Jun 172015
 
 June 17, 2015  Posted by at 11:09 am Finance Tagged with: , , , , , , , , , ,  1 Response »


Theodor Horydczak Sheaffer fountain pen factory, Fort Madison, Iowa 1935

The Euro: Portrait Of A Devastating Failure (MarketWatch)
IMF “Defense” Of Its Actions vs Greeks Is An Unintended Confession (Bill Black)
Sovereign Debt Restructuring Needs International Supervision (Joseph Stiglitz)
Many Low-Income Americans Can’t Even Afford To Rent (MarketWatch)
What Is the Real US Unemployment Rate? (CH Smith)
US 2040 Deficit To Nearly Double As Percent Of Economy-CBO (Reuters)
Greek PM Tears Into Lenders As Eurozone Prepares For ‘Grexit’ (Reuters)
A Greek Paradox: Many Elderly Are Broke Despite Costly Pensions (Reuters)
Divorce Greece In Haste, Repent At Leisure (Martin Wolf)
Austrian Chancellor Sides With Greece In Debt Row (Reuters)
‘It’s Going To Be Bad, Whatever Happens’: Greeks Stash Cash At Home (Guardian)
Greek Central Bank Issues ‘Grexit’ Warning If Aid Talks Fail (Reuters)
Europe Asks the Impossible of Greece (Crook)
Merkel’s Bavarian Allies Say Greeks Act Like ‘Clowns’ In Debt Talks (Reuters)
Central Banks Enter The Unknown With Sub-Zero Rates (FT)
Russia Cuts US Debt Holding By More Than 40% Over Year (RT)
Five Million Reasons Why China Could Go to War (Bloomberg)
The Magical Content Tree (Dmitry Orlov)
Enter Jeb and Hil (Jim Kunstler)
The American Far-Right’s Trojan Horse In Westminster (Nafeez Ahmed)
More Than A Third Of The World’s Biggest Aquifers Are In Distress (FT)

The euro has been a devastating failure, costing nations both their independence and their economies.

The Euro: Portrait Of A Devastating Failure (MarketWatch

There’s a secret fear gripping the powerful across Europe nowadays. It has policy honchos lying awake at nights in Brussels. It has bankers in Berlin tossing feverishly on their silken sheets. It has eurocrats muttering into their claret. The fear? It isn’t that if Greece leaves the euro, the Greeks will then suffer a terrible economic meltdown. The fear is that if Greece leaves the euro, the country will return to prosperity — and then other countries might follow suit. Take a look at the chart. As you can see, Greece with the bad old drachma had double the economic growth of Greece under the euro. Double. And it wasn’t alone. Italy, Spain and Portugal tell similar stories.

Their economic growth back in the 1980s and 1990s, when they were “struggling” with the lira, the peseta, and the escudo, makes a mockery of their performance under the German-dominated euro. Apparently having control of your own national currency and your own monetary policy works well with having your own government and your own national sovereignty. Who knew? The data for this chart come from the IMF’s own database. They show real economic growth in four southern European currencies in the period before they embraced the euro, from 1980 to 1998, and the period since the single currency was launched at the start of 1999. (The numbers show the average annual growth in GDP, measured per capita, and in real, “purchasing power” terms to strip out inflation).

Of course many factors are involved. This isn’t just about the euro. On the other hand, the European single currency was sold to the people of these countries – when they were given a vote at all — as a magical project that would transform their economic fortunes. They were told to give up their sovereignty and independence in return for huge economic benefits. Instead, the euro “financialized” their economies – flooding them with tons of cheap, easy money, and creating gigantic paper Ponzi schemes that have now collapsed. The people of Europe were told the euro would bring stability. It hasn’t. They were told it would bring prosperity. It hasn’t. They were told it would bring growth. It hasn’t.

Are the Greeks really just a bunch of ouzo-sipping layabouts, as the Champagne-sipping layabouts in Brussels like to claim? Prior to embracing the euro, the Greeks managed real growth of 4% a year and an average unemployment rate of 7.7%. Since accepting the warm financial embrace of Brussels, Frankfurt and Berlin, Greece has managed growth of 2% a year and average unemployment rate of 14%. In other words, Greece under the euro has averaged half the growth, and double the unemployment, of Greece under the drachma. Some benefit.

Read more …

Good definition of what happened so far: “bleed the patient” to “heal” it”.

IMF “Defense” Of Its Actions vs Greeks Is An Unintended Confession (Bill Black)

The IMF, the heedless horseman of the troika that announced it would stop negotiating with the Greeks and go home, has attempted to justify its position through Olivier Blanchard, its “Economic Counsellor and Director of the Research Department.” Blanchard entitled his defense “Greece: A Credible Deal Will Require Difficult Decisions By All Sides.” That is a “serious person” title, but it is also economically illiterate – and no one knows that better than Blanchard. After all, it is the IMF’s deeply neo-liberal economists whose research has confirmed that the IMF’s austerity policies are self-destructive responses to the Great Recession and that fiscal stimulus programs are even more effective than economists had predicted.

That means that Blanchard and the IMF know that an economically-literate deal does not “require difficult decisions by all sides.” It requires, instead, the troika to cease its destructive demands that Greece “bleed the patient” to “heal” it. The troika’s austerity demands forced Greece into a Great Depression that is worse than the Great Depression of the 1930s in terms of sustained, obscene unemployment rates. And treating Greece in an economically rational manner would set a wonderful precedent that could be extended to Spain and Italy, which also have unemployment rates today that are near or even worse than they suffered in the Great Depression of the 1930s – seven years after the acute phase of the global financial crisis.

As we (UMKC economists and NEP bloggers) and Paul Krugman have explained repeatedly, the fiscal response to a Great Recession does not require “difficult decisions” and “sacrifices.” It requires funding worthwhile projects that provide an enormous “win-win” for the nations suffering from the Great Recession – and it helps their neighbors’ economies. Germany’s economy would be much stronger today if it had not insisted on forcing Greece, Spain, and Italy into Great Depressions. Because of the inherently flawed structure of the euro, this requires the ECB to be used far more aggressively than was contemplated by its inept architects, but it can be done. It would be an awkward, inelegant, bastardized system, but the problem in getting it done isn’t the economics, it’s the toxic interconnection of politics, economic dogmas spread by the troika and the credulous media, and disdain of the EU core for the peoples of the EU periphery that pose the insuperable problems.

Read more …

Not going to happen. If an attempt is made, it’ll be watered down so much nothing much changes. Plundering entire nations is just too profitable.

Sovereign Debt Restructuring Needs International Supervision (Joseph Stiglitz)

Governments sometimes need to restructure their debts. Otherwise, a country’s economic and political stability may be threatened. But, in the absence of an international rule of law for resolving sovereign defaults, the world pays a higher price than it should for such restructurings. The result is a poorly functioning sovereign-debt market, marked by unnecessary strife and costly delays in addressing problems when they arise. We are reminded of this time and again. In Argentina, the authorities’ battles with a small number of “investors” (so-called vulture funds) jeopardised an entire debt restructuring agreed to – voluntarily – by an overwhelming majority of the country’s creditors.

In Greece, most of the “rescue” funds in the temporary “assistance” programs are allocated for payments to existing creditors, while the country is forced into austerity policies that have contributed mightily to a 25% decline in GDP and have left its population worse off. In Ukraine, the potential political ramifications of sovereign-debt distress are enormous. So the question of how to manage sovereign-debt restructuring – to reduce debt to levels that are sustainable – is more pressing than ever. The current system puts excessive faith in the “virtues” of markets. Disputes are generally resolved not on the basis of rules that ensure fair resolution, but by bargaining among unequals, with the rich and powerful usually imposing their will on others. The resulting outcomes are generally not only inequitable, but also inefficient.

Those who claim that the system works well frame cases like Argentina as exceptions. Most of the time, they claim, the system does a good job. What they mean, of course, is that weak countries usually knuckle under. But at what cost to their citizens? How well do the restructurings work? Has the country been put on a sustainable debt path? Too often, because the defenders of the status quo do not ask these questions, one debt crisis is followed by another. Greece’s debt restructuring in 2012 is a case in point. The country played according to the “rules” of financial markets and managed to finalise the restructuring rapidly; but the agreement was a bad one and did not help the economy recover. Three years later, Greece is in desperate need of a new restructuring.

Distressed debtors need a fresh start. Excessive penalties lead to negative-sum games, in which the debtor cannot recover and creditors do not benefit from the larger repayment capacity that recovery would entail. The absence of a rule of law for debt restructuring delays fresh starts and can lead to chaos. That is why no government leaves it to market forces to restructure domestic debts. All have concluded that “contractual remedies” simply do not suffice. Instead, they enact bankruptcy laws to provide the ground rules for creditor-debtor bargaining, thereby promoting efficiency and fairness.

Read more …

You can say there are not enough low-income homes. Or you can say the housing bubble has made too many homes unaffordable.

Many Low-Income Americans Can’t Even Afford To Rent (MarketWatch)

The poorest Americans, who can’t afford to buy property, are increasingly priced out of rentals. There were only 28 adequate and available to rent homes for every 100 extremely low-income renters in 2013, down from 37 in 2000, according to the Urban Institute, a nonprofit and nonpartisan organization that focuses on social and economic policy. “This gap between supply and demand leaves 72% of the country’s poorest families burdened by the high cost of housing,” it found. Extremely low-income renters are households with incomes at or below 30% of the median income in that region. Not one county in the U.S. has enough affordable housing for all these renters.

Among the 100 largest counties, the number of affordable rental homes ranges from eight per 100 in Denton County, Texas, to 51 in Suffolk County, Mass. This regional disparity is partly due to federal assistance not keeping pace with population growth, says Erika Poethig, a director at the Urban Institute. Only nine of the 100 largest counties increased the number of affordable units for extremely low-income renters from 2000 to 2013. Between 2000 and 2013, the number of extreme low-income renter households soared 38% from 8.2 million to 11.3 million as the Great Recession pushed more families toward the lower end of the income bracket, the report found. Among the 100 largest counties, five of the 10 counties with the smallest affordability gap are in Massachusetts. Only one—San Francisco—is outside the Northeast.

“The geography of poverty is changing and federal housing policy has not kept up,” Poethig says, because the cost of living is so high in these areas. As a result, renters at this income level depend increasingly on programs run by the U.S. Department of Housing and Urban Development. Depending on the area of the country, extremely low-income translates to incomes of between approximately $12,600 and $32,800 for a family of four. Without federal housing assistance, the report found, the share of extremely low-income American households who could afford adequate housing in 2013 would have fallen to 5%.

Read more …

25% make too little from work to live on.

What Is the Real US Unemployment Rate? (CH Smith)

The BLS attempts to define a broader definition of under-employment and unemployment in its category U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force: this is 10.8% of the work force. Depending on how we calculate the work force, and if we count everyone with any earnings as employed, we get an unemployment rate of somewhere between 5.6% and 12.5%. If we use the BLS’s metric for including under-employment, this is in the range of 10% to 15%. Common sense suggests that we calculate employment/unemployment based on earnings, not just any income in any amount.

If we reckon that only those with earnings of $15,000 or more annually (roughly speaking, full-time work at minimum wage) are fully employed, then the numbers change dramatically. The $15,000 annual earnings are also a rough benchmark of self-supporting households: two wage-earners making $15,000 each would have a household income of $30,000–enough to get by in much of the country. About 50 million people earn less than $15,000 annually. This includes roughly 10 million self-employed and 40 million with part-time jobs or other sources of earned income. This suggests that only 100 million of the 160 million work force are fully employed in the sense of not just having a job but making enough to be self-supporting.

There are many caveats resulting from the way that government social welfare is not included in earnings: thus a household might have two part-time wage-earners making very modest sums monthly who are getting by because they qualify for Section 8 housing, SNAP food stamps, Medicaid healthcare, school lunch programs, and so on. These programs enable the working poor to support a household despite low earnings. Should we include those depending on social welfare programs as fully employed? By my reckoning, roughly 60% of the civilian work force is fully employed and 40% are marginally employed (i.e. earning less than $15,000 annually) or unemployed. Since full-time workers even at minimum wage earn close to $15,000 annually, I think it is fair to use that as the cut-off for fully employed.

The BLS counts 121 million people as usually work full-time, but given only 100 million workers earn $15,000 or more, this doesn’t add up unless we include self-employed people earning very little who are counted as full-time workers. Based on income, I set the fully employed rate at 60%, and the marginally employed/unemployed rate at 40%. If we accept the BLS’s 121 million full-time jobs (which once again, this doesn’t make sense given even minimum wage full-time jobs earn $14,500, and 50 million people report earnings of less than $15,000), we still get a marginally employed/unemployed rate of 25%: work force of 160 million, 121 million fully employed.

Read more …

Better start spending, guys!

US 2040 Deficit To Nearly Double As Percent Of Economy-CBO (Reuters)

The U.S. budget deficit will more than double as a share of economic output by 2040 if current tax and spending laws remain unchanged, the Congressional Budget Office said on Tuesday. The CBO, releasing its annual long-term budget outlook, said however, that overall U.S. debt levels in 2040 will be slightly lower than estimates made a year ago for 2039 because of expectations of lower long-term interest rates. CBO said the 2040 deficit will reach 5.9% of gross domestic product, compared to 2.7% this year and 3.8% in 2025 based on its normal scoring methods. By contrast, the deficit reached nearly 10% of GDP in 2009 during the depths of the recent financial crisis.

Read more …

“..their aim was to “humiliate not only the Greek government – this would be the least important – but humiliate an entire people”.

Greek PM Tears Into Lenders As Eurozone Prepares For ‘Grexit’ (Reuters)

Prime Minister Alexis Tsipras lashed out at Greece’s creditors on Tuesday, accusing them of trying to “humiliate” Greeks, as he defied a drumbeat of warnings that Europe is preparing for his country to leave the euro. The unrepentant address to lawmakers after the collapse of talks with European and IMF lenders at the weekend was the clearest sign yet that the leftist leader has no intention of making a last-minute U-turn and accepting austerity cuts needed to unlock frozen aid and avoid a debt default within two weeks. Financial markets, for months indifferent to wrangling over releasing billions of euros of aid for Greece, reacted with mounting alarm.

European stock markets hit their lowest level since February and the risk premium on bonds of other vulnerable euro zone states leapt in one of the sharpest episodes of contagion since the height of Europe’s debt crisis in 2012. As the Austrian chancellor flew to Athens to warn Tsipras of the gravity of the situation and senior German lawmakers openly discussed the once-taboo prospect of a “Grexit” from the single currency area, Tsipras lambasted European and IMF policy. “I’m certain future historians will recognise that little Greece, with its little power, is today fighting a battle beyond its capacity not just on its own behalf but on behalf of the people of Europe,” he said in a televised speech to legislators in his SYRIZA party, drawing rousing applause.

Tsipras charged that the lenders were politically motivated in demanding pension cuts and tax hikes that hurt the poor, and their aim was to “humiliate not only the Greek government – this would be the least important – but humiliate an entire people”. The 40-year-old leader’s rhetoric left unclear whether he is preparing to default and risk economic collapse as the price of standing firm, or betting – wrongly according to the creditors – on a last-minute effort by Europe to save Greece. German Chancellor Angela Merkel, who has held repeated phone calls with Tsipras in recent weeks to press him to agree on reforms with EU/IMF negotiators, struck a despondent note, saying it was unclear if a deal could be found when euro zone finance ministers meet on Thursday in Luxembourg.

Read more …

“..45% of pensioners receive monthly payments below the poverty line of €665..” Yeah, cuts would be a great idea..

A Greek Paradox: Many Elderly Are Broke Despite Costly Pensions (Reuters)

The plight of 79-year-old Athenian Zina Razi and thousands like her strikes at the heart of why talks between Greece and its creditors have collapsed. She lives off a pension system that helps to consume a huge proportion of state spending and can appear overly indulgent – but still she’s broke. Razi barely keeps up with her power and water bills, and since her middle-aged son lost his job, supports him as well. “I am always in debt,” she said. “I can’t even imagine going to the cinema or the theatre like I did in the past.” This paradox goes a long way to explain why the leftist-led government and its creditors at the European Union and IMF have failed to bridge their differences over a cash-for-reform deal, leading to Sunday’s breakdown of talks.

Five years of austerity policies imposed at the creditors’ behest have helped to turn a recession into a full-blown depression, and still they want more. Athens has flatly refused to achieve further savings by raising value-added tax on essential items or, crucially, slashing pension benefits. As it inches closer to default and a potentially calamitous exit from the euro zone, the government has dismissed such demands as “absurd” or designed to pummel Greeks’ morale. To the lenders, the pension system is still too generous compared with what the country can afford. Greece spent 17.5% of its economic output on pension payments, more than any other EU country, according to the latest available Eurostat figures from 2012. With existing cuts, this figure has since fallen to 16%. [..]

To many Greeks, not least the Syriza party that stormed to power in January promising to push the clock back on austerity, the creditors’ demands are yet another way to clobber vulnerable people needlessly. The lenders have denied asking for specific pension cuts. But the Greek side said among their suggestions was slashing a top-up payment that supports some of the poorest pensioners. For Razi, that would mean losing €180 out of her €650 monthly pension. The average Greek pension is €833 a month. That’s down from €1,350 in 2009, according INE-GSEE, the institute of the country’s largest labour union. Moreover, 45% of pensioners receive monthly payments below the poverty line of €665, the government says. With more than a quarter of Greek workers jobless, many rely on parents and grandparents for financial support.

Read more …

Wolf makes sense on some things here, much less on others.

Divorce Greece In Haste, Repent At Leisure (Martin Wolf)

Some argue that Greece at least would be far better off after a default and exit. It is indeed theoretically possible that a default to its public creditors, combined with introduction of a new currency, a big devaluation (accompanied by sound monetary and fiscal policies), maintenance of an open economy, structural reforms and institutional improvements would mark a turn for the better. Far more likely is a period of chaos and, at worst, emergence of a failed state. A Greece that could manage exit well would have also avoided today’s plight. Neither side should underestimate the risks. It is also crucial to avoid the contempt so characteristic of the frayed nerves caused by failing negotiations.

Fecklessness may be a grievous fault, but grievously have the Greeks answered it. As the Irish economist, Karl Whelan, points out in a blistering response to Mr Giavazzi, the Greek economy has suffered a staggering collapse. From peak to trough, aggregate real gross domestic product fell by 27%, while real spending in the economy fell by a third. The cyclically-adjusted fiscal balance improved by 20% of GDP between 2009 and 2014 and the current account balance improved by 16% of GDP between 2008 and 2014. The unemployment rate reached 28% in 2013, while government employment fell by 30% between 2009 and 2014. Such a brutal adjustment would have shredded the politics of any country.

Europeans are now dealing with Syriza because of this calamity. But they are also dealing with Syriza because of the refusal to write down more of the debt in 2010. This was a huge error, made far worse by the subsequent collapse of the Greek economy. Indeed, the vast bulk of the official loans to Greece were not made for its benefit at all, but for that of its feckless private creditors. Creditors, too, have a duty to take care. If they are careless, they risk big losses. If governments want to save them, their own taxpayers should be told to pay up.

Read more …

A voice of reason from an unexpected corner.

Austrian Chancellor Sides With Greece In Debt Row (Reuters)

Austrian Chancellor Werner Faymann expressed solidarity with Greek Prime Minister Alexis Tsipras before meeting the leader in Athens on Wednesday in a bid to end a standoff with international creditors over a rescue package. Faymann, a Social Democrat who has taken a relatively lenient line with Greece, told broadcaster ORF that Athens had to live up to commitments under its current bailout plan but needed support to keep it from leaving the euro zone. “I know there were a number of proposals, also from the (creditor) institutions, that I also don’t find in order,” Faymann said in the radio interview.

“High joblessness, 30-40% (with) no health insurance and then raising VAT on medicines. People in this difficult situation cannot understand that.” Faymann seemed to be wading into a row over what European Commission President Jean Claude Juncker has called misrepresentations by the Greek government over just what reforms the EU wants from Athens to unlock frozen loans. Faymann said the alternative was fighting fraud and ensuring all Greeks pay their fair share of taxes. Greece and Brussels have been locked in an increasingly bitter war of words as the clock ticks toward the end of June, when the current bailout accord runs out, exposing Greece to potential default that could usher it out of the currency bloc.

Faymann said it was never helpful when insults fly, adding: “I stand on the side of the Greek people who in this difficult position are being proposed more things detrimental to society.” He said he was confident he could support Juncker’s efforts to forge an agreement by using Austria as an example of a country where workers and pensioners get affordable health care. He acknowledged nerves were frayed but said the task was to “avoid a catastrophe.” Asked whether Greek leaders could be brought on board, he said: “I assume that someone who is elected lives up to his responsibility.”

Read more …

Troika-induced fear and panic.

‘It’s Going To Be Bad, Whatever Happens’: Greeks Stash Cash At Home (Guardian)

“Everybody’s doing it,” said Joanna Christofosaki, in front of a Eurobank cash dispenser in the leafy Athens neighbourhood of Kolonaki. “Our friends have all done it. Nobody wants their money to be worthless tomorrow. Nobody wants to be unable to get at it.” A researcher in the archaeology department at the Academy of Athens, Christofosaki said she knew plenty of people who had “€10,000 somewhere at home” and plenty of others who chose to keep their stash at the office. Was she among them? “If I was, I certainly wouldn’t tell you.” It was not too hard, in central Athens’ plushest district on Tuesday, to find people worried that the latest breakdown of talks between Greece and its creditors over a new aid-for-reforms deal may have implications for the security – and accessibility – of their savings.

With time fast running out to secure a desperately needed €7.2bn in new rescue funds before the end of the month, when Athens is due to repay €1.5bn in loans to the IMF, anxious Greeks have begun withdrawing money from their country’s banks at an unprecedented rate. Bank deposits have been falling steadily since October and now stand at their lowest level since 2004. Withdrawals in recent weeks have averaged €200-250m a day, but on Monday – after the shock collapse of last-ditch talks between the Greek government and its eurozone and international lenders – withdrawals surged to €400m. “People are very concerned,” said the owner of a small company who asked not to be named. “I think those who could, have already transferred some money abroad. And lots of others have taken out a few thousand, enough to see them through any immediate crisis. I have.”

Read more …

Broad strokes?!

Greek Central Bank Issues ‘Grexit’ Warning If Aid Talks Fail (Reuters)

The Greek central bank warned on Wednesday that the country would be put on a “painful course” towards default and exiting the euro zone if the government and its international creditors failed to reach an agreement on an aid-for-reforms deal. It also said Greece risked a renewed bout of recession and predicted that the current economic slowdown would accelerate in the second quarter of this year. The Greek economy had started growing again last year after being pounded by years of austerity, but fell back into negative growth in the first quarter of 2015, contracting by 0.2% y-o-y. The ongoing crisis has prompted an outflow of deposits of about €30 billion from Greek lenders between October and April, the central bank said.

Time is fast running out for Athens and its creditors to reach a deal before a €1.6 billion repayment by Greece to the IMF falls due at the end of the month. But neither side appears willing to give ground, with Greek Prime Minister Alexis Tsipras accusing the creditors of trying to “humiliate” his country by demanding more cuts. Despite the heated rhetoric, the central bank said that the two sides appeared to have reached a compromise on the main conditions attached to an aid agreement, and that little ground remained to be covered for a deal to stick. “Failure to reach an agreement would … mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area and, most likely, from the EU,” the Bank of Greece said in a monetary policy report. “Striking an agreement with our partners is a historical imperative that we cannot afford to ignore.”

Read more …

“Yet with Tsipras gone, would the next Greek government be any more pliable – any more inclined to maintain the new rate of VAT or persist with the new round of pension cuts? I see no reason to think so.”

Europe Asks the Impossible of Greece (Crook)

Suppose for a moment that the European Union gets what it’s demanding from Greek Prime Minister Alexis Tsipras. It doesn’t look as though that will happen, but let’s imagine that Tsipras surrenders. How long, I’m wondering, would this smell like victory? Tsipras has agreed to the EU’s new, less demanding targets for Greece’s primary budget surplus over the next few years. The sticking point is that the measures he would use to hit those targets aren’t enough. Instead of raising the rate of value-added tax (a kind of sales tax) and/or collecting it on a wider range of goods, Tsipras says he’ll attack tax evasion and fraud. That’s won’t raise enough money, says Europe. The EU wants more cuts to public spending on pensions as well, which Tsipras refuses to consider.

For some reason, Europe has also been insisting on further labor-market reforms. These would doubtless be desirable, but they’re unlikely to yield extra growth in the short term and therefore have no fiscal implications in the relevant timescale. Tsipras’s numbers don’t add up, says Europe: They aren’t credible. Suppose, as I say, he did agree to raise VAT and cut pension spending. How credible would that be? Chances are good that it would be his last act as prime minister. He’d be breaking election promises and, aside from that, would enrage the faction of his own party that thinks he’s already conceded too much. Good riddance, you might say.

Yet with Tsipras gone, would the next Greek government be any more pliable – any more inclined to maintain the new rate of VAT or persist with the new round of pension cuts? I see no reason to think so. In short, if Tsipras capitulated and gave the EU what it wants, that wouldn’t be credible either. Let’s pursue this “Europe wins” thought experiment one step further. Suppose that Tsipras capitulated, and that he was able somehow to stay in power long enough to keep his promises – or that the successor government was reliably conservative on fiscal policy. Would this be sufficient to put Greek public finances on the path to sustainability? The sustainability of Greek debt, you may recall, is Europe’s main purpose in all this.

Read more …

Germans think it’s about money. Well, maybe it’s time for Deutsche to crash. And/or the Landesbanken.

Merkel’s Bavarian Allies Say Greeks Act Like ‘Clowns’ In Debt Talks (Reuters)

German Chancellor Angela Merkel’s Bavarian allies have accused the Greek government of not having grasped the seriousness of the situation in the debt talks yet, with CSU Secretary-General Andreas Scheuer calling ruling politicians in Athens “clowns”. The remarks were the latest sign of hardening positions towards Greece among European politicians, on the eve of a meeting of euro zone ministers that could be the last chance to rescue Greece from default at the end of the month. Scheuer said in an interview with Rheinische Post newspaper published on Wednesday that Greece had done too little so far to stay in the euro and there would be no “careless compromises” just for the sake of keeping Greece in the single currency bloc.

“The Greek government apparently hasn’t realized the seriousness of the situation yet,” Scheuer said. “They are behaving like clowns sitting in the back of the class room, although they have received explicit warnings from all sides that they might fail to pass to the next grade.” German Chancellor Angela Merkel said on Tuesday she was willing to do all she could to keep Greece in the euro zone but insisted the onus remained on Athens and its creditors to break a deadlock and reach a deal. Merkel is facing growing opposition among her ruling conservatives to granting Greece any further bailout funds. Germany is Greece’s biggest creditor and the biggest contributor to the EU budget and the euro zone bailout fund.

Read more …

All the central bankers have left is uncharted territory. And that’s a scarier thought than anyone cares to admit.

Central Banks Enter The Unknown With Sub-Zero Rates (FT)

For years, central bankers have treated the fabled interest rate known as the “zero lower bound” as if it were a physical barrier. Like the notion that temperatures cannot fall below absolute zero, policy makers thought they could not impose negative borrowing costs, as depositors would simply withdraw their money and hoard the cash. However, as the risk of deflation has pushed central banks in the eurozone, Denmark, Sweden and Switzerland to venture below zero, the question has shifted from whether negative rates are possible to how low they can go. Critics fear the unprecedented experiment of negative rates could have unwarranted side effects, including the formation of asset bubbles and deep disruption to the operation of the banking system.

“Negative rates are the policy for which we know least,” said Lucrezia Reichlin, an economist at London Business School. “They may create distortions and have undesirable distributional effects, so they should be considered an emergency, temporary measure.” Denmark’s Nationalbanken was the first central bank in Europe to experiment properly with negative rates after the global financial crisis. In July 2012, the DNB began charging lenders 0.2% for some of the cash parked in its deposit facility – a measure needed to defend the longstanding peg between the krone and euro. But this experiment acquired a whole different scale at the start of the year, when the ECB launched a programme of quantitative easing, having already cut its deposit rate to -0.2%.

This forced neighbouring central banks to slash their own rates deep into negative territory to stem the risk of large-scale capital inflows. In January, Switzerland dropped its deposit rate to as low as -0.75%, while Sweden’s Riksbank moved its main repo rate to -0.25% in March. The DNB, which had briefly raised the deposit rate back into positive territory, is now charging banks 0.75% for their excess reserves. Economists say that the possibility of negative rates arises because there are costs to storing and insuring cash. Savers will continue to keep their money in a deposit so long as this costs less than moving it into a safe. In fact, depositors may be willing to pay even more than that, as it is far easier to handle money from a bank account than it is from a vault.

Read more …

“Yuan-ruble trade in Russia has grown 800% between January and September 2014..”

Russia Cuts US Debt Holding By More Than 40% Over Year (RT)

Russia held US Treasury bills worth $66.5 billion as of April this year, according to the latest monthly report from the US Treasury. That compares with the $116.4 billion held a year ago. From March to April 2015, Russia sold $3.4 billion in US Treasury bonds,reported US Department of the Treasury Monday. Since August 2014, the value of US bonds in the Russian government portfolio has been steadily declining and the volume of Russian investments in US bonds dropped dramatically. Russia is now only 22nd on the list of the major US debt holders, compared to twelfth place in April 2014.

The Western sanctions imposed against Russia last year over re-unification with Crimea and its position in Ukrainian crisis have pushed Moscow to cut its dependence on the US dollar and build a more self-sufficient financial system. Western sanctions have encouraged Russia to work more actively with Asia, as the Asia-Pacific region and BRICS, as they make up 60% of the world GDP, said Russian Prime Minister Dmitry Medvedev last week. The BRICS summit in Russia this July will see the opening of the $100 billion New Development Bank, intended to compliment the World Bank and sponsor infrastructure projects within the group. Another project to be launched is currency pool worth another $100 billion, expected to guard the group from exchange rate volatility, said Russian President Vladimir Putin in May.

More than 40 countries and associations have said they would like to boost trade with the Russia-led economic block known as the Eurasian Economic Union (EEU). Vietnam became the first country out of the EEU to sign a free trade zone deal with the block in May and is considering switching to local currencies in bilateral trade. Russian Prime Minister Dmitry Medvedev said Moscow was ready to consider a currency union across the EEU. Russia s largest bank, Sberbank, issued its first credit guarantees in yuan this June, which marked another step in its de-dollarizing policy. Yuan-ruble trade in Russia has grown 800% between January and September 2014, and accounts for 7% of bilateral trade, with a huge potential to grow, according to May data.

Read more …

World power.

Five Million Reasons Why China Could Go to War (Bloomberg)

With five million citizens to protect and billions of investment dollars at stake, China is rethinking its policy of keeping out of other countries’ affairs. China has long made loans conditional on contracts for its companies. In recent years it has sent an army of its nationals to work on pipelines, roads and dams in such hot spots as South Sudan, Yemen and Pakistan. Increasingly, it has to go across borders to protect or rescue them. That makes it harder to stick to the policy espoused by then-premier Zhou Enlai in 1955 of not interfering in “internal” matters, something that has seen China decline to back international sanctions against Russia over Ukraine or the regime of Syrian President Bashar al-Assad.

As President Xi Jinping’s “Silk Road” program of trade routes gets under way, with infrastructure projects planned across Central Asia, the Indian Ocean and the Middle East to Europe, China’s footprint abroad will expand from the $108 billion that firms invested abroad in 2013, up from less than $3 billion a decade earlier. That is forcing China to take a more proactive approach to securing its interests and the safety of its people. With more engagement abroad there’s a risk that China, an emerging power with a military to match, is sucked into conflicts and runs up against the U.S. when tensions are already flaring over China’s disputed claims in the South China Sea.

“It is going to be a long, hard haul,” said Kerry Brown, director of the University of Sydney’s China Studies Centre. “You either have disruption as a new power rips up the rule book and causes bedlam or you’ve got a gradual transition where China is ceded more space but also expected to have more responsibility.” For more than a half century China stuck to Zhou’s policy predicated on non-interference and respect for the sovereignty of others. The policy partly reflected a focus on domestic stability and economic development by governments that lacked the means or interest to play a more active role offshore. It also led President Barack Obama to last year describe China’s leaders as “free riders” while others carried the global security burden. [..]

Parello-Plesner and Mathieu Duchatel, who co-wrote “China’s Strong Arm: Protecting Citizens and Assets Abroad” estimate there are five million workers offshore, based on research and interviews with officials, a figure that’s about five times larger than that given by the Ministry of Commerce. The official data reflect a lack of systemic consular registration and the absence of formal reporting by subcontractors sending workers abroad, according to the writers, who estimate about 80 Chinese nationals were killed overseas between 2004 and 2014. “There are now several countries that – in terms of the number of Chinese citizens there – are ‘too big to fail’,” said Parello-Plesner. “The business-oriented ‘going-out’ strategy now has to be squared with broader strategic calculations.”

Read more …

Great angle, great insight.

The Magical Content Tree (Dmitry Orlov)

A long, long time ago books were very expensive. They were produced by copying them by hand, page by page, onto parchment, by very poor monks toiling in their monastic scriptoria, but the books they produced turned out to be expensive anyway. The aristocracy could afford them, and, of course, the clergy, but the laymen had little access to the written word. Things were somewhat better in other, more technologically advanced parts of the world. The Chinese invented paper shortly before 200 BC, and by 200 AD lots of Buddhist texts were being mass produced using wood block printing. This know-how slowly diffused west, reaching Moslem Spain a few centuries later. By 1400 AD the art of paper-making made it all they way to the most backward of European provinces—Germany.

But then came a surprise: a German craftsman by the name of Johannes Gutenberg introduced moveable type: the ability to compose printed pages using reusable letters cast from lead. His legacy is still with us: the people who compose text for printing are still called “typesetters,” because once upon a time they physically set type, and the gaps between lines of text are still referred to as “leading,” because they used to be produced by inserting thin strips of lead. This innovation reduced the cost of producing books by orders of magnitude, making it possible for people of modest means to acquire a library. Gutenberg’s breakthrough is one of the most important bits of disruptive technology to come around, along with the steam engine and the nuclear bomb.

But an even bigger disruptive transformation occurred with the advent of the internet, which entirely decoupled the act of reproducing a work from the act of producing it in the first place. In effect, by investing in computing hardware and by paying for an internet connection, everybody gets access to a printing press. Once the equipment has been paid for, the incremental cost of producing another copy of something is zero. The overall cost is, of course, higher than ever; there is a good reason why Microsoft made fantastic fortunes with their mediocre, buggy products, or why Apple Computer is the public company with the highest market capitalization.

If you look at cost versus utility, many families now spend hundreds of dollars a month on smartphones, tablet computers, laptops, e-book readers, internet services, cellular phone services and so on. Were they to spend an equivalent amount on paper books and periodicals, they would amass a fantastically huge library in no time. Some people also pay for content—they purchase e-books, subscribe to premium services and so on—but most of the “content” they “consume” is free, paid for by advertising, or by promises of future revenue or increased market share, or by some other intangible, or—the most important category of all—by nothing at all.

Read more …

Jim in fine form.

Enter Jeb and Hil (Jim Kunstler)

The Floridian clod seeking to don the mantle of Millard Fillmore made an amazing foreign policy speech at an economic conference in Berlin last week. Inveighing against Russian President Vladimir Putin, he gave a very vivid impression of a man who has no idea what he is talking about.

“Russia must respect the sovereignty of all of its neighbors. And who can doubt that Russia will do what it pleases if its aggression goes unanswered?”

Jeb Bush was averring elliptically to the failed state formerly known as Ukraine, trying to put over the shopworn story that Russia was needlessly making war on its neighbor (and former province).

“Bush called for increased clarity on what type of sanctions would be imposed on the country if Prime Minister Vladimir Putin does not back down against a united international front…. ‘I don’t think we should be reacting to bad behavior [Bush said]. By being clear what the consequences of “bad behavior” is in advance, I think we will deter the kind of aggression that we fear from Russia. But always reacting, and giving the sense we’re reacting in a tepid fashion, only enables the bad behavior of Putin.’”

Note, by the way, that here is yet another scion of the Bush clan who was inexplicably brought up speaking Ebonics: “What the consequences… is?” Say what?

Ukraine became a failed state due to a coup d’état engineered by Barack Obama’s state department. US policy wonks did not like the prospect of Ukraine joining Russia’s regional trade group called the Eurasian Customs Union instead of tilting toward NATO and the European Union. So, we paid for and enabled a coalition of crypto-fascists to rout the duly elected president. One of the first acts of the US-backed new regime was to declare punishment of Russian language speakers, and so the predominately Russian-speaking people in eastern Ukraine revolted. Russia reacted to all this instability by seizing the Crimean peninsula, which had been part of Russia proper both before and through the Soviet chapter of history. The Crimea contained Russia’s only warm water seaports and naval bases. What morons in the US government ever thought Russia would surrender those assets to a newly-failed neighbor state?

Read more …

A look behind the Sunday Times Snowden article.

The American Far-Right’s Trojan Horse In Westminster (Nafeez Ahmed)

There is a violent extremist fifth column operating at the heart of power in Britain, and they stand against everything we hold dear in Western democracies: civil liberties, equality, peace, diplomacy and the rule of law. You wouldn’t think so at first glance. In fact, you might be taken in by their innocuous-looking spokespeople, railing against the threat of Muslim extremists, defending the rights of beleaguered Muslim women, championing the principle of free speech – regularly courted by national TV and the press as informed experts on global policy issues. But peer beneath the surface, and an entirely different picture emerges: a web of self-serving trans-Atlantic elites who are attempting to warp public discourse on key issues that pose a threat not to the public interest, but to their own vested interests.

One key organisation at the centre of this web is the Henry Jackson Society (HJS), an influential British think-tank founded a decade ago, ostensibly to promote noble ideals like freedom, human rights and democracy. But its staff spend most of their energies advancing the very opposite. More recently, HJS has turned to demonising Edward Snowden supporters and privacy advocates as accomplices with al-Qaeda and Islamic State (IS) – as is also being done by Rupert Murdoch s Sunday Times, with its hole-ridden story claiming Snowden’s revelations had allowed Russia and China to identify active MI6 agents. Journalists who have reviewed the Snowden files say that there was nothing in them that would permit MI6 operatives to be identified.

Former senior CIA official Robert Steele, whose books have received endorsements from the past and then serving Chairman of the Select Committee on Intelligence, said: “I can state categorically that there could not have been names of either intelligence officers or agents in the Snowden materials. The system simply does not work that way.” But the two-week time period between the publication of HJS report, and the Sunday Times hit-piece, is unlikely to be a coincidence. Like the Times piece, the latest HJS report damning Snowden draws almost entirely on anonymous intelligence sources along with unsubstantiated claims from the very officials responsible for mass surveillance, to claim that Snowden’s revelations had crippled the war on terror.

Read more …

Lots of places are going to be uninhabitable for lack of water.

More Than A Third Of The World’s Biggest Aquifers Are In Distress (FT)

More than a third of the world’s biggest aquifers, a vital source of fresh water for millions, are “in distress” because human activities are draining them, according to satellite observations. Scientists from Nasa, the US space agency, and the University of California, Irvine, analysed 10 years of data from the twin Grace satellites, which measure changes in groundwater reserves by the way they affect Earth’s gravitational pull. “Twenty-one of the world’s 37 biggest aquifers have passed sustainability tipping points … they are being depleted,” said Jay Famiglietti, the study leader. “Over a third [13] are so bad that they are experiencing exceptionally high levels of stress.” The problem is most serious in regions where rainfall and snowmelt cannot make up for water extracted for agriculture, industry, drinking and other human purposes.

The scientists determined aquifers’ overall stress rates on the basis of their depletion over 10 years of satellite measurements, together with their potential for replenishment, taking account of regional climate and human activities. The results, published in the Water Resources Research journal, show that the Arabian Aquifer System, an important water source for more than 60 million people, is the most “overstressed” in the world. It is followed by the Indus Basin aquifer of India and Pakistan and the Murzuq-Djado Basin in northern Africa. California’s Central Valley, currently at the center of a political battle over water rights, was classed as “highly stressed” and suffering rapid depletion mainly for agriculture.

Although many of the world’s great aquifers are being drained rapidly, there is “little to no accurate data about how much water remains in them,” the researchers added. Professor Famiglietti said: “Available physical and chemical measurements are simply insufficient. Given how quickly we are consuming the world’s groundwater reserves, we need a co-ordinated global effort to determine how much is left.” By comparing their satellite-derived groundwater loss rates to the limited data on groundwater availability, the researchers found huge discrepancies in projected times to total depletion of the aquifers. In the Northwest Sahara Aquifer System, for example, such times fluctuated between 10 and 21,000 years. The study noted that a dearth of groundwater was leading to severe ecological damage, including rivers running dry, water quality deteriorating and land subsiding.

Read more …

Feb 072015
 
 February 7, 2015  Posted by at 11:20 am Finance Tagged with: , , , , , , ,  4 Responses »


NPC Minker Motor Co, 14th Street NW, Washington, DC 1922

Currency Devaluations Are an Undeclared War (Bloomberg)
The PBOC – How To Fail In Business Without Really Flying (Russell Napier)
The Diverging Fates of China’s Provinces (Bloomberg)
Goldman Raises Alarm Over The Scariest Chart In The Jobs Report (Zero Hedge)
Stop Squeezing Syriza. We Can’t Afford Another Wrong Turn In Europe (Guardian)
Troika Trojan Horse: Will Syriza Capitulate In Greece? (Pepe Escobar)
Greece Seeks Plan C After Eurogroup Rules Out Bridge Loan (Bloomberg)
Syriza Vows To Fight Pressure To Stick To Bailout Terms (Guardian)
Greece: We Want No More Bailout With Strings (Reuters)
Defiance and Charm: A Measured First Week for New Greek Leader (Spiegel)
It’s Merkel Legacy Moment (Bloomberg)
Irish Fighting Bankers Show It’s Not Just Greeks Protesting Debt (Bloomberg)
The Biggest Loss for Scotland Since Independence Fail (Bloomberg)
Oil Production Increases Ahead: Alberta Premier (CNBC)
A Modest Proposal To Save The World (Charles Gave)
The TTIP US-EU Trade Deal -A Briefing (Guardian)
Pentagon 2008 Study Claims Putin Has Asperger’s Syndrome (USA Today)
US Navy Sailors Search for Justice after Fukushima Mission (Spiegel)
The Stuff Paradox: Dealing With Clutter (BBC)
American Sniper Is A Movie Hitler ‘Would Have Been Proud To Have Made’ (Ind.)

“The reason why this is a war is that it is ultimately a zero-sum game – someone gains only because someone else will lose.”

Currency Devaluations Are an Undeclared War (Bloomberg)

The global currency war is threatening to prove a silent killer. So says David Woo, head of global rates and currencies research at Bank of America Merrill Lynch in New York. While some question the existence of any conflict – arguing that falling exchange rates merely reflect efforts by central banks to spur lackluster domestic economies – Woo expresses concern. “There is a growing consensus in the market that an unspoken currency war has broken out,” he said in a report to clients this week. “The reason why this is a war is that it is ultimately a zero-sum game – someone gains only because someone else will lose.” The standard view on war-mongering is that by easing monetary policy, central banks from Asia to Europe are hoping to weaken their currencies to boost exports and import prices.

Trade rivals then retaliate, creating a spiral of devaluations as witnessed in the 1930s. Just this week, Reserve Bank of Australia Governor Glenn Stevens said “a lower exchange rate is likely to be needed” after he unexpectedly cut interest rates to a record low. With more than a dozen central banks injecting extra stimulus so far this year, currencies will be discussed when finance ministers and central bankers from the Group of 20 meet next week in Istanbul. For much of the past two years the G-20 has formally committed to refrain from targeting “exchange rates for competitive purposes.” That leaves Woo, a former IMF economist, declaring the war is one of “stealth” and warning the fallout from it is already roiling financial markets in a way undetected by most.

By measuring the volatility of currencies, which he calculates as the difference between the maximum and minimum exchange rate over a 26-week period, Woo estimates the dollar has been swinging about 20% against both the yen and the euro. In the past 15 years it was only higher following the collapse of Lehman Brothers in 2008. A second gauge of volatility that weighs currencies based on the gross domestic product of 20 major economies delivers the third-highest reading in two decades, topped only by the Asian crisis of 1997-98 and Lehman’s demise, he said.

Read more …

“.. the Costa Rican central bank has just announced that they will be floating the Colon. Those of a squeamish disposition should certainly not try googling “floating colon”..”

The PBOC – How To Fail In Business Without Really Flying (Russell Napier)

“Terrain seems a bit unstable…and there seems to be no sign of intelegent life anywhere” – Buzz Lightyear (Toy Story) “That wasn’t flying…that was falling with style” – Woody (Toy Story)

Another day, another central bank failure. In a world of currencies backed only by confidence, every failure is masqueraded as success. Like the ballet dancer who transforms the stumble into a pirouette, central bankers, knocked to the ground by market forces, smile and pretend that this was all part of the routine. Financial market participants, having bet everything on the promised omnipotence of central bankers, do indeed seem happy to see genius in every stumble. However a fall is a fall regardless of the style of the descent. So when will investors see that the earth is rapidly approaching and that style is just style? The key for investors today is to see behind the masquerade and the mask, the façade of those putting up a front behind a public face, and be able to tell the difference between the soaring flight of reflation and the perilous fall of deflation.

The more attitude you hear from policy makers, the more you can be sure it’s style compensating for the lack of real substance and that this is falling and not flying. And as the attitude becomes more high-handed, the lower the altitude gets. The attitude quotient is rising rapidly. Two weeks ago we noted the ‘flying’ undertaken by the Swiss National Bank as the market forced them to abandon their exchange-rate target. Deposit rates in Swiss Banks are now at such a low level that investors are better off converting deposits into bank notes and placing them under the bed. The Danish Central Bank has also instituted negative interest rates with the consequence that deposits in Denmark might also fly into paper. As the central bank managed to create over DKK106bn (US$16.3bn) in bank reserves, trying to stop a revaluation of their exchange rate last month, there will be no shortage of banknotes to go round should a ‘bank run’ from deposits to banknotes begin.

Taking interest rates so negative that they threaten a run on bank deposits should not be seen as success – it is failure. Creating bank reserves at that pace should not be seen as success – it is failure. The next failure may well be some government-inspired restriction on capital inflows. Well, you could call such restrictions, and risking the liquidity of banks, monetary success if you like, but then you probably also think it’s a success to throw the ball one yard from the touchline. Last week the Monetary Authority of Singapore was apparently “flying”, definitely not falling, when it cut interest rates and tried to devalue the SGD to defeat deflation. The Central Bank of Russia reduced interest rates while defending its exchange rate and, guess what, the currency fell. Most people, of course, would recognize that as simply falling, but as it was Russia you do have to ask did it just fall, or was it pushed ?

You may even have missed the news, that the Costa Rican central bank has just announced that they will be floating the Colon. Those of a squeamish disposition should certainly not try googling “floating colon” but, just take their word for it, the Colon will float. Elsewhere there were examples of more conventional falling, disguised as controlled flying, in the form of cuts in interest rates from Australia, Canada, Egypt, India, Pakistan, Peru and Turkey. The Turkish President has the perfect style for this sport and declared that interest rates had to fall as they were the cause and not the cure for inflation. As our hero himself remarked, ‘Buzz Lightyear to star command, I have an AWOL space ranger.’

Read more …

“The decline of fiscal revenue is the top risk in China and will lead to a sharp slowdown in GDP’..’

The Diverging Fates of China’s Provinces (Bloomberg)

From the biting-cold northeast bordering Siberia to the humid southwest next to Thailand, China’s growth rates are diverging almost as much as its geography. While the world’s second-largest economy slowed to a 7.4% expansion last year – just squeaking into the communist government’s “about 7.5%” target range – regional data presents a fractured landscape more akin to Europe’s than the rising-tide-floats-all-boats numbers we’re used to from China. There’s still a Germany: the wealthier export-focused and high-end manufacturing coastal region spanning Jiangsu, Zhejiang and Fujian. All were within about half a percentage point of their 2014 growth goals. The emerging provinces of Chongqing and Guizhou – later developers than their coastal cousins – look OK, too.

Let’s mark them down as China’s Poland, with lower labor and land costs attracting factories and helping exports. Both posted plus-10-percent expansions last year. The population-heavy Hunan, Hubei and Henan — with a combined 219 million people – almost matched their growth targets, with investment sustaining these massive economies. They’re way too populous to fit our European analogy, though. There’s even an Iceland-like outperformer: Tibet. The vast, mountainous region – which is about 12 times the size of tiny Iceland – was the only one of China’s 31 provinces and municipalities to match its 2014 target, racing ahead at 12%. Government-led infrastructure investment is behind its boom. Then we come to the sick men. While an expansion of about 5% would be stellar by European standards, in China that’s a slump.

The coal-dependent northern province of Shanxi missed its expansion target by a full 4 percentage points last year. Three other heavy industry and commodities driven north-eastern provinces – Heilongjiang, Jilin, Liaoning – all lagged with expansions near 6%, below targets of 8 or 9%. While policymakers in Beijing don’t have to contend with Grexit-like threats, there are headaches ahead. “Given the sluggish economic growth and fiscal pressure from dropping land sales, local governments have become much less ambitious than before,” Deutsche Bank AG’s chief China economist Zhang Zhiwei wrote in a Jan. 30 note. “The decline of fiscal revenue is the top risk in China and will lead to a sharp slowdown in GDP” to 6.8% this quarter. Like Europe, the slowdown may prompt more monetary easing after this week’s reduction in banks’ reserve ratio requirements.

Read more …

No good US jobs report without hidden secrets.

Goldman Raises Alarm Over The Scariest Chart In The Jobs Report (Zero Hedge)

Following the January jobs report, Goldman’s chief economist Jan Hatzius appeared on CNBC but instead of joining Steve Liesman in singing the praises of the “strong” the report (which apparently missed the memo about the crude collapse), he decided to do something totally different and instead emphasize the two series that none other than Zero Hedge has been emphasizing for years as the clearest indication of what is really happening with the US labor market: namely the recession-level civilian employment to population ratio and the paltry annual increase in average hourly earnings. This is what Hatzius said:

“The employment to population ratio is still 4% below where it was in 2006. You can explain 2% of that with the aging of the population that still leaves quite a lot of room potentially, and the wage numbers are telling us we are just not that close, although we are getting closer.”

Closer to what? Why the most dreaded event for any FDIC-backed hedge fund in the world: the Fed not only ending some $3 trillion of liquidity injections but actively starting to remove liquidity by tightening monetary conditions and rising rates. Hatzius’ punchline: “I think the case for “patience” is still quite strong.” In other words, the US may be creating almost 300K jobs per month, but stocks are still not high enough. So how should one look at today’s BLS report: well, for political purposes the data is great – just look at those whopping revisions; but when it comes to the markets, please focus on the the unadjusted, ugly details beneath the headlines. Those which we have been showing for months and months.

Because there always has to be something that prevent the Fed from hiking, and killing Chuck Prince’s proverbial music, in the process ending Wall Street’s 6-year-old “dance” ever since the 666 S&P lows. At this rate soon Goldman Sachs will become a bigger “skeptical realist” than Zero Hedge. Finally, which chart is Hatzius talking about? The one below, showing the uncanny correlation between the US civilian employment to population ratio and the annual rate of increases in hourly earnings, and the fact that neither is capable of actually increasing under the “NIRP Normal” recovery.

Read more …

And that’s how simple it is.

Stop Squeezing Syriza. We Can’t Afford Another Wrong Turn In Europe (Guardian)

With Syriza having won Greece’s election on a platform to reject the Troika-imposed bailout, the eurozone has reached yet another fork in the road. Let us hope it does not take the wrong turn, again. Squeezing Syriza and humiliating Greece further, as appears to be the strategy in Germany and other powers in the EU, could be the straw that breaks the eurozone’s back. Cutting Greece any slack is opposed by a majority of Germans, even while support for Alexis Tsipras in Greece soared after his election as he fought for concessions on debt. Political space in the eurozone has shrunk to a point where it may no longer be possible to implement sensible economic policy. Which wrong turns did we take? How can we choose wisely this time?

At the outbreak of the crisis, EU leaders insisted on national solutions to what was essentially a European problem: the fragility of large often pan-European banks. This increased the final bill, as countries refused to bite the bullet and delayed recognising that their banks were bust. Even as leaders came under domestic fire for rescuing banks with taxpayer money, Greece’s fiscal problems provided a godsend distraction. Many northern Europeans promoted a narrative of “lazy Greeks” who had been “fiscally profligate”. While the unsustainability of Greek debt was recognised by many, intensive lobbying by German and French banks which owned large amounts of Greek bonds meant that the much-needed restructuring of this debt was vetoed. An ill-designed programme was imposed as condition of financial aid to Greece.

This was essentially a bailout of European banks at the expense of Greek citizens and European taxpayers. Even worse, the narrative of “lazy southerners” and a “fiscal crisis” promoted by Germany and EU institutions crowded out the reality of an untreated banking crisis. Ireland, having foolishly guaranteed its insolvent banks, was then forbidden from imposing losses on bank bondholders by the ECB. Private debt became public and the banking crisis became a fiscal one. Even though the failure to repair and restructure banks was the biggest problem in countries such as Spain, many were treated as though they had been fiscally irresponsible and prescribed austerity.

As bank uncertainty and fiscal cuts were biting and driving the eurozone into a deep recession, the narrative of a “fiscal crisis” became self-fulfilling as debt-to-GDP ratios climbed because of both bank rescues and collapsing GDPs. The problem was compounded by Angela Merkel and Nicolas Sarkozy threatening to push Greece out of the eurozone, which in turn made markets question the viability of the single currency and fuelled panic, driving Spanish and Italian spreads up to record levels. Thus the downward spiral of a badly misdiagnosed and deliberately miscommunicated problem, and a tragically ill-conceived treatment began. Bailing out the supposedly lazy southerners has stoked anti-EU sentiment in creditor economies like Germany, who want to see more, not less austerity in debtor economies. Suffering under Troika-imposed excessive austerity has fuelled the rise of anti-austerity parties such as Syriza and Podémos.

Read more …

“The ECB bought Greek public debt from private banks for a fortune [..] private banks had found the cash to buy Greece’s public debt exactly from…the ECB. This is outright theft. ”

Troika Trojan Horse: Will Syriza Capitulate In Greece? (Pepe Escobar)

The 2015 Greek tragedy is a sorry (financial) remix of the Trojan War. But now the troika (ECB, EC, IMF) has replaced Greece, and Greece is the new Troy. It is now crystal clear the ECB will pull no punches to turn Greece into a European failed state. The rationale: others – from Spain to even, in the near future, France – must not entertain funny ideas. Toe the austerity line, or we’ll get medieval on you. It was so predictable that the destiny of Athens – and in fact the euro – would ultimately rest in the hands of ECB Governor Mario ‘Master of the Universe’ Draghi, purveyor of the latest QE which in thesis will grant an austerity-ravaged Europe a little extra time to pursue ‘reforms’.

Some background is essential. The troika sold Greece an economic racket, but it’s the Greek people that are paying the price. Essentially, Greece’s public debt went from private to public hands when the ECB and the IMF ‘rescued’ private (German, French, Spanish) banks. The debt, of course, ballooned. The troika intervened, not to save Greece, but to save private banking. The ECB bought public debt from private banks for a fortune, because the ECB could not buy public debt directly from the Greek state. The icing on this layer cake is that private banks had found the cash to buy Greece’s public debt exactly from…the ECB, profiting from ultra-friendly interest rates. This is outright theft. And it’s the thieves that have been setting the rules of the game all along.

Read more …

“The next showdown is scheduled for Feb. 11 in Brussels..”

Greece Seeks Plan C After Eurogroup Rules Out Bridge Loan (Bloomberg)

Euro-area governments won’t grant Greece’s request for a short-term financing agreement to keep the country afloat while it renegotiates the terms of its financial support, said Jeroen Dijsselbloem, chairman of the bloc’s finance ministers’ group. “We don’t do” bridge loans, Dijsselbloem told reporters in The Hague on Friday, when asked about Greece’s request. “A simple extension is possible as long as they fully take over the program.” The European Union’s latest rebuff raises the stakes for Greece’s new government, which has already failed in its demands for a debt writedown. The next showdown is scheduled for Feb. 11 in Brussels, when Greek Finance Minister Yanis Varoufakis faces his 18 euro-area counterparts in an emergency meeting after Prime Minister Alexis Tsipras delivers a major policy speech on Sunday.

“After an aggressive start, which resulted in a reality check for the new government, I think they are becoming more pragmatic,” said Aristides Hatzis, an associate professor of law and economics at the University of Athens. “No matter what they say to their internal audience, what they do abroad matters most.” Varoufakis has said his government won’t accept any more cash under the terms of Greece’s existing bailout, leaving €7 billion euros of potential aid on the table, rather than complying with demands for more austerity attached to the country’s international bailout agreement.

“Practically speaking, our proposal is that there should be a bridging program between now and the end of May, which would give us space – all of us – to carry out these deliberations and in a short space of time come to an agreement” Varoufakis said after meeting German Finance Minister Wolfgang Schaeuble in Berlin on Feb. 5. The standoff risks leaving Europe’s most-indebted state without any funding as of the end of this month, following the Jan. 25 election victory of Tsipras’s Syriza party. “It will be a first step in how we want to proceed together in the next weeks, months,” Dijsselbloem said, as he cautioned that a discussion over the terms of the bailout program would mean “we no longer talk about a simple extension.”

Read more …

Why does even the Guardian choose to speak of ‘Greece’s radical Syriza government’?

Syriza Vows To Fight Pressure To Stick To Bailout Terms (Guardian)

Greece’s radical Syriza government has vowed to keep fighting pressure from its eurozone neighbours to stick to the strict terms of its bailout package as battle lines were drawn ahead of crunch debt talks next week. Eurozone finance ministers have called an emergency meeting for Wednesday night in Brussels to discuss the Greek crisis after a whistlestop tour of Europe by Yanis Varoufakis, Greece’s finance minister, made little headway. Germany wants Greece to arrive with a plan on the repayment of €240bn (£180bn) in bailout loans it received from the international community.

The special debt meeting will be followed on Friday by a summit of European leaders, the first with Alexis Tsipras, the Greek prime minister. But a government official ruled out accepting a plan based on the old bailout and said Varoufakis would ask for a bridge agreement to tide Athens over until it can present a new debt and reform programme. “We will not accept any deal which is not related to a new programme,” an official told Reuters news agency.

Read more …

“It is … necessary that Greece is given the possibility to issue T-bills, beyond the (current) €15 billion threshold, in order to cover any extra needs..”

Greece: We Want No More Bailout With Strings (Reuters)

Greece’s new leftist-led government, isolated in the euro zone and under pressure from the European Central Bank, said on Friday it wanted no more bailout money with strings attached from the EU and IMF. Instead, a government official said, it wanted authority from the euro zone to issue more short-term debt, and to receive profits that the European Central Bank and other central banks have gained from holding Greek bonds. The official said Greece was in effect asking for a “bridge agreement” to keep state finances running until Athens can present a new debt and reform program, “not a new bailout, with terms, inspection visits, etc.”.

“It is … necessary that Greece is given the possibility to issue T-bills, beyond the (current) €15 billion threshold, in order to cover any extra needs,” said the official, asking not be named. Finance Minister Yanis Varoufakis returned empty-handed from a tour of European capitals in which even left-leaning governments in France and Italy insisted Greece must stick to commitments made to the European Union and IMF and rejected any debt write-off. The Athens official made clear that the new government, which came to power on a wave of anti-austerity anger in elections last month, now wanted to forego remaining bailout money that had austerity strings attached: “Greece is not asking for the remaining tranches of the current bailout program – except the €1.9 billion that the ECB and the EU member states’ central banks must return.”

Euro zone finance ministers will discuss how to proceed with financial support for Athens at a special session next Wednesday ahead of the first summit of EU leaders with the new Greek prime minister, Alexis Tsipras, the following day. However, the chairman of the finance ministers said the following meeting of the Eurogroup on Feb. 16 would be Greece’s last chance to apply for a bailout extension because some euro zone countries would need to consult their parliaments. “Time will become very short if they (Greece) don’t ask for an extension (by then),” said Jeroen Dijsselbloem. The current bailout for Greece expires on Feb 28. Without it the country will not get financing or debt relief from its lenders and has little hope of financing itself in the markets.

Read more …

Surprisingly positive piece from Der Spiegel, which just last week was very pro-Merkel. “..his left-wing government is already busy getting down to work. Many of its first moves have been the right ones.”

Defiance and Charm: A Measured First Week for New Greek Leader (Spiegel)

Syriza’s victory in the recent Greek elections set off a wave of concern in Europe. But even as the new prime minister tries to woo other leaders, his left-wing government is already busy getting down to work. Many of its first moves have been the right ones. [..] Something has happened in Greece that has not happened like this anywhere else in Europe: A handful of neophyte politicians, intellectuals and university professors have taken over the government. It feels like a small revolution instead of a handover of duties. And that’s not only because many members of the previous administration deleted their hard drives and took their documents with them, or that there initially wasn’t even any soap in the government headquarters.

No, the new government has upended the rules of the Greek political system – and spurred into action a Europe that is still unsure how it should react to the rebels. In Athens you can also see the euphoria reflected in the city’s traffic, which is a yardstick for the crisis. The streets had often been half empty, because fewer people were traveling to work, the gasoline was expensive, the mood gloomy. But now the city center is just as clogged as before. The people are once again in motion. Even though only 36% of voters chose Syriza, 60% of Greeks are happy with new government’s first few days. If there were new elections, support for the party could grow and Tsipras could renounce his coalition partner. Although he may be entertaining that scenario privately, members of the government deny that it is in the cards. But to maintain this enthusiasm, Tsipras now needs to show a real accomplishment: an end of the German “austerity mandate.” Which means that he doesn’t merely need to convince the Greeks, he needs to conquer Europe.

Read more …

“So either Tsipras turns 180 degrees or the euro area’s post-crisis, anti-contagion defenses will get their stiffest test.”

It’s Merkel Legacy Moment (Bloomberg)

It’s a legacy moment for Angela Merkel. How the German chancellor navigates the two-front crisis emanating from Moscow and Athens could determine whether she rises to her role as Europe’s dominant leader or slips into history as a risk-averse manager who couldn’t hold the region together. “The immediacy and urgency of taming the dual Greek and Ukraine nightmares are defining moments for Europe and for Merkel,” said Bud Collier, professor at the John F. Kennedy Institute of Berlin’s Free University. “The stakes are enormous.” An abundance of caution is the complaint she’s faced from the moment Greece spawned the euro financial crisis – forcing needy nations to take their medicine and suffer for budgetary sins in the name of becoming more competitive. In return, she slowly brought her reluctant electorate along and pried open her government’s checkbook.

Now the Greeks are as fed up as the Germans. They elected Alexis Tsipras as prime minister on the promise the days of pension, wage and job cuts were over. They’re also trying to get under Merkel’s skin. Standing in Germany’s finance ministry, the stone behemoth that was Herman Goering’s headquarters in Adolf Hitler’s regime, Greek Finance Minister Yanis Varoufakis touched the most sensitive spot in Germany’s collective consciousness: “Germany must and can be proud that Nazism has been eradicated here, but it’s one of history’s most cruel ironies that Nazism is rearing its ugly head in Greece, a country which put up such a fine struggle against it.” Remarks like that may explain Merkel’s exasperation with the new leaders in Athens and why she’s waiting for them to come around to see things her way. If they don’t, neither she nor her allies have expressed much interest in a middle ground.

So either Tsipras turns 180 degrees or the euro area’s post-crisis, anti-contagion defenses will get their stiffest test. The next signals are likely at the EU’s Feb. 12 summit. Also on the agenda at that gathering is what to do about Putin. As with Tsipras, she’s not optimistic. Unlike with Greece, though, Merkel has few cards to play. She’s stuck between the U.S. and Russia, herding the EU’s 28 governments and is largely the point person because of geography. She has stopped seeing Putin as a rational actor, according to German government officials, but is the closest to an interlocutor that she has. As she arrives for talks in Moscow with French President Francois Hollande and the fighting intensifies, the united anti-Putin front is at risk amid dwindling options: tougher sanctions that many EU leaders are resisting, arming the government in Kiev or yielding to the breakup of Ukraine.

Read more …

“About 117,000 home-mortgage accounts are in arrears, according to central bank figures, and the Free Legal Advice Centres group said last month that a “substantial spike” in repossessions may be on the way.”

Irish Fighting Bankers Show It’s Not Just Greeks Protesting Debt (Bloomberg)

Byron Jenkins says he would rather destroy his home than hand it over to the banks. The former builder owes about €750,000 euros on his house in a Co. Kildare town about 40 miles west of Dublin. After 15 court appearances, he’s still fending off repossession. “All they’ll get back is a pile of bricks,” Jenkins said. “I’ve told them that.” Banks lodged 10,000 applications to foreclose on family homes in the year through September, a legal rights group said last month, four times as many as in the previous year. The legacy of western Europe’s worst real estate crash is entering a new phase, bringing with it a very Irish version of the backlash against the establishment sweeping Europe.

As Greeks turned to Alexis Tsipras to reverse five years of austerity, and anti-immigrant parties gain ground in countries like France and Sweden, in Ireland, homeowners are increasingly organizing resistance. Jenkins is part of a group of activists allied to the Land League, named after a 19th century organization that battled with landlords when Ireland was ruled from London. In the 21st century, the fight is against bankers. “We have been creating mayhem, if by mayhem you mean keeping people in their homes,” said Jerry Beades, a developer who has spent almost a decade in disputes with banks and financial regulators and is now leading the League. “We are reflecting the anger that’s out there about the level of debt that just can’t be serviced.” About 117,000 home-mortgage accounts are in arrears, according to central bank figures, and the Free Legal Advice Centres group said last month that a “substantial spike” in repossessions may be on the way.

Read more …

“Aberdeen has been the focus of a classic oil boom..”

The Biggest Loss for Scotland Since Independence Fail (Bloomberg)

In Aberdeen, a city built out of granite on Scotland’s North Sea coast, a diamond merchant checks the price of oil every day. Until recently, the dealer, Oscar Ozdaslar, had been accustomed to North Sea oil workers stopping in to buy 3,500-pound ($5,260) diamond rings and earrings in his store on Union Street. “This Christmas was very quiet compared to the Christmas before,” said Ozdaslar, 50. “The oil guys didn’t come in.” Just six months ago, Aberdeen was the economic linchpin of Scotland’s campaign to split from the U.K. as oil traded above $100 a barrel. In the wake of the independence referendum’s failure, it serves as a microcosm of how crude’s slump to nearer $50 is hurting cities from Calgary to Kuala Lumpur.

“Aberdeen has been the focus of a classic oil boom,” said Gordon Hughes, a professor of economics in the University of Edinburgh. “There’s no doubt that the city will go through a bad period now that it’s over.” What’s more, the North Sea basin is among the most expensive in the world from which to extract oil. About 20% of U.K. production is “uneconomic” at $50 a barrel, trade group Oil & Gas U.K. says. After rallying this week, brent for March settlement traded at $57.72 a barrel on the ICE Futures Europe exchange on Friday. BP CEO Bob Dudley said this week it feels like the 1980s when he was living in Aberdeen working as an artificial lift engineer for Amoco before it merged with BP. Prices fell about 70% in a few months after Saudi Arabia increased production and didn’t recover until 1990. Regions worldwide that depend on the industry are having an “enormous shock,” he said.

Read more …

“We’ll actually be experiencing production increases over the next two years, notwithstanding low oil prices.”

Oil Production Increases Ahead: Alberta Premier (CNBC)

The steep drop in oil prices will lead to some slowdown of economic activity in Alberta, Canada, and the deferral of large capital investments in its oil sands, but Alberta Premier Jim Prentice told CNBC Friday its economy is resilient and will weather the rout. “This will be a difficult time. We’re assuming this will carry on for next 18 months or so and that we’ll be in a low-price environment,” he said in an interview. “We expect there will be some falloff in conventional drilling activity, shale drilling activity as well, clearly, but at the end of the day our economy is resilient.” Canadian rig count is down 13 rigs from last week, to 381, according to Baker Hughes. It is down 240 rigs from last year. However, oil production is going to increase. “We’ll actually be experiencing production increases over the next two years, notwithstanding low oil prices.”

Most of the oil in the region comes from oil sands, which produce about 1.9 million barrels of oil a day. In fact, Alberta’s oil sands are the third-largest crude oil reserve in the world. The province has proven oil reserves of 170 billion barrels. Prentice expects to see economic to slow down in cities like Calgary, but said Alberta has a strong public balance sheet and strong companies. About 121,500 citizens are directly employed in Alberta’s mining, oil, and gas extraction sectors. “I think there will be some consolidation to strength as we work our way through this. And certainly there will be implications and we’re concerned about that and we’re planning for that,” he said. That said, while he’s seen a deferral of large capital investments on new increments of oil sands investments and a reduction in capital expenditure in traditional oil and gas activity, Prentice sees a light at the end of the tunnel. “This will be part of a cycle, and we’ll eventually see the other side of this.”

Read more …

“..the final mission of any truly modern government must be to redirect the inventory of savings for the benefit of the rich (while, of course, claiming it is acting for the poor).”

A Modest Proposal To Save The World (Charles Gave)

As such, it seems that the ultimate aim of policy must be to transfer the nation’s entire wealth to an ever smaller number of rich people, most of who work in finance. Perhaps this is as it should be, since as already noted, money and only money can create value. Hence, the final mission of any truly modern government must be to redirect the inventory of savings for the benefit of the rich (while, of course, claiming it is acting for the poor). Interestingly, Europe’s socialists and the Democrats in the US have the ideal political cover to carry out this important exercise. And this, of course, brings us to Greece and my own big solution.

The lack of final demand in that benighted country shows that Alexis Tsipras must manage an economy suffering from not enough government spending. In response, Athens should issue unlimited sums of perpetual zero coupon bonds, which will be bought by the ECB. Next, the Italian, French and Spanish governments should follow suit. The proceeds can be transferred to local government districts in order for civil servants to be hired in earnest. The effect would be to greatly boost the local GDP, by the amount of the salaries paid to the civil servants, while the debt-to-GDP ratio will fall accordingly. The Bundesbank will be happy. Of course, the simple minded (non-economist fellows) might wonder who will buy this paper.

The answer is simple: the authorities must slap a 100% reserve requirement on all products held by insurance companies, banks and pension funds, and ‘hey presto!’ bond issues will be oversubscribed. Of course, if the choice is between a zero coupon perpetual bond and shares in the stock market, I have no doubt that the Dow will be at 100,000 in no time. At the same time, since the only competition for the perpetual zeros will be cash, the use of bank notes will need to be outlawed. Some smart fellows have already started working on this highly progressive idea. The only thing that I do not understand is why it has not yet been adopted. It must be the fault of incompetent politicians, advised by poorly trained economists. There is no other explanation.

Read more …

Again: the resistance to TTIP is not nearly strong enough.

The TTIP US-EU Trade Deal -A Briefing (Guardian)

What’s the story? It’s been called the most contested acronym in Europe, a putative free-trade deal between the world’s two richest trading powers that will either unleash untold prosperity or economic and cultural ruin, depending on your point of view. The Transatlantic Trade and Investment Partnership (TTIP) is an ugly mouthful, and not just in name. The aim is not just to reduce tariffs between the EU and US but to remove regulatory barriers and standardise rules so that companies can access each other’s market more easily. It has the potential to be the biggest trade deal ever concluded. But there are formidable pitfalls and obstacles along the way. Europeans hope the talks, which embark on an eighth round this week after almost two years of deliberation, will result in access to financial services in the US.

Washington is resisting. The Americans are eyeing up the food markets that serve the EU’s 500 million mouths. Europeans are concerned this will bring lower US food standards to a continent that prizes its Italian hams and French champagnes. Above all, public scepticism to the trade accord is spreading across Europe, where growing numbers are suspicious of their political leadership and disenchanted by two decades of globalisation. The treaty has been in the works for 12 years, and came about as it became apparent that bigger global trade deals would be hard to achieve. Negotiations started in 2013 and involve at least 100 participants. [..]

The biggest problem with TTIP is that the most significant gains are to be made from an area that the public is queasiest about: deregulation. Negotiators know that just removing tariffs is the easy bit – and not worth nearly as much as reforming, reducing and/or harmonising the differing regulations that govern business and industry in the US. But one person’s regulation is another’s protection, and opponents of TTIP argue that it could threaten consumer protection, social rights, health, the environment and data protection. Some even fret that it could open the door to privatisation by allowing, for example, US health companies to run parts of Britain’s publicly owned National Health Service.

The Europeans have already secured the exclusion of audio-visual services to protect the French film industry, a neuralgic issue for leaders in Paris. The question is: will the long list of other exceptions that already include GM food and hormone-fed beef dilute the deal to make it less worthwhile? An even bigger stumbling block is another clunky acronym, ISDS (Investor State Dispute Settlement), which would allow businesses to sue governments for action that would hurt future profits. Supporters of the bill have argued that ISDS plays an essential role in ensuring smooth transatlantic negotiations. Critics fret that it would bypass national laws and subjugate the interest of governments to those of big business.

Read more …

Fun with sketchy ‘science’.

Pentagon 2008 Study Claims Putin Has Asperger’s Syndrome (USA Today)

A study from a Pentagon think tank theorizes that Russian President Vladimir Putin has Asperger’s syndrome, “an autistic disorder which affects all of his decisions,” according to the 2008 report obtained by USA TODAY. Putin’s “neurological development was significantly interrupted in infancy,” wrote Brenda Connors, an expert in movement pattern analysis at the U.S. Naval War College in Newport, R.I. Studies of his movement, Connors wrote, reveal “that the Russian President carries a neurological abnormality.” The 2008 study was one of many by Connors and her colleagues, who are contractors for the Office of Net Assessment (ONA), an internal Pentagon think tank that helps devise long-term military strategy.

The 2008 report and a 2011 study were provided to USA TODAY as part of a Freedom of Information Act request. Researchers can’t prove their theory about Putin and Asperger’s, the report said, because they were not able to perform a brain scan on the Russian president. The report cites work by autism specialists as backing their findings. It is not known whether the research has been acted on by Pentagon or administration officials. The 2008 report cites Dr. Stephen Porges, who is now a University of North Carolina psychiatry professor, as concluding that “Putin carries a form of autism.” However, Porges said Wednesday he had never seen the finished report and “would back off saying he has Asperger’s.”

Instead, Porges said, his analysis was that U.S. officials needed to find quieter settings in which to deal with Putin, whose behavior and facial expressions reveal someone who is defensive in large social settings. Although these features are observed in Asperger’s, they are also observed in individuals who have difficulties staying calm in social settings and have low thresholds to be reactive. “If you need to do things with him, you don’t want to be in a big state affair but more of one-on-one situation someplace somewhere quiet,” he said.

Read more …

And what do they meet, of course? Denial.

US Navy Sailors Search for Justice after Fukushima Mission (Spiegel)

On March 11, 2011, the American aircraft carrier USS Ronald Reagan received orders to change course and head for the east coast of Japan, which had just been devastated by a tsunami. The Ronald Reagan had been on its way to South Korea when the order reached it and Captain Thom Burke, who was in charge of the ship along with its crew of 4,500 men and women, duly redirected his vessel. The Americans reached the Japanese coastline on March 12, just north of Sendai and remained in the region for several weeks. The mission was named Tomodachi. The word tomodachi means “friends.” In hindsight, the choice seems like a delicate one. Three-and-a-half years later, Master Chief Petty Officer Leticia Morales is sitting in a café in a rundown department store north of Seattle and trying to remember the name of the doctor who removed her thyroid gland 10 months ago.

Her partner Tiffany is sitting next to her fishing pills out of a large box and pushing them over to Morales. “It was something like Erikson,” Morales says. “Or maybe his first name was Eric, or Rick. Oh, I don’t know. Too many doctors.” In the last year-and-a-half, she has seen oncologists, radiologists, cardiologists, blood specialists, kidney specialists, gastrointestinal specialists, lymph node experts and metabolic specialists. “I’m now spending half the month in doctors’ offices,” she says. “This year, I’ve had more than 20 MRTs. I’ve simply lost track.” She swallows one of the pills, takes a sip of water and smiles wryly. It was the endocrinologist who asked her if she had been on the Ronald Reagan. During Tomodachi? Yes, Morales told her. Why?

The doctor answered that he had removed six thyroid glands in recent months from sailors who had been on that ship, Morales relates. Only then did Morales make the connection between the worst accident in the history of civilian atomic power and her own fate. The Fukushima catastrophe changed the world. Nuclear reactors melted down on live television and twice as much radioactive material was released as during the Chernobyl accident in 1986. The disaster drove 150,000 people from their towns and villages, poisoned entire landscapes for centuries and killed hundreds of thousands of farm animals. It also led countries around the world to rethink their usage of nuclear energy. Fukushima is more than just a place-name, it is an historical event – and it would seem to have changed the life of Leticia Morales as well.

Read more …

“It doesn’t make them happy – it’s a cover-up. We get so busy maintaining stuff, keeping it, making sure there’s a place for it. It’s not greed. It’s trying to fill up a hole that’s so big it will never be filled..”

The Stuff Paradox: Dealing With Clutter In The US (BBC)

While more and more Americans struggle to make do with less due to economic hardship, others are making a conscious choice to shed their possessions. When Courtney Carver was diagnosed with multiple sclerosis in 2006, she took a long, hard look at her life and decided to focus on only the things that were really important. And that meant reducing the amount of “stuff” cluttering her space and her time. “At first it seemed completely overwhelming and not manageable,” she recalls. “Even the thought of decluttering my closet felt like this huge accomplishment, and paying off tens of thousands of dollars of debt felt impossible.” But Carver persevered and discovered that casting off her possessions also reduced her stress levels and she began to feel better. “I’m not saying crazy lifestyles cause illness, but they certainly exacerbate issues,” she says.

“Freeing up a lot of resources allows me to give more of my time and attention and money to things that I care about.” She began blogging about her experience and eventually left her advertising job in Salt Lake City, Utah, to launch a website BeMoreWithLess.com. Her Project 333 – how to pare down a wardrobe to just 33 items – has attracted a large online following and she has just launched a similar initiative to reduce food in the kitchen. The point is to free up time and mental energy that would otherwise be spent on the everyday preoccupation of eating and fashion. Of course minimalism itself is nothing new. Some of the ancient Greek philosophers were advocates, most religions extol the virtues of austerity and figures as diverse as the Russian novelist Leo Tolstoy and the Indian civil rights leader Mahatma Gandhi have preached the benefits of a simple life. But a recent survey reveals that 54% of Americans feel overwhelmed by clutter and 78% have no idea what to do with it. [..]

Bev Hitchins is the founder of Align, a professional decluttering service based in Alexandria, Virginia. She has never met some of her clients and often provides counselling online. “I work with people who are poised to make a change,” she says. “They realise they’re stuck and have to do something about it. One of the easiest ways to get unstuck is to declutter.” That’s because most people accumulate possessions for psychological reasons, she says. “People gather stuff to protect themselves. It’s an illusion though. It doesn’t make them happy – it’s a cover-up. We get so busy maintaining stuff, keeping it, making sure there’s a place for it. It’s not greed. It’s trying to fill up a hole that’s so big it will never be filled. “But there’s a tremendous transformation that goes on if they stay with the process. You can go into therapy or you can start decluttering.”

Read more …

“I think when you make a film like American Sniper you have to be in decline.. You’re not a world leader any more..”

American Sniper Is A Movie Hitler ‘Would Have Been Proud To Have Made’ (Ind.)

The British documentarian Nick Broomfield has said that the controversial biopic American Sniper is a film which Adolf Hitler would have been proud to have made. In an interview for The Independent Magazine, the award-winning filmmaker branded it an example of ‘American fascism’ that made him question his decision to live in the United States. “After you’ve watched a film like American Sniper, you think “My God, what the fuck am I doing here?” He went on to say: “I think Adolf would have been proud to have made it”. Directed by Clint Eastwood, American Sniper is a biopic of the Navy SEAL sniper Chris Kyle, played by Bradley Cooper. Based on Kyle’s memoir, the film tells the story of how he rose to legendary status within the armed forces by making 164 confirmed “kills” during four tours in Iraq.

The film has been a runaway success at the US box office. American sniper Chris Kyle had over a 100 ‘kills’ to his name American sniper Chris Kyle had over a 100 ‘kills’ to his name Asked whether he agreed with criticism of America Sniper as propagandist Broomfield – who is promoting his new documentary Tales of the Grim Sleeper – labelled it a product of a country locked in an existential struggle with its own history and future. “It’s been amazing watching the whole Obama thing. Just seeing how deep-rooted it [American fascism] is. That’s really what Tales of the Grim Sleeper is about: incredible racism that really goes back to slavery and the country has not in any way got over it. “I think when you make a film like American Sniper you have to be in decline,” he added.

“You’re holding on to your bootstraps and you’re turning inwards. You’re not a world leader any more. I think it makes people very insecure and they sort of retreat to their most basic fears .The fact that that film has been such a touchstone here is worrying.” [..] Broomfield’s new documentary, Tales of a Grim Sleeper, investigates the murders of over 150 prostitutes, mostly African-American, in South Central Los Angeles. It is Broomfield’s 30th documentary – a number of which have been set in the US. “If you were making films in the 1850s when the British Empire was pre-eminent, you would undoubtedly be more interested about making films in Britain, about British people,” he explained. “But I think, in a way, it’s about to change. People look to the United States for things that are about to happen in the future.”

Read more …