Nov 212018
 
 November 21, 2018  Posted by at 10:07 am Finance Tagged with: , , , , , , , , , , , , ,  


Jack Delano Lower Manhattan 1941

 

Senate Calls On Trump For Saudi Answers (BBC)
Saudi Arabia Tortured Female Right-to-Drive Activists – Amnesty (AP)
Trump Submits Answers To Robert Mueller Questions In Russia Probe (Ind.)
Trump Wanted To Order Justice Dept To Prosecute Clinton, Comey – NYT (R.)
Dow Plunges More Than 500 Points, Erases Gain For 2018 (CNBC)
Stunned Investors Observe The Market Carnage In Shock (ZH)
A Death Cross Is Forming In US Oil (MW)
Bitcoin Plunges As Much As 16% To Below $4,100, A New Low For The Year (CNBC)
Misguided Share Buybacks Are Hollowing Out Companies’ Balance Sheets (MW)
Bank of England Backs Theresa May’s Brexit Deal, Warns Of No-Deal Dangers (G.)
May’s Brussels Trip Only Start Of ‘Endless’ EU Trade Talks (G.)
UK To Be ‘Frozen Out’ Of 182 EU Decisions During Brexit Transition (Ind.)
Interpol Elects South Korean As Its President In Blow To Russia (G.)
Tax ‘Virgin Packaging’ To Tackle Plastics Crisis – Report (G.)
Dead Whale Washes Ashore In Indonesia With 6 Kilos Of Plastic In Stomach (AP)
Julian Assange Deserves A Medal of Freedom, Not A Secret Indictment (USA Today)

 

 

The indignation over Trump’s comments on Saudi Arabia is shifting into overdrive. Perhaps that’s needed to expose the hypocrisy inherent in them. It’s not Trump, it’s America that has condoned torture and murder by the House of Saud for decades. That started actively assisting the Saudi’s in Yemen under Obama. Trump refuses to be set up by the media and Democrats as the fall guy for $150 oil prices. He’s thinking: let Congress do it, now that it’s blue. If that’s immoral, he’s not alone.

Senate Calls On Trump For Saudi Answers (BBC)

US President Donald Trump has been asked to ascertain whether Saudi Crown Prince Mohammed bin Salman played a role in the murder of Jamal Khashoggi. Republican and Democratic leaders of the US Senate Foreign Relations Committee on Tuesday sent a letter demanding a second investigation. Mr Trump earlier defended US ties with Saudi Arabia despite international condemnation over the incident. Khashoggi was killed on 2 October inside the Saudi consulate in Istanbul. In a statement on Tuesday, Mr Trump acknowledged that the crown prince “could very well” have known about Khashoggi’s brutal murder, adding: “Maybe he did and maybe he didn’t!”

He later stated that the CIA had not made a “100%” determination on the killing. Following the president’s comments, Republican Senator Bob Corker and Democrat Bob Menendez issued a statement on behalf of the Senate Foreign Relations Committee. In it they called on Mr Trump to focus a second investigation specifically on the crown prince so as to “determine whether a foreign person is responsible for an extrajudicial killing, torture or other gross violation” of human rights. The request, issued under the Global Magnitsky Human Rights Accountability Act, requires a response within 120 days.

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OK, CNN, do your job.

Saudi Arabia Tortured Female Right-to-Drive Activists – Amnesty (AP)

Several activists imprisoned in Saudi Arabia since May, including women who campaigned for the right to drive, have been beaten and tortured during interrogation, Amnesty International has said. Saudi Arabia has detained at least 10 women and seven men on vague national security allegations related to their human rights work, the organisation said on Tuesday. Those detained include Loujain al-Hathloul, Eman al-Nafjan and Aziza al-Yousef, who had campaigned for the right to drive before the decades-long ban was lifted in June. Amnesty said that according to three testimonies it obtained, some of the activists were repeatedly given electric shocks and flogged, leaving some unable to walk or stand properly. In one instance, an activist was hung from the ceiling.

Another testimony said one of the detained women was subjected to sexual harassment by interrogators wearing face masks. The kingdom is at the centre of an international firestorm after the killing of Saudi journalist Jamal Khashoggi, who had written critically about Crown Prince Mohammed bin Salman’s crackdown on dissent, including the arrests of the women activists. Khashoggi was killed and then dismembered by Saudi agents in the kingdom’s consulate in Istanbul on 2 October. Lynn Maalouf, Amnesty’s Middle East research director, said: “Only a few weeks after the ruthless killing of Jamal Khashoggi, these shocking reports of torture, sexual harassment and other forms of ill-treatment, if verified, expose further outrageous human rights violations by the Saudi authorities.”

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What a waste of resources.

Trump Submits Answers To Robert Mueller Questions In Russia Probe (Ind.)

Donald Trump has submitted written answers to questions from Special Counsel Robert Mueller as part of the probe into Russian meddling in the 2016 election and possible collusion with the Trump campaign. “We answered every question they asked that was legitimately pre-election and focused on Russia,” Trump lawyer Rudy Giuliani said in an interview. “Nothing post-election. And we’ve told them we’re not going to do that.” Mr Giuliani said Trump did not plan to answer any questions from Mr Mueller on whether he tried to obstruct the investigation once he won office, such as by firing former FBI Director James Comey last year. “It is time to bring this inquiry to a conclusion,” the lawyer said in an earlier statement on the probe, which Mr Trump has repeatedly called a “witch hunt.”

Mr Trump signed the submission on Tuesday before he left Washington to spend the Thanksgiving holiday in Florida, a person familiar with the matter said. Mr Mueller was tasked to probe “any matters that arose or may arise directly from the investigation” into possible collusion between Mr Trump’s campaign and Russia during the 2016 election. [..] Mr Giuliani said in his statement the president had provided “unprecedented cooperation” with the probe over the past year and a half, noting that more than 30 White House-related witnesses had been questioned and 1.4 million pages of material turned over before Mr Trump responded to the pre-election questions in writing. He added that “much of what has been asked raised serious constitutional issues and was beyond the scope of a legitimate inquiry.”

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Not exactly news, is it? Of course there will be an investigation of Hillary, Comey and a whole circus around them. It would be a serious perverson of justice if there isn’t.

Trump Wanted To Order Justice Dept To Prosecute Clinton, Comey – NYT (R.)

U.S. President Donald Trump wanted to order the Justice Department to prosecute two political foes, his one-time presidential opponent Hillary Clinton and former FBI director James Comey, in the spring, but his White House counsel rebuffed him, the New York Times reported on Tuesday. Don McGahn, the White House counsel at the time, wrote a memo to the president outlining consequences for Trump if he did order these prosecutions. The outcomes ranged from the traditionally independent Justice Department refusing to comply, to congressional probes and voter outcry, the Times reported.

The New York Times also reported Trump’s lawyers privately asked the Justice Department to investigate Comey for mishandling sensitive government information and his role investigating Clinton’s use of a private email account and server, but law enforcement officials declined. It was not clear if Trump read the memo or pursued the prosecutions further, the New York Times said. It was also not clear what specific charges Trump wanted the Justice Department to pursue against Comey and Clinton, the Times reported. Trump has publicly railed against Clinton’s private email use during her tenure as U.S. Secretary of State, as well as her role in the Obama administration’s decision to allow a Russian company to buy a uranium mining firm.

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Time to start writing about finance again?!

Dow Plunges More Than 500 Points, Erases Gain For 2018 (CNBC)

The Dow Jones Industrial Average and S&P 500 fell sharply on Tuesday and turned negative for the year as a decline in Target shares pressured retailers, while some of the most popular tech shares dropped again. The 30-stock Dow dropped 551.80 points to 24,465.64 and the S&P 500 plunged 1.8 percent to close at 2,641.89. The Dow and S&P 500 were up 1.2 percent and 0.6 percent, respectively, for 2018 entering Tuesday. Meanwhile, the Nasdaq Composite also dropped 1.7 percent to 6,908.82 but managed to hang on to a slight gain for 2018. Tuesday’s declines come after the Dow dropped 395 points on Monday.

Stocks hit their lows of the day after Doubleline Capital founder Jeffrey Gundlach said stocks are still too expensive, adding there has not been a “panic low” yet. The Dow was down nearly 650 points at its session low, while the S&P 500 and Nasdaq had both dropped more than 2 percent. Target fell 10.5 percent after reporting weaker-than-expected earnings for the previous quarter. The company also posted lighter-than-forecast same-store sales, which is a key metric for retailers.

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Nah, they’re not investors.

Stunned Investors Observe The Market Carnage In Shock (ZH)

After another abysmal day, in which every single sector in the market closed in the red as stocks tumbled 2%, capping a dreadful two-month stretch since the S&P hit its all time highs exactly two months ago, which has seen both the S&P and the Dow turn red for the year with the Nasdaq just barely holding onto green, while oil crashed 6% slumping to a one year low, junk bonds matched a record streak of losses, the overall market just suffered one of its worst sessions in the past three years. But what is most remarkable is the following chart from Bloomberg which shows the year-to-date return of the best performing asset between US and global equities, corporate bonds, Treasuries, gold and real cash, and according to which 2018 is shaping up as what may be the worst year on record for cross-asset investors. Indeed, nothing at all has worked this year!

The inability of any single asset class to escape the dismal black hole supergravity of devastating losses in a brutal post-BTFD catharsis that has mutated into an equal-opportunity rout, crushing returns across all assets, has left investors reeling, shellshocked and paralyzed, and dreading what may come tomorrow let alone next year when both the US economy and corporate earnings are expected to see their supercharged recent growth rates come crashing back down to earth. “While there’s still no ‘panic in the streets,’ most traders are unconvinced that the selling will slow down anytime soon,” said Instinent’s head of trading Larry Weiss. “The flight to quality is now a flight to cash. It’s tough to convince anyone that now is the time to put money to work.”

[..] Hedge funds, who hoped that “buy the dip” would work one last time and who rushed into the traditional “safety” of tech stocks at the end of October, were whipsawed, and turned net sellers this month, with the group accounting for the most selling among major industries according to Goldman Sachs. Meanwhile, as if sensing the coming storm, Goldman writes that hedge fund net exposures steadily declined throughout 2018, including during 2Q and 3Q while the broad equity market rallied, leaving most investors in the cold. Net long exposure calculated based on 13-F filings and publicly-available short interest data registered 49% at the start of 4Q, a decline from 56% at the start of 2018, and one of the lowest in years.

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Potential volatility in oil is huge. Any little shrapnel of news, Saudi, Iran, Russia, shale, can force prices up 50%.

A Death Cross Is Forming In US Oil (MW)

Oil is already in a bear market, but now a fresh, negative pattern is crystallizing in the commodity that has absolutely bludgeoned bulls over the past two months. January West Texas Intermediate crude on its first full session as the front-month contract, was down a whopping 7.5%, to $52.91 a barrel on the New York Mercantile Exchange and that downtrend has propelled the U.S. benchmark to the brink of forming a death cross—a chart formation in an asset that many market technicians believe marks the point that a short-term decline morphs into a longer-term downtrend (see chart below).

Based on the continuous chart for the most-active oil contract, the 50-day moving average at $67.58 a barrel is less than 0.5% shy of falling beneath the long-term 200-day moving average at $67.25, according to FactSet data. At the current rate of decline, a death cross could occur within a week or two. Both the U.S. contract and the global benchmark Brent oil are in bear market, usually characterized as a decline of at least 20% from a recent peak. In fact, U.S. oil is down 31% from its Oct. 3 peak at $76.41 a barrel.

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Miners are ditching their equipment.

Bitcoin Plunges As Much As 16% To Below $4,100, A New Low For The Year (CNBC)

Bitcoin is still struggling to find a bottom this week. The digital currency dropped as much as 16 percent on Tuesday to its lowest level since Sept. 30, 2017, according to data from CoinMarketCap.com. Bitcoin fell as low as $4,076.59, bringing its total losses in seven days to roughly 30 percent. The cryptocurrency briefly pared those losses and was down about 7 percent in afternoon trading. As U.S. stock markets closed though, bitcoin was still down 12 percent over 24 hours, trading near $4,299, according to data from CoinDesk.

The price plunge came after weeks of rare stability for the world’s largest and best-known cryptocurrency. While global markets churned in October, bitcoin traded comfortably in the $6,400 range — a break from volatility earlier this year. Its total losses this year are now more than 65 percent. ts epic rise last year started right after Thanksgiving as it began to gain status as a household name. Since then, the cryptocurrency has fallen more than 40 percent. Bitcoin first topped $10,000 at the end of November and made it to nearly $20,000 a week before Christmas as retail investors poured in and two regulated exchanges prepared to launch futures markets.

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“With share repurchases in these companies being almost three times their actual investment, one must wonder how much actual U.S. economic growth they are expecting.”

Misguided Share Buybacks Are Hollowing Out Companies’ Balance Sheets (MW)

GE was one of Wall Street’s major share buyback operators between 2015 and 2017; it repurchased $40 billion of shares at prices between $20 and $32. The share price is now $8.60, so the company has liquidated between $23 billion and $29 billion of its shareholders’ money on this utterly futile activity alone. Since the highest net income recorded by the company during those years was $8.8 billion in 2016, with 2015 and 2017 recording a loss, it has managed to lose more on its share repurchases during those three years than it made in operations, by a substantial margin. Even more important, GE has now left itself with minus $48 billion in tangible net worth at Sept. 30, with actual genuine tangible debt of close to $100 billion.

As the new CEO Larry Culp told CNBC last Monday: “We have no higher priority right now than bringing those leverage levels down.” The following day, GE announced the sale of 15% of its oil services arm Baker Hughes, for a round $4 billion. Of course, since that sale values Baker Hughes at $26 billion, and GE paid $32 billion for 62% of Baker Hughes as recently as last year, which looks to me like a valuation for the whole company of $52 billion, GE shareholders appears to have lost half the value of their investment in Baker Hughes in about 18 months. [..] A recent Financial Times article outlined how the five tech companies with the most cash (Apple, Alphabet, Cisco, Microsoft and Oracle) have repurchased an astounding $115 billion of stock in the first three quarters of 2018.

By contrast, the total capital spending of the five companies was only $42.6 billion during the same period. The story then congratulated investors for having done so well out of President Trump’s tax reform, which lowered the corporate tax rate, thus encouraging investment in the United States. With share repurchases in these companies being almost three times their actual investment, one must wonder how much actual U.S. economic growth they are expecting. [..] These share repurchases are misguided in so many ways. First, Apple, Alphabet and Microsoft are valued by the stock market at close to $1 trillion, levels no company has ever reached before. If you ignore the current stock price, a company repurchasing its shares is simply giving away its cash and reducing its share count; it creates no value.

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Dangerously close to a political statement.

Bank of England Backs Theresa May’s Brexit Deal, Warns Of No-Deal Dangers (G.)

Mark Carney has thrown his weight behind Theresa May’s Brexit deal, warning that a no-deal scenario would damage the economy, trigger job losses, lead to lower pay for workers and cause inflation to rise. The governor of the Bank of England said May’s draft EU withdrawal agreement would “support economic outcomes” that would be positive for the British economy, primarily because it would give Britain more time to prepare for whatever final Brexit deal is agreed between Westminster and Brussels. “We welcome the transition arrangements in the withdrawal agreement. It’s at the heart [of the deal],” he told MPs on the Treasury select committee, a week after the prime minister agreed the terms of the deal with the EU.

“[The deal] improves our ability to discharge our function relative to having no deal,” he added. The timing of the governor’s comments could help to support May as she faces tough opposition from across the political divide, following cabinet resignations and Labour’s promise to vote it down in parliament. Carney warned that failure to agree a Brexit deal with Brussels before the March 2019 deadline would deliver a “large negative shock” to the UK economy that would have a persistent effect, lowering growth and causing job losses. He said such an outcome would deliver an “unprecedented supply shock” to the UK economy with few historical or international comparisons. “It wouldn’t be a happy situation to be in,” he said.

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These talks should have started two years ago. And even then.

May’s Brussels Trip Only Start Of ‘Endless’ EU Trade Talks (G.)

When Theresa May goes to Brussels for tea with Jean Claude Juncker on Wednesday afternoon, the two leaders will have in front of them a metaphorical Christmas tree of a political declaration. “And every member state has put a bauble on it”, an EU diplomat said. A seven-page document published last week, offering some heads of terms on the future relationship, is set to more than double to some 20 pages. Calls for more ambitious language around the trade elements have been made. Demands for a Spanish veto over any deal covering Gibraltar have been tabled. And an array of asks on so called “level playing field” commitments in any future trade deal are in the mix.

There is even talk of side-declarations to the political declaration emerging at the special Brexit summit next Sunday to allow member states to feel that they have drawn a line in the sand about the real trade talks to come. “It’s all getting very confusing,” admitted a second EU diplomat. Not to Sir Andrew Cahn, the former chief executive of the government’s UK Trade & Investment (UKTI) department, who was also an aide to Neil Kinnock when vice president of the European commission in the late 1990s. This is, he said, likely to be a mere amuse-bouche to the “continuous endless” talks that will open on the UK’s trading relationship with Brussels after 29 March 2019 as the UK finds its way around the EU’s orbit.

“It is a classic EU negotiation and the member states are performing their normal way,” Cahn said. “The French always come in late to toughen their negotiating position towards the end, and that’s when they can get some additional things. “The Spanish are copying with Gibraltar – although that is partly a function of domestic Spanish politics with Pedro Sánchez [the Spanish prime minister] being vulnerable at home.”

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What, she didn’t tell you?

UK To Be ‘Frozen Out’ Of 182 EU Decisions During Brexit Transition (Ind.)

The UK will be “frozen out” of EU decisions on no fewer than 182 new rules in the months after Brexit, a new analysis says, including over budget spending, road signs and drinking water. The full scale of fresh regulations in the pipeline – during Theresa May’s planned 21-month transition period – exposes the blunder of making Britain “a rule-taker, not a rule-maker”, it warns. During that transition, the UK will be bound by Brussels’ decisions but without any ministers in the EU council, or MEPs in the European parliament, to influence them. Now the campaign for a People’s Vote on the Brexit outcome has examined the decisions expected before 2020, which also include alcohol-taxing and rules for UK investment funds.

“This analysis sets out for the first time the full scale of the UK’s capitulation under this so-called deal,” said Chris Bryant, a Labour supporter of People’s Vote. “The prime minister’s deal would weaken our ability to have a say in over 180 crucial decisions that are going to be made in Europe while the UK is in transition – meaning we have to abide by their rulings but have no say and no ability to protect Britain’s interests. “This dodgy deal will leave Britain frozen out of decision making and forced to pay billions of Euros for the privilege.” The argument goes to the heart of criticism – by both pro and anti-Brexit MPs – that the UK will be a “vassal state” during the transition phase.

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Russophobia continues unabated.

Interpol Elects South Korean As Its President In Blow To Russia (G.)

South Korea’s Kim Jong-yang has been elected as Interpol’s next president, edging out a longtime veteran of Russia’s security services who was strongly opposed by the US, Britain and other European nations. The White House and its European partners had lobbied against Alexander Prokopchuk’s attempts to be named the next president of the international police body, saying his election would lead to further Russian abuses of Interpol’s “red notice” system to go after political opponents. Prokopchuk is a general in the Russian interior ministry and serves as an Interpol vice-president. Kim was chosen by Interpol’s 94-member states at a meeting of its annual congress in Dubai.

He will serve until 2020, completing the four-year mandate of his predecessor, Meng Hongwei, who went missing in his native China in September. Beijing later said Meng resigned after being charged with accepting bribes. Critics say that Prokopchuk oversaw a policy of systematically targeting critics and dissidents during his time in charge of the Russian office of Interpol. On Tuesday, the US secretary of state, Mike Pompeo, threw his weight behind Kim, who is the acting president of the global police body. “We encourage all nations and organisations that are part of Interpol and that respect the rule of law to choose a leader with integrity. We believe Mr Kim will be just that,” Pompeo told reporters.

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If only we move to recycled plastic! Geez, Louise, how about no plastic at all? You can cut at least 50% without changing anything much at all. More recycling is a fake message.

Tax ‘Virgin Packaging’ To Tackle Plastics Crisis – Report (G.)

The government should introduce a new tax on virgin packaging to revolutionise the recycling system in the UK and tackle the plastics crisis, according to a new report. The study, presented to MPs and industry figures at Westminster on Tuesday evening, calls on ministers to impose a fee on packaging materials and offer a rebate for those products that use more recycled material. The WWF and the Resource Association, which commissioned environment consultancy Eunomia to produce the report, said the proposals would transform the UK’s broken recycling system – and drastically reduce the demand for raw materials, including fossil fuels. Dr Lyndsey Dodd, head of marine policy at WWF UK, said: “Our oceans are choking on plastic, 90% of the world’s sea birds have fragments of plastic in their stomach.

Despite the public outcry, more products are being made with virgin, or new, plastic than with recycled plastic.” Last year the Guardian revealed that plastic production is set to increase by 40% over the next 10 years as fossil fuel companies look to use raw materials produced by fracking in the US. The new report follows an announcement in October that the government is launching a consultation on the introduction of a tax on all plastic packaging with a recycled content of less than 30%. [..] Earlier this year the Guardian reported the plastics recycling industry was under investigation for suspected widespread abuse and fraud within the export system. Since China banned the import of plastic waste, the UK has been chasing other markets in Malaysia, Vietnam and Thailand, but these countries are also imposing restrictions due to the stockpiling of waste.

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“..115 plastic cups, four plastic bottles, 25 plastic bags, two flip-flops, a nylon sack and more than 1,000 other assorted pieces of plastic..”

Dead Whale Washes Ashore In Indonesia With 6 Kilos Of Plastic In Stomach (AP)

A dead whale that washed ashore in eastern Indonesia had a large lump of plastic waste in its stomach, including drinking cups and flip-flops – causing concern among environmentalists and government officials in one of the world’s largest plastic polluting countries. Rescuers from Wakatobi National Park found the 9.5-metre sperm whale late on Monday in waters near Kapota Island, southeast of Sulawesi, after receiving a report from environmentalists that villagers had surrounded the dead creature and were beginning to butcher its rotting carcass, park chief Heri Santoso said. Researchers from wildlife conservation group WWF and the park’s conservation academy found about 5.9 kilograms of plastic waste in the animal’s stomach – including 115 plastic cups, four plastic bottles, 25 plastic bags, two flip-flops, a nylon sack and more than 1,000 other assorted pieces of plastic.

“Although we have not been able to deduce the cause of death, the facts that we see are truly awful,” said Dwi Suprapti, a marine species conservation coordinator at WWF Indonesia. She said it was not possible to determine if the plastic had caused the whale’s death because of the animal’s advanced state of decay. Indonesia, an archipelago of 260 million people, is the world’s second-largest plastic polluter after China, according to a study published in the journal Science in January. It produces 3.2 million tonnes of mismanaged plastic waste a year, of which 1.29 million tonnes ends up in the ocean, the study said.

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Can we say the MSM wakes up with this USA Today piece?

Julian Assange Deserves A Medal of Freedom, Not A Secret Indictment (USA Today)

On the same day the Assange indictment scored headlines, Trump awarded seven Presidential Medals of Freedom. No controversy greeted posthumous awards to Babe Ruth and Elvis Presley — unlike the ruckus regarding Miriam Adelson, wife of Republican super-donor Sheldon Adelson. Public Citizen, a liberal nonprofit, howled that the Adelson award “is just the latest sign of [Trump’s] ability to corrupt and corrode all aspects of the government.” New York Times columnist Paul Krugman caterwauled that it was “ludicrous” and “and an insult to people who received the medal for genuine service.” In reality, Presidential Medals of Freedom have routinely been exploited to buttress the political establishment, with bevies of awards for political operators, members of Congress, and pliable foreign leaders.

President Lyndon Johnson distributed a bushel of Medals of Freedom to his Vietnam War architects and enablers, perhaps as consolation prizes for losing the war. (The medal awarded to Defense Secretary Robert McNamara, whose lies about the war making progress cost thousands of Americans and Vietnamese their lives, fetched $40,625 at an auction a few years ago.) President George W. Bush conferred Medals of Freedom on his Iraq war team, including CIA chief George “Slam Dunk” Tenet, Iraq viceroy Paul Bremer, and ambassador Ryan Crocker, whom Bush called “America’s Lawrence of Arabia.”

Some of the biggest fabulists of the modern era — including Henry Kissinger and Dick Cheney — also pocketed the award.The controversies over Assange and Adelson provide a serendipitous opportunity to update the freedom awards. Because few things are more perilous to democracy than permitting politicians to coverup crimes, there should be a new Medal of Freedom category commending individuals who have done the most to expose official lies. This particular award could be differentiated by including a little steam whistle atop the medal — vivifying how leaks can prevent a political system from overheating or exploding.

Assange would deserve such a medal — as would Thomas Drake and Edward Snowden (who revealed NSA’s abuses), John Kiriakou (who revealed CIA torture), and Daniel Ellsberg (who leaked the Pentagon Papers). Admittedly, there may be no way to stop presidents from giving steam whistle freedom awards to political donors’ wives. Organizations like Wikileaks are among the best hopes for rescuing democracy from Leviathan. Unless we presume politicians have a divine right to deceive the governed, America should honor individuals who expose federal crimes.

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Aug 092018
 


René Magritte The evening gown 1954

 

Julian Assange has received an letter from the US Senate asking him to testify in front of them. What to make of that is not entirely clear. Far as I know, Assange offered such testimony multiple times, under the ‘right standards’. The Senate ostensibly wants this to take place behind closed doors, and it’s hard to see how that would fit Assange’s standards. But who knows?

What struck me was that the letter was signed by Senators Richard Burr (R-NC) and Mark Warner (D-VA). and especially the latter runs like a red thread through everything that has to do with Assange and the US. It reminded me of what John Solomon said in his June 25 piece ‘How Comey Intervened To Kill Wikileaks’ Immunity Deal’ about Assange lawyer Adam Waldman, who according to Solomon has a ‘Forrest Gump-like penchant for showing up in major cases of intrigue’.

Mark Warner has that, too. What made me return to this is that in his piece yesterday on the Senate request, Tyler Durden, referring to Solomon’s article, wrote: After Assange’s request was run up the flag pole, Senator Warner was issued a “stand-down” order by Comey.. And I thought: I’m not sure that’s entirely correct, and not only because Comey cannot ‘order’ a US Senator to do anything.

The stand down order was not for Warner, he just passed it on to Waldman and his counterpart acting for the DOJ, David Laufman, head of Justice’s counterintelligence and export controls section. NOTE: we don’t even know if the stand down didn’t really come from Warner, or Comey AND Warner, or someone else altogether.

What we do know is that it was a very peculiar order at a very peculiar moment in time, because the intelligence community could have gotten something tangible and valuable out of the negotiations. Solomon: “..officials “understood any visibility into his thinking, any opportunity to negotiate any redactions, was in the national security interest and worth taking,” says a senior official involved at the time.

They were well on their way to -at least potentially- save the lives of CIA operatives and assets. Negotiations had been going on for at least 2 months, and probably more like three. But then Assange offered to provide evidence that he didn’t get the DNC files from Russia. And that seems to have changed the atmosphere. Tyler has some more about this, outside of the Solomon piece:

‘Last August, Congressman Dana Rohrabacher travelled to London with journalist Charles Johnson for a meeting with Assange, after which Rohrabacher said the WikiLeaks founder offered “firsthand” information proving that the Trump campaign did not collude with Russia, and which would refute the Russian hacking theory.’ After Trump denied knowledge of the potential deal, Rohrabacher raged at Trump’s Chief of Staff, John Kelly, for constructing a “wall” around President Trump by “people who do not want to expose this fraud.”

NOTE: that meeting took place 4-5 months AFTER the Comey (et al?) stand down order. So Assange was still reaching out and offering to spare individual CIA assets. He has released a lot of the CIA Vault 7 files, but not all. To my knowledge he has held back on that to this day.

 

I don’t know how much you still follow from the pro-Russiagate press, which is about the entire US MSM, but Rohrabacher is habitually called a traitor, a Putin puppet and worse for talking to Russians, just like he is for going to see Assange. Once you start trying to find a way out of the ever tighter woven Russia Russia web, you’re fair game. Even if that’s simply your job as a Congressman, or at least your interpretation of what the job entails.

Back to Solomon for a bit. What he describes is not some amnesty deal, but a “Queen for a Day” proffer. Which in this case was essentially a safe passage guarantee for Assange to leave the Ecuador embassy only to go talk to US government people. We don’t know all the prospective topics of the talks, and they don’t seem to have agreed on a location (London, Washington?!) before the Comey order. Solomon:

Not included in the written proffer was an additional offer from Assange: He was willing to discuss technical evidence ruling out certain parties in the controversial leak of Democratic Party emails to WikiLeaks during the 2016 election. The U.S. government believes those emails were hacked by Russia; Assange insists they did not come from Moscow.

“Mr. Assange offered to provide technical evidence and discussion regarding who did not engage in the DNC releases,” Waldman told me. “Finally, he offered his technical expertise to the U.S. government to help address what he perceived as clear flaws in security systems that led to the loss of the U.S. cyber weapons program.”

That is just funny: Assange offered to help the CIA on its security systems. That must have pissed them off mightily, because it can only mean they really needed to strengthen security (or he wouldn’t have brought it up). But then Waldman reaches out to Warner, in what may well have been a fatal mistake. The talks with the DOJ were going well, and might have been enough. Getting politics involved in it was one took over the line:

[..] Just a few days after the negotiations opened in mid-February, Waldman reached out to Sen. Warner; the lawyer wanted to see if Senate Intelligence Committee staff wanted any contact with Assange, to ask about Russia or other issues. Warner engaged with Waldman over encrypted text messages, then reached out to Comey. A few days later, Warner contacted Waldman with an unexpected plea.

“He told me he had just talked with Comey and that, while the government was appreciative of my efforts, my instructions were to stand down, to end the discussions with Assange,” Waldman told me. Waldman offered contemporaneous documents to show he memorialized Warner’s exact words.

Waldman couldn’t believe a U.S. senator and the FBI chief were sending a different signal, so he went back to Laufman, who assured him the negotiations were still on. “What Laufman said to me after he heard I was told to ‘stand down’ by Warner and Comey was, ‘That’s bullshit. You are not standing down and neither am I,’” Waldman recalled.

A source familiar with Warner’s interactions says the senator’s contact on the Assange matter was limited and was shared with Senate Intelligence chairman Sen. Richard Burr (R-N.C.). But the source acknowledges that Warner consulted Comey and passed along the “stand down” instructions to Waldman: “That did happen.”

Okay, so we have Warner very much in the thick of the DOJ negotiations with Assange. Fast forward to late June 2018, when his name pops up again in a list of 10 Democratic Senators who asked Vice President Mike Pence to, on a visit to Ecuador, ask new president Lenin Moreno, to revoke Assange’s asylum on the London embassy.

 

 

Warner is there, along with such fine human beings as Dianne Feinstein, and the two Dicks Durbin and Blumenthal. Wikileaks, which posted the list, suggested: “Remember them”. Looks like an idea. Why would the Democratic party want Assange delivered to the lions? Oh, right, Russia Russia, the entirely unproven allegations which they are so desperate to tie Assange into.

They can’t prove any of the many allegations of Russian meddling, let alone their role in Hillary’s election loss, and they can’t prove any allegation against Julian Assange, at least none that he could be charged for/with, but tie Russia and WikiLeaks together and they feel they no longer have to prove anything at all, that mere allegations are strong enough.

If there is no crime Assange can be accused of, you just label him a terrorist, and all your legal problems disappear. Because terrorism can be anything, and because of national security reasons, any evidence, whether it exists or not, must be treated in secret. What reason, what grounds, do these Senators have to ask Ecuador to revoke Assange’s asylum? What legal grounds could possibly exist? We have no way of knowing, and because they label Julian a terrorist, we have no right to, either. Or so they claim.

This is called abomination of justice. In the same way that America and Britain’s treatment of him is called torture. And no, that is not too strong a term. A man who has never been charged with a crime by anyone, in any country, is being tortured. Julian has severe, painful, dental problems, he has developed a condition that makes his legs swell, and his bone density is dropping fast due to extended lack of sunlight.

These people have simply decided to wait it out, so they don’t have to go through elaborate legal procedures that they may well lose, to wait until Assange has no choice but to walk out of the embassy, or be carried out on a stretcher or in a coffin. It’s not even possible to list all the British, American, Ecuadorian and international laws his treatment violates.

Someone should give it a try, though. Just like someone should investigate Mark Warner’s role in all of this. Warner was pivotal in killing off the Assange legal teams’ talks with the DOJ, he asked Ecuador to stop Assange’s asylum (which is so illegal you don’t even want to go there), and now he requests for Assange to appear before the US Senate.

Someone investigate that guy. If I can say one last thing, it would be that Warner exemplifies all that is wrong with the US Democratic Party. He’s the Forrest Gump of all their future election losses. The Democrats should be standing up to protect people like Assange, but instead they follow the example of Hillary, who said about Assange “can’t we drone this guy?”.

Yeah, the very guy who’s never been charged with a single crime. She undoubtedly said it in the same tone of voice as her insane cackle of “We came, we saw, he died” about Gaddafi. Looked at Libya lately?

The essence of this is that we will be better people, and better societies, with Julian Assange around to help us be better. Without him, things look a whole lot darker. We need to be able to hold politicians, corporations and secret services to account. And the more they resist this, often in illegal ways, the more we must insist.

The idea was never that we must answer to them. They must answer to us, and we must be able to throw them out when they cross legal and moral lines. It’s beyond the pale that that has to be explained once again. And trying to explain that, with examples, is all that Julian Assange has ever done.

 

 

Jun 232017
 
 June 23, 2017  Posted by at 9:55 am Finance Tagged with: , , , , , , , , ,  


Fred Lyon Embarcadero lunch San Francisco 1948

 

Americans Are Dying With An Average Of $61,500 In Debt (ZH)
34 Biggest Banks in US Clear First Hurdle In Fed’s Annual Stress Tests (R.)
Credit-Card Debt Slaves Move to Top of Fed’s Bank Worries (WS)
Citizens Will Soon Turn Their Rage Towards Central Bankers (Albert Edwards)
UK Homelessness Surges 34% Under Tories Since 2010 (Ind.)
UK High Court Judges Tory Policy Causes ‘Real Misery For No Purpose’ (Ind.) /span>
Buy-to-Let Uk Property Sales Fall By Almost 50% In A Year (G.)
Canada’s Private Sector Debt Growing Faster Than Any Advanced Economy (PA)
Warren Buffett Becomes Lender Of Last Resort For Canada’s Home Capital (BBG)
EU Political Class Rides Roughshod over Citizens’ Concerns & Frustrations (DQ)
Dear Oliver: About Those Putin Interviews (RM)
Arab States Send Qatar 13 Demands To End Crisis (R.)
In Yemen’s Secret Prisons, UAE Tortures and US Interrogates

 

 

Double or nothing?!

Americans Are Dying With An Average Of $61,500 In Debt (ZH)

According to a recent study, the average total household debt in America is just over $132,500, broken down as per the chart below… and thanks to the Fed’s recent and ongoing rate increases, the repayment of said debt will become increasingly more difficult. So difficult, in fact, that most Americans will be saddled with a sizable chunk of it at the time of their death. Actually, most already are. According to December 2016 data from credit bureau Experian provided to credit.com, 73% of American consumers had outstanding debt when they were reported as dead. Those consumers carried an average total balance of $61,554, including mortgage debt. Without home loans, the average balance was $12,875. As credit.com reports, the data is based on Experian’s FileOne database, which includes 220 million consumers.

To determine the average debt people have when they die, Experian looked at consumers who, as of October 2016, were not deceased, but then showed as deceased as of December 2016. Among the 73% of consumers who had debt when they died, about 68% had credit card balances. The next most common kind of debt was mortgage debt (37%), followed by auto loans (25%), personal loans (12%) and student loans (6%). The breakdown of unpaid balances was as follows: credit cards, $4,531; auto loans, $17,111; personal loans, $14,793; and student loans, $25,391. And, as a reminder, debt doesn’t just disappear when someone dies.

What happens to that debt when you die, aside from it continuing to accrue interest until someone remembers to inform the creditors? “Debt belongs to the deceased person or that person’s estate,” said Darra L. Rayndon, an estate planning attorney with Clark Hill in Scottsdale, Arizona. If someone has enough assets to cover their debts, the creditors get paid, and beneficiaries receive whatever remains. But if there aren’t enough assets to satisfy debts, creditors lose out (they may get some, but not all, of what they’re owed). Family members do not then become responsible for the debt, as some people worry they might. That’s the general idea, but things are not always that straightforward. The type of debt you have, where you live and the value of your estate significantly affects the complexity of the situation. For example, federal student loan debt is eligible for cancellation upon a borrower’s death, but private student loan companies tend not to offer the same benefit. They can go after the borrower’s estate for payment.

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Let’s do a stress test that assumes the Fed is no longer around, see what happens.

34 Biggest Banks in US Clear First Hurdle In Fed’s Annual Stress Tests (R.)

The 34 largest U.S. banks have all cleared the first stage of an annual stress test, showing they would be able to maintain enough capital in an extreme recession to meet regulatory requirements, the Federal Reserve said on Thursday. Although the banks, including household names like JPMorgan Chase and Bank of America, would suffer $383 billion in loan losses in the Fed’s most severe scenario, their level of high-quality capital would be substantially higher than the threshold that regulators demand, and an improvement over last year’s level. “This year’s results show that, even during a severe recession, our large banks would remain well capitalized,” said Fed Governor Jerome Powell, who leads banking regulation for the central bank. “This would allow them to lend throughout the economic cycle, and support households and businesses when times are tough.”

The Fed introduced the stress tests in the wake of the financial crisis to ensure the health of the banking industry, whose ability to lend is considered crucial to the health of the economy. Since the first test was conducted in 2009, big banks have seen losses abate, loan portfolios improve and profits grow. The banks that now undergo the exam have also strengthened their balance sheets by adding more than $750 billion in top-notch capital, the Fed said. Banks and their investors have been hoping the improvements would prompt the Fed to allow them to use more capital for stock buybacks and dividends, especially as the Trump administration is seeking to relax financial regulations. Wall Street analysts and trade groups quickly cheered the results on Thursday, saying regulators should feel comfortable easing tough rules put in place since the financial crisis. “We see today’s…stress test results as a positive for Trump administration efforts to deregulate the banks,” said Jaret Seiberg, a policy analyst with Cowen & Co.

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The biggest debts are still in mortgages. Falling home prices will hurt most.

Credit-Card Debt Slaves Move to Top of Fed’s Bank Worries (WS)

The comforting news in the results from the Federal Reserve’s annual stress test is that the largest 34 bank holding companies would all survive a recession. Based on this glorious accomplishment, the clamoring has already started for regulators to allow these banks to pay bigger dividends and to blow more money on share buybacks, and for these regulators to slash regulation on these banks and make their life easier and riskier in general. We don’t want these banks to survive a recession in too good a condition apparently. And it would likely be better for Wall Street anyway if banks could lever up with risks so that a few of them would get bailed out during the next recession. Let’s remember, for the Fed’s no-holds-barred bailout-year 2009, Wall Street executives and employees were doused with record bonuses.

The Fed’s bailouts were good for them. And it has been good for them ever since. The less comforting news in the stress test is that credit card debt – generally the most expensive and risky debt for consumers – has now moved to the top of the Fed’s worry list in the “severely adverse scenario” of the stress test. The projected losses for the 34 largest banks – not counting the losses at the 4,997 smaller banks – are expected to hit $100 billion, up nearly 9% from the stress test a year ago. The projected losses rose for several reasons, including that credit card balances have grown by 5.6% from a year ago to over $1 trillion. The delinquency rate has risen to 2.4%. The Fed is also blaming looser lending standards. Sharing the top spot on the Fed’s worry list in the “severely adverse scenario” are Commercial & Industrial loans, whose balances are over twice as large, at $2.1 trillion, but whose projected losses are also pegged at $100 billion. In total, the “severely adverse scenario” sees $493 billion in losses for these 34 banks:

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“..investors, drunk with the liquor of loose money..”

Citizens Will Soon Turn Their Rage Towards Central Bankers (Albert Edwards)

Albert Edwards pwrites “Theft redux: the citizens will soon turn their rage towards Central Bankers.” The core of his argument is familiar: “While politics in the West reels from a decade of economic crisis and stagnation, asset prices continue to surge on the back of continued rapid growth in G3 QE. In an age of “radical uncertainty” how long will it be before angry citizens tire of blaming an impotent political system for their ills and turn on the main culprits for their poverty – unelected and virtually unaccountable central bankers? I expect central bank independence will be (and should be) the next casualty of the current political turmoil.” That’s just the beginning from Edwards, who appears to be getting increasingly angrier and more frustrated with a market that makes increasingly less sense: his fiery sermon continue with the following preview of the “inevitable catastrophe that lies ahead.”

“Evidence of the impact of monetary madness on assets prices is all around if we care to look. I read that a parking spot in Hong Kong was just sold for record HK$5.18 million ($664,200). What about the 3.5x oversubscribed 100 year Argentine government bond? Sure, everything has a market clearing price, even one of the most regular defaulters in history. But what concerned me most about the story was it was demand from investors (“reverse enquires”) that prompted the issue. Is it just me or can I hear echoes of the mechanics of the CDO crisis? But no one cares when the party is still raging and investors, drunk with the liquor of loose money, are blind to the inevitable catastrophe that lies ahead. There is a lot of anger out on the streets, as demonstrated most visibly in recent elections.

Even in France where investors feel comforted that a “moderate” has gained (absolute?) power, it is salutary to remember that the two establishment parties have just been decimated by a man who had never before stood for public office! This is perhaps even more radical than Trump’s anti-establishment victory under the Republican umbrella. The global political situation is incredibly fluid and unpredictable. While a furious electorate has turned its pent up anger on the establishment political parties, the target for their rage is misguided. I am not completely alone in thinking it is the unelected and virtually unaccountable central bankers who are primarily responsible for the poverty of working people and who will be ultimately held to account in the next crisis.

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In other news: ” Government-funded new social housing has fallen 97% since 2010″.

UK Homelessness Surges 34% Under Tories Since 2010 (Ind.)

The number of families being declared homeless has rocketed by more a third since the Conservatives took power in 2010, analysis of new official statistics by The Independent has revealed. Between April 2016 and March 2017, 59,100 families were declared homeless by local authorities in England – a rise of 34% on the same period in 2010-11. The statistics paint a bleak picture of the UK housing crisis and the impact a lack of decent, affordable homes is having on thousands of families. There has been a 60% increase in the number of families being housed in insecure temporary accommodation. In particular, bed and breakfast-type hotels are increasingly being used to house families for long periods of time as local councils struggle to find them proper homes to live in.

There are now 77,240 families in England currently living in temporary accommodation – up from 48,240 just six years ago. Of these, almost fourth-fifths (78%) are families with children, meaning there are currently 120,500 children living in insecure, temporary homes. Of those being housed temporarily, 6,590 households are living in B&Bs, including 3,010 families with children. Almost half have been living in this type of accommodation, which often sees families crammed into one room and forced to share limited bathroom and cooking facilities with strangers, for more than six weeks. This is illegal under the Homelessness (Suitability of Accommodation) Order 2003, which banned local authorities from housing families with children in B&Bs for more than a six-week period.

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The Tories are done. Someone should tell them.

UK High Court Judges Tory Policy Causes ‘Real Misery For No Purpose’ (Ind.)

Today, the High Court ruled that the benefits cap, one of the Tories’ flagship welfare policies, is unlawful, because it amounts to illegal discrimination against single parents with small children. It’s likely that the Government will be forced to alter or completely scrap their benefits cap, a policy that limits the total amount a household can receive in benefits to £23,000 in London and £20,000 elsewhere in the UK. High Court judge Justice Collins described the benefit cap as causing “real damage” to single parent families and said “real misery is being caused to no good purpose”. This is the fundamental truth at the heart of Tory welfare policy – misery without progress or reason.

Welfare reform as part of the coalition government’s austerity measures has driven thousands more people into poverty and in many tragic cases, some deaths occurred after individuals were declared fit to work. Austerity was not inevitable. It was an ideologically-motivated programme designed to force the poorest and most vulnerable in our society to shoulder the burden of a financial crisis that they had less than nothing to do with creating. Four claimants brought this case to court. Two of them had been made homeless as a result of domestic violence, and were trying to work as many hours as possible while taking care of children under the age of two. Imagine fleeing an abusive partner, seeking support from a domestic violence service that’s had its funding brutally slashed by the Tory government, trying to work and look after a small child, then having your benefits cut, again by the Tory government.

The claimants are not alone. The benefits cap has inflicted a massive amount of suffering, with 200,000 children from the very lowest income families affected, as their parents’ income has fallen drastically. In real terms, this means that these children’s lives have become even more difficult, and they weren’t easy to begin with. This means a colder house, less food to eat, more shame at school due to unwashed clothes, uniforms that are too small, worn-through shoes. It means stressed, unhappy and increasingly desperate parents, and in family, children can’t fail to pick up on this mood of misery. [..] In this wealthy, highly developed country, poverty is the single biggest threat to the wellbeing of children and families. Poverty affects a quarter of all children in Britain, a massive, disgraceful, inexcusable proportion. one in five parents are struggling to feed their children, and 50% of all parents living in food poverty have gone without meals in order to give their children more to eat.

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There goes the bubble. Look out below.

Buy-to-Let Uk Property Sales Fall By Almost 50% In A Year (G.)

The number of properties bought by landlords has almost halved in a year after a tax and regulatory clampdown, prompting a leading banking body to downgrade its forecasts for buy-to-let lending in 2017 and 2018. The Council of Mortgage Lenders said buy to let had had a weak start to 2017, with lending falling faster than expected as landlords withdrew from the market in response to major tax changes and tighter lending rules. The data follows a series of recent surveys and indices suggesting the housing market is running out of steam. However, the crackdown on buy to let may have helped young people trying to get a foot on the property ladder. CML said house purchase activity was being driven predominantly by first-time buyers, with their numbers up 8% in the 12 months to April.

Buy-to-let homebuying activity was “nearly half what it was a year ago” and had averaged around 6,000 purchases a month over the last 12 months, said the body, which represents banks and building societies. The number of landlord purchases involving a mortgage was 5,300 in April this year. This compared with 10,300 in February 2016 and 11,800 in July 2015. As a result, the CML has cut its forecast for buy-to-let lending from £38bn being lent in both 2017 and 2018 to £35bn in 2017 and £33bn in 2018. The organisation warned against hitting landlords with any further changes to taxation and lending rules, saying the figures “re-emphasise the case for avoiding further changes to the tax and regulatory framework until the effect of these already in train have been properly assessed”.

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Download report here: Addicted to Debt – Tracking Canada’s rapid accumulation of private sector debt .

Canada’s Private Sector Debt Growing Faster Than Any Advanced Economy (PA)

For the first time ever, Canada’s private sector is racking up debt faster than any other of the world’s 22 advanced economies, putting the country at risk of serious economic consequences, according to new research by the Canadian Centre for Policy Alternatives. A new report authored by CCPA Senior Economist David Macdonald reveals that Canada added $1 trillion in private sector debt over the past five years ($2016), with the corporate sector responsible for the majority of it. Economies can become dependent on debt in order to fuel economic and asset price growth. With both rapid private debt accumulation and a high private debt-to-GDP ratio, even a small change in debt growth rates, brought on by changes in interest rates for instance, could have a devastating impact on the larger economy.

“Private sector debt growth is one of the best predictors of economic crisis, and Canada is now the only advanced economy squarely in the debt ‘danger zone’ of having high private sector debt that continues to rise rapidly,” Macdonald says. The report identifies several areas of concern:
• Canada has never before led the advanced economies in private debt growth;
• The last time Canada was close to leading the world in private debt growth was the early 1990s, just as housing prices plummeted and then stagnated for a decade;
• The country’s private debt-to-GDP ratio has risen by a fifth since 2011, from 182% to 218%. The US ratio currently stands at 152%;
• The $315 billion increase in household debt since 2011 ($2016) is almost entirely attributable to the rise in mortgage debt related to rapid home prices increases;
• Corporate debt is less well studied, and rose $671 billion since 2011 ($2016), accounting for two thirds of private debt accumulation over that time;
• Corporate debt was largely spent on mergers and acquisitions as well as real estate purchases, neither of which make the country more productive.

“Canada’s economy has become addicted to binging on ever more private sector debt, and weaning us off it should be our primary public policy concern,” adds Macdonald, who recommends further study of corporate debt and consideration of a housing speculators’ tax to further reign in mortgage debt increases.

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Well, it can’t be because Buffett see a bright future in Canada’s housing market. So draw your own conclusion.

Warren Buffett Becomes Lender Of Last Resort For Canada’s Home Capital (BBG)

Warren Buffett has become the lender of last resort for Home Capital. The billionaire investor agreed to buy shares at a deep discount and provide a fresh credit line for the Canadian mortgage company, tapping a formula he used to prop up lenders from Goldman Sachs to Bank of America. Buffett’s Berkshire Hathaway Inc. will buy a 38% stake for about C$400 million ($300 million) and provide a C$2 billion credit line with an interest rate of 9% to backstop the embattled Toronto-based lender, Home Capital said late Wednesday in a statement. The interest on the one-year loan would net Berkshire at least C$180 million if it’s fully tapped.

“While the terms of the new credit line with Berkshire Hathaway remain harsh, we believe the purpose of this loan is to motivate Home Capital’s management to bolster their own funding sources,” said Hugo Chan at Kingsferry Capital in Shanghai, which owns shares in Home Capital. “This again shows Mr. Buffett’s masterful capital allocation skills,” said Chan, citing his investment motto: “be greedy when others are fearful.” The financial backing from Buffett sent the stock higher Thursday, though it comes at a cost, in keeping with his past bailouts of financial firms. Buffett has buoyed some of the biggest U.S. corporations in times of trouble, including a combined $8 billion injection to prop up Goldman Sachs and General Electric when credit markets froze during the 2008 financial crisis.

In the Home Capital deal, Buffett’s firm agreed to pay an average price of C$10 a share, a 33% discount to Wednesday’s closing price of C$14.94. Berkshire would become the largest shareholder in Home Capital, which has a market value of about C$1 billion. Home Capital surged 27% to C$19 in Toronto on Thursday. That gives Buffett a 90% return on paper for the equity investment, assuming the deal goes through.

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They always have, it’s an MO.

EU Political Class Rides Roughshod over Citizens’ Concerns & Frustrations (DQ)

Merkel has expressed a willingness to go along with two central French demands — the appointment of a Eurozone finance minister and the creation of a common budget — as long as certain conditions are met. “We can of course think about a Eurozone budget as long as it’s clear that this is really strengthening structures and achieving sensible results,” she said. [..] Back on the table is a proposal to upgrade the grossly unaccountable Luxembourg-based European Stability Mechanism (ESM) into a full-fledged European Monetary Fund. As we’ve noted before, creating a European Monetary Fund (EMF) would be an important statement of intent. If Europe’s core countries are truly set on taking the EU project to a whole new level, such as by pursuing the creation of an EU army, an EU border force (with full powers), fiscal union, and ultimately political union, some form of burden sharing will ultimately be necessary.

The establishment of a fully operational EMF could be an important move in that direction. The EMF would essentially act as a fiscal backdrop to the banking system, something the Eurozone has desperately needed ever since its creation. As Bruegel proposes, it would serve as a fiscal counterpart of the ECB to guarantee the financial stability of the euro area in the event of a sovereign or banking crisis, or a threat thereof — of which there are plenty these days, in particular emanating from Italy’s broken banking system. Naturally, the creation of an EMF would deal a further blow to the fading remnants of national sovereignty in Europe. But that’s a price that many (but certainly not all) of Europe’s elite is more than happy to pay; some would say that destroying national sovereignty was the ultimate goal of the EU all along.

In a survey of more than 10,000 EU citizens and 1,800 EU elites carried out by Chatham House, of the elites, 37% believe the EU should get more powers, 28% want to keep the status quo and 31% would prefer to return more powers to individual member countries. This enthusiasm for a more centralized, more powerful EU is not shared with equal enthusiasm by European citizens: 48% want powers returned to the individual member countries. Citizens, overall, do not feel they have benefited from European integration in the same way Europe’s elite does. Whereas 71% of elites report feeling they have gained something from the EU, the figure among the public is only 34%. Even more worrisome for national leaders, a clear majority of the public — 54% — feel that their country was a better place to live 20 years ago, before the euro existed.

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I’ve seen a few parts. Liked them quite a bit.

Dear Oliver: About Those Putin Interviews (RM)

Dear Mr. Stone: I have just finished watching all four episodes of The Putin Interviews. May I give you my critique? Overall, I felt that the series is Very Good but felt just short of Great. I will explain below what I feel could have made it Great. First, I want to tell you what I really loved about it. 1. You have an easy style. I felt as if Mr. Putin was at ease with you, and you with him. You have a warm command of the English language and can transmit your ideas into language in a very personable way — an art that is missing among so many American media people these days. I felt that you drew out a candid side of Putin, well, that is, as far as a man of his intellectual prowess and disciplined self-control will allow. 2. Best moment of the show: Sitting next to Vlad and watching Dr. Strangelove! Oh my goodness, most people would not even dream of adding such a thing to their bucket list.

3. I loved the walking tour of the President’s offices and the general background of the Kremlin architecture and decor. I pay attention to the daily, tweeted photos from the Kremlin’s official account. I have seen those desks and tables a million times in the photos. But now I have them all within a mental frame, thanks to your film. Question: I was burning to know why Vlad had a pair of scissors and multi-colored construction paper in the middle of his desk, did you happen to ask him, off-camera?

Where It Fell Short Mr. Stone, I hated that so much time was wasted talking about the contrived “Russia hacked the election” meme. Hillary might not know why she lost the election, but the rest of the nation does. When my father would get on a roll with his bad jokes, Mom would tell us kids: “Don’t encourage him.” Well, you too need to stop encouraging the MSM to keep breathing life into a dead meme.

You also wasted time re-hashing Crimea. “Read My Lips,” Vlad said, “the Crimeans ASKED, BEGGED, AND VOTED to rejoin Russia.” Good grief, when McCain’s and Nuland’s beloved neo-Nazi Svoboda party took illegal control of Ukraine, their first move was to try and make it illegal to speak Russian. Geez, half the people in Ukraine ARE Russian! Mr. Putin has exercised considerable restraint towards Ukraine.

Mr. Stone, I have been following the development of BRICS, the “Silk Road Project,” and the EEU (European Economic Union) for a half-decade now. I can’t have a conversation with my neighbors and friends about all of that here in America because not one of them has heard anything about it! You had a great opportunity to ask Mr. Putin to school us on the Sino-Russian version of a multi-polar world without war, but you totally blew it. I don’t think you ever asked Vlad about China, did you?

 

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Saudi Arabia accuses Qatar of supporting terrorism. Rich.

Arab States Send Qatar 13 Demands To End Crisis (R.)

Four Arab states boycotting Qatar over alleged support for terrorism have sent Doha a list of 13 demands including closing Al Jazeera television and reducing ties to their regional adversary Iran, an official of one of the four countries said. The demands aimed at ending the worst Gulf Arab crisis in years appear designed to quash a two decade-old foreign policy in which Qatar has punched well above its weight, striding the stage as a peace broker, often in conflicts in Muslim lands. Doha’s independent-minded approach, including a dovish line on Iran and support for Islamist groups, in particular the Muslim Brotherhood, has incensed some of its neighbors who see political Islamism as a threat to their dynastic rule.

The list, compiled by Saudi Arabia, the United Arab Emirates (UAE), Egypt and Bahrain, which cut economic, diplomatic and travel ties to Doha on June 5, also demands the closing of a Turkish military base in Qatar, the official told Reuters. Qatar must also announce it is severing ties with terrorist, ideological and sectarian organizations including the Muslim Brotherhood, Islamic State, al Qaeda, Hezbollah, and Jabhat Fateh al Sham, formerly al Qaeda’s branch in Syria, he said, and surrender all designated terrorists on its territory, The four Arab countries accuse Qatar of funding terrorism, fomenting regional instability and cozying up to revolutionary theocracy Iran. Qatar has denied the accusations.

[..] on Monday, Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani said Qatar would not negotiate with the four states unless they lifted their measures against Doha. The countries give Doha 10 days to comply, failing which the list becomes “void”, the official said without elaborating, suggesting the offer to end the dispute in return for the 13 steps would no longer be on the table.

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Bunch of sicko’s.

Edward Snowden on Twitter: “Biggest @AP scoop in a long time: US government behind UAE torture in Yemen, with some reportedly grilled alive.

In Yemen’s Secret Prisons, UAE Tortures and US Interrogates

Hundreds of men swept up in the hunt for al-Qaida militants have disappeared into a secret network of prisons in southern Yemen where abuse is routine and torture extreme — including the “grill,” in which the victim is tied to a spit like a roast and spun in a circle of fire, an Associated Press investigation has found. Senior American defense officials acknowledged Wednesday that U.S. forces have been involved in interrogations of detainees in Yemen but denied any participation in or knowledge of human rights abuses. Interrogating detainees who have been abused could violate international law, which prohibits complicity in torture. The AP documented at least 18 clandestine lockups across southern Yemen run by the United Arab Emirates or by Yemeni forces created and trained by the Gulf nation, drawing on accounts from former detainees, families of prisoners, civil rights lawyers and Yemeni military officials.

All are either hidden or off limits to Yemen’s government, which has been getting Emirati help in its civil war with rebels over the last two years. The secret prisons are inside military bases, ports, an airport, private villas and even a nightclub. Some detainees have been flown to an Emirati base across the Red Sea in Eritrea, according to Yemen Interior Minister Hussein Arab and others. Several U.S. defense officials, speaking on condition of anonymity to discuss the topic, told AP that American forces do participate in interrogations of detainees at locations in Yemen, provide questions for others to ask, and receive transcripts of interrogations from Emirati allies. They said U.S. senior military leaders were aware of allegations of torture at the prisons in Yemen, looked into them, but were satisfied that there had not been any abuse when U.S. forces were present.

“We always adhere to the highest standards of personal and professional conduct,” said chief Defense Department spokeswoman Dana White when presented with AP’s findings. “We would not turn a blind eye, because we are obligated to report any violations of human rights.” In a statement to the AP, the UAE’s government denied the allegations. “There are no secret detention centers and no torture of prisoners is done during interrogations.” Inside war-torn Yemen, however, lawyers and families say nearly 2,000 men have disappeared into the clandestine prisons, a number so high that it has triggered near-weekly protests among families seeking information about missing sons, brothers and fathers.

None of the dozens of people interviewed by AP contended that American interrogators were involved in the actual abuses. Nevertheless, obtaining intelligence that may have been extracted by torture inflicted by another party would violate the International Convention Against Torture and could qualify as war crimes, said Ryan Goodman, a law professor at New York University who served as special counsel to the Defense Department until last year

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May 272017
 
 May 27, 2017  Posted by at 5:41 pm Finance Tagged with: , , , , , , , , , , ,  


Herbert Draper Lament for Icarus 1898

 

There are times when you have to talk about things when it appears most inopportune to do so, because they’re the only times people might listen. Times when people will argue that ‘this is not the right moment’, while in reality it’s the only moment.

A solid 99% of people will have been filled, and rightly so of course, with a mixture of disgust, disbelief and infinite sadness when hearing of yet another attack on civilians in Europe, this one in Manchester. An equally solid 99% will have failed to recognize that while the event was unique for the city of Manchester, it was by no means unique for the world, not even at the time it happened.

Though the footage of parents desperately trying to find their children, and the news that one of the dead was just 8 years old, touches everyone in more or less the same place in our hearts, by far most of us miss out on the next logical step. In a wider perspective, it is easy to see that parents crying for missing children, and children killed in infancy, is what connects Manchester, and the UK, and Europe, to parents in Syria, Libya, Iraq.

What’s different between these places is not the suffering or the outrage, the mourning or the despair, what’s different is only the location on the map. That and the frequency with which terror is unleashed upon a given population. But just because it happens all the time in other places doesn’t make it more normal or acceptable.

It’s the exact same thing, the exact same experience, and still a vast majority of people don’t, choose not to, feel it as such. Which is curious when you think about it. In the aftermath of a terror attack, the mother of a missing, maimed or murdered child undergoes the same heartbreak no matter where they are in the world (“I hope the Russians love their children too”). But the empathy, the compassion, is hardly acknowledged in Britain at all, let alone shared.

Not that it couldn’t be. Imagine that our papers and TV channels would tell us, preferably repeatedly, in their reports in the wake of an attack like the one in Manchester how eerily similar the emotions must be to those felt in Aleppo, Homs and many other cities. That would change our perception enormously. But the media choose not to make the connection, and the people apparently are not capable of doing it themselves.

None of that changes the fact, however, that British lives are not more valuable than Syrian and Libyan ones. Not even when we’ve gotten used to ‘news’ about bombings and drone attacks executed for years now by US-led coalitions, or the images of children drowning when they flee the area because of these attacks.

The overall theme here is that 99.9% of people everywhere in the world are innocent, especially when they are children, but their governments and their societies are not. That doesn’t justify the Manchester attack in any shape or form, it simply lays equal blame and condemnation for western terror attacks in the Middle East and North Africa, perpetrated by the people we elect into power.

This is something people in the west pay no attention to. It’s easier that way, and besides our media with great enthusiasm pave the way for our collective ignorance, by calling some other group of people ‘terrorists’, which while they’re at it is supposed to justify killing some other mother’s child.

There’s another thing that is also different: they didn’t start. We did. The British and French terrorized the region for many decades, since the 19th century, even way before the Americans joined in. The presence of oil, and its rising role in our economies, caused them to double down on that terror.

Yes, it’s awkward to talk about this on the eve of a deadly attack, and it’s easy to find arguments and rhetoric that appear to deflect responsibility. But at the same time this truly is the only moment we can hope that anyone will listen. And lest we forget, the UK carries an outsized share of the responsibility in this tragedy, both historically and in the present.

You can say things about the city coming together, or the country coming together, or “not allowing terrorists to affect our way of life”, but perhaps it should instead really be all the mothers who have children missing or dying, wherever they live, coming together. They all see their ways of life affected, and many on a daily basis.

Those mothers in Syria and Libya, who have been through the same hellhole as those in Manchester, are a lot closer to you than the politicians who send out jet fighters to bomb cities in the desert, or sell arms to individuals and organizations to control these cities for their own narrow personal gain, such as the governments of Saudi Arabia and Turkey.

The traumatized mothers in the desert are not your enemies; your enemies are much closer to home. Still, most of you will tend to react to fear and panic by looking for protection in exactly those circles that are least likely to provide it. The UK government under Theresa May, like those of Tony Blair, Gordon Brown and David Cameron before, is as cynically eager as their predecessors to send bombers into the desert, and sell arms to those living there.

We can illustrate all this with a few bits of news. First, the US-led coalotion, of which the UK is a substantial part, killed more civilians in Syria than at any time since they started bombing the country almost 3 years ago. They keep saying they don’t target civilians, but to put it mildly they don’t appear to go out of their way not to hit them. For instance, a single attack on Mosul, Iraq in March killed over 105 civilians. ‘Collateral damage’ in these cases, and there are hundreds by now, is a very disrespectful term. Moreover, the files released by Chelsea Manning show US soldiers killing people ‘with impunity’.

Deadliest Month For Syria Civilians In US-Led Strikes

US-led air strikes on Syria killed a total of 225 civilians over the past month, a monitor said on Tuesday, the highest 30-day toll since the campaign began in 2014. The Syrian Observatory for Human Rights said the civilian dead between April 23 and May 23 included 44 children and 36 women. The US-led air campaign against the Islamic State jihadist group in Syria began on September 23, 2014. “The past month of operations is the highest civilian toll since the coalition began bombing Syria,” Observatory head Rami Abdel Rahman told AFP. “There has been a very big escalation.” The previous deadliest 30-day period was between February 23 and March 23 this year, when 220 civilians were killed, Abdel Rahman said.

And it’s not as if the British didn’t or couldn’t know what was going on. That was clear as early as 2003, when Tony Blair couldn’t wait to join the Bush coalition to invade Iraq on the false premise of weapons of mass destruction. Before Libya was invaded, which led to Hillary’s disgusting ‘we came we saw he died’, Gaddafi, the one who did die, warned Blair about what would happen. It indeed did, which makes Blair a guilty man.

Gaddafi Warned Blair His Ousting Would ‘Open Door’ To Jihadis

Muammar Gaddafi warned Tony Blair in two fraught phone conversations in 2011 that his removal from the Libyan leadership would open a space for al-Qaida to seize control of the country and even launch an invasion of Europe. The transcripts of the conversations have been published with Blair’s agreement by the UK foreign affairs select committee, which is conducting an inquiry into the western air campaign that led to the ousting and killing of Gaddafi in October 2011. In the two calls the former British prime minister pleaded with Gaddafi to stand aside or end the violence. The transcripts reveal the gulf in understanding between Gaddafi and the west over what was occurring in his country and the nature of the threat he was facing.

In the first call, at 11.15am on 25 February 2011, Gaddafi gave a warning in part borne out by future events: “They [jihadis] want to control the Mediterranean and then they will attack Europe.” In the second call, at 3.25pm the same day, the Libyan leader said: “We are not fighting them, they are attacking us. I want to tell you the truth. It is not a difficult situation at all. The story is simply this: an organisation has laid down sleeping cells in north Africa. Called the al-Qaida organisation in north Africa … The sleeping cells in Libya are similar to dormant cells in America before 9/11.”

Gaddafi added: “I will have to arm the people and get ready for a fight. Libyan people will die, damage will be on the Med, Europe and the whole world. These armed groups are using the situation [in Libya] as a justification – and we shall fight them.” Three weeks after the calls, a Nato-led coalition that included Britain began bombing raids that led to the overthrow of Gaddafi. He was finally deposed in August and murdered by opponents of his regime in October.

What they are guilty of is no more and no less than Manchester. No hyperbole, but a warning from Blair’s own intelligence services back in 2003. The real weapons of mass destruction were not in Iraq, but in the White House and Downing Street no. 10. The CIA issued warnings similar to this.

British Intelligence Warned Tony Blair Of Manchester-Like Terrorism If The West Invaded Iraq

Before the 2003 invasion of Iraq led by the U.S. and U.K., he was forcefully and repeatedly warned by Britain’s intelligence services that it would lead to exactly this type of terrorist attack — and he concealed these warnings from the British people, instead claiming the war would reduce the risk of terrorism. We know this because of the Chilcot Report, the seven-year-long British investigation of the Iraq War released in 2016. The report declassifies numerous internal government documents that illustrate the yawning chasm between what Blair was being told in private and his claims in public as he pushed for war.

On February 10, 2003, one month before the war began, the U.K.’s Joint Intelligence Committee — the key advisory body for the British Prime Minister on intelligence matters — issued a white paper titled “International Terrorism: War With Iraq.” It began: “The threat from Al Qaida will increase at the onset of any military action against Iraq. They will target Coalition forces and other Western interests in the Middle East. Attacks against Western interests elsewhere are also likely, especially in the US and UK, for maximum impact. The worldwide threat from other Islamist terrorist groups and individuals will increase significantly.”

And it concluded much the same way: “Al Qaida and associated groups will continue to represent by far the greatest terrorist threat to Western interests, and that threat will be heightened by military action against Iraq. The broader threat from Islamist terrorists will also increase in the event of war, reflecting intensified anti-US/anti-Western sentiment in the Muslim world, including among Muslim communities in the West.”

Not long behind Blair came David Cameron, a man after Tony’s heart:

Cameron Brags Of ‘Brilliant’ UK Arms Trade As EU Embargoes Saudi Arabia

European ministers have embarrassed David Cameron by voting to impose an arms embargo on Saudi Arabia on the same day the British prime minister praised the UK for selling “brilliant” arms to the country. Speaking at a BAE Systems factory in Preston, the prime minister said the UK had pushed the sale of Eurofighter Typhoons to countries in the Middle East, including Oman and Saudi Arabia. [..] Cameron’s speech in Preston came at the same time the European Parliament voted to impose an EU-wide ban on arms exports to Saudi Arabia, citing criticism from the UN of its bombing in Yemen.

Asked at the talks how he was helping to export the planes, Cameron said: “With the Typhoon there is an alliance of countries: the Italians, Germans and ourselves. We spend a lot of time trying to work out who is best placed to win these export orders. We’ve got hopefully good news coming from Kuwait. The Italians have been doing a lot of work there. The British have been working very hard in Oman.” The vote will not force EU members to comply with the ban, but will force the government to examine its relationship with Saudi Arabia.

In the last year the British government has sold £3 billion (US$4.18 billion) worth of arms and military kit to the Gulf state, as well as providing training to Saudi forces. A report released by Amnesty International on Friday called the ongoing trade with Saudi Arabia “truly sickening,” and urged governments to attend meetings in Geneva on Monday to discuss the implementation of the Arms Trade Treaty (ATT). The report names the UK, France, Germany, Italy, Montenegro, the Netherlands, Spain, Sweden, Switzerland, Turkey and the US as having issued licenses for arms to Saudi Arabia worth more than £18 billion in 2015.

The arms sold include drones, bombs, torpedoes, rockets and missiles, which have been used by Saudi Arabia and its allies for gross violations of human rights and possible war crimes during aerial and ground attacks in Yemen, the campaign group said. Control Arms Director Anna Macdonald said: “Governments such as the UK and France were leaders in seeking to secure an ATT – and now they are undermining the commitments they made to reduce human suffering by supplying Saudi Arabia with some of the deadliest weapons in the world. It’s truly sickening.”

British MPs from Cameron’s own party didn’t like it either, but what meaning does that have if it takes 5 years to issue a report, and moreover he can simply refuse to give evidence?

MPs Deliver Damning Verdict On David Cameron’s Libya Intervention

David Cameron’s intervention in Libya was carried out with no proper intelligence analysis, drifted into an unannounced goal of regime change and shirked its moral responsibility to help reconstruct the country following the fall of Muammar Gaddafi, according to a scathing report by the foreign affairs select committee. The failures led to the country becoming a failed a state on the verge of all-out civil war, the report adds. The report, the product of a parliamentary equivalent of the Chilcot inquiry into the Iraq war, closely echoes the criticisms widely made of Tony Blair’s intervention in Iraq, and may yet come to be as damaging to Cameron’s foreign policy legacy.

It concurs with Barack Obama’s assessment that the intervention was “a shitshow”, and repeats the US president’s claim that France and Britain lost interest in Libya after Gaddafi was overthrown. Cameron has refused to give evidence to the select committee. In one of his few reflections on his major military intervention, he blamed the Libyan people for failing to take their chance of democracy.

The committee, which has a majority of Conservative members, did not have Chilcot-style access to internal papers, but took voluminous evidence from senior ministers at the time, and other key players such as Blair, the chief of the defence staff, Lord Richards, and leading diplomats. The result of the French, British and US intervention, the report finds, “was political and economic collapse, inter-militia and inter-tribal warfare, humanitarian and migrant crises, widespread human rights violations, the spread of Gaddafi regime weapons across the region and the growth of Isil [Islamic State] in north Africa”.

It seems obvious that if there were an impartial international body with the power to prosecute, Bush, Cheney, Blair, Cameron, Hillary etc. etc. (don’t forget France) would be charged with war crimes. And Obama too: his ‘shitshow’ comment must be seen in light of the ‘we came we saw he died’ comment by Hillary Clinton, his Secretary of State. Think he didn’t know what was happening?

Another person who should be charged is Theresa May, Cameron’s Home Secretary from May 2010 till July 2016, and of course Britain’s present PM, who sells as much weaponry to Saudi Arabia as she possibly can while the Saudi’s are shoving the few Yemeni’s they leave alive back beyond the Stone Age. And then May has the gall to talk about humanitarian aid.

Theresa May Defends UK Ties With Saudi Arabia

Theresa May has defended her trip to Saudi Arabia, saying its ties with the UK are important for security and prosperity. The prime minister is facing questions about the UK’s support for the Saudi-led coalition which is fighting rebels in neighbouring Yemen. Labour Party leader Jeremy Corbyn said UK-made weapons were contributing to a “humanitarian catastrophe”. [..] Mrs May said humanitarian aid was one of the issues she would be discussing on her trip. “We are concerned about the humanitarian situation – that’s why the UK last year was the fourth largest donor to the Yemen in terms of humanitarian aid – £103m. We will be continuing with that,” she told the BBC.

[..] Mr Corbyn called for the immediate suspension of UK arms exports to Saudi Arabia. He criticised the “dictatorial Saudi monarchy’s shocking human rights record” and said the PM should focus on human rights and international law at the centre of her talks. “The Saudi-led coalition bombing in Yemen, backed by the British government, has left thousands dead, 21 million people in need of humanitarian assistance and three million refugees uprooted from their homes,” he said. “Yemen urgently needs a ceasefire, a political settlement, and food aid, not more bombing. “British-made weapons are being used in a war which has caused a humanitarian catastrophe.”

The one person who would probably not be in front of such a court is Jeremy Corbyn, opponent of May’s in the June 8 elections. Though there is the issue that he never protested in much stronger terms as an MP. Still, if you have to pick one of the two, what is not obvious?

Theresa May Claims Selling Arms To Saudi Arabia Helps ‘Keep People On The Streets Of Britain Safe’

Theresa May has staunchly defended selling arms to Saudi Arabia despite the country facing accusations of war crimes, insisting close ties “keep people on the streets of Britain safe”. Jeremy Corbyn called on the Prime Minister to halt those sales because of the “humanitarian devastation” caused by a Saudi-led coalition waging war against rebels in Yemen. The Labour leader spoke out after the Parliamentary committee charged with scrutinising arms exports said it was likely that British weapons had been used to violate international law.

The Saudis stand accused of bombing multiple international hospitals run by the charity Médecins Sans Frontières, as well as schools, wedding parties and food factories. In the Commons, Mr Corbyn linked weapons sales to the ongoing refugee crisis, which he said should be Britain’s “number one concern and our number one humanitarian response”. He added: “That is why I remain concerned that at the heart of this Government’s security strategy is apparently increased arms exports to the very part of the world that most immediately threatens our security.

The British Government continue to sell arms to Saudi Arabia that are being used to commit crimes against humanity in Yemen , as has been clearly detailed by the UN and other independent agencies.”

But, in response, Ms May pointed out she had called on Saudi Arabia to investigate the allegations about Yemen when she met with the kingdom’s deputy crown prince at the recent G20 summit in China. The Prime Minister dismissed Mr Corbyn’s suggestion that “what happened in Saudi Arabia was a threat to the safety of people here in the UK”. Instead, she said: “Actually, what matters is the strength of our relationship with Saudi Arabia. When it comes to counter-terrorism and dealing with terrorism, it is that relationship that has helped to keep people on the streets of Britain safe.”

May’s, and Britain’s, utterly mad stance in this is perhaps best exemplified, in one sentence, by her comments during the speedy trip she made to Turkey, again to sell more arms to an at best highly questionable regime. Why do it, why drag your entire nation through the moral gutter for $100 million or a few billion? The military industrial complex.

Theresa May Signs £100m Fighter Jet Deal With Turkey’s Erdogan

Theresa May issued a stern warning to Turkish president Recep Tayyip Erdogan about respecting human rights yesterday as she prepared to sign a £100m fighter jet deal that Downing Street hopes will lead to Britain becoming Turkey’s main defence partner.

And once again, no, none of this justifies the Manchester bombing. Neither a government nor an extremist movement has any right to kill innocent people. But let’s make sure we know that neither does.

There’s another aspect to the story. MI6 had close links to the Libyan community in Manchester.

‘Sorted’ by MI5: How UK Government Sent British-Libyans To Fight Gaddafi

The British government operated an “open door” policy that allowed Libyan exiles and British-Libyan citizens to join the 2011 uprising that toppled Muammar Gaddafi even though some had been subject to counter-terrorism control orders, Middle East Eye can reveal. Several former rebel fighters now back in the UK told MEE that they had been able to travel to Libya with “no questions asked” as authorities continued to investigate the background of a British-Libyan suicide bomber who killed 22 people in Monday’s attack in Manchester.

Salman Abedi, 22, the British-born son of exiled dissidents who returned to Libya as the revolution against Gaddafi gathered momentum, is also understood to have spent time in the North African country in 2011 and to have returned there on several subsequent occasions. Sources spoken to by MEE suggest that the government facilitated the travel of Libyan exiles and British-Libyan residents and citizens keen to fight against Gaddafi including some who it deemed to pose a potential security threat.

One British citizen with a Libyan background who was placed on a control order – effectively house arrest – because of fears that he would join militant groups in Iraq said he was “shocked” that he was able to travel to Libya in 2011 shortly after his control order was lifted. “I was allowed to go, no questions asked,” said the source. He said he had met several other British-Libyans in London who also had control orders lifted in 2011 as the war against Gaddafi intensified, with the UK, France and the US carrying out air strikes and deploying special forces soldiers in support of the rebels.

“They didn’t have passports, they were looking for fakes or a way to smuggle themselves across,” said the source. But within days of their control orders being lifted, British authorities returned their passports, he said. Many Libyan exiles in the UK with links to the LIFG [Libyan Islamic Fighting Group ] were placed on control orders and subjected to surveillance and monitoring following the rapprochement between the British and Libyan governments sealed by the so-called “Deal in the Desert” between then-British Prime Minister Tony Blair and Gaddafi in 2004.

According to documents retrieved from the ransacked offices of the Libyan intelligence agency following Gaddafi’s fall from power in 2011, British security services cracked down on Libyan dissidents in the UK as part of the deal, as well as assisting in the rendition of two senior LIFG leaders, Abdel Hakim Belhaj and Sami al-Saadi, to Tripoli where they allege they were tortured.

Torture one day, passports the other. Lovely. And it still gets better: MI6 didn’t just have close contacts with Libyans in Manchester, it knew the alleged perpetrator’s family, and used his father multiple times as on operative:

Manchester Attack as MI6 Blowback

According to Scotland Yard, the attack on the crowd leaving the Ariana Grande concert at Manchester Arena, 22 May, has been perpetrated by Salman Abedi. A bankcard has been conveniently found in the pocket of the mutilated corpse of the ‘terrorist’. This attack is generally interpreted as proof that the United Kingdom is not implicated in international terrorism and that, on the contrary, it is a victim of it.

[..] In 1992, Ramadan Abedi [Salman’s father] was sent back to Libya by Britain’s MI6 and was involved in a British-devised plot to assassinate Muammar Gaddafi. The operation having been readily exposed, he was exfiltrated by MI6 and transferred back to the UK where he obtained political asylum. He moved in 1999 to Whalley Range (south of Manchester) where there was already resident a small Libyan Islamist community. In 1994, Ramadan Abedi returned again to Libya under MI6’s direction. In late 1995 he is involved in the creation of the Libyan Islamic Fighting Group (LIFG), a local branch of Al-Qaeda, in conjunction with Abdelhakim Belhadj.

The LIFG was then employed by MI6 again to assassinate Gaddafi, for a payoff of £100,000. This operation, which also failed, provoked heated exchanges within British Intelligence, leading to the resignation of one David Shayler. Other former members of the LIFG have also lived at Whalley Range, including Abedi’s friend Abd al-Baset-Azzouz. In 2009, this last joined Al-Qaeda in Pakistan and became a close associate of its chief, Ayman al-Zawahiri. In 2011, al-Baset-Azzouz is active on the ground with the NATO operation against Libya.

On 11 September 2012, he directs the operation against the US Ambassador in Libya, Christopher Stevens, assassinated at Benghazi. He is arrested in Turkey and extradited to the US in December 2014, his trial still pending. Nobody pays attention to the fact that Ramadan Abedi has linked LIFG members to the formation of Al-Qaeda in Iraq and, in 2011, he takes part in MI6’s ‘Arab Spring’ operations, and in LIFG’s role on the ground in support of NATO. In any event, Abedi returned to Libya after the fall of Gaddafi and moves his family there, leaving his older children in the family home at Whalley Range.

According to the former Spanish Prime Minister José Maria Aznar, Abdelhakim Belhadj was involved in the assassinations in Madrid of 11 March 2004. Later, he is secretly arrested in Malaysia by the CIA and transferred to Libya where he is tortured not by Libyan or American functionaries but by MI6 agents. He is finally freed after the accord between Saif al-Islam Gaddafi [Gaddafi’s son] and the jihadists.

Luckily, perhaps the Brits are not that stupid:

Half of Britons Blame UK’s Foreign Wars for Terror Attacks at Home

Slightly over a half of people in the UK agree that the nation’s involvement in wars abroad has increased the terror threat to the country, a poll out Friday has showed. The survey found that 53% of 7,134 UK adults sampled by YouGov said they believed wars the UK supported or fought were in part responsible for terror attacks at home. [..] Labour leader Jeremy Corbyn, who made a speech earlier in the day to mark his return to general election campaigning, said UK’s war on terror had not worked. He cited intelligence experts who said foreign wars, including in Libya, threatened the country’s security.

If that is true, Theresa May obviously should have no chance of winning. May can and will try to use the horror of Manchester, and the subsequent pause in the campaign, to strengthen her position in the upcoming election, by playing on people’s fear and making them believe she’s in control. Even if the very attack itself makes clear that she’s not. The Tories have already attacked Corbyn for saying their policies have failed; it was the wrong time to say that, according to them.

But it’s not. It’s the very best time. This is when people pay attention. And having this discussion doesn’t disrespect the victims of Manchester. If anything, it shows more respect than not having the discussion. Because you want to make sure this doesn’t happen again, neither here nor there. And to achieve that, you have to look at why these things happen.

An 8-year old child in Manchester, just like one in Mosul or Aleppo, is innocent. Yourself, perhaps not so much. The politicians you vote into power, and the media you read and watch to inform you, not a chance. Guilty as hell.

 

 

Jul 022016
 
 July 2, 2016  Posted by at 8:18 am Finance Tagged with: , , , , , , , , ,  


Walker Evans Vicksburg, Mississippi. “Vicksburg Negroes and shop front.” 1936

Everyone’s a Winner in Brexit Aftermath as Doves Rescue Market (BBG)
The European Union Is ‘Doomed To Fail’ : Taleb (CNBC)
Hungary’s Migrant Referendum Shows Europe’s Post-Brexit Challenge (R.)
Kyle Bass Says China’s Corporate Bond Market Is ‘Freezing Up’ (BBG)
QE Only Works When You’re The Only Country Doing It: Kyle Bass (ZH)
Bad-Loan Ultimatum in India Sees Default Risk Climb Most in Asia (BBG)
World Biggest Pension Fund Seen Losing $43 Billion Last Quarter (BBG)
We May Have Reached Peak Pensioner (G.)
Hacked Emails Reveal US NATO General Plotting Against Obama (Intercept)
Australia Accused Of Torturing, Waterboarding Refugees (Ind.)

 

 

Bad news is good news again. No more uncertainty.

Everyone’s a Winner in Brexit Aftermath as Doves Rescue Market (BBG)

One week after Brexit, the lesson investors are taking away is that there’s no problem central banks can’t fix. Just days after the U.K.’s vote to leave the European Union roiled financial markets around the world, stocks and bonds surged in tandem this week as policy makers once again rode to the rescue, dropping hints of further stimulus and suggesting they’ll keep interest rates lower for longer. Traditionally, what’s good for one asset class has not been good for the other, and stocks and bonds more often move in opposite directions on the same information. Yet with unprecedented monetary easing showing no signs of slowing, that relationship continues to break down.

With almost $12 trillion of government bonds globally paying less than zero, a rush into Treasuries Friday pushed yields to record lows, even as encouraging economic data helped propel U.S. stocks toward all-time highs. “This may be the new normal,” said Aaron Kohli, a fixed-income strategist in New York at BMO Capital Markets, one of 23 primary dealers that trade with Fed. “If you flood the markets with liquidity, and you have the anticipation that the central banks are going to be dovish — either adding to quantitative easing or becoming less hawkish, as the case may be for the U.S. Fed — any assets that aren’t impaired or encumbered are going to do very well.”

Read more …

“This is 2016. They are still thinking 1950 economics..”

The European Union Is ‘Doomed To Fail’ : Taleb (CNBC)

The European Union is doomed to fail, “Black Swan” author Nassim Nicholas Taleb said Thursday. He told CNBC’s “Power Lunch” the EU has become a “metastatic and rather incompetent bureaucracy” that is too intrusive. “The way they’ve been building it top down from Brussels is doomed to fail. This is 2016. They are still thinking 1950 economics,” said Taleb, who is also the author of “Antifragile” and is an advisor to Universa Investments. Taleb has warned about an EU breakup for some time, calling it a horrible, stupid project back in 2012. In fact, the U.K.’s vote to exit the EU last week didn’t turn out to be the catastrophe that was expected, he said. While Brexit fears initially rattled global markets, stocks have been climbing back up over the last few days.

While he’s against the current bureaucracy in place in the Europe, he still believes countries can work together, forming free trade agreements and joint military and economic policies. He envisions an Anglo-Saxon economic zone that encompasses the U.S., Ireland, Scotland and Britain. Taleb also doesn’t see Brexit as an isolated event. “People just realize that these elites don’t know what they’re talking about. It’s nice to have elites..you don’t want them to tell you what to do,” he said. “So they are tired of that and it’s a rebellion.” “You have waves and of course we have a wave and I think that .. it’s spreading.” That can be seen in the popularity of Donald Trump, he added. “He’s a brilliant salesperson. He knows how to sell you real estate.. He knows what people want. And he detected exactly that point. And he’s delivering but through trial and error.

Read more …

Note: On July 1, Slovakia took over from Holland as chair of the EU. Slovakia is very much opposed to the migrant quota plans.

And Orban is a dick, but he poses a basic question on sovereignty. Which the EU should not just try to sweep under the carpet, because it represents the very core of all the issues. It’s worrisome to me that the right seems to be the only side asking the right questions these days.

Hungary’s Migrant Referendum Shows Europe’s Post-Brexit Challenge (R.)

Emboldened by Britain’s shock vote to quit the EU, Hungary’s leader Viktor Orban is forging ahead with his own referendum on migration, in what European diplomats see as a sign of battles to come with anti-Brussels populists across the continent. The 53-year-old Orban, in power since 2010, has clashed several times with the EU on issues ranging from independence of the courts and the central bank to his handling of the migrant crisis, which has included a fence on Hungary’s southern border. His next clash pits him against an EU Commission plan to resettle refugees across member states based on quotas, which Orban sees as an act of out-of-touch Brussels bureaucrats usurping national authority.

“We need to fight to prove to people that it is possible to form an EU migration policy that is in line with the Hungarian national interest,” Orban said days after the Brexit vote. “This is going to be a long struggle for which I will need a strong mandate, which cannot be ensured without a referendum,” said Orban, who is in favor of remaining in the EU but wants more powers for member states. Orban has enlisted allies, such as neighboring Slovakia, which also opposes the quotas and this week joined a chorus of eastern EU states calling for the powers of the EU Commission to be reined in after Britain’s vote to leave.

“We have a big problem with the proposed reform of the Dublin system,” Slovak Prime Minister Robert Fico said. “We think it’s stupid, because this is exactly what will keep dividing Europe if (countries) will be asked to pay €250,000 for each migrant they refuse to take.” [..] Orban has said the migration crisis could drive more countries out of the EU. His government will ask Hungarians: “Do you agree that the European Union should be able to prescribe the mandatory settlement of non-Hungarian citizens in Hungary without the consent of parliament?”

Read more …

“..the largest macro imbalance in world history..” People who’ve been reading me for a while will know I fully agree with Bass. Except perhaps for his optimism about China as a buying opportunity. You must take into account, in my view, the inevitable massive losses for Chinese citizens, and their potential reaction to them.

Kyle Bass Says China’s Corporate Bond Market Is ‘Freezing Up’ (BBG)

Kyle Bass, the hedge-fund manager who’s wagering on a devaluation in China, said the country’s $3 trillion corporate bond market is “freezing up” amid rising defaults and canceled debt sales. “We’re starting to see the beginning of the Chinese machine literally break down,” Bass, the founder Hayman Capital Management, said in an interview on Real Vision. China’s corporate bond market contracted by a record in May as tepid economic growth and a raft of missed payments spooked investors. Seventeen publicly-traded Chinese bonds have defaulted so far this year, up from six in 2015, and at least 188 firms have scrapped or delayed debt sales since the end of March, according to data compiled by Bloomberg.

Bass, who rose to fame after prescient bets against U.S. subprime mortgages, has so far had less success with his China wagers, saying they’ve contributed to his “terrible” performance over the past two years. While his corporate bond warning follows signs of market stress, there’s no evidence yet of a collapse. Yields on junk-rated Chinese debt fell the most this year in June, while companies were able to sell 1.85 trillion yuan ($278 billion) of onshore notes in the second quarter. Defaults have ramifications beyond the corporate debt market, according to Bass. It also threatens to undermine the $3.5 trillion market for wealth management products, which raise money from Chinese individuals to invest in bonds, stocks and derivatives, he said.

The products receive less regulatory oversight than banks and often have mismatches between their maturities and underlying assets. Bass said in February that China’s lenders may suffer losses more than four times those at American banks during the 2008 credit crisis. He also predicted the yuan will fall in excess of 30%. In the Real Vision interview, Bass reiterated that China’s lending binge in recent years has created “the largest macro imbalance in world history.” He expects bank losses of $3 trillion to trigger a bailout, with the central bank slashing reserve requirements, cutting the deposit rate to zero and expanding its balance sheet – all of which will weigh on the yuan.

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Great interview with Bass.

QE Only Works When You’re The Only Country Doing It: Kyle Bass (ZH)

Grant : this idea of helicopter money, and the idea of banning cash, and all these things that, when you sit here in the cold like that, you can see exactly why they need to do these things. You watch the narrative unfold in the media, and then the trial balloons get floated. But you’re right, they have to go to helicopter money, they’re really not going to have a choice. And it seems to me that they are going to have to try to ban cash. Because, as you say, the U.S. savings rate has tripled since 2007, and that’s literally the last thing they want or need. So is there any way out for these guys? Because that’s the thesis that I keep checking. I can’t see a way out, absent cold fusion.

Kyle : Look, I had a fascinating out of body experience meeting with one of the world’s top central bankers in a private meeting about three years ago. And he said, “You know Kyle, quantitative easing only works when you’re the only country doing it.” He would never say that publicly. And I’ll protect his name, because it was a private meeting. But it was one of those moments where I…it was one of those epiphanies almost, where it’s something you and I knew, but hearing him say it, call it one of the four top central bankers in the world, it was a jarring experience for me, because when I look around the world today, everyone’s in the same boat. So we’re all trying…we’re attempting through our treasury and our Fed to get the rest of the world to not devalue against us, while we quietly attempt to devalue ourselves against them, and it’s all this…it is the race to the bottom, it is the beggar thy neighbor policies that we all talk about. And I believe that there is no way out.

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Another economic miracle showing rot.

Bad-Loan Ultimatum in India Sees Default Risk Climb Most in Asia (BBG)

Investors are starting to show nerves over the Reserve Bank of India’s ultimatum for state lenders to clean up their rising pile of bad loans this fiscal year. Bank of India’s credit-default swaps jumped 31 basis points in the past month, the most among Asian banks, after it was one of three lenders downgraded by S&P Global Ratings on May 30. Yield premiums on dollar bonds of the Mumbai-based company, Indian Overseas Bank and Syndicate Bank climbed to the highest in at least four months after the action. “It’s one of the most trying times for the public sector banks and how they handle this will be crucial for their future survival,” said Rajesh Mokashi at CARE Ratings. “I see a substantial jump in non-performing loans for most banks for the year to March 31, 2017.”

RBI Governor Raghuram Rajan, who will hand over the reins to an as-yet-undecided successor in September, has given lenders until March 31 to clean up stressed loans that surged to 11.5% of their assets last fiscal year. The rating downgrades will make it harder to raise capital for India’s state-owned commercial lenders, which issued no dollar bonds this year, versus $895 million in the first half of last year.

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From AAA to stocks. It took only a few years. And there goes your pension.

World Biggest Pension Fund Seen Losing $43 Billion Last Quarter (BBG)

Losses for the world’s biggest pension fund likely deepened in the quarter just ended, extending what may be its worst annual loss since the global financial crisis, brokerage estimates showed. Japan’s Government Pension Investment Fund will probably post a 4.4 trillion yen ($43 billion) loss in the April-June quarter, according to calculations by Yohei Iwao, executive director of the institutional equities division at Morgan Stanley MUFG Securities. That follows what he estimates was a 5 trillion yen decline in the fiscal year ended March 31, which would amount to the worst performance since fiscal 2009 when the fund lost 9.7 trillion yen.

The calculations come amid criticism the government has put the public’s pension money at risk after the fund known as the whale for the size of its assets increased its equity allocations in 2014. That’s prompted the main opposition party to pledge GPIF will move investments back into safer ones in its manifesto ahead of elections this month. “Looks like the scrutiny on GPIF will continue,” Morgan Stanley MUFG’s Iwao said. GPIF has been hurt after global stock routs in mid-2015 and early this year helped wipe about $7.4 trillion off world equities in the past 12 months. Japan’s Topix index has tumbled 19% in 2016 to be the second-worst performing developed stock market as the yen strengthened, reducing returns from overseas holdings.

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No politician wants to touch this. Not in their timeframe.

We May Have Reached Peak Pensioner (G.)

Since 2004-05 the average income of all pensioners has jumped from £250 a week to £297. For pensioner couples the average income is £444, or £23,000 a year. During the same period, incomes for working people have stagnated or fallen; even today, average net disposable income is below where it was in 2007-08. Two factors have driven pensioner incomes up: first, the “triple lock” for state pensions, which has guaranteed that it rises every year by the highest of price inflation, earnings growth or 2.5%. During the global financial crash the triple lock meant pensioners received income rises even when pay for working people was falling. Income from welfare benefits has increased for pensioners since 1994-95, but fallen for working people.

[..] generous final salary pension schemes are in catastrophic decline, now confined almost entirely to the public sector. In the private sector their replacements will only pay a fraction of the amount enjoyed by the generation before them. While many previously picked up two-thirds of their final salary, today’s workers will be lucky to pick up 25%-30% of their former salary. Today’s well-off pensioners are, literally, a dying breed. This is not an argument to say that today’s pensioners should in any way be stripped of their incomes. There is huge inequality among pensioners themselves.

You know all those stories about pensioners saying their incomes have been destroyed by a decade of super-low interest rates? The truth is that the median weekly income from savings in retirement is just £6 a week. The average, though, is £64 a week. That tells you that a small number of pensioners have a large investment income, but the majority have almost nothing. There is a debate to be had about generational fairness. Britain, like all developed nations, is an ageing country. How do we arrange our national finances so that the elderly are protected, while at the same time the young are not overly burdened paying for it?

The problem is that the reforms suggested so far fall on today’s working generation. For example, the age at which you will qualify for the state pension is rising steeply. That’s an inevitable consequence of improved longevity, but one that will hit people in their late 50s, especially women, hard, not the existing retired. Another widely mooted reform is to slash pension tax relief, but the losers there are again the existing working population. Should better-off pensioners be expected to pay more as well? Maybe. But as we know from the referendum result, the old vote and the young don’t.

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Breedlove is a nasty piece of work. So is NATO.

Hacked Emails Reveal US NATO General Plotting Against Obama (Intercept)

Retired U.S. Air Force Gen. Philip Breedlove, until recently the supreme commander of NATO forces in Europe, plotted in private to overcome President Barack Obama’s reluctance to escalate military tensions with Russia over the war in Ukraine in 2014, according to apparently hacked emails from Breedlove’s Gmail account that were posted on a new website called DC Leaks. Obama defied political pressure from hawks in Congress and the military to provide lethal assistance to the Ukrainian government, fearing that doing so would increase the bloodshed and provide Russian President Vladimir Putin with the justification for deeper incursions into the country.

Breedlove, during briefings to Congress, notably contradicted the Obama administration regarding the situation in Ukraine, leading to news stories about conflict between the general and Obama. But the leaked emails provide an even more dramatic picture of the intense back-channel lobbying for the Obama administration to begin a proxy war with Russia in Ukraine. In a series of messages in 2014, Breedlove sought meetings with former Secretary of State Colin Powell, asking for advice on how to pressure the Obama administration to take a more aggressive posture towards Russia.

“I may be wrong, … but I do not see this WH really ‘engaged’ by working with Europe/NATO. Frankly I think we are a ‘worry,’ … ie a threat to get the nation drug into a conflict,” Breedlove wrote in an email to Powell, who responded by accepting an invitation to meet and discuss the dilemma. “I seek your counsel on two fronts,” Breedlove continued, “… how to frame this opportunity in a time where all eyes [sic] on ISIL all the time, … and two,… how to work this personally with the POTUS.”

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Unbelievable. Australians themselves need to address their government’s despicable behavior.

Australia Accused Of Torturing, Waterboarding Refugees (Ind.)

[..] in a devastating critique of Australia’s methods, medical ethicists have warned there is “increasing evidence that Australia is engaged in torturing asylum seekers” with refugees imprisoned for more than a year without trial. There are allegations of waterboarding, another method of torture called “zipping” in which people are tied to a bed that is then thrown into the air, sexual assault and exploitation, and child abuse. And the inmates of detention centres created outside of Australia to avoid its laws are held in conditions of secrecy that prevent scrutiny of their treatment while laws prevent doctors speaking out about mistreatment.

Last year, a United Nations report accused Australia of breaking the Convention Against Torture over its treatment of migrants. The then Prime Minister, Tony Abbott, responded that “Australians are sick of being lectured to by the United Nations”, saying their policies had stopped refugee boats from trying to make the perilous sea journey to Australia and “ended the deaths at sea”. In a paper in the Journal of Medical Ethics, the ethicists, Dr John-Paul Sanggaran, of the University of New South Wales, and Professor Deborah Zion, of Victoria University, wrote that there was “increasing evidence that Australia is engaged in torturing asylum seekers”.

“There are allegations of situations, circumstances and actions that also constitute cruel and unusual punishment throughout Australian immigration detention,” they wrote. They pointed to allegations by guards at a detention centre on the island of Nauru “of waterboarding, familiar to most as a torture technique that simulates drowning used by the CIA in places like Guantanamo bay”. “‘Zipping’ is also alleged. It is described as tying an individual to a metal bed frame with cable ties, the bed is then thrown into the air causing injury to the bound individual when the frame crashes to the ground,” they added.

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Jan 182015
 
 January 18, 2015  Posted by at 11:27 am Finance Tagged with: , , , , , , , , , ,  


DPC Main Street north from Sixth, Little Rock, Arkansas 1911

How The US Dollar Stacks Up Against Major World Currencies (AP)
This Is The Case For A ‘Large, Sharp Correction’ (CNBC)
Copper’s Rout May Be A Red Flag (MarketWatch)
Swiss Central Bank’s Shock Therapy Leaves Policy Vacuum (Reuters)
Swiss Franc Trade Is Said to Wipe Out Everest’s Main Fund (Bloomberg)
Making Sense Of The Swiss Shock (Project Syndicate)
Beware Of Politicians Bearing Household Analogies (Steve Keen)
Draghi Primes His Rocket, Could End Up Shooting Europe In The Foot (Observer)
Market to European Central Bank: Size of QE Matters! (CNBC)
A New Idea Steals Across Europe – Should Greece Debt Be Forgiven? (Observer)
Ireland ‘Not Dismissive’ Of EU Debt Conference SYRIZA Wants (Kathimirini)
Aberdeen: In Scotland’s Oil Capital The Party’s Not Yet Over (Observer)
Buying A Home In Britain Should Not Be An Impossible Dream (Observer)
Obama’s State Of The Union To Call For Closing Tax Loopholes (Reuters)
Russia May Lift Food Import Ban From Greece If It Quits EU (TASS)
Donetsk Shelled As Kiev ‘Orders Massive Fire’ On East Ukraine (RT)
New Snowden Docs Reveal Scope Of NSA Preparations For Cyber War (Spiegel)
Guantánamo Diary Exposes Brutality Of US Rendition And Torture (Guardian)
Price Tag Of Saving The World From A Pandemic: $344 Billion (CNBC)
Is Lancashire Ready For Its Fracking Revolution? (Observer)
Pope Francis: Listen To Women, Men Are Too Machista (RT)

“The dollar has soared a staggering 96% against the Russian ruble since June 30.”

How The US Dollar Stacks Up Against Major World Currencies (AP)

The U.S. dollar has been rolling. Since June 30, its value has jumped 16% against a collection of world currencies. Investors are embracing the dollar because the U.S. economy is strong, especially compared with most other nations. U.S. economic growth clocked in at a 5% annual rate from July through September, the fastest quarterly pace in more than a decade. During 2014, American employers added nearly 3 million jobs, the most in any year since 1999. Investors also like the safety of U.S. Treasurys, which pay a higher yield than government bonds in Japan and most big European countries do. Another lure: The Federal Reserve is expected to raise short-term interest rates this summer or fall, making U.S. rates even more attractive for investors. But the dollar’s strength also reflects weakness elsewhere:

• JAPAN: The dollar is up 16% against the Japanese yen since mid-2014. Japan slid into recession last quarter after the government imposed an ill-timed sales tax increase. The Bank of Japan has tried to revive the economy by buying bonds to lower rates, boost inflation and drive down the value of the yen to aid Japanese exporters.

• EURO: The dollar has surged 18% against the euro since June 30. Economic growth among the 19 countries that use the euro has flat-lined. Last year, the European Central Bank slashed rates and sought to stimulate lending by promising to buy bundles of bank loans. Next week, the ECB is expected to announce a program to buy bonds — a version of what the Fed did three times since 2008 — to lower long-term rates and stimulate the eurozone economy.

• BRAZIL: The dollar has gained nearly 20% against the Brazilian real since the middle of last year. The Brazilian economy is beset by a combination of slow growth and high inflation. The Brazilian Central Bank will likely raise rates next week to try to fight inflation and rally the real, economists at Barclays predict.

• RUSSIA: The dollar has soared a staggering 96% against the Russian ruble since June 30. Plummeting oil prices and economic sanctions have devastated the Russian economy, which is likely headed toward recession. Money is fleeing the country. In mid-December, the Russian central bank raised rates to try to salvage the currency. The move has at least slowed the free-fall.

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“People are underestimating what a strong U.S. dollar can do and oil is just one of those things.”

This Is The Case For A ‘Large, Sharp Correction’ (CNBC)

Pain in the market may just be getting started, according to Raoul Pal of the Global Macro Investor. “The chance of a large sharp correction? Absolutely, because volatility is there and people will be forced to reduce risk, ” Pal said on CNBC’s “Fast Money.” “I would put that as a reasonably high probability that the S&P falls possibly from here down to the 1,800 level.” Pal thinks there will be a lot of volatility in the market this year and currency volatility will be the driving force. He expects the sharp currency moves that have happened globally to hit the U.S. equity markets. A violent move in the Swiss franc on Thursday shook investors as the Switzerland National Bank removed its cap on its currency relative to the euro.

The cap was in place to prevent the franc from gaining ground against the euro while Europe remained in recovery mode. Switzerland has been a beacon of financial stability throughout the euro zone’s recession. Brokerage and financial firms reported millions of dollars of losses from the sudden gains in the Swiss franc on Thursday and that may not be the end of it. Currency swings are an issue at home with the U.S. dollar on a tear over the past year. “The biggest risk to U.S. equities is if the long dollar trades unwind. If that happens, then you may see people unwinding their stock positions as well,” said “Fast Money” trader Brian Kelly.

Pal also believes a strengthening dollar will be part of the U.S. market downfall this year, “People are underestimating what a strong U.S. dollar can do and oil is just one of those things.” Oil is down nearly 10% so far this year and that’s after a 45% drop in 2014. Pal isn’t alone in pointing to hard times ahead in the market. On Wednesday, Dennis Gartman told Fast Money he was now net short of stocks. “As of this afternoon, I am slightly, very slightly net short.” As the markets sold off, Gartman did say that he was long the tanker stocks, which had managed to rise on the back of falling oil prices.

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Chinese data coming this week.

Copper’s Rout May Be A Red Flag (MarketWatch)

Economists are bullish on growth, but copper’s big plunge on Wednesday appeared to be suggesting that +they’re wrong. For investors, the crucial question is ‘Who is right?’ An ugly 24-hour period drove copper to mid-2009 lows on Wednesday—it fell 5% to $2.1590 a pound. In New York on Tuesday, copper fell 8 cents, but the big crack came later in that day when it crashed through key support at $6,000 a tonne on the London Metal Exchange. That drop was followed by heavy falls in Shanghai on Wednesday, said Ole Hansen, Saxo Bank’s head of commodity strategy.

Known as Dr Copper, the commodity is a chief building and manufacturing material and to some a harbinger of the global economy. So when investors start to bail on it, some say that is a sign of the proverbial canary in the coal mine is starting to keel over. Some blamed copper’s losses on the World Bank, which cut its global-growth outlook, including for China, a country that is a big global buyer of copper. Investors inured to oil serving as the whipping boy for the market’s global-growth worries, were taken aback by yet another commodity caving. Copper falling alone would be less of a worry for Adam Sarhan, chief executive officer of Sarhan Capital. A range of commodities, hard and soft, have joined oil lower: gasoline, corn, sugar, to name a few, Sarhan said.

A combination of this pressure “supports that notion that deflation is getting stronger not weaker and if that is the case then that bodes poorly for both main street and Wall Street,” he said. For its part, oil has lost nearly 60% of its value since peaking in June. Equally concerned was Keith McCullough, CEO of Hedgeye Risk Management, who says he has been telling his clients to short copper for months. “Oil, copper, etc.—they are all legacy carry trades associated with the simple expectation that the Fed could perpetually inflate asset prices,” he said. “Now deflation is dominating expectations, and all of those who underestimated how nasty the deleveraging associated with deflation can be,” said McCullough.

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“.. a serious threat for tens of thousands of Swiss jobs.”

Swiss Central Bank’s Shock Therapy Leaves Policy Vacuum (Reuters)

The Swiss National Bank had little choice but to abandon its three-year-old cap on the franc but its execution of the move left a vacuum of policy uncertainty where a pillar of stability stood before. With the euro diving against the dollar as the European Central Bank gears up for fresh stimulus as early as next week, the SNB felt the 1.20-francs-per-euro cap was not sustainable and chose to give it up rather than accumulate further risk. Yet in pulling off the move, the SNB – a conservative institution in a safe-haven state – failed to tip off its peers and shocked investors, who were left wondering whether central banks are now less a source of stability and more one of a risk. “The bottom line: central banks are a lot less predictable than in the past few years,” said Christian Gattiker, chief strategist at Swiss bank Julius Baer. The SNB, whose three board members make their decisions behind closed doors, acted in isolation.

IMF Managing Director Christine Lagarde lamented the lack of a warning from SNB Chairman Thomas Jordan. “I find it a bit surprising that he did not contact me,” she said. For ECB policymaker Ewald Nowotny, the move was “a surprising decision”. In contrast with the ECB, which has 25 policymakers from across the continent who debate major decisions, just three men call the shots at the SNB, albeit in consultation with staff advisers. Details of ECB policy debates often leak because of the large numbers of officials also involved; if President Mario Draghi announces next week that the ECB is to launch quantitative easing, he will surprise no one. Draghi has made no secret of the fact that such a programme is under discussion on the ECB Governing Council.

While officials at central banks generally play down the idea that they offer each other advance notice, they almost always prepare financial markets, businesses and each other for important policy shifts by openly discussing their thinking in the run up to any move. But Adam Posen, a former Bank of England official who heads the Peterson Institute for Economics in Washington, said transparency at times needed to be sacrificed. “Central bank communication is overrated,” Posen said at an event in Washington when asked about the SNB’s move. It’s more important to get a policy right than to stick to a “foolish consistency” of communicating everything, he said. For exporters and the tourism industry in Switzerland, the move that has led to a near 18% rise in the franc against the euro is far from understandable. Christian Levrat, president of the left-wing Social Democrat party, called the move “a serious threat for tens of thousands of Swiss jobs”.

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And many more.

Swiss Franc Trade Is Said to Wipe Out Everest’s Main Fund (Bloomberg)

Marko Dimitrijevic, the hedge fund manager who survived at least five emerging market debt crises, is closing his largest hedge fund after losing virtually all its money this week when the Swiss National Bank unexpectedly let the franc trade freely against the euro, according to a person familiar with the firm. Everest Capital’s Global Fund had about $830 million in assets as of the end of December, according to a client report. The Miami-based firm, which specializes in emerging markets, still manages seven funds with about $2.2 billion in assets. The global fund, the firm’s oldest, was betting the Swiss franc would decline. The SNB’s decision to end its three-year policy of capping the franc at 1.20 a euro triggered losses at Citigroup, Deutsche Bank and Barclays as well as hedge funds and mutual funds.

The franc surged as much as 41% versus the euro on Jan. 15, the biggest gain on record, and climbed more than 15% against all of the more than 150 currencies tracked by Bloomberg. Everest grew to $2.7 billion by the start of 1998 after navigating crises in Mexico and Southeast Asia. Russia’s default and currency devaluation proved trickier and assets fell by half amid losses. He revived the firm and a decade later Everest managed $3 billion. Then the global financial crisis hit, and assets shrunk by $1 billion. Last year, the main fund rose 14.1%, driven by Chinese equities and bets against currencies, including a wager that the Swiss franc would fall after citizens rejected a referendum that would require the central bank to hold at least 20% of its assets in gold, the investor report said.

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“The negative effects for the Swiss economy – through the decreased competiveness of its export industries (including tourism and medicine) – may already be showing that abandoning the euro peg was not a good idea.”

Making Sense Of The Swiss Shock (Project Syndicate)

There is historical precedent for the victory of political pressure, and for the recent Swiss action. In the late 1960s, the Bundesbank had to buy dollar assets in order to stop the Deutsche mark from rising, and to preserve the integrity of its fixed exchange rate. The discussion in Germany focused on the risks to the Bundesbank’s balance sheet, as well as on the inflationary pressures that came from the currency peg. Some German conservatives at the time would have liked to buy gold, but the Bundesbank had promised the Fed that it would not put the dollar under downward pressure by selling its reserves for gold. In 1969, Germany unilaterally revalued the Deutsche mark. But that was not enough to stop inflows of foreign currency, and the Bundesbank was obliged to continue to intervene. It continued to reduce its interest rate, but the inflows persisted. In May 1971, the German government – against the wishes of the Bundesbank – abandoned the dollar peg altogether and floated the currency.

Politics had prevailed over central-bank commitments. Within three months, the fallout destroyed the entire international monetary system, and US President Richard Nixon took the dollar off the gold standard. The credibility of the entire system of central bank commitments had collapsed, and international monetary policy became extremely unstable. The Deutsche mark appreciated, and life became very hard for German exporters. Today, the global ramifications of a major central bank’s actions are much more pronounced than in 1971. When the Bundesbank acted unilaterally, German banks were not very international. But now finance is global, implying large balance-sheet exposures to currency swings. Big Swiss banks fund themselves in Swiss francs, because so many people everywhere want the security of franc assets. They then acquire assets worldwide, in other currencies. When the exchange rate changes abruptly, the banks face large losses – a large-scale version of naive Hungarian homeowners’ strategy of borrowing in Swiss francs to finance their mortgages.

Though the SNB had given many warnings that the euro peg was not permanent, and though it had imposed a higher capital ratio on banks, the uncoupling from the euro came as a huge shock. Swiss bank shares fell faster than the general Swiss index. The risks created by the SNB’s decision – as transmitted through the financial system – have a fat tail. The negative effects for the Swiss economy – through the decreased competiveness of its export industries (including tourism and medicine) – may already be showing that abandoning the euro peg was not a good idea. But the consequences will not be limited to Switzerland. After years of wondering whether the exit of a small, fiscally weak country like Greece could undermine the euro, policymakers will have to deal with an even bigger shock stemming from the exit of a small, fiscally strong country that is not even a member of the European Union.

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Steve’s first piece for Forbes.

Beware Of Politicians Bearing Household Analogies (Steve Keen)

The British election campaign has begun, and Prime Minister David Cameron is running with the slogan that his Conservative Party will deliver “A Britain living within its means” by running a surplus on day-to-day government spending by 2017/18. It is, as the UK Telegraph noted, hardly an inspiring slogan. But it is one that resonates with voters, because it sounds like the way they would like to manage their own households. And a household budget—whether you balance yours or not—is something we can all understand. If a household spends less than it earns, it can save money, or pay down its debt, or both. So it has to be good if a country does the same thing, right? If only it worked that way. In fact, a government surplus has the opposite effect on Joe Public: a government surplus means that the public has to either run down its savings, or increase its debt.

And if the government runs a sustained surplus, then—unless the country in question has a huge export surplus, like Japan or Germany—a financial crisis is inevitable. That’s the opposite of what both politicians and most of the public think that running a government surplus will achieve—and yet it’s easy to prove that that is the outcome a sustained surplus will lead to. Firstly, a government surplus means that, in a given year, the taxes the government imposes on the public exceed the money it spends (and gives) to the public. There is therefore a net flow of money from the public to the government. As a once-off, that doesn’t have to be a problem. But if it’s sustained for many years, then the public has to provide a continuous flow of money to the government. Let’s call this flow NetGov: a sustained surplus requires the situation shown in Figure 1 (where a deficit is shown in red and a surplus in black).


Figure 1: A sustained government surplus requires the private sector to supply the government with a continuous flow of money

One way that the public can do this is to run down its own money stock—to reduce its savings. But that’s the opposite of what the policy is intended to achieve: the expectation of enthusiasts for government surpluses is that it will enable the public to save more, not less. But as a simple matter of accounting, increased public savings—increased balances in the public’s bank accounts—are only compatible with a government surplus if the public can produce more money than it pays to the government to maintain its surplus. This raises the question “how does the public produce money?”. Anyone in the private sector can produce goods and services for sale, but the production of money is a very different thing to production of goods. The public in general can’t “produce money”—but the banks can.

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Draghi should leave, and Weidmann be appointed head of the ECB.

Draghi Primes His Rocket, Could End Up Shooting Europe In The Foot (Observer)

Mario Draghi, the urbane boss of the European Central Bank, is about to print hundreds of billions of euros to rescue the faltering continental economy. The City expects him to launch his financial bazooka, otherwise known as quantitative easing (QE), on Thursday after the central bank governing council’s monthly meeting. His hand was forced last week by events in Zurich, where his Swiss counterpart said the policy of pegging the franc to the euro was no longer tenable. The markets were impatient for QE, the Swiss central bank chief said – they have already waited months for a decision. The ECB funds will begin to flow six years after the world’s other major economies adopted QE. The US has spent around $4 trillion, the UK £375bn, and last year the Japanese promised to spend almost $700bn a year, up from $560bn in 2013.

If Draghi goes ahead, the Super-Mario headlines will proliferate across Europe and gigabytes of the web will be devoted to analysing the consequences of the move for the 19-member currency zone – and for its trading partners, such as the UK. The ECB’s aim is to flood the eurozone banking system with money to boost lending after a collapse in the value of consumer and business borrowing. Draghi’s supporters say the very fact of taking action will increase confidence and invigorate a stuttering economic bloc. According to this argument, Brussels has done little apart from impose austerity. Now, with the ECB throwing its weight behind a strategy for growth, confidence and spending will begin to rise.

QE has clearly played a big part in rescuing the global economic system after the crash. But its usefulness as a spur for growth is less clear. As Labour’s Ed Balls has said, governments need to step in with their own funds – albeit borrowed – for investment that ensures growth is sustainable. QE is like an adrenalin shot to revive a stricken patient. It is useless when the patient is in recovery and crying out for something more substantial. But persistently printing vast quantities of a currency has one major effect. It drives down its value against other currencies. Since Christmas, the yen has been trading 50% below where it was in October 2012 against the dollar. That means Japanese exports of cars, TVs and kimonos cost 50% less in the US and, just as importantly, in China, which has pegged the renminbi to the dollar.

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No, it doesn’t. Well, other than for bringing down the euro. All else has long been priced in.

Market to European Central Bank: Size of QE Matters! (CNBC)

Earnings and economic reports all take a back seat to the European Central Bank in the holiday-shortened trading week ahead. Investors are looking to the ECB to on Thursday announce a program of government bond purchases, or quantitative easing. “The only thing that is important next week is the ECB meeting,” Mark Luschini, chief investment strategist at Janney Montgomery Scott, said. “The ECB is going to be the biggest driver next week, what they decide to do as far as rates and their QE should have a big impact on global markets,” said Paul Nolte at Kingsview Asset Management.

“The markets are expecting a very impressive QE, a la United States, a la Japan. Some investors may be playing both sides, and by that I mean playing for a big move. If they do come down with a big package, global markets will rally strongly, if they don’t do much of anything, you could see markets fall apart,” Nolte said. “There’s a huge amount of anticipation, and a lot of volatility around this ECB decision on Thursday. It’ll be a combination of what they say they’re going to do, and their intentions after that,” Scott Wren, senior equity strategist at Wells Fargo Investment Institute, said.

“I think the ECB will act next week, and make some type of announcement. But the market is likely to be disappointed by the magnitude that the ECB initially says they’re going to do, as the market would like to see a trillion. Let’s say they come out with €500 billion, and some sort of statement of more”. Switzerland’s central bank upended markets Thursday by removing its cap on the Swiss franc versus the euro, with the action viewed as a preemptive one to shield its currency from pressure should the ECB make a move. “I suspect (ECB President Mario) Draghi gave a wink to the Swiss National Bank and allowed them to get in front of that, the question mark at this juncture is the order of magnitude. The market is vulnerable to an underwhelming response. The key, basically, is trying to restore the balance sheet to 2012 levels, so we’d have to at least have to see €1.3 trillion,” Luschini said.

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“The country’s overall debt burden has actually increased in the almost five years since it was first “rescued..”

A New Idea Steals Across Europe – Should Greece Debt Be Forgiven? (Observer)

Forgiveness: it’s a rare enough quality in family life, let alone international policymaking. But if, as the polls suggest, the populist Syriza party wins next weekend’s Greek election, Athens will be asking its European brothers and sisters to forgive and forget some of the €317bn (£240bn) it still owes, so that its economy – and society – can recover from more than six years of austerity and recession. Instead of the defiant tone that once saw Syriza’s leader, Alexis Tsipras, threatening to ditch the euro altogether, the party now hopes to negotiate an agreement with Germany and other creditors that could allow Greece to remain in the single currency – but set it on the path to recovery.

London-based pressure group Jubilee Debt Campaign, which has studied the fate of heavily indebted countries around the world, says Greece is right to demand a more generous approach from its creditors, because although it has received an extraordinary €252bn in bailouts since 2010, just 10% of that has found its way into public spending. Much of the rest poured straight back out of the country: in debt repayments and interest to its creditors, many of them banks and hedge funds in the core eurozone countries, including Germany and France; and in sweeteners to persuade lenders to sign up to the 2012 bond restructuring that helped prevent the country crashing out of the euro. In effect, the “troika” of the European Central Bank, the International Monetary Fund and the European commission has simply replaced the banks and the hedge funds as Greece’s paymasters.

The country’s overall debt burden has actually increased in the almost five years since it was first “rescued”, and of the amount still outstanding, 78% is now owed to public sector institutions, primarily the EU. Stephany Griffith-Jones, an economist who is an expert on debt crises in developing countries, says: “They have got quite a lot of relief already; but a lot of that money that came to the government has gone to servicing the debt, including to the private banks. It wasn’t really money to help the Greeks. This is exactly like when I used to study Latin America in the 1980s: then, it was American and British banks, now it’s German and French banks.”

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Of coursethere should be such a conference. A fully public one.

Ireland ‘Not Dismissive’ Of EU Debt Conference SYRIZA Wants (Kathimirini)

SYRIZA leader Alexis Tsipras has seized on comments by Irish Finance Minister Michael Noonan as evidence that not just “progressive economists and the European Left” are coming round to his party’s argument that the European Union needs to hold a meeting to discuss how to reduce the debt of some of its members, including Greece. “In all of Europe, only Mr Samaras called this nonsene,” wrote Tsipras in Sunday’s Kathimerini. The Irish Times reported on Wednesday that Noonan told Irish ambassadors and civil servants he “would not be dismissive” of a European debt conference being held as long as the issue of Irish, Spanish and Portuguese debt could be discussed.

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“.. nobody believes the party’s over. That’s probably because most employees are older than 40 and have golden handshakes on a Midas scale.”

Aberdeen: In Scotland’s Oil Capital The Party’s Not Yet Over (Observer)

It has been a strange old week in the self-proclaimed oil capital of Europe. According to some members of Aberdeen’s energy sector, a group with a code of silence that would trump any Trappist throng, the North Sea is a busted flush, a dead zone of drilled-out fields with a long-term future to match. There will certainly be some transient pain in the industry; BP has confirmed 300 job losses and other subsidiaries will view the plummeting price of oil as a wonderful opportunity to trim any perceived excess fat. But if there is any panic in Aberdeen over the end of the gravy train, it is being well concealed. One executive told me on Friday: “Times are tough. And they might get tougher.” But nobody believes the party’s over. That’s probably because most employees are older than 40 and have golden handshakes on a Midas scale.

I walked along Aberdeen’s Union Street last week and one particular image struck me. It’s a once-glorious, now-dowdy thoroughfare with a few refulgent granite buildings surrounded by an excess of eyesores. On one side of the street, the Pound Shop announced that it was closing; on the other, the staff at the recently opened Eclectic Fizz champagne bar were preparing to welcome their steady stream of customers. At another location just outside the city on Thursday evening, a few hours after the BP news had broken, a group of four senior oil officials awaited their trip to the airport in Dyce. After a few minutes, four separate cabs arrived to pick them up: it didn’t matter the quartet were all travelling to the same destination. It may be a recession, Jim. But in Aberdeen, not as we usually know it.

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‘To make the impossible possible. To rise, and rise”

Buying A Home In Britain Should Not Be An Impossible Dream (Observer)

‘To make the impossible possible. To rise, and rise”. Uttered in a movie-trailer tone, it sounds like the mission statement for a Mars probe – but, set against the backdrop of the twinkling lights of night-time London, it’s actually the voiceover for a particularly obnoxious Redrow ad for flats in one of the capital’s now-ubiquitous glass and steel skyscrapers, launched and hastily withdrawn earlier this month after a furious outburst on social media. Its sharply suited, go-getting protagonist is whisked through the streets in a cab, reminiscing about all the hours he had to put in (“the mornings … that felt like night”); the calls from mates he was forced to ignore; and the terrible soul-searching he had to endure to succeed (apparently he felt the urge to “be more than individual”).

Without encountering another soul, our hero strides into an anonymous lobby and is whisked up to a vast, sparkling eyrie, worthy of a Bond villain’s hideout. An outraged viewer captured the ad for posterity; rival builder Berkeley Homes pulled its own equally nauseating effort (this one involving a private jet) a few days later. Prices for apartments at One Blackfriars, the tower block being marketed by Berkeley, range up to £23m. And judging by the ad, its lucky inhabitants in their hermetically sealed penthouses will never have to rub shoulders with hoi polloi down at ground level. It’s hard to think of a more powerful symbol of Britain’s divisive, winner-takes-all property market. Of course, the rich have always been with us, and to some extent have always cut themselves off. Strolling through the Geffrye Museum in east London recently, I was intrigued by a painting from 1936.

An elegant, bejewelled woman in a shimmering gown peers languorously out on to a crowded London thoroughfare, perhaps Regent Street or Piccadilly, from a plush, warmly lit salon, while a man faces away from the window with studied nonchalance, blowing smoke rings. Only on reading the inscription does it become clear that the lively scene outside the window is not a celebration or a festival, but the arrival of the Jarrow marchers. Britain in the 21st century is a very long way from the Great Depression; yet that well-heeled couple’s cosy imperviousness to their fellow humans’ suffering is all there in the “because I’m worth it” high-rise property porn churned out by Redrow, Berkeley and the rest (“They said nothing comes easy; but if it was easy, then it wouldn’t feel as good,” goes the voiceover).

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Yada yada.

Obama Speech To Call For Closing Tax Loopholes (Reuters)

– President Barack Obama’s State of the Union address will propose closing multibillion-dollar tax loopholes used by the wealthiest Americans, imposing a fee on big financial firms and then using the revenue to benefit the middle class, senior administration officials said on Saturday. Obama’s annual address to a joint session of Congress on Tuesday night will continue his theme of income equality, and the administration is optimistic it will find some bipartisan support in the Republican-dominated House of Representatives and Senate. The proposals administration officials listed on Saturday may still generate significant opposition from the Republicans because they would increase taxes.

In a conference call with reporters to preview the taxation aspect of Obama’s address, one official said some of the ideas the president is outlining already have “clear congressional bipartisan support or are ideas that are actually bipartisan in their nature.” Obama’s proposals call for reforming tax rules on trust funds, which the administration called “the single largest capital gains tax loophole” because it allows assets to be passed down untaxed to heirs of the richest Americans. They also would raise the capital gains and dividends rates to 28 percent, the level during the 1980s Republican presidency of Ronald Reagan. As a way of managing financial risk that could threaten the U.S. economy, Obama also wants to impose a fee of seven basis points on the liabilities of U.S. financial firms with assets of more than $50 billion, making it more costly for them to borrow heavily.

The changes on trust funds and capital gains, along with the fee on financial firms, would generate about $320 billion over 10 years, which would more than pay for benefits Obama wants to provide for the middle class, the official said. The benefits mentioned on Saturday would include a $500 credit for families with two working spouses, tripling the tax credit for child care to $3,000 per child, consolidating education tax incentives and making it easier for workers to save automatically for retirement if their employer does not offer a plan. The price tag on those benefits, plus a plan for free tuition at community colleges that Obama announced last week, would be about $235 billion, the official said. Specifics on the figures will be included in the budget Obama will send to Congress on Feb. 2. “We’re proposing more than enough to offset the new incremental costs of our proposals without increasing the deficit,” the administration official said.

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Greece has historically had close ties to Russia.

Russia May Lift Food Import Ban From Greece If It Quits EU (TASS)

Russia may lift its ban on food imports from Greece in the event it quits the European Union, Russian Minister of Agriculture Nikolai Fyodorov told a news conference in Berlin on Friday. Fyodorov is leading an official Russian delegation to the International Green Week public exhibition for the food, agriculture, and gardening industry. If Greece has to leave the European Union, we will build our own relations with it, the food ban will not be applicable to it, he said. He said that European Union countries, which felt discomfort from the slump in proceeds from exports of foods to Russia, were asking Russia to cushion the impacts of the Russian food import ban by expanding other types of imports.

We are looking at such possibility, he said, adding that these countries offer new formats of cooperation in those areas that are not covered by the Russian food sanctions. Meanwhile he stressed that Russia did not plan to toughen its sanctions. As concerns possible new sanctions, we are not looking at any such proposals from any structures, he added. Earlier on Friday, Fyodorov met with his German counterpart, Christian Schmidt, to discuss possible expansion of cooperation and mutual trade in agricultural products. The two ministers agreed that Russia and Germany may expand mutual trade in food products in the framework of the current laws.

“We cannot solve pressing political problems, but we can maintain dialogue in the current conditions, the German minister said. We can make trade between our countries more intensive. The Russian minister shared this opinion saying, the Berlin exhibitions was a non-political event working on problems of food security. We discussed possible expansion of cooperation and mutual trade in agricultural products and agreed to work in the new conditions strictly within the frameworks of the current legislation of Russia, the Customs Union, Germany and the European Union, Fyodorov said.

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This is effectively the US and EU killing women and children.

Donetsk Shelled As Kiev ‘Orders Massive Fire’ On East Ukraine (RT)

Violence escalated in eastern Ukraine as Kiev’s troops launched a massive assault on militia-held areas Sunday morning. The army was ordered to start massive shelling of all rebel positions, a presidential aide said. The order to launch the offensive was issued early approximately at 6:00 am, according to Yury Biryukov, an aide to President Petro Poroshenko. “Today we will show HOW good we are at jabbing in the teeth,” he wrote on his Facebook page, a mode of conveying information favored by many Ukrainian officials. In a later post he said: “They are now striking a dot. Uuu…” in a reference to Tochka-U (‘tochka’ means ‘dot’ in Russian), a tactical ballistic missile, one of the most powerful weapons Ukraine so far deployed against rebel forces. “That wasn’t a dot but ellipsis. Strong booms,” he added.

Reports from the ground confirmed a sharp escalation of clashes across the front line, with particularly heavy artillery fire reported at Gorlovka. “Locals in Donetsk said they haven’t heard such intensive shelling since summer,” Valentin Motuzenko, a military official in the self-proclaimed Donetsk People’s Republic, told Interfax news agency. “The Ukrainian military are using all kinds of weapons, Grad multiple rocket launchers, mortars…” Motuzenko said. Several residential buildings, a shop and a bus station have been seriously damaged by artillery fire in the city, RIA Novosti reported. There were also reports of attacks on the town of Makeevka and several nearby villages. The militia added that at least one shell hit a residential area in central Donetsk rather than the outskirts of the city. There were no immediate reports of how many casualties resulted from the offensive.

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“Canadian media theorist Marshall McLuhan foresaw these developments decades ago. In 1970, he wrote, “World War III is a guerrilla information war with no division between military and civilian participation.”

New Snowden Docs Reveal Scope Of NSA Preparations For Cyber War (Spiegel)

[..] the intelligence service isn’t just trying to achieve mass surveillance of Internet communication, either. The digital spies of the Five Eyes alliance – comprised of the United States, Britain, Canada, Australia and New Zealand – want more. According to top secret documents from the archive of NSA whistleblower Edward Snowden seen exclusively by SPIEGEL, they are planning for wars of the future in which the Internet will play a critical role, with the aim of being able to use the net to paralyze computer networks and, by doing so, potentially all the infrastructure they control, including power and water supplies, factories, airports or the flow of money. During the 20th century, scientists developed so-called ABC weapons – atomic, biological and chemical. It took decades before their deployment could be regulated and, at least partly, outlawed.

New digital weapons have now been developed for the war on the Internet. But there are almost no international conventions or supervisory authorities for these D weapons, and the only law that applies is the survival of the fittest. Canadian media theorist Marshall McLuhan foresaw these developments decades ago. In 1970, he wrote, “World War III is a guerrilla information war with no division between military and civilian participation.” That’s precisely the reality that spies are preparing for today. The US Army, Navy, Marines and Air Force have already established their own cyber forces, but it is the NSA, also officially a military agency, that is taking the lead. It’s no coincidence that the director of the NSA also serves as the head of the US Cyber Command. The country’s leading data spy, Admiral Michael Rogers, is also its chief cyber warrior and his close to 40,000 employees are responsible for both digital spying and destructive network attacks.

From a military perspective, surveillance of the Internet is merely “Phase 0” in the US digital war strategy. Internal NSA documents indicate that it is the prerequisite for everything that follows. They show that the aim of the surveillance is to detect vulnerabilities in enemy systems. Once “stealthy implants” have been placed to infiltrate enemy systems, thus allowing “permanent accesses,” then Phase Three has been achieved – a phase headed by the word “dominate” in the documents. This enables them to “control/destroy critical systems & networks at will through pre-positioned accesses (laid in Phase 0).” Critical infrastructure is considered by the agency to be anything that is important in keeping a society running: energy, communications and transportation. The internal documents state that the ultimate goal is “real time controlled escalation”.

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Chilling.

Guantánamo Diary Exposes Brutality Of US Rendition And Torture (Guardian)

The groundbreaking memoir of a current Guantánamo inmate that lays bare the harrowing details of the US rendition and torture programme from the perspective of one of its victims is to be published next week after a six-year battle for the manuscript to be declassified. Guantánamo Diary, the first book written by a still imprisoned detainee, is being published in 20 countries and has been serialised by the Guardian amid renewed calls by civil liberty campaigners for its author’s release. Mohamedou Ould Slahi describes a world tour of torture and humiliation that began in his native Mauritania more than 13 years ago and progressed through Jordan and Afghanistan before he was consigned to US detention in Guantánamo, Cuba, in August 2002 as prisoner number 760. US military officials told the Guardian this week that despite never being prosecuted and being cleared for release by a judge in 2010, he is unlikely to be released in the next year.

The journal, which Slahi handwrote in English, details how he was subjected to sleep deprivation, death threats, sexual humiliation and intimations that his torturers would go after his mother. After enduring this, he was subjected to “additional interrogation techniques” personally approved by the then US defence secretary, Donald Rumsfeld. He was blindfolded, forced to drink salt water, and then taken out to sea on a high-speed boat where he was beaten for three hours while immersed in ice. The end product of the torture, he writes, was lies. Slahi made a number of false confessions in an attempt to end the torment, telling interrogators he planned to blow up the CN Tower in Toronto. Asked if he was telling the truth, he replied: “I don’t care as long as you are pleased. So if you want to buy, I am selling.”

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“.. a massive flu outbreak could cost anywhere between $71 billion to $166.5 billion.”

Price Tag Of Saving The World From A Pandemic: $344 Billion (CNBC)

Infectious diseases are incubating everywhere across the world—ranging from the deadly Ebola virus to the more common yet debilitating influenza—to often devastating effect. It raises the question of how large a premium should world governments pay to insulate their economies from global pandemics. Would you believe $343.7 billion? That eye-popping figure is one of several takeaways of a group of scholars calling for a “global strategy” to mitigate the impact of threats to public health. In a recent paper published in the Proceedings of the National Academy of Sciences (PNAS) journal, economists and public health experts said emerging pandemics were increasing in their virulence and frequency.

The grim circumstances, which include the Ebola outbreak ravaging parts of Africa and an increasingly tough flu season in the U.S., calls for “globally coordinated strategies to combat” the hydra-headed threats posed by widespread disease—which the scientists say have their origins in animals. By pooling resources and implementing a host of programs and policies, governments could curtail the spread of infectious viruses by 50% if the measures were implemented within a 27-year span, the paper said. Of course, there’s the matter of the price tag, which is more than South Africa’s nominal GDP and is nearly as large as the U.S. Defense Department’s fiscal year 2015 budget. In response to questions, co-author Peter Daszak said the money would be funneled into “mitigation programs” that isolate the first cluster of cases at their source. The funds would also be spent on hospitals and diagnostic labs in West Africa, and creating a web of information to identify and track diseases. [..]

The study arrives at a time when public health officials are struggling to contain a blitz of mysterious outbreaks. In recent months, isolated cases of Ebola, Legionnnaire’s disease, enterovirus and Chikungunya—all sicknesses most common in developing economies—have all appeared in the U.S. In the larger scheme, the nearly $344 billion call to arms may be a reasonable price to pay to prevent yet another shock to global growth, one that’s already taking a heavy toll on African economies. In a December study, the World Bank said West Africa’s Ebola pandemic had shaved off about two-thirds of Liberia’s and Sierra Leone’s growth. For those who think the flu isn’t that pernicious, think again: A Centers for Disease Control study once estimated that a massive flu outbreak could cost anywhere between $71 billion to $166.5 billion.

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Absolute madness.

Is Lancashire Ready For Its Fracking Revolution? (Observer)

The Fylde, the flat, rich pasture land and villages stretching from Preston and the M6 to the Blackpool coast, is set to host the UK’s first full-scale fracking exploration, if Lancashire county council gives planning permission at the end of January. Nationally David Cameron and the government have declared they are “going all out” for fracking, hoping to emulate the shale gas revolution in the US. But on the frontline the mood is more equivocal. Fears of the effects on health and plummeting house prices compete with the promise of jobs and money for communities, accompanied by accusations of misinformation and hysteria from both sides.

The site owned by Sanderson’s uncle and aunt is near Roseacre, and as you wind down the pot-holed lanes towards it, past the huge communication masts of the Royal Navy’s Inskip site, placards of opposition appear: “Don’t frack with Fylde”, “Health not wealth” and “What price fracking? Clean air? Clean water?” At the site, an unspectacular stretch of grassland whose only current features are a black water butt and a dull rumble from the M55, Cuadrilla’s head of well development, Eric Vaughan, explains the company’s plans for up to four wells, each of which would see dozens of fracking blasts to release gas. “I am excited we may finally get going again,” he says. “You have to be optimistic. We have tried to answer every question. Hopefully the planning permission will go through, so we can show people what it really looks like.”

A single frack at Cuadrilla’s Preese Hall site on the Fylde in 2011 produced good flow results, says Vaughan, but it also produced two small earthquakes, a government investigation and a false start for the company. “Because we had the earthquake, we decided to abandon that well,” says Vaughan, who is originally from Kentucky and for the past 30 years has been fracking all over the world, from the US to Thailand to Turkmenistan. Fracking at Roseacre, and at a second proposed site at nearby Preston New Road, will be under way by Christmas, if all goes Cuadrilla’s way. On Friday, the Environment Agency granted the environmental permits Cuadrilla needs for Preston New Road, and has already said it is minded to grant the permits for Roseacre as well.

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So true.

Pope Francis: Listen To Women, Men Are Too Machista (RT)

Pope Francis has called on men to listen to women as they have “much to tell us.” Women are able to ask questions that men can’t grasp, the pontiff told an audience in the Philippines, where his comments drew instant applause. “Women have much to tell us in today’s society,” Francis told a mostly male audience at the Catholic University of Santo Tomas in Manila, on the last day of a weeklong visit to Philippines and Sri Lanka. His impromptu comments were welcomed with applause from the audience, which according to organizers’ estimates was 30,000 people. “At times we men are too ‘machista’, the Argentinian pontiff said using word for the term for extreme male chauvinism in his native Spanish. According to the 78-year-old Catholic leader, we “don’t allow room for women but women are capable of seeing things with a different angle from us, with a different eye.”

His comments come after he noted that four out of five people who asked him questions on the stage were male. “There is only a small representation of females here, too little,” he said, to laughter. He added that it was a 12-year-old girl who posed the toughest question to him. Glyzelle Palomar, who was living on the streets before being taken in by a church charity, broke into tears when she was posing her question. “Many children are abandoned by their parents. Many children get involved in drugs and prostitution. Why does God allow these things to happen to us? The children are not guilty of anything,” Palomar said. Francis took her into his arms and hugged her for a few seconds. “She is the only one who has put a question for which there is no answer and she wasn’t even able to express it in words, but in tears,” he said.

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Dec 192014
 
 December 19, 2014  Posted by at 11:21 am Finance Tagged with: , , , , , , , ,  


John Vachon Trucks loaded with mattresses at San Angelo, Texas Nov 1939

Oil Crash Exposes New Risks for U.S. Shale Drillers (Bloomberg)
North Sea Oil Industry ‘Close To Collapse’ (BBC)
North Sea Oilfields ‘Near Collapse’ After Price Nosedive (Telegraph)
Exxon Mobil Shows Why U.S. Oil Output Rises as Prices Plunge (Bloomberg)
Central Banks Are Now Uncorking The Delirium Phase (David Stockman)
Dow’s 421-Point Leap Is Biggest Gain In 3 Years (MarketWatch)
Already Crummy US Economy Takes a Sudden Hit (WolfStreet)
The Fed Delivers the Message that Our Economy is Dead (Beversdorf)
Emerging Markets In Danger (Erico Matias Tavares)
China’s Short-Term Borrowing Costs Surge as Demand for Money Grows (WSJ)
PBOC Offers Loans to Banks as Money Rate Jumps Most in 11 Months (Bloomberg)
Russia May Seek China Help To Deal With Crisis (SCMP)
Draghi Counts Cost of Outflanking Germany in Stimulus Battle (Bloomberg)
Federal Reserve Delays Parts Of Volcker Rule Until 2017 (BBC)
“Neoconica” – America For The New Millennium (Thad Beversdorf)
Bombs Away! Obama Signs Bill For Lethal Aid To Ukraine (Daniel McAdams)
US TV Shows American Torturers, But Not Their Victims (Glenn Greenwald)
Pope Francis Scores on Diplomatic Stage With U.S.-Cuba Agreement (Bloomberg)
Can You Live A Normal Life With Half A Brain? (BBC)

“It’s just the nature of the business. You’re not going to go drill holes in the ground if you think prices are going down.”

Oil Crash Exposes New Risks for U.S. Shale Drillers (Bloomberg)

Tumbling oil prices have exposed a weakness in the insurance that some U.S. shale drillers bought to protect themselves against a crash. At least six companies, including Pioneer Natural Resources and Noble Energy, used a strategy known as a three-way collar that doesn’t guarantee a minimum price if crude falls below a certain level, according to company filings. While three-ways can be cheaper than other hedges, they can leave drillers exposed to steep declines. “Producers are inherently bullish,” said Mike Corley, the founder of Mercatus Energy Advisors, a Houston-based firm that advises companies on hedging strategies. “It’s just the nature of the business. You’re not going to go drill holes in the ground if you think prices are going down.”

The three-way hedges risk exacerbating a cash squeeze for companies trying to cope with the biggest plunge in oil prices this decade. West Texas Intermediate crude, the U.S. benchmark, dropped 50% since June amid a worldwide glut. The Organization of Petroleum Exporting Countries decided Nov. 27 to hold production steady as the 12-member group competes for market share against U.S. shale drillers that have pushed domestic output to the highest since at least 1983. Shares of oil companies are also dropping, with a 49% decline in the 76-member Bloomberg Intelligence North America E&P Valuation Peers index from this year’s peak in June. The drilling had been driven by high oil prices and low-cost financing. Companies spent $1.30 for every dollar earned selling oil and gas in the third quarter, according to data compiled by Bloomberg on 56 of the U.S.-listed companies in the E&P index.

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450,000 people work in Britain’s oil industry.

North Sea Oil Industry ‘Close To Collapse’ (BBC)

The UK’s oil industry is in “crisis” as prices drop, a senior industry leader has told the BBC. Oil companies and service providers are cutting staff and investment to save money. Robin Allan, chairman of the independent explorers’ association Brindex, told the BBC that the industry was “close to collapse”. Almost no new projects in the North Sea are profitable with oil below $60 a barrel, he claims. “It’s almost impossible to make money at these oil prices”, Mr Allan, who is a director of Premier Oil in addition to chairing Brindex, told the BBC. “It’s a huge crisis.” “This has happened before, and the industry adapts, but the adaptation is one of slashing people, slashing projects and reducing costs wherever possible, and that’s painful for our staff, painful for companies and painful for the country. “It’s close to collapse. In terms of new investments – there will be none, everyone is retreating, people are being laid off at most companies this week and in the coming weeks. Budgets for 2015 are being cut by everyone.”

Mr Allan said many of the job cuts across the industry would not have been publicly announced. Oil workers are often employed as contractors, which are easier for employers to cut. His remarks echo comments made by the veteran oil man and government adviser Sir Ian Wood, who last week predicted a wave of job losses in the North Sea over the next 18 months. The US-based oil giant ConocoPhillips is cutting 230 out of 1,650 jobs in the UK. This month it announced a 20% reduction in its worldwide capital expenditure budget, in response to falling oil prices. Other big oil firms are expected to make similar cuts to their drilling and exploration budgets. Research from the investment bank Goldman Sachs predicted that they would need to cut capital expenditure by 30% to restore their profitability at current prices. Service providers to the industry have also been hit. Texas-based oilfield services company Schlumberger cut back its UK-based fleet of geological survey ships in December, taking an $800m loss and cutting an unspecified number of jobs.

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“The prolongation of the downward trend of the oil price in world markets is a political conspiracy going to extremes.”

North Sea Oilfields ‘Near Collapse’ After Price Nosedive (Telegraph)

The North Sea oil industry is “close to collapse”, an expert has warned, as a slump in prices piles pressure on drillers to cut back investing in the region. Robin Allan, chairman of the independent explorers’ association Brindex, told the BBC that it is “almost impossible to make money” with the oil price below $60 per barrel. “It’s a huge crisis. This has happened before, and the industry adapts, but the adaptation is one of slashing people, slashing projects and reducing costs,” he said. Mr Allan’s glum outlook for oil production and exploration in the UK Continental Shelf came on a volatile day of trading for crude. Brent – a global pricing benchmark comprising crude from 15 North Sea fields – ended trading in London down 1% at around $60 per barrel after trading up by as much as 3% earlier in the session. Mr Allan’s warning comes after The Telegraph reported that £55bn worth of oil projects in the North Sea and Europe could be cancelled due to the current slide in prices, according to consultancy Wood Mackenzie.

Concern over the ability of the North Sea to endure the current downturn has increased since OPEC decided to keep pumping at its current rate of 30m barrels per day (bpd) in late November. Opec kingpins Saudi Arabia and Iran were at odds on Thursday over the reason behind falling prices in an indication of the pain being caused to many of the cartel’s 12 members. Iran’s oil minister has said that a “political conspiracy” is to blame for the dramatic slump in remarks which could signal that the Islamic Republic will try to exert pressure on Opec to again consider cutting output. Bijan Zanganeh told the country’s state petroleum news agency: “The prolongation of the downward trend of the oil price in world markets is a political conspiracy going to extremes.”

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“Companies that are already producing oil will continue to operate those wells because the cost of drilling them is already sunk into the ground ..”

Exxon Mobil Shows Why U.S. Oil Output Rises as Prices Plunge (Bloomberg)

Crude oil production from U.S. wells is poised to approach a 42-year record next year as drillers ignore the recent decline in price pointing them in the opposite direction. U.S. energy producers plan to pump more crude in 2015 as declining equipment costs and enhanced drilling techniques more than offset the collapse in oil markets, said Troy Eckard, whose Eckard Global owns stakes in more than 260 North Dakota shale wells. Oil companies, while trimming 2015 budgets to cope with the lowest crude prices in five years, are also shifting their focus to their most-prolific, lowest-cost fields, which means extracting more oil with fewer drilling rigs, said Goldman Sachs. Global giant Exxon Mobil, the largest U.S. energy company, will increase oil production next year by the biggest margin since 2010.

So far, OPEC’s month-old bet that American drillers would be crushed by cratering prices has been a bust. “Companies that are already producing oil will continue to operate those wells because the cost of drilling them is already sunk into the ground,” said Timothy Rudderow, who manages $1.5 billion as chief investment officer at Mount Lucas Management. “But I wouldn’t want to have to be making long-term production decisions with this kind of volatility.” A U.S. crude bonanza that has handed consumers the cheapest gasoline since 2009 has left oil exporters like Russia and Venezuela flirting with economic chaos. The ruble sank as much as 19% on Dec. 16 to a record low of 80 per dollar before recovering to close at 68; Russian bond and equity markets also crumbled.

In Venezuela, the oil rout is spurring concern the country is running out of dollars needed to pay debt and swaps traders are almost certain default is imminent. U.S. oil production is set to reach 9.42 million barrels a day in May, which would be the highest monthly average since November 1972, according to the Energy Department’s statistical arm. Output from shale formations, deep-water fields, the Alaskan wilderness and land-based wells in pockets of Oklahoma and Pennsylvania that have been trickling out crude for decades already have pushed demand for imported oil to the lowest since at least 1995, according to data compiled by Bloomberg.

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“The essence of its action was that your money is not welcome in Switzerland ..”

Central Banks Are Now Uncorking The Delirium Phase (David Stockman)

Virtually every day there is an eruption of lunacy from one central bank or another somewhere in the world. Today it was the Swiss central bank’s turn, and it didn’t pull any punches with regard to Russian billionaires seeking a safe haven from the ruble-rubble in Moscow or investors from all around its borders fleeing Mario Draghi’s impending euro-trashing campaign. The essence of its action was that your money is not welcome in Switzerland; and if you do bring it, we will extract a rental payment from your deposits. For the time being, that levy amounts to a negative 25 bps on deposits with the Swiss Central bank – a maneuver that is designed to drive Swiss Libor into the realm of negative interest rates as well. But the more significant implication is that the Swiss are prepared to print endless amounts of their own currency to enforce this utterly unnatural edict on savers and depositors within its borders.

Yes, the once and former pillar of monetary rectitude, the SNB, has gone all-in for money printing. Indeed, it now aims to become the BOJ on steroids – a monetary Godzilla. So its current plunge into the netherworld of negative interest rates is nothing new. It’s just the next step in its long-standing campaign to put a floor under the Swiss Franc at 120. That means effectively that it stands ready to print enough francs to purchase any and all euros (and other currencies) on offer without limit. And print it has. During the last 80 months, the SNB’s balance sheet has soared from 100B CHF to 530B CHF – a 5X explosion that would make Bernanke envious. Better still, a balance sheet which stood at 20% of Swiss GDP in early 2008 – now towers at a world record 80% of the alpine nation’s total output. Kuroda-san, with a balance sheet at 50% of Japan’s GDP, can only pine for the efficiency of the SNB’s printing presses.

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Are they all going to sell in January?

Dow’s 421-Point Leap Is Biggest Gain In 3 Years (MarketWatch)

A surging U.S. stock market rallied to its best two-day gains in three years Thursday. The monster rally, which kicked off Wednesday after Federal Reserve Chairwoman Janet Yellen assured the markets that the central bank would be patient about lifting interest rate, burst into an all-out bull run late in Thursday trading. The move caps a two-day charge higher, bringing the Dow back to within shouting distance of 18,0000, after rocky trading days. The Dow Jones Industrial Average soared 421 points, or 2.4%, to 17,778.15, its biggest one-day gain in three years, a day after the Federal Reserve said it “can be patient” about the timing of its first rate hike, signalling increases will be slow and steady. It was the first time in more than six years since the Dow recorded back-to-back days of gains exceeding 200 points.

The S&P 500 jumped 48.34 points, or 2.4%, to 2,061.23, it’s biggest one-day gain in nearly two years. It is also the first time since Aug 2002 that the benchmark index posted two consecutive days of gains greater than 2%, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. The Nasdaq Composite jumped 104 points, or 2.2%, to 4,748, as technology companies recorded big gains. Jonathan Golub, chief U.S. market strategist at RBC Capital Markets, attributed today’s rally to halo effect from the Fed’s announcement on Wednesday. “The Fed told equity investors what we already assumed and believed,” Golub said. “There was fear that if there was going to be any change in the stance, it would be towards hawkishness, but the statement dispelled that, so stock markets rallied,” the RBC strategist added.

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Can we have some polar vortex please?

Already Crummy US Economy Takes a Sudden Hit (WolfStreet)

The Fed yesterday, in a fit of its typical though inexplicable optimism, raised its projection for economic growth. In September, it had projected that the US economy would grow between 2.0% and 2.2% in 2014. Now it raised its “central tendency” to a growth of 2.3% to 2.4%. That type of measly economic growth is far below the ever elusive escape velocity that Wall Street keeps promising without fail every year to justify sky-high stock valuations. But now reality is once again mucking up our already not very rosy scenarios. The service sector, the dominant force in the US economy, has taken another hit. Markit’s Services PMI Business Activity index slumped in December to 53.6, down from 56.2 in November. It’s now nearly 3 percentage points below the average over the last two years (56.4). And it is barely above the terrible growth rate in February (53.3), for which the polar vortex that had covered much of the nation was amply blamed.

Here is a chart of the shrinking services PMI. The peak was in June. From that point of maximum exuberance, it has been one heck of a downhill ride. Note the sudden no-polar-vortex plunge from November to December.

This time, there were no polar vortices to blame. But there were plenty of business reasons. Incoming new work was the lowest in nine months, with some survey respondents indicating that “the economic outlook had weighted on client demand at the end of the year.” The rate of job creation dropped to the lowest since April, with some respondents citing softer new business as reason. The Composite PMI, which combines the Services PMI and the Manufacturing PMI, dropped sharply from 56.1 in November to 53.8 in December. It has been on the same trajectory as the Services PMI, with the peak in June, followed by a downhill ride that culminated in a sudden plunge in December that left it below February’s polar-vortex low!

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“.. if you read some of Stanley Fischer’s early work on the rational expectation model you find that the key to fixing the lack of long term effectiveness to monetary policy is by confusing the working man. The idea being, people will act rationally with the information they are provided and so what typically happens is that people change their behaviour which counters the impact of the policy being implemented.

The Fed Delivers the Message that Our Economy is Dead (Beversdorf)

I used to get a kick out of the cute little children waiting for the Fed Chair to come and deliver presents or coal. So giddy and excited from the anticipation of not knowing who Janet thinks were good boys and girls. Who’s going to be rewarded and who disappointed? And I don’t know how many people asked me today what the Fed will do. My answer was “The same [email protected]#*ing thing they always do, nothing. So stop asking”. You see, if you read some of Stanley Fischer’s early work on the rational expectation model you find that the key to fixing the lack of long term effectiveness to monetary policy is by confusing the working man. The idea being, people will act rationally with the information they are provided and so what typically happens is that people change their behaviour which counters the impact of the policy being implemented.

The solution is to keep us guessing. And so what they have done for essentially every meeting is nothing. However, they use the media to talk about all the things they just might do. And the pundits on television go on and on about all the things that might happen and what the follow on implications will be given those alternatives and then the moment comes and ahhh nothing, damn they fooled me again! I really thought this time was it gosh golly dang it!. I guess it was just that this or that was just slightly out of place otherwise they said they were totally gonna do this or that. So close, but ultimately they are right. Yep they made the right choice based on all the variables. They are just swell. At this point, I just get annoyed with the ridiculous foolishness of people. We’ve got to start using our own brains. The Fed stopped using any benchmarks because while the benchmarks were improving, the economy wasn’t and isn’t.

And so they were being railroaded by the transparency that benchmarks provide. And now it is just a black box of various indicators that will be analyzed in real time to form justifiable actions, far too complex for you and I but trust them that there is a definite method and it’s very quantifiable at that, they just can’t tell us what it is because it would just confuse everyone. Does anyone really not get it?? I mean I was under the impression that the pundits on television were just acting for the sake of good drama. Is that not the case? Are people really still confused by what’s happening in the market and broader economy? It’s been 6 years of the absolute same bullshit. How could anyone not clearly understand exactly what is behind the action or non action of the Fed??? Come on people wake up. Take a deep breath, grab some coffee, do whatever you need to do but please wake the hell up.

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They’re all addicted to Fed QE. But that’s gone, and there’s no alternative available.

Emerging Markets In Danger (Erico Matias Tavares)

There are some signs of trouble in emerging markets. And the money at risk now is bigger than ever. The yield spread between high grade emerging markets and US AAA-rated corporate debt has jumped, almost doubling in less than three weeks to the highest level since mid-2012.


MSCI Emerging Markets Index and Yield Spread between High Grade Emerging Markets and US AAA Corporates: 14 March 2003 – Today. Source: US Federal Reserve.

This means that the best credit names in emerging markets have to pay a bigger premium over their US counterparts to get funding. When this spread spikes up and continues above its 200-day moving average for a sustained period of time, it is typically a bad sign for equity valuations in emerging markets, as shown in the graph above. One swallow does not a summer make, but it is worthwhile keeping an eye on this indicator.

As yields go up the value of these emerging market bonds goes down, resulting in losses for the investors holding them. The surge of the US dollar in recent months could magnify these losses: if the bonds are denominated in local currency they will be worth a lot less to US investors; otherwise, the borrowers will now have to work a lot harder to repay those US dollar debts, increasing their credit risk. Any losses could end up being very significant this time around, as demand for emerging markets bonds has literally exploded in recent years.


Average Annual Gross Debt Issuance ($ billions, percent): 2000 – Today. Source: Dealogic, US Treasury. Note: Data include private placements and publicly-issued bonds. 2014 data are through August 2014 and annualized.

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The craze in China stocks makes money scarce…

China’s Short-Term Borrowing Costs Surge as Demand for Money Grows (WSJ)

Short-term borrowing costs in China soared Thursday as demand for cash surged due to a number of new stock offerings and the year-end shopping spree. A recent ruling that bans the use of lower-grade corporate bonds as collateral for loans, once a key source of funding for many institutional investors, has also intensified the scramble for funds. The cash squeeze is putting the country’s financial system under renewed stress, though so far it hasn’t spread to other sectors such as stocks or the bond markets. The money markets in China have grown dramatically in recent years, with smaller banks especially vulnerable to the higher borrowing costs as they’re most reliant on the interbank market for cash.

The weighted average of seven-day repurchase agreements, or repo, a benchmark for short-term funding costs in China’s money market, rose to 5.27% from 3.89% Wednesday and 3.53% at the beginning of this week. However, the level remains well below the 12% peak that it touched at the height of the unprecedented cash crunch that China suffered in the summer of 2013. “The u%oming IPOs is the most important reason behind today’s funding squeeze. The usual year-end thirst for cash also is also playing a part,” said Wang Ming, a partner at Shanghai Yaozhi Asset Management Co. A dozen companies, including broker Guosen Securities and budget carrier Spring Airlines, are raising a total of $2.2 billion over the next few weeks from domestic stock listings. They are set to take orders for their offerings between Dec. 18 and Dec. 23.

Investors’ enthusiasm about the new IPOs was even more evident in the smaller funding market on the Shanghai Stock Exchange, the bigger of China’s two exchanges. The weighted average of the seven-day repo on the Shanghai market, where investors use exchange-listed bonds as collateral for short-term borrowing, soared to 12.20% from 10.60% Wednesday. It stood at 6.80% Monday. Such one-off factors aside, the recent strong rally in China’s stock market and a fresh move by Beijing to rein in growing risk in the corporate bond market are having a more lasting impact on the supply of funds, Mr. Wang said. China’s securities clearing house last week banned the use of lower-grade bonds, mostly issued by cash-strapped local governments and small firms, as collateral for short-term borrowing between investors.

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And banks feel the pinch.

PBOC Offers Loans to Banks as Money Rate Jumps Most in 11 Months (Bloomberg)

China’s central bank offered short-term loans to commercial lenders as the benchmark money-market rate jumped the most in 11 months. The amount of money made available by the People’s Bank of China wasn’t clear, according to people familiar with the matter. Policy makers are adding funds to the financial system to address a cash crunch as subscriptions for the biggest new share sales of the year lock up funds. Twelve initial public offerings from today through Dec. 25 will draw orders of as much as 3 trillion yuan ($483 billion), Shenyin & Wanguo Securities Co. estimated. The seven-day repurchase rate, a gauge of interbank funding availability in the banking system, surged 139 basis points, or 1.39%age points, to a 10-month high of 5.28% as of 4:39 p.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. The increase was the biggest since Jan. 20.

“The IPOs are affecting the market, leading to cautious sentiment with fewer institutions willing to lend,” said Li Haitao, a Shanghai-based analyst at China Guangfa Bank Co. “Quite a few traders found it very difficult to meet their funding needs yesterday.” Lenders paid 4.65% for 60 billion yuan of three-month treasury deposits auctioned today by the PBOC, the most they’ve paid since January for such funds. The central bank also rolled over this week at least some of the 500 billion yuan of three-month loans granted to lenders in September, a government official said yesterday, declining to be identified as the details haven’t been made public. “Banks have to prepare for quarter-end regulatory checks, including loan-to-deposit requirements, and hoard cash to meet year-end demand,” said Wang Ming, chief operations officer at Shanghai Yaozhi Asset Management LLP, which oversees 2 billion yuan of fixed-income investments. “With all these factors affecting the market, it’s no surprise it’s suffering more than during previous IPOs.”

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Eastern links will get much stronger as a result of western policies vs Russia.

Russia May Seek China Help To Deal With Crisis (SCMP)

Russia could fall back on its 150 billion yuan (HK$189.8 billion) currency swap agreement with China if the rouble continues to plunge. If the swap deal is activated for this purpose, it would mark the first time China is called upon to use its currency to bail out another currency in crisis. The deal was signed by the two central banks in October, when Premier Li Keqiang visited Russia. “Russia badly needs liquidity support and the swap line could be an ideal tool,” said Bank of Communications chief economist Lian Ping. The swap allows the central banks to directly buy yuan and rouble in the two currencies, rather than via the US dollar. Two bankers close to the People’s Bank of China said it was meant to reduce the role of the US dollar if China and Russia need to help each other overcome a liquidity squeeze.

China has currency swap deals with more than 20 monetary authorities around the world. Swaps are generally used to settle trade. “The yuan-rouble swap deal was not just a financial matter,” said Wang Feng, chairman of Shanghai-based private equity group Yinshu Capital. “It has political implications as it is a sign of mutual trust.” The rouble has lost more than 50% against the US dollar this year, pushing Russia to the brink of a currency crisis, though measures announced by the central bank helped it recover some ground yesterday. Li Lifan, a researcher at the Shanghai Academy of Social Sciences, said the swap would not be enough for Russia even if it is used in its entirety. “The PBOC might agree to extend something like 15 billion yuan initially as a way of showing China’s commitment to Russia.”

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How to blow up the EU.

Draghi Counts Cost of Outflanking Germany in Stimulus Battle (Bloomberg)

As Mario Draghi prepares to push the European Central Bank into quantitative easing, he’s counting the cost of alienating its home nation. With the ECB president signaling that he’ll override German-led concerns on government bond purchases if needed, his institution is under attack in the country whose DNA inspired it. The outrage reflects concern that the Frankfurt-based central bank, which is modeled on the Bundesbank, is taking risks that its forerunner would never tolerate. The Italian is now pursuing a charm offensive in the euro area’s biggest and most populous economy before the Governing Council’s Jan. 22 meeting to soften the blow as he presses on with stimulus. His challenge is to outflank the Bundesbank without risking a spillover into national politics serious enough to threaten German support for the single currency.

“The ECB has built up enough credibility on its own,” said Holger Schmieding, chief economist at Berenberg Bank in London. “That the Bundesbank may object to sovereign-bond purchases is largely taken for granted by markets. Tacit support from Berlin would neutralize Bundesbank objections in the German public debate.” The momentum toward QE is building, with more than 90% of economists in Bloomberg’s monthly survey predicting it’ll start in 2015. Euro-area inflation was 0.3% in November, compared with the ECB’s goal of just under 2%, and is poised to turn negative because of a slump in oil prices.

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“The rule prevents federally-insured banks from using their own money when investing in certain risky assets.”

Federal Reserve Delays Parts Of Volcker Rule Until 2017 (BBC)

The US Federal Reserve has given Wall Street banks even more time to comply with parts of the Volcker Rule, a key provision of the 2010 Dodd-Frank financial reform bill. The rule prevents federally-insured banks from using their own money when investing in certain risky assets. The Fed had already announced banks would have until 2017 to deal with one type of trading product. It will now grant an extension to other types of funds. Initially, the Fed had said banks would have until 21 July 2017 to stop trading in collateralised loan obligations, which essentially move the risk of investments in loans off their balance sheet. The new extension applies to other types of “legacy covered funds”, according to a release on the Fed’s website, which include “having certain relationships with a hedge fund or private equity fund”.

The Volcker rule is named after former Federal Reserve chair Paul Volcker and it limits the ownership stake banks can have in risky funds to a maximum of 3%. Part of the rule, which bans proprietary trading, is still scheduled to go into effect on 1 July 2015. This is the second big victory for banks, who have spent nearly four years arguing that the regulations stipulated in the 1,600-page Dodd-Frank bill are too onerous. Last week, a coalition of big banks, led by Citigroup, succeeding in convincing Congress to repeal a provision that required banks to put their riskier investments into separate holding companies that would not be insured by the US government.

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An exhaustive overview, with tons of graphs, of all aspects of the true state of the union, from obesity to poverty to incarceration rates. Don’t miss it.

“Neoconica” – America For The New Millennium (Thad Beversdorf)

I recently wrote an piece on the comprehensive breakdown of America. In it I laid out, from an analytical perspective, the things that are leading America to an economic collapse. But it might be interesting to take a look at a broader view of American life today. Policy and economic discussions are useful but in them we can lose the tangibility of what it all comes back to, which is the well being of Americans. Whether or not the national budget is 190% of GDP and whether interest rates will rise or not are important issues but only so far as they will impact the quality of life of the people. And so let s have a look at the lives of the American people. Have the policies over the past 15 to 50 years led to substantial improvements in the day to day real lives of Americans? Let’s have a look. And while we ve seen a couple of these more economic charts think about them in context of the other charts or other sides of life.

The above charts inform us that the bottom 80% of income households are making less than they did in the early 1980s, and remember the number of two income households today is far greater than it was in 1980 making this a staggering reality. However the top 20% and especially the top 1% have seen incredible income gains since the early 1980s. Total net worth for the bottom 80% of Americans has also been crushed. Since 2001 median net worth for the bottom 80% is down some 30% and this is during a period where stocks have reached all time highs. How could this be you ask?? Well this is not happenstance or simple unexplainable market forces. Those things do not exist in today s world. These results are by design.

I get frustrated hearing, even from the most intelligent of people that the Fed is doing its best and that given enough time this will work out for everyone. And that everyone is better off today than they used to be because this is America and that s just the way America works. But when we let the empirical data drive our perspective rather than our blind loyalty we see a very different story. The data tells a story of a political class that has been implementing programs and policies that are making the working class sick. We are given all sorts of medicines in the form of social programs and infinite debt to mask the symptoms but when we look at the actual medical test results we are not getting any better. In fact, our condition continues to worsen. Yet so many of us continue to listen to our political and economic shamans. We have such faith. And it is that faith that people like Ayn Rand recognized would be the death of America. So let’s continue on our journey through the life of the working class American today.

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“The solution for these three Members was to ensure that no other Members were present. It would have been difficult for other Members to object anyway, as no one else in the House had even seen the bill!”

Bombs Away! Obama Signs Bill For Lethal Aid To Ukraine (Daniel McAdams)

President Obama made good today on his promise to sign the Ukraine Freedom Support Act of 2014, which had passed Congress last week. Dubbed by former Rep. Dennis Kucinich the bill that “reignited the Cold War while no one was looking,” the Act imposes new sanctions on the Russian defense and energy industries, authorizes $350 million in lethal military assistance to the US-backed government in Kiev, urges that government to resume its deadly military operations against the Russian-speaking areas of east Ukraine seeking to break away from Kiev’s rule, and authorizes millions of dollars to fund increased US government propaganda broadcasts to the countries of the former Soviet Union.

Just days before Christmas, this bill is a massive gift to the US defense industry from which Ukraine will be required to purchase its lethal wish list. Perhaps as disturbing as the bill itself is the shocking process by which it passed the US House of Representatives. Three Members of the House, Foreign Affairs Committee Chairman Ed Royce (R-CA), Eliot Engel (D-NY), and Marcy Kaptur (D-OH), planned to be on the House Floor after the business of the day (passage of the massive omnibus spending bill) was completed and Members had left the Floor. Under a parliamentary move called “unanimous consent” the normal rules of the House can be suspended provided not a single other Member objects. The solution for these three Members was to ensure that no other Members were present. It would have been difficult for other Members to object anyway, as no one else in the House had even seen the bill!

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“Even in the worst of times, ‘we are always Americans, and different, stronger, and better than those who would destroy us.’”

US TV Shows American Torturers, But Not Their Victims (Glenn Greenwald)

Ever since the torture report was released last week, U.S. television outlets have endlessly featured American torturers and torture proponents. But there was one group that was almost never heard from: the victims of their torture, not even the ones recognized by the U.S. Government itself as innocent, not even the family members of the ones they tortured to death. Whether by design (most likely) or effect, this inexcusable omission radically distorts coverage. Whenever America is forced to confront its heinous acts, the central strategy is to disappear the victims, render them invisible. That’s what robs them of their humanity: it’s the process of dehumanization.

That, in turn, is what enables American elites first to support atrocities, and then, when forced to reckon with them, tell themselves that – despite some isolated and well-intentioned bad acts – they are still really good, elevated, noble, admirable people. It’s hardly surprising, then, that a Washington Post/ABC News poll released this morning found that a large majority of Americans believe torture is justified even when you call it “torture.” Not having to think about actual human victims makes it easy to justify any sort of crime. That’s the process by which the reliably repellent Tom Friedman seized on the torture report to celebrate America’s unique greatness.

“We are a beacon of opportunity and freedom, and also [..] these foreigners know in their bones that we do things differently from other big powers in history,” the beloved-by-DC columnist wrote after reading about forced rectal feeding and freezing detainees to death. For the opinion-making class, even America’s savage torture is proof of its superiority and inherent Goodness: “this act of self-examination is not only what keeps our society as a whole healthy, it’s what keeps us a model that others want to emulate, partner with and immigrate to.” Friedman, who himself unleashed one of the most (literally) psychotic defenses of the Iraq War, ended his torture discussion by approvingly quoting John McCain on America’s enduring moral superiority: “Even in the worst of times, ‘we are always Americans, and different, stronger, and better than those who would destroy us.’”

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“The Vatican is historically a place of politics and not just religion and has been for hundreds of years, with many popes starting their careers as diplomats for the Holy See ..”

Pope Francis Scores on Diplomatic Stage With U.S.-Cuba Agreement (Bloomberg)

After misfires in the Middle East and South Korea, Pope Francis is finding his place on the stage of world diplomacy — by taking the initiative. The pontiff who has made his name mostly by opening up debate in the Catholic Church about divorce and homosexuality yesterday achieved his first geopolitical success: The Argentine-born pope played a key role in brokering the accord between the U.S. and Cuba to move toward normal relations. After Pope Francis and President Barack Obama discussed Cuba during a Vatican meeting in March, the pontiff wrote directly to Obama and Cuban President Raul Castro urging them to conclude a prisoner exchange, according to an Obama administration official. It was the first such letter the president had received from the pope, the official said.

“The role of Pope Francis has been decisive,” said Vatican Secretary of State Pietro Parolin on Vatican Radio today. “He was the one who took the initiative of writing to the two presidents to invite them to overcome the problems between the two countries and find an agreement.” Francis, 78, had greater success with Cuba than in his other political ventures because it was an obsolescent standoff waiting for a solution and because of his Latin American roots, said Philippe Moreau-Defarges, a researcher at the French Institute of International Relations in Paris. “The Cuba situation simply made no sense to anyone anymore,” said Moreau-Defarges.

While the Vatican diplomatic corps exchanges representatives with 179 countries and popes have been sending emissaries since the 4th century, modern-day pontiffs haven’t always been politically involved. Benedict XVI, Francis’ German predecessor, focused more on doctrinal issues. His predecessor, John Paul II, pope from 1978 to 2005, spoke out frequently against military force and dictatorship and is credited with hastening the collapse of communism in his native Poland. “The Vatican is historically a place of politics and not just religion and has been for hundreds of years, with many popes starting their careers as diplomats for the Holy See,” said Federico Niglia, a history professor at Luiss University in Rome. “What’s somewhat unusual is Francis acting in person beyond diplomatic circles, which has close parallels to the style of predecessor John Paul II.”

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Brain structures are fascinating, with built-in resilience, redundancy.

Can You Live A Normal Life With Half A Brain? (BBC)

How much of our brain do we actually need? A number of stories have appeared in the news in recent months about people with chunks of their brains missing or damaged. These cases tell a story about the mind that goes deeper than their initial shock factor. It isn’t just that we don’t understand how the brain works, but that we may be thinking about it in the entirely wrong way. Earlier this year, a case was reported of a woman who is missing her cerebellum, a distinct structure found at the back of the brain. By some estimates the human cerebellum contains half the brain cells you have. This isn’t just brain damage – the whole structure is absent. Yet this woman lives a normal life; she graduated from school, got married and had a kid following an uneventful pregnancy and birth. A pretty standard biography for a 24-year-old. The woman wasn’t completely unaffected – she had suffered from uncertain, clumsy, movements her whole life.

But the surprise is how she moves at all, missing a part of the brain that is so fundamental it evolved with the first vertebrates. The sharks that swam when dinosaurs walked the Earth had cerebellums. This case points to a sad fact about brain science. We don’t often shout about it, but there are large gaps in even our basic understanding of the brain. We can’t agree on the function of even some of the most important brain regions, such as the cerebellum. Rare cases such as this show up that ignorance. Every so often someone walks into a hospital and their brain scan reveals the startling differences we can have inside our heads. Startling differences which may have only small observable effects on our behaviour. This case points to a sad fact about brain science. We don’t often shout about it, but there are large gaps in even our basic understanding of the brain. We can’t agree on the function of even some of the most important brain regions, such as the cerebellum.

Rare cases such as this show up that ignorance. Every so often someone walks into a hospital and their brain scan reveals the startling differences we can have inside our heads. Startling differences which may have only small observable effects on our behaviour. Part of the problem may be our way of thinking. It is natural to see the brain as a piece of naturally selected technology, and in human technology there is often a one-to-one mapping between structure and function. If I have a toaster, the heat is provided by the heating element, the time is controlled by the timer and the popping up is driven by a spring. The case of the missing cerebellum reveals there is no such simple scheme for the brain. Although we love to talk about the brain region for vision, for hunger or for love, there are no such brain regions, because the brain isn’t technology where any function is governed by just one part.

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Dec 142014
 
 December 14, 2014  Posted by at 9:33 pm Finance Tagged with: , , , , , , ,  


DPC Mott Street, Chinatown, New York 1900

Where are you going, America?

I don’t like to discuss politics too much. There are not enough smart, kind and honest people in politics wherever I look in the world for me to want to have anything to do with that game. I’d just spend all my time wondering what kind of mindset it takes to want to tell other people what to do, and be in control of the millions, billions and trillions of dollars that are taken from these people on a daily, yearly, basis.

Not that all of them politicians are bad, but those who have genuinely good intentions get drowned out, within seconds, by the ones for whom the need to have power over others is more important than anything else. And as I said, on the whole they’re not very smart. It’s for instance a very bad idea to let you countries’ economic policies be decided by the very people who make the decisions today.

They have no clue what they’re talking about. So they get advisors who they feel do know, and these advisors all come from the same small niche of society that steer everybody’s hard-earned cash towards that same small niche of society. 99% of economists are religious nuts who do even the Roman Catholic church one better because they chart graphs to ‘prove’ their beliefs are true -or even provable-.

They adapt the world to their theories, not the other way around, as physicists do. They pretend their field is a science, but, other than the graphs, it has none of the characteristics of a science. Falsifiability is not a term one can let loose on economics; within minutes, there’d be nothing left.

The other advisors politicians have when it comes to economic policies are bankers, who are convinced banks are the most important institutions and edifices in the world, just like priests and vicars would have described their churches and cathedrals not long ago. That is why last week we saw a spending bill being shoved through US Congress and Senate that includes parts openly written by Citigroup lobbyists, and which puts the risk of over $300 trillion in derivatives on American taxpayers’ shoulders.

America is a democracy in name only. And I often ask myself why Americans take that lying down. Why they think they don’t have to fight for their rights and their freedoms the way the founders did. Do they think they’re special, are they so full of themselves, and full of ‘it’, that they think it’s okay to let their rights being taken away from them, and their children, the same rights so many Americans died for in earlier days?

When you try and see things that way, what else do present day US citizens deserve than what’s coming to them? You can’t have freedom, and you can’t have rights, if you’re not willing to fight for them. And that doesn’t mean sending a bunch of your low-down poorest young people to some faraway desert, it means keeping in touch with what’s happening in your own town and county and state and country. And raising your voice if you don’t like what you see.

There’s a Senate report – many years too late – that confirms the CIA and other parties tortured often innocent people in the name of the United States, and that means you, in incredibly cruel ways reminiscent perhaps most of Medieval times or even before that, before man allegedly became civilized, but for which, by the looks of it, nobody will to be prosecuted in the US.

Letting people die of torture, and then afterwards finding out it was just another case of mistaken identity, has become acceptable in America. Congratulations. We’ve come a long way.

There’s the incredible story of the Ukraine, in which the Senate just days ago called for more economic sanctions vs Russia, and full-blown lethal military aid for Ukraine, where US patsies have taken over even more government positions by being handed hundreds of millions of dollars and fresh Kiev passports, and where now Russia will be forced to counteract, against its will.

Why do Americans allow for that to happen in their name? Don’t they care what other people in the world, in which they’re hugely outnumbered, since less than 1 in 20 is American, think about them? Don’t they care about the effect of harassing others incessantly for the purpose of enriching US companies?

Or do Americans think their superior weaponry allows them to do whatever they want to whoever they want to do it to? Somehow, that, too, is reminiscent of the Middle Ages. America hasn’t won an actual war since 1945, because bigger armies don’t win wars anymore. Having the biggest guns doesn’t either. Nuclear weapons are too destructive for that.

Ron Paul seems to be the only US politician who has any idea of what the US should stand for, who understands that empire building is a really bad idea with all the nukes around, and that coalition building and friendship with other peoples and nations is a much better way to keep Americans safe and -relatively – prosperous. And Ron Paul is getting on; who’ll stand up in his place?

But the biggest issues for Americans are not abroad, they’re right at home. As evidenced by Ferguson, by Eric Garner, and by the mass demonstrations in the past days. The problem is, since the 1960s people have turned their focus so much towards money and so far away from their personal rights and freedoms, and those of others, that one or two or ten demonstrations won’t make a difference anymore.

I was watching something on the 1964 Klan killing of three civil rights workers in the town of Philadelphia, Mississippi the other day, of Dr. King’s role, of how the entire town knew who was guilty but shut up. And I wondered what exactly America has achieved since then, what has changed and what is better 50 years on.

And sure enough I found my answer, in a graph of all places. It this doesn’t hurt your sense of justice, and your sense of pride to be an American, I don’t know what would. Nor do I understand, if you choose to keep silent, where you think this will lead in the future. What can you possibly say when you let these numbers sink in?

Dec 142014
 
 December 14, 2014  Posted by at 12:15 pm Finance Tagged with: , , , , , , ,  


Jack Delano Freight train on the Chicago & North Western, Chicago to Clinton, Iowa Jan 1943

Americans Are 40% Poorer Than Before The Recession (MarketWatch)
UK Low-Paid And Zero-Hours Jobs Surge Dramatically (Observer)
Global Credit Markets Have Proclaimed An End To The Recovery (Alhambra)
Oil ‘Contango’ Fandango Over How Low Prices Will Finally Go (Telegraph)
Oil Price Crash Means $87 Billion Of New European Projects Face Axe (Telegraph)
Canadian Dollar At 54-Month Low As Oil Prices Collapse Below $60 (RT)
Noah’s 12 Survival Tips (Paul B. Farrell)
Paying Down The Debt Is Now Almost Mathematically Impossible (Simon Black)
Elizabeth Warren, Obama’s Left-Side Headache (Bloomberg)
US Senate Passes $1.1 Trillion Spending Bill Averting Shutdown (Bloomberg)
Lima Marathon Climate Change Talks Reach Agreement (Guardian)
Germany To Remain Oil, Gas and Coal Powered For Next 70 Years (RT)
Assets Collapse, Loans Go Bad: UK Banks Brace For Serious Stress Test (Observer)
The New European ‘Arc Of Instability’ (Escobar)
Bundesbank Chief Attacks EU For Dragging Feet Over French Deficit (Telegraph)
A Viewer’s Guide to Dick Cheney (Bloomberg)
US Congress Readies New Sanctions On Russia (Reuters)
Russian Anger Over New US Sanctions And Lethal Military Aid For Ukraine (AFP)
‘If US Sends Weapons To Ukraine, Russia Should Send Troops’ (RT)
A New Cold War with Russia? (Ron Paul)
Do McCain and Obama Really Oppose Torture? (Ron Paul)
CIA Torture Is Reason For France To Exit NATO – Le Pen (RT)

That’s one ugly graph. Look at the difference between whites and the rest.

Americans Are 40% Poorer Than Before The Recession (MarketWatch)

The Great Recession is officially over, but Americans are still 40% poorer today than they were in 2007, the year before the global financial crisis. The net worth of American families – the difference between the values of their assets, including homes and investments, and liabilities – fell to $81,400 in 2013, down slightly from $82,300 in 2010, but a long way off the $135,700 in 2007, according to a new report released on Friday by the nonprofit think-tank Pew Research Center in Washington, D.C. “The Great Recession, fueled by the crises in the housing and financial markets, was universally hard on the net worth of American families,” the report found.

There is also a dramatic disparity in net worth between races. The median net worth of white households was $141,900 in 2013, down 26% since 2007. It declined by 42% to $13,700 over the same period for Hispanic households and fell by 43% to $11,000 for African-American households. One theory for the wealth gap: White households are more likely than other ethnicities to own stocks directly or indirectly through retirement accounts, the Pew report said. The wealth of most Americans has stood still. In November 2014, the average weekly wage was $853 versus $833 for November 2013, according to the Bureau of Labor Statistics. But things are improving somewhat when it comes to housing.

Nationwide, only 8% of borrowers have homes that are underwater as of October 2014, down from a peak of 35%, or 18 million homes, in February 2011, according to Black Knight Financial Services in Jacksonville, Fla., which tracks mortgage performance. But 8% still impacts 4 million homes. Stagnant wages and rising property prices don’t bode well for first-time buyers without wealthy parents. The homeownership rate for non-Hispanic white households fell to 73.9% in 2013 from 75.3% in 2010, Pew found, and fell to 47.4% in 2013 from 50.6% in 2010 for minorities. It takes an average of 12.5 years to save up a 20% down payment – the usual requirement by banks – with a personal savings rate of 5.6%, according to real-estate firm RealtyTrac.

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This is how Cameron has built his recovery model.

UK Low-Paid And Zero-Hours Jobs Surge Dramatically (Observer)

New figures have revealed the dramatic spread of low-paid, insecure and casual work across the British economy since the financial crash of 2008. In that year, one in 20 men and one in 16 women worked in the casualised labour market. Now, one in 12 of both men and women are in precarious employment, which includes zero-hours contracts (ZHCs), agency work, variable hours and fixed-term contracts, according to new TUC data. According to the analysis, in 2008 there were 655,000 men in the casualised labour market. That number has risen by 61.8% to 1.06 million. The casualised female workforce has increased by 35.6%, from 795,000 in 2008 to 1.08 million in 2014. The TUC is also publishing research showing that since 2008, only one in 40 new jobs has been full-time. Over the same period, 60% of net jobs added have been self-employed and 36% have been part-time.

Employers argue that casual work often leads to a permanent post. According to the Work Foundation, however, only 44% of zero-hours contract jobs last for two years or more and 25% have lasted for five years or more. A survey by the Chartered Institute of Personnel Development estimated that there are more than a million zero-hours contract workers – 3.1% of the UK workforce – four times the estimate of the Office for National Statistics in 2012. The business secretary, Vince Cable, has proposed that those on zero-hours contracts should have the right to request a fixed-term contract. Labour has proposed that an employee on a ZHC has the right to request permanent work after 12 months.

In its report, Women and Casualisation: Women’s Experiences of Job Insecurity, the TUC makes a number of recommendations to tackle precarious employment, including written contracts for those on zero- or short-hours contracts guaranteeing work patterns; payment for the time that a casual worker is on call; better enforcement of the minimum wage; better enforcement of statutory rights, such as the right to permanent work after four years; and more help from larger employers on childcare. “For many women, ‘flexibility’ has become synonymous with being at the beck and call of employers,” said the TUC general secretary, Frances O’Grady. “Job insecurity isn’t just something that affects women in industries like retail and social care; it is a problem across the labour market.”

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Heed this.

Global Credit Markets Have Proclaimed An End To The Recovery (Alhambra)

The amount of credit market fireworks this week is only surpassed by those of October 15. Everywhere you look, credit markets are not just growing bearish but, as I said earlier in the week, bearish in comparison with past crisis periods. The past few days have surpassed even that observation, making credit now a fast-moving indicator of still nothing good. For most people that makes sense of Europe. The currency bloc that has been strangled by the common euro is living up to that sense of monetary reality. All that talk of recovery only eight months ago has been washed away in a tide of remarkable fear. What was perhaps only unease or mild nervousness as late as September has turned in the past few weeks to what can only be described as growing desperation. Just this week, the German bund curve at the longer end has dropped 10-15 bps all the way out. The 15-year bund is now under 1%!

The benchmark 10-year has fallen all the way to an essentially meaningless 63 bps. That is an astounding drop of 44 bps going back to mid-September. You may recall mid-September for its break in this bearish action that started back in August. At the time I believed that minor reprieve was related to optimism over the ECB’s ABS plan and covered bond purchases that finally offered something specific apart from the usual bland platitudes of “promises.” Of course, since almost nobody even remembers that now, its total lack of efficacy has been made plain with the ECB looking far worse and even more (if that was possible) impotent for their trouble. So in the midst of what was forewarned as a major monetary “stimulus” credit market revulsion is severe; an exceptional result unlike anything of the past five years, especially the last three.

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“.. it is not inconceivable that the price of a barrel of Brent could touch lows of around $30 ..” And that’s the Telegraph …

Oil ‘Contango’ Fandango Over How Low Prices Will Finally Go (Telegraph)

Contango, or not contango? This is perhaps the most important question facing oil markets right now. In the space of a week, the global three top energy organisations have downgraded their forecasts for the amount of oil they think the world will need next year to fuel the economy. These revisions are significant in the context of understanding why the price of oil has fallen so dramatically in such a short period of time — down 45% since June — and helping to predict accurately where it is likely to be heading in the future. One of the secrets to understanding what price oil will be trading at in six months’ time could be predicting contango. This word, rarely spoken outside oil trading circles, refers to the point at which spot delivery prices for crude are cheaper than the futures contracts being bought for offloading months in advance. When contango develops, the motive to buy oil usually returns soon after, if only for the reason of brokers profiting from the price spread attached to storing excess supply in tanks.

With Brent threatening to break its current $60 per barrel resistance level, oil traders are beginning to see the sort of deep contango that could put a floor under prices taking shape in the market. Even some members of the OPEC are now fixing their spot crude contract prices on the assumption that contango is already under way. Iraq’s state oil marketing company used that excuse this week as the reason why it cut its prices. “The widened contango in crude oil prices in Asia was the major reason behind the cut,” said the company. Of course, even more crude sloshing around in brim-full storage tanks is a sign that the fundamental link between supply and demand, which drives all markets, is currently broken when it comes to oil. World oil markets are now facing a demand shock of epic proportions, which makes predicting a floor to the price of crude increasingly difficult, unless producers unilaterally agree to deep cuts in output.

Given the glut of oil already in circulation on tankers without customers to unload to, it is not inconceivable that the price of a barrel of Brent could touch lows of around $30, last seen during the depths of the financial crisis in 2008. According to the International Energy Agency (IEA), growth in world demand for oil will next year again fall below the critical figure of 1m barrels per day (bpd), reaching 93.3m bpd in total. The agency has also warned of a 300m barrel increase that has built up in the storage tanks across Europe and North America. American estimates for demand are even more depressed, with the Energy Information Administration (EIA) — part of the US Department of Energy — this week reducing its forecast demand growth to just 880,000 bpd, or 92.8m bpd in total. Finally, OPEC itself shaved off 70,000 bpd to 92.26m bpd, of which it will account for a smaller share.

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Make it 10 times that.

Oil Price Crash Means $87 Billion Of New European Projects Face Axe (Telegraph)

Dozens of new oil projects in the North Sea and Europe could be shelved as falling prices force international oil companies to tear up their investment plans. Global energy consultancy Wood Mackenzie has said that 32 potential European oil field developments containing 4.9bn barrels of oil equivalent are waiting for approval on more than $87bn (£55bn) of funding. These could be at risk should oil prices fall below $60 per barrel. Major projects and investment in the UK and across Continental and Mediterranean Europe could be at risk if prices stay below $80 per barrel, as over 70% of the pre-FID [final investment decision] reserves in each region have a break-even [price] in excess of $60 per barrel, James Webb, lead analyst at Wood Mackenzie, told The Sunday Telegraph. Whereas in Norway almost 80% of reserves require an oil price of less than $60 per barrel to break even, he said. Norway’s output is expected to increase by 50,000 barrels per day to average almost 1.9m bpd in 2014, despite the recent slump in prices.

Major international oil companies such as BP, Chevron and ConocoPhillips are already reviewing capital expenditure levels in the wake of a rout in global crude markets, which has wiped 45% off the price of a barrel of Brent since June. The benchmark closed out the week at just above $62 per barrel, close to a new five-and-a-half-year low, after the International Energy Agency slashed its forecast for demand growth next year by 230,000 barrels to 93.3m bpd. A sharp cutback in spending on new projects by oil majors could also threaten thousands of jobs in the UK s oil and gas sector offshore and hit hubs such as Aberdeen and Montrose, which serve the North Sea, hard. BP warned of thousands of potential redundancies last week, as it informed investors of $1bn of cuts it plans to make to adjust its business to the new lower price environment. The downward trend in oil prices is a growing source of concern for operators across Europe, said Mr Webb.

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Russia, Venezuela, Nigeria and Canada. Nice lise.

Canadian Dollar At 54-Month Low As Oil Prices Collapse Below $60 (RT)

The Canadian dollar is taking spill with falling oil prices, and traded at a new low of 86.58 cents against the US dollar Friday. Canada has the world’s third largest proven oil reserves, and relies on oil and gas exports for 30% of GDP. The ‘Loonie’, as the currency is called in Canada, hit a 5-year low in October, and continues to sink along with oil prices, which have lost more than 43% from their June peak. Brent crude, the global benchmark, was trading at $62.95 per barrel. West Texas Intermediate (WTI) crude futures slipped to $59. The Canadian currency hit a high of $1.05 against the dollar in summer 2011, but has been stuck in a 5-year lull as investors sell off crude oil in the market. “Roughly speaking, if we start to think about oil prices below $50 a barrel for any significant period of time, you’re talking in all likelihood of a US dollar getting up to the CAN$1.20 to CAN$1.25 range,” Shaun Osborne, chief currency strategist at TD Securities is quoted by Reuters as saying.

As oil prices collapse, so are the currencies in high-cost oil producing nations, such as Canada, Norway, and Russia. Both Norway and Russia have complex oil drilling projects in frigid northern waters, which often necessitate ice breakers. Canadian heavy crude has fallen to near $40 a barrel. The blend trades lower than WTI because production and shipping costs in Canada are more expensive. Canada specializes in oil sands, which needs to be extracted from the ground and refined and processed into lighter crude. About one-third of Canada’s proven reserves are oil sands. Like the US shale boom, Canada’s oil sands have been a big boost to the economy since the 2008-2009 recession. Canada is the largest source of energy imports into the United States, the world’s second biggest oil consumer. Canadian energy stocks have taken a beating as crude has plunged into a bear market, as many investors are losing confidence in the expensive oil extraction methods.

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Vintage Farrell.

Noah’s 12 Survival Tips (Paul B. Farrell)

Merry Christmas? No, just same ol’ happy-talkin’ Scrooges pushing the same ol’ tired message — spend, spend, spend, run up our holiday retail numbers. But I’ll bet your gut’s filled with dark storm warnings … crashing oil stocks threaten recovery, growth … China, EU, developing markets stalling … trading, commodities, exports falling … corporate profits mask low-skill jobs … wages flattening … interest rates, inflation too low … as the middle class keeps losing, superrich capitalists lobby for bigger perks … maybe economist Robert Gordon’s dismal forecast is right, America may already be collapsing into a 1% GDP by 2100.

Happy New Years? No, don’t count on it … all this is coming on top of America’s hard-right changing-of-the-guard … the victorious GOP is taking command of the ship … and they’re unconsciously threatening economic growth with their partisan dogma designed to undermine everything done by the president the past six years — health care, immigration, minority voting and women’s rights — while now aggressively undermining all climate initiatives with uncompromising science-denial plans guaranteed to further frustrate Main Street voters and sabotage America’s weak economic recovery.

But for the moment, Christmas spirit shines above all those storm warnings, above the accelerating climate disasters, a great spirit reminiscent of my days years ago overseas with the Marine Corps, often serving mass for Catholic chaplains. A great gift, a mystery, a privilege. A welcome respite from what’s ahead. Why? We just put up four Christmas trees lighting our home today, memories going back to celebrations in my home in small-town Pennsylvania, where that lit up my youth during holidays. Christmas is that kind of story time, filled with happy memories, like how we got our home, through Capt. Jerry Shields, chaplain of the First Marine Expeditionary Force. I fell in love with his Christmas list: “All I Really Need to Know I Learned From Noah’s Ark.” It was on the wall of our future home we first walked in years ago, lit up my eyes with a smile.

Chaplain Shields was the owner’s son. I looked, was hooked. The message, this home was waiting for you. Today the same spirit arises year after year, of serving mass for Marine chaplains. And also collecting Noah’s Ark memorabilia. After a double-take, they gave us a copy. We were sold on the house, put in an offer on the spot. Love it more with each passing Christmas, living here in God’s country. Noah’s spirit surrounds us every day, reminds of how to navigate successfully through good times and bad, always true to yourself. If you need to know how to survive the storm, Noah’s got the answer. Yes, the great ark-builder is one of history’s all-time survivors. He listened to the right voice, the one echoing within his soul, all souls. Trust it.

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“.. even with absurd assumptions (7%+ GDP growth for years at a time, low interest rates, etc.), it is simply not feasible for the US government to ‘grow’ its way out”.

Paying Down The Debt Is Now Almost Mathematically Impossible (Simon Black)

Exactly 199 years ago, in 1815, a “temporary” committee was established in the US Senate called the Committee on Finance and Uniform National Currency. It was set up to address economic issues and the debt accrued by the US government after the War of 1812. Of course, because there’s nothing more permanent than a temporary government measure, the committee became a permanent one after just one year. It soon expanded its role from raising tariffs to having influence over taxation, banking, currency, and appropriations. In subsequent wars, notably the American Civil War, the Committee was quick to use its powers and introduced the union’s first income tax. They also detached the dollar from gold to help fund the war.

This was all an indication of things to come. Over the subsequent decades there was a sustained push to finally establish the country’s central bank that will control money and credit, as well as institute a permanent income tax to feed the expanding aspirations of government. They succeeded in 1913 when the Federal Reserve Act was passed and the 16th Amendment ratified, binding the country in the shackles of central banking and taxation of income. Over the century that followed, the US has gone from being the biggest creditor in the world to its biggest debtor. Decades of expanding government programs, waste, endless and costly wars, etc. have racked up such an enormous pile of debt that it has become almost impossible to pay it down. A lot of folks don’t realize that, since the end of World War II, the US government’s total tax revenue has been almost constant at roughly 17% of GDP.

In other words, even though the actual tax rates themselves rise and fall, the government’s ‘slice’ of the economic pie is almost always the same – 17%. I’ve worked out a mathematical model which shows that, even with absurd assumptions (7%+ GDP growth for years at a time, low interest rates, etc.), it is simply not feasible for the US government to ‘grow’ its way out. Default has become the only option. And that could mean a number of things. They could default on their creditors (other governments like China who loaned money to the US government). But this would spark a global financial and banking crisis. They could default on the Federal Reserve, which owns trillions of dollars of US debt. But this would create an epic currency crisis for the US dollar. They could also default on their obligations to their citizens—primarily to future beneficiaries of Social Security (who collectively own trillions of dollars of US debt).

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But she didn’t win.

Elizabeth Warren, Obama’s Left-Side Headache (Bloomberg)

If the #cromnibus debate is a sign of what’s to come, President Obama may wish he had given Elizabeth Warren the Consumer Financial Protection Bureau post she wanted. From trade to taxes, President Barack Obama is looking for areas to cut deals with the new congressional Republican majority and burnish his legacy. Judging by the budget debate this week, at least one obstacle to bipartisanship will be the progressives in his own party, who will have a more influential voice in a slimmed-down caucus when Congress returns in January. House Democratic Leader Nancy Pelosi gave the White House palpitations Thursday when she railed against the $1.1 trillion government spending bill that the president supported, delaying the vote for hours and increasing the risk of a second government shutdown in as many years. Obama needed to make personal calls to House Democrats to shore up support, and sent his chief of staff, Denis McDonough, to the Capitol to do the same.

The announcement on Friday that Senator Sherrod Brown of Ohio will serve as the top Democrat on the Banking Committee, released in the midst of the spending fight that had been held up by a debate over derivatives, foreshadowed more resistance. The pro-labor senator’s news release came complete with statements of support from leaders of credit unions and homeless and housing advocates, rather than Wall Street titans. Blowback was coming from the outside, too. Americans for Financial Reform–a liberal advocacy group–was the first to alert Pelosi’s office to a provision in the spending measure that loosened a banking regulation imposed by the 2010 Dodd-Frank financial reform law. That sparked an anti-Wall Street narrative and led to other liberal groups, like Progressive Change Campaign Committee, asking their members to contact lawmakers and register their opposition. The group also sought to raise money off the dispute.

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Just another ugly moment in American politics.

US Senate Passes $1.1 Trillion Spending Bill Averting Shutdown (Bloomberg)

The Senate passed a $1.1 trillion bill to fund most of the U.S. government through September and avert a shutdown after defeating an effort by Ted Cruz that previewed a potential 2015 Republican fight over immigration. The 56-40 vote during an uncommon Saturday session follows House passage of the spending bill on Dec. 11 and sends the measure to President Barack Obama for his signature. Cruz of Texas, like a number of House Republicans, had sought to use the measure, H.R. 83, to block funding of Obama’s actions allowing millions of undocumented immigrants to stay in the U.S. The bill also drew “no” votes from Democrats who opposed language easing bank rules and allowing larger financial contributions to political parties.The measure was “poisoned by special favors flagrantly contrary to the public interest,” Democratic Senator Richard Blumenthal of Connecticut, who voted against the bill, said in a statement.

The vote ended a weeks-long drama over immigration, government spending and banking rules as Senate Democrats prepare to turn the majority over to Republicans in January. Republicans also will have an expanded House majority, and this month’s fight previewed the party’s plans to try to roll back government regulations in 2015. While Republican leaders insisted they wouldn’t allow a government shutdown like the one in October 2013 that stemmed from an effort to defund Obamacare, Congress was just a few hours from a lapse in government funding Dec. 11 when lawmakers passed a stopgap measure to give the Senate time to act.

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Empty and hollow.

Lima Marathon Climate Change Talks Reach Agreement (Guardian)

Negotiators adopted a course of action on Sunday that would for the first time commit every country to cutting the greenhouse gas emissions that drive climate change. The decision reached at United Nations climate talks on Sunday was seen as a significant first step towards reaching a global climate change deal in Paris at the end of next year – although negotiators acknowledged much of the hard work remained ahead. It is also far from clear that the actions sketched out on Sunday would be enough to limit warming to the internationally agreed limit of 2C above pre-industrial levels – or to protect poor countries from climate change. “I think this is good, and I think this moves us forward,” Manuel Pulgar-Vidal, Peru’s environment minister and the chair of the talks, said.

The deal struck early Sunday – now officially known as the Lima Call for Climate Action – would for the first time require all countries, rising economies as well as rich countries, to take action on climate change. That represents a break from one of the defining principles of the last 20 years of climate talks – that wealthy countries should carry the burden of cutting carbon dioxide emissions. Now for the first time, China, whose emissions have overtaken the US since climate talks began as well as India, Brazil and other rising economies have agreed they will need to cut their own emissions as well. As agreed, countries would come up with their own emissions reductions targets, with a suggested deadline of 31 March 2015. The United Nations would then weigh up those pledges and determine whether the collective action was enough to limit warming to 2C above pre-industrial levels, the internationally agreed goal.

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We can’t help but reset that carbon imbalance, out of the ground and into the air.

Germany To Remain Oil, Gas and Coal Powered For Next 70 Years (RT)

Germany’s plan to phase out nuclear energy and switch to renewables by 2022 is unrealistic as the country is doomed to remain dependent on fossil fuels like oil and gas for the next 70 years, energy expert Matthias Dornfeldt told RT. Renewables can’t replace fossil fuels overnight because there’s not enough infrastructure, said Dornfeldt in an interview with RT. He believes the 21st century will be the century of gas, as the 20th century was the century of oil. “We are going to be dependent on oil as well as on gas, as I see, for the next 50, 60, 70 years”, he said, adding there is “a huge impact of fossil fuels on the national economy in Germany.” His comments echo a Wednesday study by the Federal Institute for Geosciences and Natural Resources (BGR) that said Germany would remain dependent on fossil fuels for decades.

Oil, natural gas, coal and lignite account for 80% of German energy consumption. Germany’s game plan to switch to renewables known as Energiewende, and the recently approved National Action Plan for Energy Efficiency looking very unrealistic, the report added. Following the 2011 disaster at the Fukushima nuclear power plant in Japan, Angela Merkel’s government made a commitment to phase out nuclear power by 2022 and get 80% of its energy from renewable sources by 2050. The country will need new energy infrastructure, including new power plants, transmission lines and additional energy storage.

Although some scientists look at the government’s attempts to cut emissions with skepticism, it hopes to reverse this with the Action Plan on Climate Protection it passed earlier in December. The plan suggests a goal to reduce greenhouse gas emissions by 40% compared to 1990 levels by 2020. Germany is still on a long way from achieving its target. Even oil production in Germany, which is small compared with the big international producers, contributes more to power generation than all of domestic photovoltaic equipment put together, the BGR study says. In 2014 the share of renewables in Germany’s energy mix grew 5% from the year before.

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What’ll be left after a real test?

Assets Collapse, Loans Go Bad: UK Banks Brace For Serious Stress Test (Observer)

House prices fall by an unprecedented 35% and base rates jump above 4%, putting pressure on household finances already feeling the pain of falling real incomes. Unemployment doubles to 12% and inflation rockets in an economy being buffeted by a sharp drop in the value of the pound. In the worst slump in almost a century, Britain’s big banks are struggling to fund themselves on the international financial markets as they face the prospect of a wave of homebuyers and big companies defaulting on their debts. This bleak scenario is the stress test the Bank of England is running on seven banks and one building society to assess their financial strength, with the results to be released at 7am on Tuesday. These are the first tests to be run concurrently on lenders and are likely to become an annual event, incorporating lessons learned from the 2008 crisis, when banks such as Royal Bank of Scotland were exposed as running on wafer-thin capital ratios and unable to withstand the storm.

Analysts at Morgan Stanley said: “Annual stress tests form the third leg of the Bank of England’s approach to regulating bank capital.” The other two involve looking at the risks attached to assets and the leverage ratio method of assessing capital strength. Although the tests are based on hypothetical scenarios, the results could have implications for the banks taking part. Dividend payouts to shareholders could be at risk or banks could be forced to pull out of businesses. Institutions could be forced to raise more capital. The Co-op Bank has already warned it might fail while Lloyds Banking Group’s hopes to pay a dividend for the first time since 2008 could be scuppered. This comes only weeks after stress tests conducted by the European Banking Authority , which the four UK banks involved – Barclays, HSBC and bailed-out Royal Bank of Scotland and Lloyds Banking Group – all passed. Those four are now being included in the Bank of England’s test along with Co-operative Bank, Nationwide building society, Santander UK and Standard Chartered.

Some of the scenarios are the same as those tested by EBA, such as a “market tantrum” in Brazil, India, Indonesia, South Africa and Turkey, but the UK-specific test is tougher. Threadneedle Street’s approach is also different because the regulator takes accounts of efforts banks would make to improve capital positions once the crisis is under way. But the Bank has said it could exercise discretion and come down hard on a bank even though technically it managed to struggle over the line in terms of capital strength.

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“Of course, there is a plan B [in the case of Russia being shut off from the SWIFT bank system], but in my personal opinion it would mean war ..”

The New European ‘Arc Of Instability’ (Escobar)

The European Council on Foreign Relations and Berlin think-tank Friedrich Ebert Stiftung have just reached more or less the same conclusion. If the dangerous stand-off between the EU and Russia over Ukraine is not solved, the EU could face, up to 2030, a military build-up in eastern Europe; a new arms race with NATO as a protagonist; and a semi-permanent “zone of instability” from the Baltic to the Balkans and the Black Sea. What these two think-tanks don’t – and won’t – ever acknowledge is that a new European “arc of instability” – from the Baltic to the Black Sea, as myself and other independent analysts have stressed – is exactly what the Empire of Chaos and its weaponized arm – NATO – are working on to prevent closer Eurasia integration.

By the way, the Pentagon excels in fabricating “arcs of instability.” The previous one was – and remains – massive, stretching from the Maghreb to Xinjiang in western China across the Middle East and Central Asia. Moscow has totally identified the plot; Foreign Minister Sergey Lavrov, once again, has made it crystal clear, in detail. And crucially, some influential sectors in Germany also did, as in members of the cultural elite destroying the notion of a new war in Europe: “Not in our name.” The same applies to those that always preach more transatlantic cooperation, extol the US’s “defining” role in Germany, and effusively praise Germany as the most American country in Europe; that’s the case of the Frankfurter Allgemeine newspaper – which stands for the core of the political and economic establishment in Germany.

It’s still in an embryonic stage, and has not yet made Chancellor Angela Merkel see the light; but a reverse reengineering of Atlanticist relations is already in progress in Germany. Meanwhile, the proverbial group of extremist US senators, plus the notorious poodles/vassals of Britain and Poland, haven’t stopped lobbying to shut Russia off from SWIFT – just as they did with Iran. This would be nothing but yet another declaration of (economic) war – or the economic counterpoint to NATO hysteria. In fairness, a great deal of the EU – especially Germany – knows this is madness.

Germany’s top financial paper Handelsblatt recently published a key interview with head of VTB-Bank Andrei Kostin, which has still not been translated into any major English-language paper. Kostin went straight to the point: “Of course, there is a plan B [in the case of Russia being shut off from the SWIFT bank system], but in my personal opinion it would mean war – if this type of sanction will be introduced. America and Europe did that against Iran but with Iran at that time there were no diplomatic relations, only military containment…if Russian banks’ access to SWIFT will be prohibited, the US ambassador to Moscow should leave the same day. Diplomatic relations must be finished. Banking is the most vulnerable part of the Russian economy because the system is based so strongly on the dollar and the euro.”

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Weidmann is Europe’s only hope at the banking level.

Bundesbank Chief Attacks EU For Dragging Feet Over French Deficit (Telegraph)

The head of the German central bank has criticised the EU’s decision to give France extra time to sort out its budget, hinting at a disagreement between Europe’s two most powerful economies. Jens Weidmann, the Bundesbank president, told a French newspaper that he feared last month’s decision to give France more time to spell out plans to fix its budget deficit risked giving the impression that EU rules are up for negotiation. It came a day after Fitch downgraded France’s credit rating from AA+ to AA, citing its failure to get a grip on its deficit. “Fitch’s medium-term growth forecasts are somewhat weaker and budget deficits wider than official projections,” the ratings agency said. At the end of November, the European Commission gave France an extra three months to implement reforms to shrink its budget deficit.

The country has been on course to run a deficit of 4.3% of GDP in 2015, well above the 3% EU target. By extending the deadline, the EU has saved Paris from humiliating sanctions, at least for the time being. “I would have hoped for clearer decisions,” Mr Weidmann told Le Figaro. “It would be unfortunate if the impression set in that rules are in the end up for negotiation and that budgetary consolidation can be perpetually put off by national governments.” Mr Weidmann added that bending the rules to give France, among others, more time to fix their budgets could put the EU rules’ credibility at risk. “France announced that it will not reach the agreed deficit goal in 2015 and has clearly put back the envisaged correction of its excessive deficit. For me, that does not strengthen the credibility of EU rules,” he said.

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“Cheney’s blunt talk is a win-win in Washington. His black-and-white views of the world give him a bigger bullhorn that those who see gray ..”

A Viewer’s Guide to Dick Cheney (Bloomberg)

Dick Cheney is making a rare appearance Sunday on NBC’s Meet the Press to discuss the Senate Intelligence Committee’s CIA torture report. It’s an unnecessary one, really. The former vice president slipped into media chairs to trash the investigation’s findings even before the first public reports emerged on its shocking details. So here are five things you need to know as you watch:

1. He thinks the Senate report is “full of crap” and a “crock.” Cheney wasn’t a mealy-mouthed politician during his years as a top administration official. He’s further embraced that reputation since leaving the VP post. “I get to say exactly what I think,” he told Charlie Rose in June. His reaction to the Democrat-led Senate panel report has been no exception. The New York Times captured his “crock” comment. In a Fox interview that aired Wednesday, he asserted it was “full of crap,” adding: “It’s a terrible piece of work.”

2. But he hasn’t read it. Cheney acknowledged he hasn’t perused the committee’s 6,700-page investigation, or even its declassified 500-page executive summary. In fairness, he doesn’t need to. He’s in it. Cheney’s name comes up 44 times in the report. From a footnote one can glean that not only did Cheney not want to read about the his former colleague’s work, he didn’t want anyone else to either–ever. “In 2006, Vice President Cheney expressed reservations about any public release of information regarding the CIA program,” it states.

3. He said they knew. He has taken pains in both post-release interviews to refute the idea that President George W. Bush was kept in the dark about the interrogation techniques. “I think he knew everything he wanted to know and needed to know,” he said in the Fox interview. Another search through the footnotes backs him up: “March 4, 2005, Briefing for Vice President Cheney: CIA Detention and Interrogation Program.” That followed cited briefings in 2003, 2004, and before one in 2006. The president received similar backgrounders. Of course, there were also some things that Cheney, Bush and other high-ranking officials didn’t want to know.

According to the report: “A proposed phone call to the Vice President Cheney to [redacted name] solidify support for CIA operations in Country [unnamed] was complicated by the fact that Vice President Cheney had not been told about the locations of the CIA detention facilities. The CIA wrote that there was a “primary need” to “eliminate any possibility that [unnamed person] could explicitly or implicitly refer to the existence of a black site in [the country]” during the call with the vice president. There are no indications that the call occurred.”

4. He uses Meet the Press as a big platform. Although Cheney has become a fixture on Fox, he’s turned to the NBC program to make bold statements over the years. He chose MTP as his first television appearance after the terrorist attacks on Sept. 1, 2001. Host Tim Russert did the show from the presidential retreat Camp David that Sunday. Cheney’s closing line to the American people that day: “There are those in the world who hate us and will do everything they can to impose pain, and we can’t let them win.”

5. Why is anyone is still listening to Cheney, six years after he left office? Cheney’s blunt talk is a win-win in Washington. His black-and-white views of the world give him a bigger bullhorn that those who see gray, so he is viewed as the ultimate spokesman for the Republican Party’s hawk division. The fact that he outrages liberals and delights conservatives also means he can be a ratings and website bonanza for those news outlets that score one of his occasional public moments. Kudos to MTP.

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The war party rules.

US Congress Readies New Sanctions On Russia (Reuters)

U.S. lawmakers were expected on Friday to approve new sanctions on Russian weapons companies and investors in the country’s high-tech oil projects, putting more U.S. pressure on President Vladimir Putin for interference in eastern Ukraine. Late on Thursday, the Senate and House of Representatives unanimously passed the Ukraine Freedom Support Act. A House panel made a small change and sent the bill back to the Senate for a last vote expected as soon as late Friday. President Barack Obama has said he opposes further sanctions on Russia unless Europe is on board. The bill, which will be sent to Obama to sign, requires him to apply sanctions on Russian state-owned arms exporter Rosoboronexport and other defense companies Congress says contribute to instability in Ukraine, Georgia and Syria. It requires Obama to penalize global companies that make large investments in crude oil drilling projects in deep waters and the Arctic.

The penalties go beyond U.S. and EU sanctions imposed in September on the world’s largest oil companies such as Exxon Mobil and BP. The legislation would also provide $350 million in military assistance to Ukraine from 2015 to 2017, and other aid for energy to the country, which has been threatened by cutoffs in natural gas supply from Russia. Republicans, who control the House and will have a majority in the Senate from January, have criticized Obama’s reaction to Russian interference in Ukraine as inadequate. “The hesitant U.S. response to Russia’s continued invasion of Ukraine threatens to escalate this conflict even further,” said Senator Bob Corker, a Tennessee Republican, incoming chairman of the foreign relations committee. The unanimous support for the bill showed a “firm commitment to Ukrainian sovereignty and to making sure Putin pays for his assault on freedom and security in Europe,” said Corker, who co-authored the bill with Democratic Senator Robert Menendez, the current head of the panel.

The bill authorizes Obama to penalize the top Russian natural gas producer Gazprom if he determines it is withholding significant natural gas supplies from NATO members or from Ukraine, Georgia and Moldova. Lawmakers dropped a measure that would have designated Ukraine, Georgia and Moldova as non-NATO allies of Washington. Obama on Thursday said slapping fresh sanctions on Russia without a similar move by Europe would be counterproductive. In Kiev on Friday, Ukraine’s defense minister called for a doubling of the military budget to buy weapons abroad and better equip the army to fight Russian-backed separatists in the east.

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The ‘Ukraine Freedom Support Act’, no less.

Russian Anger Over New US Sanctions And Lethal Military Aid For Ukraine (AFP)

Russia responded angrily on Saturday to news that US senators had passed a bill calling for fresh sanctions against Moscow and the supply of lethal military aid to Ukraine. “Undoubtedly, we will not be able to leave this without a response,” deputy foreign minister Sergei Ryabkov told Interfax news agency ahead of a meeting between the Russian and US foreign ministers. The Senate bill – dubbed the Ukraine Freedom Support Act – must still be approved by the White House, which has so far been reluctant to provide direct military assistance to Ukraine for fear of being drawn into a proxy war with Russia. Ryabkov blamed “anti-Russian moods” in the United States for the bill passed on Friday, which calls for additional sanctions against Russia and the delivery of up to $350 million (280 million euros’) worth of US military hardware to Ukraine.

The eight-month conflict between government forces and pro-Russian separatists has left at least 4,634 dead and 10,243 wounded, while displacing more than 1.1 million people, according to new figures released by the United Nations. It also threatens fresh sanctions against Russia, whose economy is crumbling under previous rounds of Western sanctions and a collapse in oil prices. Kiev lawmakers have hailed the bill as a “historic decision”. They have long been pressing the West to provide military support to their beleaguered army, but have so far received only non-lethal equipment. US Secretary of State John Kerry is set to meet Russian Foreign Minister Sergei Lavrov in Rome against the backdrop of the hardening US stance. Ryabkov said that “the main focus at their 17th meeting this year would be on the Middle East.” There was confusion over the timing of the meeting, however, with the US state department saying it was scheduled for Monday, while the Russian embassy press office in Rome told AFP the meeting would be Sunday.

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“We should not wait until Ukraine is armed and becomes really dangerous ..”

‘If US Sends Weapons To Ukraine, Russia Should Send Troops’ (RT)

A leftist Russian MP has said the US Senate’s decision to arm the Kiev regime should prompt ‘adequate measures’ from Russia, such as deploying military force on Ukrainian territory before the threat becomes too high. “The decision of the US Senate is extremely dangerous. If it is supported by the House of Representatives and signed by their president, Russia must reply with adequate measures,” Mikhail Yemelyanov of the Fair Russia party told reporters on Friday. “It is quite possible that we should return to the decision by our Upper House and give the Russian president an opportunity to use military force on Ukrainian territory preemptively. We should not wait until Ukraine is armed and becomes really dangerous,” the lawmaker stated. Yemelyanov also noted that in his opinion the US Senate’s decision to arm Ukraine had revealed that Washington wasn’t interested in the de-escalation of the Ukrainian conflict.

He then said that US actions gave him the impression they was seeking to turn Ukraine into some sort of an “international militant targeting the Russian Federation.” “In a few years Ukraine will turn into a poor and hungry country with an anti-Russian government that will teach its population to hate Russia. They will be armed to the teeth and Ukraine and US reluctance to recognize the Russian Federation within its current borders would always provoke conflicts,” the MP said. The US Senate on Thursday passed the so called “Ukraine Freedom Support Act” allowing for the provision of lethal and non-lethal aid to Ukraine and imposing additional sanctions against Russia. The bill was passed by a unanimous vote, according to one of its main sponsors – Republican Senator Bob Corker. The motion is yet to be passed by the US House of Representatives. The bill was opposed by US President Barack Obama, who spoke before the White House Export Council on Thursday and said that the move would be counterproductive and create divisions with Washington’s European allies.

On March 1 this year, the Upper House of the Russian Parliament – the Federation Council – approved a resolution allowing the president to use military force on the territory of Ukraine “until the normalization of the social and political situation in that country.” The resolution was adopted in accordance with the first part of Article 102 of the constitution of the Russian Federation. However, on June 25 the Federation Council voted to repeal the legislation following a request from Vladimir Putin. The Russian president instigated the move from a desire to discharge tensions in view of the three-party talks on a peaceful settlement in the East and South-East of Ukraine.

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“Only 10 members – five from each party – opposed this reckless resolution. [..] We should thank those 10 members who were able to resist the war propaganda.”

A New Cold War with Russia? (Ron Paul)

Last week the U.S. House voted overwhelmingly in favor of an anti-Russia resolution so full of war propaganda that it rivals the rhetoric from the chilliest era of the Cold War. Ironically, much of the bill condemns Russia for doing exactly what the U.S. government has been doing for years in Syria and Ukraine! For example, one of the reasons to condemn Russia in the resolution is the claim that Russia is imposing economic sanctions on Ukraine. But how many rounds of sanctions has the U.S. government imposed on Russia for much of the past year? I guess sanctions are only bad when used by countries Washington doesn’t like. The resolution condemns Russia for selling weapons to the Assad government in Syria. But the U.S. has been providing weapons to the rebels in Syria for several years, with many going to terrorist groups like al-Qaeda and ISIS that the U.S. is currently bombing!

The resolution condemns what it claims is a Russian invasion of Ukraine (for which it offers no proof) and Russian violation of Ukrainian sovereignty. But it was the U.S., by backing a coup against the democratically elected Yanukovich government in February, that first violated that country’s sovereignty. And as far as a military presence in Ukraine, it is the U.S. that has openly sent in special forces and other military advisors to assist the government there. How many times have top U.S. military and CIA officials visited Kiev to offer advice and probably a lot more? The resolution condemns Russia for what it claims are attempts to “illicitly acquire information” about the U.S. government. But we learned from the Snowden revelations that the NSA is spying on most rest of the world, including our allies! How can the U.S. claim the moral authority to condemn such actions in others?

The resolution attacks Russian state-funded media, claiming that they “distort public opinion.” At the same time the bill demands that the thousands of U.S. state-funded media outlets step up their programming to that part of the world! It also seeks “appropriate responses” to Russian media influence in the rest of the world. That should be understood to mean that U.S. diplomats would exert pressure on foreign countries to shut down television networks like RT. The resolution condemns what it claims is Russia’s provision of weapons to the Russian-speaking eastern part of Ukraine, which seeks closer ties with Russia, while demanding that the U.S. government start providing weapons to its proxies on the other side. As I have said, this is one of the worst pieces of legislation I can remember. And trust me, I have seen some pretty bad bills. It is nothing but war propaganda and it will likely lead to all sorts of unintended consequences.

Only 10 members – five from each party – opposed this reckless resolution. Probably most of those who voted in favor did not bother to read the bill. Others who read it and still voted in favor may have calculated that the bill would not come up in the Senate. So they could vote yes and please the hawks in their districts — and more importantly remain in good graces of the hawks who run foreign policy in Washington — without having to worry about the consequences if the bill became law. Whatever the case, we must keep an eye on those members of Congress who vote to take us closer to war with Russia. We should thank those 10 members who were able to resist the war propaganda. The hawks in Washington believe that last month’s election gave them free rein to start more wars. Now more than ever they must be challenged!

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” .. is that the only kind of torture? Is it not torture to go to a wedding in Pakistan and watch as your family is blown up by a US drone? Is it not torture to have your village water treatment plant bombed by NATO planes seeking to overthrow Gaddafi? Is it not torture for parents of the 500,000 Iraqi children who were killed by US sanctions?”

Do McCain and Obama Really Oppose Torture? (Ron Paul)

The Senate Intelligence Committee released its long-awaited report on CIA torture of detainees and the reaction has been strong. While some still maintain that torture is justified, the emerging details of the program have left most of the country disgusted and ashamed. Many in the current Administration blame the Bush people for this dark chapter, claiming that President Obama finally put an end to what his predecessor started. Senator John McCain, an advocate for war and an interventionist foreign policy, has nevertheless been one of the strongest voices opposing torture. He has recalled his time as an abused prisoner of war in Vietnam to argue the importance of facing up to the recent behavior of the US government and making necessary corrections. He said he knows from personal experience that torture does not produce good intelligence, as the victims will say whatever they believe their captors want to hear to gain some relief from their agony.

Torture is morally wrong and it doesn’t work, he maintains. I believe the Senator is sincere and that his intentions are good when it comes to the torture outlined in the report. I also believe that President Obama is sincere when he denounces the practices outlined by the Senate Committee. But I think both President Obama and Senator McCain are being disingenuous and selective in their opposition to torture. It is one thing to argue that people should not have their feet broken and be forced to stand cuffed to a wall, to oppose rectal force-feeding, and to condemn water-boarding a detainee 50 or 100 times. Most of us reject this kind of torture for both moral and practical reasons.

But is that the only kind of torture? Is it not torture to go to a wedding in Pakistan and watch as your family is blown up by a US drone? Is it not torture to have your village water treatment plant bombed by NATO planes seeking to overthrow Gaddafi? Is it not torture for parents of the 500,000 Iraqi children who were killed by US sanctions? Is endorsing pre-emptive war, knowing that thousands of civilians are sure to be “collateral damage,” not support for torture? Both Senator McCain and President Obama take the moral high ground with regard to CIA torture, but both are enthusiastic supporters of past and current US military interventions that have the same effect on millions. It is one thing to oppose horrific practices that leave perhaps dozens killed or maimed. But what about practices that do the same for tens of thousands or millions? A consistent anti-torture position would also reject sanctions, “humanitarian” interventions, regime change, and preemptive war. Anything less is missing the whole point.

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It should be for many nations. But many were (are?) involved.

CIA Torture Is Reason For France To Exit NATO – Le Pen (RT)

The shocking revelations of CIA torture techniques give France a reason to exit NATO, National Front party leader Marine Le Pen said on Saturday. The report on the CIA’s former interrogation practices has drawn wide criticism since its release. “If indeed everyone is outraged by the tortures used by the US then, let’s leave NATO,” Le Pen said during an interview with Europe 1 radio channel. She wrote the same statement on her Twitter account. The US Senate Intelligence Committee’s CIA “torture report,” which details the CIA’s use of torture on prisoners in the wake of 9/11, was released by the Senate on Tuesday. After four years of research at a cost of over $40 million, the findings unveiled the “enhanced interrogation techniques,” or EITs, used within the walls of covert, overseas prisons by the CIA.

The report raised serious questions over controversial tactics which included sleep deprivation, waterboarding, rectal feeding, and others. Dianne Feinstein, the committee chair, admitted that the techniques were “torture,” though the word was never used in the report. The findings also revealed that the CIA’s treatment breached the body’s legal mandate, as investigators said they found evidence of the intelligence agency’s systematic deception of Congress. Despite the methods used, the agency failed to gather information that foiled subsequent threats to US national security, the report found. Since the report’s release, prominent human rights groups have demanded to prosecute the responsible US officials listed in the document.

Despite widespread criticism and a wave of outrage sparked by the results of the Senate investigation, the Department of Justice (DOJ) said on Wednesday that it will not be pursuing charges against those involved in the interrogations. UN special rapporteur for torture Juan Mendez told RT that the report will likely create momentum that will lead to justice. He insisted that countries complicit in the CIA torture need to carry out their own investigations. “We have lived without prosecutions now for several years, but the experience shows that when truth telling is done honestly and sincerely, it generates a debate and the debate then generates a momentum towards justice,” he said in an interview on Thursday.

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Dec 112014
 
 December 11, 2014  Posted by at 11:55 am Finance Tagged with: , , , , , , , , ,  


DPC Pine Street below Kearney after the great San Francisco earthquake and fire 1906

Oil Plunge Rips Through Markets as Investors Seek Bottom (Bloomberg)
Bank Of America Sees $50 Oil As OPEC Dies (AEP)
Name That Chart! Oil Supply Or Demand Edition (Zero Hedge)
Dow Down Triple Digits As Oil Hits Multi-Year Lows (CNBC)
Steen Jakobsen: The US Could Bail Out Its Own Oil Sector (CNBC)
China’s Wild Market Swings: This Is Just The Start (CNBC)
PBOC, Traders Tussle Over Yuan (WSJ)
Yuan Has Real Shot at IMF Blessing on Reserve Status (Bloomberg)
How Wal-Mart Made Its Crumbling China Business Look So Good for So Long (BBG)
‘Known Unknown’ Dangers Are Lurking In The Stock Market (MarketWatch)
Britons Are Living Beyond Their Means, Says Government Watchdog (Telegraph)
Leaked EU Summit Conclusions: Draghi Left Hanging? (FT)
Greek Left Candidate Willing To Call European Leaders’ Bluff (AEP)
Superbugs To Kill 10 Million People A Year, Cost $100 Trillion By 2050 (BBC)
Generation Y Have Every Right To Be Angry At Baby Boomers’ Wealth (Guardian)
One-Fifth Of Americans Don’t Plan To Pay Off Their Debt (CNBC)
IMF Finds Another $15 Billion Black Hole In Ukraine’s Finances (CNBC)
Guantanamo Six ‘Will Enjoy Complete Freedom’ In Uruguay (BBC)
CIA Torture Report May Set Off Global Prosecutions (Bloomberg)
President George W. Bush ‘Knew Everything’ About CIA Interrogation (BBC)

“The mantra of ‘lower oil prices are good for the economy’ can only last so long until finally there’s a break in the psychology of investors ..”

Oil Plunge Rips Through Markets as Investors Seek Bottom (Bloomberg)

Oil’s collapse is rippling through financial markets, broadening a selloff in stocks beyond energy companies and leaving investors with few havens as assets from metals to corporate debt sink. Brent crude fell below $65 for the first time since 2009 as OPEC cut its forecast for 2015 demand, raising concern over the strength of the global economy and leaving investors contemplating when oil’s plunge will reach a bottom. “As great as it feels to pump $2 gasoline at the station, it’s not a healthy environment for financial assets,” Walter Todd, chief investment officer for Greenwood Capital, said. “It’s rare to see commodity prices fall this quickly in a non-recessionary situation. You really need to see some stabilization.” The selloff sent the MSCI All-Country World Index to its biggest drop in two months. The Standard & Poor’s 500 Index lost 1.6%, Canadian stocks plunged to the lowest since February and emerging-market shares fell to an eight-month low.

Traders are almost certain that Venezuela will teeter into default as bonds plunge to a 16-year low and the cost of default protection soars to a record. A measure of risk in the U.S. junk-bond market rose the most in two months. Copper fell 1.2% and gold slipped 0.2%. Investors sought relief in Treasuries as 30-year bond yields fell to a seven-week low, and the yen capped its biggest three-day gain versus the dollar in more than a year. While oil prices have been spiraling downward since June, entering a bear market and dragging down energy shares, the pace of today’s decline spurred selling in S&P 500 groups that helped drive the benchmark gauge to an all-time high on Dec. 5. All 10 major industries in the S&P 500 slumped at least 1% today.

“There’s nothing like human emotion to take over in the short term and fear is taking over, it looks like this really is a slowdown,” Ron Weiner at RDM Financial said. “In this case it really is an oil story, it really is a global slowdown of some sort.” [..] “The mantra of ‘lower oil prices are good for the economy’ can only last so long until finally there’s a break in the psychology of investors,” Jeff Sica at Circle Squared Alternative Investments said. “You start to realize the reason why oil prices are declining is because there’s severe economic weakness that has yet to be acknowledged. It’s bringing down all commodity prices.”

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“What is clear is that the world has become addicted to central bank stimulus. Bank of America said 56% of global GDP is currently supported by zero interest rates, and so are 83% of the free-floating equities on global bourses.”

Bank Of America Sees $50 Oil As OPEC Dies (AEP)

The OPEC oil cartel no longer exists in any meaningful sense and crude prices will slump to $50 a barrel over the coming months as market forces shake out the weakest producers, Bank of America has warned. Revolutionary changes sweeping the world’s energy industry will drive down the price of liquefied natural gas (LNG), creating a “multi-year” glut and a much cheaper source of gas for Europe. Francisco Blanch, the bank’s commodity chief, said OPEC is “effectively dissolved” after it failed to stabilize prices at its last meeting. “The consequences are profound and long-lasting,“ he said. The free market will now set the global cost of oil, leading to a new era of wild price swings and disorderly trading that benefits only the Mid-East petro-states with deepest pockets such as Saudi Arabia. If so, the weaker peripheral members such as Venezuela and Nigeria are being thrown to the wolves.

The bank said in its year-end report that at least 15pc of US shale producers are losing money at current prices, and more than half will be under water if US crude falls below $55. The high-cost producers in the Permian basin will be the first to “feel the pain” and may soon have to cut back on production. The claims pit Bank of America against its arch-rival Citigroup, which insists that the US shale industry is far more resilent than widely supposed, with marginal costs for existing rigs nearer $40, and much of its output hedged on the futures markets. Bank of America said the current slump will choke off shale projects in Argentina and Mexico, and will force retrenchment in Canadian oil sands and some of Russia’s remote fields. The major oil companies will have to cut back on projects with a break-even cost below $80 for Brent crude.

[..] What is clear is that the world has become addicted to central bank stimulus. Bank of America said 56% of global GDP is currently supported by zero interest rates, and so are 83% of the free-floating equities on global bourses. Half of all government bonds in the world yield less that 1pc. Roughly 1.4bn people are experiencing negative rates in one form or another. These are astonishing figures, evidence of a 1930s-style depression, albeit one that is still contained. Nobody knows what will happen as the Fed tries to break out of the stimulus trap, including Fed officials themselves.

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That’s some serious charts. “.. if it quacks like a duck, cook it.”

Name That Chart! Oil Supply Or Demand Edition (Zero Hedge)

While the question of supply vs demand in global oil markets is merely different sides of the same coin, we hope the following “name that chart” image provides some clarifying perspective on what is really dragging oil prices lower…
Nope… they are not the same… one of these is a commodity that is crashing but is believed to be “unequivocally” good for the global economy… the other is the global economy!!

DO NOT LOOK BELOW HERE UNTIL YOU GUESS… DON’T DO IT!!!!

Answer here.

and yes, we know correlation does not imply causation’ but… if it quacks like a duck, cook it.

You decide… steady supply into globally crushed demand…

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Come up for air today, dive down again tomorrow?

Dow Down Triple Digits As Oil Hits Multi-Year Lows (CNBC)

U.S. stocks declined on Wednesday, furthering the week’s losses, as the price of crude fell to multi-year lows and the Organization of Petroleum Exporting Countries cut its demand outlook for next year. “Oil continues to be the concern. Depending on who you talk to and in what time frame on which day of the week, oil may be a leading indicator, so there may be something behind the decline other than we have a lot of oil,” said Paul Nolte, senior vice president, portfolio manager at Kingsview Asset Management. “I don’t know that for sure. I do know, historically at least, energy stocks have tended to lead the market, and that lead time is anything from three months to a year, and we’re now six months into oil under performing the overall market, so we may be in for some rough sledding,” he added.

OPEC reduced its estimate for 2015 by roughly 300,000 barrels a day, with the cartel saying the effect of the 40% drop in prices on supply and demand is uncertain. The CBOE Volatility Index, a measure of investor uncertainty known as the VIX, jumped 9.4% to 16.29. Toll Brothers edged lower after the home builder reported mixed quarterly results; Yum Brands fell after the operator of Taco Bell and other fast-food brands cut is profit outlook for the year for a second time; Costco Wholesale climbed after the warehouse-club operator posted a better-than-expected quarterly profit and GlaxoSmithKline declined after Bank of America Merrill Lynch downgraded its stock to underperform from neutral.

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See:

Can The US Bail Out Its Oil Industry?

Steen Jakobsen: The US Could Bail Out Its Own Oil Sector (CNBC)

An economist who correctly predicted the fall in oil price this year has told CNBC that the U.S. government could look to bail out its energy sector in 2015 as the commodity’s low price starts hitting the country’s economy. “The U.S. energy sector is clearly important,” Steen Jakobsen, the chief economist at Danish investment bank Saxo Bank, told CNBC Wednesday. “They are paramount to the long-term strategic issue that the U.S. will be self-dependent on oil.” Jakobsen is part of team that puts together an annual “outrageous predictions” outlook that has been running for more than a decade. He concedes that these so-called black swan scenarios are “relatively controversial” but says that they could help investors navigate any real-life turmoil that arises. His prediction on a U.S. bailout is his own personal prediction and did not make the formal list that the Copenhagen-based company published on Wednesday morning.

A large number of economists believe the drilling frenzy and huge domestic energy boom has helped the U.S. to recover since the global financial crash of 2008, contributing an estimated 0.3-0.6 percentage points to U.S. gross domestic product. but Jakobsen believes this headwind could soon become a tailwind despite gas becoming cheaper at the pump for U.S. citizens. “It will subtract 0.5% from GDP, bare minimum,” he said. “There’s a precedent here, back in the 80s we also had an oil crisis and that led to bank recoveries.” He added that oil companies are in for a “massive correction,” similar to the downtrend seen in mining stocks, explaining that exploration was getting “hugely expensive” with energy majors having little free cash flow available. The S&P 500 index has clocked gains of around 11% so far this year but the energy sector within the benchmark is currently down nearly 12%. Oil prices are trading at five-year lows with Brent futures losing around 40% in value since June.

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What’s worrisome is that many have bought stocks with borrowed funds, and with apartments as collateral.

China’s Wild Market Swings: This Is Just The Start (CNBC)

The rout in China stocks on Tuesday is a healthy bull-market correction, say strategists, however the wild swings reinforce that the market is not for the faint of heart. The benchmark Shanghai Composite lived up to its notoriously volatile reputation on Wednesday, swinging between gains and losses after the market tanked more than 5% a day earlier – its biggest single-day percentage fall in 5 years. Losses were triggered by the Chinese securities clearing house’s decision late Monday to restrict the use of lower-grade corporate debt as collateral for short-term loans obtained through repurchase agreements. The move follows a surge in margin buying that accompanied the recent stock surge. Strategists, however, don’t believe the latest regulatory move will derail broader momentum in the market that has rallied 35.5% year to date.

“The new regulations were more of a negative catalyst for profit-taking. We see Tuesday’s selloff as a healthy correction,” said Stephen Sheung, head of investment strategy at SHK Private. Sheung says a reduction in leverage is unlikely to have a large impact because on the stock market: “You only need a small amount of money to move from bank deposits or wealth management products into stocks to push the market higher.” Audrey Goh, equity strategist at Standard Chartered also sees the recent market plunge as a pause for breath. “Yesterday’s move was a reaction to the rapid appreciation in the market over the past month,” Goh said. “Sentiment wise, there may be a perception that regulators are tightening up policies. But I think they are going on the right track because historically collateral has not been tightly scrutinized – this is all part of the reform process and shouldn’t have a long-term impact on the market,” she added.

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“Investors have been focusing on an almost daily deluge of downbeat economic news about China.”

PBOC, Traders Tussle Over Yuan (WSJ)

A battle in China’s currency market has emerged in recent days: Traders are pushing the yuan weaker, while the People;s Bank of China has been attempting to guide the tightly-controlled foreign-exchange rate stronger. That tension was on show Wednesday. The yuan began trading 1.1% weaker than the level at which the central bank set the morning reference rate, marking the biggest drop since June. Daily trading is limited to 2% above or below this so-called central parity rate. A slide in the currency has accelerated this month, after the central bank cut interest rates in November. The yuan is now 2% weaker than it was at the start of the year and is on track for its first annual loss since 2009. Investors have been focusing on an almost daily deluge of downbeat economic news about China.

Reports this week showed the rate of inflation slipped to a five-year low in November, while the country’s exports fell well below expectations in the same period. A broadly stronger dollar- the result of a recovering U.S. economy -has also hurt sentiment about the yuan. Volatility in the market has picked up this week, after Beijing curbed risky lending in the bond markets, sparking heavy declines in the stock and bond markets Tuesday. Monday and Tuesday, the yuan recorded its biggest-ever two-day tumble against the dollar. Wednesday, the central parity rate was set at 6.1195 yuan to the dollar, the strongest since March 3. The yuan opened at 6.1894. China’s central bank has been fighting the market, setting the yuan’s reference exchange rate, or “fix,” stronger against the dollar.

Analysts say Beijing appears eager to prevent one-way speculation on the currency and squeeze out those betting that it will decline further. “China doesn’t want to join the currency wars and that explains the fix movement,” said Ju Wang, a currency strategist at HSBC Holdings PLC in Hong Kong, referring to some countries’ efforts to push their currencies lower so that their exporters remain competitive. “But markets see it as China will eventually be dragged into the currency war or just fundamentally, growth and exports will weaken so much that will trigger the markets’ demand for the U.S. dollar.”

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Hard to deny.

Yuan Has Real Shot at IMF Blessing on Reserve Status (Bloomberg)

For the first time, China has a real shot at getting the International Monetary Fund to endorse the yuan as a global reserve currency alongside the dollar and euro. In late 2015, the IMF will conduct its next twice-a-decade review of the basket of currencies its members can count toward their official reserves. Including the yuan in this so-called Special Drawing Rights system would allow the IMF to recognize the ascent of the world’s second-biggest economy while aiding China’s attempts to diminish the dollar’s dominance in global trade and finance. China would need to satisfy the Washington-based lender’s economic benchmarks and get the support of most of the other 187 member countries.

The Asian nation is likely to pass both tests, said Eswar Prasad, who until 2006 worked at the IMF, including spells as heads of its financial studies and China divisions. “It will certainly help China’s objective of making the renminbi a more widely-used currency,” said Prasad, a professor of trade policy at Cornell University and senior fellow at the Brookings Institution. Renminbi is China’s official name for the yuan. Reserve-currency status for the yuan would make central banks, particularly those in developing economies, more eager to hold yuan assets and “diversify at the margin away from dollars,” as well as euros, yen and Swiss francs, Prasad said.

Approval hinges partly on whether the IMF reverses its 2010 decision that the yuan wasn’t “freely usable.” There’s growing evidence that the currency may now pass this test, after already qualifying on the IMF’s other condition of being a large exporter. The proportion of China’s trade that’s settled in yuan has risen to about 20%; the market for yuan-denominated Dim Sum bonds has grown to $72.9 billion from nothing in just seven years; and the government has loosened controls on foreigners’ access to its financial markets. China has also signed agreements to trade the yuan freely in cities from Hong Kong and Singapore to Frankfurt and London.

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Shouldn’t investors look at bringing charges?

How Wal-Mart Made Its Crumbling China Business Look So Good for So Long (BBG)

After years of heralding China as one of its best markets, Wal-Mart in August said its performance there was among the worst in its major countries. A management shake-up and job cuts have followed. Although the reversals seem abrupt, cracks in the foundation of Wal-Mart’s retail business in China have been developing for years, hidden by questionable accounting and unauthorized sales practices, according to employees and internal documents reviewed by Bloomberg. The practices – including bulk sales to other retailers and some sales allegedly booked when no merchandise left the shelves – made business appear strong even as retail transactions slowed and unsold inventory piled up, these people and documents say. Wal-Mart said in August that it was unhappy with inventory growth internationally. Stores in China continue to make bulk sales, sometimes unprofitably and without required management authorizations, according to employees who’ve left the company this past month.

Concerns about bulk sales, raised as far back as 2011 in an internal report, have been the subject of inquiries in China by Wal-Mart’s legal team as recently as May, according to an internal company e-mail and an employee interviewed by lawyers. The report and interviews with current and former employees say Chinese Wal-Mart stores, under pressure to meet earnings targets, resorted to temporary markups of inventory as an accounting move that can burnish profits without any added sales of merchandise. After employees “recognized inventory pricing discrepancies” in 2011, the company’s senior leadership in the U.S. and China ordered an extensive investigation that led to “various leadership changes and disciplinary actions,” strengthened compliance measures, training, and regular audits, Wal-Mart Stores Inc. said in a statement.

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“..stock market disasters are much more typically caused by “known unknowns” — the events that have been perking for a while, whose natures are familiar to us and yet whose exact forms and potential dangers remain unclear.”

‘Known Unknown’ Dangers Are Lurking In The Stock Market (MarketWatch)

As the S&P 500 Index keeps reaching new highs, investor conversations have shifted from how low it might go (October’s topic) to how high the stock market can possibly climb. When people get that excited, it’s time to think about risks. What could possibly go wrong and arrest this great bull market? Much speculation currently points to the kind of scary, exogenous, low-probability events we call black swans: an Ebola pandemic, say, or a “third world war” due to the Russia/Ukraine conflict or the ISIS threat escalating out of control. Nevertheless, while these and other black swan events may have the potential to cause catastrophic damage to the markets and society, stock market disasters are much more typically caused by “known unknowns” — the events that have been perking for a while, whose natures are familiar to us and yet whose exact forms and potential dangers remain unclear.

Take, for example, the 2008 global financial crisis: It did not happen overnight, and, looking back, there were plenty of signs and warnings, such as the subprime lending meltdown in 2007. Or, think of the dot-com bubble, which burst in 2000, several years after the first warnings of “irrational exuberance” by Federal Reserve Chairman Alan Greenspan in a speech given in 1996. So rather than reaching for sensational “unknown unknowns,” we are focusing on market risks we know and understand. We’ve listed a few here, starting with low probability and ending with high.

• Washington politics: As Republicans won the Senate in the mid-term elections and, thus, have full control of Congress, the government is now truly divided. Early signs indicate that political infighting between the two parties will become even more intense, a distasteful scenario to imagine. To make matters worse, another government funding deadline is looming Dec. 11. We believe that, whereas the political maneuvering may cause market volatility, it’s unlikely to pose a huge threat to the market.

• Rising interest rates: There is little argument that interest rates will go up, eventually, but it is also abundantly clear to many pundits that the rise will be a slow, grinding process rather than a spike. For the stock market, interest rates are, therefore, a long-term concern, and not likely to be an imminent threat. At the current near historic levels, equities are still far more attractive than fixed-income from a valuation standpoint, and rising interest rates will probably not tip the balance. Interest rates jumped in 2013, but the stock market, ironically, performed exceedingly well.

• Slowing growth: This is by far the No. 1 threat to markets and has flared up repeatedly. Just the anticipation of slowing growth can cause companies to slow production and consumers to temper spending, which is quickly reflected in falling stock prices. The most recent September-October market downturn, one of the worst during the past couple years, was caused by concerns about slowing growth.

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No, really?!

Britons Are Living Beyond Their Means, Says Government Watchdog (Telegraph)

Britons are living beyond their means more now than at almost any point over the past two decades, according to the head of the Government’s fiscal watchdog. Robert Chote, the chairman of the Office for Budget Responsibility (OBR), said real consumer spending over the past year had accelerated ahead of inflation-adjusted pay growth at its second fastest rate since the 1990s. “If you look at the relatively robust pace of growth over recent quarters, that has been reflected particularly in terms of the contribution from the consumer, of people running down saving rather than having stronger income growth,” he told the Treasury Select Committee. Mr Chote said this pace of consumption relative to earnings growth was likely to be unsustainable. “We’ve assumed that it is not plausible [that this could continue],” he said. “If you look at the last year, real consumption growth has been running further ahead of real wage growth than in almost any other year over the last 15 or 20 or so.

Therefore, in our forecast the main reason we expect the quarterly pace of growth to slow into next year is that you see consumer spending moving more into line with income growth, and being less driven by [a] decline in saving.” The OBR believes the UK economy will grow by 3pc this year, before slowing to 2.4pc in 2015 and 2.2pc in 2016. Household consumption growth is forecast to strengthen next year to 2.8pc, fuelled by a further decrease in savings. The household saving ratio is projected to fall to 5.4pc in 2015, from 6.6pc this year. However, consumer spending is expected to slow to 2.2pc in 2016 as the saving ratio stabilises. The OBR noted that consumption had grown by 2.1pc in real terms in the first three quarters of 2014, despite limited growth in real wages. Mr Chote also said that there had been a “structural deterioration” in productivity that meant British households would not enjoy the same living standards as they would have done had the financial crisis not occured. He added that rising productivity was essential for stronger pay growth.

In a separate speech, Ian McCafferty, a Bank of England policymaker, said raising interest rates now would help to “support and sustain” Britain’s recovery while ensuring prices rise smoothly in the future. Mr McCafferty said Britain’s “remarkable” recovery over the past 18 months suggested that pay growth was at a “turning point”, and that a sustained increase in wages was within sight. Speaking at the Institute of Directors on Wednesday, Mr McCafferty outlined four reasons for raising Bank Rate from its record low of 0.5pc, and warned that even small miscalculations about the degree of “spare capacity” meant the point at which the economy could start to overheat may arrive sooner than policymakers expect. He said raising rates now would ensure increases were “gradual and limited”.

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“Draghi may have to deliver his quo without a eurozone quid. The text makes clear that leaders have no intention of delivering a new blueprint any time soon. According to the draft, a debate on how to proceed will be pushed off until February, and the report itself will come no sooner than June.”

Leaked EU Summit Conclusions: Draghi Left Hanging? (FT)

The dance had become so routine that we at the Brussels Blog were thinking of giving it a name, the Eurozone Two-Step. Ever since the eurozone crisis first rocked international markets nearly five years ago, European Central Bank chiefs – first Jean-Claude Trichet, then Mario Draghi – sent a very clear message to the currency union’s political leaders: we can only act if you act first. The deal was never explicit, but both sides knew what was required. The ECB’s first sovereign bond purchase programme in May 2010 came only after eurozone leaders created a new €440bn bailout fund; its €1tn in cheap loans to eurozone banks in early 2012 only came after political leaders agreed to a new “fiscal compact” of tough budget rules. But with the markets watching Frankfurt closely for signs Draghi is about to launch another bold move – US-style quantitative easing, purchasing sovereign bonds to halt fears the bloc is headed into a deflationary spiral – there are new indications one of the partners is no longer dancing.

Back in October at a eurozone summit, Draghi was able to get a little-noticed statement out of the assembled leaders committing them to another “Four Presidents Report”, a reference to the blueprint delivered in 2012 that set a path towards further centralisation of eurozone economic policy. The report helped kick-start the EU’s just-completed “banking union.” Progress on that 2012 blueprint has since stalled, however, and at his last summit press conference, then-European Council president Herman Van Rompuy said the new “Four Presidents Report” would be delivered at the December EU summit, which starts next Thursday. Many in Brussels saw this as the quid for Draghi’s quo – once the leaders agreed to another blueprint for eurozone integration, Draghi would have a free hand to launch QE.

But according to a leaked draft of the communiqué for next week’s summit, Draghi may have to deliver his quo without a eurozone quid. The text makes clear that leaders have no intention of delivering a new blueprint any time soon. According to the draft, a debate on how to proceed will be pushed off until February, and the report itself will come no sooner than June.

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“There will be US-style food stamps and we will reconnect electricity to homes where it has been cut off. There will have to be debt relief because the debt is simply unpayable. We will ask Germany to renegotiate.”

Greek Left Candidate Willing To Call European Leaders’ Bluff (AEP)

Events have rudely exposed the illusion that the Greek people will submit quietly to a decade of colonial treatment and debt servitude. As matters stand, it is more likely than not that a defiant Alexis Tsipras will be prime minister of Greece by late January. His Syriza alliance vows to overthrow the EU-IMF Troika regime, refusing to implement the key demands. A view has taken hold in EU capitals and the City of London that Mr Tsipras has resiled from these positions and will ultimately stick to the Troika Memorandum, a text of economic vandalism that pushed Greece into seven years of depression, with a 25.9pc fall in GDP, longer and deeper than Europe’s worst episodes in the 1930s. Mr Tsipras is a polished performer on the EU circuit. He can no longer be caricatured as motorbike Maoist. But the fact remains that he told Greek voters as recently as last week that his government would cease to enforce the bail-out demands “from its first day in office”.

The logical implication is that Greece will be forced out of the euro in short order, unless the EU institutions capitulate. Mr Tsipras knows this. He is gambling that EU leaders – meaning Germany’s Angela Merkel – will yield. His calculation is that they will not dare to blow up monetary union at this late stage, and over a relative pittance. Too much political capital has been invested. The EU-IMF loans have already reached €245bn (£194bn), the biggest indenture package in history. To let it fall apart would expose failure of Mrs Merkel’s EMU crisis management. Yet the reality is that Greece must repay €6.7bn to the European Central Bank in July and August. The ECB will not roll it over because that would be monetary financing of a government. The capital markets are shut. Mr Tsipras knows that he is likely to receive a call from the ECB within weeks of taking office, reminding him that Greece owes some €40bn in emergency support (ELAs) for the banking system, a threat to cut off funding as occurred in Ireland and Cyprus.

I am reliably informed that his answer to the EU authorities will be “do your worst”. “We are not going to crumble at the first hurdle,” said one of his close advisers. “A freshly elected government cannot allow itself to be intimidated by threats of Armageddon.” Markets are taking fright. The Athens bourse fell 13pc on Tuesday, the biggest one-day drop since the 1987 crash. The yield curve on three-year Greek debt has exploded by almost 300 basis points to 9.52pc in two days and is higher than 10-year yields, a violent inversion of the yield curve unseen since default scares of the EMU crisis. The Syriza roadshow in the City last month went horribly wrong. “Everybody coming out of the meeting wants to sell everything Greek,” said a leaked memo by Capital Group’s Jorg Sponer.

The reported shopping list was: a haircut for creditors; free electricity, food, shelter, and health care for all who need it; tax cuts for the all but the rich; a rise in the minimum wage and pensions to €750 a month; a moratorium on private debt payments to banks above 20pc of disposable incomes; and demand for a 62pc debt forgiveness on the grounds that this is what Germany received in 1952. “The programme is worse than communism. This will be total chaos,” said Mr Sponer. “It was a disaster,” said Prof Yanis Varoufakis from Athens University, a man tipped to play a key role in any Syriza-led government. The reality is more prosaic. “We are not going to go on a spending spree. We will aim to achieve a modest primary surplus, and we will liberalise the labour market,” he said. “Greece faces a humanitarian crisis and we will spend €1.3bn to alleviate abject poverty. There will be US-style food stamps and we will reconnect electricity to homes where it has been cut off. There will have to be debt relief because the debt is simply unpayable. We will ask Germany to renegotiate.”

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Attention long overdue.

Superbugs To Kill 10 Million People A Year, Cost $100 Trillion By 2050 (BBC)

Drug resistant infections will kill an extra 10 million people a year worldwide – more than currently die from cancer – by 2050 unless action is taken, a study says. They are currently implicated in 700,000 deaths each year. The analysis, presented by the economist Jim O’Neill, said the costs would spiral to $100tn (£63tn). He was appointed by Prime Minister David Cameron in July to head a review of antimicrobial resistance. Mr O’Neill told the BBC: “To put that in context, the annual GDP [gross domestic product] of the UK is about $3tn, so this would be the equivalent of around 35 years without the UK contribution to the global economy.” The reduction in population and the impact on ill-health would reduce world economic output by between 2% and 3.5%. The analysis was based on scenarios modelled by researchers Rand Europe and auditors KPMG.

They found that drug resistant E. coli, malaria and tuberculosis (TB) would have the biggest impact. In Europe and the United States, antimicrobial resistance causes at least 50,000 deaths each year, they said. And left unchecked, deaths would rise more than 10-fold by 2050. Mr O’Neill is best known for his economic analysis of developing nations and their growing importance in global trade. He coined the acronyms Bric (Brazil, Russia, India and China) and more recently Mint (Mexico, Indonesia, Nigeria and Turkey). He said the impact of the would be mostly keenly felt in these countries. “In Nigeria, by 2050, more than one in four deaths would be attributable to drug resistant infections, while India would see an additional two million lives lost every year.”

The review team believes its analysis represents a significant underestimate of the potential impact of failing to tackle drug resistance, as it did not include the effects on healthcare of a world in which antibiotics no longer worked. Joint replacements, Caesarean sections, chemotherapy and transplant surgery are among many treatments that depend on antibiotics being available to prevent infections. The review team estimates that Caesarean sections currently contribute 2% to world GDP, joint replacements 0.65%, cancer drugs 0.75% and organ transplants 0.1%. This is based on the number of lives saved, and ill-health prevented in people of working age. Without effective antibiotics, these procedures would become much riskier and in many cases impossible. The review team concludes that this would cost a further $100tn by 2050.

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But what are they going to do about it?

Generation Y Have Every Right To Be Angry At Baby Boomers’ Wealth (Guardian)

A new study by the Grattan Institute on wealth across generations shows that the older Australians benefitted the most from the strong economic times of the early 2000s, and that by virtue of being effectively shut out of the housing market, members of “Generation Y” may be the first generation to be less wealthy than that of their parents. Whenever younger generations are discussed in the media, invariably comments will be made that Generation Y are unemployable, lazy, spendthrifts who need to learn discipline if they want to get ahead. They’re essentially the same comments that were made 20 years ago about Generation X and 15 or 20 years before that about the various incarnations of the baby boomer generation. Very little changes.

But a new report by the Grattan Institute’s, “The Wealth of Generations” suggests that one aspect of Generation Y is different from previous ones – they are on track to have less wealth than the generation before them. The report makes it abundantly clear that the good economic times of the late 1990s and early 2000s were of benefit mostly to older Australians, and such people “are capturing a growing share of Australia’s wealth, while the wealth of younger Australians has stagnated”. In 2003-04, households whose main earner was under 34 accounted for 6.52% of all household wealth in Australia. By 2011-12 such households only accounted for 4.52%:

The biggest eaters of the wealth pie in that time were those over 55. They now hold 58% of all wealth, up from the 51% held by such households back in 2003-04. But it is not just in the share of the pie that the younger generations lost out, their wealth has also gone down in real terms. The Grattan Institute found that households across all age groups are wealthier now than their comparative aged households were in 2003-04. All that is except for those aged 25-34 years. The wealth of households aged 45-54 years old from 2003-04 to 2011-12 grew by $163,000 (in 2012 dollar terms) – a 23% increase. Those aged 55-64 saw their wealth in that time rise $174,000 (19%), while the wealth of 65-74 year old households rose a staggering $216,000, (27%). The households of 24 to 34-year-olds however lost $10,400 in wealth – a 4% drop:

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“Survey respondents who expect to pay off their debts anticipate doing so at an average age of 53. But in addition to the 18% who expect to owe money forever, another 25% expect to be in debt until at least age 61.”

One-Fifth Of Americans Don’t Plan To Pay Off Their Debt (CNBC)

The golden years are going to feel a bit tarnished for almost one in five Americans. In a personal finance survey published today, 18% of the respondents said they expect to be in debt for the rest of their lives. That is double the percentage who expected that in May 2013, the last time the survey was conducted. Mortgage delinquencies dropped for the eleventh consecutive quarter, to 3.36%, in the third quarter of 2014, and credit card delinquency was at 1.34%, according to TransUnion. Credit card indebtedness has increased moderately since the 2013 CreditCards.com survey, Schulz said. In contrast, student loan debt rose from an aggregate of $390 billion at the end of 2005 to $966 billion at the end of 2012, according to data from the Federal Reserve Bank of New York.

Average student loan debt topped $30,000 in six states, according to the Project on Student Debt. “We’ve all seen the student loan debt numbers, and credit card debt is increasing, and even though the job market is improving it’s certainly not humming along, and there is data about people’s salaries not growing quite as quickly as people had hoped,” said Matt Schulz, senior analyst at CreditCards.com. “You just wonder if it has all come together to create this unease.” Survey respondents who expect to pay off their debts anticipate doing so at an average age of 53. But in addition to the 18% who expect to owe money forever, another 25% expect to be in debt until at least age 61.

Older respondents are more likely to believe their debt will be with them forever. Some 31% of those over age 65 expect to be lifelong debtors, compared to 22% of those aged 50 to 64 and just 6% of millennials aged 18 to 29. “The more years you have left, the more likely you are to have a chance to get rid of that debt,” Schulz said. “I think some of that can just be chalked up to the optimism and positivity of youth,” since after all, millennials are the ones most likely to be holding student loans. Schulz speculated that perhaps some older borrowers are assuming responsibility for children’s student loans, and that is adding to their pessimism.

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Corruption Inc.

IMF Finds Another $15 Billion Black Hole In Ukraine’s Finances (CNBC)

A further $15 billion may be needed to bailout struggling Ukraine, which seems ever closer to economic disaster. The International Monetary Fund (IMF) has spotted a shortfall of $15 billion on top of the $17 billion bailout loan package it has worked out for the troubled country, according to reports. This black hole is especially worrisome as the world’s economies are facing slower global growth and so the appetite to help out Ukraine may dwindle – especially as the country’s economy is such trouble. Besieged by conflict in some of its most important economic areas and the collapse of exports to Russia, Ukraine’s economy is expected to shrink by 7% this year, according to its government. Its currency reserves have shrunk, raising concerns that its central bank will not be able to keep propping up the country’s currency, the hryvnia.

If Ukraine’s currency – which has been world’s the worst-performing this year – falls even further, Ukraine could enter the dangerous territory of hyperinflation, where prices rise by more than 50% in a month. Inflation already hit 22% in November. “It is not a question of throwing a few billion bucks at the problem, the program financing as is just does not add up and very significantly,” Tim Ash, head of emerging markets research at Standard Bank, wrote in a research note. He argued that at least the government and its creditors had realized this in time to ramp up the bailout. If the bailout were to collapse, it could trigger worse problems for the recently assembled, Western-backed, government led by Prime Minister Arseny Yatseniuk and President Petro Poroshenko. Ukraine has become an important symbol for both Russia and the West, as relationships between them deteriorate to their worst since the Cold War.

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This is how the world sees America, and Americans, these days.

Guantanamo Six ‘Will Enjoy Complete Freedom’ In Uruguay (BBC)

Six prisoners released from the US detention centre in Guantanamo Bay will enjoy complete freedom in Uruguay, the country’s defence minister says. Eleuterio Huidobro told Reuters news agency that Uruguay had not imposed or accepted any conditions when it agreed to receive the former inmates. The six men arrived in Montevideo on Sunday after being freed by the US. They spent 12 years in jail for alleged ties with al-Qaeda but were never charged. The former inmates – four Syrians, a Palestinian and a Tunisian – were taken to a military hospital for health checks. The Pentagon identified them as Abu Wael Dhiab, Ali Husain Shaaban, Ahmed Adnan Ajuri, and Abdelahdi Faraj, from Syria; Palestinian Mohammed Abdullah Taha Mattan, and Adel bin Muhammad El Ouerghi, from Tunisia. Uruguayan President Jose Mujica said they had been subjected to “an atrocious kidnapping”. Mr Huidobro told Reuters: “They will not be restricted in any way. Their status is that of refugees and immigrants.”

US President Barack Obama has pledged to close the camp in Cuba, which was opened in 2002 as a place to detain enemy combatants in America’s war on terror. About half of the 136 men still in Guantanamo have been cleared for transfer but have nowhere to go because their countries are unstable or unsafe. In Latin America, El Salvador is the only other country to have given Guantanamo prisoners sanctuary, taking two in 2012. One of the former detainees, Abdelahdi Faraj, published an open letter through his lawyer in New York thanking Mr Mujica for his decision. “Were it not for Uruguay, I would still be in the black hole in Cuba today,” he said. “I have no words to express how grateful I am for the immense trust that you, the Uruguayan people, have placed in me and the other prisoners by opening the doors to your country.” Mr Mujica was himself held for over a decade in harsh prison conditions during Uruguay’s period of military rule in the 1970s and 1980s.

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“After reviewing this report, we will give consideration to reopening petitions or filing new petitions in European courts under the principles of universal jurisdiction ..”

CIA Torture Report May Set Off Global Prosecutions (Bloomberg)

The release of the Senate Intelligence Committee’s report on the CIA’s secret prisons roiled Washington Tuesday, but its real impact could be felt in courtrooms across the globe in the months and years to come. Attorneys for human rights organizations are now poring over the 525-page declassified summary of the Senate majority report to find new material that could revive long-dormant and failed civil and criminal lawsuits on behalf of those detained by the Central Intelligence Agency. While many American and international nongovernmental organizations have mounted legal challenges on behalf of people who were detained, transferred and harshly interrogated by the CIA and allied governments, these court challenges have rarely been successful. One reason is that the Justice Department under Presidents George W. Bush and Barack Obama have asserted that almost all details about the CIA program were a state secret.

And while some government reports have been released about the black sites, the Senate committee’s majority report released Tuesday is the most comprehensive and detailed document to date. “One of the tragedies about this is the attempt to find redress,” said Andrea Prasow, the deputy director of the Washington office for Human Rights Watch. “Judges have accepted the state secrets claim. Now it will be much harder to do that when we all have access to a 500-page public report that details a lot of this.” The chances of a U.S. court re-opening civil or criminal charges against U.S. officials involved with the CIA program are slim. The agency and the Justice Department have conducted their own investigations into the CIA’s program and only low-level military officials and one CIA contractor has been prosecuted.

But European courts may be a different story. Some human-rights groups are now seeking to petition European courts to renew efforts to prosecute Bush administration officials under the principle of universal jurisdiction. That principle was established in 1998, when a Spanish court indicted Augosto Pinochet, the dictator of Chile, for his role in the murder and torture of many of his political opposition. When Pinochet was traveling through the U.K. in 1998, he was arrested by order of the Spanish court. (U.K. officials released him back to Chile two years later.) “After reviewing this report, we will give consideration to reopening petitions or filing new petitions in European courts under the principles of universal jurisdiction,” said Baher Azmy, the legal director of the Center for Constitutional Rights, a group that has represented Guantanamo detainees including Majid Khan and Abu Zubaydah, two detainees who went through the CIA’s black-site prisons.

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Did anyone doubt that?

President George W. Bush ‘Knew Everything’ About CIA Interrogation (BBC)

Former US President George W Bush was “fully informed” about CIA interrogation techniques condemned in a Senate report, his vice-president says. Speaking to Fox News, Dick Cheney said Mr Bush “knew everything he needed to know” about the programme, and the report was “full of crap”. The CIA has defended its use of methods such as waterboarding on terror suspects after the 9/11 attacks. The Senate report said the agency misled politicians about the programme. But the former Republican vice-president dismissed this, saying: “The notion that the committee is trying to peddle that somehow the agency was operating on a rogue basis and that we weren’t being told – that the president wasn’t being told – is a flat-out lie.”

In the interview on Thursday, Mr Cheney said the report was “deeply flawed” and a “terrible piece of work”, although he admitted he had not read the whole document. President Bush “knew everything he needed to know, and wanted to know” about CIA interrogation, he said. “He knew the techniques … there was no effort on my part to keep it from him. “He was fully informed.” Mr Bush led the charge against the report ahead of its release on Tuesday, defending the CIA on US TV. “We’re fortunate to have men and women who work hard at the CIA serving on our behalf,” he told CNN on Sunday. A summary of the larger classified report says that the CIA carried out “brutal” and “ineffective” interrogations of al-Qaeda suspects in the years after the 9/11 attacks on the US and misled other officials about what it was doing.

The information the CIA collected using “enhanced interrogation techniques” failed to secure information that foiled any threats, the report said. But Mr Cheney said the interrogation programme saved lives, and that the agency deserved “credit not condemnation”. “It did in fact produce actionable intelligence that was vital in the success of keeping the country safe from further attacks,” he said. The UN and human rights groups have called for the prosecution of US officials involved in the 2001-2007 programme. “As a matter of international law, the US is legally obliged to bring those responsible to justice,” Ben Emmerson, UN Special Rapporteur on Human Rights and Counter-Terrorism, said in a statement made from Geneva. He said there had been a “clear policy orchestrated at a high level”.

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