Texas Archives - Page 4 of 4 - The Automatic Earth

“It’s hard to imagine how anyone can survive at 50% of the poverty level. As of 2013, that corresponded to $9,384 a year for a family of three. [..] more than 7 million people were living below it.

• Being Poor Is Getting Scarier in the US (Bloomberg)

By any measure, the U.S. is among the wealthiest countries in the world. Judging from new research, though, it’s becoming an increasingly hazardous place to be poor. Every advanced nation has a mechanism to protect its most vulnerable members from economic shocks. In the U.S., government transfer programs such as unemployment insurance, food stamps and the earned income tax credit act to offset the impact of recessions, particularly for the poorest families. By putting much-needed money in the pockets of the people most likely to spend it, these “automatic stabilizers” also help the broader economy recover.

In a paper presented over the weekend at the annual meeting of the American Economic Association, economists Hilary Hoynes of the University of California at Berkeley and Marianne Bitler of UC Irvine explored how well automatic stabilizers in the U.S. are working. Using state-level data on unemployment rates and a measure of household income that accounts for taxes and transfers, they compared the effects of the most recent recession to those of the last deep recession in the 1980s. The result: The U.S. is doing a significantly worse job of protecting its most vulnerable households than it did a few decades ago.

Specifically, the economists estimate that during the 2008 recession, a one-percentage-point increase in the unemployment rate was associated with a nearly 10% increase in the share of 18- to 64-year-olds with household incomes of less than half the poverty level. That’s roughly double the effect of unemployment in the 1980s recession. It’s hard to imagine how anyone can survive at 50% of the poverty level. As of 2013, using the measure of income employed by Hoynes and Bitler, that corresponded to $9,384 a year for a family of three. Nonetheless, more than 7 million people were living below it. [..] Over the past three decades, economic output per person in the U.S. has increased more than 60%, to an estimated $54,678 in 2014. Surely such a rich country can afford to do better for the poor.

Nothing left to prop it up.

• The Euro In 2015: A Very Bad Start (CNBC)

The euro can’t seem to catch a break, starting 2015 with a drop to a nine-year low against the U.S. dollar as the timetable for central bank action appears to step up amid a storm of other negatives for the common currency. “The market was divided over when the ECB would undertake QE,” David Forrester, a foreign-exchange strategist at Macquarie, said. But comments from ECB President Mario Draghi changed that, he said, adding expectations are now for a policy adjustment possibly at the year’s first meeting on January 22. In an interview with German newspaper Handelsblatt, Draghi said he believes the risk that the central bank won’t be able to fulfill its mandate to preserve price stability had risen compared with six months ago. “It moves the timetable for QE potentially forward,” he said, but he noted that other factors are also weighing. “You also have U.S. dollar strength and the Fed potentially raising rates – that’s what’s feeding the euro weakness now.”

Weakness abounds, with the euro fetching $1.1936, after trading as low as $1.1860, its lowest since 2006. The ECB likely wants the euro to decline to help spur the economy and inflation, noted Jesper Bargmann, head of trading for Asia at Nordea. But he added, “I’m not sure they would like the euro to collapse in the short term.” Just how low could the euro fall? Willem Nabarro at Exane BNP Paribas, believes $1.1760 is the first target – the level where the common currency was first introduced, although he noted that consensus forecasts range from $1.10-$1.15. There are other ingredients likely spoiling the euro stew. For one, the euro’s attractiveness as a reserve currency appears to be slipping, with the IMF saying that the share of global central banks’ currency reserves held in the common currency was at 22.6% in the third quarter of last year, the lowest in a decade and off by more than a fullpercentage point from the previous quarter.

Another headwind: the price of oil has also started off the year with a run downward to fresh more than five year lows. U.S. crude futures extended declines to a third day on Monday, trading as low as $51.40 a barrel, while London Brent crude for February delivery fell as low as $55.36 a barrel, levels last seen in 2009. “In trying to anticipate the possible extent of further euro depreciation, it is worth remembering that inflation and inflation expectations lie at the crux of ECB policy initiatives,” Brian Martin, an economist at ANZ, said in a note Friday. “The trend in EUR/USD has been closely correlated with the trend in the oil price and is likely to remain so for the foreseeable future.”

Let’s see Draghi address this issue. Or Merkel.

• Tsipras Says ECB Cannot Shut Greece Out Of Stimulus (Reuters)

Greek leftwing opposition leader Alexis Tsipras said the European Central Bank (ECB) could not exclude Greece if it decides to move to a full «quantitative easing» programme to stimulate the euro zone’s faltering economy. Speaking at a party congress on Saturday, three weeks before a Jan. 25 general election, Tsipras also said his Syriza party would ensure much of Greece’s debt was written off as part of a renegotiation of its international bailout deal. The election takes place three days after a Jan. 22 policy meeting at which the ECB may decide to proceed with a quantitative easing (QE) programme to pump billions of euros into the euro zone economy by buying government bonds.

Tsipras said he hoped ECB President Mario Draghi would decide to go ahead with the programme and said Greece could not be shut out, as some economists and politicians from countries including Germany have suggested. “Quantitative easing by the ECB with direct purchases of government bonds must include Greece,» Tsipras said. The comments underline the pressures facing Draghi ahead of the decision, with many in Germany opposed to full-scale QE which they fear will create asset bubbles and remove incentives for reform-shy governments to act. Syriza, which holds a slim opinion poll lead over Prime Minister Antonis Samaras’ centre-right New Democracy party, has moderated its tone in recent months, pledging to keep Greece in the euro and not to unilaterally repudiate the bailout deal.

But the prospect of a Syriza-led government has set financial markets on edge and caused alarm in Germany, where a succession of politicians and economists have argued the euro zone could cope with Greece’s exit. In a speech laced with barbs against German Chancellor Angela Merkel and finance minister Wolfgang Schaeuble, Tsipras said his party would roll back many of the austerity policies imposed by the bailout «troika». “Austerity is both irrational and destructive. To pay back debt, a bold restructuring is needed,» he said. Repeating many policy pledges first laid out last year, he promised to do away with a real estate tax, freeze house foreclosures, raise the minimum wage and reinstate a €12,000 ($14,400) tax-free threshold to help low earners. He said he would abandon the goal of achieving primary budget surpluses, aimed at cutting Greece’s debt burden equivalent to more than 175% of gross domestic product. But he pledged to protect bank deposits and ensure public finances remain on a sound footing.

Greece needs to fight its corruption, and that won’t happen under Samaras.

• Samaras Warns of Euro Exit Risk as Greek Campaign Starts (Bloomberg)

Greece’s political parties embarked on a flash campaign for elections in less than three weeks that Prime Minister Antonis Samaras said it will determine the fate of the country’s membership in the euro currency area. Samaras used a Jan. 2 speech to warn that victory for the main opposition Syriza party would cause default and Greece’s exit from the 19-member euro region, while Syriza leader Alexis Tsipras said his party would end German-led austerity. Der Spiegel magazine reported Chancellor Angela Merkel is ready to accept a Greek exit, a development Berlin sees as inevitable and manageable if Syriza wins, as polls suggest. The high-stakes run-up to the Jan. 25 vote returns Greece to the center of European policy makers’ attention as they strive to fend off a return of the debt crisis that wracked the region from late 2009, forcing international financial support for five EU countries.

While Greek 10-year bond yields rose to about 9% last week from a post-crisis low of 5.57% in September, the relative improvement in yields from Italy to Ireland suggests that the contagion has been contained. “Many European officials believe a Greek exit would be manageable, and in contrast to 2010-2011, we wouldn’t see the same cascading effect on countries like Spain or Ireland,” Fredrik Erixon, director of the European Centre for International Political Economy in Brussels, said by telephone. Tsipras, in a speech on Jan. 3, vowed to restructure his nation’s debt and end what he called the “unreasonable and catastrophic” austerity policies. Greece will “write down on most of the nominal value of debt, so that it becomes sustainable,” Tsipras said, according to the e-mailed transcript of a speech in Athens. “That’s what was done for Germany in 1953, it should be done for Greece in 2015.”

EU referendum pushed forward.

• Worried About The UK In 2015? You’re Not Alone (CNBC)

The shadow of a general election and a possible exit from the European Union are already making investors nervous about the UK in 2015. On Monday, traditionally the first back-to-work day of the New Year, sterling fell slightly against the dollar and the FTSE was flat, as traders warily eyed the UK. The new year also saw all of the main parties launch their campaigns for May’s general election and for what many pundits predict will be the most unpredictable poll in living memory. “The traditional metrics in how the poll will turn out are being thrown out of the window,” Jeremy Stretch, head of currency strategy at CIBC, told CNBC. He argued that sterling is likely to come under continued pressure ahead of the elections. “All of a sudden, investors are saying they want to look back and see how the smoke clears before committing to the UK”

While the left-leaning Labour Party is leading most recent polls, it looks increasingly likely that either it or the Conservative Party may have to enter a coalition with one or more of the smaller parties to ensure a majority. Another option is that one of the parties governs in what is known as a “hung parliament”, where it doesn’t have a majority and is reliant on the support of other parties to pass laws. Either of these options may lead to the Liberal Democrats party, which got the third-biggest share of the vote in the last election, or minority parties like the Scottish National Party, the U.K. Independence Party (UKIP) or Northern Ireland’s Democratic Unionist Party (DUP) holding the key to running of the country.

The other cloud hanging over investors is whether the UK chooses to stay in the European Union or not. Back in 2013 Prime Minister David Cameron, under pressure from euro-skeptic members of his own party and the increasingly popular UKIP, promised to hold a referendum on the UK’s membership of the EU, which is seen as meddlesome, bureaucratic and expensive by a large number of voters. In an interview with the BBC, Cameron said Sunday that, if his party is in power after the next election, a referendum on the U.K.’s EU membership may come earlier than 2017, the year previously promised. Ministers who are against the U.K.’s continued membership of the trading bloc will have to step aside from their posts if they want to campaign for a “no” vote, he announced.

A divide between rich and poor, as well as one between old and young.

• The Credit Boom Is A Ticking Timebomb For UK Plc (Guardian)

There is a warning buried in the economic figures that appeared last week. While most of the focus was on the steady decline in house buying and numbers showing Britain’s national income grew more slowly last year than previously estimated; the latest borrowing figures set alarm bells ringing. Consumer credit figures from the Bank of England revealed Britons ended the year slapping their credit cards on shop counters as if the financial crisis was a distant memory. Borrowing on credit cards and unsecured loans grew in November at its strongest pace since 2008. We knew that retail sales had surged that month and now we knew why. Mortgage borrowing added to the credit boom, piling another £2.1bn on the debt mountain in November.

The increase was higher than expected and came despite a fall in the number of mortgage approvals. At the same time the central bank was publishing its credit figures, a survey of factory managers could only be described as depressing. Yet again, just as the sector appeared to be finally recovering from the great crash, the momentum has tailed off. The survey of manufacturers found expansion eased back in December after picking up in October and November. And that little period of early winter joy was shortlived, coming after a September that represented a 17-month low. Output and new orders growth moderated in December, and most importantly exports remained lacklustre.

Those economists who found reasons to be cheerful from the figures suggested that the UK’s strong domestic demand would keep the sector growing. The same economists look at the borrowing figures and discern a more benign outlook from the total UK household debt burden, which is continuing a trend since the crash and still coming down. What was once a household debt to income ratio of 175% is now nearer 130%. Yet the overall figure depends on the over-50s paying off their mortgages at an accelerated rate. By contrast, the under-40s take on bigger mortgages to buy a home with an inflated price and borrow on credit cards to fund a lifestyle ravaged by six years of below inflation pay rises.

No, it really is a race to the bottom.

• Oil’s Future Hangs Between The Emirates And The Shales Of Eagle Ford (Observer)

The decision by president Barack Obama to open the door to US oil exports seeped out of Washington in a low-key manner last week, but the impact could be as explosive as a New Year’s Eve firework display. The ban – imposed after the Middle East oil embargoes in the 1970s – has made it close to impossible to ship abroad the fruits of America’s shale bonanza. It also long looked wrong-headed in the home of free trade. The US department of commerce quietly overturned the four-decade-old policy by saying it had started to approve a backlog of requests to sell processed light oil to foreign buyers. The issue is tremendously sensitive, which is possibly why the announcement came out at a time of year when most policymakers were still at home enjoying the Christmas holidays with their families.

Many manufacturers and many domestic consumers are totally opposed to domestic oil or gas production being exported, on the grounds that it could bring an end to cheaper local energy supplies and competitive advantages. But prospectors from the shales in Eagle Ford, Texas and Marcellus, Pennsylvania have been campaigning in Washington for a change in the law for some time, their calls growing more urgent now that some face potential financial trouble as the price of oil plunges from $115 per barrel down to $56. Meanwhile American oil sometimes sells at $15 per barrel less on the local market as supply exceeds demand: not good for the frackers already burdened by their relatively high-cost operations.

But by opening the door to exports – of slightly refined products – Washington has struck a more serious blow to its export rivals in Saudi Arabia, Russia and elsewhere. Ed Morse, global head of commodities research at Citigroup bank, had no trouble predicting that the move would “open up the floodgates to substantial increases in [US] exports by end 2015”.

Bubble.

• Plunging Oil Prices Test Texas’ Economic Boom (WSJ)

Retired Southwest Airlines co-founder Herb Kelleher remembers a Texas bumper sticker from the late 1980s, when falling energy prices triggered an ugly regional downturn: “Dear Lord, give me another boom and I promise I won’t screw it up.” Texas got its wish with another energy-driven boom, and now plunging oil prices are testing whether the state has held up its end of the bargain. The Lone Star State’s economy has been a national growth engine since the recession ended, expanding at a rate of 4.4% annually between 2009 and 2013, twice the pace of the U.S. as a whole. The downturn in energy prices now has triggered a debate over whether Texas simply got lucky in recent years, thanks to a hydraulic-fracturing oil-and-gas boom, or whether it hit on an economic playbook that other states, and the country as a whole, could emulate.

One in seven jobs created nationally during the 50-month expansion has been created in Texas, where the unemployment rate, at 4.9%, is nearly a percentage point lower than the national average. But a big dose of the state’s good fortune comes from the oil-and-gas sector. Midland, which sits atop the oil-rich Permian Basin, had the fastest weekly wage growth in the country among large counties: 9% in the 12 months ending June 2014. Now that oil prices have plunged nearly 51% from their June peak to $52.69 a barrel, some Texans sobered by memories of past energy busts are bracing for a fall. The argument among economists and business leaders isn’t whether the state will be hurt, but how badly.

Mr. Kelleher is among the Texans predicting this won’t be a replay of the 1980s oil bust and banking crisis, which drove the state unemployment rate to 9.3%. As evidence, he and others cite a more cautious banking sector, a tax and regulatory environment favorable to business, and a state economy less dependent on energy and other resources. “Texas has become a well-rounded state,” Mr. Kelleher said. “People did remember not to overextend themselves.”

Michael Feroli, a New York-based economist at J.P. Morgan Chase & Co., is one of the skeptics of the “this-time-is-different” camp. Although the oil-and-gas industry today makes up a smaller share of Texas’ workforce than it did in the mid-1980s, it accounts for roughly the same share of its economic output, he said. So a decline in oil prices similar to the plunge of more than 50% seen in the mid-1980s, he said, could have a similar result: recession. “Texas is, if oil prices stay where they are, going to face a more difficult economic reality,” Mr. Feroli said.

Another bubble.

• From Boom To Bust In Australia’s Mining Towns (BBC)

After 23 years of growth, including one of the biggest mining booms in the nation’s history, tumbling iron ore and coal prices have put a brake on Australia’s economy – and mining towns are paying the price. Peter Windle is a casualty of the mining slowdown. The New South Wales mining employee has lost a well-paid job, a company car and an annual bonus that in some years was as high as A$60,000 ($48,800; £31,300). A termination package from the mining company he used to work for has helped soften the blow. But Mr Windle still had to sell his investment property to keep his head above water. Once part of a vast army of workers in what was Australia’s booming resources sector, Mr Windle now gets up at 5.30 am five days a week to clean and drive school buses in the small town of Muswellbrook.

For decades, the town had ridden the waves of Australia’s coal boom. “It’s the worst I’ve seen it in 28 years in the mining industry,” says Mr Windle. “Everyone is getting out. Three hundred houses are for sale in my town, three in my street, and rental prices have collapsed on older weatherboard houses from A$1,000 a week to A$200,” he says. Mr Windle was the purchase and compliance manager at Glennies Creek Coal Mine. Earlier this year, however, Brazilian company Vale – which owns the underground mine and an open-cut mine at nearby Camberwell – suddenly announced it was sacking 500 workers and mothballing the mines. Mr Windle’s story is not unusual. Across Australia, coal and iron ore mines are laying off staff, shutting down operations or putting new investments on hold.

Resource analysts say it is the end of a long and lucrative mining boom that was mostly fuelled by demand from China. The number of people employed in coal mining alone rose from 15,000 to 60,000 between 2001 and 2014, according to the Australian Bureau of Statistics. Mining companies offered high wages to entice workers from other industries, and to mines that were often in remote locations such as outback Western Australia. Preliminary estimates suggest that this year, Australia exported over A$40bn of coal, much of it to China. But as China’s economy has slowed, the price of coal used for power generation has fallen, from US$142 a tonne in January 2011 to US$67 a tonne in November 2014, according to the World Bank. In the case of iron ore, in mid-December it was trading at about US$70 a tonne, the lowest level since 2009.

And The Bubble to End All Bubbles.

• The Bubble to End All Bubbles (Phoenix)

If your job is to sit in front of a camera selling the notion of getting rich from investing, you’re not going to talk about bonds or currencies (maybe the latter is of interest but only with insane amounts of leverage which usually bankrupts a trader in his or her first trade). However, today stocks are in fact a very minor story. They are, in a sense, the investing equivalent of picking up pennies in front of a steamroller. That steamroller is the $100 trillion bond bubble. For 30+ years, Western countries have been papering over the decline in living standards by issuing debt. In its simplest rendering, sovereign nations spent more than they could collect in taxes, so they issued debt (borrowed money) to fund their various welfare schemes. This was usually sold as a “temporary” issue. But as politicians have shown us time and again, overspending is never a temporary issue. This is compounded by the fact that the political process largely consists of promising various social spending programs/ entitlements to incentivize voters.

This type of social spending is not temporary… this is endemic. The US is not alone… Most major Western nations are completely bankrupt due to excessive social spending. And ALL of this spending has been fueled by bonds. This is why Central Banks have done everything they can to stop any and all defaults from occurring in the sovereign bonds space. Indeed, when you consider the bond bubble everything Central Banks have done begins to make sense. 1) Central banks cut interest rates to make these gargantuan debts more serviceable. 2) Central banks want/target inflation because it makes the debts more serviceable and puts off the inevitable debt restructuring. 3) Central banks are terrified of debt deflation (Fed Chair Janet Yellen herself admitted that oil’s recent deflation was an economic positive) because it would burst the bond bubble and bankrupt sovereign nations.

The bond bubble, like all bubbles, will burst. When it does, everything about investing will change. Bonds have been in bull market since the early ‘80s. Thus, an entire generation of investors and money managers (anyone under the age of 55) has been investing in an era in which risk has generally gotten cheaper and cheaper. This, in turn, has driven the rise in leverage in the financial system. As the risk-free rate fell, so did all other rates of return. Thus investors turned to leverage or using borrowed money to try to gain greater rates of return on their capital. Today, that leverage has resulted in $100 trillion in bonds with over $555 trillion in derivatives based on bonds. This bubble, literally dwarfs all other bubbles. To put this into perspective, the Credit Default Swap (CDS) market that nearly took down the financial system in 2008 was only a tenth of this ($50-$60 trillion). When this bubble bursts, 2008 will look like a picnic.

Makes sense.

• Russia’s ‘Startling’ Proposal To Europe: Dump The US, Join Us (Zero Hedge)

Slowly but surely Europe is figuring out that as a result of the western economic and financial blockade of Russian, it is Europe itself that is suffering the most. And while Germany was first to acknowledge this late in 2014 when its economy swooned and is now on the verge of a recession, now others are catching on. Case in point: the former head of the European Commission, and Italy’s former Prime Minister, Romano Prodi who told Messaggero newspaper that the “weaker Russian economy is extremely unprofitable for Italy.” The other details from Prodi’s statement:

Lowered prices in the international energy markets have positive aspects for the Italian consumers, who pay less for the fuel, but the effect will be only short-term. In the long-term however the weaker economic situation in countries producing energy resources, caused by lower oil and gas prices, mostly in Russia, is extremely unprofitable for Italy, he said. “The lowering of the oil and gas prices in combination with the sanctions, pushed by the Ukrainian crisis, will drop the Russian GPD by five% per annum, and thus it will cause cutting of the Italian export by about 50%,” Prodi said. “Setting aside the uselessness or imminence of the sanctions, one should highlight a clear skew: regardless of the rouble rate against dollar, which is lower by almost a half, the American export to Russia is growing, while the export from Europe is shrinking.”

In other words, just as slowly, the world is starting to grasp the bottom line: it is not the financial exposure to Russia, or the threat of financial contagion should Russia suffer a major recession or worse: it is something far simpler that will lead to the biggest harm for Europe’s countries. The lack of trade. Because while central banks can monetize everything, leading to an unprecedented asset bubble which if only for the time being boosts investor and consumer confidence, they can’t print trade – that all important driver of growth in a globalized world long before central banks were set to monetize over $1 trillion in bonds each and every year to mask the fact that the world is deep in a global depression.

Which is why we read the following report written in yesterday’s Deutsche Wirtschafts Nachrichten with great interest because it goes right to the bottom line. In it Russia has a not so modest proposal to Europe: dump trade with the US, whose call for Russian “costs” has cost you another year of declining economic growth, and instead join the Eurasian Economic Union! From the source:

Russia has presented a startling proposal to overcome the tensions with the EU: The EU should renounce the free trade agreement with the United States TTIP and enter into a partnership with the newly established Eurasian Economic Union instead. A free trade zone with the neighbors would make more sense than a deal with the US.

It surely would, but then how will Europe feign outrage when the NSA is found to have spied yet again on its “closest trading partners?”

Funny. St. Cyr writes exactly what I did last November in Making Money While The World Burns and Hugh Hendry And The Deflationary Zeitgeist.

• Knowing It Will End Badly And Turning A Blind Eye (Mark St.Cyr)

As 2014 came to an end I like many of you probably felt a brief sigh of relief that maybe, just maybe, we could move into 2015 with a little more sanity shoved back into the financial markets. Now with QE as a know certain (at least for this moment) that indeed the spigot to the fire-hose has been shut off albeit there is still the “reinvestment” sprinkler system still at play. We might possibly get back to a little bit of sanity within the capital markets. I watched a great many pundits take to both the financial air-wave cameras, as well as radio and print with fervent breath to make more or less a blanket statement that all the so-called “doom crew” (this is what you are now branded if you dare make a cogent case against fairy-tales and pixie-dust) were proven to be, without a doubt – totally wrong.

Added to this near foamed mouthed expression of glee was the added generalized diatribe, “when will these people just admit they were wrong and go away?!” Every time I heard or read a statement reminiscent of this I burst out into laughter. Until I read Hugh Hendry’s Eclectica Fund’s “Letter to Investors.” Here is where I went from laughter – to outright stupefaction. Before I go any further let me make this point clear: I am, and have been a fan of Mr. Hendry’s investing prowess, his willingness to point out in public whether an Emperor is clothed or not, and more. However, I have also made my opinion clear about my uneasiness when he originally turned his investing thesis onto its head and became by his own words “a Bull.”

Although I understood the thesis I believed (and still do) that there is an inherent danger when this view is accepted and codified based on this market. So strongly do I feel about this I suggest we turn the danger scale up more towards perilous. Or, in simple terms – the danger knob has just been turned to 11 in my view after reading his latest letter. The opening paragraph was nearly all one had to read as to know both the direction and the stance that seems now fully embraced by more than just Mr, Hendry – but everyone currently on this Keynesian fueled bandwagon. To wit:

“There are times when an investor has no choice but to behave as though he believes in things that don’t necessarily exist. For us, that means being willing to be long risk assets in the full knowledge of two things: that those assets may have no qualitative support; and second, that this is all going to end painfully. The good news is that mankind clearly has the ability to suspend rational judgment long and often.”

“The Czech President said something is “wrong” not only with Ukraine, but also with the European Union, which did not protest or condemn this action.”

• Czech President Condemns Kiev ‘Nazi Torchlight Parade’, EU’s Silence (RT)

The chilling slogans and a flagrant demonstration of nationalist symbols during the neo-Nazi march in Kiev reminded the Czech President Milos Zeman of Hitler’s Germany. He said something was “wrong” both with Ukraine and the EU which didn’t condemn it. Zeman was commenting on the appalling scenes, which showed thousands of Ukrainian nationalists holding a torchlight procession across the Ukrainian capital on Thursday to commemorate the 106th birthday of Stepan Bandera, a Nazi collaborator and the Ukraine nationalist movement’s leader during World War II. “There is something wrong with Ukraine,” the Czech Republic’s leadertold radio F1 on Sunday. “Yesterday evening I was browsing the Internet and discovered a video showing the demonstration on Kiev’s Maidan on January 1.”

“These demonstrators carried portraits of Stepan Bandera, which reminded me of Reinhard Heydrich,” Zeman said referring to one of the main architects of the Holocaust and at the time a Reich-Protector of Czech Republic’s territories. The parade itself was organized similar to Nazi torchlight parades, where participants shouted the slogan: ‘Death to the Poles, Jews and communists without mercy,”Zeman explained. Bandera was the head of the Organization of Ukrainian Nationalists (OUN), which collaborated with Nazi Germany, and was involved in the ethnic cleansing of Poles, Jews and Russians. “Glory to the nation! Death to enemies!”, “Ukraine belongs to Ukrainians” and “Bandera will return and restore order”, were the repeated slogans during the neo-Nazi march. Some of the participants wore World War II Bandera’s insurgent army uniforms while others paraded with red and black nationalist flags.

The Czech President said something is “wrong” not only with Ukraine, but also with the European Union, which did not protest or condemn this action. “Don’t forget that Bandera is considered a national hero in Ukraine, his image is hanging in the Maidan, his statue is in Lvov. In reality, he was a mass murderer,” Zeman said last summer on Czech Television. Russia too has on numerous occasions condemned the resurgence of neo-Nazi traditions in Ukraine and considers such displays of militant nationalism as means to fabricate history. “Torch-lit marches in Ukraine demonstrate that it is continuing to move along the path of the Nazis!” Konstantin Dolgov, the foreign ministry’s human rights envoy, said last week. “And this is in the center of civilized Europe!”

They need to throw out Yats and the other US agents.

• France Seeks End To Russia Sanctions Over Ukraine (BBC)

French President Francois Hollande says he wants Western sanctions on Russia to be lifted if progress is made in talks on the Ukraine conflict this month. He did not specify which sanctions – imposed by the EU, US and Canada – could be lifted. The sanctions began after Russia annexed Crimea in March. Mr Hollande said Russian President Vladimir Putin “doesn’t want to annex eastern Ukraine – he told me that”. Germany’s vice-chancellor has warned against further sanctions on Russia. Sigmar Gabriel – a centre-left politician like Mr Hollande – said the sanctions were aimed at making Russia negotiate to resolve the Ukraine conflict. But some “forces” in Europe and the US wanted sanctions to cripple Russia, which would “risk a conflagration”. “We want to help get the Ukraine conflict resolved, but not to push Russia onto its knees,” he told Bild am Sonntag newspaper.

The OSCE security organisation has reported sporadic shelling between Ukrainian forces and pro-Russian separatists in eastern Ukraine despite a ceasefire agreement. In late December several hundred prisoners were exchanged. There have been calls elsewhere in the EU for an easing or lifting of the sanctions on Russia, which have hit Russia’s banks, energy industry and arms manufacturers, as well as targeting powerful figures close to Mr Putin. Politicians in Italy, Hungary and Slovakia are among those who want the sanctions eased. “The sanctions must be lifted if there is progress. If there is no progress the sanctions will stay in place,” Mr Hollande told France Inter radio. He confirmed that a France-Germany-Russia-Ukraine summit would be held in Astana, Kazakhstan, on 15 January, focusing on the Ukraine conflict.

“.. additional sanctions may exclude Moscow from partnership in the resolution of conflicts which “will have very dangerous consequences for the entire world.”

• ‘More Russia Sanctions To Provoke ‘Dangerous Situation’ In Europe’ (RT)

Tougher sanctions against Russia could destabilize the country and provoke an “even more dangerous” situation in Europe and have negative consequences for the entire world, German Vice-Chancellor Economic Affairs and Energy Minister has warned. “Those who want it, provoke an even more dangerous situation for all of us in Europe,” Sigmar Gabriel said in an interview with the Bild am Sonntag newspaper on Sunday. “Those who are seeking to even more destabilize Russia from the economic and political point of view are pursuing quite different goals.” The goal of sanctions against Russia was to return Moscow to the negotiating table to find ways for a peaceful resolution to the crisis in Ukraine, he said. He elaborated that additional sanctions may exclude Moscow from partnership in the resolution of conflicts which “will have very dangerous consequences for the entire world.”

Though there are some in the US and EU that “would like to floor their superpower rival,” but it is not in the interest of Germany or Europe, he stated. “We want to help solve the conflict in Ukraine, not to force Russia to its knees,” he stressed. The US and EU slapped Russia with several rounds of sanctions, starting in March after Crimea joined Russia. Western nations have accused Russia of annexing Crimea, though Moscow has denied the claims stressing that residents of the peninsula voted in favor of the notion in a referendum that was in line with the international law and the UN Charter. The first round of Western sanctions targeted Russian officials and companies and included visa bans and asset freezes. The second round of sanctions that put pressure on financial, energy, and defense sectors was announced in July with the US and EU blaming Moscow for involvement in the unrest in eastern Ukraine.

Amen.

• North Korea/Sony Shows US Media Still Regurgitate Government Claims (Greenwald)

This government-subservient reporting was not universal; there were some noble exceptions. On the day of Obama’s press conference, MSNBC’s Rachel Maddow hosted Xeni Jardin in a segment which repeatedly questioned the evidence of North Korea’s involvement. The network’s Chris Hayes early on did the same. The Guardian published a video interview with a cyber expert casting doubt on the government’s case. The Daily Beast published an article by Rogers expressly arguing that “all the evidence leads me to believe that the great Sony Pictures hack of 2014 is far more likely to be the work of one disgruntled employee facing a pink slip.” He concluded: “I am no fan of the North Korean regime. However I believe that calling out a foreign nation over a cybercrime of this magnitude should never have been undertaken on such weak evidence.”

Earlier this week, the NYT‘s Public Editor, Margaret Sullivan, chided the paper’s original article on the Sony hack, noting – with understatement – that “there’s little skepticism in this article.” Sullivan added that the paper’s granting of anonymity to administration officials to make the accusation yet again violated the paper’s own supposed policy on anonymity, a policy touted by the paper as a redress for the debacle over its laundering of false claims about Iraqi WMDs from anonymous officials. But – especially after that first NYT article, and even more so after Obama’s press conference – the overwhelming narrative disseminated by the U.S. media was clear: North Korea was responsible for the hack, because the government said it was.That kind of reflexive embrace of government claims is journalistically inexcusable in all cases, for reasons that should be self-evident. But in this case, it’s truly dangerous.

It was predictable in the extreme that – even beyond the familiar neocon war-lovers – the accusation against North Korea would be exploited to justify yet more acts of U.S. aggression. In one typical example, the Boston Globe quoted George Mason University School of Law assistant dean Richard Kelsey calling the cyber-attack an “act of war,” one “requiring an aggressive response from the United States.” He added: “This is a new battlefield, and the North Koreans have just fired the first flare.” The paper’s own writer, Hiawatha Bray, explained that “hackers allegedly backed by the impoverished, backward nation of North Korea have terrorized one of the world’s richest corporation” and approvingly cited Newt Gingrich as saying: “With the Sony collapse America has lost its first cyberwar.”

“.. the hospital was unable to obtain ZMapp, the drug used to treat fellow British volunteer nurse William Pooley, because “there is none in the world at the moment ..”

• UK Ebola Patient Zero In Critical Condition (FT)

The condition of Pauline Cafferkey, a Scottish nurse who this week became the first person to be diagnosed with Ebola on UK soil, has deteriorated and is now critical, the Royal Free Hospital said on Saturday, as it emerged that another patient had tested negative for the deadly virus at a hospital in Swindon The 39-year-old’s sudden change in condition comes after her doctor described her as sitting up, eating, drinking and communicating with her family on New Year’s Day. Michael Jacobs, one of the medics treating her, warned that she faced a “critical” few days while she was treated with the blood from a survivor and an experimental antiviral drug which is “not proven to work.” Great Western Hospitals NHS Foundation Trust said on Sunday that an individual with a history of travel to west Africa had tested negative for Ebola but remained under observation at the hospital.

“The test results have come back negative. The patient is continuing to stay within the hospital for treatment,” the trust said. Ms Cafferkey was initially admitted to a hospital in Glasgow, the city in which she works as part of a public health team, after she returned from west Africa having flown via Morocco to London’s Heathrow airport. As her condition worsened she was transferred to an isolation unit at the Royal Free Hospital in Hampstead, north London. However, the hospital was unable to obtain ZMapp, the drug used to treat fellow British volunteer nurse William Pooley, because “there is none in the world at the moment,” Dr Jacobs said. Mr Pooley, who was also treated at the Royal Free, made a full recovery and has since returned to Sierra Leone to continue treating those affected by the virus.

Too good to be true?

• Scientists Target ‘Universal’ Protein To Treat Brain Cancer And Ebola (RT)

US researchers have identified a protein, which they believe is a universal therapeutic target for treating a number of deadly human diseases. They used a drug combination which included Viagra to effectively target the protein. Researchers at Virginia Commonwealth University (VCU) have figured out a protein – GRP78 – that may be a possible target to rid humans of such viral and bacterial infections as Ebola, Influenza and Hepatitis, as well as be a way to cure brain cancer. The pre-clinical study which was led by the US University, and published in the Journal of Cellular Physiology, used a drug combination – with Viagra being one of its elements – to target GRP78 and related proteins. As a result, researchers managed to prevent replication of a variety of major viruses in infected cells, and made some antibiotic-resistant bacteria vulnerable to common antibiotics. Evidence that brain cancer stem cells were killed was also found.

“Basically, we’ve got a concept that by attacking GRP78 and related proteins: (a) we hurt cancer cells; (b) we inhibit the ability of viruses to infect and to reproduce; and (c) we are able to kill superbug antibiotic-resistant bacteria,” said the study’s lead investigator, Paul Dent. After studying the effect in cancer cells, the researchers applied the same drug combination to target the protein for infectious diseases. Viral receptor expression on the surface of target cells was reduced, which decreased infectivity, and replication of a virus in infected cells was also prevented. By proving GRP78 to be a “drugable” target, researchers say the findings open new possibilities in treating various viral infections – “that certainly most people would say we’ll never be able to treat.” According to Dent, scientists already know that in mice the same Viagra treatment can kill tumor cells without harming other tissues, and the next steps in further discovering the possibilities of the method have already been taken.

How to make me sad on a Monday morning.

• 13 Species We Might Have To Say Goodbye To In 2015 (GlobalPost)

British broadcaster and naturalist Sir David Attenborough once asked: “Are we happy to suppose that our grandchildren may never be able to see an elephant except in a picture book?” This year marked the 100th anniversary of the death of the last passenger pigeon, Martha, who managed to survive only 14 years in captivity after her species became extinct in the wild. More recently, Angalifu, a 44-year-old northern white rhinoceros, died at the San Diego Zoo, leaving just five other white rhinos worldwide, all in captivity. Chances are our grandchildren will never get to see this remarkable creature. In fact, the world is losing dozens of species every day in what experts are calling the sixth mass extinction in Earth’s history.

As many as 30 to 50% of all species are moving toward extinction by mid-century – and the blame sits squarely on our shoulders. “Habitat destruction, pollution or overfishing either kills off wild creatures and plants or leaves them badly weakened,” said Derek Tittensor, a marine ecologist at the World Conservation Monitoring Centre in Cambridge. “The trouble is that in coming decades, the additional threat of worsening climate change will become more and more pronounced and could then kill off these survivors.” About 190 nations met last month at the United Nations climate talks in Lima, Peru to discuss action needed to curb rising greenhouse gas emissions. It ended with a watered-down agreement that seems unlikely to help much in the battle against global warming.

Corruption and illegal online trafficking also threaten conservation efforts. The illegal wildlife trade is an estimated $10-billion-a-year industry. It’s the fifth largest contraband trade after narcotics, fueled by the rising demand for animals as pets, trophies, and ingredients in medicine, food and other products. There’s no doubt that we’re facing an uphill battle against mankind’s unsustainable greed and consumption, but it’s a battle we can’t afford to lose. “The thought of having to explain to my children that there were once tigers — real, wild tigers, out there, in the great forests of the world – but that we let them die out, because we were busy – well, it was bad enough explaining about the Tooth Fairy, and that wasn’t even my fault,” said English comedian Simon Evans.

Yikes!

• Earth’s Magnetic Field Now Flips More Often Than Ever (BBC)

The Earth’s magnetic field, which protects us from potentially dangerous solar radiation, is gradually losing its stability. No need to move underground or build space colonies just yet, though: the changes are taking place over millions of years. You might assume that compasses will always point north, but in fact the magnetic poles have swapped places many times in the Earth’s history. Earth scientists have long suspected that these flips are becoming more frequent, and that the magnetic field was less prone to pole reversals in the distant past. Now the most detailed analysis of the geological evidence to date suggests that the field really is slowly destabilising. Whereas in the distant past it reversed direction every 5 million years, it now does so every 200,000 years.

Earth’s magnetic field is powered by the heart of the planet. At its centre is a solid inner core surrounded by a fluid outer core, which is hotter at the bottom. Hot iron rises within the outer core, then cools and sinks. These convection currents, combined with the rotation of the Earth, are thought to generate a “geodynamo” that powers the magnetic field. Because of changing temperatures and fluid flows, the strength of the magnetic field varies, and the positions of the north and south magnetic poles shift. These shifts leave traces in rocks. When lava cools, metal oxide particles within the rock become frozen in the direction of the prevailing magnetic field. So scientists can work out the historic positions of the magnetic poles by examining and dating lava samples. As a result we know there have been about 170 magnetic pole reversals during the last 100 million years, and that the last major reversal was 781,000 years ago.

Debt Rattle December 22 2014

Dec 222014

December 22, 2014 Posted by Raúl Ilargi Meijer at 12:05 pm Finance Tagged with: austerity, CFTC, CIA, oil, olive oil, OPEC, Saudi, swaps, Texas 5 Responses »

Russell Lee Secondhand store in Council Bluffs, Iowa Dec 1936

• Age of Plenty Seen Over for Gulf Arabs as Oil Tumbles (Bloomberg)

• Ready for $20 Oil? (A. Gary Shilling)

• Houston Suddenly Has A Very Big Problem (Feroli via ZH)

• Saudis Insist Oil Supply Cuts Are Not Needed (Independent)

• Oil Crash Wipes $11.7 Billion From Buyout Firms’ Holdings (Bloomberg)

• North Sea Oil Summit Announced By Aberdeen City Council (BBC)

• Southwest’s Oil Swap Trade Waiver Raises CFTC Questions (Reuters)

• US Gas Prices Fall To Lowest Since May 2009 (Reuters)

• Rosneft Repays $7 Billion and Says Has No Need to Buy Dollars (Bloomberg)

• China Offers Russia Help With Currency Swap Suggestion (Bloomberg)

• China Investigates Possible Stock-Price Manipulation (WSJ)

• China Stock Connect Scheme Scorecard Throws Up Surprises (Reuters)

• The Fallacy of Keynesian Macro-Aggregates (Ebeling)

• Europe in Wonderland Wants Russia to Bail Out Ukraine (Mish)

• Greek Premier Makes Offer In Bid To Avoid Snap Elections (WSJ)

• Greece’s Radical Left Could Kill Off Austerity In The EU (Guardian)

• Rising Price Of Olive Oil Is A Pressing Matter (FT)

• Leaked CIA Docs Teach Operatives How To Infiltrate EU (RT)

Tall building syndrome?!

• Age of Plenty Seen Over for Gulf Arabs as Oil Tumbles (Bloomberg)

The boom that adorned Gulf Arab monarchies with glittering towers, swelled their sovereign funds and kept unrest largely at bay may be over after oil prices dropped by almost 50% in the last six months. The sheikhdoms have used the oil wealth to remake their region. Landmarks include man-made islands on reclaimed land, as well as financial centers, airports and ports that turned the Arabian desert into a banking and travel hub. The money was also deployed to ward off social unrest that spread through the Middle East during the Arab Spring. “The region has had 10 years of abundance,” said Simon Williams, HSBC chief economist for central and eastern Europe, the Middle East and North Africa. “But that decade of plenty is done. The drop in oil prices will hurt performance in the near term, even if the Gulf’s buffers are powerful enough to ensure there’s no crisis.”

Brent crude, which has averaged $102 a barrel since the end of 2009, plunged to about $60 by the end of last week. The slump accelerated after the Organization of Petroleum Exporting Countries, whose top producer is Saudi Arabia, decided in November to keep output unchanged. At $65 a barrel, the six nations of the Gulf Cooperation Council, which hold about a third of the world’s crude reserves, would run a combined budget deficit of about 6% of gross domestic product, according to Arqaam Capital, a Dubai-based investment bank. Cheaper oil “will force a reassessment of the ambitious infrastructure investment program” in the region, Qatar National Bank said in a report. One exception is likely to be Qatar, which is spending on infrastructure to host the 2022 soccer World Cup final, QNB said. The oil-price drop has already prompted economists to cut next year’s growth estimates for Saudi Arabia, the United Arab Emirates and Kuwait, according to data compiled by Bloomberg.

Complex political games.

• Ready for $20 Oil? (A. Gary Shilling)

When the U.S. Federal Reserve ended its quantitative-easing program in October, it also ended the primary driver of U.S. stocks during the past six years. So long as the central bank kept flooding the markets with money, investors had little reason to worry about a broader economy limping along at 2% real growth. Now investors face more volatile markets and securities that no longer move in lock-step. At the same time, investors must cope with slower growth in China, minuscule growth in the euro area and negative growth in Japan. Such widespread sluggish demand – along with ample supplies of oil and most everything else – is the reason commodity prices are falling. They have been since early 2011, but many people failed to notice until recently, when crude oil prices nosedived.

Normally, less demand and a supply glut would lead OPEC, beginning with Saudi Arabia, to cut production. As the de facto cartel leader, the Saudis would often reduce output to prevent supply increases from driving down prices. Of course, this also cost the Saudis market share and encouraged cheating by OPEC members. Saudi leaders must grind their teeth over the last decade’s unchanged demand for OPEC oil, while all the global growth has been among non-OPEC suppliers, principally in North America. That may explain why, while Americans were enjoying their Thanksgiving turkeys, OPEC surprised the world. Pressed by the Saudis and other rich Persian Gulf producers, it refused to cut output despite a 38% drop in the price of Brent crude, the global benchmark, since June.

OPEC, in effect, is challenging other producers to a game of chicken. Sure, the wealthier producers need almost $100 a barrel to finance bloated budgets. But they also have huge cash reserves, which they figure will outlast the cheaters and the U.S. shale-oil producers when prices are low. The Saudis also seized the opportunity to damage their opponents, especially Iran and what they see as Iran-dominated Iraq, in the Syria conflict. They also want to help allies Egypt and Pakistan reduce expensive energy subsidies as prices fall.

“.. the four states where oil is more important to the local economy than Texas have a combined GSP that is only 16% of the Texas GSP.”

• Houston Suddenly Has A Very Big Problem (Feroli via ZH)

The well-known energy renaissance in the US has occurred in both the oil and natural gas sectors. Some states that are huge natural gas producers have limited oil production: Pennsylvania is the second largest gas producing state but 19th largest oil producer. The converse is also true: North Dakota is the second largest crude producer but 14th largest gas producer. However, most of the economic data as it relates to the energy sector, employment, GDP, etc, often lump together the oil and gas extraction industries. Yet oil prices have collapsed while natural gas prices have held fairly steady. To understand who is vulnerable to the decline in oil prices specifically we turn to the EIA’s state-level crude oil production data.

The first point, mentioned at the outset, is that Texas, already a giant, has become a behemoth crude producer in the past few years, and now accounts for over 40% of US production. However, there are a few states for which oil is a relatively larger sector (as measured by crude production relative to Gross State Product): North Dakota, Alaska, Wyoming, and New Mexico. For two other states, Oklahoma and Montana, crude production is important, though somewhat less so than for Texas. Note, however, that these are all pretty small states: the four states where oil is more important to the local economy than Texas have a combined GSP that is only 16% of the Texas GSP. Finally, there is one large oil producer, California, which is dwarfed by such a huge economy that its oil intensity is actually below the national average, and we would expect it, like the country as a whole, to benefit from lower oil prices.

As discussed above, Texas is unique in the country as a huge economy and a huge oil producer. When thinking about the challenges facing the Texas economy in 2015 it may be useful, as a starting point, to begin with the oil price collapse of 1986. Then, like now, crude oil prices collapsed around 50% in the space of a few short months. As noted in the introduction, the labor market response was severe and swift, with the Texas unemployment rate rising 2.0%-points in the first three months of 1986 alone. Following the hit to the labor market, the real estate market suffered a longer, slower, burn, and by the end of 1988 Texas house prices were down over 14% from their peak in early 1986 (over the same period national house prices were up just over 14%). The last act of this tragedy was a banking crisis, as several hundred Texas banks failed, with peak failures occurring in 1988 and 1989.

Chances they’ll do anything shrink by the day.

• Saudis Insist Oil Supply Cuts Are Not Needed (Independent)

Gulf states yesterday insisted that oil prices will recover without intervention from the OPEC cartel, arguing that current prices will boost global economic growth. Crude oil prices have plummeted as global demand has eased and new supplies such as US shale oil have come on to the market. The cost of benchmark Brent crude has nearly halved from $115 a barrel in June to below $60 last week. But although oil producers and explorers from Aberdeen to Alberta are struggling to operate at a profit, OPEC has refused to cut supply in order to lift prices. Ali al-Naimi, the Saudi oil minister, yesterday said he was “100% not pleased” with current prices, but insisted: “I am confident the oil market will improve.” He added: “Current prices do not encourage investment, but they stimulate global economic growth, leading ultimately to an increase in global demand and a slowdown in the growth of supplies.”

Saudi Arabia, OPEC (and the world’s) largest oil exporter, has been the “swing supplier” in the past, cutting or increasing production in order to stabilise global oil prices at around $100 a barrel. The Gulf state blames the current price slump on speculators and a lack of co-operation from producers outside OPEC, and Mr Naimi said the kingdom would not act this time. “If they [non-OPEC oil producers] want to cut production they are welcome,” he told reporters on the sidelines of the 10th Arab Energy Conference in the United Arab Emirates. “Certainly Saudi Arabia is not going to cut.” Attempts to get non-OPEC producers such as Russia to sign up to output reductions before last month’s meeting of the oil cartel failed. “I don’t think we [OPEC] need to cut,” Kuwait’s oil minister told Reuters yesterday. “We gave a chance to others, they were not willing to do so.”

“It’s been a really volatile period, and frankly that’s how Saudi Arabia wants it,” [..] “This is a battle of endurance.”

• Oil Crash Wipes $11.7 Billion From Buyout Firms’ Holdings (Bloomberg)

Oil’s plunge makes energy a great investment for the coming years, according to Blackstone’s Stephen Schwarzman and Carlyle’s David Rubenstein. For private equity firms, it’s also been painful. More than a dozen firms – including Apollo Global , Carlyle, Warburg Pincus and Blackstone – have lost a combined $11.7 billion in 27 publicly traded oil producers since June, when crude prices reached this year’s peak before beginning their six-month slide, according to data compiled by Bloomberg. Stocks of buyout firms with exposure to energy have slumped, and bond prices suggest some closely held oil producers may struggle to pay for their debt. “It’s been a really volatile period, and frankly that’s how Saudi Arabia wants it,” said Francisco Blanch, head of global commodity research at Bank of America. “This is a battle of endurance.”

Brent crude oil slumped 47% to about $61 late last week from its high this year of $115 a barrel, dragging down energy stocks, as the Organization of Petroleum Exporting Countries sought to defend market share amid a U.S. shale expansion that’s adding to a global glut. The group, responsible for 40% of the world’s supply, will refrain from curbing output, U.A.E. Energy Minister Suhail al-Mazrouei said on Dec. 14. Kosmos Energy, Antero Resources, EP Energy, Laredo Petroleum and SandRidge Energy, each of which is backed by a buyout firm as its largest shareholder, fell by an average of 50% in U.S. trading from oil’s peak through Dec. 19 in New York. Warburg Pincus is the top stakeholder in Kosmos, Antero and Laredo; Apollo is the largest investor in EP Energy; and Carlyle, with a partner, owns the biggest piece of SandRidge, according to data compiled by Bloomberg.

Apollo has $5 billion invested in energy debt and equity, including companies that are closely held. Carlyle has directed 10% of its $203 billion in assets into the industry. Blackstone, the second-biggest shareholder in Kosmos, has backed drilling projects off Ghana’s coast and in the Gulf of Mexico. The deals highlight private equity’s role in the debt-fueled shale push, as hydraulic fracturing in search of oil and gas leads to higher production. After investing billions of dollars, the firms are preparing to step in with more cash to fund development when prices stabilize.

More consequences.

• North Sea Oil Summit Announced By Aberdeen City Council (BBC)

A plan for a summit to look at the challenges facing the North Sea oil industry has been announced by Aberdeen City Council. Council leader Jenny Laing said the UK and Scottish governments, trade unions and industry bodies needed “to get round the table as soon as possible”. The Labour councillor said a “strategic plan” was required to save jobs as the price of oil continued to fall. Labour called on Nicola Sturgeon and David Cameron to attend the summit. It comes after a warning that the UK’s oil industry is in “crisis”. On Thursday, Robin Allan, chairman of the independent explorers’ association Brindex, told the BBC that the industry was “close to collapse”. He claimed almost no new projects in the North Sea were profitable with oil below $60 a barrel. However, Sir Ian Wood, another leading industry figure, said Mr Allan’s warning was “well over-the-top and far too dramatic”. Sir Ian predicted conditions would begin to recover next year.

Ms Laing said Aberdeen was the oil capital of Europe and as such it was her job, as leader of the city council, to work with the governments in Edinburgh and Westminster and the oil industry to ensure jobs in the city were protected and companies remained based there. She said: “I have today instructed Angela Scott, our chief executive, to arrange a summit between senior politicians, government officials, industry representatives, trade unions, and local politicians. “The aim will be to ensure an agreement to develop a strategic plan to ensure job losses are either avoided or kept to a minimum. “It must concern us all that the price of oil has dropped so heavily in such a short space of time and we need to agree a strategy to deal with fluctuations that undermine confidence in the North Sea.” Ms Laing said the council chief executive would write to various politicians within both the UK and Scottish governments, as well as UK Oil and Gas, other industry leaders and trade unions to encourage them to take part in the summit.

Dangerous development.

• Southwest’s Oil Swap Trade Waiver Raises CFTC Questions (Reuters)

Last month’s move by the U.S. commodities regulator to let Southwest Airlines Co keep its multibillion-dollar oil trades secret for 15 days offered the world’s biggest low-cost carrier a break it has been seeking for three years. However, the decision to grant the airline an exemption from rules calling for greater derivatives transparency raised concerns about its market impact and sparked a debate among regulators, according to people familiar with the approval process. All other swap trades except Southwest’s must be reported “as soon as technologically practicable.” The Dallas-based airline has argued that its deals are so specific that immediate disclosure could cause the market to move against it, adding tens of millions of dollars to its costs. For years, that argument was not enough to sway the Commodity Futures Trading Commission and its former chairman, Gary Gensler. One concern was that granting an exemption to just one company is unusual and could hurt others in a similar position.

Also, the waiver could set a precedent that would encourage others to seek similar special treatment, restoring a veil over bigger parts of derivative markets. The agency is already looking into problems the Mexican government is facing in its vast oil hedging program after news organizations, including Reuters, reported on the country’s trades using publicly available swaps trading data, said one person familiar with the agency’s procedures. A CFTC spokesman said Tim Massad, Gensler’s successor, had issued the waiver to Southwest after his staff had done proper analysis to confirm the company’s claims, and the relief was a lot narrower than what the company had originally requested. But the person familiar with the approval process said the decision caused “a big stink” within the agency.

Still happy?

• US Gas Prices Fall To Lowest Since May 2009 (Reuters)

The average price of a gallon of gasoline in the United States fell 25 cents in the past two weeks, tumbling to its lowest level in more than five-and-a-half years, according to the Lundberg survey released Sunday. Prices for regular-grade gasoline fell to $2.47 a gallon in the survey dated Dec. 19, down 25 cents since the previous survey on Dec. 5. The recent drop has taken prices down more than $1.25 a gallon since a recent peak in May of this year.

“This is mostly driven by crude oil prices, and absent a sudden spike we very well may see a drop of a few pennies more,” said the survey’s publisher, Trilby Lundberg. “That said, demand is up at these low prices.” U.S. crude futures have been sharply weaker of late, dropping for four straight weeks, as well as in 11 of the past 12 weeks. Crude prices fell 14.2% over the past two weeks, though they rose 5.1% on Friday, settling at $57.13 per barrel. The highest price within the survey area in 48 U.S. states was recorded in Long Island at $2.82 per gallon, with the lowest in Tulsa, at $2.06 per gallon.

Wonder if Russia stress tests its companies.

• Rosneft Repays $7 Billion and Says Has No Need to Buy Dollars (Bloomberg)

Rosneft repaid $7 billion in debt and said it is generating enough dollars to meet the obligations taken on to buy TNK-BP last year and become the world’s largest traded oil producer. The state-led company, hit by sanctions from the U.S. and EU limiting access to capital markets, said it has settled $24 billion this year in line with credit agreements. Rosneft has sufficient foreign currency to cover debt, Chief Executive Officer Igor Sechin said in a statement. “To service debt the company does not need to enter the currency market, because it generates enough foreign currency earnings,” Sechin said. The latest repayment doesn’t mean the end of financial pressure on Rosneft however.

The oil producer has to grapple with the slump in oil prices, sanctions that bar it from international capital markets and a Russian economy at risk of sliding into recession. Rosneft is scheduled to repay another bridge loan of $7.1 billion on Feb. 13, the first part of $19 billion in debt repayments scheduled for next year, according to data compiled by Bloomberg. Sechin, who denied speculation last week the company had been selling rubles to buy dollars, said today that the company may get state support from Russia’s state Wellbeing Fund. The money would be used to develop oil projects at home, he said.

“For the sake of national interests, China should deepen cooperation with Russia when such cooperation is in need.”

• China Offers Russia Help With Currency Swap Suggestion (Bloomberg)

Two Chinese ministers offered support for Russia as President Vladimir Putin seeks to shore up support for the ruble without depleting foreign-exchange reserves. China will provide help if needed and is confident Russia can overcome its economic difficulties, Foreign Minister Wang Yi was cited as saying in Bangkok in a Dec. 20 report by Hong Kong-based Phoenix TV. Commerce Minister Gao Hucheng said expanding a currency swap between the two nations and making increased use of yuan for bilateral trade would have the greatest impact in aiding Russia, according to the broadcaster. The ruble strengthened 4.1% against the dollar today amid the signs of willingness by China, the world’s second-largest economy, to prop up its neighbor.

Russia, the biggest energy exporter, saw its currency tumble as much as 59% this year as crude oil prices slumped and U.S. and European sanctions hurt the economy. President Xi Jinping last month called for China to adopt “big-country diplomacy” as he laid out goals for elevating his nation’s status. “Many Chinese people still view Russia as the big brother, and the two countries are strategically important to each other,” said Jin Canrong, Associate Dean of the School of International Studies at Renmin University in Beijing, referring to the Soviet Union’s backing of Communist China in its first years. “For the sake of national interests, China should deepen cooperation with Russia when such cooperation is in need.”

Still corrupt to the bone.

• China Investigates Possible Stock-Price Manipulation (WSJ)

China is investigating possible stock-price manipulation amid the recent run-up in the country’s equity market, according to officials with direct knowledge of the matter, a move that serves as a stark reminder of the problems that have long haunted Chinese stocks. The probe launched by the China Securities Regulatory Commission comes as stocks traded in mainland China rallied to their highest level in three years on Monday despite the country’s weakening economic growth. Much of the surge, analysts and officials say, has been triggered by short-term speculators betting on looser monetary conditions as opposed to investors with long-term belief in China’s economy. The securities commission is focusing its investigation on a practice that involves groups of investors pumping up prices of certain targeted stocks. Such practices were common during the early and mid-2000s when China’s stock market boomed along with the country’s breathtaking economic growth.

The market peaked in 2007 and started to plummet a year later as the global financial crisis weighed on China’s growth. The practice, which was common in China’s previous market boom, “is making a comeback,” one of the officials said. The securities agency said on Friday that it had launched investigations into 18 stocks, but didn’t explain the reasons for the probe at the time. Most of the stocks targeted are those of small-cap companies, such as a maker of automobile tires in eastern China’s Shandong province and a government-controlled hydroelectric power company in central China’s Hunan province. Shares in larger companies are harder to manipulate because the volumes are bigger. The probes mainly focus on the “individuals and institutions” who recently bought into the stocks, and the companies themselves aren’t the target, the officials said.

“.. early trade volumes in the program launched in mid-November were completely dominated by hedge funds and banks’ proprietary trading desks ..”

• China Stock Connect Scheme Scorecard Throws Up Surprises (Reuters)

A month after China opened up its equity markets in a landmark trading link with Hong Kong, demand has been subdued and the bulk of activity has come from short-term speculative investors. The authorities had hoped mutual and pension funds and private banks would form the bedrock of the Shanghai-Hong Kong stock connect. But early trade volumes in the program launched in mid-November were completely dominated by hedge funds and banks’ proprietary trading desks, according to five traders at some of the biggest brokerages participating in the scheme. Regulatory hurdles have kept out a large swathe of the investment community – and the steady business the financial industry and regulators had hoped they would bring – despite a sizzling stock market rally on the mainland.

Market players say it could take months for long-term investors to eventually trickle into the program, as they devise ways to cope with its peculiarities. “We are not participating in the scheme yet because of the operational issues that have yet to be resolved and we prefer to access the mainland markets via exchange traded funds,” Robert Cormie, Asia CEO of BMO Private Bank, told Reuters. Edmund Yun, executive director of investment at the same wealth management firm, agreed, citing a number of prohibitive issues. These include beneficial ownership, tax and trading settlement. Hedge funds use banks’ prime brokerages, which help them more deftly manage those regulatory constraints.

Stock portfolios of hedge funds are often held by the prime brokers themselves to facilitate quick trading decisions so they are unaffected by ownership constraints. For example, under the scheme, funds wanting to sell holdings of Shanghai-listed shares have to deliver the shares to brokers a day before they are to be sold, a peculiarity that exists in no other major stock market. While regulators have looked for ways to encourage long-term funds, including fast-tracking applications for products benchmarked under the stock connect scheme, industry officials say that persuading pension funds to participate could take months.

“.. there are no such things as “aggregate demand,” or “aggregate supply,” or output and employment “as a whole.” These are statistical creations constructed by economists and statisticians ..”

• The Fallacy of Keynesian Macro-Aggregates (Ebeling)

A specter is haunting the world, the specter of two% inflationism. Whether pronounced by the U.S. Federal Reserve or the European Central Bank, or from the Bank of Japan, many monetary central planners have declared their determination to impose a certain minimum of rising prices on their societies and economies. One of the oldest of economic fallacies continues to dominate and guide the thinking of monetary policy makers: that printing money is the magic elixir for the creating of sustainable prosperity. In the eyes of those with their hands on the handle of the monetary printing press the economic system is like a balloon that, if not “fully inflated” at a desired level of output and employment, should be simply “pumped up” with the hot air of monetary “stimulus.”

The fallacy is the continuing legacy of the British economist, John Maynard Keynes, and his conception of “aggregate demand failures.” Keynes argued that the economy should be looked at in terms of series of macroeconomic aggregates: total demand for all output as a whole, total supply of all resources and goods as a whole, and the average general levels of all prices and wages for goods and services and resources potentially bought and sold on the overall market. If at the prevailing general level of wages, there is not enough “aggregate demand” for output as a whole to profitably employ all those interested and willing to work, then it is the task of the government and its central bank to assure that sufficient money spending is injected into the economy. The idea being that at rising prices for final goods and services relative to the general wage level, it again becomes profitable for businesses employ the unemployed until “full employment” is restored.

Over the decades since Keynes first formulated this idea in his 1936 book, The General Theory of Employment, Interest, and Money, both his supporters and apparent critics have revised and reformulated parts of his argument and assumptions. But the general macro-aggregate framework and worldview used by economists in the context of which problems of less than full employment continue to be analyzed, nonetheless, still tends to focus on and formulate government policy in terms of the levels of and changes in output and employment for the economy as a whole. In fact, however, there are no such things as “aggregate demand,” or “aggregate supply,” or output and employment “as a whole.” These are statistical creations constructed by economists and statisticians, out of what really exists: the demands and supplies of multitudes of individual and distinct goods and services produced, and bought and sold on the various distinct markets that comprise the economic system of society.

“.. the EC wants Russia to bail out Ukraine while accusing Russia of invading Ukraine. Icing on the wonderland-cake is the Russian Ruble has plunged nearly 50% this year, but Ukraine needs money from Russia to fight Russia. Is this complete lunacy or what?”

• Europe in Wonderland Wants Russia to Bail Out Ukraine (Mish)

Ukraine’s president, speaking a day after the nation’s junk credit rating was cut further, said next year’s budget mustn’t cut corners on military spending and should account for the possibility of an invasion. “The war made us stronger, but has crushed the economy,” Poroshenko said. “There’s one article of spending that we won’t save on and that’s security. Ukraine is finalizing next year’s fiscal plan amid a new cease-fire in the conflict that’s ravaged its industrial heartland near Russia’s border. As its economy shrinks and reserves languish at a more than 10-year low, it’s also racing to secure more international aid to top up a $17 billion rescue.

Standard & Poor’s said Dec. 19 that a default may become inevitable, downgrading Ukraine’s credit score one step to CCC-. With official forecasts putting this year’s contraction at 7%, the government needs $15 billion on top of its bailout to stay afloat, according to the European Union. The European Union and the U.S. are discussing $12 billion to $15 billion in aid to Ukraine and “there needs to be a Russian contribution to the package,” Pierre Moscovici, the 28-nation bloc’s economy commissioner, said at a Bloomberg Government event this week in Washington. A decision is needed in January, he said.

Ukraine president says “War has made us stronger“. That lie is so stupid my dead grandmother knows it from the grave. The evidence is a CCC- debt rating, a step or so above above default, with default imminent. The story gets even stranger. To avoid default, Ukraine needs a “Russian contribution to the package” according to Pierre Moscovici, the economic policy commissioner for the European Commission. Europe and the US have crippling sanctions on Russia for the conflict in Ukraine, yet the EC wants Russia to bail out Ukraine while accusing Russia of invading Ukraine. Icing on the wonderland-cake is the Russian Ruble has plunged nearly 50% this year, but Ukraine needs money from Russia to fight Russia. Is this complete lunacy or what?

“Once we are shielded economically and politically, we can find the appropriate schedule for national elections, even by the end of 2015 ..”

• Greek Premier Makes Offer In Bid To Avoid Snap Elections (WSJ)

Greek Prime Minister Antonis Samaras reached out to lawmakers Sunday, offering a set of compromises to resolve an impasse over the selection of Greece’s future head of state and to avoid snap elections early next year. Speaking in an unscheduled televised address, the Greek premier called for consensus over the government’s presidential candidate. In return, he offered to hold general elections by the end of 2015 – before the term of the current government expires – but only after Greece concluded negotiations with its international creditors and passed political and constitutional reforms. “Once we are shielded economically and politically, we can find the appropriate schedule for national elections, even by the end of 2015,” Samaras said.

“We cannot enter into a period of uncertainty as soon as we finish another one. The problems of the country cannot stagnate in a permanent election campaign.” Samaras also offered to reshuffle his cabinet to include ministers who would be appointed by other political parties, a move aimed at winning over undecided lawmakers from smaller parties in parliament. Elected to a four-year term in mid-2012, the country’s current coalition government — composed of the conservative New Democracy and the socialist Pasok parties — isn’t due to face elections again until June 2016. But it faces an uphill struggle convincing a supermajority of lawmakers to back its candidate for head of state, a largely ceremonial role.

The opposition Syriza party is blocking the election of the government’s candidate in the hopes of forcing early elections. Under Greece’s constitution, parliament has three tries to elect a president — a first vote took place last week, a second is due on Tuesday and the last tentatively scheduled for Dec. 29. If it fails, parliament would be dissolved and fresh elections called within a month. In the first two rounds, the president must be elected by a two-thirds majority of the 300 lawmakers in parliament, but that threshold falls to 180 votes in the third and final round.

” .. It has conjured up the example of a European debt conference to wipe away a portion of the debt, as happened with Germany in 1953.”

• Greece’s Radical Left Could Kill Off Austerity In The EU (Guardian)

What misery has been inflicted on Greece. One in four of its people are out of work; poverty has surged from 23% before the crash to 40.5%; and research has demonstrated how key services such as health have been hammered by cuts, even as demand has risen. No wonder the country has experienced a political polarisation that has prompted comparisons with Weimar Germany. The neo-Nazi Golden Dawn – which makes other European rightist movements look like fluffy liberals – at one point attracted up to 15% in the polls; though still a menace, its support has thankfully subsided to half that.

But unlike many other European societies – with the notable exceptions of Spain and Ireland – fury and despair with austerity has been channelled into the ranks of the populist left. After years on the fringes of Greek politics, Syriza only became a fully fledged party in 2012, and yet it won Greece’s elections to the European parliament earlier this year. The latest opinion polls give Syriza a substantial lead over the governing centre-right New Democracy party. A radical leftwing government could well assume power for the first time in the EU’s history. After years of social ruin, Syriza is offering Greeks that precious thing: hope. Although it has shifted from demanding an immediate cancellation of debt, it is demanding a negotiated solution.

It has conjured up the example of a European debt conference to wipe away a portion of the debt, as happened with Germany in 1953. Syriza’s manifesto proposes that repayment of debt could come through economic growth, rather than from budget cuts. It wants a European new deal backed up by an investment bank; an all-out war against the tax avoidance endemic in Greek society; an emergency employment programme; a raised minimum wage; and the restoration of collective bargaining. In alliance with anti-austerity forces such as Spain’s surging Podemos party, Syriza wants the EU to abandon crippling austerity policies in favour of quantitative easing and a growth-led recovery.

Getting worse.

• Rising Price Of Olive Oil Is A Pressing Matter (FT)

Never mind the shale revolution, or OPEC’s deliberations. Some oil producers are enjoying the highest prices in six years. A severe drought in Spain and a fruitfly infestation in Italy have caused a surge in the price of olive oil. The two countries normally account for just under 70% of output, and the Madrid-based International Olive Oil Council forecasts that production will drop next year by 27%. “Production in Spain is very, very short,” Rafael Pico Lapuente, director-general of Asoliva, the Spanish Olive Oil Exporters Association, said. The shortage has been pushing up wholesale prices for months. Premium-quality extra virgin olive oil rose to $4,282 a tonne last month, the highest since 2008, according to the International Monetary Fund. The civil war in Syria has also hit production there. Most Syrian output is consumed domestically, but some argue that this is providing further psychological support for prices.

Vito Martielli, analyst at Rabobank, said higher costs might further hit consumption in southern Europe, traditionally the largest market. The economic crisis in 2008 hit olive oil demand in Spain, Italy and Greece, and appetite has been waning as shoppers have turned to cheaper substitutes. Favorable weather in most parts of the world this year has meant that harvests of oilseed crops have been plentiful and prices have been falling. The price of soya oil has fallen 20% so far this year; palm oil has declined 17%, and rapeseed oil is down 5%. “We are in a situation where there are cheaper alternatives in Europe,” Mr Martielli said. The IOC expects olive oil consumption in 2015 to fall 7% to 2.8 million tonnes. Italy, the largest consumer of olive oil, is forecast to see a fall of 16% to 520,000 tonnes, Spain is expected to see a 3% decline to 515,000 tonnes, while Greece’s consumption is expected to fall 6% to 160,000 tonnes.

That’s what friends are for.

• Leaked CIA Docs Teach Operatives How To Infiltrate EU (RT)

Wikileaks has released two classified documents instructing CIA operatives how best to circumvent global security systems in international airports, including those of the EU, while on undercover missions. The first of the documents, dated September 2011, advises undercover operatives how to act during a secondary airport screening. Secondary screenings pose a risk to an agent s cover by focusing significant scrutiny on an operative via thorough searches and detailed questioning. The manual stresses the importance of having a “consistent, well-rehearsed, and plausible cover,” in addition to cultivating a fake online presence to throw interrogators off track. Meanwhile, the second document, dated January 2012, presents a detailed overview of EU Schengen Border Control procedures. The overview outlines the various electronic security measures, including the Schengen Information System (SIS) and the European fingerprint database EURODAC, used by border control and the dangers these measures may pose to agents on clandestine missions.

WikiLeaks’ chief editor Julian Assange explains that these documents show that under the Obama administration the CIA is still intent on infiltrating European Union borders and conducting clandestine operations in EU member states.” The document also demonstrates the CIA s increasing concern over the risks to operatives’ assumed identities posed by biometric databases the very same systems the US pushed for after 9/11. On Friday, WikiLeaks released a CIA report suggesting that though targeted killing programs, including drone strikes, may be effective in some cases, there is also a risk that the programs may backfire. For example, targeted strikes may prompt local populations to sympathize with insurgents or further radicalize remaining militants.

George W. Bushmeat and the Economics of Ebola

Oct 122014

October 12, 2014 Posted by Raúl Ilargi Meijer at 8:30 pm Finance Tagged with: bushmeat, casino, complacency, ebola, fruitbat, Madrid, nurse, Texas 25 Responses »

Dorothea Lange 4 families, 15 children, from Texas Dust Bowl, in roadside camp, Calipatria, CA Mar 1937

Ebola was until a few weeks ago mostly a forgotten affliction in the western world. Something that flared up in the Congo or thereabouts, parts of the world we’re aware of only because of the horrors of machete attacks and other mayhem induced by our own secret services in order to keep ‘our’ access to their mind-boggling amounts of resources going, while their populations live in conditions many miles below squalor.

We have applied divide and rule in the Congo better, or more ferociously, depending on your point of view, than anywhere else, ever. Hardly a word about western cruelty seeps through to our own media. A true imperium success story.

But the present ebola epidemic is not taking place where the disease was mostly raging. It’s in western Africa now. Where immense segments of native forest have been cut down, which in turn brought long-time ebola carrying fruit bats closer to other animals, and in turn to humans long dependent on bushmeat for survival.

Somewhere in that chain of events it was probably inevitable that an epidemic would break out. Of ebola or any other of a long list of viral or bacterial diseases. It’s also inevitable that a next epidemic will follow.

Until recently, my own personal knowledge of ebola was limited to the idea that it was one of, if not the worst way for a human being to die. Intense internal bleeding will do that. Something I find sorely missing in western media coverage of the people dying by the side of the road in west Africa. How they’re dying, that is.

It’s treated in a very detached way, as if it doesn’t really concern us until it might spread our way. ‘Western’ cases get treated with experimental drugs, while 4000+ Africans so far have been left to perish by the side of dirt roads in excruciating pain.

The ones that did receive treatment were attended to by local doctors, and that has led to dozens of the best and bravest doctors in Sierra Leone and Liberia succumbing to ebola themselves, a major feat in countries where per capita access to a doctor is mostly a tenth or a hundredth of what it is where we live. Take away doctors out of that situation, and that’s not even including nurses, and you have a disaster on your hands.

I’m not an expert on ebola or infectious diseases in general by any means, but I can read, and I can think, and occasionally I manage to bo both simultaneously. And what I see so far is a sweet mix of complacency, denial, stupidity and human error.

There’s a lot of political interest in downplaying the danger ebola poses. There’s even more economic interest in doing that, but then the two are Siamese twins. As of today in America, and last week in continental Europe, that attitude has become a threat to potentially millions of people.

I saw someone comparing HIV deaths to Ebola deaths, with the intent to downplay the threat, 1 million HIV deaths, ‘only’ 4000 ebola deaths. But ebola’s just getting started, and it’s much more contagious. Which makes such comparisons as irrelevant as it makes them dangerous.

The first Ebola infection on US soil that was announced today developed in the exact same way the one in Spain last week did: a health care worker tending to a confirmed ebola case got him/herself infected. Both ‘2nd generation’ cases have no idea how they were infected. The US nurse was allegedly wearing full-body protective gear all the time, while the Spanish nurse herself said she had no clue how she could have gotten the disease.

In the US case, we know that the first deadly victim, Thomas Duncan, had been in Liberia. He was sent home by several medical services after both reporting symptoms, and stating he’d been in ebola infected territory.The very same thing happened to the Spanish nurse, who was sent away from at least 3 clinics with a Tylenol prescription, after she had said she’d been attending to an ebola patient.

The patient she had been nursing was a priest who had been flown in from Africa after exhibiting symptoms. He was, however, the second Spanish priest in that situation. The first one reportedly died in the same hospital in Madrid as long ago as August.

Madrid got a lot of flack for the infected nurse: it was accused of not having its precautions properly in place. We should now review how well the Texas Presbyterian is doing in that regard. Given the fact that the Texas nurse diagnosed, or rather confirmed, today, was allowed to lead a normal personal life, socializing, shopping etc., until (s)he started exhibiting obvious symptoms, should make us feel queasy.

There will always be plenty political voices more than willing to declare that ‘there is no need to panic’ or ‘now is not the time to panic’, but we need to realize that what politicians and media say is inevitable based on economic grounds.

It might be worth contemplating to isolate western Africa from the rest of the world, halt flights etc., and meanwhile give them all the support we can, no matter what the cost. We choose instead to do everything related to support on the ground on the cheap, bleeding WHO coffers dry while we’re at it, and we let transportation options continue, because it would cost ‘too much’ not to. Money will rule our approach to ebola, like to everything else, until it’s too late.

Ironically, it was George W. Bushmeat government’s bio-terrorist anthrax and flu paranoia in the wake of 9/11 that injected a lot of money into America’s epidemiology protection layers. If not for those paranoid billions, I kid you not, G-d help us. His epitaph will read not only that he was an accomplishes portrait painter, he may well also have saved America from a much worse epidemic than it’s yet to get. America could sure use some of that paranoia right now.

And so could Europe, where everyone to a man solemnly declares that the chances of ebola appearing in their country are slim to none. And where dozens of flights arrive daily from west Africa. To paraphrase the CDC’s Mike Osterholm: the virus moves at virus time, we move at bureaucrat time.

The nurse is Madrid is reportedly healing, she’s been given the experimental ZMapp drug. We better get a million doses of that to Liberia and Sierra Leone. But we’ll probably fight over the economics of that until we need 10 million doses.

We’ve maybe grown so accustomed to living in a casino economy that we think the world is a crap table. But some things had better not be wagered on. Remember the Spanish Flu. Or should I say: Remember the Spanish Flu? Again, we tell ourselves no major epidemic could hurt us. We understand viruses as poorly as we do the exponential function. Which happen to have lots in common.

Judging from what we’ve seen so far, our health care systems are woefully unprepared for even single cases of ebola infection occurring on our soil. What’s going to happen when there’s dozens? Are we just going to say that there’s ‘only’ a 25% chance of that, based on some computer model? Or are we going to make sure we do what we can to keep ebola away from our lands?

There’s only one way to make sure: get into western Africa now, with all we have. Good for us, and good for our karma.

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