trade war Archives - The Automatic Earth

It’s a probe of the Mueller probe. The MSM will do what they can to ridicule it, saying it’s for political reasosns only. But the Mueller probe wasn’t? At least they haven’t dared attack Durham yet, or his reputation.

• Justice Dept. To Launch Criminal Investigation Into Its Own Russia Probe (Hill)

The Justice Department has reportedly opened a criminal investigation into its own Russia probe The New York Times reports. The newspaper reports that after former special counsel Robert Mueller closed the official investigation months ago, a new criminal inquiry will proceed to find out how the investigation of Russian interference into the 2016 presidential election and Trump’s alleged collusion with Russia “all began.” Attorney General William Barr has closely reviewed how the department handled the Russia investigation.

But shifting the administrative review to a criminal inquiry would allow the prosecutor presiding over the inquiry, John H. Durham, to subpoena for witness testimony and documents, people familiar with the matter told the Times. It would also enable Durham, a U.S. attorney appointed by Barr to lead the inquiry, to put together a grand jury and to file charges. When defined as an administrative review, Durham could only voluntarily interview witnesses and investigate government documents, according to the Times.

Yes, this made me laugh.

• Trump Cancels All Admins’ NYT, WaPo Subscriptions (ZH)

In what we are sure will be “hair-on-fire” screamed about as ‘tyrannical-book-burning’, President Trump has reportedly planning to instruct federal agencies to not renew their subscriptions to the New York Times and the Washington Post. As The Wall Street Journal reports, White House press secretary Stephanie Grisham said in an email Thursday: “Not renewing subscriptions across all federal agencies will be a significant cost saving – hundreds of thousands of taxpayer dollars will be saved.” The decision comes days after the president cancelled the White House’s print subscriptions to the Post and the Times after expressing frustration with their coverage.

“We don’t even want it in the White House anymore,” Mr. Trump said of the Times during an interview with Fox News host Sean Hannity that aired Monday night. “We’re going to probably terminate that and the Washington Post. They’re fake.” Additionally, The Journal reports that a White House official confirmed that print editions of the Times and the Post weren’t among the newspapers delivered to the White House on Thursday. And while liberals use “fact checkers” to force advertisers to boycott “right wing” websites/newspapers, President Trump’s response is even cleaner: “your subscription has been terminated.”

Corbyn insists Boris must take No-Deal off the table.

• EU Set To Put Brexit Delay On Hold After Johnson’s Ultimatum (G.)

The EU’s plan to offer the UK an extension until 31 January on Friday is expected to be put on hold after Boris Johnson threatened to pull the Brexit deal if Jeremy Corbyn rejects a general election. Sources said the dramatic developments in Westminster needed to be fully understood and the choreography in Brussels could change. Donald Tusk, the European council chairman, had been expected to announce on Friday morning, following a meeting with ambassadors, that the EU27 had accepted the delay requested in a letter reluctantly sent by Johnson last Saturday. But senior EU sources said the developments in London had left the situation in flux. An announcement is expected on Monday or Tuesday.

Suggestions that the Labour leader could reject Johnson’s demand for a general election on 12 December provoking the prime minister to pull his deal set alarm bells ringing. Sources said the French government wanted to see the outcome of the vote on a general election before making a decision, but that the other 26 member states were ready to grant the three-month extension. The final offer could differ from the extension requested in the Benn act by specifying that the UK could leave on 15 November if the deal was ratified in the UK and European parliament. Before Johnson’s ultimatum to the Labour leader, the EU looked set to offer a three-month extension, which could be cut short at the point at which the Brexit deal was ratified.

It remains the most likely outcome. “We don’t want to be dragged into British politics and this is what was requested,” said one senior EU diplomat. “They can leave earlier if they ratify the deal. To echo your prime minister, we just want Brexit done.”

Bless her. Casualty of Russophobia.

• Russian Gun Activist Maria Butina To Touch Down In Moscow Saturday (RT)

Maria Butina is finally coming back home, after spending over a year behind bars in a bizarre case of anti-Russian hysteria that saw the gun rights activist libeled in the media and locked up as “unregistered foreign agent.” She is expected to leave a federal prison in Tallahassee, Florida and would be transferred from to a migrant center in Miami on Friday, Russian ambassador in Washington, Anatoly Antonov confirmed, saying The same day Butina would board the plane to Moscow and is set to touch down in the Russian capital on Saturday morning.

Butina was sentenced by a US federal judge for 18 months in April after pleading guilty to conspiring to act as a foreign agent without registration, Antonov said that he hopes Butina’s belated homecoming would “put an end to the most difficult period in her life,” and wished the 30-year-old reunite with her family and loved ones as soon as possible after her ordeal is over.

A broken market. The Fed broke it.

• Despite Ultra-Low Mortgage Rates, New House Prices At Multi-Year Low (WS)

The median price of new single-family houses in September fell 8.8% from a year ago to $299,400 – down 12.8% from the peak in November and December 2017 and back where the median price had first been in November 2014, according to the Commerce Department this morning: “Median price” means half of the houses sold for more, and half sold for less. The decline in the median price does not include incentives that are thrown in by homebuilders to close deals, such as free granite counter tops.

This median-price data – produced jointly by the Census Bureau and the Department of Housing and Urban Development – is “volatile” on a month-to-month basis. To show the longer-term trend, I added the 12-month moving average, which eliminates the monthly ups and downs. The September data point, being the average of the past 12 months, lags months behind of today’s market, but it allows for longer-term trends to become clearer. The lag of the 12-month moving average (red line) shows up in how, on the way up, median prices were mostly above the red line, and now on the way down, median prices are mostly below it:

Let’s see what develops. Bit early to draw grand conclusions.

• Vladimir Putin, Syria’s Pacifier-in-Chief (Escobar)

Russia-Turkey deal establishes ‘safe zone’ along Turkish border and there will be joint Russia-Turkey military patrols The negotiations in Sochi were long – over six hours – tense and tough. Two leaders in a room with their interpreters and several senior Turkish ministers close by if advice was needed. The stakes were immense: a road map to pacify northeast Syria, finally. The press conference afterwards was somewhat awkward – riffing on generalities. But there’s no question that in the end Russian President Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan managed the near impossible.

The Russia-Turkey deal establishes a safe zone along the Syrian-Turkish border – something Erdogan had been gunning for since 2014. There will be joint Russia-Turkey military patrols. The Kurdish YPG (People’s Protection Units), part of the rebranded, US-aligned Syrian Democratic Forces, will need to retreat and even disband, especially in the stretch between Tal Abyad and Ras al-Ayn, and they will have to abandon their much-cherished urban areas such as Kobane and Manbij. The Syrian Arab Army will be back in the whole northeast. And Syrian territorial integrity – a Putin imperative – will be preserved.

This is a Syria-Russia-Turkey win-win-win – and, inevitably, the end of a separatist-controlled Syrian Kurdistan. Significantly, Erdogan’s spokesman Fahrettin Altun stressed Syria’s “territorial integrity” and “political unity.” That kind of rhetoric from Ankara was unheard of until quite recently. Putin immediately called Syrian President Bashar al Assad to detail the key points of the memorandum of understanding. Kremlin spokesman Dmitry Peskov once again stressed Putin’s main goal – Syrian territorial integrity – and the very hard work ahead to form a Syrian Constitutional Committee for the legal path towards a still-elusive political settlement.

[..] For all the cliffhangers in Sochi, there was not a peep about an absolutely key element: who’s in control of Syria’s oilfields, especially after President Trump’s now-notorious tweet stating, “the US has secured the oil.” No one knows which oil. If he meant Syrian oil, that would be against international law. Not to mention Washington has no mandate – from the UN or anyone else – to occupy Syrian territory.

Just as the US donates millions more to the White Helmets. OPCW should be dismantled.

• WikiLeaks Releases New Docs Questioning Syria Chemical Attack Narrative (ZH)

A whistleblower with the Organization for the Prohibition of Chemical Weapons (OPCW), responsible for conducting an independent investigation into the alleged chemical attack in the Syrian town of Douma on April 7, 2018, has presented WikiLeaks with a body of evidence suggesting the chemical weapons watchdog agency manipulated and suppressed evidence. A prior official OPCW report of the investigation issued last March found “reasonable grounds” for believing a toxic chemical was used against civilians, likely chlorine. Long prior to any independent investigators reaching the site, however, Washington had launched major tomahawk airstrikes against Damascus in retribution for “Assad gassing his own people”.

]WikiLeaks published documents based on evidence presented by the internal OPCW whistleblower to an expert review panel on Wednesday. “The panel was presented with evidence that casts doubt on the integrity of the OPCW,” WikiLeaks editor Kristinn Hrafnsson wrote. An official WikiLeaks press release said as follows: “Kristinn Hrafnsson took part in the panel to review the testimony and documents from the OPCW whistleblower. He says: “The panel was presented with evidence that casts doubt on the integrity of the OPCW. Although the whistleblower was not ready to step forward and/or present documents to the public, WikiLeaks believes it is now of utmost interest for the public to see everything that was collected by the Fact Finding Mission on Douma and all scientific reports written in relation to the investigation.”

“Based on the whistleblower’s extensive presentation, including internal emails, text exchanges and suppressed draft reports, we are unanimous in expressing our alarm over unacceptable practices in the investigation of the alleged chemical attack in Douma,” the experts pointed out.

An aditional report comes out today from a US transportation board. Boeing’s reply: we’re updating the software…

• Indonesia’s Report On Lion Air 737 MAX Crash Faults Design, Certification (R.)

Indonesia has called for better Boeing cockpit systems and oversight by US regulators after design flaws helped bring down a Lion Air 737 MAX jet – a crash that was compounded by errors from ground staff and crew. In its final report into the crash of the jet on Oct 29, 2018 that killed all 189 people on board, Indonesia made recommendations to Boeing, Lion Air, the US Federal Aviation Administration (FAA) and other agencies. A copy was seen by Reuters and it is due to be released publicly later on Friday.

Less than five months after the Lion Air accident, an Ethiopian Airlines 737 MAX crashed, leading to a global grounding of the model and a growing crisis for the world’s biggest planemaker, which has just ousted the top executive of its commercial airplanes division. In the report, Indonesian regulators criticised the design of the anti-stall system known as MCAS, which automatically pushed the plane’s nose down, leaving pilots fighting for control. During the flight, the control column was in such disarray that it required 103 pounds of strength to counter the automated system. “The design and certification of the MCAS did not adequately consider the likelihood of loss of control of the aircraft,” the report said.

It’s company wide.

• South Korea Grounds Nine Boeing 737 NG Planes With Cracks (R.)

South Korea’s transport ministry on Friday said nine Boeing 737 NG planes in the country had been grounded after checks found structural cracks requiring repairs. The suspension follows an order from the U.S. Federal Aviation Administration earlier this month for aircraft operators to inspect older Boeing 737 NGs for structural cracks. Boeing on Oct. 11 said inspections of 810 of the planes globally had led to 38 requiring repair. South Korea said it found nine planes with cracks among 42 planes examined. Among the nine grounded planes are five operated by Korean Air Lines, according to the transport ministry.

It is possible to sing the praises of China too much.

• Can The US Beat China In A “Trade War”? (Vltchek)

There are now many new systems, in numerous corners of the world. These systems, some Communist, others socialist or even populist, are ready to defend their citizens, and to use the natural resources to feed the people, and to educate, house and cure them. No matter how popular these systems are at home, the West finds ways to demonize them, using its well-established propaganda machinery. First, to smear them and then, if they resist, to directly liquidate them. As before, during the colonial era, no competition has been permitted. Disobedience is punishable by death.

Naturally, the Western system has not been built on excellence, hard work and creativity, only. It was constructed on fear, oppression and brutal force. For centuries, it has clearly been a monopoly. Only the toughest countries, like Russia, China, Iran, North Korea or Cuba, have managed to survive, defending they own cultures, and advancing their philosophies. To the West, China has proved to be an extremely tough adversary. With its political, economic, and social system, it has managed to construct a forward-looking, optimistic and extraordinarily productive society. Its scientific research is now second to none. Its culture is thriving. Together with its closest ally, Russia, China excels in many essential fields.

That is precisely what irks, even horrifies the West. For decades and centuries, Europe and the United States have not been ready to tolerate any major country, which would set up its own set of rules and goals. China refuses to accept the diktat from abroad. It now appears to be self-sufficient, ideologically, politically, economically and intellectually. Where it is not fully self-sufficient, it can rely on its friends and allies. Those allies are, increasingly, located outside the Western sphere.

“The group is demanding 4 Bitcoin..”

• Johannesburg Shuts Down Computers City-Wide After Bitcoin Ransomware Attack (CCN)

Hackers have breached the computer network of South Africa’s commercial capital Johannesburg in an attempt to ransom the city for Bitcoin. Consequently, the city has shut down its website and suspended all e-services as a ‘precautionary measure’. At the time of writing the city’s website was still inaccessible. Per The Times, the group behind the cyber-attack is an outfit known as Shadow Kill Hackers. The group is demanding 4 Bitcoin – nearly $30,000 at the current Bitcoin price – by the close of business on October 28. In their ransom note received by several employees of the city, Shadow Kill Hackers claimed to have obtained valuable and confidential data from the city:

“All your servers and data have been hacked. We have dozens of back doors inside your city. We have control of everything in your city. We also compromised all passwords and sensitive data such as finance and personal population information.” Failure to pay the Bitcoin ransom, the hackers have warned, will see the sensitive data released publicly. Some of the e-services that will be affected by the shutdown include online billing services. Internet-based customer care services have also been suspended. An investigation into the Bitcoin ransomware attack has already been launched and is expected to take 24 hours.

Debt Rattle September 9 2019

Sep 092019

September 9, 2019 Posted by Raúl Ilargi Meijer at 9:48 am Finance Tagged with: backstop, Boris, Brexit, Britsh Airways, EU, fish, Google, sabotage, trade war, Varoufakis 4 Responses »

Pablo Picasso Portrait of Maya 1939

To everyone used to receiving Automatic Earth posts in their email, I’m sorry but since Saturday they’re suddenly bouncing again en masse. This makes me very tired by now, but I’ll look for a solution. I suspect there may be a connection between this and Google accusing me of violating their rules, without telling me what rules I’m supposed to have violated.

• Brexit Heading For Dramatic Supreme Court Showdown (Ind.)

• Boris Johnson ‘Sabotage’ Letter To EU ‘Would Break Law’ (G>)

• Johnson Has Reneged On Good Friday Agreement Vows, Says EU (G.)

• EU’s Ex-Legal Chief Says Johnson’s Plan To ‘Shut Down EU’ Will Fail (Ind.)

• China’s Exports To US Fell 16% In August As Trump Escalates Trade War (CNBC)

• Air China Denies Plans To Take Over Cathay Pacific (R.)

• Nearly All British Airways Flights Canceled As Pilots Go On Strike (CNN)

• States Expected To Target Google In New Antitrust Probe (AP)

• Yanis Varoufakis’ Close-Up (K.)

• Australia Launches Emergency Relocation Of Fish (G.)

Really, what is not to like about the Brexit comedy? it’s the British doing what they do best. Parliament will vote for a law that forces Boris to send a letter to Brussels asking for an extension to Article 50, and he plans to send a second letter saying he doesn’t want that extension.

Anyway, Supreme Court it always would be. But can that court tell parliamentarians or a prime minster what to do, or are they above the court in legal standing, as a lower court suggested last week? Too late to get a constitution now. But not too late to make this much more chaotic still.

There is even a plan for the UK to shut down the EU.

• Brexit Heading For Dramatic Supreme Court Showdown (Ind.)

The battle for Brexit is heading for a nailbiting showdown in the Supreme Court in late October – when the deadline for crashing out of the EU will be just days away – after Boris Johnson’s new strategy was revealed. Ministers plan to manufacture a legal fight to avoid directly breaking the law when compelled to ask for a further Article 50 extension, while also sidestepping the requirement to comply with it. The “plan B” paves the way for an unprecedented constitutional crisis after parliament’s deadline for seeking a Brexit delay passes on 19 October – with the threat of the prime minister being jailed for contempt of court. With the deadline for crashing out on 31 October, it will be a race against time to force Mr Johnson to Brussels before Halloween, or to bring him down in a vote of no confidence and send a replacement.

Labour condemned the strategy as behaving like “every tinpot dictator on the planet throughout history” – demanding that Mr Johnson obey the “duty” imposed by parliament. No10 is also reported to be considering sending a letter to the EU requesting a Brexit extension, in order to meet the conditions passed by MPs last week, but then immediately sending another saying the government does not actually want a delay. Legal experts, including former attorney general Lord Falconer, warned that this would still breach the law. If Mr Johnson disregards some or all of the bill’s requirements – which is set to receive royal assent on Monday – this could lead to an emergency judicial review in the courts by MPs.

The unprecedented case would start in the High Court and the expectation is that it would very quickly move to the Supreme Court, almost certainly before 31 October. And it triggered an extraordinary warning from the justice secretary, Robert Buckland, to obey “the rule of law”, as he denied he was poised to follow Amber Rudd by resigning.

“..he risked the resignation of the justice secretary, the attorney general, and other members of his cabinet…”

• Boris Johnson ‘Sabotage’ Letter To EU ‘Would Break Law’ (G>)

A former supreme court justice has said Boris Johnson would be in contempt of court if he applied for article 50 extension while simultaneously trying to get the EU to reject it. Reports in the Daily Telegraph suggested that the prime minister has drawn up plans to “sabotage” parliament’s efforts to force through a Brexit extension to prevent the UK leaving the bloc without a deal. He is said to be considering sending an accompanying letter to the EU alongside the request to extend article 50, which would say the government does not want any delay to Brexit. Lord Sumption, a former supreme court justice, said it would not be legal for the prime minister to ask for an extension while rubbishing the request at the same time.

He told BBC Radio 4’s Today programme: “The bill or the act as its about to become says that he’s got to apply for an extension. Not only has he got to send the letter, he’s got to apply for an extension. And to send the letter and then try and neutralise it seems to me to be plainly a breach of the act.” A Downing Street source said: “We intend to sabotage any extension. The ‘surrender bill’ only kicks in if an extension is offered. Once people realise our plans, there is a good chance we won’t be offered a delay. Even if we are, we intend to sabotage that too.” Sumption said he had read the bill and there was not “the slightest obscurity” about what the government was obliged to do. [..] Sumption said Johnson would not only be in contempt of court if he failed to do what the bill states, he risked the resignation of the justice secretary, the attorney general, and other members of his cabinet.

“This avoidance of the hard border, it is not just a desire, it is not just about preferences, it is legal obligation.”

• Johnson Has Reneged On Good Friday Agreement Vows, Says EU (G.)

European officials have accused Boris Johnson of reneging on pledges to uphold the Good Friday agreement, ahead of the prime minister’s first meeting with his Irish counterpart. Johnson will meet the Irish taoiseach, Leo Varadkar, in Dublin on Monday at a tumultuous moment in the Brexit process, with only 52 days until the UK’s departure. Talks are set to be tense as fears grow in Dublin and Brussels that the British prime minister is backsliding on promises to protect the tightly knit economic and social links on the island of Ireland. “The commitment to all aspects and all the provisions of the letter and spirit of the Good Friday agreement recently seems to be taken more lightly than before,” a senior diplomat from a continental member state told the Guardian.

“This avoidance of the hard border, it is not just a desire, it is not just about preferences, it is legal obligation.” A senior official working for the EU’s chief negotiator, Michel Barnier, told diplomats this week that the UK had reneged on commitments to protect north-south co-operation on the island of Ireland, a key pillar of the Good Friday agreement. Alarm bells were set off by Johnson’s recent letter to the European council president, Donald Tusk, which declared his government could not endorse a commitment made by Theresa May in a December 2017 EU-UK joint report. The Brexit secretary, Stephen Barclay, fuelled concerns that the government was seeking to back out of past commitments, when he tweeted that the government was “committed to no infrastructure on the NI border”.

Such comments were seen in Brussels as “meaningless” words that marked a significant dilution of the promise to uphold an open border. The May government pledged to protect “north-south cooperation” on the island of Ireland in the 2017 joint report, widely seen in Brussels as a landmark in Brexit talks.

Something tells me Dominic Cummings will have more before this is over.

• EU’s Ex-Legal Chief Says Johnson’s Plan To ‘Shut Down EU’ Will Fail (Ind.)

Brussels’ former top law officer has rubbished Boris Johnson’s extraordinary plan to sabotage the EU and make it ‘no longer legal’, arguing it makes no sense. Downing Street has threatened to render the bloc no longer “legally constituted”, paralysing its decision making, to force EU leaders to cave in to the UK’s demands. But Jean-Claude Piris, formerly the director-general of the EU Council’s legal service, said the idea – refusing to appoint a new commissioner – would fail to shut down the EU, as No 10 hoped. “The Commission can continue to work and decide legally,” Mr Piris wrote on Twitter, citing a precedent dating back to 1999. Instead, he said: “The UK will be brought to the EUCJ [the European Court of Justice] for violation of its obligation.”

Richard Corbett, the leader of Labour’s bloc of Euro-MPs, echoed the criticism, tweeting: “Nonsense idea that Johnson could paralyse EU to force it to expel UK. “If he refuses to nominate a Commissioner, the UK would be in breach of the treaty – that being so, EU Commission not at fault and can operate legally.” In a dramatic escalation of its battle with Brussels, No 10 believes it can put the EU in breach of its own legal duty for all 28 member states to be represented on its executive branch. The UK would be “disrupting” Brussels life to such a degree that member states will then make it clear they will refuse to grant an Article 50 extension – even if asked for – it hopes. A source told The Independent: “We will turn the pressure onto the EU to show how difficult it will be for them if the UK is still hanging around.”

That’s a lot.

• China’s Exports To US Fell 16% In August As Trump Escalates Trade War (CNBC)

China’s exports unexpectedly fell in August as shipments to the United States slowed sharply, pointing to further weakness in the world’s second-largest economy and underlining a pressing need for more stimulus as the Sino-U.S. trade war escalates. Beijing is widely expected to announce more support measures in coming weeks to avert the risk of a sharper economic slowdown as the United States ratchets up trade pressure, including the first cuts in some key lending rates in four years. On Friday, the central bank cut banks’ reserve requirements for a seventh time since early 2018 to free up more funds for lending, days after a cabinet meeting signalled that more policy loosening may be imminent.

August exports fell 1% from a year earlier, the biggest fall since June, when it fell 1.3%, customs data showed on Sunday. Analysts had expected a 2.0% rise in a Reuters poll after July’s 3.3% gain. That’s despite analyst expectations that a falling yuan would offset some cost pressure and looming tariffs may have prompted some Chinese exporters to bring forward or “front-load” U.S.-bound shipments into August, a trend seen earlier in the trade dispute. China let its currency slide past the key 7 per dollar level in August for the first time since the global financial crisis, and Washington labelled it a currency manipulator.

“..the biggest corporate casualty of anti-government protests after China demanded it suspend staff involved in, or who support, demonstrations..”

• Air China Denies Plans To Take Over Cathay Pacific (R.)

Air China has no plans to take over Hong Kong’s Cathay Pacific Airways, an independent director of the state-owned Chinese carrier told the South China Morning Post newspaper. “Based on what I know, I wouldn’t think that is anywhere on the agenda, no way,” Air China non-executive director Stanley Hui told the newspaper when asked if the carrier, a 30% shareholder, might seek to buy Cathay outright. The Hong Kong airline has become the biggest corporate casualty of anti-government protests after China demanded it suspend staff involved in, or who support, demonstrations that have plunged the former British colony into a political crisis.

Cathay Chairman John Slosar last week announced plans to step down in November, less than three weeks after CEO Rupert Hogg left amid mounting regulatory scrutiny. Air China is Cathay’s second-largest shareholder, behind manager Swire Pacific with a 45% stake. Long-time Swire executive Patrick Healy was last week appointed as Slosar’s replacement.

No flights tomorrow either. Big airline.

• Nearly All British Airways Flights Canceled As Pilots Go On Strike (CNN)

British Airways says it was forced to cancel “nearly 100 per cent” of flights for Monday and Tuesday after the British pilots union went ahead with a strike. The strike was called for by the British Airline Pilots Association (BALPA) amid a heated dispute over pay with the airline. BALPA said Sunday on Twitter that it put forward a proposal to the carrier’s management Wednesday, but had yet to receive a reply. British Airways said in a statement posted Monday it remains “ready and willing to return to talks with BALPA.”

The airline said it was forced to cancel so many flights because “with no detail from BALPA on which pilots would strike, we had no way of predicting how many would come to work or which aircraft they are qualified to fly.” Customers who had flights booked for Monday and Tuesday will likely “not be able to travel as planned,” British Airways said. The airline also advised customers not to go to the airport. Members of the pilots union voted 93% in favor of a strike in July. BALPA said last week that it would be willing to call it off if British Airways returned to the negotiating table. According to its website, BALPA represents more than 10,000 pilots in the United Kingdom — more than 85% of all commercial pilots who fly there.

And Facebook in a different probe. But Google is CIA.

• States Expected To Target Google In New Antitrust Probe (AP)

A group of states led by Texas is expected to announce an investigation into Google on Monday to examine whether the Silicon Valley tech giant has gotten too big and effective at stomping or acquiring rivals. The probe is the latest blow against big tech companies as antitrust investigations ramp up in the U.S. and around the world. A separate group of states announced an investigation into Facebook’s dominance on Friday. The Department of Justice , the Federal Trade Commission and Congress are also conducting probes.

Texas Attorney General Ken Paxton has said only that the investigation will look at “whether large tech companies have engaged in anticompetitive behavior that stifled competition, restricted access, and harmed consumers.” Reports in The Washington Post and The Wall Street Journal say Google will be the primary target. Google expects state attorneys general will ask it about past similar investigations in the U.S. and internationally, senior vice president of global affairs Kent Walker wrote in a blog post Friday . Google’s parent company, Alphabet, has a market value of more than $820 billion and controls so many aspects of the internet that it’s hard to imagine surfing the web for long without running into at least one of its services. Experts believe the antitrust probe could focus on at least one of three aspects of Google’s business that have caught regulators’ eyes.

Background: renowned Greek film director Costa-Gravas has made a movie based on Varoufakis’ book “Adults in the Room,” which recounts Yanis’ dealings with the EU. It was presented at the Venice film festival this week. Well, the Greek press still doesn’t like him (but they dare not ignore Costa-Gavras either). And because of the structure of the press, neither do many Greeks. But they make it about how Yanis presents himself, and sure, maybe it’s too much about him at times. But really, it should be about his ideas, about substance. Unfortunately, those ideas go above their paygrade and understanding. So appearance it is then…

• Yanis Varoufakis’ Close-Up (K.)

The term “narcissist,” which has become almost a permanent fixture in any description of Yanis Varoufakis – in tones ranging from the deliberate and angry to the lighthearted and playful, sometimes to the point of absolving him of his sins – is inadequate. A man who writes a book while simultaneously envisioning himself as a big-screen hero does not simply fall into the category of garden-variety delusions of stardom because his actions are rife with intent. Viewing reality through the realm of fiction neither clears nor burdens an official of complicity with regard to how he managed the country’s economic affairs and the stance he adopted more generally, and especially when this concerns an exceptionally crucial period.

Walking down the red carpet does not instantly transform Varoufakis from a former finance minister (who is co-credited with a memorandum and capital controls) into a movie star. The Venice International Film Festival – the glamour, the camera flashes, the gowns – and the reviews of critics neither erase nor transfer political responsibility. The publicity shone on Greece as a result of Costa-Gavras’ film “Adults in the Room,” based on Varoufakis’ book of the same title, shifts the focus of the conversation from the intentions and rules according to which officials with institutional responsibilities ought to abide, to the rule-free realm of art. It takes it away from the need for political figures to answer for their actions and omissions, to the extremely capacious realm of film production and artistic creativity.

Noah.

• Australia Launches Emergency Relocation Of Fish (G.)

Faced with a looming ferocious summer with little rain forecast, the New South Wales government has embarked on a Noah’s Ark type operation to move native fish from the Lower Darling – part of Australia’s most significant river system – to safe havens before high temperatures return to the already stressed river basin. Researchers have warned of other alarming ecological signs that the Lower Darling River – part of the giant Murray-Darling Basin – is in a dire state, following last summer’s mass fish kills. Professor Fran Sheldon, from Griffith University’s Australian Rivers Institute, said only one surviving colony of river mussels had been found along the river and there were signs that river red gums were under severe stress.

“If the river red gums die, and some are hundreds of years old, there will be a domino effect. Banks will collapse, there will be massive erosion and it will send sediments down the river.” “These sort of ecological collapses are much harder and expensive to reverse,” she warned. The New South Wales government announced a $10m rescue package last week to mitigate the effects of the river crisis on native fish this summer. The NSW agriculture minister, Adam Marshall, said the unprecedented action would provide “a lifeline for key native species ahead of an expected summer of horror fish kills”. “We’re staring down the barrel of a potential fish Armageddon, which is why we’re wasting little time rolling out this unprecedented action,” Marshall said.

Debt Rattle September 6 2019

Sep 062019

September 6, 2019 Posted by Raúl Ilargi Meijer at 9:22 am Finance Tagged with: Alaska, Assange, Boris, China, Fannie and Freddie, Fed, glyphosate, Hong Kong, MBS, Monsanto, QE, Tongass, trade war 10 Responses »

Claude Monet Éretrat sunset 1882-3

• The Trade War Is Smart Geopolitics (NR)

• China’s Growth Is Slowing, but not Because of the Trade War (PIIE)

• The Ugly Truth About The Trade War (Alt-M)

• Fed QE Unwind Continues Via Sharp Drop In MBS (WS)

• Trump Administration Backs Privatizing Fannie Mae And Freddie Mac (MW)

• Is Armed Conflict Possible in Today’s Europe? (Spiegel)

• Boris Johnson: I’d Rather Be Dead In a Ditch Than Delay Brexit (BBC)

• Hong Kong Braces For More Protests As Merkel Calls For Peaceful Solution (R.)

• The Pentagon Wants More Control Over the News. What Could Go Wrong? (Taibbi)

• Germany Announces Plan to Ban Glyphosate (CD)

• Targeting the Tongass National Forest for Amazon-like Destruction (CP)

• They Want Him Dead As A Warning (Maurizi)

A bunch of views on the trade war. I’d say take your pick. Something for everyone.

• The Trade War Is Smart Geopolitics (NR)

Why is our industrial supply chain located inside of an adversary? Why does our military readiness therefore depend on that adversary? Why are American companies allowed to transfer critical technologies to China in exchange for short-term market access? Why can Tesla build self-driving cars in Shanghai? Why can Google run an AI lab in Beijing after canceling an AI contract with the Pentagon? The free traders have an answer: because the market wills it. But of course, markets have no reason to prefer one global power over another, and there’s no market rule barring a surveillance state from winning the competition. In that competition, our ideological commitment to free trade is nearly as great a handicap as the Soviet Union’s commitment to central planning was during the Cold War.

Free trade with China means allowing its distortions into our market. Refusing to allow our government to “pick winners” by rejecting industrial-policy support to key sectors means that Beijing will pick winners for us. Depending on Ricardian comparative advantage to organize supply chains means, in effect, that we will watch helplessly as American innovations are transformed into growth-boosting industries elsewhere, as firms reap efficiency gains by locating their engineering and management operations next to their manufacturing. Inevitably, the innovation will depart too. A recent survey of 369 manufacturers found that American firms are moving their R&D operations to China not just to take advantage of lower costs, but to be in close proximity to their supply chains.

Some 50 percent of foreign R&D centers in China are now run by American companies, helping China achieve first place in market share for manufacturing R&D. If we remain neutral as to where supply chains are located, “we innovate, they build” will become “they innovate, they build.” China’s rise may be inevitable. But given the danger represented by that rise, America can choose to minimize its risk. It can reduce opportunities for China to erode the long-term competitive advantage of American firms through forced technology transfer and R&D migration, and reduce our dependence on Chinese manufacturing for crucial industrial and military supply chains. In a word: decoupling.

China’s problem is the dollar. It’s not dependent on the US for its GDP, but that is a problem in itself. If exports to the US were larger, it would receive more dollars.

• China’s Growth Is Slowing, but not Because of the Trade War (PIIE)

First, as is well known, US taxpayers, not Chinese consumers and companies, are bearing the burden of Trump’s tariffs. The president acknowledged as much when he postponed new tariffs on goods (such as toys and consumer electronics) likely to be purchased during the US holiday shopping season. US tariffs on imports from China will likely subtract about half a percentage point from US GDP growth in 2019.

But second, China’s growth began to slow long before the trade war started (see figure). The pace of growth has moderated from the double-digit pace of 2010 to only 6.2 percent in the most recent quarter. As for the assertion that the trade war has accelerated China’s economic decline, the facts show the opposite. As shown in the figure, the pace of the slowdown has moderated since the initial imposition of tariffs by the United States in July 2018. Most of the slowdown is the result of President Xi Jinping’s ill-advised policy choice of allocating credit and other resources to less efficient state firms rather than private firms. Moreover, since 2017, China has reduced the growth of credit overall in order to reduce financial risk at a time of growing corporate indebtedness, a trend that also contributes to slowing growth throughout the economy.

Third, properly measured, China’s dependence on exports to the United States is not as large as some, including President Trump, may think. China’s exports to the United States before tariffs were imposed ran at $500 billion annually, or 4 percent of its $12.25 trillion GDP, which in theory is a significant number. In fact, the percentage is far less. The potential impact of US tariffs on China’s growth needs to be adjusted to measure only value added by China. GDP is measured in value-added terms; US imports from China are measured in gross sales. The value-added share in US imports from China is about one-half, so the direct contribution to China’s GDP from its sales to the United States is approximately $250 billion or only 2 percent of China’s GDP.

Brandon Smith doesn’t appear to fully agree with PIIE.

• The Ugly Truth About The Trade War (Alt-M)

The US only comprises around 18% of Chinese exports. While this is a nice piece of the pie, it’s hardly enough leverage to bring down China’s economy. China would suffer profit losses in certain sectors as well as a recession, but not the kind of crisis that some in the alternative media are predicting. Around 40% of China’s GDP is generated domestically, and 80% of its GDP growth comes from private consumption. For quite some time I have warned that China was shifting its economic model from an export based system to a more self reliant domestic based system, and that this might be an indication of a coming economic war with the US. As it turns out, this is exactly what has happened. Since 2010, China’s domestic market has grown dramatically, indicating that China has no intention of relying on the US consumer as an economic pillar.

The US consumer is almost tapped out. While retail sales in certain areas remain steady and this has been used by the mainstream media and the Fed to promote the idea that the economy is still “going strong”, this is not the big picture. The reality is that US consumption is driven by historic levels of debt. Household debt is now FAR above levels last seen after the last financial crisis, with total debt at $1.2 trillion higher today than its last peak in 2008. The downturn in retail is more obvious in the steady closings of thousands of outlets in 2019 alone. This year has seen a 29% increase in store closings compared to 2018, even though 2018 saw a considerable spike in store shutdowns. Around 12,000 stores are slated to close this year.

So the question is, with the US consumer stretched thin by debt and US retail on the verge of a recessionary plunge, why would China feel threatened by the loss of the American consumer market? They are losing it already by attrition. The truth is they aren’t threatened, which is why, as I predicted last year, the trade war continues unabated despite the fact that so many people argued that China would “quickly fold” to Trump’s demands. I realize this is not what many people want to hear, but it is foolish to get caught up in a farcical mob mentality and ignore the fundamentals in the trade war. If you think that the US is going to “win” based on leverage, you are sorely mistaken. The US is in no better shape economically than China; in many ways we are much worse off.

Close down the place before it can do even more harm.

• Fed QE Unwind Continues Via Sharp Drop In MBS (WS)

In August, the Fed shed Mortgage Backed Securities (MBS) at a rate that exceeded its self-imposed “cap” of $20 billion for the fourth month in a row, but added some Treasury securities, with a new emphasis on short-term Treasury bills. Total assets on the Fed’s balance sheet fell by $20 billion, to $3.76 trillion, as of the balance sheet for the week ended September 4, released this afternoon. This brought the balance sheet to the lowest level since September 2013. So far this year, the Fed has shed $314 billion in assets. Since the beginning of the “balance sheet normalization” process, the Fed has shed $700 billion. Since peak-QE in January 2015, it has shed $738 billion:

During the month of August, $70 billion in Treasury securities in the Fed’s portfolio matured and were redeemed by the US Treasury Department. The Fed replaced all those with new Treasury securities. This replacement would have kept its holdings level. Per its new plan to replace its MBS securities with Treasury securities – more on that in a moment – it added about $15 billion in Treasury securities, bringing the total to $2.095 trillion. This was the first monthly increase since the end of 2017, bringing its Treasury holdings back to the level of last July, and just above the September 2013 level:

As part of its new regime to shorten the overall maturity of its holdings, the Fed’s holdings now include $3 billion in Treasury bills (maturing in one year or less), up from zero a few months ago. After “Operation Twist,” which was layered between QE-2 and “QE Infinity,” the Fed had not held any Treasury bills. About four months ago, it started dabbling in them again, but in August it got serious. These T-bills replaced some of the MBS that ran off its balance sheet.

Trump giveth and the Fed taketh away. End the Fed AND Fannie and Freddie.

• Trump Administration Backs Privatizing Fannie Mae And Freddie Mac (MW)

The Trump administration said it would support returning mortgage-finance giants Fannie Mae and Freddie Mac to private hands, a development that could keep the companies at the center of the housing market for decades to come. The principles announced Thursday represent a major reversal from what leaders of both parties over the past decade promised — to abolish the companies, which guarantee roughly half the U.S. mortgage market. The approach, which doesn’t require approval by Congress, would mark an important win for investors who have been betting politicians wouldn’t follow through on those promises. Treasury officials said they would aim to privatize the government-controlled firms without making it tougher and more expensive for people to get mortgages.

They generally avoided making specific policy recommendations on how to accomplish these goals in a report released Thursday. They said they would work with federal regulators to flesh out the details on how to put Fannie and Freddie on a sounder financial footing as well as to curtail the firms’ roles in housing finance. The process could take years to implement and won’t affect existing mortgages. “Our view is that the government footprint has become too big,” Treasury Secretary Steven Mnuchin said in an interview ahead of Thursday’s report. ”There are people in Washington who are happy to leave this the way it is for another 10 or 20 years, and that’s not us. We feel an obligation to try to fix this.”

“The direction of European history would seem to have changed – shifting away from convergence and back to delineation.”

• Is Armed Conflict Possible in Today’s Europe? (Spiegel)

“The war changed everything.” This statement by the late British historian Tony Judt contains the kernel of modern-day Europe. It was the war that made possible an extended period of peace. Things had to get extremely bad before they could get good again. For the last 75 years, there has been peace on the Continent, with just a few exceptions. Now, this Europe finds itself in crisis. It is no longer the Europe where national thinking is slowly dwindling. It is no longer the Europe that is growing together step by step. It is no longer the Europe in which all countries seem to be committed to democracy forever. The direction of European history would seem to have changed – shifting away from convergence and back to delineation.

What does that mean for the most important of all questions, the question of war or peace? At the moment, it doesn’t look at all as though the long period of peace is going to come to an end. There is no reason for alarm. But if the direction of European history is changing, we should take a close look at what that could mean. Not in the immediate future, but in the long term. History is a snail that persistently crawls along its path. Exactly 80 years ago, the war that changed everything began — on Sept. 1, 1939, with Adolf Hitler’s Germany invading neighboring Poland. Almost six years later, more than 60 million people around the world were dead as a result of the violence, huge portions of the Continent were destroyed, millions of Europeans had been forced from their homes and millions more were plunged into poverty. A state of shock reigned.

When will he quit?

• Boris Johnson: I’d Rather Be Dead In a Ditch Than Delay Brexit (BBC)

Boris Johnson has said he would “rather be dead in a ditch” than ask the EU to delay Brexit beyond 31 October. But the PM declined to say if he would resign if a postponement – which he has repeatedly ruled out – had to happen. Mr Johnson has said he would be prepared to leave the EU without a deal, but Labour says stopping a no-deal Brexit is its priority. The prime minister’s younger brother, Jo Johnson, announced earlier that he was standing down as a minister and MP. Speaking in West Yorkshire, Boris Johnson said Jo Johnson, who backed Remain in the 2016 referendum, was a “fantastic guy” but they had had “differences” over the EU.

Announcing his resignation earlier in the day, the MP for Orpington, south-east London, said he had been “torn between family loyalty and the national interest”. During his speech at a police training centre in Wakefield, the prime minister reiterated his call for an election, which he wants to take place on 15 October. He argued it was “the only way to get this thing [Brexit] moving”. “We either go forward with our plan to get a deal, take the country out on 31 October which we can or else somebody else should be allowed to see if they can keep us in beyond 31 October,” Mr Johnson said.

This is absolutely explosive and absolutely spot on!

Brexit has made the Westminster political scene into a hard nosed English Nationalist movement.

Please share this heavily. It’s us truly incredible. pic.twitter.com/E9c8KyycEU

— Hope Over Fear (@hopeoverfear01) September 5, 2019

Mutti? You here?

• Hong Kong Braces For More Protests As Merkel Calls For Peaceful Solution (R.)

Hong Kong is bracing for more demonstrations this weekend, with protesters threatening to disrupt transport links to the airport, after embattled leader Carrie Lam’s withdrawal of a controversial extradition bill failed to appease some activists. Germany’s Chancellor Angela Merkel raised Hong Kong with Chinese premier Li Keqiang in Beijing on Friday, saying a peaceful solution is needed. “I stressed that the rights and freedoms for (Hong Kong) citizens have to be granted,” said Merkel. “In the current situation violence must be prevented. Only dialogue helps. There are signs that Hong Kong’s chief executive will invite such a dialogue. I hope that materializes and that demonstrators have the chance to participate within the frame of citizens’ rights,” she said during a visit to Beijing.

Li told a news conference with Merkel: “The Chinese government unswervingly safeguards ‘one country, two systems’ and ‘Hong Kong people govern Hong Kong people’”. He said Beijing supported the Hong Kong government “to end the violence and chaos in accordance with the law, to return to order, which is to safeguard Hong Kong’s long-term prosperity and stability”. Protesters plan to block traffic to the city’s international airport on Saturday, a week after thousands of demonstrators disrupted transport links, sparking some of the worst violence since the unrest escalated three months ago. Many protesters have pledged to fight on despite a withdrawal of the extradition bill, saying the concession is too little, too late.

The Pentagon will protect you from “large-scale, automated disinformation attacks” by publishing “large-scale, automated disinformation attacks..”

• The Pentagon Wants More Control Over the News. What Could Go Wrong? (Taibbi)

If there’s a worse idea than the Pentagon becoming Editor-in-Chief of America, I can’t remember it. But we’re getting there: From Bloomberg over Labor Day weekend: “Fake news and social media posts are such a threat to U.S. security that the Defense Department is launching a project to repel “large-scale, automated disinformation attacks,” as the top Republican in Congress blocks efforts to protect the integrity of elections.” One of the Pentagon’s most secretive agencies, the Defense Advanced Research Projects Agency (DARPA), is developing “custom software that can unearth fakes hidden among more than 500,000 stories, photos, video and audio clips.”

Once upon a time, when progressives still reflexively distrusted the military, DARPA was a liberal punchline, known for helping invent the Internet but also for developing lunatic privacy-invading projects like LifeLog, a program to “gather in a single place just about everything an individual says, sees, or does.” DARPA now is developing a semantic analysis program called “SemaFor” and an image analysis program called “MediFor,” ostensibly designed to prevent the use of fake images or text. The idea would be to develop these technologies to help private Internet providers sift through content. It’s the latest in a string of stories about new methods of control over information flow that should, but for some reason do not, horrify every working journalist.

From the Senate dragging Internet providers to the Hill to demand strategies against the sowing of “discord,” to tales of hundreds of Facebook sites zapped for “coordinated inauthentic behavior” following advice by government-connected groups like the Atlantic Council, it’s been clear the future of the information landscape is going to involve elaborate new forms of algorithmic regulation. Stories about the need for such technologies are always couched as responses to the “fake news” problem. Unfortunately, “fake news” is a poorly-defined, amorphous concept that the public has been trained to fear without really understanding.

Why wait 4 years?

• Germany Announces Plan to Ban Glyphosate (CD)

The German government announced Wednesday it had agreed on a plan to phase out the use of glyphosate—the key chemical in the weedkiller Roundup—with a total ban set to begin by the end of 2023. “Way to go, Germany!” tweeted the U.S.-based advocacy group Organic Consumers Association. Chancellor Angela Merkel’s cabinet agreed to the plan Wednesday. The proposal, reported Bloomberg, also says that the “government intends to oppose any request for the E.U. to renew the license to produce the weedkiller, according to a release by the environment ministry.” The European Commission, the E.U.’s rules and regulations body, in 2017 renewed the license for glyphosate in the bloc through the end of 2022.

Germany’s environment Minister, Svenja Schulze, framed the new move as necessary to protect biodiversity, and said that “a world without insects is not worth living in”. “What harms insects also harms people,” Schulze said at a press conference. “What we need is more humming and buzzing.” Glyphosate is no longer exclusive to Monsanto’s Roundup, as it “is now off-patent and marketed worldwide by dozens of other chemical groups including Dow Agrosciences and Germany’s BASF,” as Reuters noted. That’s despite the World Health Organization’s International Agency for Research on Cancer’s 2015 designation of glyphosate as a “probable carcinogen,” increasing concerns over its health effects, and mounting legal woes for Bayer, which acquired Monsanto last year, as multiple juries have found Roundup to have been a factor in plaintiffs’ cancers.

Stop calling them conservatives.

• Targeting the Tongass National Forest for Amazon-like Destruction (CP)

Alaskan politicians, the governor, Mike Dunleavy, and the two senators, Lisa Murkowski and Dan Sullivan, all Republican, convinced Trump to dismantle federal protections of the Tongass National Forest. The Trump administration ordered the Forest Service to approve this process of destruction. In March 16, 2019, the Forest Service designed a 15-year logging project in the Prince of Wales Island that included the opening of 164 miles of new roads in 67 square miles of land and the clearcutting of up to 23,000 acres of old-growth trees – trees several centuries old.

Environmental organizations like Earthjustice, Sierra Club, Alaska Wilderness League, Southeast Alaska Conservation Council, Alaska Rainforest Defenders, National Audubon Society, Natural Defense Council, Defenders of Wildlife, and the Center for Biological Diversity sued the Forest Service and the US Department of Agriculture for violating the National Environmental Policy Act and other environmental laws. They pointed out that such massive timber sale from the projected clearcutting of old growth trees was “wasteful, destructive, and a giveaway” to a timber industry contributing less than 1 percent to the economy of Alaska.

In addition, clearcutting 23,000 acres of ancient trees would harm the Alexander Archipelago wolf, flying squirrels, and birds like Goshawk. Why this violent attack on a forest these environmental organizations call the crown jewel of America? The Alaskan politicians, like Bolsonaro of Brazil, have a distorted and selfish vision: satisfy the landowners in Brazil and the timber barons in Alaska. Do these politicians, including Trump, ever think about the real bad effects, ecological and social, of their actions? They must have heard of the inferno in the Brazilian Amazon and its potentially horrific consequences on the planet. They cannot really assume or believe that adding quite a bit more carbon to the atmosphere from logging Tongass would be a good thing for America or the world? Or could they?

The only reasonable explanation of the murky world of Trump and the Republican politicians (of Alaska and the rest of the country) is that they reject science. Certainly, the Evangelicals do. These Christian Republicans support Trump. They make no secret they expect Jesus to rise up, thus signaling the end of life on Earth. This delusion gets scary as high officials of the Trump administration are its fervent believers.

Long-time Assange confidant Stefania Maurizi talks to Roger Waters.

• They Want Him Dead As A Warning (Maurizi)

He is one of the legends of rock famous for his progressive battles. At seventy-six, the Pink Floyd co-founder, Roger Waters, has not given up at all and does not hesitate to call his country, Great Britain, “disgusting” for its treatment of Julian Assange. Last Monday, Waters sang his great classic, “Wish You Were Here” in front of the UK Home Office in London in support of Assange, while the Australian journalist, John Pilger, explained the serious risk the WikiLeaks founder runs of being extradited to the US, and Assange’s brother, Gabriel, described an emotional meeting with Julian Assange. Roger Waters is currently in Venice to present his film “US + Them”. Repubblica interviewed him.

What made you go very public about Julian Assange’s situation? “Clearly, there has been a really powerful and international smear campaign, really since the Collateral Murder video. I have been watching it developing. Assange is the pet hate of Western governments, particularly the government of the United States, because he published evidence that shows the United States to have committed heinous war crimes, crimes against humanity in a big way. This smear campaign against him is all about getting him extradited to the US. They want him dead as a warning: they want to persuade any young person who might be thinking about the work of Julian Assange, or any whistleblower or any investigative journalist, that to pursue the path of truth-telling is extremely bad for your health. The message is: if you tell the truth, we will kill you, watch! The same with Chelsea Manning”.

Withdrawing the extradition bill is no longer enough:

Globalization Just Peaked

Aug 262019

August 26, 2019 Posted by Raúl Ilargi Meijer at 1:56 pm Primers Tagged with: Carney, crypto, currency, exports, Giant Squid, globalization, Henry Ford, SDR, trade war, Trump, underwear 9 Responses »

Joan Miro The farmer’s wife 1923

In Jackson Hole on Friday, Bank of England’s outgoing governor Mark Carney talked about a Synthetic Hegemonic Currency (SHC) that the world ‘must’ create, and I thought: that sounds as creepy as anything Halloween. Now, Carney is a central banker as well as a former Giant Squid partner, hence a certified cultist, but still.

He even mentioned Facebook’s Libra ‘currency’ as some sort of example for something that should replace the US dollar internationally. And that replacement is allegedly needed because countries are hoarding dollars. And/or “protecting themselves by racking up enormous piles of dollar-denominated debt.” Whichever comes first, I guess?!

I’ve read quite a few comments on Carney’s speech, but far as I’ve seen they all ignore one aspect of it: the current shape and form of globalization. See, Carney can see only one thing: more centralization, more things moving more in the same direction. Remember, he’s the man who with Michael Bloomberg in 2016 wrote “How To Make A Profit From Defeating Climate Change”. Aka things are worth doing only if they make you richer.

It’s a state of mind that works fine when you’re inside a system and an echo chamber, when you’re a central banker or a corporate banker. But there’s nothing that indicates it’s a useful state of mind when the system you’re serving must undergo change. What is as true when it comes to climate change as it is for changing the entire global economy. Carney’s got blinders on.

World Needs To End Risky Reliance On US Dollar: BoE’s Carney

Carney [..] said the problems in the financial system were encouraging protectionist and populist policies. [..] Carney warned that very low equilibrium interest rates had in the past coincided with wars, financial crises and abrupt changes in the banking system. As a first step to reorder the world’s financial system, countries could triple the resources of the IMF to $3 trillion as a better alternative to countries protecting themselves by racking up enormous piles of dollar-denominated debt.

In other words, to reorder the world’s financial system, you must put a ton of money into a fund that has served (and failed) to uphold the old system. Really?

“While such concerted efforts can improve the functioning of the current system, ultimately a multi-polar global economy requires a new IMFS (international monetary and financial system) to realize its full potential,” Carney said. China’s yuan represented the most likely candidate to become a reserve currency to match the dollar, but it still had a long way to go before it was ready. The best solution would be a diversified multi-polar financial system, something that could be provided by technology, Carney said.

There is no doubt that the present system is a little off balance, that the USD’s role in the financial system is way bigger then America’s share of global trade. But the yuan is completely unfit as a reserve currency because it’s not freely traded. And whether “technology” could “provide a diversified multi-polar financial system” (quite the statement) is very much in question. Perhaps that is true in theory, but Carney’s claims are not only about theory -anymore-.

Facebook’s Libra was the most high-profile proposed digital currency to date but it faced a host of fundamental issues that it had yet to address. “As a consequence, it is an open question whether such a new Synthetic Hegemonic Currency (SHC) would be best provided by the public sector, perhaps through a network of central bank digital currencies,” Carney said.

The most fundamental issue about Libra would appear to be that it doesn’t exist. Then there are a whole slew of other issues, like why should Facebook and its partners play any role at all in finance. Because they’re such benign enterprises who focus on guarding your privacy? Why Carney would present it as a potential ‘solution’ is totally unclear, other than Libra is something that could fit inside his echo chamber.

I’m still nervous about crypto, too many things still go wrong, too many thefts, too many things too many people don’t understand. But I would support Bitcoin over Carney’s “network of central bank digital currencies” any day. Because that’s the creepiness of this “Synthetic Hegemonic Currency” in all its infamy.

Carney and his echo chamber banker mates seek control, we get it. But that doesn’t mean we want them to have it. Look at the present system, which they created, and the failure of which necessitates the creation of yet another system. And then they want to control that one too?

But that’s still all a bit of a sideshow. I’m thinking Carney is not just wearing blinders, he’s simple too late. The globalization that his proposals might serve is already past its peak. He may not be able to see beyond it, but we should.

Globalization is a process, it’s something that moves, it can’t stand still. And now that it’s fully reached China, there’s nowhere else for it to go. Sure, there are some smaller countries that might be willing to produce at even lower prices, like Vietnam or Cambodia, but they could never do it at the same scale as China has.

The same goes for Africa. Moving the entire manufacturing capacity to Africa that was transferred from the west to China starting 20-30 years ago, would be such a logistical nightmare nobody would seriously consider it, And so we have come to a standstill. Globalization can no longer move, because it has nowhere to move to. The world is as fully globalized as it ever will be. But globalization is a process.

Perhaps counterintuitively, the only thing it can really do is to move back. For a number of different reasons, I think that’s exactly what will happen. And I don’t think that’s all that bad. Trump is of course already preparing part of that move with his tariffs war. But it can, and I’m quite sure will, go much further.

If globalization only means, and is restricted to, the transfer of manufacturing anything and everything from the US and Europe to China, and that’s what it appears to mean, the drawback for the former(s) is painfully obvious. So is the one for the planet.

It may make sense to produce high end products, like intricate complex electronics, in one location in the world, but why on earth should China produce our underwear? Yeah, they can do it cheaper, sure, but the main effect of that is it kills our jobs. The narrative about this over the past few decades has been that we were building a ‘knowledge economy’ or a ‘service economy’, but that’s a whole lot of BS.

Not only do we now depend on China to make our underwear, all those panties and shorts and shirts have to be hauled halfway across the planet by fossil-fuel-powered behemoth container ships. While we could make them right where we live, pay people a living wage to do it, and lower pollution in the process. Not a hard choice, even if your boxers would cost a dollar more.

And whether you worry about the planet and climate and species extinction or not, enough people do to make it an ever growing factor in decision making on these topics. And there’s more. Henry Ford understood it: people must be paid enough to afford your products if your business is to be successful. The whole “globalization” towards lower wage countries has not only lowered prices in the US and Europe, but also wages.

And that in turn has opened the way towards higher pay for executives, higher stock prices and dividends etc., in other words towards more inequality. Very few people understand the mechanics that drive this, but more of them will and must as their wages become the same as those in China.

So anyway, Mark Carney’s grand Synthetic Hegemonic plans are too little too late. Not that that will keep him from blabbing about them, he represents the ruling classes after all, which are doing just fine and would like to be doing even finer. But even he, and they, cannot deny that globalization is like a shark that dies when it can no longer move. Scary movie title: Globalization Never Sleeps…

And Trump plays his role in this just dandy. Not that he’s the smartest guy around, far from it, but he does recognize how globalization hurts America. And that China, a third world country not long ago, is now perhaps the world’s largest economy and will have to be subject to entirely different rules and scrutiny than in, say, 1980.

China must open up its economy to US and EU products, or the latter must close theirs to what China produces. That’s what the trade war, and/or the currency war, the whole enchilada, is about. And perhaps it needed an elephant like Trump to say it, but that’s not important. The entire world economy has reached the limits of its lopsided-ness , and the imbalance must be fixed. Simple stuff.

I’ve been using underwear as an example, but we all know -or we could- how much of what we purchase daily comes from China. Well, that, too, like globalization, and because of it, has reached its peak. We will make our own underwear again. It that a bad thing? How? Henry Ford would have understood it is not, even if he might have been the first to move his production lines to Shenzhen if he would have had the option.

Ford understood the link between prices and wages, but that knowledge appears to be gone. Except perhaps in China, but their model relies exclusively on exports and that can’t last either. Ford sought to sell his cars to his own workers. Which is just about the very opposite of what today’s financial elites are after, and why Carney wants a -belated- Synthetic Hegemonic Currency.

See the point? I predict Carney and his ilk will propose a cloud-based world currency soon, ‘guaranteed’ by -probably- the IMF’s Special Drawing Rights (SDR), but that is totally unfit for the role they have in mind.

Because you don’t need such a currency to pay for the underwear that’s produced by your neighbors just down the road. You only need it for the underwear that comes from China.

Debt Rattle August 26 2019

Aug 262019

August 26, 2019 Posted by Raúl Ilargi Meijer at 9:10 am Finance Tagged with: Boris, Brexit, China, ECB, homeless, Hong Kong, Mnuchin, trade war, Trump 11 Responses »

Marc Chagall The Smolensk newspaper 1914

• Yield Curve Screams “Recession” as Trade War Picks Up Steam (Mish)

• China’s Yuan Slumps To 11-Year Low, Stocks Fall As Trade War Escalates (R.)

• Trump Says China Called Twice To Restart Trade Talks (MW)

• China Willing To Resolve Trade Dispute With US Via Dialogue (R.)

• Mnuchin: If China Agreed To Fair Relationship, We’d Sign ‘In A Second’ (CNBC)

• Hong Kong Police Arrest 36 After Running Battles With Protesters (R.)

• Australia’s Big Banks Gear Up For Capital Raising Rush (R.)

• Why The Next ECB Stimulus Plan May Fail (Lacalle)

• Britain Can ‘Easily Cope’ With No-Deal Brexit, Claims Boris Johnson (G.)

• Has Anyone Loved Being Prime Minister As Much As Boris Johnson? (Peston)

• England’s Homeless Children Problem (ZH)

• English Police Could Patrol Northern Ireland Border After No-Deal Brexit (RT)

To think that until recently this was not considered possible at all.

• Yield Curve Screams “Recession” as Trade War Picks Up Steam (Mish)

Futures pick up where they left off Friday with equity prices and bond yields lower. Sunday Evening Futures: • Equities Down • Gold Up • Treasury Yields Down As of 1:36 AM Central on Monday morning, the 30-year long bond is a record low 1.942%. It’s now inverted 17.8 basis points with the Fed Funds rate. The 5-year note is a whopping 78.4 basis points inverted. Few seem to believe it, but the yield curve is now screaming recession.

“The impact of the new tariffs on China’s economic growth will be sizeable..”

• China’s Yuan Slumps To 11-Year Low, Stocks Fall As Trade War Escalates (R.)

China’s yuan slumped to a fresh 11-year low against the dollar on Monday and stocks fell as the Sino-U.S. trade war sharply escalated, threatening to inflict more damage on the world’s largest economies and weigh further on global growth. In Hong Kong, a weekend flare-up in violence during anti-government protests added to pressure on share prices. The onshore yuan fell 0.6% in early trade to 7.15 per dollar, its weakest since February 2008 and its second biggest one-day drop of the month. The offshore yuan fell to a record low of 7.1850, before regaining some ground to around 7.1595.

The Chinese authorities have allowed the tightly-managed yuan to fall some 3.6% so far this month as trade tensions between Beijing and Washington worsened, sparking fears of a global currency war. It was trading around 7.1419 by 0330 GMT. On Friday, U.S. President Donald Trump announced an additional duty on some $550 billion of targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75 billion worth of U.S. goods. “This tit-for-tat escalation shows how unlikely a trade deal and de-escalation have become,” Louis Kuijs, of Oxford Economics, wrote in a note late on Sunday. “The impact of the new tariffs on China’s economic growth will be sizeable,” he said.

China denies.

• Trump Says China Called Twice To Restart Trade Talks (MW)

In a comment that moved financial markets, President Donald Trump on Monday said serious negotiations with China will begin after the U.S. received two “very good calls” from Beijing. “China called last night our top trade people and said let’s get back to the table,” the president said after meeting Egyptian President Abdel-Fattah el-Sissi. “I have great respect for it.” Trump said “we are going to start talking very seriously.” He says the Chinese want to make a deal and he thinks one will finally be reached. Trump says he’ll say more about China later Monday.

China’s foreign ministry meanwhile said it wasn’t aware of any such calls and that a U.S.-China decoupling will lead to market chaos, according to wire reports. After the Dow Jones Industrial Average DJIA, -2.37% dropped 623 points on Friday, U.S. stock futures were higher in the early hours of Monday morning. The dollar rose against the Japanese yen. Europe stocks were a bit weaker, with trading light with the U.K. market closed for a holiday.

All has to be said in a way that avoids losing face.

• China Willing To Resolve Trade Dispute With US Via Dialogue (R.)

Chinese Vice Premier Liu He said on Monday that China is willing to resolve its trade dispute with the United States through calm negotiations and resolutely opposes the escalation of the conflict, a state-backed newspaper reported. Liu, China’s top trade negotiator, was speaking at a tech conference in Chongqing in southwest China, the Chongqing Morning Post reported. The comments come after U.S. President Donald Trump last week announced an extra 5% duty on some $550 billion of Chinese goods, the latest tit-for-tat move announced hours after China unveiled its retaliatory tariffs on $75 billion worth of U.S. products.

“They have free entrance into our markets, our investments, our companies and we do not have the same thing there. That’s the only reason why we are in this situation..”

• Mnuchin: If China Agreed To Fair Relationship, We’d Sign ‘In A Second’ (CNBC)

American Treasury Secretary Steven Mnuchin doubled down on the White House’s latest punch in the U.S.-China trade war by calling out Beijing for unfair trade practices. “We do not have free trade with them,” Mnuchin said Sunday on the sidelines of the G-7 meeting in France. “It’s a one way street: They have free entrance into our markets, our investments, our companies and we do not have the same thing there. That’s the only reason why we are in this situation with China. If China would agree to a fair and balanced relationship, we would sign that deal in a second,” he added.

“Sometimes you’ve got to take stern measures,” White House economic advisor Larry Kudlow said alongside Mnuchin, adding that American companies should heed the president’s call to leave China. “Come home to America, we’ve got the best tax system, we’ve got the best regulatory system, it’s an easy place to make money, the best technology in the world. Come home. That’s what the president is saying,” Kudlow said. Before leaving for the G-7, U.S. President Donald Trump said he would raise existing duties on $250 billion in Chinese products to 30% from 25% on Oct. 1. Additionally, he said, tariffs on another $300 billion of Chinese goods, which start to take effect on Sept. 1, will now be 15% instead of 10%.

Protesters are escalating because their demands are ignored.

• Hong Kong Police Arrest 36 After Running Battles With Protesters (R.)

Hong Kong police said on Monday they arrested 36 people, the youngest aged 12, after violence during anti-government demonstrations escalated as protesters hurled Molotov cocktails at security forces who responded with water cannon and tear gas. Sunday’s protests saw some of the fiercest clashes yet between police and demonstrators since protests escalated in mid-June over a now-suspended extradition bill that would have allowed Hong Kong people to be sent to mainland China for trial. Police fired water cannon and volleys of tear gas in running battles with brick-throwing protesters on Sunday, the second day of violent clashes in the Chinese-ruled city.

Six officers drew their pistols and one officer fired a warning shot into the air, police said in a statement. “The escalating illegal and violent acts of radical protesters are not only outrageous, they also push Hong Kong to the verge of a very dangerous situation,” the government said in a statement.

More demonstrations are planned in the days and weeks ahead, including a rally at Hong Kong’s Cathay Pacific Airways headquarters on Wednesday to protest against perceived “white terror”, a common expression to describe anonymous acts that create a climate of fear. Cathay has emerged as the biggest corporate casualty of the protests after China demanded it suspend staff involved in, or who support, the anti-government demonstrations that have plunged the former British colony into a political crisis. The protests also pose the gravest popular challenge to Chinese President Xi Jinping since he took power in 2012, with Beijing eager to quell the unrest ahead of the 70th anniversary of the founding of the People’s Republic of China on Oct 1.

Bubbling below the surface.

• Australia’s Big Banks Gear Up For Capital Raising Rush (R.)

Australia’s biggest banks are expected to cut dividend payments and tap bond markets for more funding to cope with tougher capital requirements as regulators look to safeguard the sector from future market volatility, according to analysts and bankers. This week, Commonwealth Bank of Australia Chief Executive Matt Comyn and Chief Financial Officer Alan Docherty will finalise a roadshow with Australian equity investors before holding similar meetings in New York next month as well as London and Hong Kong. The bank traditionally meets with investors following its full-year results and the presentations have often preceded CBA tapping the bond markets. However, the meetings this year come as Australia’s banks are under increasing pressure to boost their capital.

Last week, the Australian Prudential Regulation Authority (APRA) said local banks would only be allowed to have 25% of their tier one capital – core funds held to help absorb losses – exposed to international operations or related parties from January 2021, down from the current 50%. That means banks such as Australia and New Zealand Banking Group face higher costs because they will have to fund each unit separately. The news came on top of another decision by APRA last month ruling that Australian banks would need to raise an extra A$50 billion ($33.8 billion) of so-called “tier two” bonds – riskier instruments that suffer losses before tier one capital is touched – by 2024 as part of its new total loss absorbing capital rules.

“..all this happens amidst an unprecedented chained stimulus.”

• Why The Next ECB Stimulus Plan May Fail (Lacalle)

When many analysts tell us that Europe “is not so bad” or that “it is only a slowdown,” they ignore that all this happens amidst an unprecedented chained stimulus. The results are not only extremely poor, but they are also deeply worrying. According to Morgan Stanley, the European Central Bank could be preparing a new repurchase program of between 2.2 and 3.3 billion euros. Not only buying back bonds from governments, but also from banks and companies. What for? Even Italy – in the midst of a political crisis – has negative real sovereign bond yields. The sovereign debt of all the eurozone countries shows negative yields in two-year maturity and negative as well going up to seven years. Germany has just launched a 30-year bond at -0.11%.

Is it really necessary to artificially depress yields even more? In the eurozone there are already fourteen junk bonds listed with negative yields and high-risk bonds of banks and companies are listed with ridiculous returns of 3-4%. The problem of the eurozone is not lack of liquidity, when excessive liquidity reaches 1.8 trillion euros, or low rates when they are already negative,. The eurozone problem is precisely the constant practice of using monetary policy as a perverse incentive to maintain structural imbalances. Monetary policy works as a huge transfer of wealth from savers and productive sectors of the eurozone to inefficient governments and unproductive sectors that are constantly refinanced, zombifying the economy, putting obstacles to productivity and technological change.

The stimulus chain described above can be summed up in the phrase: a huge subsidy to low productivity. Here is the debate. Why has it worked in the US and not in Europe? First, because it is not true that the United States owes its improvement to quantitative easing. In a report by Stephen Williamson for the Federal Reserve, he already warned that “there is no relationship between greater economic activity and quantitative easing.” The US economy is the most dynamic, open and least dependent on bank financing of the world’s leading countries. The Federal Reserve never accounted for 100% of the demand for government bonds, it always kept an eye on the secondary market. The ECB became seven times the bond supply, according to Deutsche Bank.

Blaming the EU will not work.

• Britain Can ‘Easily Cope’ With No-Deal Brexit, Claims Boris Johnson (G.)

Britain could “easily cope” with a no-deal Brexit, which would be the fault of EU leaders’ “obduracy”, Boris Johnson claimed at the summit of G7 countries in France, as he continued to resist mounting pressure to spell out his own plans for breaking the deadlock. “I think we can get through this, this is a great, great country, the UK, we can easily cope with a no-deal scenario,” Johnson insisted in Biarritz, as he made his debut on the international stage as prime minister with a series of bilateral meetings with world leaders including Donald Trump, the EU council president Donald Tusk and Indian prime minister Narendra Modi. Johnson said preparations for no deal were being ramped up to help secure an agreement, but also “so that if and when we are forced by the obduracy by our European friends to come out on 31 October without a deal that things are as smooth as they can possibly be”.

Johnson claimed food shortages – one of the risks outlined in the leaked Operation Yellowhammer documents on no-deal planning – were “highly unlikely”, and offered a “guarantee” that patients would be able to access medicines unhindered. The prime minister said that in the event of no deal the UK would withhold much of the £39bn financial settlement agreed by Theresa May – and insisted it was up to the EU27 to avert that eventuality. “If we come out without an agreement it is certainly true that the £39bn is no longer, strictly speaking, owed,” he said “There will be very substantial sums available to our country to spend on our priorities. It’s not a threat. It’s a simple fact of reality.”

Robert Peston was once a serious journalist. What is this, the elites are closing ranks?

• Has Anyone Loved Being Prime Minister As Much As Boris Johnson? (Peston)

I’ve learned only one thing at the G7 summit of big rich countries here in Biarritz: Boris Johnson absolutely loves being Prime Minister. There’s little of the conspicuous sense of duty that weighed on the shoulders of Theresa May, Gordon Brown and Sir John Major. Nor is there that unnerving claim to embody the spirit of a nation that Tony Blair and Margaret Thatcher perhaps made too often and believed too much. There’s a touch of David Cameron’s Old Etonian entitlement, the idea that it would be odd if he weren’t PM. But mostly Johnson simply seems to be having fun – whether by pointing a joshing finger at the imperious president of France or telling an incredulous President of the EU that they agree on absolutely everything.

Johnson’s bonhomie is all the more odd because the UK – as his advisers remind him continuously – is in the grips of the most acute peacetime crisis for generations, over how and even whether to leave the EU, and Johnson’s grip on power is almost non-existent, with no majority in Parliament and fratricide in his own Tory party as unremarkable as shaking hands. But in Johnson we have the clown prince of prime ministers, who – for the first time in years, or perhaps ever – plainly thinks he is home. His interlocutors – Emmanuel Macron, Donald Tusk, Justin Trudeau – all laugh. With him or at him? I am not sure that matters, in that he seems to cheer them up.

Feel-good Boris.

• England’s Homeless Children Problem (ZH)

New estimates from the Children’s Commissioner’s Office for England have revealed that, in addition to the official figure for child homelessness of 124 thousand, there are thought to be around 92 thousand children ‘sofa surfing’ in the country. Statista’s Martin Armstrong notes that the report, ‘Bleak Houses’ also found that the temporary accommodation of families and children is often not fit for human habitation with shipping containers, office blocks and B&Bs being re-purposed to house them.

Commenting on the findings, Children’s Commissioner Anne Longfield said: “It is a scandal that a country as prosperous as ours is leaving tens of thousands of families in temporary accommodation for long periods of time, or to sofa surf.” On the reasons for the current situation, Polly Neate, chief executive of charity Shelter blamed “a cocktail of punitive welfare policies, a woeful lack of social homes and wildly expensive private rents mean this is frighteningly commonplace.”

Oh no.

• English Police Could Patrol Northern Ireland Border After No-Deal Brexit (RT)

Despite a wealth of history suggesting that it’s a very bad idea, UK politicians have reportedly devised detailed plans to deploy English police officers in Northern Ireland in the event of a no-deal Brexit. According to a report in The Sunday Times, the plans would first see approximately 300 Scottish police drafted in to support the Police Service of Northern Ireland (PSNI) as a preliminary step. However, if tensions between the unionist and nationalist communities boil over or civil unrest erupts, officers from English forces will be deployed in the province.

A source at London’s City Hall told the newspaper: “All the police forces have agreed to give support to Northern Ireland. It is a concern. Thankfully it wouldn’t affect too many London officers, but we would be there. Imagine it: officers from the mainland in Northern Ireland. Bloody hell.” Unsurprisingly the report has triggered alarm bells in Northern Ireland and Ireland with many people worrying that it could incite anger among Irish nationalists and endanger the fragile peace in the region. “English police on the Irish border. What could go wrong? Don’t remember this on the referendum ballot paper or being debated in 2016? In the week we have remembered Mo Mowlam I despair at such a reckless attitude to hard-won peace,” Labour MP Anna Turley said.

Debt Rattle June 3 2019

Jun 032019

June 3, 2019 Posted by Raúl Ilargi Meijer at 10:07 am Finance Tagged with: Assange, Boeing, Brennan, Growth, homeless, Juncker, Monsanto, Mueller, pensions, retirement, trade war 5 Responses »

Paul Ranson Apple tree with red fruit 1902

• Global Recession Fears Mount As Manufacturing Shrinks Across Asia (R.)

• How Many People Will Be Retiring in the Years to Come? (St.L.Fed)

• Economic Growth Is An Unnecessary Evil (TLE)

• Mueller Must Testify Publicly To Answer Three Critical Questions (Turley)

• Alan Dershowitz: US ‘Overplayed Its Hand’ on Assange (NM)

• The Intelligence Community Needs A House-Cleaning (Matt Taibbi)

• Juncker: Not Enough Work To Keep 28 EU Commissioners Busy (EuA)

• US Regulators Say Some Boeing 737 MAX Planes May Have Faulty Parts (R>)

• Science institute That Advised EU and UN ‘Actually Industry Lobby Group’ (G.)

• EU Candidate To Run UN Food Body Will ‘Not Defend’ EU Stance On GMO (G.)

• Helsinki’s Radical Solution To Homelessness (G.)

One tool left: lower interest rates.

• Global Recession Fears Mount As Manufacturing Shrinks Across Asia (R.)

Factory activity contracted in most Asian countries last month as an escalating trade war between Washington and Beijing raised fears of a global economic downturn and heaped pressure on policymakers in the region and beyond to roll out more stimulus. Such growth indicators are likely to deteriorate further in coming months as higher trade tariffs take their toll on global commerce and further dent business and consumer sentiment leading to job losses and delays in investment decisions. Some economists predict a world recession and a renewed race to the bottom on interest rates if trade tensions fail to ease at a Group of 20 summit in Osaka, Japan at the end of June, when presidents Donald Trump and Xi Jinping could meet.

In China, Asia’s economic heartbeat, the Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) showed modest expansion at 50.2, offering investors some near-term relief after an official gauge on Friday showed contraction. The outlook, however, remained grim as output growth slipped, factory prices stalled and businesses were the least optimistic on production since the survey series began in April 2012. PMIs were below the 50-point mark separating contraction from expansion in Japan, South Korea, Malaysia and Taiwan, came below expectations in Vietnam and improved slightly in the Philippines. “The additional shock from the escalated trade tensions is not going to be good for global trade and if demand in the U.S., China and Europe continues to soften, which is very likely, it will bode ill for Asia as a whole,” said Aidan Yao, senior emerging markets economist at AXA Investment Managers.

And because of those lower interest rates, very few Americans will be able to retire, let alone at 65. Which makes this St. Louis Fed article outright insane, insulting even.

• How Many People Will Be Retiring in the Years to Come? (St.L.Fed)

In this post, I will describe a preliminary estimate of the number of people retiring each month over the next 20 years. I started with the population of workers between the ages of 40 and 65 in 2018 using data gathered by IPUMS-USA. I then used age- and gender-specific mortality rates from the Human Mortality Database to compute how many people are expected to still be alive the next year (at only one year older). I continued iterating this procedure for a few years, assuming that the age-specific mortality rates remain constant over the years I specify. Finally, I counted the number of people reaching age 65 each year, further breaking it down to the averages of those reaching 65 each day and each month. The figure below shows the result of this calculation.

Initially, it is evident that there will be around 10,000 people (taking the total of retiring males and females) turning 65 each day for the next two decades. The right axis indicates the number of people turning 65 each month, which is an easier number to compare with the BLS monthly report on the current employment situation in the U.S. Not surprisingly, the peak corresponds to the retiring of the baby boomers. From 2025 onward, the trend is declining, which is likely because of the baby bust that followed the baby boom.

Don’t worry, growth will soon be a thing of the past.

• Economic Growth Is An Unnecessary Evil (TLE)

In 2012, writing as a lone economics blogger, I put forward a case for why countries should ditch economic growth as a political priority. Long revered as a stalwart of a capitalist society the need to grow has come to overshadow everything else. We prioritise it over our personal health, we prioritise it over the health of the planet and we prioritise it over our happiness. But given that the function of any economy is to provide an environment of subsistence, that could be little short-sighted. Economist Kenneth Boulding once said that we eat in order to achieve the state of being well-fed, and moving our jaws is simply the ‘cost’ of getting there.

We would therefore be mistaken to focus our attention on the act of chewing as the desired end-state when it is simply the price we pay to become fed. But as long as growth is the target of our economic systems people will continue to focus on chewing, which is neither a sustainable nor desirable trait of an economy. Which is why I welcomed news that New Zealand’s Prime Minister Jacinda Ardern has put out a national budget where spending is dictated by what best encourages the “well-being” of citizens, rather than focussing on traditional bottom-line measures like productivity and economic growth.

The government will put an emphasis on goals like community and cultural connection and equity in well-being across generations in what has been described as a “game-changing event” by LSE professor Richard Layard. As part of the framework Ardern has set aside more than $200 million to bolster services for victims of domestic and sexual violence and included a promise to provide housing for the homeless population. New guidance on policy suggests all new spending must advance one of five government priorities: improving mental health, reducing child poverty, addressing the inequalities faced by indigenous Maori and Pacific islands people, thriving in a digital age, and transitioning to a low-emission, sustainable economy.

But he said he wouldn’t say another word…

• Mueller Must Testify Publicly To Answer Three Critical Questions (Turley)

In that twinkling zone between man and myth, Robert Mueller transcends the mundane. Even in refusing to reach a conclusion on criminal conduct, he is excused. As Mueller himself declared, we are to ask him no questions or expect any answers beyond his report. But his motivations as special counsel can only be found within an approved range that starts at “selfless” and ends at “heroic.” Representative Mike Quigley defended Mueller’s refusal to reach a conclusion as simply “protecting” President Trump in a moment of “extreme fairness.” Yet, as I noted previously, Mueller’s position on the investigation has become increasingly conflicted and, at points, unintelligible.

As someone who defended Mueller’s motivations against the unrelenting attacks of Trump, I found his press conference to be baffling, and it raised serious concerns over whether some key decisions are easier to reconcile on a political rather than a legal basis. Three decisions stand out that are hard to square with Mueller’s image as an apolitical icon. If he ever deigns to answer questions, his legacy may depend on his explanations. One of the most surprising disclosures made by Attorney General William Barr was that he and Deputy Attorney General Rod Rosenstein expressly told Mueller to submit his report with grand jury material clearly marked to facilitate the release of a public version.

The Justice Department cannot release grand jury material without a court order. Mueller knew that. He also knew his people had to mark the material because they were in the grand jury proceedings. Thus, Barr and Rosenstein reportedly were dumbfounded to receive a report that did not contain these markings. It meant the public report would be delayed by weeks as the Justice Department waited for Mueller to perform this basic task. Mueller knew it would cause such a delay as many commentators were predicting Barr would postpone the release of the report or even bury it. It left Barr and the Justice Department in the worst possible position and created the false impression of a coverup.

Why would a special counsel directly disobey his superiors on such a demand? There is no legal or logical explanation. What is even more galling is that Mueller said in his press conference that he believed Barr acted in “good faith” in wanting to release the full report. Barr ultimately did so, releasing 98 percent of the report to select members of Congress and 92 percent to the public. However, then came the letter from Mueller.

“..the Supreme Court. “I suspect that is where this case is headed as well..”

• Alan Dershowitz: US ‘Overplayed Its Hand’ on Assange (NM)

Bringing charges against WikiLeaks founder Julian Assange under the Espionage Act is one thing, but legal extradition is going to be far more difficult for merely publishing stolen material, not actually stealing it, according to legal expert Alan Dershowitz. “I think the Trump administration has overplayed its hand, so did the Justice Department,” Dershowitz told “The Cats Roundtable” on 970 AM-N.Y.. “They had a very strong case for extradition when they initially accused him of breaking into a password [-protected machine] to try to get classified material, that’s a crime. “But publishing materials? That’s very different. That’s The New York Times and The Washington Post, and I think Great Britain is going to have a lot of difficulty extraditing Assange to the U.S. to face trial for merely publishing material stolen not by him but by others.”

The case will not be one of espionage but a case of free speech and the First Amendment, according to Dershowitz. I think we’re in for a very interesting First Amendment case, probably the most interesting First Amendment case involving national security since Pentagon Papers.” Dershowitz was one of the lawyers of the Pentagon Papers case related to Watergate and the ultimate impeachment proceedings and resignation of former President Richard Nixon, taking the case to the Supreme Court. “I suspect that is where this case is headed as well,” Dershowitz told host John Catsimatidis.

“Schiff was gung-ho to declassify “as much as possible about Russia hacking our elections” back in the summer of 2016, but now describes attempts to declassify information about the reasons for the probe as an attempt to “weaponize law enforcement.”

• The Intelligence Community Needs A House-Cleaning (Matt Taibbi)

CIA director Gina Haspel crowed to the Washington Post a year ago that disclosing the name of informant Stefan Halper “could risk lives.” It turned out Halper had been outed as a spook in the pages of the New York Times back in 1983, and openly traded on his intelligence past as a professor in England. Where were lives at risk, in the Cambridge University Botanical Garden? We also saw reports that revealing the name of former British spy Christopher Steele would imperil his life. When the Wall Street Journal outed him in January of 2017, Steele responded by telling British media that he was “terrified for his safety.” He added he was going into hiding because he feared a “potentially dangerous backlash against him from Moscow.”

We later found out Steele had more media contacts than the Kardashian family, meeting with (at minimum) the Times, Post, Yahoo!, The New Yorker, CNN and Mother Jones in the space of about seven weeks in September-October 2016. In the years since his report became public, Steele fought through his terror to keep commiserating with the media. He invited a sprawling, laudatory 2018 profile in The New Yorker that described him answering “one of his two phones” in Farnham, a Surrey town with a “beautiful Georgian high street,” where he and his four children live on “nearly an acre of land.” He’s given depositions, negotiated to testify before congress, and been a primary source in several bestselling books. Thanks to such elaborate precautions, he’s managed somehow to avoid assassination since 2016.

[..] The release of the Page warrant turned out to not to compromise anything but the reputation of the FBI and other agencies. The major revelation was the FBI had indeed used Steele, a “compensated” FBI informant as well as a private oppo researcher, as a source despite having “suspended its relationship” with him in October 2016, ostensibly over failure to disclose media contacts. House Intel committee ranking member Adam Schiff knew this information when he conducted his “bombshell” hearing” on March 20, 2017. That was the one in which he and other members questioned not-yet-fired FBI chief James Comey and Rogers, and read out information from the Steele report as if it were factual, not giving any hint that there might be issues with it.

Schiff was gung-ho to declassify “as much as possible about Russia hacking our elections” back in the summer of 2016, but now describes attempts to declassify information about the reasons for the probe as an attempt to “weaponize law enforcement.” The hemming and hawing about “sources and methods” is really a pre-emptive ass-covering campaign. A bunch of these people are about to be highlighted in the upcoming review by Justice IG Michael Horowitz, as well as the larger probe led by former Connecticut U.S. Attorney John Durham. This is why we’ve seen stories that essentially show James Comey and Brennan pointing fingers and blaming the other for using the Steele material.

“..a million euro per Commissioner, for relocation, staff and the lifelong pension which every Commissioner gets, no matter how long he or she has been in office..”

• Juncker: Not Enough Work To Keep 28 EU Commissioners Busy (EuA)

European Commission President Jean-Claude Juncker has urged member states not to name short-term replacements for the Commissioners that have been elected as MEPs, insisting there is not enough work for 28 Commissioners anyway. Five of Juncker’s Commissioners have been elected as MEPs: First Vice President Frans Timmermans, vice-presidents Andrus Ansip and Valdis Dombrovskis, and Commissioners Corina Cretu and Mariya Gabriel. In an interview with BILD am Sontag yesterday (2 June), Juncker made a strong appeal that the member states should not replace them until the end of the mandate in November.

The elected MEPs must decide whether to take their seats before 1 July. If some of the elected Commissioners take their MEP seats, their countries will be without a Commissioner for four months. “Each member state has the right to appoint a new Commissioner for the remaining four months,” Juncker said, adding that “this would cost the European taxpayer a million euro per Commissioner, for relocation, staff and the lifelong pension which every Commissioner gets, no matter how long he or she has been in office, because the member states have decided that this is so. I’m trying to stop this.”

“If it is in the air by Christmas (Dec. 25) I’ll be surprised – my own view..”

• US Regulators Say Some Boeing 737 MAX Planes May Have Faulty Parts (R>)

The U.S. Federal Aviation Administration on Sunday disclosed a new problem involving Boeing Co’s grounded 737 MAX, saying that more than 300 of that troubled plane and the prior generation 737 may contain improperly manufactured parts and that the agency will require these parts to be quickly replaced. The FAA said up to 148 of the part known as a leading-edge slat track that were manufactured by a Boeing supplier are affected, covering 179 MAX and 133 NG aircraft worldwide. Slats are movable panels that extend along the wing’s front during takeoffs and landings to provide additional lift. The tracks guide the slats and are built into the wing.

[..] In a statement issued after the FAA announcement, Boeing said it has not been informed of any in-service issues related to this batch of slat tracks. Boeing, the world’s largest plane maker, said it has identified 20 737 MAX airplanes most likely to have the faulty parts and that airlines will check an additional 159 MAXs for these parts. Boeing said it has identified 21 737 NGs most likely to have the suspect parts and is advising airlines to check an additional 112 NGs. The NG is the third-generation 737 that the company began building in 1997. The affected parts “may be susceptible to premature failure or cracks resulting from the improper manufacturing process,” the FAA said.

[..] Boeing in April said the two fatal crashes had cost it at least $1 billion as it abandoned its 2019 financial outlook, halted share buybacks and lowered production. The company’s shares have fallen by nearly 20 percent since the Ethiopian Airlines crash in March. Some international carriers are skeptical the plane will resume flying by August as some U.S. airlines have suggested. Tim Clark, president of Emirates, told reporters in Seoul that it could take six months to restore operations as other regulators re-examine the U.S. delegation practices. “If it is in the air by Christmas (Dec. 25) I’ll be surprised – my own view,” he said.

And there’s Monsanto again.

• Science Institute That Advised EU and UN ‘Actually Industry Lobby Group’ (G.)

An institute whose experts have occupied key positions on EU and UN regulatory panels is, in reality, an industry lobby group that masquerades as a scientific health charity, according to a peer-reviewed study. The Washington-based International Life Sciences Institute (ILSI) describes its mission as “pursuing objectivity, clarity and reproducibility” to “benefit the public good”. But researchers from the University of Cambridge, Bocconi University in Milan, and the US Right to Know campaign assessed over 17,000 pages of documents under US freedom of information laws to present evidence of influence-peddling.

The paper’s lead author, Dr Sarah Steele, a Cambridge university senior research associate, said: “Our findings add to the evidence that this nonprofit organisation has been used by its corporate backers for years to counter public health policies. ILSI should be regarded as an industry group – a private body – and regulated as such, not as a body acting for the greater good.” In a 2015 email copied to ILSI’s then director, Suzanne Harris, and executives from firms such as Coca-Cola and Monsanto, ILSI’s founder Alex Malaspina, a former Coca-Cola vice-president, complained bitterly about new US dietary guidelines for reducing sugar intake.

“These guidelines are a real disaster!” he wrote. “They could eventually affect us significantly in many ways; Soft drink taxations, modified school luncheon programs, a strong educational effort to educate children and adults to significanty [sic] limit their sugar intake,, curtail advertising of sugary foods and beverages and eventually a great pressure from CDC [the US Center for Disease Control and Prevention] and other agencies to force industry to start deducing [sic] drastically the sugar we add to processed foods and beverages.”

And more Monsanto. Europe is losing.

• EU Candidate To Run UN Food Body Will ‘Not Defend’ EU Stance On GMO (G.)

Europe’s candidate to run the UN’s Food and Agriculture Organisation (FAO), which guides policymakers around the world, has promised the US she will “not defend the EU position” in resisting the global spread of genetically modified organisms (GMOs). In a bid for US support, Catherine Geslain-Lanéelle told senior US officials at a meeting in Washington on 15 May that under her leadership the FAO would be more open to American interests and accepting of GMOs and gene editing, according to a US official record of the meeting seen by the Guardian. The issue has been a longstanding point of conflict in trade talks with the EU, which has adopted a far more cautious approach to biotechnology in food and agriculture.

All GMO imports are subject to strict safety assessments imposed on a case-by-case basis. Plants and animals whose genome has been manipulated through gene editing are deemed to be GMOs and are subject to similar restrictions. The US portrays such restrictions as trade barriers and has demanded they be dropped. In the meeting with officials from the US agriculture and state departments, Geslain-Lanéelle, a former director general of the French agriculture and food ministry who also ran the European Food Safety Authority, signalled she would veer to the US side if she ran the FAO. “She is proud to be European, who she is, and where she comes from; however, she will promote FAO from a global perspective rather than with European Union or French views,” said a US government internal memo.

“She will not defend the EU position on biotechnology and genetically modified organisms. This is not what agriculture needs. She will defend a global project that includes US interests.”

“..you don’t need to solve your problems before you get a home. Instead, a home should be the secure foundation that makes it easier to solve your problems.”

• Helsinki’s Radical Solution To Homelessness (G.)

As in many countries, homelessness in Finland had long been tackled using a staircase model: you were supposed to move through different stages of temporary accommodation as you got your life back on track, with an apartment as the ultimate reward. “We decided to make the housing unconditional,” says Kaakinen. “To say, look, you don’t need to solve your problems before you get a home. Instead, a home should be the secure foundation that makes it easier to solve your problems.” With state, municipal and NGO backing, flats were bought, new blocks built and old shelters converted into permanent, comfortable homes – among them the Rukkila homeless hostel in the Helsinki suburb of Malminkartano where Ainesmaa now lives.

Housing First’s early goal was to create 2,500 new homes. It has created 3,500. Since its launch in 2008, the number of long-term homeless people in Finland has fallen by more than 35%. Rough sleeping has been all but eradicated in Helsinki, where only one 50-bed night shelter remains, and where winter temperatures can plunge to -20C. The city’s deputy mayor Sanna Vesikansa says that in her childhood, “hundreds in the whole country slept in the parks and forests. We hardly have that any more. Street sleeping is very rare now.” In England, meanwhile, government figures show the number of rough sleepers – a small fraction of the total homeless population – climbed from 1,768 in 2010 to 4,677 last year (and since the official count is based on a single evening, charities say the real figure is far higher).

But Housing First is not just about housing. “Services have been crucial,” says Helsinki’s mayor, Jan Vapaavuori, who was housing minister when the original scheme was launched. “Many long-term homeless people have addictions, mental health issues, medical conditions that need ongoing care. The support has to be there.”

It’s discouraging to think how many people are shocked by honesty and how few by deceit.
– Noel Coward

Debt Rattle June 1 2019

Jun 012019

June 1, 2019 Posted by Raúl Ilargi Meijer at 8:30 am Finance Tagged with: Assange, Galloway, Melzer, Mexico, rapporteur, Ron Paul, smear campaign, torture, trade war, Trump, UN 4 Responses »

• Relentless and Unrestrained Public Mobbing, Intimidation and Defamation (CN)

• UN Special Rapporteur Calls for Julian Assange to Be Freed (DN)

• Assange ‘Psychologically Tortured To Breaking Point By Democratic States’ (RT)

• Are US/UK Trying To Kill Assange? – Ron Paul (DM)

• Assange May Have To Die Before Journalists Realize Implications – Galloway (RT)

• 36 Countries The US Has Bullied This Week (RT)

• Prelude to a Fiasco (Jim Kunstler)

• US Stock Market Forgoes $5 Trillion In Returns Due To Trade War – Deutsche (MW)

• Dow 25,000! Oops…(WS)

• Mexico Tariffs May Hurt $600 Billion In Cross-Border Trade, US Economy (MW)

• Brazil Snubs Venezuelan Opposition Envoy As Doubts Rise On Guaido (R.)

NOTE: quite a few video’s today, which don’t always show if you receive this by mail. In that case, please refer to the Automatic Earth site.

“I’ve seen atrocities in war areas that were physically more horrible but I’ve never seen a single person pursued so relentlessly and with so little foundation.”

• Relentless and Unrestrained Public Mobbing, Intimidation and Defamation (CN)

“It was obvious that Mr. Assange’s health has been seriously affected by the extremely hostile and arbitrary environment he has been exposed to for many years. Most importantly, in addition to physical ailments, Mr. Assange showed all symptoms typical for prolonged exposure to psychological torture, including extreme stress, chronic anxiety and intense psychological trauma.” “My most urgent concern is that, in the United States, Mr. Assange would be exposed to a real risk of serious violations of his human rights, including his freedom of expression, his right to a fair trial and the prohibition of torture and other cruel, inhuman or degrading treatment or punishment,” said Melzer.

He said he was “particularly alarmed” by the Espionage Act charges. “This may well result in a life sentence without parole, or possibly even the death penalty, if further charges were to be added in the future,” said Melzer. “[Assange] is really something I’ve never seen in 20 years,” Melzer said. “I’ve seen atrocities in war areas that were physically more horrible but I’ve never seen a single person pursued so relentlessly and with so little foundation. “[When I saw him] I immediately compared him to some of the graver cases in interrogation prisons in terms of his psychological reaction patterns. That’s what alarmed me so much.” He said Assange’s treatment was “very close to the intentional, purposeful infliction of coercive measures to try to break him”.

He appeared “extremely agitated and preoccupied,” Melzer said. “He asked a lot of questions and he would jump around, he was so preoccupied with everything he can’t even compute my answers any more. “There were episodes of this, then he was part of the conversation as normal, then again he would enter into this agitated state. I have seen with other victims of psychological torture that would happen.” Melzer also blasted the government of Assange’s native Australia. He told the newspaper, “Australia is a glaring absence in this case. They’re just not around, as if Assange was not an Australian citizen. That is not the correct way of dealing with that.”

Interesting man for sure. This part of his report stands out:

“I believe we have to take a step back and look at all these proceedings, how they have been conducted, and come to our own conclusions whether these are fair. We also have to take a step back and look at this whole narrative of suspected rapist; narcissist; selfish, ungrateful person; hacker, and scratch the surface a little bit and see what’s below there.

When I was first approached by his defense team seeking protection from my mandate in December last year, I was reluctant to do so, because, me, too, I had been affected by this prejudice that I had absorbed through all these public, you know, narratives spread in the media over the years. And only when I scratched the surface a little bit, I saw how little foundation there was to back this up and how much fabrication and manipulation there is in this case. So I encourage everybody to really look below the surface in this case.”

• UN Special Rapporteur Calls for Julian Assange to Be Freed (DN)

The United Nations special rapporteur on torture is warning that WikiLeaks founder Julian Assange is suffering from the effects of “psychological torture” due to his ongoing detention and threats of possible extradition to the United States. The U.N. expert, Nils Melzer, also warned that Assange would likely face a “politicized show trial” if he were to be extradited to the United States. Melzer writes, “In 20 years of work with victims of war, violence and political persecution, I have never seen a group of democratic states ganging up to deliberately isolate, demonize and abuse a single individual for such a long time.” Julian Assange is currently serving a 50-week sentence for skipping bail in 2012 at London’s Belmarsh Prison, after he was forcibly removed from the Ecuadorean Embassy by British police last month.

Last week, the U.S. Justice Department announced it was charging Assange with 17 counts of violating the Espionage Act for his role in publishing U.S. classified military and diplomatic documents exposing U.S. war crimes in Iraq and Afghanistan. Assange, who had already been charged on one count of hacking a government computer, now faces up to 170 additional years in prison under the new charges—10 years for each count of violating the Espionage Act. Assange was due to appear by video link before a magistrates’ court on Thursday but failed to appear, reportedly due to health problems. We speak with U.N. Special Rapporteur on Torture Nils Melzer.

Nils Melzer did a whole range of interviews in one day.

• Assange ‘Psychologically Tortured To Breaking Point By Democratic States’ (RT)

Jailed WikiLeaks co-founder Julian Assange shows clear signs of degrading and inhumane treatment which only adds to his deteriorating health, UN Special Rapporteur on Torture Nils Melzer told RT. Assange has “all the symptoms typical for a person who has been exposed to prolonged psychological torture,” Melzer told RT’s Afshin Rattansi. This adds to the toll of his deteriorating physical state caused by a lack of adequate medical care for several years, he said. Melzer said he was judging from two decades of experience in working with POWs and political prisoners, and only after applying “scientific” UN methods to assess Assange’s condition. But the journalist’s case still “shocked” him.

An individual has been isolated and singled out by several democratic states, and persecuted systematically… to the point of breaking him. Earlier this month, a UK court sentenced the WikiLeaks co-founder to nearly a year in jail for skipping bail in 2012. The courts are now deciding whether to extradite Assange to the US where he is wanted for 17 charges under the Espionage Act. He can end up serving up to 175 years in prison if proven guilty.

Me too, I thought of Warmbier: “..how would we look a lot different to the North Koreans on the surface?’

• Are US/UK Trying To Kill Assange? – Ron Paul (DM)

Former Congressman and presidential candidate Ron Paul says Julian Assange could die in prison and blames the apparent deterioration in the WikiLeaks founder’s heath on how he is being treated by the US and UK governments. Speaking on ‘Ron Paul Liberty Report, the 83-year-old accuses the US government of pursuing Assange and says they would like to either challenge him with a death penalty or a life time in prison ‘for being a journalist.’ The Libertarian calls Assange’s a ‘tragic story’ and describes his health as ‘very very bad,’ commenting that friends of the whistleblower are worried that his health may not hold up. [..] Paul also compares Assange’s plight to the case of Otto Frederick Warmbier, an American college student imprisoned in North Korea in 2016.

In June 2017, Warmbier was released by North Korea in a vegetative state and died soon afterward. Paul goes on to ask what the ramifications would be if Assange is much sicker than is being revealed and dies in prison as the result of how his case has been handled by Washington and London. ‘If he had a terminal disease or something happens to him, good, bad, or whatever and he dies in the prison, how would we look a lot different to the North Koreans on the surface?’ Paul questions. Paul goes on to slam the American media and journalists for their lack of reporting on Assange’s health problems, adding that news of his ill health came out via a Swedish newspaper. Paul adds there is ‘not much good journalism around any more’ and that by not doing more reporting on Assange, journalists ‘don’t want to protect their right to be a journalist.’

They still wouldn’t realize a thing.

• Assange May Have To Die Before Journalists Realize Implications – Galloway (RT)

“Julian Assange may have to die in the hospital wing of Belmarsh prison in order to bring it about” George Galloway believes it’s not long until ‘we could be in George Orwell’s 1984’ as he talks to In Question’s Manila Chan about the Wikileaks founder being too ill to appear at extradition hearing.

The US will end up all alone.

• 36 Countries The US Has Bullied This Week (RT)

It’s been a busy few days for American diplomacy, with three dozen nations ending up at the receiving end of threats, ultimatums and sanctions this week alone. And it’s only Friday. Mexico is the latest target, slapped with 5 percent tariffs on each and every export, gradually increasing to 25 percent until it stops the flow of Latin American migrants into the US, thus fulfilling one of President Donald Trump’s election promises. Most of those migrants aren’t even from Mexico. On the other side of the world, India is reportedly about to be forced to face a choice: ditch the purchase of Russian S-400 air defense systems or face sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA, Washington’s go-to cooperation enforcement instrument).

Turkey is facing a similar ultimatum: abandon S-400s (something Ankara has repeatedly refused to do) or lose access to the F-35 fighter jet program. This threat was repeated on Thursday by Kathryn Wheelbarger, US acting assistant secretary of defense for international security affairs. Ankara has already invested some $1.25 billion into the super-expensive American fighter, but with a lot of its parts being made in Turkey, it’s still an open question who would be the bigger loser. The entire European Union could be facing punishment if it tries to trade with Iran using its non-dollar humanitarian mechanism to bypass the American embargo. Having worked hard on the 2015 nuclear deal with Tehran, which has repeatedly been confirmed to be working, EU member states are not ready to ditch trade at Trump’s whim – and US Special Representative to Iran Brian Hook on Thursday reaffirmed the threat of CAATSA sanctions.

”The object is solely to divert the nation’s attention with an impeachment circus, allowing Mr. Mueller to slip away harmlessly into history..”

• Prelude to a Fiasco (Jim Kunstler)

You’d think that Robert Mueller might know what any licensed attorney-at-law in the land tells a client in a tight spot with a lame alibi: better keep you mouth shut. Instead, Mr. Mueller crept Sphinx-like out of the Deep State woodwork on little cat’s paws and in a brief nine minutes blabbed out a set of whopperish riddles much more likely to get himself in trouble than the target of his hinky inquisition. The key whopper was that he could not make “a determination” on an obstruction-of-justice charge against Mr. Trump because guidance policy from the DOJ’s Office of Legal Counsel had said some years ago that a sitting president can’t be indicted. That is not what he told his boss, Mr. Barr, the Attorney General (and a roomful of the AG’s staffers who heard it), in person when he delivered his final report a few weeks ago.

Upon receipt of that report, Mr. Barr asked the Special Counsel three times whether his inability to conclude anything on an obstruction charge was due to the OLC guidance, and three times Mr. Mueller answered “no.” Mr. Barr relayed this on-the-record in testimony before the House Judiciary Committee and, as averred above, he has plenty of witnesses. It should not be hard to reach a determination on who is telling truth here. In fact, Mr. Mueller could have declared that he found chargeable obstruction crimes were committed based on the evidence, and also demurred to press them at this time — leaving them available to federal prosecutors until after the president was out of office, one way or another.

The reason he didn’t is that Mr. Mueller does not want the case to come to trial, ever, because he would lose badly and his reputation would be destroyed. Consider that in any trial, the defendant gets to call witnesses and make his own case. The evidence for gross prosecutorial misconduct on the part of Mr. Mueller and his associates is mountainous compared to the molehill of Mr. Trump’s temper tantrums over the seditious hoax he was subject to. And that matter is now moving in the direction of adjudication. So instead, Mr. Mueller has set in motion a potential political crisis as momentous as the Civil War, but completely unlike it.

Knowing that congress can impeach the president on just about anything — especially this president, publicly reviled like no other before him — he served congress the platter of material to use in the form of his final report, and pretty much dared them to not go forward with it. Get this: it is a ruse. The object is solely to divert the nation’s attention with an impeachment circus, allowing Mr. Mueller to slip away harmlessly into history without sacrificing his own reputation in a courtroom.

We like big numbers.

• US Stock Market Forgoes $5 Trillion In Returns Due To Trade War – Deutsche (MW)

The U.S. stock market has left $5 trillion on the table as trade tensions over the past 17 months contributed to an effectively sideways trade, Deutsche Bank estimated on Friday. “While other factors also arguably played a role, the trade war has been key in preventing a recovery in global growth and keeping U.S. equities range bound. Foregone U.S. equity returns from price appreciation for 17 months are worth $5 trillion,” wrote Binky Chadha, the bank’s chief strategist, in a Friday note, based on an price appreciation at an annual rate 12.5% (see chart below).

Chadha’s calculation is based on the capitalization of the Russell 3000, a broad measure of equity markets, which had a capitalization of $28.7 trillion at the start of 2018. Foregone returns for the index over 17 months comes out to $5 trillion. The S&P 500 in the first four months of 2019 bounced back sharply from a steep fourth-quarter selloff nudging to an all-time closing high in April. But the index has retreated more than 6% in May, posting its first monthly decline since December and its worst May performance since 2010. The Dow Jones Industrial Average which failed to return to record territory before the May swoon, also fell more than 6% for the month.

What $20 trillion in stimulus bought you.

• Dow 25,000! Oops…(WS)

Stocks were already gunning for the worst May since 2010 when, on the evening before the last trading day, Trump tweeted that he would impose tariffs on imports from Mexico, if Mexico doesn’t crack down on migration flows coming through its southern border. Those tariffs would hit the automakers particularly hard because they imported 2.6 million vehicles from Mexico in 2018, up 10% from the prior year. Not even counting the component makers. But the Presidential tweet was just the icing on the cake. May had been crappy for stocks before the tweet went out.

The S&P 500 index, which earlier this week had fallen through 2,800, dropped another 1.3% today to 2,752, down 6.8% from its peak in early May that had exceeded by a hair the prior peak of September 2018. The index is now back where it had first been on January 9, 2018, having spent nearly 17 months going nowhere, despite intoxicating surges and nerve-wracking drops. And the chart is morphing from “not pretty” to something a little uglier (data via S&P Dow Jones Indices):

The Dow Jones Industrial Average fell 1.1% today, unceremoniously plopping through the 25,000 level and closed at 24,815. It’s now 7.9% below its October 2018 peak and right back where it had first been in December 2017, having spent 17 months gyrating to nowhere, including a 19% peak-to-trough plunge in four months followed by a blistering 22% rally in four months. The Nasdaq composite dropped 1.5% today, to 7,453, the level it first reached in January 2018, also going nowhere in nearly 17 months despite a huge bout of volatility. It fell 8.7% in May. The Russell 2000 index, which covers stocks with smaller market capitalization, fell 1.3% today, to 1,478. It’s down 9.2% in May alone, down 15.7% from its October 2018 peak, and right back where it had first been on September 26, 2017, a very volatile 20 months of going nowhere. Chart looking ugly (data via Investing.com):

This just might go horribly wrong.

• Mexico Tariffs May Hurt $600 Billion In Cross-Border Trade, US Economy (MW)

The U.S. economy could suffer a wrenching blow, business leaders and economists say, if President Trump follows through on his threat to slap tariffs on all imports from Mexico in a dispute over immigration controls. The president on Thursday said he would apply a 5% tariff on $350 billion in imports from Mexico unless the country reduces the flow of immigrants seeking to enter the United States. The surprise move slammed the stock market and prompted an immediate backlash from business. “These proposed tariffs would have devastating consequences,” said Jay Timmons, president of the National Association of Manufacturers. “Workers should not be forced to suffer because of the failure to fix our immigration system.”

Households could face higher prices for groceries and other key consumer staples, economists say. And businesses would have to pay more for key parts and materials, especially in the auto industry. “The duties represent a significant risk to business activity both north and south of the border,” said chief economist Gregory Daco of Oxford Economics. He said Mexico could be thrown into recession while U.S. growth could fall to 1% or less by 2020. The economies of the U.S. and Mexico have become inextricably intertwined in the quarter of a century since the North American Free Trade Agreement deal was signed in 1994. The two countries exchanged a whopping $612 billion in goods last year, making Mexico the third largest trading partner after Canada and China. More than $1.5 billion in products cross the border between the two countries every day.

Although Mexico is popularly known as the main U.S. source for avocados and tequila, the huge amount of products it sends to its northern neighbor each year touch almost every major segment of America’s economy. The U.S. imports enormous quantities of autos and parts, computer equipment, oil and gas, appliances and plastic and rubber products — not to mention fruits and vegetables such as tomatoes, berries and melons. Mexican imports in 2018 hit a record $347 billion.

Geez, is that still on?

• Brazil Snubs Venezuelan Opposition Envoy As Doubts Rise On Guaido (R.)

Brazil withdrew an invitation to the envoy for Venezuelan opposition leader Juan Guaido to present her diplomatic credentials, she said on Friday, and the government in Brasilia said it would decide later whether to accept them. Brazilian President Jair Bolsonaro still recognises Guaido as the legitimate president of Venezuela, his spokesman said. Guaido’s envoy, Maria Teresa Belandria, played down the idea that the snub reflected scepticism from Bolsonaro’s government. Diplomatic analysts said mounting evidence that a change of government in Venezuela is not imminent may have Bolsonaro and his aides wondering if they overplayed their support for Guaido.

Former military officers making up about a third of Brazil’s cabinet have been wary of provoking Venezuelan President Nicolas Maduro, warning against moves that could tip an economic and political crisis into violence across Brazil’s northern border. Belandria had been invited to present her credentials at the presidential palace along with ambassadors from other countries next Tuesday, but the government changed its mind. “I was uninvited,” she told Reuters, but went on to dismiss any suggestion the snub reflected diminished support for Guaido. “There will be another opportunity,” she said. “Brazil’s support continues to be strong, solid and decisive. It’s merely a protocol matter.”

Julian on Google

Debt Rattle September 18 2018

Sep 182018

September 18, 2018 Posted by Raúl Ilargi Meijer at 9:30 am Finance Tagged with: Assange, Brexit, debt, declassified, elephant, Lagarde, Lesbos, monsters, trade war, Trump, Wikileaks 7 Responses »

M. C. Escher Development II 1939

• Trump Orders More Russia-Related Probe Documents To Be Declassified (R.)

• David Stockman Exposes The “$20 Trillion Elephant In The Room” (ZH)

• An Economic Recovery Based Around High Debt Is Really No Recovery (G.)

• Four Lessons (Not) Learned From The Financial Crisis (F.)

• Trump Is ‘A Symptom And Not The Cause’ Of The Trade War With China (CNBC)

• UK Will Shift Brexit Stance In Its ‘Darkest Hour’ Claim EU Officials (G.)

• Christine Lagarde Warns Of ‘Dire Consequences’ Of Disorderly Brexit (G.)

• Monsters All the Way Down (Kunstler)

• Vulnerable Migrant Groups Must be Removed from Greek Island – MSF (GR)

• WikiLeaks Slams AP “Assange Letter” As Fake, Denies He Sought Russian Visa (ZH)

As I said would happen a few weeks ago. Inevitable. But what a curious choice of headline for Reuters. The docs are related to the probe, not to Russia.

• Trump Orders More Russia-Related Probe Documents To Be Declassified (R.)

U.S. President Donald Trump has directed the Justice Department to immediately declassify more information related to the investigation into possible election meddling by Russia, the White House said on Monday. Trump’s demands mark his latest effort to turn up the heat on the Justice Department, whom he and his Republican allies have accused of running a tainted probe into Russian interference in the 2016 U.S. presidential election. Among the documents Trump ordered the Justice Department and the director of national intelligence to make public are 20 additional pages of FBI surveillance warrant applications related to his former campaign adviser Carter Page.

Trump also ordered the release of FBI interview reports with Justice Department official Bruce Ohr related to the Russia probe, and FBI interview reports related to the Page surveillance warrant applications, White House spokeswoman Sarah Sanders said in a statement. Finally, Trump directed the Justice Department to release, without redactions, text messages relating to the Russia probe from former FBI Director James Comey, former FBI Deputy Director Andrew McCabe and other officials, including FBI agent Peter Strzok.

Trump fired Comey in May 2017, originally citing the Russia probe, and then saying that the firing was not “because of the phony Russia investigation.” McCabe was fired in March by Attorney General Jeff Sessions. Strzok was also recently fired, and has been criticized for sending texts disparaging Trump as a presidential candidate.

Look at that graph. And keep looking.

• David Stockman Exposes The “$20 Trillion Elephant In The Room” (ZH)

In a recent interview with Sprott Media in Vancouver, Stockman reiterated that he remains a skeptic, particularly in an era where central banks (thanks to their $20-trillion-plus aggregate balance sheet) have destroyed price discovery and contributed to the blowing of a debt bubble that – when it finally pops – will make the aftermath of the financial crisis appear tame by comparison. Stockman begins his interview by clarifying that he would be optimistic about the long-term prospects for growth and markets if it wasn’t for this $20 trillion ‘elephant in the room’.

“I am an optimist, I truly am – if it weren’t for the fact that central banks are totally out of control. So my talk centered on the Great $20 trillion elephant in the room, which is the balance sheets of all the central banks in the world, in excess of what it probably should be in a rational stable historically prudent world”. As central banks have bought up assets, they’ve repressed interest rates, rigged equity prices and provided the fuel for the explosion of debt that has occurred over the past 20 years, Stockman said.And when the music finally stops – as they say – it will be the central banks that bear the brunt of the blame.

“And it’s that $20 trillion, built up over the last two decades, that has basically distorted everything – falsified prices, repressed interest rates, caused an explosion of debt. Twenty years ago there was $40 trillion of debt in the world today there is $250 trillion worth of debt in the world. The leverage of the world has gone from 1.3 times which is stable…to 3.3 times, which basically means the world has created a huge temporary prosperity by burying itself in debt.

Same difference.

• An Economic Recovery Based Around High Debt Is Really No Recovery (G.)

Rickard Nyman and Paul Ormerod have compared economic forecasting by humans and machines in both the US and the UK, and come up with some stark conclusions. At the start of 2008 the survey of professional forecasters in the US failed to predict that within a year their country would be in a deep recession. Had US policymakers relied on machine-learning algorithms they would have been much better prepared for the trouble ahead. Even more impressive results using machine learning were obtained for the UK. There’s more, however. Nyman and Ormerod sift through all the economic and financial variables that might have been responsible for causing the downturn and come up with a conclusion that explodes the myth that overspending governments were to blame.

“The evidence suggests quite clearly that public sector debt played no causal role in generating the Great Recession” they say. “In contrast, the ratio of private sector debt to GDP does appear to have played a significant role, especially in the UK.” In truth, the idea that state profligacy caused the Great Recession has never been credible. What really happened was that the expansion of the global marketplace led to cheap goods flooding the west. Inflationary pressure abated and that persuaded central banks to cut interest rates. Financial deregulation meant the only remaining constraint on excessive borrowing – high interest rates – was removed – and so credit was cheap and readily available. The private sector loaded up on debt, which was fine so long as the assets on the other side of the balance sheet were going up in value. When the markets turned, things went pear-shaped very quickly.

Excellent example.

• Four Lessons (Not) Learned From The Financial Crisis (F.)

Let’s say you know three people: Alexandra, Meg and Melanie. Alex owes Meg $5, and Meg owes Melanie $5. Further say that they have run into financial trouble. You, the government, believe that if this is not addressed then it could have terrible consequences for the rest of the macroeconomy. So you decide to come to the rescue by paying the $5 . . . but to whom? You have three choices, each of which costs exactly $5: i. Give the money to Alexandra, who passes it to Meg, who passes it on to Melanie. All debts are retired and the economy returns to financial health. ii. Give the money to Meg, who passes it on to Melanie. They both return to economic health, while Alexandra remains saddled with debt. iii. Give the money to Melanie, who then becomes viable once again. Alexandra and Meg remain weighed down.

Guess which one we did? The one that bailed out Wall Street while leaving Main Street indebted. This has two huge consequences. One, higher levels of debt reduce spending and therefore represent a drag on the economy. Second, they increase “financial fragility,” or the likelihood of system-wide insolvency. If the second part sounds like the financial crisis, it should. Fortunately, however, we have avoided such a consequence. Reuters suggests that the structure of debt has changed in a positive way and we should be especially thankful for the low unemployment rate which has meant that people have not had difficulty making payments.

But data from the Bank for International Settlements (displayed below) show two things: 1) the ratio appears to be making an upward turn and 2) it remains much closer to the dangerous levels of the 2000s than those of the New Economy of the 1990s. It was precisely that 2000s level that raised red flags to analysts like Steve Keen, who went on to be recognized as the economist who most accurately forecast the financial crisis. Incidentally, he’s worried again.

It should have been resolved years ago.

• Trump Is ‘A Symptom And Not The Cause’ Of The Trade War With China (CNBC)

George Yeo, Singapore’s former foreign minister, said at the conference that the “big story” here was the rise of China. The trade war is but one manifestation in the tensions between the world’s two largest economies which could go on for years, he added. There’s a growing anxiety in the U.S. about China’s rise, said Yeo, who is currently chairman of logistics company Kerry Logistics Network. He pointed to how former White House Chief Strategist Steve Bannon said it was an “economic war” and not a trade war. “For Peter Navarro, it’s Death by China,” Yeo added, referring to Trump’s trade advisor and fierce China critic, who wrote a book of that title. “It’s not difficult for an economic war to become a political war to become a real war,” he said.

Both superpowers need to find some kind of “accommodation” in this multi-polar world, Rodrik stressed. China may say that it knows how to manage its economy, and the West needs to recognize Asia’s largest economy has its own model. “On the other hand, I think China will need to understand that it has been a free rider on the system created by the U.S., of openness, and it would have to provide a certain amount of … policy space for the Europeans and the Americans too,” he said, adding that this would be an example of “peaceful co-existence.” “China is playing the long game,” Rodrik said, and the question is how the world can accommodate such a new power. “I view Trump really as a temporary phenomenon, there are deeper issues,” he concluded.

Oil on fire.

• UK Will Shift Brexit Stance In Its ‘Darkest Hour’ Claim EU Officials (G.)

The British government will have to experience its “darkest hour” and stare into the abyss of a no-deal Brexit before it will cave in to Brussels demands, senior EU diplomats have predicted. Ahead of a summit of EU leaders in Salzburg, diplomats in Brussels privately warned that Theresa May still needed to make a significant shift on her red lines for a deal to be possible, with the Irish border issue remaining a major hurdle in the talks. The stark prediction came as a French government official said that the president, Emmanuel Macron, wanted to nail down the key terms of the future deal now, rather than allow any ambiguous drift on the major issues after 29 March 2019.

That was at odds with the UK environment secretary, Michael Gove, who had claimed over the weekend that any deal with the EU on the political declaration could be undone by MPs after Brexit, as he urged his Tory colleagues to support the Chequers proposals “for now”. Brussels wants credible assurances from May that any deal will not be unpicked by her successor. The prime minister was only to be given “a few minutes” to talk to leaders at a dinner on Wednesday night in Salzburg before the 27 talk among themselves the following day, in a sign of the low expectation that she will have anything significant to say until after the Conservative party conference.

Let’s hope someone pays attention.

• Christine Lagarde Warns Of ‘Dire Consequences’ Of Disorderly Brexit (G.)

The UK economy would rapidly start to contract in the event of a disruptive exit from the EU next spring, according to a stark International Monetary Fund report that highlights the recession risks of a no-deal Brexit. Christine Lagarde, the IMF’s managing director, added that there would be costs to the UK under any outcome that involves leaving the EU. Expressing the IMF’s growing concern at the possibility of an acrimonious divorce next March, Lagarde said: “If that happened there would be dire consequences. It would inevitably have consequences in terms of reduced growth, an increase in the [budget] deficit and a depreciation of the currency. “In relatively short order it would mean a reduction in the size of the economy.”

Lagarde said the IMF’s forecast of 1.5% growth next year was based on a smooth exit from the EU. Her remarks were seized upon by the chancellor, Philip Hammond, as evidence that the UK had to strike a deal that would safeguard jobs and prosperity. “As the IMF has said, no deal would be extremely costly for the UK as it would be for the EU,” Hammond said. “Despite contingency planning, it would put at risk the significant progress made over the past 10 years in repairing the economy.” No 10, however, pointedly refused to endorse Hammond’s gloomy predictions. When asked about what he had said, her spokesman referred to what Theresa May told the BBC in an interview broadcast earlier: “The PM said very clearly that she believes our best days are ahead of us and that we will have plans in place for us to succeed in all scenarios.”

All roads lead to Podesta.

• Monsters All the Way Down (Kunstler)

Robert Mueller’s fishing crew was out trawling for Manafort, a blubbery swamp mammal valued for its lubricating oil when, by happenstance, a strange breed of porpoise called a Podesta got caught up in the net. Turns out it was a traveling companion of the Manafort. Back in 2014, the pair swam all the way to a little country called Ukraine via the Black Sea where the Podesta used some Manafort SuperLube on then-president of Ukraine, Victor Yanukovych. The objective was to grease the wheel of NATO and the EU for Ukraine to become a member. But the operation went awry when Yanukovych got a better offer from the Eurasian Customs Union, a Russian-backed trade-and-security org.

And the next thing you know, the US State Department and the CIA are all over the situation and, whaddaya know, the Maidan Square in Kiev fills up with screaming neo-Nazis and Mr. Yanukovych gets the bum’s rush — and despite the major screw-up, the Manafort and the Podesta swim off with a cool few million in fees and return to the comforts of the swamp where they finally part ways. Mr. Mueller is apparently concerned about just what happened with those fees. Possibly the loot ended up getting washed and rinsed through an international banking laundromat, and somehow went unreported to the federal tax authorities.

Of course, the charge raises some interesting questions, such as: were Manafort and Podesta over in Ukraine as opportunistic freelancers, or were they part of phase one of a US government effort to get Ukraine to sign up for Team West against its old Uncle Russia, the manager of Team East? Kind of seems like that was exactly what they were doing, so it will be interesting to see whether Mr. Mueller may have stepped into a big pile of dog shit on his way to the Manafort plea session in federal court.

Please stop it.

• Vulnerable Migrant Groups Must be Removed from Greek Island – MSF (GR)

Greek authorities must remove children and other vulnerable groups from the Moria refugee camp on Lesvos as their physical and mental health is in danger, the Medecins Sans Frontieres (MSF) aid agency said on Monday. A total 615 migrants arrived on Lesvos island in the past three days, local authorities say, adding to the already overcrowded Moria migrant registration center and making living conditions hazardous to public health. The MSF suggests that at least the vulnerable groups (children, elderly, ill) must me moved to the mainland. Overall, there are 11,000 asylum seekers on Lesvos at the moment, with 9,000 of them at the Moria camp.

The policy of over-concentrating migrants and refugees in the Greek islands has led to more than 9,000 people — one third of them children — to be packed in the Moria camp, which has a maximum capacity of 3,000 people, MSF says. “Every week, Medecins Sans Frontieres teams see incidents of adolescents who have attempted suicide or make self-inflicted wounds. They also offer help in serious incidents of violence and self-harm. The lack of access to emergency medical care shows the significant gaps in the protection of children and other vulnerable groups,” the aid agency statement says.

Picked the story up yesterday on Twitter. Tyler doesn’t do the greatest write-up, but I can’t really repost the AP thing either. WikiLeaks was very clear in its reaction:

“”Mr. Assange did not apply for such a visa at any time or author the document. The source is document fabricator & paid FBI informant Sigurdur Thordarson who was sentenced to prison for fabricating docs impersonating Assange, multiple frauds & pedophilllia.”

Pointing to this 3-year old Iceland news article: https://grapevine.is/news/2015/09/25/siggi-the-hacker-gets-3-years-in-prison/.

“Thordarson distributed these docs to Scandinavian media outlets years ago who found them to be untrustworthy. Thorsdarson, a proven serial document fabricator & media hoaxer has been released, so the docs are being recycled yet again.”

Looks like AP was had. Why they run with it anyway is unclear. Due diligence, anyone? Yeah, they claim to have talked to FIVE different Wikileaks people, all anonymous of course. AP claims to have 1000s of docs, and this is the best they can get out of all that?

• WikiLeaks Slams AP “Assange Letter” As Fake, Denies He Sought Russian Visa (ZH)

For years international media outlets worked collaboratively with WikiLeaks to publish leaked files on subjects ranging from the Iraq and Afghan wars to Syria to State Department diplomatic cables, but now it’s WikiLeaks itself that media outlets are attempting to expose. An exclusive Associated Press story claims that WikiLeaks founder Julian Assange sought to obtain a Russian visa as his legal troubles and pressures from Western politicians grew. This comes after US officials have long sought to smear Assange as a Russian asset and the WikiLeaks organization as a whole as working with Russian intelligence.

The AP has published a letter it says is from a WikiLeaks laptop and penned by Julian Assange only days after the group made world headlines by publishing hundreds of thousands of US diplomatic cables in 2010, however WikiLeaks immediately disputed the authenticity of the letter. The AP story begins as follows: “Julian Assange had just pulled off one of the biggest scoops in journalistic history, splaying the innards of American diplomacy across the web. But technology firms were cutting ties to his WikiLeaks website, cable news pundits were calling for his head and a Swedish sex crime case was threatening to put him behind bars. Caught in a vise, the silver-haired Australian wrote to the Russian Consulate in London. “I, Julian Assange, hereby grant full authority to my friend, Israel Shamir, to both drop off and collect my passport, in order to get a visa,” said the letter, which was obtained exclusively by The Associated Press.

Amazon is scary.

How Amazon got to be so powerful, and what it means for our economy: pic.twitter.com/hCGsdUa5v2

— Bernie Sanders (@SenSanders) September 17, 2018

Debt Rattle July 12 2018

Jul 122018

July 12, 2018 Posted by Raúl Ilargi Meijer at 9:09 am Finance Tagged with: Brexit, China, EU, Greece, junk bonds, NATO, recycling, Silk Road, Supreme Court, trade war, trash, Trump, wage rises 5 Responses »

Blu Mural in Rome, Italy 2015 Click to enlarge See also here

• Trade War Risk On (Hedgeye)

• Corporate Bonds Are Getting Junkier (DDMB)

• It’s Not Wage Rises That Are A Problem – It’s The Lack Of Them (Frank)

• Britain Facing ‘State Of Emergency’ If No Deal Reached – Grieve (Ind.)

• Trump Tells NATO Allies To Spend 4% of GDP On Defence (G.)

• Germans Want Trump To Pull US Troops Out Of Germany (Ind.)

• China’s Silky Charming of Arabia (Escobar)

• The Supreme Court Is Much Too Powerful (Mises.org)

• New Zealand Hospitals In Chaos As 30,000 Nurses Strike (G.)

• EU Approves ‘Enhanced Surveillance’ for Post-Bailout Greece (GR)

• Trash Piles Up In US As China Closes Door To Recycling (AFP)

Great cartoon.

• Trade War Risk On (Hedgeye)

– Global equities are retreating materially today on fears of a commensurate escalation in the burgeoning trade war between the U.S. and China. Specifically, the Trump administration released a list of goods that it may target w/ sanctions totaling some $200 billion, while China’s Commerce Ministry described the move as “totally unacceptable bullying”, and promised to lodge complaints at the WTO without detailing what its retaliatory steps would be. Are trade wars bad for growth? Of course they are. Does anyone really possess a reliable framework for quantifying the ultimate impact ex ante? Probably not.

This we do know, however: prior to the last Friday’s tit-for-tat escalation targeting $34 billion in Chinese goods and a list of [mostly] U.S. agricultural products, Export growth was trending lower in 70% of the near-50 economies we maintain detailed predictive tracking algorithms for, while 77% of Manufacturing PMI series were trending lower. This figures reflect data through MAY and JUN, respectively, and are supportive of our view that trade tensions aren’t the driving force behind Global #Divergences; they are merely adding fuel to the fire. Global equities peaked in late-JAN for a reason.

Anyone remember AAA?

• Corporate Bonds Are Getting Junkier (DDMB)

Life insurers invest heavily in high-grade corporate bonds to fund annuities, life insurance policies and other products. Here’s a look at the possibility that the issues might be affected by credit rating grade inflation… Much has been made of the degradation of the $7.5 trillion U.S. corporate debt market. High yield offers too little, well, yield. And “high grade” now requires air quotes to account for the growing dominance of bonds rated BBB, which is the lowest rung on the investment-grade ladder before dropping into “junk” status. And then there’s the massive market for leveraged loans, where covenants protecting investors have all but disappeared.

How does that break down? Corporate bonds rated BBB now total $2.56 trillion, having surpassed in size the sum of higher-rated debentures, which total $2.55 trillion, according to Morgan Stanley. Put another way, BBB bonds outstanding exceed by 50% the size of the entire investment grade market at the peak of the last credit boom, in 2007. But aren’t they still investment grade? At little to no risk of default? In 2000, when BBB bonds were a mere third of the market, net leverage (total debt minus cash and short term investments divided by earnings before interest, taxes, depreciation and amortization) was 1.7 times. By the end of last year, the ratio had ballooned to 2.9 times.

Given the marked deterioration in fundamentals, bond powerhouse PIMCO worries that “This suggests a greater tolerance from the credit rating agencies for higher leverage, which in turn warrants extra caution when investing in lower-rated IG names, especially in sectors where earnings are more closely tied to the business cycle.” [..] why not treat the BBB portion of the bond market for what it is: a high-risk slice of the corporate debt pie. Keeping count of “fallen angels,” or those investment-grade bonds that are downgraded into junk territory, will become a spectator sport.

“Except in the very tightest labour markets, workers simply don’t have the power to demand their fair share.”

• It’s Not Wage Rises That Are A Problem – It’s The Lack Of Them (Frank)

If you study the Bureau of Labor Statistics’ numbers on wages for nonsupervisory workers over the past few decades, you will notice that wage growth has been strangely slow to pick up. Hot economies usually drive wages up pretty promptly; this recovery has been running since 2009 and it has barely moved the needle. It’s even more perverse on the other side of the Atlantic. According to a 2017 story in the Financial Times, Britain was “the only big, advanced economy in which wages contracted while the economy expanded” – an amazing achievement if you think about it. And UK thinktank the Resolution Foundation has said this decade is “set to be the worst for pay growth since the Napoleonic wars”.

How could such a thing happen in this modern and enlightened age? Well, for starters, think of all that whining we’re hearing from the US’s management, who will apparently blame anyone and do anything to avoid paying workers more. Every labour-management innovation seems to have been designed with this amazing goal in mind. Every great bipartisan political initiative, from free trade to welfare reform, points the same way. When Republicans are in charge, it’s open season on working-class organisations. And you can forget about increases in the minimum wage, regardless of who’s in the White House.

Of course it’s happening the same way in the UK; be it Thatcher’s war on unions or New Labour’s “third way”, Britain has followed the US model closely. Political decisions within both countries have had highly predictable results, and we are now fated to live with them. Good times aren’t really all that good for ordinary people any more, only for the people on top – the owners of companies, of real estate, of stocks. Except in the very tightest labour markets, workers simply don’t have the power to demand their fair share. If you ask me, this is the thing to panic about: not the possibility that workers might prosper, but that they’re not prospering yet.

“..ordinary life will grind to a halt. That is the extent to which our lives are intermeshed with the lives of our European partners..”

• Britain Facing ‘State Of Emergency’ If No Deal Reached – Grieve (Ind.)

Britain will face a “state of emergency” if no Brexit deal is reached by February, Dominic Grieve has warned at an exclusive event for Independent subscribers. Appearing on a stage with other key Brexit figures, including Jacob Rees-Mogg and Gina Miller, the leading Tory rebel said “ordinary life will grind to a halt” if the talks are still deadlocked as D-Day nears. The warning came as Mr Rees-Mogg launched his most outspoken attack yet on big businesses opposing a hard Brexit, claiming they have “got everything wrong in the whole of their history”. Andrea Leadsom, the Commons leader, suggested she would not accept any further “compromises” beyond the deal struck at Chequers by Theresa May – preferring a no-deal outcome. [..]

Last month, Mr Grieve, a former attorney general, led an aborted revolt to guarantee MPs a “meaningful vote” to prevent Britain crashing out of the EU without an agreement. In his most dramatic language yet, to underline the high stakes, Mr Grieve told the audience: “If by the end of February or early March it is clear that there is no deal on anything, there will be a declaration of a state of emergency in this country. “Actually, ordinary life will grind to a halt. That is the extent to which our lives are intermeshed with the lives of our European partners, and that is what will happen if there is no deal on anything.” Mr Grieve said hardline anti-Brexit MPs had “abdicated” their responsibilities to the public by boasting that they will do “absolutely nothing while we skated off the edge of the cliff into this major national crisis”. “That is the madness that has crept into some of the discourse in parliament,” he added.

They won’t.

• Trump Tells NATO Allies To Spend 4% of GDP On Defence (G.)

Donald Trump left the opening day of the Nato summit in Brussels in disarray on Wednesday after making a surprise demand for members to raise their defence spending to 4% of GDP, and clashing with German chancellor Angela Merkel over a proposed pipeline deal with Russia. Trump left the assembled presidents and prime ministers floundering, unsure whether he was serious about the 4% target, double the existing Nato target of 2%, which many do not meet, or whether it was just a ploy. After making the announcement, Trump walked out.

The White House press secretary, Sarah Sanders, confirmed the 4% figure. “During the president’s remarks today at the Nato summit he suggested that countries not only meet their commitment of 2% of their GDP on defence spending, but that they increase it to 4%,” she said. Sanders added: “President Trump wants to see our allies share more of the burden and, at a very minimum, meet their already stated obligations.”

So there. WHy on earth would you need so many US bases?

• Germans Want Trump To Pull US Troops Out Of Germany (Ind.)

Germans would actually welcome the withdrawal of American troops stationed in their country, a new poll has found – as Donald Trump threatens to pull the plug on military support. The finding comes on the first day of a Nato summit in which the US president is urging Europe to spend more on defence if it wants to continue to receive American military protection. But far from being seen as a threat, a YouGov poll for the dpa news agency found that more Germans would welcome the departure of the 35,000-strong American force than would oppose it.

42% said they supported withdrawal while just 37% wanted the soldiers to stay, with 21% undecided. Last month the US media reported that the US government was in the process of assessing the cost of keeping troops in Germany ahead of a possible withdrawal, citing Pentagon sources. But the policy of actually pulling out of the country has not actually reached the negotiating table in his week’s Brussels summit and is not expected to be discussed as a possibility – for now.

At some point the Chinese will run into Americans there.

• China’s Silky Charming of Arabia (Escobar)

Under the radar, away from World Cup frenzy and the merger and acquisition of Cristiano Ronaldo Inc. and Fiat, the eighth ministerial meeting of the China-Arab States Cooperation Forum (CASCF), established in 2004, sailed on in Beijing, hosted by President Xi Jinping. Amid the torrential pledge of loans and aid, China committed to invest right across the Arab world in transportation infrastructure, oil and gas, finance, digital economy and artificial intelligence (AI). Significantly, Beijing will offer $15 million in aid for Palestinian economic development, as well as $91 million distributed among Jordan, Lebanon, Syria and Yemen.

A China-Arab bank consortium will be set up, with a dedicated fund of $3 billion tied up with the financial aid and loan package. Beijing also foresees importing a whopping $8 trillion from Arab states up to 2025. Predictably, once again Xi fully connected the whole Arab world with the expansion of the New Silk Roads, or Belt and Road Initiative (BRI). And careful to navigate the geopolitical minefield, he urged “relevant sides” to respect the international consensus in the Israel-Palestine confrontation, calling for justice. That may indicate a gradual, but sure departure from trademark Chinese passive or reactive policy across the Arab world, focused exclusively on energy and political non-interference.

Xi is now openly tying up Chinese financial aid and deals with nations across the Global South to an overall economic development drive; the only roadmap to solve intractable political and religious conflict. And that includes full respect of international deals. As much as the Arab world, Iran is in Southwest Asia. A day before the China-Arab forum, Premier Li Keqiang, in Berlin, was warning of “unforeseeable consequences” if the Iran nuclear deal, known as JCPOA, were to be discarded, as the Trump administration wants.

Stating the obvious.

• The Supreme Court Is Much Too Powerful (Mises.org)

The current frenzy over the vacancy on the Supreme Court in the wake of Justice Kennedy’s retirement highlights just how much power has been centralized in the hands of a small number of people in Washington, DC. The left has grown positively hysterical over the thought of yet another Trump-appointed judge being installed, who could potentially serve on the court for decades. Right-wingers who claim the left is overreacting, however, are unconvincing. One can only imagine the right’s reaction were Hillary Clinton president. She would have already had the opportunity to appoint Scalia’s replacement, and we might now be talking about her nominee to replace Justice Ginsberg.

The right-wing media would be filled with article after article about how the new court would be a disaster for health-care freedom, private gun ownership, and, of course, the unborn. But, as it is, we live in a country where five people on a court decide what the law is for 320 million people. And for some reason, many people think this is entirely normal. It’s our own American version of the Soviet politburo, but few are even bothering to ask whether it’s a good idea. After all, if it makes sense for a small handful of people to decide law for the entire country, why even bother with a House of Representatives? Even the Senate — composed primarily of multimillionaires living full-time in Washington, DC, is [by comparison] extravagantly “democratic.”

“be fair to those who care”

• New Zealand Hospitals In Chaos As 30,000 Nurses Strike (G.)

Hospitals in New Zealand have cancelled elective surgeries and discharged patients early after 30,000 nurses walked off the job in the first such nationwide strike in 30 years. The 24-hour strike began on Thursday, and comes after months of negotiations between the government and nurses broke down on Wednesday, leaving hospitals to battle winter illnesses without crucial staff. Long delays at hospital emergency departments are expected around the country. Striking nurses held rallies in major cities, chanting “be fair to those who care” in the largest public demonstrations by the health sector ever seen on the country’s streets. Nurses said they were overworked and underpaid, with unsafe working conditions leading to burnout and exhaustion.

Patient care and staff wellbeing were routinely compromised, they said. Acting prime minister Winston Peters said the government was “very, very disappointed” that its latest offer of a 12.5% increase had been rejected, and that it would take time to address nine years of neglect under the previous National government. Although the May budget delivered a surplus, Peters said the extra funds were needed to handle unforeseen spending, such as managing the spread of mycoplasma bovis, a cow disease. “We are saying give us some time … it’s not that we’re not willing to, we haven’t got the money,” said Peters. “We’ve gone as far as we can go as a government. We got hold of a negotiated arrangement which we inherited – the nurses have had a raw nine years.”

Straight jacket.

• EU Approves ‘Enhanced Surveillance’ for Post-Bailout Greece (GR)

The European Commission on Wednesday said Greece will remain under an “enhanced surveillance framework” to ensure that it meets ambitious budget targets through 2022. The country will still be subject to quarterly inspections from creditors after the bailout program ends in late August. “Greece is now able to stand on its own two feet but that doesn’t mean it has to stand alone … The reform era has not ended,” EU Financial Affairs Commissioner Pierre Moscovici said. “Enhanced surveillance is not a fourth program: it involves no new commitments or conditions. It is a framework to support the completion and delivery of ongoing reforms,” he added.

Despite returning to growth after a massive recession, Greece leaves the program still facing major difficulties. Banks are struggling to deal with a high rate of bad loans. At over 20%, Greece has the highest unemployment rate in the euro currency union. Government bonds remain below investment grade even though their yields have fallen to manageable rates. And to help reduce its debt, Greece has committed to punishingly high primary budget surpluses — that is, the budget excluding the cost of debt servicing — of above 3.5% through 2022. “Enhanced surveillance is there to help Greece build confidence with markets, investors and companies,” Commission Vice-President Valdis Dombrovskis said. “They all want stability and predictability.”

They’ll find a new dump.

• Trash Piles Up In US As China Closes Door To Recycling (AFP)

For months, a major recycling facility for the greater Baltimore-Washington area has been facing a big problem: it has to pay to get rid of huge amounts of paper and plastic it would normally sell to China. Beijing is no longer buying, claiming the recycled materials are “contaminated.” For sure, the 900 tons of trash dumped at all hours of the day and night, five days a week, on the conveyor belts at the plant in Elkridge, Maryland – an hour’s drive from the US capital – are not clean. Amid the nerve-shattering din and clouds of brown dust, dozens of workers in gloves and masks – most of them women – nimbly pluck a diverse array of objects from the piles that could count as “contaminants.”

That could be anything from clothes to cables to tree branches to the bane of all recyclers: plastic bags, which are not supposed to go in recycling bins because they snarl up the machinery. “We’ve had to slow our machinery, and hire more people” to clean up the waste, says Michael Taylor, the head of recycling operations for Waste Management, the company that runs the plant. At the end of the sorting line is the end product — huge bales of compacted waste containing paper, cardboard or plastics. These have been bought up for decades by businesses, most of them based in China, which clean them up, crush them and transform them into raw materials for industrial plants.

Last year, China bought up more than half of the scrap materials exported by the United States. Globally, since 1992, 72% of plastic waste has ended up in China and Hong Kong, according to a study in the journal Science Advances. But since January, China has closed its borders to most paper and plastic waste in line with a new environmental policy pushed by Beijing, which no longer wants to be the world’s trash can, or even its recycle bin. For other waste products such as cardboard and metal, China has set a contamination level of 0.5% — a threshold too low for most current US technology to handle. US waste handlers say they expect China will close its doors to all recycled materials by 2020 — an impossibly short deadline.

Debt Rattle July 11 2018

Jul 112018

July 11, 2018 Posted by Raúl Ilargi Meijer at 9:24 am Finance Tagged with: Brexit, China, debt, Mexico, migration, Monsanto, stockpile, tariffs, Thailand, trade war, Trump 10 Responses »

Edward Hopper The camel’s hump 1931

• As Global Debt Hits A Record $247 Trillion, The IIF Issues A Warning (ZH)

• US To Slap Tariffs On Extra $200 Billion Of Chinese Imports (R.)

• Has the Fed Permanently Inflated Home Prices? (Whalen)

• Trump Forced To Reinstate ‘Catch And Release’ After Court Defeats (G.)

• 40% Of Mexican Territory Is Paralyzed By Violence (G.)

• EU Negotiator Michel Barnier Says 80% Of Brexit Deal Is Agreed (G.)

• UK Government Draws Up Secret Plans To Stockpile Processed Food (Sun)

• Red Cross Tells UK: End Damaging Immigration Detention (Ind.)

• I’m A Doctor In Lampedusa. We Can’t Let These Migrant Deaths Go On (Bartolo)

• US Judge Allows Lawsuits Over Monsanto’s Roundup To Proceed To Trial (R.)

• Thailand Water Pumps Failed Just After Last Boy Escaped (G.)

Madness.

• As Global Debt Hits A Record $247 Trillion, The IIF Issues A Warning (ZH)

Every quarter the Institute of International Finance publishes a new number of the total amount of global debt outstanding, and every quarter the result is the same: a new record high Today was no exception: according to the IIF’s latest Global Debt Monitor, the amount of debt held in the world rose by the biggest amount in two years during the first quarter of 2018, when it grew by $8 trillion to hit a new all time high of $247 trillion, up from $238 trillion as of Dec. 31, 2017 and up by $30 trillion from the end of 2016. In other words, there is now a quarter quadrillion dollars in global debt, and it represents 318% of global GDP.

More concerning is that this was the first time since Q3 2016 that global debt to GDP increased, suggesting that the marginal utility of debt is once again below 1. This is how the debt is broken down as of Q1 2018 and compared to Q1 2013: • Non-financial corporate debt: $74 trillion, up from $58 trillion in 5 years • Government debt: $67 trillion, up from $56 trillion • Financial debt: $61 trillion, up from $56 trillion • Household debt: $47 trillion, up from $40 trillion. [..] What was surprising about the report – certainly not the latest all time high debt numbers, those are now standard – is that the IIF voiced a strongly negative opinion of recent developments in the debt arena.

“The pace is indeed a cause for concern,” warned IIF’s Managing Director Hung Tran during a call with reporters. “The problem with the pace and speed is if you borrow or if you lend very quickly, the quality of the credit tends to suffer.” It also means more governments, businesses and individuals have been borrowing that could have trouble paying the money back, or merely paying interest on it as rates rise. “The quality of creditworthiness has declined sharply,” Tran added ominously, echoing what Moody’s said at the end of May.

“Tariffs are taxes, plain and simple..”

• US To Slap Tariffs On Extra $200 Billion Of Chinese Imports (R.)

The Trump administration raised the stakes in its trade war with China on Tuesday, saying it would slap 10 percent tariffs on an extra $200 billion worth of Chinese imports. U.S. officials released a list of thousands of Chinese imports the administration wants to hit with the tariffs, including hundreds of food products as well as tobacco, chemicals, coal, steel and aluminum. It also includes consumer goods ranging from car tires, , furniture, wood products, handbags and suitcases, to dog and cat food, baseball gloves, carpets, doors, bicycles, skis, golf bags, toilet paper and beauty products. “For over a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition,” U.S. Trade Representative Robert Lighthizer said in announcing the proposed tariffs.

“Rather than address our legitimate concerns, China has begun to retaliate against U.S. products … There is no justification for such action,” he said in a statement. Last week, Washington imposed 25 percent tariffs on $34 billion of Chinese imports, and Beijing responded immediately with matching tariffs on the same amount of U.S. exports to China. Investors fear an escalating trade war between the world’s two biggest economies could hit global growth. President Donald Trump has said he may ultimately impose tariffs on more than $500 billion worth of Chinese goods – roughly the total amount of U.S. imports from China last year. The new list published on Tuesday targets many more consumer goods than those covered under the tariffs imposed last week, raising the direct threat to consumers and retail firms.

The tariffs will not be imposed until after a two-month period of public comment on the proposed list, but some U.S. business groups and senior lawmakers were quick to criticize the move. Senate Finance Committee Chairman Orrin Hatch, a senior member of Trump’s Republican Party, said the announcement “appears reckless and is not a targeted approach.” The U.S. Chamber of Commerce has supported Trump’s domestic tax cuts and efforts to reduce regulation of businesses, but it has been critical of Trump’s aggressive tariff policies. “Tariffs are taxes, plain and simple. Imposing taxes on another $200 billion worth of products will raise the costs of every day goods for American families, farmers, ranchers, workers, and job creators. It will also result in retaliatory tariffs, further hurting American workers,” a Chamber spokeswoman said.

No.

• Has the Fed Permanently Inflated Home Prices? (Whalen)

The importance of the fact that US bank credit metrics are showing essentially zero cost in residential lending from portfolio loans is that it begs the question as to home price valuations and thus loan-to-value (LTV) ratios. A number of analysts have predicted an imminent reset in terms of home prices, but this has not happened for several reasons. The chart below shows the Case-Shiller average for US home price appreciation. First, real estate is a local market, so generalizations such as Case-Shiller are dangerous. New York City has been slumping for the past two years, but other markets around the country such as Denver remain hot.

The work of Weiss Residential Research clearly shows a turn in some major urban markets that have been moving higher since 2012 and before. But these moves seem more a function of buyer exhaustion than a permanent move to a buyers market. They key factor is cheap money chasing a limited supply of homes. Second, the US home market is in a classic supply squeeze. Referring to the work of Laurie Goodman at Urban Institute, the US is adding less than 1 million new units per year net of attrition of obsolete homes. Basically, new household formation is 50% higher than the growth in new housing units. More, the Fed’s manipulation of interest rates and credit spreads encouraged Wall Street to allocate capital to buying residential homes as rental properties, further limiting supply of homes available for sale.

Net, net, Millennials have been priced out of the housing market because the omniscient souls on the Federal Open Market Committee think that boosting asset prices will lead to more spending and job creation. Instead, low interest rates and help from the GSES (Fannie, Freddie and Ginnie) have driven up home prices beyond the reach of many home owners in major metro areas.

Stop. It.

• Trump Forced To Reinstate ‘Catch And Release’ After Court Defeats (G.)

Donald Trump’s administration has said it will release some migrant families from detention with ankle monitors, marking a return to the so-called “catch-and-release” policy the president vehemently denounced. The announcement comes as the US government scrambles to reunite thousands of migrant children who were separated from their parents at the border under the Trump administration’s “zero tolerance” immigration policy. “Parents of children under the age of five are being reunified with their children, then released and enrolled into an alternative to detention (ATD) program, meaning they will be placed on an ankle monitor and released into the community,” said Matthew Albence, a senior official with US Immigration and Customs Enforcement.

The Trump administration was left with few options after a series of court orders. A federal judge last month ordered the reunification of children under five by 10 July. That deadline was not met, officials acknowledged, while noting plans were under way on Tuesday to reunite up to 54 migrant children under five with their parents. There are an estimated 102 migrant children under five in federal custody, with a limited number of cases not qualifying for reunification due to the parents’ criminal background or signs of child abuse. The administration additionally lost in an attempt to overturn a 1997 court precedent that says minors cannot be held for more than 20 days.

What a job the new government has.

• 40% Of Mexican Territory Is Paralyzed By Violence (G.)

As much as 40% of Mexican territory is prisoner to chronic insecurity and violence, the future chief of staff of Andrés Manuel López Obrador, the incoming president, has claimed. Alfonso Romo, a prominent entrepreneur who was part of the leftist’s watershed election triumph last week, made the assertion during a summit of business leaders on Monday in Mexico City. “Veracruz is paralyzed. Tamaulipas, paralyzed; Michoacán, paralyzed. Guerrero, paralyzed,” Romo said, referring to four of the most notoriously violent states in a country that last year suffered a record 29,000 murders.

“I won’t go on, so I don’t scare you,” Romo added, according to the newspaper Unomásuno which splashed the widely-reported claim onto its front page under the bright red headline: “Paralyzed by Insecurity”. López Obrador, or Amlo as he is widely known, made cutting violence a key prong of his third presidential bid and his promise to “pacify” Mexico helped him secure more than 30 million votes. Amlo has vowed to rethink Mexico’s devastating and highly militarized war on drugs – which experts blame for at least 200,000 deaths since 2006 – and be tough on the social causes of crime.

Hard to believe.

• EU Negotiator Michel Barnier Says 80% Of Brexit Deal Is Agreed (G.)

The chief Brexit negotiator for the European Union has declared that 80% of a deal with the UK has been agreed, in a change of narrative that suggests a full agreement can be sealed before October’s deadline. Speaking in New York on Tuesday, Michel Barnier said: “After 12 months of negotiations we have agreed on 80% of the negotiations.” He added that he was determined to negotiate a deal on the remaining 20%. The declaration that four-fifths of the deal is done is a significant change of tone from the EU after months of protests that it could not negotiate because the UK had not put its own proposals on the table.

Speaking at the Council on Foreign Relations in New York, Barnier said he looked forward to a “constructive discussion” with the UK after the white paper on Brexit is published on Thursday. But he warned: “We need clarity for these negotiations to move forward for the time is very short.” Barnier said he had never been shown how Brexit provided added value when the world faced challenges from terrorism and climate change to migration, poverty and financial instability. “It will be clear, crystal clear at the end of this negotiation that the best situation, the best relationship with the EU, will be to remain a member,” he said. Barnier added: “No deal is the worst solution for everybody. It would be a huge economic problem for the UK and also for the EU. I’m not working for that deal, I’m working for a deal.”

Fun with the Sun.

• UK Government Draws Up Secret Plans To Stockpile Processed Food (Sun)

Ministers have drawn up secret plans to stockpile processed food in the event of EU divorce talks collapsing – to show Brussels that “no deal” is not a bluff. Theresa May has ordered “no deal” planning “to step up” — with the government poised to start unveiling some of the 300 contingency measures in the coming weeks. At last week’s Chequers summit, Brexiteer ministers demanded more be done to prepare for Britain leaving the EU out without a new arrangement in place. The Sun can reveal that includes emergency measures to keep Britain’s massive food and drinks industry afloat – including stockpiling ahead of exit day on 29 March next year.

More than £22 billion worth of processed food and drinks are imported in to the UK – 97 per cent from the EU – in an industry that keeps 400,000 workers employed in the UK. Similar stockpiles are also being prepared for medical supplies amid fears of chaos at British ports next year. Brexit department insiders also claim plans have also been “wargamed” to ease pressure on Calais, including importing and exporting more goods through Holland, Belgium and directly from Spain. Last night Downing Street said “no deal preparation work is to be stepped up” and led by new Brexit Secretary Dominic Raab. Yesterday the Cabinet newbie briefed fellow ministers on measures Britain is taking, with No10 saying: “It’s sensible to make preparations for all scenarios and that includes No Deal.”

Humanity.

• Red Cross Tells UK: End Damaging Immigration Detention (Ind.)

The British Red Cross has called for an overhaul of the UK’s immigration detention system. Conditions are such that detainees suffer mental health problems which sometimes lead to suicide attempts, according to the charity. Thousands of innocent asylum seekers – often fleeing war and torture – are detained each year and locked up indefinitely with no support, the charity warned. In the first intervention of its kind by a major charity, the Red Cross calls for significant reforms including a 28-day limit on detention. It found cases of asylum-seekers being detained for as long as two years and seven months. Five of the 26 detainees interviewed for the report had attempted suicide while they were detained, and just 25 of them said they had been given no access to mental health support services.

Pregnant women continue to be “needlessly detained” in breach of the Home Office’s own guidance – with 47 pregnant women detained in the year to June 2017. The charity said the “overly onerous and traumatic” experience of attending immigration reporting centres – which many are required to do every every two weeks – should be overhauled by banning the practice of detaining people when they turn up. Mike Adamson, chief executive of the British Red Cross, said: “Most of the people in the UK asylum process have fled conflict or persecution to find a place of safety. They have already experienced more trauma and anguish than the rest of us could possibly imagine.

“The threat of detention without notice hangs over many people going through the asylum process in the UK. Our research shows that not knowing whether this week will be the week they are detained again, can make the process of having to report regularly extremely distressing. “This can exacerbate existing mental health issues and mean people never truly feel free.”

More humanity.

• I’m A Doctor In Lampedusa. We Can’t Let These Migrant Deaths Go On (Bartolo)

For a long time, I was proud of my country. I work as a doctor on the small island of Lampedusa in the middle of the Mediterranean, a place that is something of a symbolic gateway between Africa and Europe. In recent decades, Italy showed how it could honour humanity, giving the word “welcome” a new meaning, without ever building walls or putting up barbed wire along its borders. These acts of openness were recognised by other countries, by the EU, and by the gratitude of the thousands of people whose lives we saved over the years. But I stopped feeling proud to be Italian from the moment our government, denying all that had previously been done, decided to establish an agreement with Libyan groups in Tripoli – which meant, directly or indirectly, with people smugglers.

I still remember how in 2016 my country had vigorously joined the outrage triggered by Europe’s decision to bankroll Turkey’s President Erdogan with €6bn so he’d ignore or stop the migration flows from Syria. Italy’s position was then sacrosanct. It has since been somehow inexplicably disavowed in deeds. There is only one dramatic difference between what Europe did with Turkey then and what Italy is doing with Libya today. Refugee camps set up in Turkey are more or less efficient; in Libya, people are detained in horror camps where they are raped, tortured and killed. Instead of the wall that Italy did not build on its own territory, we’ve erected two walls elsewhere. The one in Libya has allowed us to cut the number of arrivals on our shores by 70%; the other, within ourselves, allows us to pretend we don’t see what is being done to the 70%.

Well, I can tell you what’s being done to these people. From my workplace, the Lampedusa clinic, their fate is clear to see. They are tortured daily, atrociously, for years on end. Those brought to us, by helicopter or motorboat, are close to death, with burns, serious injuries from blows, electric currents applied to the head or genitals, gunshot wounds, and razor-blade cuts. They are almost always dehydrated, in a state of hypothermia, and so underfed they are on the brink of collapse. They bring to mind the suffering of a concentration camp – yes, a concentration camp.

There will always be scientists willing to claim it’s not cancerous.

• US Judge Allows Lawsuits Over Monsanto’s Roundup To Proceed To Trial (R.)

Hundreds of lawsuits against Monsanto by cancer survivors or families of those who died can proceed to trial, a federal judge ruled on Tuesday, finding there was sufficient evidence for a jury to hear the cases that blame the company’s glyphosate-containing weed-killer for the disease. The decision by U.S. District Judge Vince Chhabria in San Francisco followed years of litigation and weeks of hearings about the controversial science surrounding the safety of the chemical glyphosate, the key ingredient in Monsanto’s top-selling weed-killer. Monsanto is now a unit of Bayer, following a $62.5 billion takeover of the U.S. seed major which closed in June. The U.S. Environmental Protection Agency last September concluded glyphosate is likely not carcinogenic to humans.

But the World Health Organization in 2015 classified glyphosate as “probably carcinogenic to humans.” Chhabria called the plaintiffs’ expert opinions “shaky” and entirely excluded the opinions of two scientists. But he said a reasonable jury could conclude, based on the findings of four experts he allowed, that glyphosate can cause cancer in humans. The plaintiffs will next have to prove Roundup caused cancer in specific people whose cases will be selected for test trials, a phase Chhabria in his Tuesday opinion called a “daunting challenge.” Lawsuits by more than 400 farmers, landscapers and consumers who claim Roundup caused them to develop non-Hodgkin’s Lymphoma, a type of blood cell cancer, have been consolidated before Chhabria.

Good read on what went down. Amazing people. All the equipment that was brought in. All the mud that was removed. Wow.

• Thailand Water Pumps Failed Just After Last Boy Escaped (G.)

The rescue operation to free the last of the 12 boys and their football coach from a Thailand cave could have been a disaster, divers have revealed, with water pumps draining the area failing just hours after the last boy had been evacuated. Divers and rescue workers were still more than 1.5km inside the cave clearing up equipment when the main pump failed, leading water levels to rapidly increase, three Australian divers involved in the operation told the Guardian on Wednesday, in the first detailed account of the mission to be published. The trio, stationed at “chamber three”, a base inside the cave, said they heard screaming and saw a rush of head torches from deeper inside the tunnel as workers scrambled to reach dry ground. Everyone, including the last three Thai navy Seals and medic who had spent much of the past week keeping vigil with the trapped boys, was out of the cave a short time later.

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