISIS and other terrorist organizations, and he at least urges us to consider why they seek to attack us. Likewise, the rise of Boko Haram in Africa is a direct result of a US intervention. Before the US-led “regime change” in Libya, they just were a poorly-armed gang. Once Gaddafi was overthrown by the US and its NATO allies, leaving the country in chaos, they helped themselves to all the advanced weaponry they could get their hands on. Instead of just a few rifles they found themselves armed with rocket-propelled grenades, machine guns with anti-aircraft visors, advanced explosives, and vehicle-mounted light anti-aircraft artillery. Then they started killing on a massive scale. Now, according to the Global Terrorism Index, Boko Haram has overtaken ISIS as the world’s most deadly terrorist organization.

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Signing these deals is going to be far more expensive than any nation can afford.

TPP Clauses That Let Australia Be Sued: Weapons Of Legal Destruction (Guardian)

Andrew Robb, the Australian trade minister, was quick to defend the agreement from its detractors. He lauded Australia’s efforts to secure significant exemptions, which he said would make it impossible for foreign corporations to sue the Australian government for enacting environmental policy. “It’s a trade agreement which looks at issues relating to trade that can affect public policy in the environmental area … It does provide safeguards, the best safeguards that have ever been provided in any agreement in this regard.” Robb said critics were just the usual suspects “jumping at shadows”, “peddling lines they’ve been peddling for years without having a decent look at what’s been negotiated”. But George Kahale III is not one of the usual suspects.

As chairman of the world’s leading legal arbitration firm – Curtis, Mallet-Prevost, Colt & Mosle – his core business is to defend governments being sued by foreign investors under ISDS. Some of his clients are included in the TPP, and he says the trade minister’s critics are right: “There are significant improvements in this treaty, but they do not immunise Australia from any of these claims. If the trade minister is saying, ‘We’re not at risk for regulating environmental matters’, then the trade minister is wrong.” Speaking via Skype from his office in New York, Kahale thumbs through the investment chapter, pointing out the critical loopholes that leave Australia wide open. “The one where all the discussion should be focused is 9.15,” he says, referring to one of the “safeguards”.

“That’s a very nice provision, which I imagine the trade minister points to as, ‘We’ve really protected ourselves on anything of social importance.’ I think that’s nonsense, frankly.” Here’s what 9.15 says: “Nothing in this chapter shall be construed to prevent a party from adopting, maintaining or enforcing any measure otherwise consistent with this chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health or other regulatory objectives.” This entire provision is negated, says Kahale, by five words in the middle: “unless otherwise consistent with this chapter”. “So at the end of the day, this provision, which really held out a lot of promise of being very protective, is actually much ado about nothing.”

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“The U.S. is responsible for the majority of profits for most large pharmaceutical companies..”

Why the US Pays More Than Other Countries for Drugs (WSJ)

Norway, an oil producer with one of the world’s richest economies, is an expensive place to live. A Big Mac costs $5.65. A gallon of gasoline costs $6. But one thing is far cheaper than in the U.S.: prescription drugs. A vial of the cancer drug Rituxan cost Norway’s taxpayer-funded health system $1,527 in the third quarter of 2015, while the U.S. Medicare program paid $3,678. An injection of the asthma drug Xolair cost Norway $463, which was 46% less than Medicare paid for it. Drug prices in the U.S. are shrouded in mystery, obscured by confidential rebates, multiple middlemen and the strict guarding of trade secrets. But for certain drugs—those paid for by Medicare Part B—prices are public. By stacking these against pricing in three foreign health systems, as discovered in nonpublic and public data, we were able to pinpoint international drug-cost differences and what lies behind them.

What we found, in the case of Norway, was that U.S. prices were higher for 93% of 40 top branded drugs available in both countries in the third quarter. Similar patterns appeared when U.S. prices were compared with those in England and Canada’s Ontario province. Throughout the developed world, branded prescription drugs are generally cheaper than in the U.S. The upshot is Americans fund much of the global drug industry’s earnings, and its efforts to find new medicines. “The U.S. is responsible for the majority of profits for most large pharmaceutical companies,” said Richard Evans, a health-care analyst at SSR LLC and a former pricing official at drug maker Roche. The reasons the U.S. pays more are rooted in philosophical and practical differences in the way its health system provides benefits, in the drug industry’s political clout and in many Americans’ deep aversion to the notion of rationing.

The state-run health systems in Norway and many other developed countries drive hard bargains with drug companies: setting price caps, demanding proof of new drugs’ value in comparison to existing ones and sometimes refusing to cover medicines they doubt are worth the cost. The government systems also are the only large drug buyers in most of these countries, giving them substantial negotiating power. The U.S. market, by contrast, is highly fragmented, with bill payers ranging from employers to insurance companies to federal and state governments. Medicare, the largest single U.S. payer for prescription drugs, is by law unable to negotiate pricing. For Medicare Part B, companies report the average price at which they sell medicines to doctors’ offices or to distributors that sell to doctors. By law, Medicare adds 6% to these prices before reimbursing the doctors. Beneficiaries are responsible for 20% of the cost.

The arrangement means Medicare is essentially forfeiting its buying power, leaving bargaining to doctors’ offices that have little negotiating heft, said Sean Sullivan, dean of the School of Pharmacy at the University of Washington.

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“It all looks like a feckless slide provoked by our side into World War III, and for what? To make the world safe for the Kardashians?”

The Story Line Dissolves (Jim Kunstler)

Sometimes societies just go crazy. Japan, 1931, Germany, 1933. China, 1966. Spain 1483, France, 1793, Russia, 1917, Cambodia, 1975, Iran, 1979, Rwanda, 1994, Congo, 1996, to name some. By “crazy” I mean a time when anything goes, especially mass killing. The wheels came off the USA in 1861, and though the organized slaughter developed an overlay of romantic historical mythos — especially after Ken Burns converted it into a TV show — the civilized world to that time had hardly ever seen such an epic orgy of death-dealing. I doubt that I’m I alone in worrying that America today is losing its collective mind. Our official relations with other countries seem perfectly designed to provoke chaos. The universities have melted into toxic sumps beyond even anti-intellectualism to a realm of hallucination.

Demented gunmen mow down total strangers weekly in what looks like a growing competition to end their miserable lives with the highest victim score. The financial engineers have done everything possible to pervert and undermine the operations of markets. The political parties are committing suicide by cluelessness and corruption. There is no narrative for our behavior toward Russia that makes sense anymore. Our campaign to destabilize Ukraine worked out nicely, didn’t it? And then we acted surprised when Russia reclaimed the traditionally Russian territory of Crimea, with its crucial warm-water naval ports. Who woulda thought? Then we attempted to antagonize them further with economic sanctions. The net effect is that Vladimir Putin ended up looking more rational and sane than any leader in the NATO coalition.

Lately, Russia has filled the vacuum of competence in Syria, cleaning up a mess that America left with its two-decade-long crusade to leave a train of broken governments everywhere in the region. A few weeks back, Mr. Putin made the point before the UN General Assembly that wrecking every national institution in sight among weak and unstable nations was probably not a recipe for world peace. President Obama never did formulate a coherent comeback to that. It’s a little terrifying to realize that the leader of our former arch-adversary is the only figure onstage who can come up with a credible story about what needs to happen there. And his restraint this week following what may have been a US-assisted shoot-down of a Russian bomber by idiots in Turkey is really estimable. It all looks like a feckless slide provoked by our side into World War III, and for what? To make the world safe for the Kardashians?

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Yeah, Americans are your best friends…

The Slow Death Of Hope For America’s Loyal Friends In Iraq (FT)

The phone calls in the past week were tearful. I spoke to two Iraqis, former colleagues who had risked their lives for Americans, to tell them I doubted they would ever be welcomed in my country. As France mourned murders by Islamist terrorists, and US politicians thousands of miles away spewed anti-refugee rhetoric, I realised my friends probably had no friends in Washington. For years after the 2003 invasion, Americans relied on Iraqis to navigate a country whose terrain we barely knew and whose sectarian loyalties it was vital to understand. Journalists could not have survived without them. Neither could the troops, aid workers or diplomats. The goodwill of those caught in the middle of these war zones — whether in Iraq or now perhaps in Syria — allowed us to stay safe and do our jobs.

The men I knew had been translators and drivers for the Chicago Tribune, then my employer. They reported through mortar attacks, even a car bomb. Then Sinan Adhem and Nadeem Majeed decided they wanted to live in the US. They applied 10 years ago for visas. As they waited, they became fathers, perfected their English and found better jobs. Sinan is now a security analyst for the UN. Nadeem works for Nissan Motors. Both live in Baghdad. Last year, both Sinan and Nadeem received emails from the US Citizenship and Immigration Services stating that they could not be trusted. No one disputed they had presented all the proper papers or that the visa applications were credible. Yet form letters dismissed Sinan, then Nadeem, with vague finality: “Denied as a matter of discretion for security-related reasons.”

“Are the Americans calling me a terrorist?” Sinan sputtered over the phone. I calmed him down; it had to be a clerical error by USCIS and the Department of Homeland Security. I was sure I could sort it and I knew we had to work fast. Neighbouring Syria was falling apart; my friends could soon be vying with thousands of desperate refugees. In the weeks that followed, though, I found few people in my government willing to help. No single bureaucrat wanted to accept responsibility.

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Huh?: “..losses in excess of around €1.5 million.” Is that the same as around in excess of?

Other than that: hey, it works. Let the 1500 refugees go and you can ship your holiday rush gadgets and trinkets. Easy.

Migrant Blockades Of Train Tracks In Northern Greece Hit Commerce (Kath.)

Trainose, the company that manages Greece’s state-owned railway system, has said that a blockade of the tracks at the country’s northern border has led to losses in excess of around €1.5 million. Speaking to Skai on Tuesday, Trainose CEO Thanasis Ziliaskopoulos said that about 1,800 cars waiting to cross the border between Greece and the Former Yugoslav Republic of Macedonia (FYROM) have been affected by protests as an estimated 1,500 refugees and migrants remain stuck at the crossing as they try to make their way deeper into Europe.

About a dozen or so protesters have been lying or camping out on the tracks since November 18 in demand that FYROM relax its border controls, following its decision in the wake of the Paris terror attacks to bar entry to what it deems are “economic migrants.” Ziliaskopoulos said that Trainose has been receiving complaints from some of its biggest clients – including Cosco, Hewelett Packard and Sony – over the delays in shipments, adding that contracts may be at stake unless the situation is resolved, particularly given the pre-holiday rush to meet orders.

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Nov 152015
 
 November 15, 2015  Posted by at 8:47 pm Finance Tagged with: , , , , , , , ,  11 Responses »
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Osama Hajjaj Madeleine Pleure 2015

9/11, 3/11, 7/7, 11/13 = New York, Madrid, London, Paris

Better to wait a day before writing, after a night like that. What does one write after such a night anyway? And why write anything at all if you can be dead sure to always antagonize some one on some side of some spectrum, ideological or not, no matter what you write, unless you tag some safe official line, and even then, or especially then?

Better to soak in what the official media have to say, or so one might think. After all, they got all the resources and the reporters and the analysts and -access to- the politicians, and most of all the attention of the people.

Unfortunately, all that firepower -pun intended- is used only to tag official lines. To provide air space to ‘leaders’ who profess their utmost grief and sadness and anger and solidarity over barbarous criminal “acts of war” that they swear will be avenged with all the power they have. It’s so predictable it’s like all of their spin doctors have been sent on a Caribbean holiday at the same time, and together.

Still, it also doesn’t seem very appropriate to address the economic issues we usually talk about, at least not at first glance. Respect for victims and families must come first, that is a given. Then again, it does seem appropriate, out of that very same respect, to get to the bottom of what’s behind these attacks that will at final count leave perhaps 200 people dead on what started as a nice and balmy autumn evening in the city of lights. And the politicians’ truisms and platitudes don’t exactly help.

But how does one go about that truth finding? French President Hollande declared eerily early in the ‘game’ he was sure ISIS is behind the tragedy, and ISIS statements seem to confirm that conclusion. But what is ISIS? And where does it come from?

It’s no longer really credible to entirely ignore the role of the west, including France, in the origins of the ‘movement’, if it can be called that. From Al Queda to ISIS, and scores of groups and factions in between and beyond, there is at least some kind of link to western military action in the middle East. And that link goes back quite a few years, if not decades.

So if we really want to pay the kind of respect to the victims that comes with trying to figure out what’s behind these attacks, it would seem that we can’t get it done without a critical look at our own roles in what led up to this. Not to say that we’re the only guilty party, or that the perpetrators are not cuckoos, but to say we’re not credible if we completely ignore our own roles and don’t look in a mirror.

Hence, the first reaction we probably might want to have is that it’s enough alright with the ‘us’ vs ‘them’ meme. Even if, or exactly because, that reaction is, obviously, 180º removed from what the initial reactions to the attacks are, whether they’re provoked by media coverage or not. And they are. It cannot be only ‘us’ vs ‘them’. No black, no white. To understand this world you need a lot more than that.

If we try to phrase it that way, and we’re only halfway decent and honest about it, there’s no escaping that in the final analysis we indeed are them. We’re not like them, we are them. ‘We’ have spread terror, death and mayhem across the Middle East and North Africa (MENA) regions for a long time (to a large extent because that’s where the oil is, but that’s a story for a different day).

And then ‘we’ took it up a notch with the removal of the likes of Saddam and Gaddafi, leaving rudderless societies in their wake.

We can’t pretend to be honest and still ignore the fact that for many people in the Middle East a day like this Friday 13th is their everyday routine. And that that’s what makes them refugees. Many Parisians -or New Yorkers, for that matter- would do the same, get out of Dodge, if this were a common event in their city. Not only because of the danger and the fear, but also because there would be no functioning society or economy left, and hence no future.

No matter how you look at it, there’s no denying it’s kind of ironic that attacks on Beirut that were similar in many regards to the ones in Paris, even took place at the same time, and similar attacks on several other places, receive no media coverage at all in the west, while the Paris attacks dominate all western media.

That is not a coincidence. And it’s not either because most Americans would find it as easy to find Damascus or Beirut on a map as they would Paris. That is, they would not. But still Paris is on American TV about 48/7 (that’s the attention span limit), interrupted only by either a Kardashian body part -or two- or by the single The Donald’s body part that sticks in memory.

And that’s where we find our link to economics, because in geo-politics as in economics, we, all of us, think, talk and live exclusively in narratives. We have stories pre-fabricated for us, and these stories determine how we see the world, and our lives, and other people’s lives and dreams and wishes.

That is to say, whatever it is we want and dream of is per definition just and justified, and other people’s desires are not, as soon as they threaten to interfere with ours. As we read ad nauseam post-Paris in literally countless references to the ‘freedom’ that ‘we’ have and ‘they’ hate, and to ‘our way of life’ that is under threat -with nary a soul knowing what that way is.

We cannot forever fool ourselves and others into believing that we are the good guys and ‘the others’ are the bad guys. It’s tempting, and there’s a whole behemoth media apparatus to confirm it, but it doesn’t get us any closer to what happened, and why, and therefore no closer to paying our full and due respect to those who died in Paris on 11/13.

“They” don’t resent us for our freedom, “they” resent us for not allowing them to have their freedom, too. We need to recognize at some point that we owe our affluence to the misery of others, not to our superior intelligence or morals or religion or way of life. But there’s not a single voice among us which wants to make that recognition happen.

We are not a benevolent force, no matter what we tell ourselves or how many times we repeat it. We are a civilization of oppressors. Just like the Romans and the Mongols and so many others before and after. We seek to uphold our status and our wealth at the expense of others, of strangers, people who live conveniently far enough away in conveniently impoverished conditions.

We have been building our empire this way since well before Columbus, we’ve greatly expanded it over the past 500 years, and we’re now looking at the terminal phase of that empire. Just like the Romans and the Mongols and so many others before and after.

Interestingly enough, it’s our own technological prowess and ‘progress’ that leads us into that phase. The very moment we started exporting our oil drilling technologies, our smartphones, our databases and most of all our modern weaponry to what we still see as colonies, the very foundations of our civilization and our power started eroding.

But that’s getting too philosophical, and it would require too many words and lead us too far astray from Paris and the due diligence we owe those who lost their lives and those who mourn them.

Pope Francis said in a reaction to the Friday 13th attacks: “This is not human”. Unfortunately, 2000 years of Christianity say he’s dead wrong, wrong as he could be. This is very human. It’s as human as feeling an overbearing love for our children. It’s all human.

It’s very human, too, to go for the ‘us’ vs ‘them’ meme. Because it feels good, and you can be sure it makes those around you feel good too. Which is a big help in times of fear and insecurity and not having the answer, not having any other answers than the ubiquitous ones the media feed you.

But that still is not what the dead deserve. They deserve much more. They deserve that we try the best we can, not to settle for the first thing that comes to our reptilian minds. Not to make our entire lives come down to just fight or flight, but to attempt to find that area in between that is as close to truth finding as we know we can come.

To honor the dead, we need to look inside ourselves, and inside the societies we live in. And only when we’ve found, and eradicated, those things that make both us, and our communities, ‘guilty by association’ -for lack of a better term-, will we have paid proper respect to those who lost their lives.

Nov 152015
 
 November 15, 2015  Posted by at 10:05 am Finance Tagged with: , , , , , , , ,  10 Responses »
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Jack Delano Atchison, Topeka & Santa Fe train at Emporia, Kansas 1943

Credit Bust In Rich Countries Caused Credit Boom In Emerging Markets (Economist)
Irish President: Unaccountable Forces Are Running EU (IT)
The Global Economy Slows Down. Is It Recession Or Protectionism? (Guardian)
Yuan’s Rise Means World Economy Takes Step To Greater Stability (Bloomberg)
Whistleblower At HBOS Bank Attacks ‘Ludicrously Bad’ City Regulation (Guardian)
More Tough Measures Loom As Greece Eyes Bailout Loans (Kath.)
ECB Demands Portugal’s Novo Banco Plug $1.5 Billion Capital Hole (Reuters)
The Streets of Paris Are as Familiar to Me as the Streets of Beirut (Joey Ayoub)
After Paris, Europe May Never Feel As Free Again (Guardian)
What’s Next for Migrants After Paris? (Atlantic)
Syrian Refugees In France Say Paris Terror Is The Terror They Fled (BuzzFeed)
There Is Only One Way to Defeat ISIS (Esquire)
Syrian Transition Plan Reached by US, Russia in Vienna (Bloomberg)
Poland to Shun Refugees After Paris Attack, Future Minister Says (Bloomberg)
After Mass Extinctions, The Meek (Fish) Inherit The Earth (WaPo)
Two Refugee Children Die In Greece In Separate Incidents (Kath.)

Recipe for mayhem.

Credit Bust In Rich Countries Caused Credit Boom In Emerging Markets (Economist)

The build-up of emerging-market credit began just as the rich world’s financial system started to creak in 2007. According to figures collated by JP Morgan, private-sector debt in emerging markets rose from 73% of GDP at the end of 2007 to 107% of GDP by the end of last year. These figures include loans made by banks and bonds issued by companies. Including the credit extended by non-bank financial institutions (so-called “shadow banks”) for the handful of emerging markets where such estimates are available gives a steeper rise and a higher total burden: 127% of GDP. The credit boom in emerging markets was in large part a response to the credit bust in the rich world. Fearing a depression in its richest export markets, the authorities in China brought about a massive increase in credit in 2009.


Meanwhile a flood of capital escaping the paltry yields on offer in developed economies pushed interest rates lower in developing ones. This search for yield by rich-world investors took them to ever more exotic places. A dollar-denominated government bond issued in 2012 by Zambia, a copper-rich country with an average GDP per person of $1,700 a year, offered just 5.4% interest; even so, it was 24 times oversubscribed as rich-world investors clamoured to buy. The following year a state-backed tuna-fishing venture in Mozambique, a country even poorer than Zambia, was able to raise $850m at an interest rate of 8.5%.

In contrast to the credit booms in America and Europe, where households were the main borrowers, three-quarters of the private debt burden in emerging markets is shouldered by businesses: corporate debt has ballooned from less than 50% of GDP in 2008 to almost 75% by 2014. Much of the lending was done in Asia, notably in China. But Turkey, Brazil and Chile also saw substantial increases in the ratio of company debt to GDP. Construction firms (notably in China and Latin America) increased their leverage a great deal. The oil and gas industry was a big player, too, according to the IMF’s latest Global Financial Stability Report.

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A point I’ve made 1000 times. “..a breakdown of trust between citizens and their institutions..”

Irish President: Unaccountable Forces Are Running EU (IT)

Unaccountable forces removed from democratic control are today in control in the European Union, President Michael D Higgins has declared in one of the most pointed speeches of his term in office. “The present institutional structure of the European Union can be seen as reflecting the distribution of political power in recent decades, decades that have seen the emergence of a new financialised global order, where unaccountable agencies and forces removed from democratic oversight or control are in the ascendancy,” he said. He made the speech as he opened the Royal Irish Academy’s Centre for the Study of the Moral Foundations of Economy and Society. The anti-austerity street protests in many EU states, he said, could be seen as “not just the mechanical result of deplorable levels of unemployment and deteriorating material circumstances”, but also a reflection of a “breakdown of trust between citizens and their institutions”.

Deep injury has been inflicted on people’s moral outlook in recent decades by an extraordinarily narrow version of economics which had cut ties with its ethical and philosophical roots, Mr Higgins said. European leaders must remain “attentive and open”, he added saying, “a social view of Europe demands that our fellow citizens should never be seen merely as ‘consumers’ of public policies, driven by a sense of their sectional interests.” He was confident, he said, that the new educational centre “will contribute in an important way, over the years to come, in tackling the deep injuries inflicted upon our moral imaginations by the extraordinary ascendancy in recent decades of what is an extraordinarily narrow version of economics”.

This connection “of economy, ecology and ethics” and “of policy, theory and method”, had been at the centre of his presidency, “because I believe that they are essential to reading and understanding the current situation in which we find ourselves”. Referring to upcoming commemorations in Ireland, he said: “One can legitimately wonder, for example, what shape would our economy and society have assumed, had our fellow citizens kept alive, during Ireland’s recent economic boom, the cultural, philosophical, political and moral motivations which underpinned the Irish national revival, or the spirit of other historical movements for social and political reform such as the co-operative movement. “We neglected the contribution of the co-operative instinct to our social cohesion,” he said.

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Every country will want to protect itself when times get worse.

The Global Economy Slows Down. Is It Recession Or Protectionism? (Guardian)

Goldman Sachs’s decision to close down its loss-making Bric fund was a symbolic reminder that the days are gone when the economic rise of Brazil, Russia, India and China (the four countries from which the fund drew its name) seemed guaranteed. Indeed, Brazil and Russia are both in recession. The US Federal Reserve’s plans to raise interest rates from near zero, which many experts now expect to happen next month, could deepen the agony of countries already struggling with plunging currencies and rising borrowing costs. The International Monetary Fund has warned of a flurry of bankruptcies in emerging economies as rates rise.

“A lot of these countries haven’t been helping themselves: Taiwan, Korea; they’ve all been cranking up their own credit growth,” says Russell Jones of Llewellyn Consulting, an economics advisory firm. But he too believes the world should escape a general slump. “I don’t think we’re on the cusp of a major downturn — probably more of the same.” Simon Evenett of St Gallen University in Switzerland, who collates detailed data for the thinktank Global Trade Alert, offers an alternative explanation for the recent slide in trade volumes. He calculates that about half of the fall, since exports peaked in September last year, has been caused by the commodity price rout; but the rest, rather than evidence of sickly global demand, has resulted from a creeping rise in protectionism.

His analysis suggests the declines have overwhelmingly taken place in just 28 categories of product. “That’s very concentrated; that makes me doubt that it’s a global downturn.” Eight of these categories are commodities; but the rest map closely on to areas where countries have taken protectionist measures. In the wake of the financial crisis, policymakers from the G20 countries pledged not to resort to the tit-for-tat protectionism that led to collapsing trade volumes in the wake of the Great Crash of 1929, and was ultimately seen as a contributor to the Great Depression. Since then, there has been little sign of anything with the scope of America’s Smoot-Hawley Act of 1930, which slapped import tariffs on more than 800 products.

But Evenett says there has been a flurry of more subtle manoeuvres: restricting public procurement to domestic firms, for example, or quietly tightening regulations to raise the bar against imports. “I think the China story is adding spice to it, but I think there’s more going on here,” he says. He is concerned that unless action is taken, politicians will continue to throw sand in the wheels of the international trading system. If he’s right, the downturn seen so far may not be sending a warning signal about global demand; instead, it would be best read as a measure of the fragility of globalisation.

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With China debt levels where they are, a curious idea.

Yuan’s Rise Means World Economy Takes Step To Greater Stability (Bloomberg)

With China’s yuan taking the biggest step yet toward joining the dollar and euro as a top-rank reserve currency, the global economy may be approaching an era of greater stability. So say economists who highlight the dollar’s role in the biggest financial crises in recent decades. Drawn to the liquidity and security of the unit of the world’s biggest economy, investors and governments relied on the dollar and produced dislocations including historically low borrowing costs in the 2000s even as the Federal Reserve raised interest rates. Rushes toward the safety of the dollar challenged global policy makers in 2008 as money markets seized up, prompting the Fed to open swap lines with counterparts that remain in place today.

China responded in 2009 with a call for reducing reliance on the dollar, with central bank Governor Zhou Xiaochuan floating the idea of a “super-sovereign” reserve currency. While the proposal fell flat, Zhou and his allies began a campaign to win inclusion for the yuan in the IMF’s special drawing rights unit. The SDR, as it’s called, is a kind of overdraft account for members of the IMF, convertible into dollars, euros, pounds and yen. The fund’s staff said Friday that the yuan has now met the qualification terms for inclusion in the SDR. “The current configuration of the global monetary-financial system that is centered and increasingly dominated by the dollar is not a stable or a sustainable one,” Stephen Jen of SLJ Macro Partners, a former IMF economist, wrote with colleague Joana Freire last week.

Some 87% of foreign-exchange trading involves the dollar, the most recent survey by the Bank for International Settlements showed. “The role of the U.S. dollar as the world’s dominant vehicle currency remains unchallenged,” the BIS said in 2013, noting that the euro had declined in the wake of the European debt crisis. With the world’s second-largest economy and as the number-one trading nation, China may offer the global system a currency that can complement the dollar. For now, restrictions on the ability to take money in and out of China, and on what foreign investors can buy, mean the yuan’s role will be limited.

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“..I hope and pray I’m not going to have to fight for the next five years.”

Whistleblower At HBOS Bank Attacks ‘Ludicrously Bad’ City Regulation (Guardian)

When the long-delayed official report into the near-collapse of HBOS is released on Thursday former bank bosses James Crosby, Andy Hornby and Lord Stevenson will be braced for a fresh round of condemnation. But if the report’s 500 pages are likely to revive painful criticism of their role in the demise of Britain’s biggest mortgage lender and savings institution, its publication also marks a crucial moment for a lesser known former executive at the bank: Paul Moore. Moore, 57, emerged some years ago as the whistleblower at HBOS. He said he was sacked as head of group regulatory risk at the end of 2004 – less than two years after joining – after warning that the then fast-growing bank was too strongly motivated by sales.

His views were first aired in public shortly after the bank had to be rescued by Lloyds in September 2008. The enlarged institution was later bailed out with £20bn of taxpayer money. On learning that the publication of the report by the Financial Conduct Authority and Bank of England – first promised in 2013 – has finally been scheduled for Thursday, Moore said: “I’m a bit nervous and a bit frightened and I hope and pray I’m not going to have to fight for the next five years.” His main fear now, he says, is that the report could turn out to be “a cover-up and a fudge”. If he was writing it, he says, he would refer the directors not just for banning orders but for criminal investigation, as well as demanding a proper judicial inquiry into the auditing of all the big banks and the conduct of the credit ratings agencies.

That is not all. “I would name and shame in the most rigorous detail the ludicrously bad regulators,” says Moore. Thursday’s report will be published alongside an analysis of the decision by the City regulator at the time of the collapse, the Financial Services Authority, to punish only one HBOS banker – Peter Cummings, who ran the bank’s commercial lending arm and has now been banned for life from the City and fined £500,000. Work on the official report only began after the enforcement action against Cummings, although in 2013 the parliamentary commission on banking standards, set up in the wake of the Libor-rigging scandal, published its own account of the collapse. It accused Crosby, Hornby and Stevenson of “colossal” management failures and questioned why it was only Cummings who had been censured by the City regulator.

Earlier evidence Moore had given to the Treasury select committee in 2009 had been so damning it led to a fresh examination of the role of Crosby, and forced his resignation as deputy chairman of the then City regulator, the Financial Services Authority. When Moore’s allegations were first aired at the select committee, Crosby had insisted there was no substance to them. A report – commissioned from the bank’s auditors, KPMG – concluded that he lost his job because of personality clashes inside the lender and not that Crosby sacked him because of warnings that HBOS was “going too fast”. Crosby has since handed back his knighthood and 30% of his pension, and keeps out of the public eye.

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The EU makes it impossible for Greece to leave its recession.

More Tough Measures Loom As Greece Eyes Bailout Loans (Kath.)

The government is hoping to clinch the release of €2 billion in loan funding, and another €10 billion for Greek banks, after a tough round of negotiations with representatives of the country’s international creditors which has focused mainly on the issue of nonperforming loans and foreclosures of primary residences. The money is linked to a series of additional measures that Greece must legislate next week before turning to a second set of prior actions including even more contentious reforms such as higher taxes on farmers and an overhaul of the pension system. Greece is already running behind schedule on reforms. But authorities are hoping the creditors will show some flexibility so the process of recapitalizing Greece’s banks is not derailed.

Talks are already under way within the key ministries on the next round of reforms. Labor and Social Security Minister Giorgos Katrougalos, whose ministry is overseeing the difficult task of pension reform, aims to reach a “comprehensive” agreement with creditors and approve it in Parliament by early next month, according to sources. The hope is that the creditors will reward an active effort by Greeks to make up for lost time by making some concessions in the pension overhaul. Already Greek authorities are seeking to soften the impact of the pension overhaul by exploring the possibility of increasing the social security contributions of employers and workers instead of further reducing monthly payouts.

Other politically contentious challenges the government faces in the coming weeks include raising taxes on Greek farmers, creating a new tax system, creating a task force that will manage a new fund for privatizing state assets and drafting new measures to meet fiscal targets for the next two years. SYRIZA officials have expressed concerns about the impact on social cohesion of the bailout program’s austerity measures, which has already struck the leftists’ popularity, according to opinion polls.

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Europe’s next powder keg…

ECB Demands Portugal’s Novo Banco Plug $1.5 Billion Capital Hole (Reuters)

The ECB has ordered Portugal’s Novo Banco to fill a €1.4 billion hole in its finances, possibly delaying its planned sale and hampering Lisbon’s efforts to draw a line under its biggest banking collapse. The request to repair Novo Banco, created from the failed Banco Espirito Santo (BES), presents a challenge for any anti-austerity, Socialist-led government that could come to power in coming weeks after a parliamentary vote this week. Of nine banks across the euro zone tested by the ECB as a follow-through on wider checks last year, only Novo Banco was found to be short of capital. It has two weeks to present a plan of action and nine months to plug the gap. The Bank of Portugal said in a statement that Novo Banco had already started working on a plan to raise capital through asset sales to meet the shortfall.

The plan will be presented in the coming weeks. The central bank failed to sell Novo Banco in September as the bids it received were seen as too low. The result of the ‘stress test’ means the sale can resume. “Preparation for the new phase of the sale process will be initiated immediately, now that one of the main factors of uncertainty hanging over the previous process is out of the way,” the Bank of Portugal said. The Bank of Portugal is in charge of the sale process under the terms of the €4.9 billion rescue plan for BES, which was carried out by a bank resolution fund that is formally the responsibility of Portugal’s other banks. The government lent part of the money to the fund used in the rescue and must be repaid.

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“The Human Body is not one. It sure feels that it should be by now. Maybe that in itself is an illusion.”

The Streets of Paris Are as Familiar to Me as the Streets of Beirut (Joey Ayoub)

I come from a privileged Francophone community in Lebanon. This has meant that I have always seen France as my second home. The streets of Paris are as familiar to me as the streets of Beirut. I was just in Paris a few days ago. These have been two horrible nights of violence. The first took the lives of over 40 in Beirut; the second took the lives of over 120 people and counting in Paris. It also seems clear to me that to the world, my people’s deaths in Beirut do not matter as much as my other people’s deaths in Paris. We do not get a “safe” button on Facebook. We do not get late night statements from the most powerful men and women alive and millions of online users. We do not change policies which will affect the lives of countless innocent refugees. This could not be clearer. I say this with no resentment whatsoever, just sadness.

It is a hard thing to realize that for all that was said, for all the progressive rhetoric we have managed to create as a seemingly united human voice, most of us members of this curious species are still excluded from the dominant concerns of the “world”. And I know that by “world”, I am myself excluding most of the world. Because that’s how power structures work. I do not matter. My “body” does not matter to the “world”. If I die, it will not make a difference. Again, I say this with no resentment. That statement is merely a fact. It is a political fact, true, but a fact nonetheless. Maybe I should have some resentment in me, but I am too tired. It is a heavy thing to realize. I know that I am fortunate enough that when I do die, I will be remembered by friends and loved ones.

Maybe my blog and an online presence might even gather some thoughts by people around the world. That is the beauty of the internet. And even that is out of reach to too many. Never so clearly as now have I understood what Ta-Nehisi Coates wrote about when he spoke of the Black Body in America. I think there is a story to be told of the Arab Body as well. The Native American Body. The Indigenous Body. The Latin American Body. The Indian Body. The Kurdish Body. The Pakistani Body. The Chinese Body. And so many other bodies. The Human Body is not one. It sure feels that it should be by now. Maybe that in itself is an illusion.

But maybe it is an illusion worth preserving because without even that vague aspiration towards oneness on the part of some part of the body, I am not sure what sort of world we would be living in now. Some bodies are global, but most bodies remain local, regional, “ethnic”. My thoughts are with all the victims of today’s and yesterday’s horrific attacks, and my thoughts are with all those who will suffer serious discrimination as a result of the actions of a few mass murderers and the general failure of humanity’s imagination to see itself as a unified entity. My only hope is that we can be strong enough to generate the opposite response to what these criminals intended. I want to be optimistic enough to say that we are getting there, wherever “there” might be. We need to talk about these things. We need to talk about Race. We just have to.

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Interesting point of view.

After Paris, Europe May Never Feel As Free Again (Guardian)

How long will it be before European liberalism cracks? The aftermath of a terrorist massacre is the worst time to make predictions. The extremity of the outrage pushes policy-makers and citizens to play with equally outraged responses. It is worth steadying yourself with the thought that until Friday night, Europe’s response to terrorism has not been extreme. Despite gruesome predictions to the contrary, European democracies have not turned themselves into police states. There have been no backlashes or pogroms against Muslims. EU countries, including Britain, have remained free and good societies overall; nations we can be proud of in our necessarily grudging way, for all the faults and abuses we must tackle.

People running from real terror know our true state better than we do. They flee to Europe, not from Europe. Callous though it may sound today to say it, the modest response to terrorism is the consequence of the modesty of the violence. Since al-Qaida’s assault on the World Trade Center and the Pentagon in 2001, the most striking feature of Islamist terrorism in Europe is how little of it there has been. You can give credit to police forces and intelligence agencies for arresting suspects before they strike. You can repeat the essential point that we are up against Islamism, not Islam, and most Muslims want nothing to do with totalitarian religion. Whatever the reason, the practical consequence remains that no one in power has felt the need to move towards anything resembling martial law.

Europe has “just” endured the attacks on Madrid and the 7/7 assault on London, and the actual and attempted murders of Jews, satirists, freethinkers in Paris, Brussels, Copenhagen and Marseille. Beyond that, there have been “lone wolf” killers of the type who did for poor Lee Rigby. I am not pretending that Europe has stayed the same. After Islamists sanctioned the murder of cartoonists who mocked Muhammad, a cowardly self-censorship spread across the arts and journalism, which was all the more cowardly for being unacknowledged. But it remains true that radical Islam has not forced a radical break with the past.

If you could travel in a time machine, you would see the continuities between our world and the Britain or France or Denmark of 20 years ago hugely outweigh the differences. I do not mean to minimise Islamist crimes when I say that Europe has been lucky. From Nigeria to Afghanistan, a clerical fascist doctrine that mandates mass murder and self-murder has pushed whole regions into civil war. Yet divinely sanctioned violence has failed to engulf our continent. Suspects are still innocent until proved guilty beyond reasonable doubt. The European convention on human rights remains in force. Terrorism is still subject to the rule of law, not martial law. In spite of all the provocations, we are what we once were.

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“What is clear is that there are 4 million people displaced by the crisis and, for them, a solution will need to be reached.”

What’s Next for Migrants After Paris? (Atlantic)

After a terrorist attack killed more than 120 people and injured hundreds more on Friday, France imposed border controls and authorities discovered a Syrian passport on one of the attackers. While it’s not clear whether any of the assailants were migrants themselves, the attack has nonetheless reignited the debate over Europe’s migrant crisis. As Quartz notes, the attacks attributed to ISIS are anything but good news for migrants in Europe. Marine Le Pen, the leader of the far-right National Front party in France, told reporters on Saturday that “urgent action is needed” to “annihilate” Islamic fundamentalism. Le Pen went on to advocate that France regain control of its borders and expel “illegal migrants.”

In Poland, incoming Minister of European Affairs Konrad Szymanski announced today that the country will not accept migrants without security guarantees. In September, Poland agreed to accept 4,500 refugees as part of a European Union quota system. In the U.S., the role the country should play in this refugee crisis is a subject of continued partisan debate. President Obama announced in September that at least 10,000 Syrian refugees will be resettled in the U.S. over the next year. While this number might seem small compared to the 4 million total refugees created by the war since 2011, it represents a marked jump from the fewer than 2,000 Syrian refugees accepted last year. But some GOP candidates argued against the administration’s policy by suggesting that ISIS militants could infiltrate the country by hiding among refugees.

According to Vox, Ben Carson, Ted Cruz, Mike Huckabee, and Rick Santorum quickly cited the Paris attacks to justify closing the borders to more Syrian refugees. On the Democratic side, Hillary Clinton, Martin O’Malley, and Bernie Sanders have remained mostly quiet on the subject so far. All three have publically expressed their condolences for the victims and their families, but no one has yet made the leap to policy. Meanwhile, to the north, Canada has its own ambitious refugee agenda to assess. Newly elected Canadian PM Justin Trudeau committed to resettling 25,000 Syrian refugees by the end of the year — a number deemed unrealistic by some observers. [..] the Toronto Star reported earlier today that the country remains steadfast in its plan despite the Paris attacks. Ultimately, how the recent events will affect the debate surrounding migration in Europe and beyond remains to be seen. What is clear is that there are 4 million people displaced by the crisis and, for them, a solution will need to be reached.

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As should be obvious. But is not at all.

Syrian Refugees In France Say Paris Terror Is The Terror They Fled (BuzzFeed)

Syrians who fled a brutal war and often undertook deadly sea journeys to settle in France reacted with horror to Friday’s terror attacks in Paris, and said they recognized the enemy all too well. “Syrians left Syria in dangerous ways to live in peace, but the killers followed them to Europe,” said Moaz Shaklab, a businessman from the Syrian city of Homs who settled in France two years ago as a refugee. The Paris attacks could spark new waves of Islamophobia in France and beyond — and with it fear of the refugees pouring into Europe from Syria and other countries. This is exactly what ISIS wants; the group has vowed to make it impossible for Muslims to exist peacefully in the West. Yet citizens in France share an ally against Islamic extremism in most refugees settling there.

Many newly arrived Syrians sought to escape the terror of ISIS and other jihadi groups, in addition to the brutal campaign being waged by Bashar al-Assad. Many worked against ISIS and other jihadi groups before leaving or have friends and family doing so now. “We’re united with the French people against terrorism,” Shaklab said. “And we don’t forget that they are united with us to get our freedom.” French police officials told the AP on Saturday that they had found a Syrian passport at the scene of an attack that they believed belonged to an assailant. But because of the refugee crisis, fake Syrian passports are now prevalent and easy to obtain.

Whether or not the passport is authentic, news of its discovery promised to help to fan refugee fears — which may have been the intent of the man who brought it to the scene. Sakher Edris, a journalist and political organizer who worked against both ISIS and the Syrian government before fleeing to France this summer, said he expected a backlash against refugees following the attacks. “We are really scared,” he said. “French people are kind, and it’s understandable to have some backlash, but we want them to know that we are with them against terror.”

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Stop our ‘friends’ from funding it.

There Is Only One Way to Defeat ISIS (Esquire)

It’s not like this is any kind of secret. In 2010, thanks to WikiLeaks, we learned that the State Department, under the direction of then-Secretary of State Hillary Rodham Clinton, knew full well where the money for foreign terrorism came from. It came from countries and not from a faith. It came from sovereign states and not from an organized religion. It came from politicians and dictators, not from clerics, at least not directly. It was paid to maintain a political and social order, not to promulgate a religious revival or to launch a religious war. Religion was the fuel, the ammonium nitrate and the diesel fuel. Authoritarian oligarchy built the bomb. As long as people are dying in Paris, nobody important is dying in Doha or Riyadh.

Saudi Arabia is the world’s largest source of funds for Islamist militant groups such as the Afghan Taliban and Lashkar-e-Taiba – but the Saudi government is reluctant to stem the flow of money, according to Hillary Clinton. “More needs to be done since Saudi Arabia remains a critical financial support base for al-Qaida, the Taliban, LeT and other terrorist groups,” says a secret December 2009 paper signed by the US secretary of state. Her memo urged US diplomats to redouble their efforts to stop Gulf money reaching extremists in Pakistan and Afghanistan.

“Donors in Saudi Arabia constitute the most significant source of funding to Sunni terrorist groups worldwide,” she said. Three other Arab countries are listed as sources of militant money: Qatar, Kuwait and the United Arab Emirates. The cables highlight an often ignored factor in the Pakistani and Afghan conflicts: that the violence is partly bankrolled by rich, conservative donors across the Arabian Sea whose governments do little to stop them. The problem is particularly acute in Saudi Arabia, where militants soliciting funds slip into the country disguised as holy pilgrims, set up front companies to launder funds and receive money from government-sanctioned charities.

It’s time for this to stop. It’s time to be pitiless against the bankers and against the people who invest in murder to assure their own survival in power. Assets from these states should be frozen, all over the west. Money trails should be followed, wherever they lead. People should go to jail, in every country in the world. It should be done state-to-state. Stop funding the murder of our citizens and you can have your money back. Maybe. If we’re satisfied that you’ll stop doing it. And, it goes without saying, but we’ll say it anyway – not another bullet will be sold to you, let alone advanced warplanes, until this act gets cleaned up to our satisfaction. If that endangers your political position back home, that’s your problem, not ours. You are no longer trusted allies. Complain, and your diplomats will be going home.

Complain more loudly, and your diplomats will be investigated and, if necessary, detained. Retaliate, and you do not want to know what will happen, but it will done with cold, reasoned and, yes, pitiless calculation. It will not be a blind punch. You will not see it coming. It will not be an attack on your faith. It will be an attack on how you conduct your business as sovereign states in a world full of sovereign states… And the still, stately progress of the news from Paris continues. There are arrests today in Brussels, of alleged co-conspirators. The body count has stabilized. New information comes at its own pace, as if out of respect for the dead. In the stillness of the news itself, there is refuge and reason and a kind of wounded, ragged peace, as whatever rolled up from the depths of the sickness of the human heart rolls back again, like the tide and, like the tide, one day will return.

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Given the American desire for world dominance, what are the odds?

Syrian Transition Plan Reached by US, Russia in Vienna (Bloomberg)

Seventeen nations, spurred on by Friday’s deadly attacks in Paris, overcame their differences on how to end Syria’s civil war and adopted a timeline that will let opposition groups help draft a constitution and elect a new government by 2017. As a first step, the United Nations agreed to convene Syria’s government with opposition representatives by Jan. 1, U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov said Saturday at a joint press conference in Vienna. A cease-fire between the government in Damascus and recognized opposition groups should be in place within six months, according to their statement. The terrorist attacks in Paris galvanized the diplomats, who at previous talks had been unable to resolve the discord within their ranks.

While Russia and Iran had sided with Syrian President Bashar al-Assad, the U.S. and its regional allies had insisted upon his removal. With diplomats bogged down over the question of Assad, terrorist groups like Islamic State, also known as ISIS or ISIL, grew and become more powerful inside Syria. “It is time to deprive the terrorists of any single kilometer in which to hide,” Kerry said. “There can be no doubt that this crisis is not Syria’s alone to bear.” Assad has “cut his own deal” with Islamic State, buying oil from the group and failing to attack militants, Kerry said. Assad’s allies have conveyed that he’s prepared to be serious and engage in talks, but the “proof will be in the pudding,” he said. In a statement posted on Twitter, Islamic State said the Paris attacks that killed 129 people and injured 352 came in retribution for French involvement in the Syrian civil war.

The conflict has so far cost about 250,000 lives, sent millions fleeing the region, and triggered Europe’s worst refugee crisis since World War II. Diplomats meeting in the Austrian capital also decided to place Islamic State, along with the al-Qaeda affiliated Nusra Front terrorist group, on a list of those subject to military strikes even when a cease-fire is in place. The list, managed by the Kingdom of Jordan, may later be expanded to include other groups in Syria, Kerry and Lavrov said. The Paris attacks “show that it doesn’t matter if you’re for Assad or against him,” said Lavrov, “ISIS is your enemy.”

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Many more countries will follow the example.

Poland to Shun Refugees After Paris Attack, Future Minister Says (Bloomberg)

Poland’s new government won’t accept migrant quotas imposed by the European Union, as the terror attacks in France have exposed the weakness in the bloc, the nation’s future minister for European affairs said. “In the wake of the tragic events in Paris, Poland doesn’t see the political possibilities to implement a decision on the relocation of refugees,” Konrad Szymanski was quoted as saying on Wpolityce.pl website on Saturday. “The attacks mean there’s a need for an even deeper revision of the European policy regarding the migrant crisis.” Szymanski’s rejection of the EU quotas hours after Paris was rocked by terrorist attacks underscore the divide among governments in the bloc over the influx of Middle Eastern migrants.

His Law & Justice party will take power in Poland this week after winning last month’s general election on a campaign that tapped into concerns among the country’s conservative Catholic base that too many Muslims are arriving in Europe. Poland’s previous cabinet, led by the Civic Platform party, also opposed efforts led by German Chancellor Angela Merkel to force EU member states to take in more migrants. While incoming Foreign Minister Witold Waszczykowski said Poland will meet an commitment by the Civic Platform to shelter 7,000 refugees, prime minister designate Beata Szydlo referred to the deal as “blackmail.” She will be sworn in on Monday.

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Only the small make it through. It takes many millions of years for larger creatures to develop.

After Mass Extinctions, The Meek (Fish) Inherit The Earth (WaPo)

A new study suggests that being a little shrimpy might come in handy when the going gets tough. A mass extinction called the Hangenberg event, which took place some 359 million years ago, led to a reduction in vertebrate size for around 40 million years afterward. The research, published Thursday in Science, adds support to the so-called Lilliput Effect, which suggests that mass extinctions cause marked shrinkage in the animal population. To study how fish fared after this devastating extinction, the University of Pennsylvania’s Lauren Sallen (along with Andrew K. Galimberti at the University of Maine) studied 1,120 fish fossils dating back 419 to 323 million years ago. She found that the ancient fish had been increasing in size over time — which is to be expected — but that body size plummeted after 97% of species were wiped out.

“Some large species hung on, but most eventually died out,” Sallan said in a statement. Before the extinction, some fish had grown to be as big as school buses. But in the unstable ecosystem of a post-mass-extinction ocean, only small fish — ones that could reproduce quickly and survive on less food — could thrive. That means an ocean full of enormous sea monsters gave way to an ocean full of sardine-like critters. “[T]he end result is an ocean in which most sharks are less than a meter and most fishes and tetrapods are less than 10 centimeters, which is extremely tiny. Yet these are the ancestors of everything that dominates from then on, including humans,” Sallan said. There’s a very good reason to look into these devastating extinctions of the distant past: Many scientists believe that Earth is on the verge of a sixth mass extinction — one caused by human activity.

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What Europe stands for.

Two Refugee Children Die In Greece In Separate Incidents (Kath.)

Two refugee children died in Greece in two separate incidents on Saturday. A 3-year-old boy drowned off the coast of Chios, in the eastern Aegean, after an engine blast on a refugee boat that threw the passengers in the sea, coast guard officials said. Fifteen other people were rescued while officials arrested an 18-year-old Turk believed to be a trafficker. Meanwhile, a 5-year-old Syrian girl was killed by an oncoming train while she was walking on rail tracks near the town of Alexandroupoli, police said.

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