G.G. Bain Scramble for pennies – Thanksgiving, New York Nov 1911
I smell international trouble.
China, which as documented extensively in the past, has clammed down on its unprecedented credit creation now that its debt/GDP is well over 300% and as a result conventional industries are dying a fast and violent death. In fact, months ago we, jokingly, suggested that what China should do, now that it has scared sellers and shorters to death, is to launch QE where it matters – the commodity space. That joke has become a reality according to Reuters, which reports that China’s aluminum and nickel producers have asked Beijing to buy up surplus metal, sources said, the first coordinated effort since 2009 to revive prices suffering their worst rout since the global financial crisis.
The state-controlled metals industry body, China Nonferrous Metals Industry Association, proposed on Monday that the government scoop up aluminum, nickel and minor metals including cobalt and indium, an official at the association and two industry sources with direct knowledge of the matter said. The request was made to the state planner, the National Development and Reform Commission (NDRC). One Reuters source familiar with the producers’ request said the China Nonferrous Metals Industry Association had suggested that the state buys 900,000 tonnes of aluminum, 30,000 tonnes of refined nickel, 40 tonnes of indium, and 400,000 tonnes of zinc. In other words, everything that is plunging because there is simply no end-demand should simply be bought by the state.
And why not: in “developed” countries, the same thing is being done by central banks, only instead of directly “monetizing” metals, the central banks indirectly push up stock prices which is where 70% of household net worth is located. For China, and largely investment driven economy, the same can be said about commodity prices. Furthemore, as reported two months ago, at current commodity prices, more than half of all companies with debt in the space are unable to make even one interest payment using organic cash flow which makes the decision for Beijing moot: either buy up the excess metals or reap the consequences of mass defaults.
Reuters: “In the United States, aluminum smelters have blamed ballooning exports from China for hurting international prices. Nickel prices on the London Metal Exchange, which sets the benchmark for global trade, plunged to their lowest in more than a decade on Monday amid concerns about waning demand from China, the world’s second-largest economy. Few, if any smelters, are making a healthy profit at prices as low as $8,200 per tonne, down almost 60% since last year. Aluminum prices have fallen nearly 30% over the past year.”
“..about a quarter of all overseas investments and construction and engineering projects undertaken by Chinese companies from 2005 to 2014—worth $246 billion—have been stalled by snafus or failed.”
[..] At home, Beijing is attempting to decrease the economy’s dependence on astronomical levels of credit-driven investment for growth, and that spells tougher times for Chinese construction companies, equipment makers, and other businesses that had gorged on the country’s building boom. A key motivation behind Beijing’s big infrastructure schemes is to find fresh outlets for these companies overseas. China understandably expects that its own companies will take the lead in planning, constructing, and supplying projects it’s also funding. In fact, a study by London-based merchant bank Grisons Peak showed that 70% of the overseas loans it examined from two Beijing policy banks were made on the condition that at least part of the funds be used to purchase Chinese goods.
Even with China’s banks and special funds running full tilt, it’s uncertain where all of the money will come from to finance the Silk Road scheme. A report on Chinese state media says the number of projects under its umbrella has already reached 900, with an estimated price tag of $890 billion. With many projects destined for economically weak countries with dubious governance, China’s money could get lost to corruption or wasted in poorly conceived plans. Chinese companies already have a suspect record of implementing such projects. According to data compiled by the American Enterprise Institute (AEI), about a quarter of all overseas investments and construction and engineering projects undertaken by Chinese companies from 2005 to 2014—worth $246 billion—have been stalled by snafus or failed.
Almost half were in transport and energy—just the sort of projects that will be key to One Belt, One Road. “China is currently trying to create the story of an economic success, and if it has some public failures, that could be damaging to its brand,” says Homi Kharas, deputy director of the Global Economy and Development program at the Brookings Institution. Nor is there any guarantee that China’s cash will win it camaraderie. In Africa, where China has a long record of investment, a Gallup poll released in August showed the approval rating of Beijing’s leaders had dropped among Africans in 7 of the 11 countries included in the survey. “The goodwill expressed at the highest levels doesn’t trickle down into warm sentiments,” says J. Peter Pham, director of the Africa Center at the Atlantic Council, a think tank based in Washington. “Chinese soft power is relatively weak.”
China’s infrastructure bonanza also presents dangers to its own economy. Local governments are jumping on the bandwagon, announcing a slew of projects aimed at connecting their provinces to Silk Road routes. In an April report, HSBC estimated that the projects already planned within China could total $230 billion. That may help sustain growth in the short run but delay the economy’s crucial transition away from investment-led growth, which would lead to even harder times in coming years. In fact, One Belt, One Road is in its essence the export of China’s old growth strategy—using state banks to fund investment by Chinese companies on foreign soil.
None of these concerns is likely to matter in the end. China’s international infrastructure push is, after all, a diplomatic endeavor, one to which the reputation of the state has become intimately tied. “The Chinese are going to work very hard—throw money at any and all problems—to make sure prized ‘belt and road’ projects all work out,” says Derek Scissors, an AEI scholar. That could turn China’s grand Silk Road dreams into an even grander disappointment.
Not could but will.
The head of the European Union’s executive said Wednesday that the region’s Schengen border-free system was under threat and warned that if it fails, the single currency could fall with it. Speaking in the European Parliament in Strasbourg about the recent terror attacks in Paris, European Commission President Jean-Claude Juncker acknowledged that the “Schengen system is partly comatose.” “If the spirit of Schengen leaves us…we’ll lose more than the Schengen agreement. A single currency doesn’t make sense if Schengen fails,” he said. “You must know that Schengen is not a neutral concept. It’s not banal. It’s one of the main pillars of the construction of Europe.”
Faced with the biggest migration influx since the aftermath of the World War II and the recent terror attacks in Paris, a number of countries, including Germany, France and others have tightened controls of their borders. Member states are also looking to revise Schengen’s rules to tighten control of the EU’s external border and to change the way the free movement rules apply to asylum seekers. The Schengen Agreement, an arrangement that allows the free movement of European citizens between 26 countries across the continent, is under threat. The Wall Street Journal’s George Downs explains why. Schengen currently has 26 members, including several non-EU countries. It allows freedom of movement across the region and therefore plays a key role in underpinning the EU’s single market of goods, services and labor.
Mr. Juncker said that following the Nov. 13 Paris attacks, European politicians must resist the temptation to “mix up” asylum seekers and terrorists. He said those inciting violence in Europe’s capitals “are the same people who are forcing the unlucky of this planet to flee” Syria and other places. Mr. Juncker called for stepped-up coordination between intelligence agencies—a promise, he said, that had been made in the past but never followed up on. He confirmed the commission would make a proposal in December for an EU-wide border guard system and he pressed lawmakers to toughen the proposed EU passenger name records legislation to include people taking flights within the bloc. EU interior and justice ministers last week demanded this measure be included in the legislation which has been long delayed by the European Parliament.
Yeah, we know that works…
Euro zone central bank officials are considering options such as whether to stagger charges on banks hoarding cash or to buy more debt ahead of the next European Central Bank meeting, according to officials. Little over a week before the meeting to set the ECB’s policy course, numerous alternatives are open, from snapping up the bonds of towns and regions to introducing a two-tier penalty charge on banks that park money with the ECB. Officials, who spoke on condition of anonymity, said that even buying rebundled loans at risk of non-payment has been discussed in preparatory meetings, although such a radical step is highly unlikely for now. The ECB declined to comment. “They are still trying to figure out what will be in the package. A lot of people have different views,” said one official with knowledge of talks that have put ECB president Mario Draghi at loggerheads with sceptical German policy-makers.
“There are some who say you should surprise markets. But you cannot surprise indefinitely. Sooner or later, you are bound to disappoint.” A virtually stagnant euro zone economy and a heightened sense of concern at the ECB sets the backdrop for a series of high-level meetings of central bank officials in Frankfurt that take place this week. “We have deflation, so you have to do something,” said a second person. “How this all looks in a few years, nobody knows.” Yet after many weeks of discussion about what measures are needed to address persistently low price inflation, however, divisions are making it difficult to sign off any package to enhance quantitative easing and rock-bottom interest rates. Failing to do so risks disappointing investors who expect ECB policy setters to bolster a one-trillion-euro plus program of quantitative easing when they meet on December 3, in a move so significant it has been dubbed ‘QE2’.
Draghi has made it clear that he would be willing to extend ECB money printing, now used to buy chiefly government bonds, as well as increase the charge on banks holding money at the ECB – known as the negative deposit rate. In order to soften the impact of this on banks, officials are discussing a split-level rate, a contested step that would impose a higher charge on banks depending on the amount of cash they deposit with the ECB. “It could be combined with a ceiling, so that from a certain point onwards liquidity can only be parked overnight at a stronger rate,” said a second official. “Whether and how to shape a deposit rate cut in December is in discussion.” Any such staggered approach would blunt a straightforward increase in the charge, which would particularly hit banks from Germany or France, who park most with the ECB. Banks hold roughly €170 billion with the ECB in this way.
Britain’s banks lent more money through mortgages in October than at any point since the summer of 2008, figures show, as low interest rates and rising incomes tempted more people into the market. Gross mortgage lending hit £12.9bn during the month, 26% higher than in October 2014 and the highest figure since August 2008, according to the latest data from the British Bankers’ Association (BBA). Mortgage lending for house purchases slowed in the latter half of 2014, but has been growing again this year, and in October there were 77,951 approvals – 21% more than in the same month last year. Remortgaging was up by 34% year on year, at 24,275 approvals. The BBA said the average value of mortgages approved for house purchases was £175,600, while remortgagers typically borrowed £172,800.
Recent months have seen a price war among mortgage lenders, which has led to some of the cheapest deals on record. Borrowers looking to fix their mortgage for five years can pay as little as 2.14%, while those fixing for two years can get a rate as low as 1.15%. Richard Woolhouse, chief economist at the BBA, said: “These statistics show that housing market activity remained strong in October, with gross mortgage borrowing 26% higher than a year ago and at its highest level for seven years. “Consumers remain confident and their incomes are growing. Mortgage rates are at multi-year lows and people are snapping up the competitive deals being offered by banks.” Personal loan rates have also been plummeting, leading to a rise in borrowing, which the Bank of England warned on Tuesday “ultimately might be an issue that the financial policy committee might want to look at fairly carefully”.
“For the record, yet again: this Chancellor has missed every economic target he ever proclaimed.”
War is the great distraction. Right or wrong, foolish or wise, it suspends all the usual political and economic rules. Suddenly a chancellor who has spent five and a half years telling us “there is no money” can find ready billions for warfare. Though he might not wish it, George Osborne has been luckier than most. In what passed until recently for normal times, he would have approached today’s Autumn Statement under a black cloud of derision. To follow the tax credits debacle with the worst October borrowing figures in six years is more than just another bit of bad luck. Even in his own, narrow terms, Mr Osborne is bad at his job. Carnage and fear have, reasonably enough, given us other things to worry about. A chancellor’s task in an international crisis is to ensure that his Prime Minister has sufficient funds with which to keep the islands safe.
It is not (or not directly) Mr Osborne’s job to say whether F-35 Stealth aircraft are a lousy buy, or whether increasing billions should be earmarked for a Trident system that could be hacked by a laptop jockey. He just finds the cash. Recently, however, the Chancellor has taken to saying that you can’t have national security without economic security. It isn’t a new proposition, but Mr Osborne tried it for size again during his latest chat with the BBC’s Andrew Marr. Convoluted logic had him claiming, in essence, that you can’t fight terrorism unless he “balances the books”. It was a bold claim, not least because you could turn it on its head. Various police chiefs have stepped up to say that another round of Mr Osborne’s cuts will leave them ill-prepared to deal with events of the sort witnessed in Paris.
How’s that for a “long-term economic plan”? The funding for defence the Chancellor has meanwhile just discovered in the Treasury accounts in large part reinstates cash he has already cut. How’s that for shrewd economic management? The point is that the observation does not just apply to defence. Mr Osborne is improvising, even as his plans to eradicate a budget deficit – it was supposed to be gone by now – dissolve into a pile of excuses. So today, reportedly, he “finds” £3.8 billion to hold a politically-inconvenient winter crisis in NHS England at bay, as though winter has just been discovered. The reality is that the Chancellor is bringing forward one part of the £8.4bn the English NHS was meant to spend a couple of years from now.
And that sum – part of it still devoted to breaking junior doctors – was only supposed to keep the service alive while trusts edge towards insolvency. There is nothing “long-term” about this: it’s ad hoc, another skinned rabbit from a battered hat. Mr Osborne clings to the assumption that the only answer to a big borrowing problem is to cut spending hard and fast. When that doesn’t work, you cut again. If you meanwhile wish to lead the Tory Party and win a general election, you aim for an absurd budget surplus, detrimental to the wider economy, that might give scope for tax cuts circa 2020. And where does this austerity lead? To an £8.2bn government borrowing requirement in October, despite all previous cuts in state spending.
Ambrose wants to embrace Osborne, but even he finds it hard.
George Osborne has wisely pulled back from a fiscal cliff and a welfare crisis next year but the austerity measures planned until the end of the decade will nevertheless be draconian. Citigroup and RBS both estimate that net retrenchment will be 3.5pc of GDP over the coming three years, roughly what we have already endured since the Lehman crisis. Much of it is from higher taxes – normally the reflex of Labour or the French socialists. This is in stark contrast to the eurozone, where policy is finally on a neutral setting after the bloodbath of 2011-2013. The US is even going into a period of net fiscal stimulus as state and local governments launch a blitz of spending. Unfortunately, Britain needs its bitter medicine. Cyclically-adjusted net borrowing is 3.4pc of GDP this year, the highest in the Western world.
This is courting fate at such a late stage of the economic cycle, leaving no safety margin against an external shock or a global recession. The current account deficit is the worst in the OECD club at 5.1pc of GDP. The country is systematically borrowing from global investors to fund a lifestyle beyond its means. The Bank of England warned in its Stability Report that the deficit leaves the UK vulnerable to a sudden cut-off at any time, if the mood changes. “We’re selling off assets to finance excessive spending,” said Philip Rush from Nomura. “Foreigners may be comfortable to do this now but what happens if the economy rolls over or there is a vote for Brexit?” Plundering the family silver has led to a slow deterioration of Britain’s “net international investment position”, now -25pc of GDP and ever closer to the danger line of 30pc flagged by the IMF.
Fiscal contraction is one way to deal with this, so long as the axe falls on over-consumption, and not on the pockets of spending that boost productivity. Osborne’s latest retreat on welfare ensures that it will not go beyond the correct therapeutic dose and bring the economy to a screeching halt. The lesson from Europe’s double-dip recession is that fiscal overkill is counter-productive, since the contraction of nominal GDP causes the debt ratio to rise even faster. One can only smile at Osborne’s mellifluous suggestion that he can ditch two-thirds of the spending cuts penciled in a recently as March, yet still achieve a budget surplus of £10.1bn by 2019-2020. [..] What Osborne has failed to do yet again in this Autumn Statement is to grasp the nettle of reform and start to sort out the chronic pathologies of the British economy.
That means a shift in the entire tax and regulatory system to reward output, to curb our proclivity to import and to raise the rate of savings and investment. It means a radical assault on Britain’s dire productivity levels, our lack of skills and our bad infrastructure, even if this means that the deficit comes down more slowly in the short run. We know the problems. They are listed in the World Economic Forum’s index of competitiveness. The UK ranks 126 for savings, 63 for maths and science in schools, 62 for days to start a business, 57 for procedures, 44 for government procurement of hi-tech products, 42 for business costs of crime, 33 for work incentives, 30 for quality of roads and so on. What we have is a typical British story: manufacturing stagnation and dismal exports, with economic growth once again reliant on a deeply unhealthy property market. Household debt ratios are about to take off again. We all know how this will end.
“The UK already spends just a tenth of the European average on funding parties..”
The Government has moved to make sharp cuts to state funding to Britain’s opposition parties. So-called “short money”, an annual payment that has been paid to opposition parties since the 1970s, will be cut by 19% subject to parliamentary approval. Short money is not received by parties in Government and was introduced to allow oppositions to “more effectively fulfil their parliamentary functions”. It is generally used to employ parliamentary staff and meet political office costs. The cut will affect Labour the most and also take significant chunks of funding from the SNP, Green Party and smaller regional parties. The cut was not mentioned by George Osborne in his speech to the House of Commons but emerged later when full documentation was released.
“The government has taken a series of steps to reduce the cost of politics, including cutting and freezing ministerial pay, abolishing pensions for councillors in England and legislating to reduce the size of the House of Commons,” the spending review says. “However, since 2010, there has been no contribution by political parties to tackling the deficit. Subject to confirmation by Parliament, the government proposes to reduce Short Money allocations by 19%, in line with the average savings made from unprotected Whitehall departments over this Spending Review.” The payments will then be frozen in cash terms for the rest of the Parliament, removing automatic rises with inflation.
Grants for policy development will also be cut by the same amount. The Government says the cost of short money has risen from £6.9 million in 2010-11 to £9.3 million in 2015-16. Katie Ghose, chief executive of the Electoral Reform Society, which campaigns for democratic reform, said the cut would be likely to damage government accountability. “The decision to cut public funding for opposition parties by 19% is bad news for democracy. The UK already spends just a tenth of the European average on funding parties,” she said. “Short Money is designed to level the playing field and ensure that opposition parties can hold the government of the day to account. This cut could therefore be deeply damaging for accountability.”
If governments won’t do it…
A class action lawsuit, filed Wednesday, accuses 10 of Wall Street’s biggest banks and two trading platforms of conspiring to limit competition in the $320 trillion market for interest rate swaps. The class action lawsuit, filed in U.S. District Court in Manhattan, accuses Goldman Sachs, Bank of America Merrill Lynch, JPMorgan Chase, Citigroup, Credit Suisse, Barclays, BNP Paribas, UBS, Deutsche Bank, and the Royal Bank of Scotland of colluding to prevent the trading of interest rate swaps on electronic exchanges, like the ones on which stocks are traded. As a result, the lawsuit alleges, banks have successfully prevented new competition from non-banks in the lucrative market for dealing interest rate swaps, the world’s most commonly traded derivative. The banks “have been able to extract billions of dollars in monopoly rents, year after year, from the class members in this case,” the lawsuit alleged.
The suit was brought by The Public School Teachers’ Pension and Retirement Fund of Chicago, which purchased interest rate swaps from multiple banks to help the fund hedge against interest rate risk on debt. The plaintiffs are represented by the law firm of Quinn, Emanuel, Urquhart, & Sullivan LLP, which has taken the lead in a string of antitrust suits against banks. As a result of the banks’ collusion, the suit alleges, the Chicago teachers’ pension and retirement fund overpaid for those swaps. The suit alleged that since at least 2007 the banks “have jointly threatened, boycotted, coerced, and otherwise eliminated any entity or practice that had the potential to bring exchange trading to buyside investors.” “Defendants did this for one simple reason: to preserve an extraordinary profit center,” the lawsuit said.
Doesn’t seem to be much doubt left on the Turkey-ISIS connection.
In October 2014 US Vice President Joe Biden told a Harvard gathering that Erdogans regime was backing ISIS with hundreds of millions of dollars and thousands of tons of weapons& Biden later apologized clearly for tactical reasons to get Erdogans permission to use Turkey’s Incirlik Air Base for airstrikes against ISIS in Syria, but the dimensions of Erdogan’s backing for ISIS since revealed is far, far more than Biden hinted. Erdogans involvement in ISIS goes much deeper. At a time when Washington, Saudi Arabia and even Qatar appear to have cut off their support for ISIS, they remaining amazingly durable. The reason appears to be the scale of the backing from Erdogan and his fellow neo-Ottoman Sunni Islam Prime Minister, Ahmet Davutoglu.
The prime source of money feeding ISIS these days is sale of Iraqi oil from the Mosul region oilfields where they maintain a stronghold. The son of Erdogan it seems is the man who makes the export sales of ISIS-controlled oil possible. Bilal Erdogan owns several maritime companies. He has allegedly signed contracts with European operating companies to carry Iraqi stolen oil to different Asian countries. The Turkish government buys Iraqi plundered oil which is being produced from the Iraqi seized oil wells. Bilal Erdogans maritime companies own special wharfs in Beirut and Ceyhan ports that are transporting ISIS smuggled crude oil in Japan-bound oil tankers.
Girsel Tekin, vice-president of the Turkish Republican Peoples Party, CHP, declared in a recent Turkish media interview: “President Erdogan claims that according to international transportation conventions there is no legal infraction concerning Bilal’s illicit activities and his son is doing an ordinary business with the registered Japanese companies, but in fact Bilal Erdogan is up to his neck in complicity with terrorism, but as long as his father holds office he will be immune from any judicial prosecution.” Tekin adds that Bilal’s maritime company doing the oil trades for ISIS, BMZ Ltd, is a family business and president Erdogans close relatives hold shares in BMZ and they misused public funds and took illicit loans from Turkish banks.
French geopolitical analyst, Thierry Meyssan [..] claims that the Syria strategy of Erdogan was initially secretly developed in coordination with former French Foreign Minister Alain Juppe and Erdogans then Foreign Minister Ahmet Davutoglu, in 2011, after Juppe won a hesitant Erdogan to the idea of supporting the attack on traditional Turkish ally Syria in return for a promise of French support for Turkish membership in the EU. France later backed out, leaving Erdogan to continue the Syrian bloodbath largely on his own using ISIS.
1984 as the new normal.
In the autumn of 2012, when Walmart first heard about the possibility of a strike on Black Friday, executives mobilized with the efficiency that had built a retail empire. Walmart has a system for almost everything: When there’s an emergency or a big event, it creates a Delta team. The one formed that September included representatives from global security, labor relations, and media relations. For Walmart, the stakes were enormous. The billions in sales typical of a Walmart Black Friday were threatened. The company’s public image, especially in big cities where its power and size were controversial, could be harmed. But more than all that: Any attempt to organize its 1 million hourly workers at its more than 4,000 stores in the U.S. was an existential danger.
Operating free of unions was as essential to Walmart’s business as its rock-bottom prices. OUR Walmart, a group of employees backed and funded by a union, was asking for more full-time jobs with higher wages and predictable schedules. Officially they called themselves the Organization United for Respect at Walmart. Walmart publicly dismissed OUR Walmart as the insignificant creation of the United Food and Commercial Workers International (UFCW) union. “This is just another union publicity stunt, and the numbers they are talking about are grossly exaggerated,” David Tovar, a spokesman, said on CBS Evening News that November.
Internally, however, Walmart considered the group enough of a threat that it hired an intelligence-gathering service from Lockheed Martin, contacted the FBI, staffed up its labor hotline, ranked stores by labor activity, and kept eyes on employees (and activists) prominent in the group. During that time, about 100 workers were actively involved in recruiting for OUR Walmart, but employees (or associates, as they’re called at Walmart) across the company were watched; the briefest conversations were reported to the “home office,” as Walmart calls its headquarters in Bentonville, Ark.
The details of Walmart’s efforts during the first year it confronted OUR Walmart are described in more than 1,000 pages of e-mails, reports, playbooks, charts, and graphs, as well as testimony from its head of labor relations at the time. The documents were produced in discovery ahead of a National Labor Relations Board hearing into OUR Walmart’s allegations of retaliation against employees who joined protests in June 2013. The testimony was given in January 2015, during the hearing. OUR Walmart, which split from the UFCW in September, provided the documents to Bloomberg Businessweek after the judge concluded the case in mid-October. A decision may come in early 2016.
But so do ‘renewable’ energy companies.
Fossil fuel companies risk wasting up to $2tn (£1.3tn) of investors’ money in the next decade on projects left worthless by global action on climate change and the surge in clean energy, according to a new report. The world’s nations aim to seal a UN deal in Paris in December to keep global warming below the danger limit of 2C. The heavy cuts in carbon emissions needed to achieve this would mean no new coal mines at all are needed and oil demand peaking in 2020, according to the influential thinktank Carbon Tracker. It found $2.2tn of projects at risk of stranding, ie being left valueless as the market for fossil fuels shrinks. The report found the US has the greatest risk exposure, with $412bn of projects that could be stranded, followed by Canada ($220bn), China ($179bn) and Australia ($103bn).
The UK’s £30bn North Sea oil and gas projects are at risk, the report says, despite government efforts to prop up the sector. Shell, ExxonMobil and Pemex are the companies with the greatest sums potentially at risk, with over $70bn each. The failure of the fossil fuel industry to address climate change is laid out in a second report on Wednesday, in which senior industry figures state there is “a significant disconnect between the changes needed to reduce greenhouse gas emissions to the [2C] level and efforts currently underway”. Lord John Browne, former BP boss, Sir Mark Moody-Stuart, former Shell and Anglo American chair and others say there must be “fundamental reassessment of the fossil fuel industry’s business models” and that companies should seize commercial opportunities in low-carbon energy.
The Carbon Tracker report looked at existing and future projects being considered by coal, oil and gas companies up to 2025 and determined which could proceed if carbon emissions are cut to give a 50% chance of keeping climate change under 2C. Many high-cost projects, including Arctic and deepwater drilling, tar sands and shale oil are unneeded and therefore uneconomic in the 2C scenario, the report found, although some are required to replace fields that are already depleting.
It’s been over 5 years since the Lagarde list.
Germany has handed Athens the names of more than 10,000 of its citizens suspected of dodging taxes with holdings in Swiss banks. The inventory, which details bank accounts worth €3.6bn – almost twice the last instalment of aid Athens secured from creditors earlier this week – was given to the Greek finance ministry in an effort to help the country raise tax revenues. “This is an important step for the Greek government to create more honesty regarding tax in the country,” said Norbert Walter-Borjans, finance minister of the regional state of North Rhine-Westphalia. The state disclosed the data through Germany’s federal tax office. Greece’s leftist-led government vowed it would go after tax dodgers as one of the many policy commitments it signed up to when a €86bn bailout between Athens and its partners was agreed after months of wrangling in July.
The financial lifeline was the third since Athens’ near economic meltdown following the first revelations of runaway deficits in May 2010. A total of 10,588 depositors were said to be on the list, including private individuals and companies. Sources said it resembled a “who’s who” of the well-heeled upper echelons of Greek society – able to spend Christmas in villas in Gstaad in Switzerland and summer at sea in luxury pleasure boats. Prime minister Alexis Tsipras, who won snap polls in September pledging to do away with the “old order”, has promised to dismantle Greece’s oligarchical establishment. Mired in a sixth year of recession, with unprecedented levels of poverty and unemployment, it is ordinary Greeks hit by ever-increasing taxes who have borne the brunt of the country’s long-running economic crisis.
New levies are at the basis of the savings Athens agreed to make in exchange for its latest international bailout. With affluent Greeks spiriting their money abroad, the German chancellor Angela Merkel has seen fit to publicly chastise them for failing to pitch in. Tryfon Alexiadis, the deputy finance minister in charge of tax revenues, said the list would be acted on as quickly as possible – even if the government had to assume the innocence of those revealed to be on it. “It will not stay in a drawer for three years,” he told reporters outside parliament on Wednesday. “The list will be evaluated … and we will see what is hidden behind it. All the services of the ministry of finance and the ministry of justice will cooperate so that we have results as soon as possible.”
In October 2010 Greece was given a similar inventory by Christine Lagarde, then French finance minister, of more 2,000 Greeks with deposits at the Geneva branch of HSBC. Successive governments did little to follow up on it with Tsipras accusing predecessors of deliberately keeping the data in a drawer. Estimated at more than $35bn a year, tax dodging is thought to be the biggest drain on the Greek economy. Last month, Alexiadis got a letter in the post with a bullet in it and a note comparing him to a collaborator with Germany’s Nazi forces. Berlin has been the biggest contributor of the €326bn in bailout funding Athens has received to date.
There is no market left.
Greek residential property prices fell at a faster pace in the third quarter compared to the previous three-month period as economic contraction hit household income and employment, knocking values on banks’ outstanding real estate loans. Property accounts for a large chunk of household wealth in Greece, which has one of the highest home ownership rates in Europe – 80% versus a European Union average of 70%, according to the European Mortgage Federation. Bank of Greece data showed apartment prices fell by 6.1% in the third quarter of 2015 from a year earlier, with the annual pace of price declines accelerating from 5.0% in the second quarter. The price slide had started to ease after a 10.8% fall in 2013 up until the first quarter of 2015. Greece’s real estate market has been hit by property taxes to plug budget deficits, a tight credit market and a jobless rate hovering around 25%.
Residential property prices have dropped by 41.2% from a peak hit in 2008, when the country’s recession began. Greece has been pushed to the brink of default by a debt crisis that at one stage put into question its membership of the eurozone single currency bloc. Its economic prospects have improved after it signed up to a new bailout package worth up to 86 billion euros this summer. Apart from their negative effect on wealth, falling property prices also affect collateral values on banks’ outstanding real estate loans. Greece’s economy shrank 0.5% in the third quarter compared with the first three months of 2015, contracting by a milder-than-expected pace. The EC projects Greece will see a 1.4% recession this year, but the left-wing government expects the €173 billion economy to flatline.
Slippery slope with regards to UN treaties. But what else is new?
A Dutch high court on Thursday upheld a government policy of withholding food and shelter to rejected asylum-seekers who refuse to be repatriated, giving legal backing to one of Europe’s toughest immigration policies. The Raad van State or Council of State, which reviews the legality of government decisions, found that the new policy of conservative Prime Minister Mark Rutte does not contravene the European Convention on Human Rights. A rejected asylum seeker does not have the right to appeal to the European Social Charter, it said. The Dutch government “has the right, when providing shelter in so-called locations of limited freedom, to require failed asylum-seekers to cooperate with their departure from the Netherlands,” a summary of the ruling said.
As the Netherlands toughened its stance on newcomers in recent years, Dutch policy toward asylum-seekers and immigrants has been criticized by NGOs and the United Nations as overly strict. Thursday’s ruling counters an August report by the U.N.’s Committee on the Elimination of Racial Discrimination, which told the Dutch they should meet migrants’ basic needs unconditionally. “As long as they are in The Netherlands, they have to enjoy minimum standards of living,” co-author Ion Diaconu, wrote at the time. The EU’s leading human rights forum, the 47-nation Council of Europe admonished the Netherlands in 2014 for placing asylum seekers in administrative detention and leaving many “irregular immigrants” in legal limbo and destitution.
“..they were leaving a homeland where they were fined, jailed and sometimes even executed for their views.”
Thanksgiving is as known for being a day to delicately navigate talking to relatives with vastly different political beliefs as it is for overeating. And the hot-button topic certain to be on everyone’s lips will be what do about Syrian refugees. If it were up to 25 Republican governors and the US House of Representatives, the answer would be to keep them out. This is ironic. Today’s Syrian refugees today don’t look, sound or worship like us, but the Pilgrims that landed on Plymouth Rock 400 years ago also didn’t look, sound or worship like we do – and certainly neither looked, sounded nor worshipped like the native inhabitants of America do. They brought Calvinist determination to this country, and we celebrate that, but that determination came pre-packaged with with bigotry and narrow-mindedness.
What came to be known as the Protestant work ethic was driven by the same zeal that caused some of the British exiles who landed on American shores to persecute anyone already here, or who came here after, who wasn’t like them. We praise the Pilgrims’ work ethic as part of our American DNA, but rarely acknowledged the work ethic and determination of the people who already lived here, nor what the Pilgrims and those who came after them did to destroy the indigenous people they met. Though we may never know exactly what transpired on that First Thanksgiving, let’s never forget that it was the Native Americans’ land – and that they brought the food.
If we continue to celebrate the Pilgrims – or even just to use them as an excuse to eat too much pie – we and our lawmakers should acknowledge that turning our backs on Syrian refugees is akin to turning our back on our own foundations. While it’s true that the Pilgrims weren’t exactly fleeing a war-torn country, they were leaving a homeland where they were fined, jailed and sometimes even executed for their views. Calling themselves “saints” or “the godly”, the Pilgrims were religious separatists who argued for a complete break from the state-run Church of England, which ran them afoul of the law and the king. After a decade of exile in the Netherlands that saw “sundry of them taken away by death” and their children tempted by “the great licentiousness of youth in that country”, the Pilgrims partnered with financial backers in England to help them outfit the Mayflower for the long voyage.
In return, they agreed to work for the company to repay their debts. Then they sailed across the pond, exploited the locals and paved the way for the America we have today. Though their behavior in “the new world” was far from saintly, the Pilgrims were still refugees. But today’s conservatives – some of whom would go so far as to float the idea of World War II-style internment camps for Syrian refugees or registration lists for Muslims – can’t stomach the idea that if the Pilgrims were to show up today, the Republican Party would turn would them back at the border. They actually were a lot of what conservatives are mistakenly accusing Syrian refugees of being.