Aug 092018
 


René Magritte The evening gown 1954

 

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

 

 

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

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

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

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

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

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

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

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

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

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

 

 

Apr 212018
 
 April 21, 2018  Posted by at 12:43 pm Finance Tagged with: , , , , , , , , , , ,  


Arthur Rothstein Lower Broadway, New York 1941

 

British media report today that Donald Trump may visit the country in late summer. (Renewed) calls for mass protests are everywhere, of course. The Metro news outlet features a picture of a pamphlet that reads No To Racism. No To Trump, that dates from an earlier occasion (Trump was supposed to come several times, but never did).

Now, good luck with those protests, it’s still a free country, in name at least. But boy oh boy, would you guys miss the point. Because as we now all know – or could-, your country is being governed by a group of people who are so racist they make even Trump’s fake tan pale in comparison. If Theresa May is still in office by the time Trump visits, you’re all a bunch of racists.

Both May and her Home Secretary Amber Rudd – and you all know they’re far from alone- look so completely deranged in reports about the Windrush scandal that you will have to get rid of them first, or else shut up about Trump because you will have no moral ground whatsoever left on which to protest his visit.

For those of you who don’t know what Windrush is about, and if you’re British you have no excuse not to know, it’s the name given to a group of people who arrived, on invitation, in Britain between the late 1940s and early 1970s, often as children, and whose legal status in the country is now put in so much doubt that some have already been deported, some are denied health care, and all live in fear. Despite having lived and worked and paid taxes all their lives.

There are many instances of people who have never left Britain for a family visit, some who can’t see their own children because they did go for that visit and weren’t allowed back in, the entire story is so appalling and disastrous it’s hard to read the various reports on it. The common denominator of all of these people? They are black.

 

Windrush: When Even Legal Residents Face Deportation

In the aftermath of World War II, the British government invited thousands of people from Caribbean countries in the British Commonwealth to immigrate to the United Kingdom and help address the war-torn country’s labor shortages. Now, nearly 70 years later, many of those same people, now elderly, are having their legal status in the country questioned and are facing deportation. Though the deportation threats date as far back as October, the crisis burst into wider view this week after Caribbean diplomats representing a dozen Commonwealth nations chastised the U.K. government publicly. “This is about people saying, as they said 70 years ago, ‘Go back home.’ It is not good enough for people who gave their lives to this country to be treated like this,” Guy Hewitt, the high commissioner from Barbados to the U.K., said at a gathering of the diplomats.

As for the Guardian, which claims it broke the story, here’s a question: where were you all those years? As for Theresa May, who when she occupied the Home Office from 2010-2016 and devised all manner of tough-on-immigrants measures that have now spread to people the UK itself invited into its nation: you have to go. You cannot continue to be the face of Britain, because you blemish any and all of your fellow country men and women.

 

 

As for Donald Trump, as much as we would like to engage in constructive criticism of the man and his government, we find we no longer can. The anti-Trump echo-chamber has turned so deafening that any intelligent debate about his policies is being drowned out amid the never ending flow of fake news and half truths and innuendo and empty smears that US media continue to spout. With a brief lull when the bombs fell on Syria.

Thank you, New York Times, WaPo, CNN, MSNBC. Thank you for killing the entire discussion, thank you for killing off journalism. There is a lot to say about Trump, much of it critical, but we can no longer open our mouths. Because we don’t want to be in the same camp as you. Life in the echo chamber has given us vertigo. We had to get out.

And now, what are you going to do? The DNC lawsuit-for-campaign-cash which was launched yesterday against everything Trump, plus Wikileaks, plus everything Russia, may appear to you to be a nice and juicy next episode in your ‘impeach the comb-over’ narrative, but if I were you, I’d be careful. Because the suit creates the ideal ground upon which the empire can strike back.

And the counter suits look a lot stronger. The DNC has nothing on Russia, Wikileaks and most Trump affiliated people and organizations, as the Mueller investigation has shown by now. But Loretta Lynch, the “Pakistani mystery man”, Debbie Wasserman Schultz, Comey, McCabe, and many more around Hillary Clinton, that’s a whole different story.

First of all, they haven’t been investigated for well over a year. But can you see Rosenstein now still refusing to appoint a second special counsel and going after anything Democrat? It would cost him his job, and for good reason. And then what will the place of the echo chamber be? What have been your sources on Trump et al over the past, let’s say, 18 months? How are you going to report on your own role? Someone’s going to ask these questions.

And, you know, you do know that at least someone will name Trump for the Nobel Peace Prize if he pulls off ‘pacifying’ North Korea. How will you address that? See, you can’t praise the Donald anymore even if he does achieve things -other than missiles-, and we can’t criticize him anymore for what does indeed go wrong because you monopolized that criticism with your opinionated 24/7 non-news. While claiming to be the serious press.

Trump must be very grateful to you for what you’ve done. Come to think of it, perhaps that second special counsel should look into any payments you have received from Russia. Because nobody has helped Trump more than you have. Except perhaps for the Britons who plan to protest his visit with their racist prime minister.

Why do I feel like most of the world has lost its compass? Like we’re all just aimlessly bobbing around on a sea of meaningless words? You know, Trump territory.

 

 

Mar 172018
 


Times Square NYC ca. 1909

 

Higher Interest Rates To Spell Private Debt Trouble in Many Countries (BBG)
The US Economy Is Not Really Growing (RIA)
US Gross National Debt Spikes $1.2 Trillion in 6 Months, Hits $21 Trillion (WS)
Russia Expels 23 British Diplomats In Retaliation (Ind.)
EU Ready To Hit Big US Tech Firms With 3% Turnover Tax (R.)
Goldilocks, R. I. P. – Part 2 (Stockman)
School Daze (Jim Kunstler)
‘America’s New Vietnam’: The Homelessness Crisis Seems Unsolvable (G.)
An Information Apocalypse Is Coming. How Can We Protect Ourselves? (G.)
China To Bar People With Bad ‘Social Credit’ From Planes, Trains (R.)
Global Biodiversity Crisis Puts Mankind At Risk (AFP)

 

 

What’s kept us alive will kill us off.

Higher Interest Rates To Spell Private Debt Trouble in Many Countries (BBG)

Hong Kong, Sweden, China and Australia could all find themselves in hot water over private-sector debt if borrowing costs rise, according to research by Oxford Economics. That’s because those countries all have a particularly high share of floating-rate debt in relation to economic output. If interest rates increase, households and companies are likely to feel the pinch, the study of 16 economies found. With global economic momentum picking up, several major central banks are weighing steps to tighten policy, though the pace of movement varies significantly. The Federal Reserve is expected to raise interest rates again next week and economists also predict that Sweden’s Riksbank will tighten policy later this year.

Oxford Economics estimated that an interest rate rise of 100 basis points would raise Hong Kong’s debt service ratio by around 2.5% of GDP after a year, while Sweden, China and Australia would experience increases of between 1.5% and 1.7% of GDP. By contrast, Germany, where debt levels are moderate, as well as France and the U.S. are less likely to suffer. For the latter two, that’s because mortgages are typically of fixed rate.

Read more …

It’s embarrassing that we need this to be pointed out.

The US Economy Is Not Really Growing (RIA)

Most people are aware that GDP growth has been lower than expected in the aftermath of the Global Financial Crisis of 2008 (GFC). For example, real GDP growth for the past decade has been closer to 1.5% than the 3% experienced in the 50 years prior to 2008. As a result of the combination of slow economic growth and deficit spending, most people are also aware that the debt/GDP ratio has been rising. However, what most people don’t know is that, over the past ten years, the dollar amount of cumulative government deficit spending exceeded the dollar amount of GDP growth. Put another way, in the absence of deficit spending, GDP growth would have been less than zero for the past decade. Could that be true?

Let’s begin with a shocking chart that confirms the statements above, and begins to answer the question. The black line shows the difference between quarterly GDP growth and the quarterly increase in Treasury debt outstanding (TDO). When the black line is above zero (red dotted line), the dollar amount is GDP is growing faster than the increase in TDO. From 1971 to 2008, the amount of GDP typically grew at a faster rate than the increase in TDO, which is why the black line is generally above the red dotted line.

Most people are aware that GDP growth has been lower than expected in the aftermath of the Global Financial Crisis of 2008 (GFC). For example, real GDP growth for the past decade has been closer to 1.5% than the 3% During the 1971-2008 period, inflation, budget deficits, and trade deficits varied widely, meaning that the relationship between GDP growth and TDO was stable even in the face of changes in other economic variables. Regardless of those changing economic variables, the US economy tended to grow at a pace faster than TDO for four decades. The only interruptions to the pattern occurred during recessions of the early 1980s, early 1990s, and early 2000s when GDP fell while budget deficits did not.

[..] From 2008-2017, GDP grew by $5.051 trillion, from $14.55 trillion to $19.74 trillion. During that same period, the increase in TDO totaled $11.26 trillion. In other words, for each dollar of deficit spending, the economy grew by less than 50 cents. Or, put another way, had the federal government not borrowed and spent the $11.263 trillion, GDP today would be significantly smaller than it is. It is possible to transform Chart 1, which shows annual changes in TDO and GDP from 1970-2017, into Chart 3 below, which shows the cumulative difference between the growth of TDO and GDP over the entire period from 1970-2017. The graph below clearly shows the abrupt regime change that occurred in the aftermath of the GFC. A period in which growth in GDP growth exceeded increases in TDO has been replaced by a period in which increases in TDO exceeded GDP growth.

Read more …

“These dang trillions are flying by so fast, they’re hard to see.”

US Gross National Debt Spikes $1.2 Trillion in 6 Months, Hits $21 Trillion (WS)

The US gross national debt jumped by $72.8 billion in one day, on Thursday, the Treasury Department reported Friday afternoon. This March 16 is a historic date of gloomy proportions, because on this date, the US gross national debt punched through the $21 trillion mark and reached $21.03 trillion. Here’s the thing: On September 7, 2017, a little over six months ago, just before Congress suspended the debt ceiling, the gross national debt stood at $19.84 trillion. In those six-plus months – 132 reporting days, to be precise – the gross national debt spiked by $1.186 trillion. I tell you, these dang trillions are flying by so fast, they’re hard to see. And we wonder: What was that? Where did it go?

Whatever it was and wherever it went, it added 6% to the gross national debt in just 6 months. And with 2017 GDP at $19.74 trillion in current dollars, the gross national debt now amounts to 106.4% of GDP. In the chart below, the flat spots are the various debt-ceiling periods. This is a uniquely American phenomenon when Congress forbids the Administration to borrow the money that it needs to borrow in order to spend it on the things that Congress told the Administration to spend it on via the appropriation bills. So that’s where we are, on this glorious day of March 16, 2018:

Read more …

So many holes have been pointed out in ‘the official story’ that not much of it remains standing.

Russia Expels 23 British Diplomats In Retaliation (Ind.)

Russia has announced it will expel 23 British diplomats in response to the expulsion of 23 Russian diplomats from Britain. The move marks the latest development in the diplomatic spat over the poisoning of former Russian spy Sergei Skripal in Salisbury on 4 March. The Russian Foreign Ministry announced on Saturday morning that the 23 diplomatic representatives of the British Embassy in Moscow should leave Russia within a week. The ministry also said all activities by the British Council, the UK’s international organisation for cultural relations, would cease in Russia and that the planned reopening of the British consulate in St Petersburg would no longer go ahead. The ministry warned that Russia could take further measures if Britain takes any more “unfriendly actions” against the country.

Shortly before the announcement, British ambassador to Russia, Laurie Bristow, was summoned to the foreign ministry for talks, where he learned of the retaliation measures. As he left the ministry, Mr Bristow said: “This crisis has arisen as a result of an appalling attack in the UK, the attempted murder of two people using a chemical weapon developed in Russia and not declared by Russia to the Organisation for the Prohibition of Chemical Weapons (OPCW) as Russia is obliged to do under the Chemical Weapons Act.” The retaliation from Russia comes four days after Theresa May announced that 23 Russian diplomats would be expelled from Britain after Russia missed a deadline to provide an explanation for the poisoning of Skripal and his daughter Yulia. Both remain critically ill in hospital.

Russia has continued to dismiss accusations of Russian culpability for the attack and to deny possessing Novichok, the nerve agent used in the incident. On Friday, UK Foreign Secretary Boris Johnson directly accused Russian President Vladimir Putin of ordering the poisoning, saying it was “overwhelmingly likely” Mr Putin personally ordered the assassination attempt. Dmitry Peskov, Russian presidential press secretary, responded to the verbal escalation with a further denial of the state’s involvement. “Any reference or mention of our President in this connection is nothing but a shocking and unforgivable violation of the diplomatic rules of propriety,” Mr Peskov said.

Read more …

Once Europe does this, will other ‘entities’ follow?

EU Ready To Hit Big US Tech Firms With 3% Turnover Tax (R.)

Large companies with significant digital revenues in the European Union such as Google and Facebook could face a 3% tax on their turnover under a draft proposal by the European Commission seen by Reuters. The proposal, expected to be adopted next week and still subject to changes, updates an earlier draft which envisaged a tax rate of between 1 and 5%. The tax, if backed by EU states and lawmakers, would only apply to large firms with annual worldwide revenues above 750 million euros (£662.2 million) and annual “taxable” revenues above 50 million euros in the EU. The threshold for EU revenues has been raised from 10 million euros initially foreseen to exempt smaller companies and emerging start-ups from the tax.

Large U.S. firms such as Uber, Airbnb and Amazon could also be hit by the new levy, which would apply across the 28 EU countries. Big tech firms have been accused by large EU states of paying too little tax in the bloc by re-routing some of their profits to low-tax member states like Ireland and Luxembourg. Services that will be taxed are digital advertising, which would capture both providers of users’ data like Google, and companies offering ad space on their websites, like popular social media such as Facebook. The tax would be also be levied on online platforms offering “intermediation services,” a concept under which the Commission includes gig economy firms such as Airbnb and Uber. Digital market places, including Amazon, would also be within the scope of the levy.

Read more …

True enough: Kudlow was by no means the only one to get it all awfully wrong.

Goldilocks, R. I. P. – Part 2 (Stockman)

Goldilocks is a conceit of monetary central planning and its erroneous predicate that falsifying financial asset prices is the route to prosperity. In fact, it only leads to immense and unstable financial bubbles which eventually crash – monkey-hammering the purported Goldilocks Economy as they do. It also leads to a complete corruption of the economic and financial narrative on both ends of the Acela Corridor. To wit, the Fed’s serial financial bubbles on Wall Street are falsely celebrated as arising from a booming main street economy. In fact, they are an economic dagger that bleeds it of investment and cash and exposes it to “restructuring” mayhem from the C-suites when the egregious inflation of share prices and stock option values finally gets crushed by another financial meltdown.

In this context, the Washington Post (WaPo) is out this morning with brutal takedown of our friend Larry Kudlow for his ebullient whistling past the graveyard on the eve of the financial crisis and Great Recession. It would be an understatement to say he didn’t see it coming, but it’s also completely unfair not to acknowledge that 95% of Wall Street and 100% of the FOMC were equally bubble-blind. In fact, when Larry Kudlow waxed eloquently in a piece in the National Review about the awesome economy the George Bush Administration had produced in December 2007, he was just delivering the Wall Street consensus forecast for the coming year:

“There’s no recession coming. The pessimistas were wrong. It’s not going to happen. At a bare minimum, we are looking at Goldilocks 2.0. (And that’s a minimum). Goldilocks is alive and well. The Bush boom is alive and well. It’s finishing up its sixth consecutive year with more to come. Yes, it’s still the greatest story never told…….In fact, we are about to enter the seventh consecutive year of the Bush boom.”

Well, not exactly. The worst recession since the 1930s actually incepted that very month and 10 months latter came Washington’s hair-on-fire moment when the monetary and fiscal spigots were opened far wider than ever before – bailing out everything that was collapsing, tottering, moving or even standing still.

Read more …

Our education system serves uniquely to create pawns in games.

School Daze (Jim Kunstler)

Sunday night was Secretary of Education Betsy DeVos’s turn through the CBS 60-Minutes wringer of censure with a visibly frustrated inquisitor Lesley Stahl trying to hector her into self-incrimination. The sad truth about American schools is that they’re a mirror for the painful collapse of the society they supposedly serve — a process ongoing for decades before Ms. DeVos came on the scene. The expectation that some uber-regent can or ought to fix public education is bound to disappoint a news media searching for saviors. The further we leave the 20th century behind, the more anomalous its organizing principles look, especially the idea of preparing masses of young people for mass, regimented work at the giant corporate scale.

There’s a big divergence underway between the promises of schooling and the kind of future that the 21st century is actually presenting — of no plausible careers or vocations besides providing “therapy” and policing for the discontented masses stewing in anomie and compensatory pleasure-seeking, with all its nasty side effects. In the meantime, we’re stuck with wildly expensive, out-of-scale, giant centralized schools where the worst tendencies of human status competition are amplified by smart phones and social media to all but eclipse classroom learning.

Education in the years to come is destined to become more of a privilege than a right, and it will probably depend more on how much an individual young person really desires an education than just compelling masses of uninterested or indisposed kids to show up everyday for an elaborate and rather poorly supervised form of day-care. But it’s difficult to let go of old habits and obsolete arrangements, especially when we’ve spent countless billions of dollars on them. I call the future a World Made By Hand because it is going to be entirely unlike the sci-fi robotic fantasy that currently preoccupies the thought-leaders in this culture. A lot of what will be required in this time-to-come will be physical labor and small-scale skilled work in traditional crafts. There never were that many job openings for astronauts, not even in the 1960s, but in the decades ahead there will be none — notwithstanding Elon Musk’s wish to colonize Mars.

Read more …

In New York, 111,000 students in the public school system are homeless.

‘America’s New Vietnam’: The Homelessness Crisis Seems Unsolvable (G.)

In Los Angeles, the more the politicians push to solve the city’s festering homelessness crisis, the worse it seems to get. The city leadership has taken one bold step after another: restructuring the budget to free more than $100m a year in homelessness funding, sponsoring one voter-approved initiative to raise more than $1bn for housing and backing another regional proposal to raise the sales tax and generate an estimated $3.5bn for support services over the next decade. And yet the tent cities continue to proliferate, in rich neighborhoods and poor, by the beach, the airport, the Hollywood Walk of Fame and within view of City Hall itself. It’s the sorriest urban scene anywhere in America, and the same voters who not so long ago opened their hearts and their wallets to put an end to it are growing increasingly impatient.

As the numbers of homeless people continue to rise – the latest figures put the countywide number at 58,000, up more than 20% in a single year – and new encampments spring up on sidewalks, under freeways, and along stretches of river and rail lines, the politicians who not so long ago were earning praise for their courage are facing the beginnings of an angry backlash. “How many people have we housed?” the Los Angeles Times asked impatiently in a blistering series of editorials late last month. “How many are we on track toward housing? Is Los Angeles setting the national standard for rapid and effective response to a vexing problem? Or are its leaders merely mastering the art of appearances while passing the buck and hoping things turn around? … Who’s in charge here?”

Read more …

Sorry, but that apocalypse is already very much here. ‘Ordinary people’ already have no idea what’s true or real or not.

An Information Apocalypse Is Coming. How Can We Protect Ourselves? (G.)

John F Kennedy’s last speech reads like a warning from history, as relevant today as it was when it was delivered in 1963 at the Dallas Trade Mart. His rich, Boston Brahmin accent reassures us even as he delivers the uncomfortable message. The contrast between his eloquence and the swagger of Donald Trump is almost painful to hear. The problem is, Kennedy never spoke these words. He was killed before he made it to the Trade Mart. You can only hear them now thanks to audio technology developed by a British company, CereProc. Fragments of his voice have been taken from other speeches and public appearances, spliced and put back together, with neural networks employed to mimic his natural intonation.

[..] “Dual use” of technology is not a new problem. Nuclear physics gave us both energy and bombs. What is new is the democratisation of advanced IT, the fact that anyone with a computer can now engage in the weaponisation of information; 2016 was the year we woke up to the power of fake news, with internet conspiracy theories and lies used to bolster the case for both Brexit and Donald Trump. We may, however, look back on it as a kind of phoney war, when photoshopping and video manipulation were still easily detectable. That window is closing fast. A program developed at Stanford University allows users to convincingly put words into politicians’ mouths. Celebrities can be inserted into porn videos. Quite soon it will be all but impossible for ordinary people to tell what’s real and what’s not.

What will the effects of this be? When a public figure claims the racist or sexist audio of them is simply fake, will we believe them? How will political campaigns work when millions of voters have the power to engage in dirty tricks? What about health messages on the dangers of diesel or the safety of vaccines? Will vested interests or conspiracy theorists attempt to manipulate them? Unable to trust what they see or hear, will people retreat into lives of non-engagement, ceding the public sphere to the already powerful or the unscrupulous? The potential for an “information apocalypse” is beginning to be taken seriously. The problem is we have no idea what a world in which all words and images are suspect will look like, so it’s hard to come up with solutions.

Perhaps not very much will change – perhaps we will develop a sixth sense for bullshit and propaganda, in the same way that it has become easy to distinguish sales calls from genuine inquiries, and scam emails with fake bank logos from the real thing. But there’s no guarantee we’ll be able to defend ourselves from the onslaught, and society could start to change in unpredictable ways as a result. Like the generation JFK was addressing in his speech, we are on the cusp of a new and scary age. Rhetoric and reality, the plausible and the possible, are becoming difficult to separate. We await a figure of Kennedy’s stature to help us find a way through. Until then, we must at the very least face up to the scale of the coming challenge.

Read more …

Would have been nice to see Orwell comment on this.

China To Bar People With Bad ‘Social Credit’ From Planes, Trains (R.)

China said it will begin applying its so-called social credit system to flights and trains and stop people who have committed misdeeds from taking such transport for up to a year. People who would be put on the restricted lists included those found to have committed acts like spreading false information about terrorism and causing trouble on flights, as well as those who used expired tickets or smoked on trains, according to two statements issued on the National Development and Reform Commission’s website on Friday. Those found to have committed financial wrongdoings, such as employers who failed to pay social insurance or people who have failed to pay fines, would also face these restrictions, said the statements which were dated March 2.

It added that the rules would come into effect on May 1. The move is in line with President’s Xi Jinping’s plan to construct a social credit system based on the principle of “once untrustworthy, always restricted”, said one of the notices which was signed by eight ministries, including the country’s aviation regulator and the Supreme People’s Court. China has flagged plans to roll out a system that will allow government bodies to share information on its citizens’ trustworthiness and issue penalties based on a so-called social credit score.

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We’re going to figure this one out way too late. The time to stop this is now, not at some future point down the line. But we’re not doing anything at all. We blindly parrot claims about clean energy and electric cars that will allegedly ‘save’ us, because we want to do the saving without paying a price for it that makes our lives one iota less comfy.

Global Biodiversity Crisis Puts Mankind At Risk (AFP)

Earth is enduring a mass species extinction, scientists say – the first since the demise of the dinosaurs and only the sixth in half-a-billion years. The reason? Humanity’s voracious consumption, and wanton destruction, of the very gifts of nature that keep us alive. Starting Saturday, a comprehensive, global appraisal of the damage, and what can be done to reverse it, will be conducted in Colombia. “The science is clear: biodiversity is in crisis globally,” WWF director general Marco Lambertini told AFP ahead of a crucial meeting of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES). “We depend on biodiversity for the food we eat, the water we drink, the clean air we breathe, the stability of weather patterns, and yet our actions are pushing nature’s ability to sustain us to the brink.”

Scientists and government envoys will gather as the 128-member IPBES to dot the i’s and cross the t’s on five monumental assessment reports designed to inform global policymaking into the future. Compiled over the last three years, the reports will provide the most up-to-date picture of the health of the world’s plants, animals and soil. [..] Meeting host Colombia claims to boast the world’s largest variety of birds and orchids and is second only to Brazil in terms of overall species diversity. Paradoxically, decades of conflict have preserved fragile habitats in no-go zones in the country, whose mountainous topography supports 311 different ecosystems.

Read more …

Mar 162018
 
 March 16, 2018  Posted by at 10:18 am Finance Tagged with: , , , , , , , , , , , ,  


Pablo Picasso Women of Algiers (after Delacroix) 1955

 

The British Government’s Russia Nerve Agent Claims Are Bullshit (Nafeez Ahmed)
UK Claims Questioned About Source Of Salisbury Novichok (G.)
Buying Stocks Now Is Betting On Buybacks (F.)
Has Europe Really Recovered From Its 2008 Financial Meltdown? (Steve Keen)
UK Household Debt Levels Close To 2008 Peak (Ind.)
UK Economy In Grip Of Most Feeble Recovery On Modern Record – IFS (Ind.)
More Than 600,000 Britons Sought Help From Debt Charity Last Year (G.)
European Commission Rebuked Over Ex-Chief Barroso’s Goldman Sachs Job (G.)
Japan PM Shinzo Abe’s Cronyism Scandal Worsens (G.)
Greece’s Jobless Rate Jumps To 21.2% In Fourth Quarter (K.)
EU Provides Financial Support For Turkey Amid Ethnic Cleansing (ANF)
The Oxfam Scandal: There Is No Reward For Honest Charities (Crack)
Bali Switches Off Internet Services For 24 Hours For New Year ‘Reflection’ (G.)

 

 

Yesterday was a travel day, hence no post. I’m back in Greece for talks about the Automatic Earth for Athens project.

 

 

Nafeez takes no prisoners. There must be a strong counter narrative to the UK government’s attempt to deflect attention from its dismal performance by conjuring up a common enemy for all Britons. Either show proof or hold your tongue.

The British Government’s Russia Nerve Agent Claims Are Bullshit (Nafeez Ahmed)

[..] far from offering a clear-cut evidence-trail to Vladimir Putin’s chemical warfare labs, the use of Novichok in the nerve gas attack on UK soil points to a wider set of potential suspects, of which Russia is in fact the least likely. Yet a concerted effort is being made to turn facts on their head. No clearer sign of this can be found than in the statement by Ambassador Peter Wilson, UK Permanent Representative to the Organisation for the Prohibition of Chemical Weapons (OPCW), in which he claimed that Russia has “failed for many years” to fully disclose its chemical weapons programme.

Wilson was parroting a claim made a year earlier by the US State Department that Russia had not made a complete declaration of its chemical weapons stockpile: “The United States cannot certify that Russia has met its obligations under the Convention.” Yet these claims are contradicted by the OPCW itself, which in September 2017 declared that the independent global agency had rigorously verified the completed destruction of Russia’s entire chemical weapons programme, including of course its nerve agent production capabilities. [..] The OPCW’s press statement confirmed that:

“The remainder of Russia’s chemical weapons arsenal has been destroyed at the Kizner Chemical Weapons Destruction Facility in the Udmurt Republic. Kizner was the last operating facility of seven chemical weapons destruction facilities in Russia. The six other facilities (Kambarka, Gorny, Maradykovsky, Leonidovka, Pochep and Shchuchye) completed work and were closed between 2005 and 2015.” [..] According to Craig Murray, former US Ambassador to Uzbekistan and prior to that a longtime career diplomat in the UK Foreign Office who worked across Africa, Eastern Europe, and Central Asia, the British government itself has advanced capabilities in Novichok:

“The ‘novochok’ group of nerve agents – a very loose term simply for a collection of new nerve agents the Soviet Union were developing fifty years ago – will almost certainly have been analysed and reproduced by Porton Down. That is entirely what Porton Down is there for. It used to make chemical and biological weapons as weapons, and today it still does make them in small quantities in order to research defences and antidotes. After the fall of the Soviet Union Russian chemists made a lot of information available on these nerve agents. And one country which has always manufactured very similar persistent nerve agents is Israel. ”

[..] A secret British intelligence unit is actively arranging ‘honey trap’ propaganda operations to incriminate ‘adversaries’

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People are subject to abuse for questioning the official story. At least Corbyn has the decency to ask for evidence.

UK Claims Questioned About Source Of Salisbury Novichok (G.)

It was a historic moment largely ignored at the time by most of the world’s media and might have remained so but for the attack in Salisbury. At a ceremony last November at the headquarters of the world body responsible for the elimination of chemical weapons in The Hague, a plaque was unveiled to commemorate the destruction of the last of Russia’s stockpiles. Gen Ahmet Üzümcü, the director general of the Organisation for the Prohibition of Chemical Weapons (OPCW), which works closely with the UN, was fulsome in his praise. “This is a major achievement,” he said. The 192-member body had seemingly overseen and verified the destruction of Russia’s entire stock of chemical weapons, all 39,967 metric tons.

The question now is whether all of Russia’s chemical weapons were destroyed and accounted for. Theresa May – having identified the nerve agent used in the Salisbury attack as novichok, developed in Russia – told the Commons on Wednesday that Russia had offered no explanation as to why it had “an undeclared chemical weapons programme in contravention of international law”. Jeremy Corbyn introduced a sceptical note, questioning whether there was any evidence as to the location of its production. The exchanges provoked a debate echoing the one that preceded the 2003 invasion of Iraq over whether UN weapons inspectors had overseen the destruction of all the weapons of mass destruction in the country or whether Saddam Hussein had retained secret hidden caches.

[..] The former British ambassador to Uzbekistan, Craig Murray, who visited the site at Nukus, said it had been dismantled with US help. He is among those advocating scepticism about the UK placing blame on Russia. In a blog post, he wrote: “The same people who assured you Saddam Hussein had WMDs now assure you Russian ‘novichok’ nerve agents are being wielded by Vladimir Putin to attack people on British soil.” [..] Murray, in a phone interview, is undeterred, determined to challenge the government line, in spite of having been subjected to a level of abuse on social media he had not experienced before. “There is no evidence it was Russia. I am not ruling out that it could be Russia, though I don’t see the motive. I want to see where the evidence lies,” Murray said. “Anyone who expresses scepticism is seen as an enemy of the state.”

Read more …

Casino.

Buying Stocks Now Is Betting On Buybacks (F.)

It is no secret that a large portion of the rally in equities over the last few years, and especially the rebound from the lows of early February, has been bolstered by the record amounts of capital sitting in the coffers of American corporations which, has naturally found its way into the stock market. This cash had three main sources. First, corporations built a large precautionary hoard of cash in the aftermath of the financial crisis to prevent being buffeted by credit markets, choosing to recycle their income into savings rather than spending. Some of this cash is now being unleashed. Second, the extremely low level of yields and spreads in the corporate bond markets allows the issuance of longer term bonds to willing yield-starved bond buyers and take in even more cash.

And finally, the tax reform unlocked foreign cash that came flowing back into the U.S. – a good fraction of which has gone into the stock market. This trifecta of positives (for the stock market) has created a systematic bid whenever markets correct downwards. The big question for investors is whether we can count on the buybacks to continue to provide the support on dips as the economic cycle matures. The question really is whether “Buying the Dip” is the same as “Buying the Buyback.” Just like the yield of a bond is the income that an investor receives from cash, the most important component of the yield on a stock is the dividend that the investor receives as the company pays out cash dividends.

The total yield from holding a stock is the sum of the dividend yield and the “buyback” yield. The buyback yield is simply the capital returned to investors divided by the market value of the stock. To compare the relative yield value of stocks and bonds, then, we should compare the yield on bonds and the total yield on stocks. What has been a direct consequence of the large buying of bonds by central banks until recently is that investors have been buying stocks for their total yield since this yield has been much higher than the comparable bond yields. One could also argue that investors have been buying bonds for capital appreciation, not yield. Otherwise why would one hold negatively yielding securities in Europe? Bonds for capital gains, equities for yield – very interesting!

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Household debt. That’s the focal point.

Has Europe Really Recovered From Its 2008 Financial Meltdown? (Steve Keen)

There’s no doubt that Europe is recovering, and those factors have been part of it. But so is another element which economists, especially Krugman himself, continue to ignore: credit. Not only Europe’s crisis, but America’s and the UK’s as well in 2008, was due to a collapse in credit-based demand. In fact, Europe is back largely because credit is back: European (and American and British) consumers and firms are borrowing once again and unleashing that borrowed money into their economies, boosting demand and lowering unemployment. This means the recovery can continue only so long as households and firms can keep getting into debt. Yet, given private debt levels are still high when compared to GDP, it won’t be long before the national credit cards are maxed out again. Then the borrowing will stop, and the recovery will run out of steam.

So why aren’t economists warning of this dark lining in the silver cloud of economic recovery? It’s because they don’t think that credit matters, and they ignore it when making forecasts about where the economy is likely to go. Their logic is that credit simply transfers spending power from one person to another, so changes in the level of private debt only affect the economy if the borrower has substantially different spending patterns to the lender. To use Krugman’s own language here, rising private debt will only affect demand if the borrowers are “impatient people” who spend a lot, while the lenders are “patient people” who spend very little. This implies that large changes in private debt should have only small effects on the macroeconomy.

I could get all theoretical here and prove why this belief is false, but it’s rather easy to show what the biologist Thomas Huxley once described as “no sadder sight in the world,” which is “to see a beautiful theory killed by a brutal fact.” If the theory that credit doesn’t matter were true, then credit and unemployment would be unrelated to each other. But they are! Here’s a killing of this beautiful theory by a brutal fact that’s worthy of a Game of Thrones beheading: Ladies and gentlemen, I give you the relationship between credit (the annual change in private debt, measured as a percentage of GDP) and unemployment in Spain, between 1990 and July 2017 (the latest quarter for which there is data on debt from the Bank of International Settlements).

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You can see the wall ahead that hey’re about to crash into.

UK Household Debt Levels Close To 2008 Peak (Ind.)

Worrying numbers of householders may be “in too deep” with their borrowing, a city regulator boss has told a credit conference. Jonathan Davidson, executive director of supervision for retail and authorisations at the Financial Conduct Authority (FCA), said credit levels were close to a peak seen in 2008. He said the FCA would take action against firms whose businesses were based on people being unable to clear their debts. More can be done to pre-empt future harm to customers, he said, warning: “There are a significant number of households that are in so deep that the slightest sign of rough weather could see them in over their heads.” He said it was “far from certain” that some customers who could just manage to afford loans now would be able to do so in future.

Mr Davidson told the audience: “A business model that is predicated on selling products to customers who can’t afford to repay them is not acceptable. “We will take action against firms who run their businesses this way.” He said that while most borrowers could still comfortably afford their credit, the industry should “think strategically about the issues facing your customers”, adding that this was “the right thing to do, not only for your customers, but for the future of your businesses”. Mr Davidson said the consumer credit sector, which comprises nearly 40,000 firms registered with the FCA, was part of everyday life, serving around 39 million people, whether it was to help finance a car, a big purchase or to make ends meet towards the end of the month.

He said some arrears and default rates, while still low, were on the rise, begging the question: “If we’re seeing this pattern now, what would happen if there was an economic downturn?” Speaking at the Credit Summit in London, Mr Davidson said: “Total credit lending to individuals is currently very close to its September 2008 peak.

Read more …

What QE has brought us. This is a global phenomenon revealed stronger and sooner in Britain because of, but not caused by, Brexit.

UK Economy In Grip Of Most Feeble Recovery On Modern Record – IFS (Ind.)

The UK has been living through the most feeble and protracted economic recovery in modern British history, leaving people on course to be almost £9,000 worse off on average by 2022-23 relative to the pre-crisis trend, according to calculations by the Institute for Fiscal Studies. In its analysis of the Government’s Spring Statement on Tuesday, which contained no new tax or spending measures, the think tank took a longer term perspective on the performance of the UK economy in the decade since the UK economy first sank into recession in 2008. It has long been noted that the UK’s recovery from that slump has been the slowest since the Great Depression in the 1930s.

But, analysing historic data on UK GDP per capita, the IFS showed on Wednesday that it has been weaker even than what followed the agonising slump of the early 1920s. In that era output per person fell by 10%, as global industrial overcapacity in the wake of the First World War ravaged once mighty UK firms, resulting in mass unemployment. The UK recession after the global financial crisis was shallower, with GDP per capita falling by around 7% as banks failed and global trade fell off a cliff. Yet a decade after the 1920-21 recession UK output per person was more than 10% higher than before the crisis. Today it is only around 3% higher than it was in 2008-09. “The history matters,” said Paul Johnson, the IFS’s director.

“It matters in part because we should never stop reminding ourselves just what an astonishing decade we have just lived through and continue to live through.” The UK has avoided the mass unemployment that scarred the 1920s and indeed employment has grown strongly since 2010, but the chronic weakness of UK GDP and productivity growth since 2008 is the reason why average real wages are still below where they were a decade ago – and are not set to return to their peak until well into the next decade. The IFS also produced calculations showing that if the pre-crisis trend of GDP per capita growth had continued national income per person would today be £5,900 higher this year. By 2022-23, on current official projections, the financial hit per person will grow to £8,600.

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Third world here we come.

More Than 600,000 Britons Sought Help From Debt Charity Last Year (G.)

More than 600,000 people in financial difficulties last year sought help from the debt charity StepChange, including disproportionate numbers of single parents and those in rental accommodation. The charity said 619,946 new clients contacted it for debt advice last year – 3.5% more than in 2016, and 22% more than four years earlier. There has been a notable increase in recent years in the number of young people seeking debt advice: about one in seven new clients was under 25, and nearly two-thirds were under 40. Most people (80%) contacting the charity were tenants, even though only a third of UK households rent. More than a fifth (21.5%) of new clients, though only 6% of UK households are single-parent families.

The average couple with children owed £16,834 last year, while single parents had unsecured debts of £10,033. Unemployment was the most common reason why people were in financial difficulty, cited by 18.7%, followed by injury or illness (16.4%) and lack of budgeting (14.3%). About two-fifths of people have fallen behind on at least one of their priority household bills when they contact the charity, typically on council tax. Borrowing on credit cards remains the most common debt, with more than two-thirds of new clients having accumulated credit card debts. Other borrowings included store cards, overdrafts, personal loans, doorstep and payday loans.

[..] Phil Andrew, the chief executive of StepChange, said: “It is both striking and shocking that last year about one in every 100 UK adults contacted StepChange alone for debt advice. “Our clients show that the debt problem is far from solved. With the prospect of higher interest rates ahead, it would be a mistake to take too much reassurance from the gradual improvement in the wider economy.”

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This is Brussels. Simple as that. The next crony case is already known in the person of Selmayr. More on that soon. There are a few decent people in Brussels, but they don’t have much time left.

European Commission Rebuked Over Ex-Chief Barroso’s Goldman Sachs Job (G.)

An EU watchdog has rebuked the European commission for failing to prevent potential lobbying by a former president who took a job at Goldman Sachs. In a stinging report, Emily O’Reilly, the European ombudsman who acts as the EU’s public administration watchdog, said the commission had committed “maladministration” by not taking any decision after an ethics inquiry into its former president, José Manuel Barroso. O’Reilly called on the commission to refer Barroso’s appointment to its internal ethics committee, while raising questions about the independence of that body. “Ex-commissioners have a right to post-office employment, but as former public servants they must also ensure that their actions do not undermine citizens’ trust in the EU,” said O’Reilly, Ireland’s former national ombudsman.

She said Barroso’s new post had “generated serious public disquiet”, which should have raised commission concerns about whether he had complied with the “duty of discretion” incumbent on all former officeholders under EU treaties. “Much of the recent negative sentiment around this issue could have been avoided if the commission had at the time taken a formal decision on Mr Barroso’s employment with Goldman Sachs. Such a decision could at least have required the former president to refrain from lobbying the commission on behalf of the bank,” she said.

[..] Barroso, a former Portuguese prime minister, led the commission for a decade until 2014. He took a job at Goldman Sachs in July 2016, after an 18-month cooling-off period during which ex-officials are required to notify the commission of any new jobs and are banned from lobbying. His decision to become a Brexit adviser at the bank triggered an avalanche of criticism, especially as Goldman Sachs had come under fire for its alleged role in the Greek debt crisis that dominated Barroso’s final years in Brussels. More than 150,000 people signed an EU staff petition calling for Barroso to lose his EU pension..

The commission has been set a deadline of 6 June 2018 to make a formal response to the ombudsman. Responding to the report, which followed a one-year investigation, the commission’s chief spokesman said: “The former president joined his current employer after the then applicable cooling-off period of 18 months. “The commission drew a political conclusion from the situation that we inherited by extending this cooling-off period for former presidents from 18 months to three years.”

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Abe had better leave while he can.

Japan PM Shinzo Abe’s Cronyism Scandal Worsens (G.)

A cronyism scandal engulfing the Japanese government has taken a dark turn, with reports that a finance official left a note before his suicide saying that he was forced to rewrite crucial records. The finance ministry admitted this week that it had altered 14 documents surrounding the sale of public land at an 85% discount to a nationalistic school operator with links to prime minister Shinzo Abe’s wife Akie. The revisions, made early last year, included removing references to Abe and the first lady before the records were provided to parliamentarians investigating suspicions of influence-peddling. An official from the local finance bureau that oversaw the transaction was found dead at his home in Kobe last week.

Now it has been revealed the man, aged in his 50s, left a detailed suicide note stating he was worried he might be forced to take all the blame. He said his superiors had told him to change the background section of the official documents surrounding the Osaka land sale because they were supposedly too specific, according to public broadcaster NHK. He reportedly made it clear that he did not act alone but in line with finance ministry instructions. His family described him as an honourable man who “hated to do anything unfair”. He had told relatives in August last year that he was “worn out both mentally and physically” and his “common sense has been destroyed”. “I hope everything will be revealed. I don’t want his death to be wasted,” said a family member…

Read more …

How to spell recovery.

Greece’s Jobless Rate Jumps To 21.2% In Fourth Quarter (K.)

Greece’s jobless rate rose by a full %age point to 21.2% in October-to-December from 20.2% in the third quarter, data from the country’s statistics service ELSTAT showed on Thursday. About 71.8% of Greece’s 1.006 million jobless are long-term unemployed, meaning they have been out of work for at least 12 months, the figures showed. Greece’s highest unemployment rate was recorded in the first quarter of 2014, when joblessness hit 27.8%. Athens has already published monthly unemployment figures through December, which differ from quarterly data because they are based on different samples and are seasonally adjusted. Quarterly figures are not seasonally adjusted. Greece’s economy grew for a fourth straight quarter in October-December, driven by stronger investment spending, but the pace was slower than in the previous quarter.

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That EU-Turkey refugee deal looks darker by the minute. Dirty politics.

EU Provides Financial Support For Turkey Amid Ethnic Cleansing (ANF)

The European Commission gave a green light to a second financial aid package for Turkey on the grounds of Syrian refugees. The 3 billion euros allocated for Turkey will be given in the scope of the controversial refugee deal. Several human rights organizations protested the renewed financial aid package for Turkey, arguing that it is not humanitarian as Turkey has openly used refugees as a means of blackmail against the European Union. Turkey had received another 3 billion euros of financial aid before. The European Commission defended that this second package will be granted to Turkey to provide convenience for the refugees.

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No, really, it’s an industry.

The Oxfam Scandal: There Is No Reward For Honest Charities (Crack)

Abuse thrives under two conditions: when victims are afraid to speak out, and when those in power do not listen. Oxfam have been condemned for not listening to demands that they do more to address sexual violence before the Haiti scandal hit the headlines. However, the net of blame needs to be cast wider than NGOs. Those at the top of the aid chain – donor governments – did not listen to warnings of wrongdoing. Donors do not have a good record of being proactive when presented with evidence of abuse. It has emerged that the Dutch Foreign Ministry was given an internal Oxfam report in 2012 detailing the use of prostitutes by staff in Haiti. No action appears to have been taken.

The Swedish International Development Cooperation Agency (SIDA), was told by one of its own officials in 2008 that Roland van Hauwermeiren, the former Oxfam employee at the centre of the Haiti allegations, left another NGO following an investigation into sexual misconduct. Rather than take action, SIDA awarded more than £500k to Oxfam in Chad, where Van Hauwermeiren was county director. In the UK, the Department for International Development (DFID) and the Charity Commission were told by Oxfam in 2011 that staff had been sacked for sexual misconduct, with assurances that no beneficiaries were involved. Priti Patel, former international development secretary, claims that she raised the issue of sexual violence with DFID officials, only for it to be “dismissed as only a problem with UN peacekeepers”.

My research into NGO regulation has led me to ask: do government donors create the impression that they will only fund organisations with glowing track records? NGOs that receive aid money are expected to complete detailed reports that assess measurable outcomes. I have interviewed several senior managers in leading NGOs who described how the pressure to demonstrate value for money drives a tick-box culture where all the incentives are to make the reports as positive as possible. Respondents felt there was very little tolerance for charities that make mistakes.

Read more …

There are still a few smart people left.

Bali Switches Off Internet Services For 24 Hours For New Year ‘Reflection’ (G.)

Internet services on Bali will go dark this Saturday, with providers switching off mobile services for 24 hours to mark the Indonesian island’s annual day of silence. Nyepi, or New Year according to the ancient Balinese calendar, is a sacred day of reflection on the Hindu-majority island. Even the international airport shuts down. This year authorities have called on telecommunications companies to unplug – a request Bali says firms have promised to honour. “It was agreed that internet on mobile phones will be cut. All operators have agreed,” Nyoman Sujaya, from the Bali communications ministry, told tirto.id. The plan, based on an appeal put forward by Balinese civil and religious groups, was announced following a meeting at the ministry in Jakarta.

This is the first time internet services will be shut down in Bali for Nyepi, after the same request was denied last year. However, wifi connection will still be available at hotels and for strategic services such as security, aviation, hospitals and disaster agencies. Phone and SMS services will be operational, but the Indonesian Internet Service Provider Association is reviewing whether wifi at private residences will be temporarily cut. Indonesia is one of the most connected nations on earth, with more than 132 million internet users. Balinese governor Made Pastika said it would not hurt to refrain from using the internet for one day. “If the internet is disconnected, people will not die,” he joked to reporters. “I will turn off my gadgets during Nyepi.”

Read more …

Feb 022018
 
 February 2, 2018  Posted by at 11:01 am Finance Tagged with: , , , , , , , , , ,  


Vincent van Gogh Pink peach trees (Souvenir de mauve) 1888

 

Trump to Release Memo Friday Morning Without Redactions (DisM)
Bank of Japan Offers ‘Unlimited’ Bond Buying To Curb Rising Yields (CNBC)
Bitcoin’s Brutal Week Is Even Worse in South Korea (BBG)
Chinese Stocks Tumble As Hong Kong ATM Withdrawals Surge (ZH)
Surprise Rise In UK House Prices As Lack Of Homes For Sale Fuels Lift (G.)
Buying Home In UK Cities At Least Affordable Level Since 2007 (Ind.)
UK Labour Party Plans To Make Landowners Sell To State For Fraction Of Value (G.)
Big Banks Accused of Stifling Competition in Stock Lending (Morgenson)
Here Comes the Next Financial Crisis (Nomi Prins)
Texas Shale Challenges North Sea Crude As World Oil Benchmark (R.)
Greek Taxpayers’ Debts To The State Soar To Record Highs (K.)
Erdogan’s Top Adviser Threatens To “Break The Legs” Of Greek PM (KTG)
Polar Bears Could Become Extinct Faster Than Was Feared (G.)
Warming Could Breach 1.5ºC Within Five Years (CCN)

 

 

Finally we get to see how ugly it can get.

Trump to Release Memo Friday Morning Without Redactions (DisM)

According to a recent report by the Washington Examiner, President Trump will declassify the controversial four-page memo that reportedly details surveillance abuses by the Department of Justice and FBI, and send it back to House Intelligence for a Friday morning release. The news comes just days after President Trump’s State of the Union address, where he was overheard stating that he would “100%” release the memo. The Examiner further reports that FBI Director Wray continues to oppose the release of the memo to the American public, citing: “grave concerns about the memo’s accuracy.” However, as the Wall Street Journal reports, it is important to remember that the FBI knows and has known what is in the memo for a long time, as the Bureau had, “refused to provide access to those documents until director Christopher Wray and the Justice Department faced a contempt of Congress vote.”

The Journal further relates that: “The FBI’s public statement appears to be an act of insubordination after Mr. Wray and Deputy Attorney General Rod Rosenstein tried and failed to get the White House to block the memo’s release. Their public protest appears intended to tarnish in advance whatever information the memo contains. The public is getting to see amid this brawl how the FBI plays politics, and it isn’t a good look.” Members of the Democratic Party have also expressed their opposition to the release of the memo. For example, ranking member of the House Intelligence Committee, Rep. Adam Schiff (D-CA), has also come out against the release of the memo to the public.

Last week, Schiff and Sen. Diane Feinstein (D-CA), wrote a letter to Facebook and Twitter, in which they expressed their fears that the top trending hashtag “#ReleaseTheMemo” was being pushed by Russian bots as part of a propaganda effort seeking to “attack our democracy”. However, much to their dismay, it was revealed that the top trending hashtag was not the work of Russian bots, but originated organically by fellow Americans. This news did not deter a California duo from penning a second letter to Facebook and Twitter on Wednesday, in order to raise awareness about potential abuse of their platforms by “agents of foreign influence”.

Read more …

Artificial ‘market’. How can anyone see it as a good thing?

Bank of Japan Offers ‘Unlimited’ Bond Buying To Curb Rising Yields (CNBC)

Japanese government bond prices recovered from earlier losses after the Bank of Japan acted decisively on Friday to curb a rise in bond yields, offering “unlimited” buying in long-term Japanese government bonds. Heavy buying of JGBs raises the price of bonds to force down their yield, an essential element of the BOJ’s ultra-loose yield curve control (YCC) policy. It was the first time in more than six months that the BOJ has conducted special operations to buy bonds to achieve the yields it wants to see, rather than the auctions used in regular operations – a powerful show of force to direct the market. On top of that, the BOJ increased the amount of its planned buying in five- to 10-year JGBs to 450 billion yen from the 410 billion amount it has favored since late August.

Following the BOJ’s operations, the price of the 10-year JGB futures rose to as high as 150.31 from the day’s low of 150.09. It was up 0.11 on the day. The benchmark 10-year cash JGB yield edged down to 0.090%, the same level as its previous close, from 0.095% touched earlier. JGB yields have risen in recent weeks, in line with global peers, on rising expectations that the world’s central banks are increasingly leaning towards winding back stimulus as the global economy gains momentum. Investors have started to speculate that the BOJ could also be moving towards an exit from ultra-easy policy, although BOJ Governor Haruhiko Kuroda has denied that he was considering such a major policy adjustment in the near future.

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Significant shift: “The country’s waning frenzy has been reflected in declining activity on domestic exchanges. Data compiled by CryptoCompare.com show that volumes have dropped by about 85% from December highs.”

Bitcoin’s Brutal Week Is Even Worse in South Korea (BBG)

Bitcoin’s brutal start to the year is proving especially painful in South Korea. While prices for the cryptocurrency are falling on major exchanges around the world, nowhere have the declines been faster than in Asia’s fourth-largest economy. The losses have erased a 51% premium for Bitcoin on Korean venues, sending prices back in line with those on international markets for the first time in seven weeks on Friday. The so-called kimchi premium had been so persistent – and so unusual for a large country – that traders named it after Korea’s staple side dish. While its disappearance is partly explained by selling pressure from arbitragers, it also reflects a dramatic reversal of investor sentiment in one of the world’s most frenzied markets for cryptocurrencies.

Bitcoin has tumbled more than 60% from its high in Korea after the nation’s regulators took several steps over the past two months to restrict trading and said they may ban cryptocurrency exchanges outright. Policy makers around the world have been moving to rein in the mania surrounding digital assets amid concerns over excessive speculation, money laundering, tax evasion and fraud. “The bubble in crytpocurrencies has burst” in Korea, said Yeol-mae Kim at Eugene Investment & Securities in Seoul. The kimchi premium began shrinking in mid-January as fears of a regulatory clampdown escalated. Selling by arbitragers – who have been buying Bitcoin on international venues to offload at a higher price in Korea – also played a role, although the country’s capital controls and anti-money-laundering rules made it difficult to execute such transactions in bulk.

Bitcoin traded at about 9.1 million won ($8,449) in Korea on Friday morning, according to a CryptoCompare index tracking the country’s major exchanges. That compared with the $8,601 composite price on Bloomberg, which is derived from venues including Bitstamp and Coinbase’s GDAX exchange. When the kimchi premium reached its peak in January, Bitcoin’s price was about $7,500 higher in Korea. The country’s waning frenzy has been reflected in declining activity on domestic exchanges. Data compiled by CryptoCompare.com show that volumes have dropped by about 85% from December highs.

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Liquidity.

Chinese Stocks Tumble As Hong Kong ATM Withdrawals Surge (ZH)

Chinese stocks are down for the fifth day in a row (something that hasn’t happened since May 2017) with the tech-heavy Shenzhen Composite is now down 5% YTD and the Shanghai Composite is tumbling back towards unchanged. The decline is happening at the same time as Bitcoin is in freefall… And chatter about bankers using WeChat to ask for Deposits. In other words – a liquidity crisis. And that anxiety is only increased by the latest report from Reuters that cash withdrawals at Hong Kong ATMs have surged, prompting scrutiny from monetary authorities, the banking industry, and police amid media reports that mainland Chinese are withdrawing hundreds of thousands of dollars using up to 50 cards at a time. China has battled to curb capital outflows for years. A move that took effect on Jan. 1 caps overseas withdrawals using domestic Chinese bank cards.

The gambling hub of Macau last year introduced facial recognition technology at ATMs to target illicit outflows from mainland China, a move that Hong Kong’s central bank told Reuters could increase cash withdrawals in the financial center. “The HKMA is aware of media reports about people using multiple mainland cards to withdraw cash at ATMs in Hong Kong,” the central bank said in a statement, adding that it was “monitoring the situation and is in discussion with the banking industry and the police about this issue”. A local banker said some commercial banks have stepped up monitoring of cash withdrawals. Hong Kong police said they were working closely with the HKMA and banking industry to respond to any changes in financial crime trends. While this is as much to do with money-laundering and capital flight, the liquidation of stocks, cryptocurrencies, and now mass ATM withdrawals suggests more is going on that the usual pre-new-year liquidity hording.

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There is no lck of homes. There’s a huge surplus in ultra low interest rate loans.

Surprise Rise In UK House Prices As Lack Of Homes For Sale Fuels Lift (G.)

UK house prices rose at the fastest annual pace in 10 months in January, bolstered by a lack of new homes coming on to the market, according to Nationwide. The average price of a home reached £211,756 last month, according to the building society’s monthly survey. Property values were up 0.6% from the month before, the same monthly gain as in December, but the annual growth rate picked up to 3.2% from 2.6%, the highest since March 2017, when it was 3.5%. Robert Gardner, Nationwide’s chief economist, said: “The acceleration in annual house price growth is a little surprising, given signs of softening in the household sector in recent months. Retail sales were relatively soft over the Christmas period, as were key measures of consumer confidence, as the squeeze on household incomes continued to take its toll.”

But he added: “The flow of properties coming on to estate agents’ books has been more of a trickle than a torrent for some time now and the lack of supply is likely to be the key factor providing support to house prices.” Many forecasters predicted the housing market would continue to slow to about 1% this year. This would mean property values falling in real terms. Nationwide is still forecasting price growth of 1-1.5% this year.

Chris Scicluna, an economist at Daiwa, said: “With real wage growth remaining below zero and consumer confidence still subdued, house price growth appears unlikely to extend this upward trend over coming months and quarters. However, a similar pace could well be maintained on the back of very attractive mortgage rates, limited supply, record high employment, and the strong likelihood that consumer price inflation is likely to moderate.” Home ownership in England remained at a 30-year low last year. The government’s latest English housing survey showed that of an estimated 22.8m households, 14.4m – or 62.6% – were owner-occupiers in 2016-17, compared with 62.9% in 2016. This was similar to the rate seen in the mid-1980s and down from a peak of 71% in 2003. Of young adults aged 25 to 34, only 37% owned their home.

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Greater Fool hour.

Buying Home In UK Cities At Least Affordable Level Since 2007 (Ind.)

The typical cost of buying a home in a UK city has reached its least affordable levels in a decade, a report has found. The average house price across cities equated to seven times typical annual earnings in 2017, the Lloyds Bank Affordable Cities Review found. This is the highest house price-to-income multiple since the average city home cost seven and-a-half times earnings in 2007. In 2012, the average city home cost around 5.6 times wages. But over the past five years, the average house price across UK cities has surged by over a third (36%), reaching £232,945 in 2017.

Over the same period, average city earnings have risen by 9% to £33,420. Oxford was found to be the least affordable city in the study, with average property prices there equating to 11-and-a-half times average annual earnings. Stirling in Scotland was identified as the UK’s most affordable city for the fifth consecutive year, with average property prices at around four times annual earnings. Six cities in the study have house prices commanding at least 10 times the average earnings of residents.

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Only, so-called value is highly inflated, profiting from government actions.

UK Labour Party Plans To Make Landowners Sell To State For Fraction Of Value (G.)

Labour is considering forcing landowners to give up sites for a fraction of their current price in an effort to slash the cost of council house building. The proposal has been drawn up by John Healey, the shadow housing secretary, and would see a Jeremy Corbyn-led government change the law so landowners would have to sell sites to the state at knockdown prices. Landowners currently sell at a price that factors in the dramatic increase in value when planning consent is granted. It means a hectare of agricultural land worth around £20,000 can sell for closer to £2m if it is zoned for housing. Labour believes this is slowing down housebuilding by dramatically increasing costs. It is planning a new English Sovereign Land Trust with powers to buy sites at closer to the lower price.

This would be enabled by a change in the 1961 Land Compensation Act so the state could compulsorily purchase land at a price that excluded the potential for future planning consent. Healey’s analysis suggests that it would cut the cost of building 100,000 council houses a year by almost £10bn to around £16bn. With the “hope value” removed from the price of land, the cost of building a two-bed flat in Wandsworth, south-west London, would be cut from £380,000 to £250,000, in Chelmsford it would fall from £210,000 to £130,000 and in Tamworth in the West Midlands, where land values are lower, it would drop from £150,000 to £130,000. “Rather than letting private landowners benefit from this windfall gain – and making everyone else pay for it – enabling public acquisition of land at nearer pre-planning-permission value would mean cheaper land which could help fund cheaper housing,” said Healey.

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Stock lending links to shorting.

Big Banks Accused of Stifling Competition in Stock Lending (Morgenson)

A newly filed lawsuit against six major investment banks contends they worked together to prevent a startup company from competing in the vast and lucrative stock-lending market. The complaint, filed Tuesday in a New York federal court, follows a suit brought last summer against the same institutions by three pension funds who accused the banks of conspiring to keep their stranglehold on the roughly $1 trillion market. The litigation brings increased scrutiny on the stock-loan business, an opaque, over-the-counter market that is a crucial but behind-the-scenes cog in Wall Street’s trading machinery. At issue are stock-lending transactions, in which pension funds, insurance companies and other investors lend their shares to brokerage firms whose customers, such as hedge funds, borrow stock to offset other positions or make bets against companies in trades known as short sales.

Asset managers receive a fee for the stock they lend depending on borrower interest in it. The suit was filed by QS Holdings, the parent of Quadriserv, which was formed in 2001 and built an electronic trading platform. Called AQS, the platform gave stock-loan participants access to real-time prices on trades that reflected actual bids and offers. Transactions on AQS were executed anonymously and centrally settled; the system was registered with the Financial Industry Regulatory Authority and the Securities and Exchange Commission. But it never gained traction and was sold in a distressed sale in 2016. On Jan. 26, the six firms — Bank of America, Credit Suisse, Goldman Sachs, JPMorgan Chase, Morgan Stanley and UBS— filed a motion to dismiss the lawsuit filed last summer by the pension funds.

In that filing, the firms said the allegations were meritless, noting that “none of the plaintiffs’ allegations identified ‘direct evidence’ of conspiracy.” In the stock-loan business, investors borrowing shares from brokerage firms also pay, sometimes steeply, for the service. When many traders want to borrow a company’s shares, its stock is known as “hard-to-borrow” and fees associated with the transaction are far higher. The middlemen in these trades often are Goldman, J.P. Morgan and Morgan Stanley. They make trades in an over-the-counter market where prices are typically given privately to customers. It thus is difficult for them to determine whether they are getting appropriate prices.

The middlemen typically keep most of the fees collected on the most lucrative trades, and critics say that amount would be far lower if borrowers and lenders met in a centralized market where pricing was transparent, like the AQS.

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Squid squared.

Here Comes the Next Financial Crisis (Nomi Prins)

Thanks to the Senate confirmation of his selection for chairman of the board, Donald Trump now owns the Fed, too. The former number two man under Janet Yellen, Jerome Powell will be running the Fed, come Monday morning, February 5th. Established in 1913 during President Woodrow Wilson’s administration, the Fed’s official mission is to “promote a safe, sound, competitive, and accessible banking system.” In reality, it’s acted more like that system’s main drug dealer in recent years. In the wake of the 2007-2008 financial crisis, in addition to buying trillions of dollars in bonds (a strategy called “quantitative easing,” or QE), the Fed supplied four of the biggest Wall Street banks with an injection of $7.8 trillion in secret loans. The move was meant to stimulate the economy, but really, it coddled the banks.

Powell’s monetary policy undoubtedly won’t represent a startling change from that of previous head Janet Yellen, or her predecessor, Ben Bernanke. History shows that Powell has repeatedly voted for pumping financial markets with Federal Reserve funds and, despite displaying reservations about the practice of quantitative easing, he always voted in favor of it, too. What makes his nomination out of the ordinary, though, is that he’s a trained lawyer, not an economist. Powell is assuming the helm at a time when deregulation is central to the White House’s economic and financial strategy. Keep in mind that he will also have a role in choosing and guiding future Fed appointments. (At present, the Fed has the smallest number of sitting governors in its history.)

The first such appointee, private equity investor Randal Quarles, already approved as the Fed’s vice chairman for supervision, is another major deregulator. Powell will be able to steer banking system decisions in other ways. In recent Senate testimony, he confirmed his deregulatory predisposition. In that vein, the Fed has already announced that it seeks to loosen the capital requirements big banks need to put behind their riskier assets and activities. This will, it claims, allow them to more freely make loans to Main Street, in case a decade of cheap money wasn’t enough of an incentive.

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Crude still rules.

Texas Shale Challenges North Sea Crude As World Oil Benchmark (R.)

As the United States approaches a record 10.04 million barrels of daily production, trading volumes of so-called “WTI” futures exceeded volumes of Brent crude in 2017 by the largest margin in at least seven years. A decade ago, falling domestic production and a U.S. ban on exports meant that WTI served mostly as a proxy for U.S. inventory levels. “There was a time when the U.S. was disconnected from the global market,” said Greg Sharenow, portfolio manager at PIMCO, who co-manages more than $15 billion in commodity assets. Two changes drove the resurgence of the U.S. benchmark. One was the boom in shale production, which spawned a multitude of small producers that sought to hedge profits by trading futures contracts.

Then two years ago, the United States ended its 40-year ban on crude exports, making WTI more useful to global traders and shippers. U.S. exports averaged 1.1 million barrels a day through November 2017, rising to an average 1.6 million bpd in the final three months. That compares to just 590,000 bpd in 2016. As U.S. production and exports grow, global firms that increasingly buy U.S. oil are offsetting their exposure by trading in U.S. financial markets. That also gives U.S. shale producers more opportunity to lock in profits on their own production.

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Why Greece needs debt relief across the board “It is estimated that just 20% of expired debts are collectible.”

Greek Taxpayers’ Debts To The State Soar To Record Highs (K.)

Taxpayers’ total overdue debts to the state soared to a record 101.8 billion euros at the end of December, in a clear indication that society’s taxpaying capacity is at breaking point due to overtaxation. In December alone, when 2018 road tax and an installment of the Single Property Tax (ENFIA) came due, new expired debts amounted to 1.3 billion euros. According to data released on Thursday by the Independent Authority for Public Revenue, the new expired debts added last year came to 12.9 billion euros, concerning all tax obligations that went unpaid, from income tax and ENFIA to tax penalties and value-added tax. The phenomenon has major consequences for taxpayers. The figures also showed that confiscations and debt settlements brought 5.07 billion euros into the state coffers in 2017, of which 2.69 billion concerned old debts (dating before 2017). More than 1 million taxpayers have already had assets confiscated over debts to the tax authorities. Their number grew by 14,871 in December to reach 1,050,077 at the end of 2017.

The authority’s data reveal that 4,068,857 taxpayers – or more than half – have expired debts to the state, and that this figure would have been 138,260 higher had those people not settled their dues in December due to fears of repossessions. At the moment taxpayers can enter a tax payment program involving 12 to 24 monthly installments, even for dues that are not classified as expired. The online platform also allows them to add new debts to the fixed plan each month. Taxpayers who want to enter such a payment plan can visit the authority’s website and choose which of their debts that are not overdue they want to add to the 12-installment scheme. The picture regarding expired debts is set to change drastically once the bailout obligation for arrears clearance is completed, separating collectible dues from those that cannot be collected. It is estimated that just 20% of expired debts are collectible.

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Fulminating against the 1923 Lausanne Treaty is easy populist fodder for Erdogan. His gamble is that Turkey’s bust-up with the US in Syria, and the threat to NATO because of it, will allow him to take Greek territory.

Erdogan’s Top Adviser Threatens To “Break The Legs” Of Greek PM (KTG)

Chief advisor of Turkish President Erdogan, Yigit Bulut, has threatened Greece over the disputed islet of Imia in the Eastern Aegean Sea. “Athens will face the wrath of Turkey worse than that in Afrin,” Bulut said in a Television show of a private network. “We will break the arms and legs of officials, of the Prime Minister and any Minister, who dares to step on the Kardak/Imia islet in the Aegean,” he claimed. Bultu’s threats come just a couple of days after Defense Minister Panos Kammenos sailed to Imia and threw a wreath into the sea to honor the three fallen soldiers during the Imia conflict in 1996. Ankara does not miss a chance to challenge Greece’s sovereignty in the islets and islands of the Aegean Sea, escalate tension around Imia and risk an ugly incident that could bring the two neighboring countries at the verge of an armed conflict like two decades ago.

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Much higher metabolism than anyone had ever noticed.

Polar Bears Could Become Extinct Faster Than Was Feared (G.)

Polar bears could be sliding towards extinction faster than previously feared, with the animals facing an increasing struggle to find enough food to survive as climate change steadily transforms their environment. New research has unearthed fresh insights into polar bear habits, revealing that the Arctic predators have far higher metabolisms than previously thought. This means they need more prey, primarily seals, to meet their energy demands at a time when receding sea ice is making hunting increasingly difficult for the animals. A study of nine polar bears over a three-year period by the US Geological Survey and UC Santa Cruz found that the animals require at least one adult, or three juvenile, ringed seals every 10 days to sustain them.

Five of the nine bears were unable to achieve this during the research, resulting in plummeting body weight – as much as 20kg during a 10-day study period. “We found a feast and famine lifestyle – if they missed out on seals it had a pretty dramatic effect on them,” said Anthony Pagano, a USGS biologist who led the research, published in Science. “We were surprised to see such big changes in body masses, at a time when they should be putting on bulk to sustain them during the year. This and other studies suggest that polar bears aren’t able to meet their bodily demands like they once were.” Pagano’s team studied the bears in a period during April over the course of three years, from 2014 to 2016, in the Beaufort Sea off Alaska.

They fitted the bears with GPS collars with video cameras to measure activity levels. Blood chemistry was also taken from the bears. Previously, polar bears were thought to expend relatively little energy during days where they often wait for hours beside holes in the ice, which seals emerge from in order to breathe. But the researchers found that they actually have an average metabolism 50% higher than prior estimates. With previous studies showing recent drops in polar bear numbers, survival rates and body condition, scientists said the new research suggests the species is facing an even worse predicament than was feared.

A recent widely-shared video of an emaciated polar bear is a “horrible scene that we will see more of in the future and more quickly than we thought,” according to Dr Steven Amstrup, who led polar bear research for 30 years in Alaska. “This is an excellent paper that fills in a lot of missing information about polar bears,” said Amstrup, who was not involved in the USGS research. “Every piece of evidence shows that polar bears are dependent on sea ice and if we don’t change the trajectory of sea ice decline, polar bears will ultimately disappear. “They face the choice of coming on to land or floating off with the ice as it recedes, out to the deep ocean where there is little food. We will see more bears starving and more of them on land, where they will get into trouble by interacting with humans.”

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The takeaway from this is not in the numbers. It’s in the certainty that we will not stop the process. All we have is a Paris agreement spearheaded by politicians who see their polls and businessmen who see a profit.

Warming Could Breach 1.5ºC Within Five Years (CCN)

The UK’s meteorological agency has forecast the global temperature might flicker above 1.5C within the next five years. That would be within a decade of the Paris climate deal setting 1.5C as an aspirational limit on global warming. The Met Office’s decadal forecast said the global average temperature was “likely” to exceed 1C between 2018-2022 and could reach 1.5C. “There is also a small (around 10%) chance that at least one year in the period could exceed 1.5C above pre-industrial levels,” the office said in a statement on Wednesday. “It is the first time that such high values have been highlighted within these forecasts.” Met Office scientists were quick to point out that this would not actually breach the Paris Agreement, as that limit refers to a long term average, rather than a yearly reading.

The office’s chief scientist, professor Stephen Belcher, said: “Given we’ve seen global average temperatures around 1C above pre-industrial levels over the last three years, it is now possible that continued warming from greenhouse gases along with natural variability could combine so we temporarily exceed 1.5C in the next five years.” The Paris climate deal, agreed by 197 UN member states in 2015, set a global goal for keeping temperatures “well below 2C”, aiming for 1.5C. The lower goal is considered by many of the most vulnerable countries, especially low-lying island nations, to be the upper limit for their homelands to survive. Coral scientists also predict that more than 1.5C of warming would wipe out most coral reefs.

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Jan 152018
 
 January 15, 2018  Posted by at 10:48 am Finance Tagged with: , , , , , , , , , , , ,  


Elliott Erwitt Jack Kerouac 1953

 

Nearly 40% May Default On Their Student Loans By 2023 (Brookings)
3 Years After Currency Shock, Swiss Central Bank Can’t Get Back To Normal (R.)
China Vows to Toughen Rules on $38 Trillion Banking Industry
Bitcoin Not Even In Top 10 Of Crypto World’s Best Performers (AFP)
UK’s Carillion Files for Liquidation After Failing to Get Bailout (BBG)
London Housing Woe Endures as Prices Drop to 2 1/2-Year Low (BBG)
Let’s Wrench Power Back From The Billionaires (Bernie Sanders)
Trust in News Media Takes a Hit During Trump Presidency (AP)
Outgoing EWG Chief Says Greece May Get Debt Relief With Conditions Attached (K.)
Berlin Worried EU Reform Will Boost Immigration Influx (DS)
A New Refugee Flow To Europe: Turkish Refugees (AM)
Why We’re Losing the War on Plastic (BBG)

 

 

The reality of -personal- debt.

Nearly 40% May Default On Their Student Loans By 2023 (Brookings)

The best prior estimates of overall default rates come from Looney and Yannelis (2015), who examine defaults up to five years after entering repayment, and Miller (2017), who uses the new BPS-04 data to examine default rates within 12 years of college entry. These two sources provide similar estimates: about 28 to 29% of all borrowers ultimately default. But even 12 years may not be long enough to get a complete picture of defaults. The new data also allow loan outcomes to be tracked for a full 20 years after initial college entry, though only for the 1996 entry cohort. Still, examining patterns of default over a longer period for the 1996 cohort can help us estimate what to expect in the coming years for the more recent cohort.

If we assume that the cumulative defaults grow at the same rate (in percentage terms) for the 2004 cohort as for the earlier cohort, we can project how defaults are likely to increase beyond year 12 for the 2004 cohort. To compute these projections, I first use the 1996 cohort to calculate the cumulative default rates in years 13-20 as a percentage of year 12 cumulative default rates. I then take this percentage for years 13-20 and apply it to the 12-year rate observed for the 2004 cohort. So, for example, since the 20-year rate was 41% higher than the 12-year rate for the 1996 cohort, I project the Year 20 cumulative default rate for the 2004 cohort is projected to be 41% higher than its 12-year rate.

Figure 1 plots the resulting cumulative rates of default relative to initial entry for borrowers in both cohorts, with the data points after year 12 for the 2003-04 cohort representing projections. Defaults increase by about 40% for the 1995-96 cohort between years 12 and 20 (rising from 18 to 26% of all borrowers). Even by year 20, the curve does not appear to have leveled off; it seems likely that if we could track outcomes even longer, the default rate would continue to rise. For the more recent cohort, default rates had already reached 27% of all borrowers by year 12. But based on the patterns observed for the earlier cohort, a simple projection indicates that about 38% of all borrowers from the 2003-04 cohort will have experienced a default by 2023.

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The reality of central banking.

3 Years After Currency Shock, Swiss Central Bank Can’t Get Back To Normal (R.)

Three years after the Swiss National Bank shocked currency markets by scrapping the franc’s peg to the euro, it faces the toughest task of any major central bank in normalising ultra-loose monetary policy. If it raises rates, the Swiss franc strengthens. If it sells off its massive balance sheet, the Swiss franc strengthens. If a global crisis hits, the Swiss franc strengthens. And the abrupt decision to scrap the currency peg on Jan. 15, 2015, means it still has credibility issues with financial markets. “The SNB will most probably be one of the last central banks to change course, and it will take years or even decades for monetary policy to return to ‘normal’,” said Daniel Rempfler, head of fixed income Switzerland at Swiss Life Asset Managers.

The Bank of Japan illustrated the problem of reducing expansive policy when a small cut to its regular bond purchases sent the yen and bond yields higher. The scrapping of the cap – which sought to keep the franc at 1.20 to the euro to protect exporters and ward off deflationary pressure – sent it soaring. On the day of the announcement it went to 0.86 francs buying a euro before easing in later days. Although it weakened last year, SNB Chairman Thomas Jordan said in December it was too early to talk about normalising policy. The SNB has to wait for the European Central Bank to start raising interest rates before it can start hiking its own policy rate from minus 0.75%.

If the SNB acted first, the spread between Swiss and European market rates would narrow, making Swiss investments more attractive and boosting the franc. The ECB has already scaled back its asset purchasing programme, which is expected to end this year, but more action may be someway off. Meanwhile, any attempt by the SNB to cut its balance sheet – which has ballooned to 837 billion francs ($861 billion) – will be hard because 94% of its investments are in foreign currencies, held via bonds and shares in companies such as Apple and Starbucks.

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The reality of Chinese borrowing.

China Vows to Toughen Rules on $38 Trillion Banking Industry

China’s banking regulator pledged to continue its crackdown on malpractice in the $38 trillion industry in 2018, vowing to tackle everything from poor corporate governance and violation of lending policies to cross-holdings of risky financial products. The China Banking Regulatory Commission unveiled its regulatory priorities for the year in a statement on Saturday. They include: • Inspecting the funding source of banks’ shareholders and ensuring they have obtained their stakes in a regular manner • Examining banks’ compliance with rules restricting loans to real estate developers, local governments, industries burdened by overcapacity, and some home buyers • Looking into banks’ interbank activities and wealth management businesses.

The statement comes after China’s financial regulators started 2018 with a flurry of rules to plug loopholes uncovered in last year’s deleveraging campaign, showcasing their determination to limit broader risks to the financial system. Still, analysts have warned that the moves will make it more difficult for companies to obtain financing from loans, equities and bonds and could undermine economic growth. The “CBRC’s regulatory storm continues” with the weekend announcement covering almost all aspects of banks’ daily operations, Bocom International analysts Jaclyn Wang and Hannah Han wrote in a note. “We believe challenges for smaller banks in the current regulatory environment remain high,” they wrote, noting that curbs on off-balance-sheet lending and interbank activities may drag on profitability.

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There’s no such thing as the reality of crypto.

Bitcoin Not Even In Top 10 Of Crypto World’s Best Performers (AFP)

Bitcoin may be the most famous cryptocurrency but, despite a dizzying rise, it’s not the most lucrative one and far from alone in a universe that counts 1,400 rivals, and counting. Dozens of crypto units see the light of day every week, as baffled financial experts look on, and while none can match Bitcoin’s €200 billion ($242 bilion) market capitalisation, several have left the media darling’s profitability in the dust. In fact, bitcoin is not even in the top 10 of the crypto world’s best performers. Top of the heap is Ripple which posted a jaw-dropping 36,000% rise in 2017 and early this year broke through the €100 billion capitalisation mark, matching the value of blue-chip companies such as, say, global cosmetics giant L’Oreal.

“Its value shot up when a newspaper said that around 100 financial institutions were going to adopt their system,” said Alexandre Stachtchenko, co-founder of specialist consulting group Blockchain Partners. Using Ripple’s technology framework, however, is not the same as adopting the currency itself, and so the Ripple’s rise should be considered as “purely speculative”, according to Alexandre David, founder of sector specialist Eureka Certification. Others point out that Ripple’s market penetration is paper-thin as only 15 people hold between 60 and 80% of existing Ripples, among them co-founder Chris Larsen. But it still got him a moment of fame when, according to Forbes magazine, Larsen briefly stole Facebook founder Mark Zuckerberg’s spot as the fifth-wealthiest person in the US at the start of the year.

Ether is another rising star, based on the Ethereum protocol created in 2009 by a 19-year old programmer and seen by some specialists as a promising approach. Around 40 virtual currencies have now gone past the billion-euro mark in terms of capitalisation, up from seven just six months ago. The Cardano cryptocurrency’s combined value even hit €15 billion only three months after its creation. In efforts to stand out from the crowd, virtual currency founders often concentrate on the security of their systems, such as Cardano, which has made a major selling point of its system’s safety features.

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After having been given numerous gov’t contracts just to stay alive. Biy, that country is sick.

UK’s Carillion Files for Liquidation After Failing to Get Bailout (BBG)

Carillion, a U.K. government contractor involved in everything from hospitals to the HS2 high-speed rail project, has filed for compulsory liquidation after a last-ditch effort to shore up finances and get a government bailout failed. The company, which employs 43,000 people worldwide – 20,000 of them in the U.K. – had held talks with the government Sunday to ask for the 300 million pounds ($412 million) it needed by the end of the month to stay afloat, the Mail on Sunday reported. On Monday morning, the board of Carillion said in a statement it had “concluded that it had no choice but to take steps to enter into compulsory liquidation with immediate effect,” adding that it has obtained court approval for the move.

The challenge for liquidators and the government is now to ensure that the company’s break-up is orderly, with contracts and staff moved to rivals. For Prime Minister Theresa May, the collapse comes as opposition Labour Party leader Jeremy Corbyn questions the longstanding British policy of getting private sector contractors to deliver public sector projects. “This is very worrying for a lot of groups,” Labour’s business spokeswoman Rebecca Long-Bailey told the BBC. “We expect the government to step up now and take these contracts back into government control. Where it’s possible to take those back in-house it should do.” She also questioned why the company had been awarded further government contracts despite issuing profit warnings.

[..] Carillion’s struggles posed a conundrum for May over the political cost of using public money to assist a private company, or allowing it to fail, putting public services and infrastructure projects nationwide in danger. The company has contracts with many wings of government, including building roads, managing housing for the armed services, and running facilities for schools and hospitals.

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Timber!

London Housing Woe Endures as Prices Drop to 2 1/2-Year Low (BBG)

The new year brought little cheer for London’s housing market with asking prices dropping to the lowest since August 2015. New sellers cut prices 1.4% in January to an average of 600,926 pounds ($821,500), according to a report by Rightmove on Monday. In a further concerning sign for the market, the average number of days required to sell a house jumped to the longest since January 2012, reaching 78 from 71 a month earlier. The report suggests 2018 won’t be any brighter for the capital’s housing market, which was the worst performing in the U.K. in 2017. Asking prices are down 3.5% from a year ago, according to the report, with the slowdown due to factors including an inflation squeeze, Brexit uncertainty and tax changes affecting landlords and owners of second homes.

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Now find the language that the people respond to.

Let’s Wrench Power Back From The Billionaires (Bernie Sanders)

[..] all over the world corrupt elites, oligarchs and anachronistic monarchies spend billions on the most absurd extravagances. The Sultan of Brunei owns some 500 Rolls-Royces and lives in one of the world’s largest palaces, a building with 1,788 rooms once valued at $350m. In the Middle East, which boasts five of the world’s 10 richest monarchs, young royals jet-set around the globe while the region suffers from the highest youth unemployment rate in the world, and at least 29 million children are living in poverty without access to decent housing, safe water or nutritious food. Moreover, while hundreds of millions of people live in abysmal conditions, the arms merchants of the world grow increasingly rich as governments spend trillions of dollars on weapons.

In the United States, Jeff Bezos – founder of Amazon, and currently the world’s wealthiest person – has a net worth of more than $100bn. He owns at least four mansions, together worth many tens of millions of dollars. As if that weren’t enough, he is spending $42m on the construction of a clock inside a mountain in Texas that will supposedly run for 10,000 years. But, in Amazon warehouses across the country, his employees often work long, gruelling hours and earn wages so low they rely on Medicaid, food stamps and public housing paid for by US taxpayers. Not only that, but at a time of massive wealth and income inequality, people all over the world are losing their faith in democracy – government by the people, for the people and of the people.

They increasingly recognise that the global economy has been rigged to reward those at the top at the expense of everyone else, and they are angry. Millions of people are working longer hours for lower wages than they did 40 years ago, in both the United States and many other countries. They look on, feeling helpless in the face of a powerful few who buy elections, and a political and economic elite that grows wealthier, even as their own children’s future grows dimmer. In the midst of all of this economic disparity, the world is witnessing an alarming rise in authoritarianism and rightwing extremism – which feeds off, exploits and amplifies the resentments of those left behind, and fans the flames of ethnic and racial hatred.

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Typical? Sign of the times? Laurie Kellman and Jonathan Drew for AP prove their own point by pretending to write about Americans from all stripes losing faith in news media, but then turn it into a one-sided Trump hit piece anyway.

Trust in News Media Takes a Hit During Trump Presidency (AP)

When truck driver Chris Gromek wants to know what’s really going on in Washington, he scans the internet and satellite radio. He no longer flips TV channels because networks such as Fox News and MSNBC deliver conflicting accounts tainted by politics, he says. “Where is the truth?” asks the 47-year-old North Carolina resident. Answering that question accurately is a cornerstone of any functioning democracy, according to none other than Thomas Jefferson. But a year into Donald Trump’s fact-bending, media-bashing presidency, Americans are increasingly confused about who can be trusted to tell them reliably what their government and their commander in chief are doing. Interviews across the polarized country as well as polling from Trump’s first year suggest people seek out various outlets of information, including Trump’s Twitter account, and trust none in particular.

Many say that practice is a new, Trump-era phenomenon in their lives as the president and the media he denigrates as “fake news” fight to be seen as the more credible source. “It has made me take every story with a large grain, a block of salt,” said Lori Viars, a Christian conservative activist in Lebanon, Ohio, who gets her news from Fox and CNN. “Not just from liberal sources. I’ve seen conservative ‘fake news.'” Democrat Kathy Tibbits of Tahlequah, Oklahoma, reads lots of news sources as she tries to assess the accuracy of what Trump is reported to have said. “I kind of think the whole frontier has changed,” said the 60-year-old lawyer and artist. “My degree is in political science, and they never gave us a class on such fiasco politics.”

Though Trump’s habit of warping facts has had an impact, it’s not just him. Widely shared falsehoods have snagged the attention of world leaders such as Pope Francis and former President Barack Obama. Last year, false conspiracy theories led a North Carolina man to bring a gun into a pizza parlor in the nation’s capital, convinced that the restaurant was concealing a child prostitution ring. Just last week, after the publication of an unflattering book about Trump’s presidency, a tweet claiming that he is addicted to a TV show about gorillas went viral and prompted its apparent author to clarify that it was a joke. Trump has done his part to blur the lines between real and not. During the campaign, he made a practice of singling out for ridicule reporters covering his raucous rallies.

As president, he regularly complains about his news coverage and has attacked news outlets and journalists as “failing” and “fake news.” He’s repeatedly called reporters “the enemy of the people” and recently renewed calls to make it easier to sue for defamation. About 2 in 3 American adults say fabricated news stories cause a great deal of confusion about the basic facts of current affairs, according to a Pew Research Center report last month. The survey found that Republicans and Democrats are about equally likely to say that “fake news” leaves Americans deeply confused about current events. Despite the concern, more than 8 in 10 feel very or somewhat confident that they can recognize news that is fabricated, the survey found.

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Greece will be monitored till 2060. I’m going to bet that’s not going to happen.

Outgoing EWG Chief Says Greece May Get Debt Relief With Conditions Attached (K.)

Greece could receive debt relief but with terms attached when its bailout program is concluded in August, according to the outgoing chief of the Eurogroup Working Group (EWG), Thomas Wieser. In an interview in Sunday’s Greek edition of Kathimerini, Wieser said that despite there being no discussion about post-bailout arrangements, he expects that debt relief would be granted conditionally. “If there should be further debt relief after the end of the program then it’s only logical there will be some kind of additional agreements.” His comments imply there will be no clean exit from the bailout program as envisioned in the government’s narrative. Greece’s post-bailout status was raised at last week’s EWG meeting in Brussels where, according to sources, the taboo issue of Greece debt relief was raised.

It was noted in the meeting that if there is to be debt relief, then questions regarding Greece’s post-bailout framework have to be addressed. According to EU regulations, bailout countries including Ireland, Spain, Portugal, Cyprus – as well as Greece in the near future – will be monitored until 75% of their loans have been repaid. This means in Greece’s case that it will be monitored until 2060. Wieser added that one of Greece’s biggest problems, which remains unresolved despite eight years of fiscal adjustment programs, is that it doesn’t lure foreign investments like other countries. “I still have the feeling that foreign direct investment is not welcomed in Greece as it is in many other countries,” Wieser said.

While adding that he has the feeling that many domestic rules and regulations over the last eight years have indeed changed, he bemoaned the fact that investments have not picked up. “I think it’s only very recently that international and national investors trust that Greece is finally approaching the time where it can stand on its own feet again financially and that it is not a huge risk to invest in its economy,” he said, adding that one of the main reasons that investors have been reluctant to do business in Greece is its justice system.

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Unlimited?

Berlin Worried EU Reform Will Boost Immigration Influx (DS)

The European Parliament is planning to amend the Dublin Regulation, which requires asylum seekers to register in the first European Union member state they set foot on. That state would also be responsible for processing these requests. The proposed amendment, however, could possible shift that responsibility to wherever any asylum seeker claims to have family in the EU. Under such a change, “Germany would have to accommodate significantly more asylum seekers,” said an Interior Ministry memo, quoted by Der Spiegel. Furthermore, any and all caps on refugees and immigrant intakes would be nullified. This would effectively render Germany’s decision to cap immigrations influxes at around 180,000 to 220,000 as agreed upon by the working groups aiming to form a new German government.

Germany has been struggling to form a new government since the Sept. 24th elections; however, Chancellor Angela Merkel’s Christian Democrats (CDU), their sister party the CSU and Social Democrat Party leader Martin Schultz have agreed to go into official coalition talks, now made harder by the proposed EU bill. The proposed reform of the Dublin Agreement was put forth last November and now has to be approved by the European Council, which is composed of every single member states’ government leaders. Despite Germany’s worries, given the circumstances, the proposal is not expected to have much support. Between the nations of Eastern Europe, who never wanted any immigration at all, and the ever-more skeptical western nations, as well as the ones in Southern Europe, such as Greece, Italy and Spain that became the frontlines of the crisis, the proposed reform is not guaranteed to pass.

While the exact number of people that have entered Europe since 2015 is unknown, it is estimated that it is about 2 to 3 million, with the United Nations Human Rights Commission reporting that tens of millions more are on the move, mainly from sub-Saharan Africa. While Germany was probably Europe’s biggest supporter of asylum seekers and chain-migration, it now worries that it in particular will be negatively affected by what it sees as immigration on “an entirely different scale.” The German Interior Ministry noted that it was particularly worried by a section of the proposal that stated: “The mere assertion of a family connection was enough.” “As a result, a member state hosting many so-called ‘anchor persons’ will take over responsibility for far-reaching family associations.”

“If every one of the more than 1.4 million people who have applied for asylum in Germany since 2015 becomes an anchor for newcomers arriving in the EU, then we’re dealing with [numbers] on an entirely different scale compared to family reunifications,” said Ole Schröder, a parliamentary state secretary in Germany’s Interior Ministry.

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It only gets messier.

A New Refugee Flow To Europe: Turkish Refugees (AM)

This past November, three bodies were found washed ashore the Greek island of Lesbos. They were later identified as a Turkish husband and wife, Huseyin and Nur Maden, and one of their three children. The Madens were teachers in Turkey, but they were among the 150,000 civil servants dismissed from their jobs after the failed coup in July 2016. Some of those dismissed tried to flee to Greece to avoid arrest or find work. More than 12,000 Turks applied for asylum in Europe for the first time in 2017, according to Eurostat. This figure is triple what it was the year preceding the failed coup and is the highest it has been in the past decade. Since July 2016, Turkish authorities have arrested over 50,000 people, including journalists and intellectuals.

Around 150,000 Turks have both had their passports revoked and lost their jobs as police officers, soldiers, teachers and public servants. For some, the solution was to leave Turkey and find work in another country, where they could have a better life and avoid prosecution. With their passports revoked by the Turkish government, Turks prefer to go to Greece as opposed to other European countries since they can arrange transport by boat via smugglers. The journey from the Turkish coast to certain Greek islands can be short, distance-wise. “Turkish refugees [in Athens] are the most educated and intellectual segment of Turkish society,” said Murat, who fled Turkey for Greece after July 2016. “We can learn a new language or adapt to the culture in Europe really fast.”

Murat has been a member of the Gulen movement since 1994. He worked alongside his wife as a teacher in the Gulen schools in southeastern Turkey, but they were both dismissed from their jobs after the 2016 coup attempt, which the government claims was planned by the Gulen movement. Their children’s school was shut down after the coup attempt, and they were denied registration at a new school in their hometown due to their parent’s affiliation with the Gulen movement. “We tried to start over, but we were already marginalized in the community as ‘putschists,’” said Murat. “Our children were not accepted to schools, and finally, when 50 police arrived at our parent’s village to detain my wife, by chance we were not there. I sold my car within a week and with that money, we came to Greece.”

The Gulenists are not the only ones who have had to leave Turkey following the coup attempt. There are others, like Merve, 21, and her uncle Hasan. Merve was only 19 when she was arrested after the coup attempt and put in jail for a year. “I was studying philosophy in Tunceli and was part of a left-wing student organization at my university,” she said. “Now there are only two possibilities left for us Kurds in Turkey. If you don’t want to be jailed, you should either join the PKK [Kurdistan Workers Party] fighters or flee into exile.”

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Nope, there is no war on plastic. So we can’t be losing it either.

Why We’re Losing the War on Plastic (BBG)

T.V. naturalist Sir David Attenborough made his viewers weep last month with an exposé on how plastics are polluting the oceans, harming marine animals and fish. Last week, British prime minister Theresa May announced a slew of new measures to discourage plastics use, including plastic-free supermarket aisles and an expanded levy on plastic bags. A ban on microbeads in cosmetics came into force this year. Not to be outdone, the EU is mulling plastics taxes to cut pollution and packaging waste. Is this industry the new tobacco?It’s no wonder politicians feel compelled to act. About 60% of all the plastics produced either went to landfill or have been dumped in the natural environment. At current rates there will be more plastic than fish in the ocean by 2050 by weight, much of it in the form of small particles, ingestible by wildlife and very difficult to remove.

Public awareness has increased in recent years, yet that hasn’t led to falling consumption. More than half of the total plastics production has occurred since the turn of the millennium. Producers such as DowDuPont, Exxon Mobil, LyondellBasell and Ineos, as well as packaging manufacturers like Amcor, Berry Global and RPC have been happy to meet that demand. They don’t plan on it ending suddenly. Plastic packaging is an almost $290 billion-a-year business and sales are forecast to expand by almost 4 percent a year until 2022, according to research firm Smithers Pira. Demand for polyethylene, the most used plastic, is set to rise at a similar rate, meaning total consumption will rise to 118 million metric tons in 2022, according to IHS Markit. In the U.S., the shale gas boom has encouraged the construction of new ethylene plants. Oil companies are counting too on rising plastics consumption to offset the spread of electric vehicles, as my colleague Julian Lee has explained.

The reasons for the bullishness are obvious. Growing populations, rising living standards and the march of e-commerce mean more demand. In developed countries, per capita polyethylene use is as much as 40 kg per person, whereas in poorer countries like India the figure is just one tenth of that, according to IHS Markit. Plastics are displacing materials like glass and paper because they tend to be cheap, lightweight and sturdy. That plastics don’t easily decompose is an asset – it prevents food going bad – as well as a liability for the natural environment. Cutting consumption will be difficult. While bioplastics are an alternative, they make up only about 1 percent of global plastics demand. Quality and cost issues have prevented wider adoption. “A lot of these materials aren’t really competitive in a world of low to mid oil prices,” says Sebastian Bray, analyst at Berenberg.

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Nov 232017
 
 November 23, 2017  Posted by at 9:43 am Finance Tagged with: , , , , , , , , , , , ,  


Roger Viollet Great Paris Flood, Avenue Daumesnil 1910

 

Fed Fears New Record High Credit Bubble – Danielle DiMartino Booth (USAW)
Global Debt Is Rising, Especially in Emerging Economies (St. Louis Fed)
Pressure on US Households Intensifies (DDMB)
Zombie Firms Roam Europe Because Banks Help Keep Them Undead
China Is Pumping A Lot Of Cash Into Its Economy To Calm Investors (CNBC)
Chinese Investors Eye Leverage to Juice U.S. CLO Returns (BBG)
China’s $3.4 Trillion Corporate Bond Market Faces Rocky 2018 (BBG)
Worst Growth In Decades Pushes UK To Inject £25bn Into Economy (Ind.)
Budget Shows Tories Are Unfit For Office – Corbyn (G.)
Facebook To Let Users See If They ‘Liked’ Russian Accounts (R.)
Putin Tell Russian Firms To Be Ready For War Production (Ind.)
PNG Police Move In On Closed Australia Refugee Camp On Manus (AFP)
Night Being Lost To Artificial Light (BBC)

 

 

“I don’t think any of us know what the implications are for a $50 trillion debt build since the great financial crisis (of 2008). It is impossible to say. We have never dealt with anything of this magnitude.”

Fed Fears New Record High Credit Bubble – Danielle DiMartino Booth (USAW)

Former Federal Reserve insider Danielle DiMartino Booth says the record high stock and bond prices make the Fed nervous because it’s fearful of popping this record high credit bubble. DiMartino Booth says, “The Fed’s biggest fear is they know darn well this much credit has built up in the background, and the ramifications of the un-wind for what has happened since the great financial crisis is even greater than what happened in 2008 and 2009. It’s global and pretty viral. So, the Fed has good reason to be fearful of what’s going to happen when the baby boomer generation and the pension funds in this country take a third body blow since 2000, and that’s why they are so very, very intimidated by the financial markets and so fearful of a correction.”

Why will the Fed not allow even a small correction in the markets? DiMartino Booth says, “Look back to last year when Deutsche Bank took the markets to DEFCON 1. Maybe you were paying attention and maybe you weren’t, but it certainly got the German government’s attention. They said the checkbook is open, and we will do whatever we need to do because we can’t quantify what will happen when a major bank gets into a distressed situation. I think what central banks worldwide fear is that there has been such a magnificent re-blowing of the credit bubble since 2007 and 2008 that they can’t tell you where the contagion is going to be. So, they have this great fear of a 2% or 3% or 10% (correction) and do not know what the daisy chain is going to look like and where the contagion is going to land.

It could be the Chinese bond market. It could be Italian insolvent banks or it might be Deutsche Bank, or whether it might be small or midsize U.S. commercial lenders. They can’t tell you where the systemic risk lies, and that’s where their fear is. This credit bubble is of their making.” In short, the Fed does not know what is going to happen, and according to DiMartino Booth, nobody does. DiMartino Booth contends, “I don’t think any of us know what the implications are for a $50 trillion debt build since the great financial crisis (of 2008). It is impossible to say. We have never dealt with anything of this magnitude.”

“2017 is the record for quantitative easing (money printing) globally. We have never, not even in the darkest days of the financial crisis, central banks have never injected as much money as they have into the markets. . . . I am not a gold bug, but we do know that in times of corrections that there is no place to hide in traditional asset classes that you can get at your Merrill Lynch brokerage. Gold and silver in the precious metals complex are the only places to hide and get true diversification and safety.”

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They do know what’s going on.

Global Debt Is Rising, Especially in Emerging Economies (St. Louis Fed)

The world has become used to cheap credit. And the increase in borrowing by emerging economies could pose a risk as monetary policy normalizes. In response to the most recent recession, central banks around the world decreased their main policy rates to almost zero, as seen in the figure below.

[..] The downward trend in short-term and long-term interest rates has made borrowing cheaper over time. As a result, global debt has increased substantially since 2007. According to Bank for International Settlements (BIS) data, total debt of the nonfinancial sector (that is, households, government and nonfinancial corporations) amounted to $145 trillion in the first quarter of 2017, an increase of 40% since the first quarter of 2007. Most of this increase has been driven by an increase in total debt in emerging economies, especially in China, as seen in the following figure.

Furthermore, emerging economies have borrowed heavily in foreign currency, mainly in U.S. dollars, shown in the figure below.

According to the BIS, total dollar-denominated debt outside the U.S. reached $10.7 trillion in the first quarter of 2017, and about a third of this debt is owed by the nonfinancial sector of emerging economies. Analysts have stressed that the rapid accumulation of debt in emerging economies could pose risks for the global economy in the presence of U.S. monetary policy normalization. Market expectations of a rapid increase in the policy rate and the reduction of the Federal Reserve’s balance sheet could lead to higher borrowing costs and an appreciation of the U.S. dollar. This, in turn, would increase the cost of refinancing debt in emerging economies. If these risks materialized, there could be an increase in the demand for safe assets, particularly U.S. Treasuries. This would lead to a decrease in long-term rates. In times of monetary normalization, the yield curve would flatten, and banks profitability could be eroded.

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After the storms…

Pressure on US Households Intensifies (DDMB)

The full effects of Hurricanes Harvey and Irma are rapidly showing up in the data. In September, according to Black Knight, the number of mortgages either past due or in foreclosure rose by 214,000, or 9%, compared with August. At 5.1%, the combined rate is far off the previous month’s 4.7% and the most recent low of 4.5% recorded in March 2007. October’s numbers have brought the picture more clearly into focus. More than 229,000 past-due mortgages are tied to the storms. Hurricane Irma accounted for 163,000 and Harvey, 66,000. To place the damage to households in context, before the storms, Florida and Texas ranked 22nd and 20th among non-current mortgage states. As of October, Florida has risen to second place and Texas is in fifth place.

The economy has also enjoyed a rush of car sales as sufficiently-collateralized and insured drivers immediately replaced vehicles destroyed by the storms. According to the latest retail data, car sales slowed to a 0.7% growth rate in October, far below September’s blistering 4.6-percent pace. Nonetheless, the next development could be a further deterioration in auto delinquencies attributed to storm victims. The most recent third-quarter data from the New York Fed suggest struggling households continue to buckle under the strains of their monthly payments. The delinquency rate for subprime loans originated by auto-finance companies, as opposed to banks, hit 9.7% in the three months ended in September.

With one in four auto loans outstanding going to subprime borrowers, the rate has been rising since 2013 and is at a seven-year high. What’s most notable is that these delinquency rates are being recorded outside recession, all but ensuring 2009’s peak of 10.9% will be breached in the next downturn. And while credit-card delinquencies are nowhere near their crisis-era double-digit peaks, the New York Fed noted that serious delinquencies have been on the rise for one year. The serious delinquency rate hit 4.6% in the third quarter, up from 4.4% the prior quarter. Adjusted for inflation, the growth of U.S. credit-card spending has outpaced that of incomes for 26 straight months.

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Anyone shorting Italy for real yet?

Zombie Firms Roam Europe Because Banks Help Keep Them Undead

So-called zombie firms – companies that would be out of business or painfully restructured in a competitive economy – have become a key issue for policy makers grappling with sluggish productivity growth in developed economies. The fear is that those “zombies” are sucking up capital that could otherwise go to more productive firms. A new study by the OECD helps explaining how banks favor the spread of zombie firms. It shows that weak companies tend to be connected to weak banks which prefer to roll over or restructure bad loans rather than declaring them delinquent and writing them off. The OECD’s research by Dan Andrews and Filippos Petroulakis lends new urgency to the ECB’s efforts to slash non-performing loans in the region.

Supervisors have asked for detailed plans of how NPLs will be cut and are mulling requiring banks to set aside more capital for soured loans. “In order to facilitate the unwinding of the zombie problem, it is essential that bank balance sheets are strong, underlining the need for fast recapitalizations after crises and other measures to reduce NPLs,” write the authors. “The zombie firm problem in Europe may at least partly stem from bank forbearance.” Weak productivity matters in an ageing continent like Europe, where a shrinking working population is expected to support an ever increasing number of retirees. This can’t happen unless technology and education make it possible to squeeze more and more output from labor and capital.

The OECD has been investigating the impact of living-dead companies for years. It argues that zombification leads to capital misallocation, as weak banks tend to steer less capital to healthier and more productive firms. This in turn leads to low productivity and returns, making it more difficult to get credit even for innovative companies. Andrews and Petroulakis also say that, in addition to forcing banks to work down their NPLs and bolster capital, efficient laws on insolvency are needed. It is not a coincidence that Italy – the European country with the largest NPL problem – overhauled its bankruptcy rules last month to make them quicker and more efficient.

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Mr. Xi, sir, it’s time to be careful.

China Is Pumping A Lot Of Cash Into Its Economy To Calm Investors (CNBC)

China has been pumping a lot of cash into its system to lift market sentiment, as the world’s second-largest economy walks a thin line between curbing debt and keeping everything running smoothly. Last week, the People’s Bank of China injected cash totaling 810 billion Chinese yuan ($122.4 billion) in five straight days of daily liquidity management operations. Those actions, which represented the largest weekly net increase since January, were in part a Beijing response to its 10-year sovereign bond yields spiking to multiyear highs, experts said. “Surging Chinese government bond yields hit the nerve of policymakers, so in order to further prevent a greater surge, they injected liquidity into the system to improve market sentiment,” said Ken Cheung, a foreign exchange strategist at Mizuho Bank who focuses on Chinese currencies and monetary policies.

Nomura analysts said last week in a note that the bond rout was due to fears of regulatory tightening from Beijing. Bond yields, which move inversely to prices, briefly hit 4% in China for the first time in three years. A rise in the benchmark government bond yield threatens to drive up overall borrowing costs — and potentially worsen the country’s debt situation. On Monday and Tuesday of this week, the PBOC injected a net 30 billion yuan ($4.5 billion), but it didn’t expand that money supply on Wednesday. Analysts said that pause may have been due to market sentiment seemingly stabilizing, but it may be short-lived. As Chinese 10-year yields are still near the psychologically important 4% level, Cheung told CNBC he expects more injections ahead if necessary, as Beijing needs to “maintain liquidity to please the market.”

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“It’s dangerous territory. Leveraging BB-rated bonds – is that a good idea?”

Chinese Investors Eye Leverage to Juice U.S. CLO Returns (BBG)

The last time Asian investors borrowed money to invest in structured-credit products – during the run-up to the financial crisis – it didn’t work out so well. Now, a new set of buyers from China are hoping things turn out differently. Instead of snapping up packages of risky derivatives tied to U.S. home loans, they’re buying collateralized loan obligations that bundle together corporate loans to highly leveraged companies. And while such CLOs weathered the last crisis relatively well, there’s already concern that these investors are being tempted to deploy leverage to amplify their returns. The problem is that even the riskiest pieces of CLOs can yield less than the 8 to 10% targets Chinese investors have grown accustomed to in their markets, according to Collin Chan, a CLO analyst at Bank of America Corp.

So CLOs, the junk-rated slices of which yield just 5.5 percentage points more than Libor, “may not be crazily attractive” to them, said Chan, whose team has trekked to China multiple times this year to pitch the products to investors there. On a recent trip to China, potential new investors expressed interest in the idea of applying leverage for the purchase of CLOs, even at the riskier BB level, Chan said. He estimates levered returns for the BB-rated CLO slice may be almost 20%. Leverage is employed using the repo financing market, where short-term loans allow investors to borrow money by lending securities. It’s the latest evidence of the search for yield that has engulfed credit markets and provided a significant boost for CLO sales this year. China and its many types of financial institutions now look like promising buyers for a product that in Asia has typically been bought by Japanese banks and Korean insurers.

“It wouldn’t be wise for the Chinese to use leverage at this stage,” said Asif Khan, head of CLO origination and distribution at MUFG. “It’s dangerous territory. Leveraging BB-rated bonds – is that a good idea? Any potential use of leverage by Chinese investors could pose potential risk in case of severe volatility.” [..] Chinese investors have yet to enter the CLO market en masse. However signs point to their growing participation. In some cases, investment banks and CLO managers have made as many as five trips to Asia this year, adding on special CLO-focused investor conferences in mainland China for the first time ever to raise the product’s profile. The demand to diversify into dollar assets has grown from a wide range of investors, despite Chinese-government capital controls limiting deployment of capital abroad.

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$3.4 trillion sounds low.

China’s $3.4 Trillion Corporate Bond Market Faces Rocky 2018 (BBG)

China’s deleveraging campaign is finally starting to bite in the nation’s corporate-bond market, a shift that will make 2018 a clearer test of policy makers’ appetites to let struggling companies fail. Yields on five-year top-rated local corporate notes have jumped about 33 basis points since the month began, to a three-year high of 5.3%, according to data compiled by clearing house ChinaBond. Government bonds, which have far greater liquidity, had already moved last month as the central bank warned further deleveraging was needed. With more than $1 trillion of local bonds maturing in 2018-19, it will become increasingly expensive for Chinese companies to roll over financing – and all the tougher for those in industries like coal that the nation’s leadership wants to shrink.

Two companies based in Inner Mongolia, a northern province that’s suffered from a debt-and-construction binge, missed bond payments on Tuesday, in a demonstration of the kind of pain that may come. In the long haul, that all may be good for China. Allowing more defaults could see its bond market become more like its overseas counterparts, with a greater differentiation in price. And that could mean it channels funds more productively. “The deleveraging campaign and the new rules on the asset management industry will further differentiate good and bad quality credits, and make the onshore credit market more efficient,” said Raymond Gui at Income Partners Asset Management. “Weaker companies will find it harder to roll over their debts because funding costs will stay high.” Gui predicts yields will keep climbing. The average for top-rated corporate bonds is already 2.2 percentage points above what investors demanded to hold them in October last year.

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More austerity.

Worst Growth In Decades Pushes UK To Inject £25bn Into Economy (Ind.)

Britain faces its worst period of economic growth in more than half a century after official data revealed a country hamstrung by feeble productivity and Brexit. Dismal figures released alongside Philip Hammond’s Budget led the Chancellor to announce a £25bn cash injection to strengthen the ailing economy. The major giveaway will see money head towards housebuilding, preparing Whitehall for Brexit, the NHS and boosting the tech sector. But despite the extra cash most government departments will still experience deep cuts over the next five years, as Mr Hammond struggles to get the public finances under control. Mr Hammond tried to put a positive sheen on progress towards reducing net debt and abolishing the deficit, but data suggested Britain would now fail to achieve a budget surplus before 2031.

Forecasts from the Office for Budget Responsibility indicated GDP would grow by 1.5% in 2017, down from the 2% forecast in March. The Government’s official financial auditor said growth would drop to 1.4% next year – as low as 1.3% in 2019 and 2020 – and then pick up to 1.5% in 2021 and 1.6% in 2022. The OBR said the main downward pressure on growth was a big fall in the UK’s projected productivity, intensifying public spending cuts and Brexit uncertainty. The body was established in 2010 by then-Chancellor George Osborne to end a system under which the Treasury produced its own economic growth estimates. The latest predictions are the gloomiest that the auditor has ever given, and they are also smaller than any produced by the Treasury since 1983. Institute for Fiscal Studies director Paul Johnson said the 1.4% average growth forecast over the period was “much worse than we have had over the last 60 or 70 years”.

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“.. the reality will be – a lot of people will be no better off. And the misery that many are in will be continuing.”

Budget Shows Tories Are Unfit For Office – Corbyn (G.)

In his response to the budget, Corbyn – it is the leader of the opposition who traditionally speaks rather than the shadow chancellor – said Hammond had completely failed to tackle a national crisis of stagnation and falling wages. “The test of a budget is how it affects the reality of people’s lives all around this country,” the Labour leader said. “And I believe as the days go ahead, and this budget unravels, the reality will be – a lot of people will be no better off. And the misery that many are in will be continuing.” Largely eschewing direct focus on Hammond’s specific announcements in favour of a broader critique of the government’s wider economic approach, Corbyn castigated Hammond for again missing deficit reduction targets, and for a continued spending squeeze on schools and the police.

Speaking about housing, Corbyn said rough sleeping had doubled since 2010, and that this Christmas 120,000 children would be living in temporary accommodation. “We need a large-scale publicly funded housebuilding programme, not this government’s accounting tricks and empty promises.” Summing up, he said: “We were promised a revolutionary budget. The reality is nothing has changed. People were looking for help from this budget. They have been let down. Let down by a government that, like the economy they’ve presided over, is weak and unstable and in need of urgent change. They call this budget ‘Fit for the Future’. The reality is this is a government no longer fit for office.”

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Mish commented on Twitter he’d be more interested in seeing which CIA propaganda sites he’d liked.

Question is: should we trust Facebook’s assessment of what is Russian and what not? I don’t think so.

Facebook To Let Users See If They ‘Liked’ Russian Accounts (R.)

Facebook said on Wednesday it would build a web page to allow users to see which Russian propaganda accounts they have liked or followed, after U.S. lawmakers demanded that the social network be more open about the reach of the accounts. U.S. lawmakers called the announcement a positive step. The web page, though, would fall short of their demands that Facebook individually notify users about Russian propaganda posts or ads they were exposed to. Facebook, Alphabet Inc’s Google and Twitter are facing a backlash after saying Russians used their services to anonymously spread divisive messages among Americans in the run-up to the 2016 U.S. elections. U.S. lawmakers have criticized the tech firms for not doing more to detect the alleged election meddling, which the Russian government denies involvement in.

Facebook says the propaganda came from the Internet Research Agency, a Russian organization that according to lawmakers and researchers employs hundreds of people to push pro-Kremlin content under phony social media accounts. As many as 126 million people could have been served posts on Facebook and 20 million on Instagram, the company says. Facebook has since deactivated the accounts. Facebook, in a statement, said it would let people see which pages or accounts they liked or followed between January 2015 and August 2017 that were affiliated with the Internet Research Agency. The tool will be available by the end of the year as “part of our ongoing effort to protect our platforms and the people who use them from bad actors who try to undermine our democracy,” Facebook said.

The web page will show only a list of accounts, not the posts or ads affiliated with them, according to a mock-up. U.S. lawmakers have separately published some posts. It was not clear if Facebook would eventually do more, such as sending individualized notifications to users.

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NATO is a real threat.

Putin Tell Russian Firms To Be Ready For War Production (Ind.)

Russian business should be prepared to switch to production to military needs at any time, said Vladimir Putin on Wednesday. The Russian president was speaking at a conference of military leaders in Sochi. “The ability of our economy to increase military production and services at a given time is one of the most important aspects of military security,” Mr Putin said. “To this end, all strategic, and simply large-scale enterprise should be ready, regardless of ownership.” A day earlier, the president had spoken of a need to catch up and overtake the West in military technology. “Our army and navy need to have the very best equipment — better than foreign equivalents,” he said. “If we want to win, we have to be better.”

Since the 2008 Georgian war, which was a difficult operation, the Russian military has undergone extensive modernisation. Ageing Soviet equipment has gone. There is a new testing regime. There are new command structures. The budget has also increased exponentially. This year, military expenses will cross 3 trillion roubles, or 3.3% of GDP. This would be a record were it not for one-off costs in 2016. Over the next two years, spending is forecast to be cut back slightly, to approximately 2.8% of GDP. Though that budget remains less than 30% of the combined Nato budget in Europe, many countries are increasing their military spending in response to the “Russian threat”. Nato military command has also been restructured — it says in response to Russian cyber and military threats.

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First thing that needs to happen is Australian media reporting on this. Then people must protest. New Zealand recently offered to take a whole group of these people, Australia declined. Many need medical treatment. Australia refuses.

PNG Police Move In On Closed Australia Refugee Camp On Manus (AFP)

Papua New Guinea police moved into the shuttered Australian refugee camp on the country’s Manus Island Thursday in the most aggressive push yet to force hundreds of men to leave, the Australian government and detainees said. The police operation was confirmed by Australia’s Immigration Minister Peter Dutton, who said Canberra was “very keen for people to move out of the Manus regional processing centre”. “I think it’s outrageous that people are still there,” he told Sydney commercial radio station 2GB. “We want people to move.” Iranian Behrouz Boochani tweeted from inside the camp earlier Thursday, writing that “police have started to break the shelters, water tanks and are saying ‘move, move'”.

“Navy soldiers are outside the prison camp. We are on high alert right now. We are under attack,” he said, adding that two refugees were in need of urgent medical treatment. Other refugees posted photos to social media sites showing police entering the camp, which Australia declared closed on October 31 after the PNG Supreme Court declared it unconstitutional. [..] Australia had shut off electricity and water supplies to the camp and demanded that some 600 asylum-seekers detained there move to three nearby transition centres. Around 400 of the asylum-seekers have refused to leave, saying they fear for their safety in a local population which opposes their presence on the island. They also say the three transition centres are not fully operational, with a lack of security, sufficient water or electricity.

[..] Canberra has strongly rejected calls to move the refugees to Australia and instead has tried to resettle them in third countries, including the United States. But so far, just 54 refugees have been accepted by Washington, with 24 flown to America in September. Despite widespread criticism, Canberra has defended its offshore processing policy as stopping deaths at sea after a spate of drownings.

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Oh, the lights will go out eventually…

Night Being Lost To Artificial Light (BBC)

A study of pictures of Earth by night has revealed that artificial light is growing brighter and more extensive every year. Between 2012 and 2016, the planet’s artificially lit outdoor area grew by more than 2% per year. Scientists say a “loss of night” in many countries is having negative consequences for “flora, fauna, and human well-being”. A team published the findings in the journal Science Advances. Their study used data from a Nasa satellite radiometer – a device designed specifically to measure the brightness of night-time light. It showed that changes in brightness over time varied greatly by country. Some of the world’s “brightest nations”, such as the US and Spain, remained the same. Most nations in South America, Africa and Asia grew brighter. Only a few countries showed a decrease in brightness, such as Yemen and Syria – both experiencing warfare.

The nocturnal satellite images – of glowing coastlines and spider-like city networks – look quite beautiful but artificial lighting has unintended consequences for human health and the environment. Lead researcher Christopher Kyba from the German Research Centre for Geoscience in Potsdam said that the introduction of artificial light was “one of the most dramatic physical changes human beings have made to our environment”. He and his colleagues had expected to see a decrease in brightness in wealthy cities and industrial areas as they switched from the orange glow of sodium lights to more energy-efficient LEDs; the light sensor on the satellite is not able to measure the bluer part of the spectrum of light that LEDs emit.

“I expected that in wealthy countries – like the US, UK, and Germany – we’d see overall decreases in light, especially in brightly lit areas,” he told BBC News. “Instead we see countries like the US staying the same and the UK and Germany becoming increasingly bright.” Since the satellite sensor does not “see” the bluer light that humans can see, the increases in brightness that we experience will be even greater than what the researchers were able to measure.


UK, Netherlands, Belgium

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Jun 142017
 
 June 14, 2017  Posted by at 9:34 am Finance Tagged with: , , , , , , , , , ,  


Fred Lyon San Francisco cable car turnaround 1946

 

A Record 60% Of Americans Disapprove Of President Trump (ZH)
Age Is The New Dividing Line In British Politics (YouGov)
UK Low Income Families Forced To Walk ‘Relentless Financial Tightrope’ (G.)
Gundlach Says DC Establishment Wants to ‘Wait Trump Out’ (BBG)
Trump Administration Welshes on “Repeal Dodd Frank” Promise (NC)
Tillerson Says Allies Pleading With US To ‘Improve Russia Relations’ (RT)
Are Public Pensions A Thing Of The Past? (CNN)
Death Of The Human Investor: Just 10% Of Trading Is Regular Stock Picking (C.)
OPEC Oil Production Jumps In May Despite Output Cuts Deal (CNBC)
China Defaults Feared as Firms Confront Short Debt Addiction (BBG)
Greeks Promised Economic Boost Despair of Ever Seeing Debt Deal (BBG)
Schaeuble Promises Greece Deal With Lenders On Thursday (R.)
Foreign Buyers Snap Up Greek Property (K.)
State Of Emergency Declared On Lesvos As 800 Left Homeless (AP)
‘Impossible And Risky To Take In More Migrants’ – Rome’s Mayor (RT)

 

 

A nation divided.

A Record 60% Of Americans Disapprove Of President Trump (ZH)

Despite record high stock prices, 43-year lows in jobless claims, and near record-high optimism among small business owners, Gallup reports the percentage of Americans who disapprove of the job President Trump has risen to a record 60% this week. As Gallup details, despite the president’s claim on Monday at a Cabinet meeting that “Never has there been a president, with few exceptions – in the case of F.D.R. he had a major Depression to handle – who’s passed more legislation, who’s done more things than what we’ve done,” his administration has been roiled by controversies. Most recently, Trump ran into a buzz saw of criticism with his decision, announced June 1, to withdraw the U.S. from participation in the Paris climate accord.

He has also been under significant political scrutiny over the June 8 testimony of former FBI Director James Comey before the Senate Intelligence Committee. Those events coincided with the lower averages seen in the past two weeks. But, given that his averages were almost as low in the weeks leading up to them, it is difficult to establish direct causality between specific events and the president’s ratings.

The highly polarized nature of Americans’ views of Trump (and Obama before him) have been well-documented, and that pattern continues: Trump’s 8% average approval rating among Democrats last week is right at his 9% average to date; His 83% approval among Republicans is three points lower than his average among that group; Among independents, his approval is 31%, five points lower than his average among that group; Notably the spread between Republican ‘confidence’ and Democrat ‘confidence’ (via Bloomberg) has not been this wide since before Barack Obama was elected…

Trump’s job approval ratings are the worst of his administration so far, and Trump continues to have the lowest ratings for a newly elected president in Gallup’s history of approval ratings. The previous low first-year approval rating in June for an elected president was Bill Clinton, with a 37% approval June 5-6, 1993. The approval ratings of all other presidents since 1953 in June (May in the case of Eisenhower) of their first year after being elected were above 50%.

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Another nation divided, but not along the same lines. Older people, especially pensioners, vote Conservative, and a much higher percentage of them actually vote.

Age Is The New Dividing Line In British Politics (YouGov)

Since last week’s election result YouGov has interview over 50,000 British adults to gather more information on how Britain voted. This is part of one of the biggest surveys ever undertaken into British voting behaviour, and is the largest yet that asks people how they actually cast their ballots in the 2017 election. The bigger sample size allows us to break the results down to a much more granular level and see how different groups and demographics voted on Thursday. In electoral terms, age seems to be the new dividing line in British politics. The starkest way to show this is to note that, amongst first time voters (those aged 18 and 19), Labour was forty seven percentage points ahead. Amongst those aged over 70, the Conservatives had a lead of fifty percentage points.

In fact, for every 10 years older a voter is, their chance of voting Tory increases by around nine points and the chance of them voting Labour decreases by nine points. The tipping point, that is the age at which a voter is more likely to have voted Conservative than Labour, is now 47 – up from 34 at the start of the campaign.

Despite an increase in in youth turnout, young people are still noticeably less likely to vote than older people. While 57% of 18 and 19 year-olds voted last week, for those aged 70+ the figure was 84%.

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Corbyn growth territory.

UK Low Income Families Forced To Walk ‘Relentless Financial Tightrope’ (G.)

Low-income families are going without beds, cookers, meals, new clothes and other essential items as they struggle to cope with huge debts run up to pay domestic bills, according to a survey highlighting the cost-of-living crisis experienced by the UK’s poorest households. Clients of the debt charity Christians Against Poverty (CAP) had run up an average of £4,500 in debts on rent or utility bills, forcing them on to what the charity described as a “relentless financial tightrope” juggling repayments and basic living costs, leaving many acutely stressed and in deteriorating health. The pressure of coping with low income and debt frequently triggered mental illness or exacerbated existing conditions, with more than a third of clients reporting that they had considered suicide and three-quarters visiting a GP for debt-related problems.

More than half were subsequently prescribed medication or therapy. “The crippling reality of living in poverty and debt is still unashamedly evident in every home we visit, and year on year we see financial difficulty taking a tighter grip,” said Matt Barlow, the UK chief executive of CAP. Experts said the survey highlighted the extreme hardship faced by the “new destitute” – people on low incomes who might in the past have been able to rely on a welfare safety net to help them through financial shocks but who now were forced to go into debt to survive, leaving them struggling to afford even the basics. Debt had a crushing effect on living standards, the CAP survey found, with one in 10 clients unable to afford to buy or repair a bed, washing machine, TV, sofa or fridge. Roughly the same proportion could afford to acquire furniture only on punitive rent-to-buy terms, for example paying £6 a week to acquire a bed and mattress over a set three-year period.

The impact on family life was severe, with a quarter of clients saying debt caused relationship breakdowns, and more than two-thirds saying they felt unable to cater for their children’s needs. A sixth said they could not afford to feed their children three meals a day. A third feared eviction. A tiny handful of clients – predominantly single mothers – reported that they had turned to prostitution to make ends meet. Prof Suzanne Fitzpatrick, of Heriot Watt University, the co-author of groundbreaking research into destitution, told the Guardian: “The new destitute are citizens who would previously have managed to avoid absolute destitution with the help of the welfare safety net. But the level of working age benefits is now so low that people barely managing to get by can easily find themselves in a position where they can’t afford even the basic essentials to eat, stay warm and dry, and keep clean.”

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“If you’re a trader or a speculator, I think you should be raising cash today, literally today..”

Gundlach Says DC Establishment Wants to ‘Wait Trump Out’ (BBG)

DoubleLine Capital’s Jeffrey Gundlach said the establishment in Washington is trying to undermine President Donald Trump by running out the clock on his administration. “They’re really just trying to wait Trump out, trying to obstruct his agenda as much as possible,” Gundlach, one of the few money managers to predict Trump’s election, said during a webcast Tuesday. “Small change is what they’re looking for.” Gundlach, manager of the $53.9 billion DoubleLine Total Return Bond Fund, spoke during televised Senate testimony by Attorney General Jeff Sessions, which the money manager called “a sideshow or entertainment.” He called the U.S. political conflict “rope-a-dope,” a strategy used by boxer Muhammad Ali to wear out opponents.

Among Gundlach’s other observations:
• There’s a low probability of a recession.
• The days of low volatility markets are probably numbered.
• Expect higher bond yields and lower stock prices this summer.
• Yields on 10-year Treasuries are likely to end 2017 roughly in the 2.7% to 2.8% range, from about 2.2% currently.

The Dow Jones Industrial Average and the S&P 500 Index closed at record highs Tuesday prior to Gundlach’s talk. Futures trading implies a 98% probability the Federal Reserve will raise interest rates by 0.25% when it meets Wednesday. “If you’re a trader or a speculator, I think you should be raising cash today, literally today,” Gundlach said. “If you’re an investor, I think you can sit through a seasonally weak period.” The Total Return fund was up 2.7% this year through June 12, beating 84% of its peers, according to data compiled by Bloomberg.

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Yves Smith’s piece is too long and comprehensive to do justice here. Click the link.

Trump Administration Welshes on “Repeal Dodd Frank” Promise (NC)

After having promised banks to get rid of Dodd Frank, which was never a strong enough bill to have a significant impact on profits or industry structure, Trump didn’t even back the House version of the bill to crimp Dodd Frank. But you’d never know that from the cheerleading from bank lobbyists upon the release of a 147 page document by the Treasury yesterday, the first of a series describing the gimmies that the Administration seeks to lavish on banks. As we’ll touch on below, the document repeatedly asserts that limited bank lending post crisis to noble causes like small businesses was due to oppressive regulations. We wrote extensively at the time that small business surveys showed that small businesses then overwhelmingly weren’t interested in borrowing and hiring. Businessmen don’t expand operations because money is cheap, they expand because they see a commercial opportunity.

But the even bigger lie at the heart of this effort is the idea that the US will benefit from giving more breaks to its financial sector. As we’ve written, over the last few years, more and more economists have engaged in studies with different methodologies that come to the same conclusion: an oversized financial sector is bad for growth, and pretty much all advanced economies suffer from this condition. The IMF found that the optimal level of financial development was roughly that of Poland. The IMF said countries might get away with having a bigger banking sector and pay no growth cost if it was regulated well. Needless to say, with the banking sector already so heavily subsidized that it cannot properly be considered to be a private business, deregulating with an eye to increasing its profits is driving hard in the wrong direction.

[..] So if it wasn’t Dodd Frank, what was led the banks to focus so much on high FICO score borrowers? It was mortgage servicing reforms, which made it hard to foreclose due to stopping abuses, like dual tracking (continuing to foreclose even when supposedly considering a mortgage modification). To look at the bigger picture, it’s hard to take bank complaints about oppressive regulation seriously in light of this:

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But the domestic echo chamber makes that hard to do.

Tillerson Says Allies Pleading With US To ‘Improve Russia Relations’ (RT)

All of America’s allies and partners have been calling on Washington to improve its relations with Russia, Secretary of State Rex Tillerson acknowledged after the US Senate reached a bipartisan deal to boost sanctions against Moscow. “I have yet to have a bilateral, one-on-one, a poolside conversation with a single counterpart in any country: in Europe, Middle East, even South-East Asia, that has not said to me: please, address your relationship with Russia, it has to be improved,” Tillerson said on Tuesday during testimony before the Senate Appropriations Committee on Foreign Operations. Tillerson added that the countries urging the US to review its Russian policy “believe worsening this relationship will ultimately worsen theirsituation.” He added: “People have been imploring me to engage and try to improve the situation, so, that was our approach anyway.”

Earlier, Tillerson warned that the US Senate’s bipartisan deal on new set of restrictive measures against Moscow might further worsen relations with Russia and hinder existing efforts on joint US-Russia progress to fight terrorism in Syria. “There are efforts under way in Syria specifically, those are, I would say, progressing in a positive way,” America’s top diplomat said on Tuesday during testimony to the Senate Foreign Relations Committee. Despite the relationship between US and Russia being “at an all-time low,” according to Tillerson, the “objective is to stabilize that” rather than deteriorate it further. Washington is “engaged” and working with Moscow “in a couple of areas,” including on such issues of international importance as the Ukrainian and Syrian crises. “We have some channels that are open, where we are starting to talk, and I think what I wouldn’t want to do is close the channels off,” Tillerson told the Senate committee, warning that to establish “something new… will take time.”

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Yes, they are.

Are Public Pensions A Thing Of The Past? (CNN)

New teachers and state workers will no longer get a traditional pension in Pennsylvania. Governor Tom Wolf signed a bill Monday, making it the ninth state to replace the pension with a “hybrid” retirement plan. It goes into effect in 2019. The new plan combines elements of a traditional pension and a 401(k)-style account. Overall, new workers will contribute more of their salary, work longer, and likely receive a smaller payout in retirement than under the current system, according to a report from the state’s Independent Fiscal Office. But Pennsylvania’s pension system is currently one of the most underfunded in the country and is in need of reform. The bill had bipartisan support. “It’s a win for Pennsylvania taxpayers and fair to Pennsylvania’s workforce,” Wolf said at a press conference Monday.

The reform will build upon previous legislation to help fully fund the pension system and preserve a path to retirement for public workers, said Greg Mennis, a director at Pew Charitable Trusts. “Our research indicates that this would be one of the most – if not the most – comprehensive and impactful reforms any state has implemented,” he wrote in a letter urging state lawmakers to pass the bill. Over the past 10 years, Rhode Island, Virginia, Tennessee and Georgia have created plans similar to Pennsylvania’s. They require workers to contribute some of their salary to a pension-like plan that guarantees a certain payout based on their salary. Workers also contribute to a 401(k)-style plan that they can take with them if they leave public service. The state will make contributions to both plans on their behalf.

In Pennsylvania, workers will be defaulted into a hybrid plan, but there will be two other versions they could opt into. Under the default, workers will have to contribute a total of 8.25% of their salary. (Teachers currently contribute 7.5% and other public workers pay 6.25%.) Most will have to work until 67, instead of 65, in order to get their full payout in retirement. A state employee who works for 35 years and earns a final salary of $60,000, currently receives an estimated $40,000 a year in retirement. Under the reformed system, that same worker would receive $34,1048, according to the Independent Fiscal Office report. [..] Like pension plans in other states, Pennsylvania’s was badly hurt by the Great Recession. It also took a hit because of retroactive benefit increases made before the market took a dive. The pension fund went from a nearly $20 billion surplus in 2000 to a $70 billion deficit in 2015.

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ZIRP machines have taken over.

Death Of The Human Investor: Just 10% Of Trading Is Regular Stock Picking (C.)

Quantitative investing based on computer formulas and trading by machines directly are leaving the traditional stock picker in the dust and now dominating the equity markets, according to a new report from JPMorgan. “While fundamental narratives explaining the price action abound, the majority of equity investors today don’t buy or sell stocks based on stock specific fundamentals,” Marko Kolanovic, global head of quantitative and derivatives research at JPMorgan, said in a Tuesday note to clients. Kolanovic estimates “fundamental discretionary traders” account for only about 10% of trading volume in stocks. Passive and quantitative investing accounts for about 60%, more than double the share a decade ago, he said.

In fact, Kolanovic’s analysis attributes the sudden drop in big technology stocks between Friday and Monday to changing strategies by the quants, or the traders using computer algorithms. In the weeks heading into May 17, Kolanovic said funds bought bonds and bond proxies, sending low volatility stocks and large growth stocks higher. Value, high beta and smaller stocks began falling in a rotation labeled “an unwind of the ‘Trump reflation’ trade,” Kolanovic said. “Upward pressure on Low Vol and Growth, and downward pressure on Value and High Vol peaked in the first days of June (monthly rebalances), and then quickly snapped back, pulling down FANG stocks” — Facebook, Amazon.com, Netflix and Google parent Alphabet, the report said.

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Told you those output cuts wouldn’t go anywhere.

OPEC Oil Production Jumps In May Despite Output Cuts Deal (CNBC)

OPEC’s oil production jumped in May, despite the exporter group agreeing last month to extend its six-month deal to cap output into 2018. Production across OPEC rose by about 336,100 barrels per day to 32.1 million bpd, according to secondary sources, led by increases from Libya and Nigeria, which are exempt from the deal, and Iraq. Output from Libya surged by more than 178,000 bpd to 730,000 bpd as the country’s rival factions moved toward reconciliation, and supplies disrupted throughout years of conflict remained on line. In Nigeria, production was up more than 174,000 bpd to 1.68 million bpd as supplies sidelined by militant attacks on energy infrastructure last year came back into operation. With the gain, Nigeria reclaimed the title of largest African producer in OPEC from Angola, where output fell by 54,000 bpd, the biggest drop among the 13 members in May.

Iraq, OPEC’s second-largest producer, contributed the third-biggest increase with a more than 44,000 bpd jump. Baghdad has yet to cut deeply enough to hit its quota of 4.35 million bpd under the output cut deal. In May, it produced 4.42 million bpd. Only four countries were producing at or below the levels they agreed to in November: Saudi Arabia, Angola, Kuwait, and Qatar. Last month, OPEC and other exporters extended an agreement to remove 1.8 million barrels a day from the market in order to shrink brimming global stockpiles of crude oil. In May, inventories in the OECD, a group of mostly wealthy countries, remained 251 million barrels above the five-year average.

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More ground for shadow banks to take over.

China Defaults Feared as Firms Confront Short Debt Addiction (BBG)

China’s leverage crackdown is forcing local companies to confront their addiction to short-term bond sales that they use to roll over debt. The shock therapy is worsening the outlook for corporate defaults in the second half of this year after borrowing costs jumped to a two-year high. With yields surging, Chinese non-banking firms sold 131 billion yuan ($19.3 billion) of bonds with a maturity of one year or less in May, the least since January 2014 and less than half of the same month last year, according to data compiled by Bloomberg. About 87% of the short note sales last month will be used for refinancing, according to Bloomberg data.

The habit of relying on borrowing short-term money to repay maturing debt has pushed up such liabilities to a total of 5.2 trillion yuan on China’s listed non-financial companies’ balance sheets as of March 31, the highest on record, according to data compiled by Bloomberg. With no sign of an end to the government’s campaign against leverage, the average coupon rate for bonds maturing in one year or less rose to 5.5% in June, deterring issuers from raising money to roll over debt. “Small issuance of short-term bonds will be a normal phenomenon in the coming six months because cash supply will probably remain tight,” said Ma Quansheng at Fullgoal Fund Management. “Both default risks and the number of corporate bond defaults may increase.”

The loose funding environment last year helped Chinese companies raise enough money to withstand repayment pressure so far in 2017. There have been 13 onshore defaults in the public bond market in 2017, compared with 16 in the same period of 2016. The yield on one-year AAA rated company bonds averaged 4.19% this year, up from 2.97% in 2016. HFT Investment Management said more note defaults may come as the economy doesn’t look good. In the second half of this year, Chinese non-banking firms must repay 2.36 trillion yuan of bonds. “The current rising borrowing costs may have a big impact on companies’ operations and finance,” said Lu Congfan at HFT Investment Management. “What can you do when you must refinance to repay maturing debt while facing such high borrowing costs? That would be a question challenging many local companies in the second half or next year.”

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Well, well… Let’s see it.

Schaeuble Promises Greece Deal With Lenders On Thursday (R.)

German Finance Minister Wolfgang Schaeuble said on Tuesday he was confident that Greece and its international lenders will reach a compromise deal this week, a step that would unleash more loans for Athens. “We’ll manage it on Thursday. You’ll see,” Schaeuble said during a panel discussion in Berlin. Officials have said eurozone finance ministers and the IMF are likely to strike a compromise on Greece on Thursday, paving the way for new loans for Athens while leaving the contentious debt relief issue for later. IMF head Christine Lagarde suggested a plan last week under which the Fund would join the Greek bailout now, because Athens is delivering on agreed reforms, but would not disburse any IMF money until the euro zone clarifies what debt relief it can offer Greece.

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Greeks don’t believe you, Wolfie…

Greeks Promised Economic Boost Despair of Ever Seeing Debt Deal (BBG)

Alexis Tsipras has spent nearly two years telling Greeks that a debt deal and inclusion in the ECB’s quantitative-easing program will unleash an investment boom that salves the pain of austerity. The prime minister’s message hasn’t convinced Panagiotis Kouinis, a 60-year-old civil engineer in Corinth who says business has steadily dwindled through all of Greece’s eight-year crisis and has now ground almost to a halt. “What I know is they tell you pensions will be cut another 20%, wages down, and what is quantitative easing?” Kouinis said in an interview in his office near the city center. “Do we have to be economists so we can understand what they’re saying?” Across the country in places like Corinth, an industrial hub 80 kilometers west of Athens, Greeks have spent years treading water as news bulletins bombard them daily with reports of meetings and decisions in Brussels and Frankfurt that will determine their economic future.

In the meantime, as the ECB’s stimulus measures – including its asset-purchase program – buoy the rest of the euro-area economy, Greece’s output has been stagnant, leaving its people the most pessimistic in the region. Yet the ECB remains unlikely to include Greek bonds in its QE program in the foreseeable future, according to a person familiar with the matter. That’s because a meeting on Thursday of euro-area finance ministers, whose electorates are leery of debt relief, looks like delivering another fudge. There may be agreement to disburse more bailout loans but without easing repayment terms enough to satisfy the ECB and IMF. That would leave Tsipras high and dry.

[..] Despite some signs of an improvement in industrial output, Greece has been heavily reliant on consumers and a booming tourist sector to keep GDP – which shrank by a quarter in the early years of the crisis – from continuing its slide. While the economy hasn’t been in a recession since 2015, and grew 0.4% at the start of the year, it hasn’t strung together more than two quarters of consecutive expansion in more than a decade. Accountancy firm PWC said in March that infrastructure investment plunged during the crisis, leaving a backlog of planned and in-progress projects amounting to more than 21 billion euros. Near Corinth, that includes rail, waste management, road and marina developments. “With taxation what it is, not only will no-one come to invest here, but they’d need to be mad to,” said Kouinis, the civil engineer. “Growth needs to start from public works, because the private sector has been killed.”

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Foreigners buy apartments in Athens to rent out to other foreigners on Airbnb. So wrong in so many ways.

Foreign Buyers Snap Up Greek Property (K.)

Property buyers from abroad are this year growing at the fastest pace in a decade, as booming Greek tourism has had a positive impact on the property market too. According to the latest data from the Bank of Greece, in the first quarter of the year the inflow of capital from abroad for real estate acquisitions increased by 61.7% on an annual basis. The March figures have signaled a further improvement, since in the first couple of months the yearly rise had come to 56.7%. If the existing growth rate is sustained throughout 2017, it is likely that by the end of the year more than 430 million euros will have been invested the Greek property market from other countries. The equivalent figure for the whole of 2016 had amounted to 270 million euros, up 45.3% on the 2015 inflow of 186 million euros.

The only time a similar growth rate had been recorded before was in the first quarter of 2007, when foreign investors spent 66.5% more money on property acquisitions than a year earlier. Real estate professionals say this uptick in foreign funds entering the local property market is particularly positive because it came during a period when transactions are usually sparse: Expressions of buying interest this year started in the winter months, not in the summer when demand typically peaks. This has bolstered optimism about an even better summer in terms of transactions, which may reach their high for the entire period since the outbreak of the financial crisis.

The major rise in inflows this year is due to the increase in demand for apartments in Athens, primarily in the city center and the southern suburbs. This mainly concerns flats eligible for short-term leasing through Internet platforms such as HomeAway, Airbnb and FlipKey. It also concerns luxury mansions that would fit the bill for the same type of online platforms as well as for the purpose of getting a Golden Visas (for buys of properties worth 250,000 euros or more by investors from outside the European Union). Besides those buyers aiming for the five-year residence permits, considerable buying interest is also coming from Italy, France, Switzerland, Germany and the Scandinavian countries.

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It’s a miracle there are not many more victims.

State Of Emergency Declared On Lesbos As 800 Left Homeless (AP)

Authorities in Greece have declared a state of emergency on the island of Lesvos after an earthquake left one woman dead and more than 800 people displaced. The 6.1 magnitude undersea quake on Monday occurred south of Lesvos but was felt as far as Istanbul, Turkey. Officials from the island’s regional government on Tuesday said homes in 12 villages in southern Lesvos had been seriously damaged or destroyed. The mostly elderly residents affected were being housed with relatives, in hotels or at an army-run shelter. The earthquake marked the second crisis to hit the island in the last two years, after hundreds of thousands of migrants and refugees, including many fleeing war in Syria and Iraq, crossed to Lesvos on boats from Turkey as they headed to Europe.

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Brussels should be forced to take in 100,000. In their new swanky buildings.

‘Impossible And Risky To Take In More Migrants’ – Rome’s Mayor (RT)

Rome Mayor Virginia Raggi has asked the Italian Interior Ministry for stricter measures to be taken toward the influx of foreigners into the capital. A letter outlining the need for a “moratorium” on “the continued influx of foreign citizens” was sent by Raggi to Roman prefect Paola Basilone. “I find it impossible, as well as risky, to think up further accommodation structures,” she wrote in the letter, as quoted by La Repubblica on Tuesday. “This administration, given the high flows of unregistered migrants, hopes the assessments of new facilities take into account the evident migrant pressure on Roma Capitale [the City of Rome] and the possible devastating consequences in terms of social costs as well as for the protection of the beneficiaries themselves.”

In May, Raggi told RT that she was working to help accommodate refugees and asylum seekers in Rome, but also that she also has a responsibility to her constituents and other countries in the EU must do their part. “Let’s put it this way – Rome would be better off if European states didn’t build walls along their borders, but rather followed through on their obligations and respected the migrant quotas agreed upon by the EU,” she told RT’s Sophie Shevardnadze. “According to the law, the city of Rome must accept migrants, as Mayor – I have to follow the law and do everything in my power to make sure that people are granted a safe place to stay here. But if other European countries decide to finally follow through on their obligations, we will welcome that decision.” “As mayor of Rome, I have to accommodate migrants, but I am also responsible for the security of my city and its residents. We cannot ignore either issue.”

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Jun 092017
 
 June 9, 2017  Posted by at 9:27 am Finance Tagged with: , , , , , , , , , , ,  


Labour Campaign Poster 1922

 

Trump Accuses Comey Of Lying About Leaked Memo (ZH)
Chris Matthews: “There’s No ‘There’ There” On Trump-Russia ‘Collusion’ (ZH)
Theresa May Has ‘No Intention Of Resigning’ After Losses (BBC)
This Is Where Theresa May’s Arrogance Will Lead Us Next (Ind.)
UK’s Shock Election Result May Hamper Brexit Talks, EU Leaders Warn (G.)
The Myth of “Cash on The Sidelines” (Roberts)
US Household Net Worth Hits Record $95 Trillion… There Is a Catch (ZH)
Opioid Overdoses The Leading Killer Of American Adults Under 50 (ZH)
Trump’s $110 Billion Arms Deal With Saudis Mostly Speculative (RT)
Defense Minister Kammenos Says US Is Greece’s Best International Ally (K.)
European Court Of Justice: Refugee Crisis Trumps Dublin Regulation (K.)
The Shield of Law and Humanism (K.)

 

 

I know the echo chamber won’t agree, but after watching quite a bit of it, four things stood out for me in the Comey testimony, other than the somewhat too loud remarks about how the entire White House lied about him and the FBI:

1) He admitted to leaking information of his private talk with Trump in the Oval Office. Comey said he didn’t understand why Trump asked everyone to leave the room, but, well, perhaps it’s this: that if anything leaked, it would be clear whodunnit. And leaking info about a private talk with your president is not an obvious thing to do. Illegal? Borderline? Comey stated that he did it because he thought it would lead to a special counsel being appointed. But who is he to ‘promote’ such a thing?

2) He finally said in public that Trump himself had not been under investigation, something the president had asked him to do on three occasions. There was some excuse about not doing it because he might have to walk that back later, but the fact remains: no Trump investigation, and despite all other leaks, no public acknowledgement of that.

3) Comey insisted in no uncertain terms that the entire US intelligence community is convinced that Russia interfered in the 2016 elections, and Russia here means the Kremlin, re: Putin. Well, let’s finally see the proof.

4) He recounted how then-AG Loretta Lynch pushed him to relabel the criminal investigation into the Clinton server as a “matter”, a term the Clinton campaign used. But why would an AG do it too, and push the FBI to do the same? Very odd. And then Comey added that this was a reason to call the press conference in which he advised the Department of Justice not to indict Clinton.

Trump Accuses Comey Of Lying About Leaked Memo (ZH)

As we detailed earlier, during his testimony today, former FBI Director Comey testified that he only leaked the memo about his contact with the President AFTER he saw President Trump’s tweet…
COMEY: I asked — the president tweeted on Friday after I got fired that I better hope there’s not tapes. I woke up in the middle of the night on Monday night because it didn’t dawn on me originally, that there might be corroboration for our conversation. There might a tape. My judgement was, I need to get that out into the public square. I asked a friend of mine to share the content of the memo with a reporter. Didn’t do it myself for a variety of reasons. I asked him to because I thought that might prompt the appointment of a special counsel. I asked a close friend to do it. [..] A close friend who is a professor at Columbia law school.

Pretty clear – it was a response to a tweet. But, as President Trump’s personal lawyer Marc Kasowitz states: “Today, Mr. Comey admitted that he unilaterally and surreptitiously made unauthorized disclosures to the press of privileged communications with the President. The leaks of this privileged information began no later than March 2017 when friends of Mr. Comey have stated he disclosed to them the conversations he had with the President during their January 27, 2017 dinner and February 14, 2017 White House meeting. Today, Mr. Comey admitted that he leaked to friends his purported memos of these privileged conversations, one of which he testified was classified.

He also testified that immediately after he was terminated he authorized his friends to leak the contents of these memos to the press in order to “prompt the appointment of a special counsel.” Although Mr. Comey testified he only leaked the memos in response to a tweet, the public record reveals that the New York Times was quoting from these memos the day before the referenced tweet, which belies Mr. Comey’s excuse for this unauthorized disclosure of privileged information and appears to entirely retaliatory. We will leave it the appropriate authorities to determine whether this leak should be investigated along with all those others being investigated”

So the question is – having called President Trump a liar, did Comey just get caught in an even bigger lie… ?

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At least on his personal involvement.

Chris Matthews: “There’s No ‘There’ There” On Trump-Russia ‘Collusion’ (ZH)

If you count yourself among the die-hard, disaffected Hillary supporters still holding out hope that President Trump will be impeached for conspiring with Russian spies to stage a coup in the United States, then you may want to sit down because earlier today one of your biggest cheerleaders just threw in the towel on that whole narrative. Yes, MSNBC’s very own Chris Matthews, the same man who confessed he “got a thrill up his leg” from simply watching Obama speak, admitted today that Comey’s testimony pretty much confirmed that “there’s no ‘there’ there” when it comes to Trump colluding with the Russians.

“The assumption of the critics of the President, of his pursuers, you might say, is that somewhere along the line in the last year is the President had something to do with colluding with the Russians … to affect the election in some way. Some conversation he had with Michael Flynn or Pual Manafort or somewhere.” “And yet what came apart this morning was that theory in two regards…the President said, according to the written testimony of Mr. Comey, go ahead and get any satellites of my operation and nail them. I’m with you on that…” “And then also, Comey said that basically Flynn wasn’t central to the Russian investigation.” “And I’ve always assumed that what Trump was afraid of was that he had said something to Flynn and Flynn could be flipped on that and Flynn would testify against the President that he’d had some conversation with Flynn in terms of dealing with the Russians affirmatively.” “And if that’s not the case, where’s the there-there?”

And when Chris Matthews throws in the towel on a liberal narrative, you know the gig is up. Oh, and by the way, this probably doesn’t help your case either… Burr: “Director Comey, did the President at any time ask you to stop the FBI investigation into Russian involvement in the 2016 U.S. elections?” Comey: “Not to my understanding, no.” Burr: “Did any individual working for this administration, including the Justice Department, ask you to stop the Russian investigation?” Comey: “No.”

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Theresa May can stay until the Tories throw her out; she’s proven to be an awful liability, not a leader. Far too risky. How much would she lose next time around? Their problem is there’s no-one else who’s obvious, there must be dirty fights in dark and rainy alleys first.

So: Tories will throw out May, while Corbyn will have to throw the Blairites out of Labour who made his position a living hell.

Most likely seems Corbyn as PM of a minority government. But that’s a big risk going into Brexit talks.

Theresa May Has ‘No Intention Of Resigning’ After Losses (BBC)

The UK faces the prospect of a hung parliament with the Conservatives as the largest party after the general election produced no overall winner. With nearly all results in, Theresa May faces having fewer seats than when she called the election. The Tories are projected to get 318 seats, Labour 261 and the SNP 35. Jeremy Corbyn has urged the PM to resign but the BBC understands she has no intention of doing so at this stage and will try to form a government. The prime minister has said the country needs stability after the inconclusive election result and the BBC’s political editor Laura Kuenssberg said Mrs May intended to try and govern on the basis that her party had won the largest number of votes and seats.

Labour is set to make 29 gains with the Tories losing 13 seats – and the SNP down by 22 seats in a bad night for Nicola Sturgeon, with her party losing seats to the Tories, Labour and Lib Dems. The Conservatives are forecast to win 42% of the vote, Labour 40%, the Lib Dems 7%, UKIP 2% and the Greens 2%. Turnout so far is 68.7% – up 2% up on 2015 – but it has been a return two party politics in many parts of the country, with Labour and the Conservatives both piling up votes in numbers not seen since the 1990s. UKIP’s vote slumped dramatically but rather than moving en masse to the Tories, as they had expected, their voters also switched to Labour.

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New elections? One positive for the former Empire: the threat of Scottish independence was wiped out.

This Is Where Theresa May’s Arrogance Will Lead Us Next (Ind.)

Despite a lot of the good news streaming out of counts everywhere right now, make no mistake: this is going to be chaos. A deep and growing sense of frustration is about to ripple through the country, because what May has essentially done in her arrogance is take a gamble that could cost us decades of stability and prosperity. It is likely that what awaits us over the next few weeks is, to put it bluntly, a mess. Hung parliament. No clear majority. No willingness to form a coalition. A possible resignation from the Prime Minister (whether she’s pushed or jumps is yet to be seen) and then yet another leadership contest. Boris Johnson is said on the Westminster grapevine to already be positioning himself as a candidate, yet his reputation has turned increasingly sour over the last few years.

Many now regard him as a cynical power-grabber without much regard for the people he claims to represent. The Tories have spent the last two years playing Russian roulette with the electorate in the hope of cementing their credibility, and causing utter shambles along the way. Having barely recovered from a referendum result which caused deep divisions and painful rifts within our society, and as Europe watches us scramble for any sort of political legitimacy, who will now head into the talks that will determine our economic and political future? Theresa May has now shoved us off a cliff into political unknowns just when what we actually needed was, ironically enough, some strong and stable leadership.

Any reassurance from Westminster that the lives of ordinary people in this country mattered more than political point-scoring would be welcome. What we’ll get instead, despite the Labour surge, is yet another election, whether that be in two months’ or two years’ time. It feels inspiring and hopeful that we have so many progressive and wonderful MPs back in the Commons. But until we have a government and a plan of how to get ourselves through this, that hope is limited to a symbolic step in the right direction. In the words of one particularly concise campaign poster: strong and stable, my arse.

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It’s going to get terrible no matter what. But for now the EU has no-one to talk to. They’re not going to sit down with May if she may last only a few more weeks.

UK’s Shock Election Result May Hamper Brexit Talks, EU Leaders Warn (G.)

The EU will force a humiliated Theresa May to explain her intentions at a face-to-face meeting in Brussels as senior diplomats and politicians warned that the hung parliament resulting from the UK election was a “disaster” that hugely increases the chance of a breakdown in the Brexit negotiations. The result is likely to delay the point at which Michel Barnier, the EU’s chief negotiator, has someone with whom to negotiate. Sources said a meeting of the European council on 22 June was the deadline by which time the EU27 would want to know the prime minister’s plans. Guenther Oettinger, the German member of the European commission, said: “We need a government that can act. With a weak negotiating partner, there’s the danger than the negotiations will turn out badly for both sides … I expect more more uncertainty now.”

It had been hoped that officials from both sides would have informal talks next week over the logistics of the negotiations, before formal talks began on the week starting 19 June. With the prime minister needing to both seek to form a minority or coalition government, as well as potentially revise her goals for the talks in the light of the election result, the original timetable seems unrealistic to officials in Brussels. The EU had, until now, believed it understood that May wanted to take the UK out of both the single market and the customs union, but in the early hours of Friday morning the Brexit secretary, David Davis, had suggested the election result could prompt a rethink.

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All on red.

The Myth of “Cash on The Sidelines” (Roberts)

[..] despite 8-years of a bull market advance, one of the prevailing myths that seeming will not die is that of “cash on the sidelines.” To wit: “Underpinning gains in both stocks and bonds is $5 trillion of capital that is sitting on the sidelines and serving as a reservoir for buying on weakness. This excess cash acts as a backstop for financial assets, both bonds and equities, because any correction is quickly reversed by investors deploying their excess cash to buy the dip,” Nikolaos Panigirtzoglou, the managing director of global market strategy at JPMorgan, wrote in a client note. This is the age old excuse why the current “bull market” rally is set to continue into the indefinite future. The ongoing belief is that at any moment investors are suddenly going to empty bank accounts and pour it into the markets.

However, the reality is if they haven’t done it by now after 3-consecutive rounds of Q.E. in the U.S., a 200% advance in the markets, and ongoing global Q.E., exactly what will that catalyst be? However, Clifford Asness previously wrote: “There are no sidelines. Those saying this seem to envision a seller of stocks moving her money to cash and awaiting a chance to return. But they always ignore that this seller sold to somebody, who presumably moved a precisely equal amount of cash off the sidelines.” Every transaction in the market requires both a buyer and a seller with the only differentiating factor being at what PRICE the transaction occurs. Since this must be the case for there to be equilibrium to the markets there can be no “sidelines.”

Each month, the Investment Company Institute releases information related to the mutual fund industry. Included in this data is the total amount of assets invested in mutual funds, ETFs and money market funds. As a rough measure of investor sentiment, this indicator looks at the total assets invested in equity mutual funds and ETFs, and compares it to the total assets invested in the safety of money market funds. The higher the ratio, the more comfortable investors have become holding stocks; the lower the ratio, the more uncertainty there is in the market. Currently, with the ratio at the highest level on record there is little fear of holding stocks. Negative free cash balances also suggest the same as investors have piled on the highest levels of leverage in market history.

Furthermore, with investors once again “fully invested” in equities, it is not surprising to see cash and bond allocations near historic lows. Cash on the sidelines? Not really. Everyone “all in the boat?” Absolutely. Historical outcomes from such situations? Not Great.

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The No Price Discovery Bubble.

US Household Net Worth Hits Record $95 Trillion… There Is a Catch (ZH)

In the Fed’s latest Flow of Funds report, today the Fed released the latest snapshot of the US “household” sector as of March 31, 2017. What it revealed is that with $110.0 trillion in assets and a modest $15.2 trillion in liabilities, the net worth of the average US household rose to a new all time high of $94.835 trillion, up $2.4 trillion as a result of an estimated $500 billion increase in real estate values, but mostly $1.78 trillion increase in various stock-market linked financial assets like corporate equities, mutual and pension funds, as the stock market continued to soar to all time highs . At the same time, household borrowing rose by only $36 billion from $15.1 trillion to $15.2 trillion, the bulk of which was $9.8 trillion in home mortgages.

And the historical change of the US household balance sheet.

And while it would be great news if wealth across America had indeed risen as much as the chart above shows, the reality is that there is a big catch: as shown previously, virtually all of the net worth, and associated increase thereof, has only benefited a handful of the wealthiest Americans. As a reminder, from the CBO’s latest Trends in Family Wealth analysis, here is a breakdown of the above chart by wealth group, which sadly shows how the “average” American wealth is anything but.

While the breakdown has not caught up with the latest data, it provides an indicative snapshot of who benefits. Here is how the CBO recently explained the wealth is distributed: In 2013, families in the top 10% of the wealth distribution held 76% of all family wealth, families in the 51st to the 90thpercentiles held 23%, and those in the bottom half of the distribution held 1%. Average wealth was about $4 million for families in the top 10% of the wealth distribution, $316,000 for families in the 51st to 90th percentiles, and $36,000 for families in the 26th to 50th percentiles. On average, families at or below the 25th percentile were $13,000 in debt In other words, roughly three-quarter of the $2.4 trillion increase in assets went to benefit just 10% of the population, who also account for roughly 76% of America’s financial net worth,

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Trump and Congress had better go out and do something.

Opioid Overdoses The Leading Killer Of American Adults Under 50 (ZH)

The opioid crisis that is ravaging urban and suburban communities across the US claimed an unprecedented 59,000 lives last year, according to preliminary data gathered by the New York Times. If accurate, that’s equivalent to a roughly 19% increase over the approximately 52,000 overdose deaths recorded in 2015, the NYT reported last year. Overdoses, made increasingly common by the introduction of fentanyl and other powerful synthetic opioids into the heroin supply, are now the leading cause of death for Americans under 50. And all evidence suggests the problem has continued to worsen in 2017. One coroner in Western Pennsylvania told a local newspaper that his office is literally running out of room to store the bodies, and that it was recently forced to buy a larger freezer. The initial data points to large increases in these types of deaths in states along the East Coast, particularly Maryland, Florida, Pennsylvania and Maine.

In Ohio, which filed a lawsuit last week accusing five drug companies of abetting the opioid epidemic, the Times estimated that overdose deaths increased by more than 25% in 2016. In some Ohio counties, deaths from heroin have virtually disappeared. Instead, the primary culprit is fentanyl or one of its many analogues. In Montgomery County, home to Dayton, of the 100 drug overdose deaths recorded in January and February, only three people tested positive for heroin; 97 tested positive for fentanyl or another analogue. In some states in the western half of the US, data suggest deaths may have leveled off for the time being – or even begun to decline. Experts believe that the heroin supply west of the Mississippi River, traditionally dominated by a variant of the drug known as black tar which is smuggled over the border from Mexico, isn’t as easily adulterated with lethal analogues as the powder that’s common on the East Coast.

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Fake News.

Trump’s $110 Billion Arms Deal With Saudis Mostly Speculative (RT)

That $110 billion arms deal President Donald Trump signed with Saudi Arabia isn’t much of a deal at all, according to reports which found the majority of the agreement was based on memos, rather than contracts. On May 20, Trump negotiated an arms deal with Riyadh. The State Department said it was worth nearly $110 billion to support “the long-term security of Saudi Arabia and the Gulf region in the face of malign Iranian influence and Iranian related threat.” White House Press Secretary Sean Spicer hailed it the “largest single arms deal in US history.” The State Department then released a general list of the weapons that were included in the deal. However, many experts have said that most of the arms sales had not been cleared by the State Department, Congress or even the industries themselves.

On Thursday, Defense News released a more detailed list of the weapons included in the deal, according to documents they obtained from the White House. The ‘deal’ lists $84.8 billion under memos of intent (MOI) “to be offered at visit,” and $12.5 billion under letters of agreement (LOA), rather than contracts. NPR also obtained a list of commercial deals from a White House spokeswoman and found that it added up to $267 billion, but said most of the deals were listed as “memoranda of understanding” (MOU). “There is no $110 billion deal,” Brookings Institution Senior Fellow Bruce Riedel wrote in blog post Monday. “Instead, there are a bunch of letters of interest or intent, but not contracts,” Riedel said. “Even then the numbers don’t add up. It’s fake news.”

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So what did they do to prove that?

Defense Minister Kammenos Says US Is Greece’s Best International Ally (K.)

Washington is Greece’s only true international ally, Defense Minister Panos Kammenos insisted on Thursday, and accused the country’s European partners of showing a lack of respect. “The Greek people are well aware that the United States has been the country’s only genuine ally,” Kammenos said. “The others are allies, but they are [allies] only in the form of creditors, without [any sense of] respect and this is because some of them will never forget that they lost World War II to this country,” Kammenos, who is also leader of junior coalition partner Independent Greeks, added during a speech marking the 70th anniversary of the US Office of Defense Cooperation in Athens yesterday. “For this reason, we welcome US support at this very difficult moment for our country,” said Kammenos, who also called for the strengthening of the Hellenic Navy with US help so “that it can operate from Crete to the Suez.”

Bolstering the navy and the country’s military aviation capabilities are necessary, he said, to intercept the flow of drugs, weapons and fuel through which terrorism is funded. He also said that Greece is positively inclined to extend the time frame of the defense agreement between the two countries, adding that Prime Minister Alexis Tsipras and his government are working in that direction. He also referred to the latest developments in the Gulf states and stressed that he supports describing the Muslim Brotherhood as a terrorist organization. Aiming his fire at Turkey, he said that each country must choose “whose side they want to be on.” It is certain, he said, that “Greece will be on the side of the US.” For his part, US Ambassador to Greece Geoffrey Pyatt praised relations between Athens and Washington, adding that as Greece’s economy stabilizes, it will become even more active in its role as a bridge between countries of the region.

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Nobody cares unless you hold their feet to the fire.

European Court Of Justice: Refugee Crisis Trumps Dublin Regulation (K.)

Any countries in the European Union receiving asylum requests from refugees have an obligation to process them irrespective of where the applicants first entered into the bloc, an advocate general at the European Court of Justice said on Thursday. Eleanor Sharpston said in a non-binding opinion that under the “exceptional circumstances” of the refugee crisis, member states should not be bound by the Dublin Regulation’s requirement that first-entry states handle all asylum applications, even after a refugee or migrant has moved on to a different country. “The words ‘irregular crossing’ in the Dublin III Regulation do not cover a situation where, as a result of the mass inflow of people into border member states, those countries allowed third-country nationals to enter and transit through their territory in order to reach other member states,” she wrote.

Sharpston referred to the case of a Syrian national who traveled to Slovenia via Croatia and that of an Afghan family that entered Europe in Greece and then made its way to Austria. Slovenia and Austria should be responsible for examining their asylum applications, she said. “If border member states… are deemed to be responsible for accepting and processing exceptionally high numbers of asylum seekers, there is a real risk that they will simply be unable to cope with the situation,” Sharpston wrote. “This in turn could place member states in a position where they are unable to comply with their obligations under EU and international law,” she added.

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The last thing Greece has left is rumored to be on the way out.

The Shield of Law and Humanism (K.)

It is difficult to believe that after Greece’s judiciary offered protection to eight members of the Turkish military, rejecting Ankara’s request for their extradition, the government would agree to the illegal, secret and inhuman expulsion of people who requested asylum here. Yet unease grows. On Wednesday the government spokesman stated, “The Greek government does not engage in pushbacks.” Let us hope that is so. The Hellenic League for Human Rights cites two instances where groups of Turkish citizens who requested asylum in Greece appear to have been handed over illegally to Turkish authorities. The Council of Europe’s commissioner for human rights, Nils Muiznieks, the UN High Commissioner for Refugees and the head of the Alliance of Liberals and Democrats in the European Parliament, Guy Verhofstadt, have expressed concern at the possibility.

There is also the strange story of three Turkish military men who where arrested in Edirne last month, accused of being part of a group that intended to kidnap President Recep Tayyip Erdogan during the failed coup last July. Turkish media said the men were arrested while on their way to Greece; some Greek lawyers, however, claim that the three had crossed into Greece when they disappeared, only to turn up in Turkish custody. The Citizens’ Protection Ministry in Greece scoffed that the claims were “fairy tales.” The case of the eight servicemen who arrived in Alexandroupoli in a helicopter the day after the coup attempt shows how difficult it is for any country to withstand Ankara’s pressure. It is understandable that no government would like to open a new front with a neighbor who can cause problems at will. But it is of paramount importance that Greece withstand such pressures.

In the past few years, among our country’s very few victories were the welcome provided to refugees and the institutional way in which it dealt with the “Eight.” Our great wound, though, is the lack of strategy, of method, of goals – of follow-up. On the refugee issue, government incompetence undermined the initial, heroic efforts of citizens. In the case of Turkish asylum seekers, the difficulties of handling the case of the Eight should not lead to cynicism, to injustice, to the violation of international conventions. Greece has a responsibility toward its own people and toward the Turkish people, to serve the principles of humanism, to abide by the law. Strenuous defense of these principles is part of the identity we aspire to but also our shield. And it is the best thing that we can offer our neighbors – the hope that there is something better than that which they are now enduring.

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Feb 122017
 
 February 12, 2017  Posted by at 10:47 am Finance Tagged with: , , , , , , , , , ,  


Model wearing Dior on the banks of the Seine, Paris 1948

 

Does UK’s Lucrative Arms Trade Come At The Cost Of Political Repression? (G.)
UK Journalists Who Obtain Leaked Official Material Could Face Jail (Tel.)
Women And Children ‘Raped, Beaten And Abused’ In Dunkirk’s Refugee Camp (G.)
Bank For International Settlements Warns Of Looming Debt Bubble (F.)
Trump Regime Was Manufactured By A War Inside The Deep State (Nafeez Ahmed)
Banking, Credit & Norway (Steve Keen)
Greece Says Bailout Deal Close, But Will Not Accept ‘Illogical’ Demands (G.)
Greece 2017: Numbers And Facts About 8 Years Of Recession (AthensLive)
Tsipras Warns IMF, Germany To Stop ‘Playing With Fire’ Over Greek Debt (AFP)
Yanis Varoufakis: Grexit ‘Never Went Away’ (AlJ)
Why Falling Home Prices Could Be a Good Thing (NYT)
Army Veterans Return To Standing Rock To Form Human Shield Against Police (G.)
France’s Bumbling Search for a Candidate to Stop Le Pen (Spiegel)
A $500 Billion Plan To Refreeze The Arctic Before The Ice Melts (G.)

 

 

Look, Guardian, this is a good piece. But your editor destroys it by adding a headline with a question mark. Reality is, Britain is nothing but a front for a criminal racket. Its arms sales -both abroad and to its own forces- are responsible for the misery of countless deaths and maimed and refugees each and every year. Which your PM phrases as “..the UK will be at the forefront of a wider western effort to step up our defence and security partnership.” But you as a paper don’t have to play that game. Just tell your readers what is happening, and what has happened for decades. You live by blood and destruction.

Does UK’s Lucrative Arms Trade Come At The Cost Of Political Repression? (G.)

On 24 January 2015 a private jet touched down in Saudi Arabia’s capital, Riyadh. On board were a handful of Foreign Office officials, security personnel and the then prime minister, David Cameron, who was visiting the kingdom to pay his condolences following the death of King Abdullah bin Abdulaziz. The decision to charter the jet – at a cost to the taxpayer of £101,792 – raised eyebrows among Whitehall mandarins. But when it comes to Saudi Arabia, normal UK rules don’t seem to apply. For decades the two kingdoms have quietly enjoyed a symbiotic relationship centred on the exchange of oil for weapons. Analysis of HM Revenue and Customs figures by Greenpeace EnergyDesk shows that in 2015 83% of UK arms exports – almost £900m – went to Saudi Arabia. Over the same period, the UK imported £900m of oil from the kingdom.

Now this relationship has come under scrutiny as a result of a judicial review brought by the Campaign Against Arms Trade (CAAT), which has sent alarm bells ringing in Whitehall. The case follows concerns that a coalition of Saudi-led forces may have been using UK-manufactured weapons in violation of international humanitarian law during their ongoing bombardment of Yemen, targeting Iranian-backed Houthi forces loyal to the country’s former president. The legal challenge comes at a crucial time for the UK’s defence industry, which makes about 20% of arms exported globally. In recent years Ministry of Defence cutbacks have led to the sector looking abroad for new sales, and the government, with one eye on the post-Brexit landscape, is keen on the strategy. Last month Theresa May heralded a £100m deal involving the UK defence giant BAE and the Turkish military, and many defence experts see this as a sign of things to come.

But the policy – as the Saudi case makes clear – is controversial. Many of the UK’s biggest customers have questionable human rights records and there are concerns exported weapons are used for repression or against non-military targets. Thousands have died in the Yemen campaign, with the Saudis accused of targeting civilians. Four-fifths of the population is in need of aid, and famine is gripping the country. But despite this, and protests from human rights groups and the United Nations, the UK has continued to arm the Saudi regime, licensing about £3.3bn of weapons to the kingdom since the bombing of Yemen began in March 2015.

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Orwell meets Samuel Beckett.

UK Journalists Who Obtain Leaked Official Material Could Face Jail (Tel.)

Campaigners have expressed outrage at new proposals that could lead to journalists being jailed for up to 14 years for obtaining leaked official documents. The major overhaul of the Official Secrets Act – to be replaced by an updated Espionage Act – would give courts the power to increase jail terms against journalists receiving official material. The new law, should it get approval, would see documents containing “sensitive information” about the economy fall foul of national security laws for the first time. In theory a journalist leaked Brexit documents deemed harmful to the UK economy could be jailed as a consequence. One legal expert said the new changes would see the maximum jail sentence increase from two years to 14 years; make it an offence to “obtain or gather” rather than simply share official secrets; and to extend the scope of the law to cover information that damages “economic well-being”.

John Cooper QC, a leading criminal and human rights barrister who has served on two law commission working parties, added: “These reforms would potentially undermine some of the most important principles of an open democracy.” Jodie Ginsberg, chief executive of Index on Censorship, said: “The proposed changes are frightening and have no place in a democracy, which relies on having mechanisms to hold the powerful to account. “It is unthinkable that whistle blowers and those to whom they reveal their information should face jail for leaking and receiving information that is in the public interest.” Her organisation has accused the Law Commission, the Government’s statutory legal advisers, of failing to consult fully with journalists before making its recommendations in a 326-page consultation published earlier this month. “It is shocking that so few organisations were consulted on these proposed changes given the huge implications for public interest journalism in this country,” said Ms Ginsberg.

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And this, too, is Britain, in 2017. And way before that too.

Women And Children ‘Raped, Beaten And Abused’ In Dunkirk’s Refugee Camp (G.)

Children and women are being raped by traffickers inside a refugee camp in northern France, according to detailed testimony gathered ahead of fresh legal action against the UK government’s approach to the welfare of unaccompanied minors. Corroborating accounts from volunteers, medics, refugees and security officials reveal that sexual abuse is common within the large camp at Dunkirk and that children and women are forced to have sex by traffickers in return for blankets or food or the offer of passage to the UK. Legal proceedings will be issued by London-based Bindmans against the Home Office, which is accused of acting unfairly and irrationally by electing to settle only minors from the vast Calais camp that closed last October, ignoring the child refugees gathered in Dunkirk, 40 miles away along the coast.

The legal action, brought on behalf of the Dunkirk Legal Support Team and funded by a crowd justice scheme, says the Home Office’s approach was arbitrary and mean-spirited. On Wednesday the government’s approach to child refugees provoked widespread indignation when the home secretary, Amber Rudd, announced the decision to end the “Dubs scheme”, having allowed just 350 children to enter the UK, 10% of the number most MPs and aid organisations had been led to believe could enter. [..] On Friday the archbishop of Canterbury said the government’s decision meant that child refugees would be at risk of being trafficked and even killed. Justin Welby’s warnings of what could happen if child refugees were denied the opportunity of safe passage are graphically articulated in the testimonies gathered over several months by the Observer.

Accounts from those at the camp, which currently holds up to 2,000 refugees, of whom an estimated 100 are unaccompanied minors, portray a squalid site with inadequate security and atrocious living conditions. The Dunkirk Legal Support Team says the failure of the authorities to guard the site has allowed the smugglers to take control. One volunteer coordinator, who has worked at the camp’s women’s centre since October 2016, said: “Sexual assault, violence and rape are all far too common. Minors are assaulted and women are raped and forced to pay for smuggling with their bodies.” Testifying on condition of anonymity, she added: “Although the showers are meant to be locked at night, particularly dangerous individuals in the camp have keys and are able to take the women to the showers in the night to force themselves on them. This has happened to women I know very well.”

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Looming, right?

Bank For International Settlements Warns Of Looming Debt Bubble (F.)

So you thought the world was deleveraging after the housing and derivatives bubble of 2008, hey? Well…fooled you! Global debt-to-GDP is now at a comfortable record high and the Bank for International Settlements, aka the central bank of central banks, noted on Friday that over the last 16 years, debts of governments, households and corporations has gone up…everywhere. In the U.S., debt is up 63%. The Eurozone, Japan, U.K., Canada and Australia average around 52%. And emerging markets, led by China, leverage is up 85%. In some important emerging economies like Brazil major cities are on the verge of bankruptcy. Rio is CCC credit thanks to mismanagement of a deep sea oil bonanza and over spending on the FIFA World Cup and the 2016 Olympics.

“The next financial crisis is likely to revolve around how this debt burden is managed,” warns Neil MacKinnon, an economist with VTB Capital in London. “In the U.K., most crises are related to boom and busts in the housing market, where there is an approximate 18-year cycle suggesting that the next bust will be in 2025.” That’s quite a ways away. And for London real estate, they always have the Saudis, the Russians and the Chinese to save them. But further south, in countries like France and Italy, credit downgrades are expected. And guess which southern European country is back to give us all headaches again? Greece! Greece is making headlines once more for its inability to work out a debt deal with its lenders. There is now a rift between the EU and the IMF over Greek debt sustainability.

Most of the debt is with the European Commission itself, so German policy makers are basically the lenders and so far are not willing to take a haircut on bond prices. The IMF predicts that the Greek debt-GDP ratio, now at 180%, will soar to 275% all the while primary fiscal surplus is currently at zero. That means Greece’s debt to GDP is like Japan, only without the power of the Japanese economy to back it up. Greece is broke. “Greece is caught in a debt-trap which has shrunk the Greek economy by 25%,” notes MacKinnon. They owe Europe around €7 billion in July. Good luck with that. Jaime Caruana, General Manager for the Bank for International Settlements hinted in a speech in Brussels on Monday that the core central banks might not know what they’re in for.

“We need to escape the popular models that prevent us from recognizing the build-up of vulnerabilities,” Caruana said. “Getting all the right dots in front of you does not really help if you do not connect the dots. Right now, I worry that even though we have data on aggregate debt, we are not properly connecting the dots and we are underestimating the risks, particularly when the high levels of debt are aggravated by weak productivity growth in many countries. The standard of evidence for precautionary action has to be the preponderance of evidence, not evidence beyond a shadow of doubt. Waiting for fully compelling evidence is to act too late.”

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Long and deep from Nafeez.

Trump Regime Was Manufactured By A War Inside The Deep State (Nafeez Ahmed)

President Donald Trump is not fighting a war on the establishment: he’s fighting a war to protect the establishment from itself, and the rest of us. At first glance, this isn’t obvious. Among his first actions upon taking office, Trump vetoed the Trans Pacific Partnership, the controversial free trade agreement which critics rightly said would lead to US job losses while giving transnational corporations massive power over national state policies on health, education and other issues. Trump further plans to ditch the TTIP between the EU and US, which would have diluted key state regulations on the activities of transnational corporates on issues like food safety, the environment and banking; and to renegotiate NAFTA, potentially heightening tensions with Canada. Trump appears to be in conflict with the bulk of the US intelligence community, and is actively seeking to restructure the government to minimize checks and balances, and thus consolidate his executive power.

His chief strategist, Steve Bannon, has completely restructured the National Security Council under unilateral presidential authority. While Bannon and his Chief of Staff Richard ‘Reince’ Priebus now have permanent seats on the NSC’s Principals’ Committee, the Director of National Intelligence and the Chairman of the Joint Chiefs of Staff are barred from meetings except when requested for their expertise. The Secretary of Energy and US ambassador to the UN have been expelled entirely. Trump’s White House has purged almost the entire senior staff of the State Department, and tested the loyalty of the Department of Homeland Security with its new ‘Muslim ban’ order. So what is going on? One approach to framing the Trump movement comes from Jordan Greenhall, who sees it as a conservative (“Red Religion”) Insurgency against the liberal (“Blue Church”) Globalist establishment (the “Deep State”).

Greenhall suggests, essentially, that Trump is leading a nationalist coup against corporate neoliberal globalization using new tactics of “collective intelligence” by which to outsmart and outspeed his liberal establishment opponents. But at best this is an extremely partial picture. In reality, Trump has ushered in something far more dangerous: The Trump regime is not operating outside the Deep State, but mobilizing elements within it to dominate and strengthen it for a new mission. The Trump regime is not acting to overturn the establishment, but to consolidate it against a perceived crisis of a wider transnational Deep System. The Trump regime is not a conservative insurgency against the liberal establishment, but an act of ideologically constructing the current crisis as a conservative-liberal battleground, led by a particularly radicalized white nationalist faction of a global elite.

The act is a direct product of a global systemic crisis, but is a short-sighted and ill-conceived reaction, pre-occupied with surface symptoms of that crisis. Unfortunately, those hoping to resist the Trump reaction also fail to understand the system dynamics of the crisis.

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If you want to know what ails us, it doesn’t get much clearer than this.

Banking, Credit & Norway (Steve Keen)

This was an invited talk during Oslo University’s “Week of Current Affairs”, so though my talk covered the global issues of credit and economic cycles, I paid particular attention to Norway, which is one of the 9 countries I have identified as very likely to experience a credit crunch in the next few years.

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But illogical demans are all there is.

Greece Says Bailout Deal Close, But Will Not Accept ‘Illogical’ Demands (G.)

Greek PM Alexis Tsipras said on Saturday he believed the country’s drawn-out bailout review would be completed positively but repeated that Athens would not accept “illogical” demands by its lenders. He warned all sides to “be more careful towards a country that has been pillaged and people who have made, and are continuing to make, so many sacrifices in the name of Europe”. Greece and its international lenders made clear progress on Friday toward bridging differences over its fiscal path in coming years, moving closer to a deal that would secure new loan disbursements and save the country from default. “(The review) will be completed, and it will be completed positively, without concessions in matters of principle,” Tsipras told a meeting of his leftist Syriza party. Reaching agreement would release another tranche of funds from it latest €86 billion bailout, and facilitate Greece making a major €7.2 billion debt repayment this summer.

European and IMF lenders want Greece to make €1.8 billion – or 1% of GDP – worth of new reforms by 2018 and another €1.8 billion after then and the measures would be focused on broadening the tax base and on pension cutbacks. But further cutbacks, particularly to pensions which have already gone through 11 cuts since the start of the crisis in 2010, are hard to sell to a public worn down after years of austerity. Representatives of Greece’s lenders are expected to return to Athens this week to report on whether Greece has complied with a second batch of reforms agreed under the current bailout, its third. “We are ready to discuss anything within the framework of the (bailout) agreement and within reason, but not things beyond the framework of the agreement and beyond reason,” Tsipras said. “We will not discuss demands which are not backed up by logic and by numbers,” he said.

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One minute of devastating numbers.

Greece 2017: Numbers And Facts About 8 Years Of Recession (AthensLive)

While Greece is back in the headlines, we got together some numbers and facts about eight years of economic recession.

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Well, they won’t stop.

Tsipras Warns IMF, Germany To Stop ‘Playing With Fire’ Over Greek Debt (AFP)

Greek PM Alexis Tsipras on Saturday warned the IMF and German Finance Minister Wolfgang Schaeuble to “stop playing with fire” in the handling of his country’s debt. Opening a meeting of his Syriza party, Tsipras said he was confident a solution would be found, a day after talks between Greece and its creditors ended in Brussels with no breakthrough. He urged a change of course from the IMF. “We expect as soon as possible that the IMF revise its forecast.. so that discussions can continue at the technical level.” Referring to Schaeuble, Tsipras also called for German Chancellor Angela Merkel to “encourage her finance minister to end his permanent aggressiveness” towards Greece. Months of feuding with the IMF has raised fears of a new debt crisis.

Greece is embroiled in a row with its eurozone paymasters and the IMF over debt relief and budget targets that has rattled markets and revived talk of its place in the euro. Eurogroup chief Jeroen Dijsselbloem said progress had been made in the Brussels talks with Greek Finance Minister Euclid Tsakalotos and other EU and IMF officials. But he provided few details. The Athens government faces debt repayments of €7.0 billion this summer that it cannot afford without defusing the feud that is holding up new loans from Greece’s €86 billion bailout. Breaking the stalemate in the coming weeks is seen as paramount with elections in the Netherlands on March 15 and France in April through June threatening to make a resolution even more difficult.

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Mostly rehashing Yanis’ time as FinMin. That’s a shame, because his views on today are much more interesting.

Yanis Varoufakis: Grexit ‘Never Went Away’ (AlJ)

With the UK on the cusp of leaving the European Union and Greece increasingly facing the same fate, is it over for the beleaguered body? An “epidemic” washing over other European countries may see the end of the EU, warns Yanis Varoufakis, Greece’s former finance minister. “The right question is: Is there going to be a eurozone and the European Union in one or two years’ time?” asks Varoufakis, who served as finance minister for five months under the Syriza government. Italy is already on the way out, Varoufakis tells UpFront. “When you allow an epidemic to start spreading from a place like Greece to Spain … to Ireland, then eventually it gets to a place like Italy,” says Varoufakis. “As we speak, only one political party in Italy wants to keep Italy in the eurozone.”

When asked about his failure to pull Greece out of its debt crisis during his tenure as finance minister, Varoufakis blamed the so-called troika – the IMF, the EU Commission and the European Central Bank – by intentionally sabotaging any debt-repayment agreement. “They were only interested in crushing our government, making sure that there would be no such mutually advantageous agreement,” says Varoufakis, who claims Greece was being used as a “morality tale” to scare voters in other European countries away from defying the troika. “The only reason why we keep talking about Greece … is because it is symptomatic of the architectural design faults and crisis of the eurozone.”

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To pop the bubble? To allow people to live where their families do?

Why Falling Home Prices Could Be a Good Thing (NYT)

Suppose there were a way to pump up the economy, reduce inequality and put an end to destructive housing bubbles like the one that contributed to the Great Recession. The idea would be simple, but not easy, requiring a wholesale reframing of the United States economy and housing market. The solution: Americans, together and all at once, would have to stop thinking about their homes as an investment. The virtues of homeownership are so ingrained in the American psyche that we often forget that housing is also a source of economic stress. Rising milk prices are regarded as a household tragedy for some, and spiking gas prices stoke national outrage. But whenever home prices go up, it’s “a recovery,” even though that recovery also means millions of people can no longer afford to buy.

Homes are the largest asset for all but the richest households, but shelter is also a basic necessity, like food. We have a variety of state and federal programs devised to make housing cheaper and more accessible, and a maze of local land-use laws that make housing scarcer and more expensive by doing things like prohibiting in-law units, regulating how small lots can be, and capping the number of unrelated people who can live together. Another big problem: High rent and home prices prevent Americans from moving to cities where jobs and wages are booming. That hampers economic growth, makes income inequality worse and keeps people from pursuing their dreams. So instead of looking at homes as investments, what if we regarded them like a TV or a car or any other consumer good? People might expect home prices to go down instead of up.

Homebuilders would probably spend more time talking about technology and design than financing options. Politicians might start talking about their plans to lower home prices further, as they often do with fuel prices. In this thought experiment, housing prices would probably adjust. They would be somewhat cheaper in most places, where population is growing slowly. But they would be profoundly cheaper in places like super-expensive San Francisco. That was the conclusion of a recent paper by the economists Ed Glaeser of Harvard and Joe Gyourko at the Wharton School of the University of Pennsylvania. The paper uses construction industry data to determine how much a house should cost to build if land-use regulation were drastically cut back. Since the cost of erecting a home varies little from state to state — land is the main variable in housing costs — their measure is the closest thing we have to a national home price.

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Hope they get their media organized so news can get out. If it does it could be the worst PR disaster ever.

Army Veterans Return To Standing Rock To Form Human Shield Against Police (G.)

US veterans are returning to Standing Rock and pledging to shield indigenous activists from attacks by a militarized police force, another sign that the fight against the Dakota Access pipeline is far from over. Army veterans from across the country have arrived in Cannon Ball, North Dakota, or are currently en route after the news that Donald Trump’s administration has allowed the oil corporation to finish drilling across the Missouri river. The growing group of military veterans could make it harder for police and government officials to try to remove hundreds of activists who remain camped near the construction site and, some hope, could limit use of excessive force by law enforcement during demonstrations. “We are prepared to put our bodies between Native elders and a privatized military force,” said Elizabeth Williams, a 34-year-old Air Force veteran, who arrived at Standing Rock with a group of vets late Friday.

“We’ve stood in the face of fire before. We feel a responsibility to use the skills we have.” It is unclear how many vets may arrive to Standing Rock; some organizers estimate a few dozen are on their way, while other activists are pledging that hundreds could show up in the coming weeks. An estimated 1,000 veterans traveled to Standing Rock in December just as the Obama administration announced it was denying a key permit for the oil company, a huge victory for the tribe. The massive turnout – including a ceremony in which veterans apologized to indigenous people for the long history of US violence against Native Americans – served as a powerful symbol against the $3.7bn pipeline. Since last fall, police have made roughly 700 arrests, at times deploying water cannons, Mace, rubber bullets, teargas, pepper spray and other less-than-lethal weapons.

Private guards for the pipeline have also been accused of violent tactics. “We have the experience of standing in the face of adverse conditions – militarization, hostility, intimidation,” said Julius Page, a 61-year-old veteran staying at the vets camp. Dan Luker, a 66-year-old veteran who visited Standing Rock in December and returned this month, said that for many who fought in Vietnam or the Middle East it was “healing” to help water protectors.“This is the right war, right side,” said Luker, a Vietnam vet from Boston. “Finally, it’s the US military coming on to Sioux land to help, for the first time in history, instead of coming on to Sioux land to kill natives.” Luker said he was prepared to be hit by police ammunition if necessary: “I don’t want to see a 20-something, 30-something untrained person killed by the United States government.”

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Good overview of what is only 2 months away and could change Europe dramatically. Opinionated, but then that’s Der Spiegel.

France’s Bumbling Search for a Candidate to Stop Le Pen (Spiegel)

[..] even if Fillon survives as a candidate, he will be so damaged that he has virtually no chance of winning. Last week, in fact, his own party began discussing a “Plan B” so openly that it was almost disrespectful. Juppé is one possible replacement candidate being discussed, but the names of some young conservatives have also been circulating. Regardless, none of these alternatives would be as capable of taking voters away from Marine Le Pen and her project “Marine 2017” as the pre-scandal Fillon would have been. This, of course, is welcome news for Marine Le Pen, who transformed the fascist clique surrounding her father into a modern party, the right-wing populist Front National, with her at the center. Over the weekend, she introduced “140 proposals for France” as she launched the main segment of her campaign.

Yet even as she hits the stump, she is comfortably secure in the knowledge that she has the support of at least one-quarter of the country’s voters no matter what she says and no matter what others might say about her. She has been accused of having systematically misappropriated EU funds for party purposes in the European Parliament. She is no longer able to hide the fact that she is sparring over the direction of the party with her own niece, Marion Maréchal-Le Pen. But it doesn’t matter: Her polling numbers have remained constant at 25%, indicating that it is very likely she will attract enough voters to make it into the second round of voting in the presidential election. The only question is who will be her challenger? Who will become the “lesser of two evils” of this campaign?

Will it be Socialist candidate Hamon, with his foolhardy plan of introducing an unconditional basic income for all French, starting at €600 and later rising to €750? The plan would likely lead to €380 billion in additional annual spending for the French government. Or will it be Emmanuel Macron? There is no doubt that he has the charisma of a leader, but he also has some weaknesses that make him prone to attack, including two that could become particularly dangerous. The first is a resume that is hardly consistent with the image of a young hero shaking up an ossified political system. Macron studied at France’s elite École nationale d’administration (ENA), he’s a wealthy former banker who worked at Rothschild before becoming an adviser to François Hollande. He has long been part of the elite on which he has declared war.

Then there’s Macron’s second problem: With the exception of a relatively refreshing and clear commitment to the EU, at least for a Frenchman, he doesn’t have much of a platform. He has said he will announce his plans in late February, once his movement’s hundreds of thousands of volunteers, organized in working groups across the country, assemble policy proposals on diverse issues. If this operation is successful and Macron does indeed produce a coherent political platform, it will represent yet another grassroots miracle for France. But is such a thing even possible? Can a new political course -neither left nor right, but simply correct and good- really be formulated by the masses? There is plenty of hope surrounding Macron, but mockery is never far away. A French comedian could be heard last week on the radio, still an important opinion-shaping media in France, saying that washing machines have more programs than Macron.

Recent polls showed him pulling in 23% of the vote. Leftist Jean-Luc Mélenchon, a man who thinks quite highly of himself and his ideas, stands at around 10%. Mélenchon is promising to allow people to retire at the age of 60 and draw full pension benefits and is calling for a monthly minimum wage of 1,300 euros. He wants France and the European Union to recognize Palestine as a state, he is calling for France to withdraw from NATO and is demanding the renegotiation of the EU treaties. Next.

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Someday some fool will actually execute some of these schemes. Why stop the causes if you can play God?

A $500 Billion Plan To Refreeze The Arctic Before The Ice Melts (G.)

Physicist Steven Desch has come up with a novel solution to the problems that now beset the Arctic. He and a team of colleagues from Arizona State University want to replenish the region’s shrinking sea ice – by building 10 million wind-powered pumps over the Arctic ice cap. In winter, these would be used to pump water to the surface of the ice where it would freeze, thickening the cap. The pumps could add an extra metre of sea ice to the Arctic’s current layer, Desch argues. The current cap rarely exceeds 2-3 metres in thickness and is being eroded constantly as the planet succumbs to climate change. “Thicker ice would mean longer-lasting ice. In turn, that would mean the danger of all sea ice disappearing from the Arctic in summer would be reduced significantly,” Desch told the Observer.

Desch and his team have put forward the scheme in a paper that has just been published in Earth’s Future, the journal of the American Geophysical Union, and have worked out a price tag for the project: $500bn. It is an astonishing sum. However, it is the kind of outlay that may become necessary if we want to halt the calamity that faces the Arctic, says Desch, who, like many other scientists, has become alarmed at temperature change in the region. They say that it is now warming twice as fast as their climate models predicted only a few years ago and argue that the 2015 Paris agreement to limit global warming will be insufficient to prevent the region’s sea ice disappearing completely in summer, possibly by 2030. “Our only strategy at present seems to be to tell people to stop burning fossil fuels,” says Desch. “It’s a good idea but it is going to need a lot more than that to stop the Arctic’s sea ice from disappearing.”

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