Yeah, just keep ’em coming, right, so that when the last one falls flat on its face people will have already forgotten about it and instead focus on the new one. It’s been the modus operandi of the US MSM ever since Donald Trump emerged as an actual presidential candidate, and they haven’t let go.
They realize by now that it divides the nation, it costs them a large chunk of their potential readers and viewers, and creates chaos all around, but the bottom line is it makes them money. Because those people who fall into the echo chamber trap, tumble into it fast and furious, and will gladly pay to read yet another installment of how bad the man really is.
But it is getting out of hand, guys and gals, it is becoming a real and present danger to the -formerly- United States. The anti-Russia propaganda machine far predates Trump, but manufacturing an ever closer link between the two has proven to be a masterstroke of media genius.
That Vladimir Putin is an existential threat to the US and indeed the entire western world is a narrative taken straight out of Edward Bernays’ playbook. And it works like a charm. The problem is, it is also the biggest threat to peace anywhere on the globe that we have ever seen since WWII.
Putin is a patriot who came to the fore in mostly unexplained ways, named by American puppet Boris Yeltsin as his successor, only to save his country from US-induced plundering and restore Russia as a functioning country. Far from perfect, but functioning. Don’t forget that Russian life-expectancy fell by many years in the post-Gorbachev era. And then look now.
Yes, Putin uses some hard-handed tactics from time to time. He has no choice: the US threat to Russia is an ongoing one. There’s still a huge economic threat, of which US sanctions are but a minor part, there’s an intelligence threat, there’s NATO encroaching upon Russia’s borders.
Thus far, Putin has been able to counter them all. And his popularity among Russia’s population is far higher than that of any western politician. His people understand and recognize what he’s done and why he’s done it. He refuses for his country to be overrun and sold off to the highest bidders.
Just a few of the points of contention: Crimea – The US tried to take away Russia’s only warm water port. Putin countered with what through non-western eyes was tactical masterpiece; no violence, no shots fired, an election that saw an overwhelming majority of Crimeans voted to (re-)join Russia.
Connected to Crimea is Ukraine. Putin had -and has- to protect Russian-speaking people in the region. Who were going to be under threat from the very dubious, neo-nazi linked government installed by the US after the coup. All Putin has been able to achieve so far is a very brittle stand still. But ‘his’ people in Eastern Ukraine have strong links to the Russian area just across the border. He’s not going to sell them out.
Connected to Ukraine is MH17. The Netherlands commemorates the victims of the shooting down again today. Several years of investigating have come up with no conclusive proof, even if they say it has. The problem is that the investigation was -is- led by The Netherlands itself. You don’t let the biggest victim conduct an investigation.
What’s worse: the Ukraine was actively involved in the investigation, even when it was a potential culprit. Try to write that scenario into the plot of one of your favorite TV crime series. Won’t fly.
Then the novichok ‘events’ in the UK. Again, no evidence, but tons of allegations. And if Russia says it’s not guilty, everyone says and writes: of course they would say that. They get accused anyway. Still, no evidence is no evidence. the time that intelligence agencies were believed on their word is over. And they did it to themselves.
In the regard, it’s useful to see that Robert Mueller was one of the people who ‘swore’ that the Weapons of Mass Destruction ‘evidence’ against Saddam Hussein was real. We now know it was complete and utter fiction. Intelligence has overplayed its hand, and they won’t get it back for a long time.
People now realize they cannot be trusted. Well, not those who read and view the MSM, but then that’s sort of the entire point, isn’t it? That’s where the dividing line is being drawn. The CIA, FBI et al present a view of the world in concoction with the media that they think a sufficient number of people will swallow, and that’s really all they care for.
And boy, it is successful. The vitriol spewed over the Helsinki summit is something to behold. #TreasonSummit was a trending hashtag. For a meeting that was long overdue and aimed at calming down tensions. The by now very poorly named ‘social’ media play an ever bigger role in these things.
People can say whatever they want on them, without feeling they’ll ever actually be tested on their claims. One after the other, and each one trying to outdo the last. It all leads up to one particular worldview at the exclusion of all others. And again, that is very dangerous.
Mueller’s indictment of 12 Russians, which just happened to coincide with the first meeting of American and Russian presidents in an exceptionally long time, has been shot full of holes by many commentators, see for instance Adam Carter and Aaron Mate, but those views won’t make it to CNN or the NYT.
But despite the fact that the indictment is hollow and riddled with holes, it’s been a large part of why people call Trump a traitor for meeting with Putin. It ties together their opinions, carefully built along Bernays principles over the past two years. It’s a Matrix, it’s a trap. But then they throw in another story, of a 29 year-old Russian(!) girl arrested for allegedly setting up links between Russia and the NRA when she was 24 or so, and that replaces the Mueller indictment in most attention spans. And so the carrousel goes on. The torture never stops.
See, the idea is that you get yourself informed and then form your own opinion. Not that you let others pre-cook and pre-chew your opinions for you. Still, once you’re inside the deafening echo chamber, that’s what inevitably happens. Because there’s so much one-sided innuendo in there, your head aches and you just give up all resistance. Just to have a quiet moment.
And so very many Americans end up believing that indeed their president is guilty of treason. Because so many pundits claim that he is. But how many of them understand what treason really is, how serious an allegation it is? Is doesn’t really matter anymore, does it? Because all those others say he is, and they can’t all be wrong. And the echo chamber gives you a headache.
This is where I should say that somebody better do something about this, but it’s hard to see what. The divide has grown into a chasm. And that both sides are equally to blame for that doesn’t excuse either side’s wilful blindness. But yes, I hear you, it makes them money.
Still, if a US president can no longer talk to another president without being accused of treason, you’re in a scary predicament.
At some point you’re going to need real proof. And Bob Mueller is not going to get it for you. That’s what his indictment of the 12 Russians, as well as the moment he released it, makes abundantly clear. Mueller is -forever- going to hide behind the ‘Trust me, I’m the FBI’ line. Well, he betrayed you before. Wisen up. Demand evidence.
We know Mueller betrayed America when he made false claims over WMD. We have no evidence that Trump betrayed his country, we have only allegations. He may be a poor choice for president, but that’s not the same thing.
A marked shift toward protectionism by President Donald Trump caused sharp outflows from U.S. large-cap stocks this week, Bank of America Merrill-Lynch (BAML) strategists said on Friday. Investors rushed into government bonds and other safer assets amid rising fears of an international trade war after Trump’s plans for tariffs on imported steel and aluminum met barbed responses from allies and trade bodies. Overall, investors pulled money out of equities, though the damage was mostly in the United States where $10.3 billion flowed out of U.S. equity funds, while global equity funds suffered just $0.4 billion of outflows, according to EPFR data cited by BAML. “As QE ends, protectionism begins,” wrote BAML strategists.
The risk-off mood drove investors into money market funds, pushing assets up to $2.9 trillion – the highest level since 2010. Safe-haven gold also drew in $0.4 billion. U.S. small caps were sheltered from the storm, the only U.S. sector to draw inflows, albeit tiny at $0.03 billion. U.S. large-cap stocks lost $10.1 billion. Flows into Japanese equities continued apace, with the market drawing in $4.1 billion in its 14th straight week of inflows, the longest streak of inflows since 2013. European stock funds managed to draw in $0.1 billion. Trump’s exemption of Canada and Mexico from the final tariffs announced late on Thursday soothed investors somewhat, and news the U.S. president would meet with North Korean President Kim Jong Un caused crude prices to rise.
Vice President Mike Pence has said the US made “zero concessions” in order to get an invitation to meet North Korean leader Kim Jong-un and talk about a possible end to Pyongyang’s nuclear weapons programme. Mr Pence said that President Donald Trump has “consistently increased the pressure” on North Korea, which has continued the development of its weapons – including an increasing number of missile tests in the last 12 months – despite numerous resolutions by the United Nations. Later at the White House, the press secretary made it clear that talks would only take place if Washington saw “concrete action” by North Korea towards denuclearisation. Mr Trump and Mr Kim are expected to meet before the end of May, although a date and location has yet to be set.
After months of escalating rhetoric between the nations the prospect of a thaw has been welcomed by world leaders. Ms Sanders said at a briefing on Friday that President Trump was “in a great mood” in the wake of the announcement, saying that the US was having conversations “from a position of strength” – with denuclearisation having always been the goal of the administration. It has taken many by surprise, including US Secretary of State Rex Tillerson, who had said just hours before the announcement that the US was a “long ways from negotiations”. But, Mr Tillerson said the President made the decision to accept the invite “himself”, a move he said was a “dramatic” reversal in posture for North Korea.
While everyone is “high fiving” over stocks holding up, the bond market is back to imploding. Already Treasury yields have bounced and are soaring higher in one of the nastiest breakouts in over 20 years.
In a world awash in too much debt (global Debt to GDP is over 300%) this is a MAJOR problem. Most investors believe that the 2008 Crisis was the worst crisis of their lifetimes. They’re mistaken… what’s coming down the pike when the Bond Bubble blows up will be many times worse than 2008. The reason is that bonds, not stocks, represent the bedrock of the financial system. When a stock bubble bursts, investors lose money. When a sovereign bond bubble bursts, entire countries go bust (a la Greece in 2010). On that note, I want to point out that bond yields are not just rising in the US… we’re seeing them spike in Germany, Japan, and others.
This is a truly global problem, and if Central Banks don’t move to get it control soon, we’re heading into a MAJOR crisis.
The census bureau does the data-gathering and the Bureau of Labor Statistics feeds the questionable data sample through its statistical sausage grinder and spits out some type of grotesque scatological substance. You know an economic report is pure absurdity when the report exceeds Wall Street’s rose-colored estimate by 53%. That has to be, by far, an all-time record-high “beat.” If you sift through some of the foul-smelling data, it turns out 365k of the alleged jobs were part-time, which means the labor market lost 52k full-time jobs. But alas, I loathe paying any credence to complete fiction by dissecting the “let’s pretend” report. The numbers make no sense. Why? Because the alleged data does not fit the reality of the real economy.
Retail sales, auto sales, home sales and restaurant sales have been declining for the past couple of months. So who would be doing the hiring? Someone pointed out that Coinbase has hired 500 people. But the retail industry has been laying off thousands this year. Given the latest industrial production and auto sales numbers, I highly doubt factories are doing anything with their workforce except reducing it. And if the job market is “so strong,” how comes wages are flat? In fact, adjusted for real inflation, real wages are declining. If the job market was robust, wages would be soaring. Speaking of which, IF the labor market was what the Government wants us to believe it is, the FOMC would tripping all over itself to hike the Fed Funds rate. And the rate-hikes would be in chunks of 50-75 basis points – not the occasional 0.25% rise.
So we have the first Fed Governor and member of the policy-setting FOMC who came out and said that the QE Unwind that began last October with baby steps isn’t fast enough. And because it’s so slow it may actually contribute to, rather than lower, the “financial imbalances.” In her speech, Kansas City Fed President Esther George pointed at the growth of the economy, the tightness in the labor market, the additional support the economy will get from consumers and companies as they spend or invest the tax cuts, etc., etc. And despite this growth, “the stance of monetary policy remains quite accommodative,” she said. She cited the federal funds rate – the overnight interest rate the Fed targets. The Fed’s current target range is 1.25% to 1.50%, which is “well below estimates of its longer-run value of around 3%,” she said.
The Fed would have to raise rates at least six more times of 25 basis points each, for a total of at least 1.5 percentage points, to bring the federal funds rate to around 3% and get back to neutral. If the Fed wanted to actually tighten after that, it would have to raise rates further. So far, so good. And then came her concerns about the Fed’s balance sheet. Under QE, the Fed acquired $1.7 trillion in Treasury securities and $1.78 trillion in mortgage-backed securities, for a total of about $3.5 trillion. After QE ended in October 2014, the Fed then maintained the levels by replacing maturing securities. But in October last year, it commenced the QE-Unwind and started to not replace some maturing securities. This has the effect of shrinking its balance sheet.
Just like the Fed “tapered” QE by phasing it out over the course of a year, it is also ramping up the QE-Unwind over the course of a year. But the pace of the QE-Unwind has been too slow, according to George – and this may be destabilizing the financial markets: “By the end of this year, however, only about a quarter of the increase to the Fed’s balance sheet resulting from the first round of large scale asset purchases will be unwound. These holdings of longer-term assets were intended to put downward pressure on longer term interest rates. Many investors responded, as would be expected, by purchasing riskier assets in a reach for higher yield. As a result, asset prices may have become distorted relative to the economic fundamentals.”
The mobility of capital radically alters the simplistic 18th century view of free trade. In today’s world, trade can not be coherently measured as goods moving between nations, because capital from the importing nation owns the productive assets in the exporting nation. If Apple owns a factory (or joint venture) in China and collects virtually all the profits from the iGadgets produced there, this reality cannot be captured by the models of simple trade described by Ricardo. In today’s globalized version of “free trade,” mobile capital can arbitrage labor, currencies, interest rates, regulatory burdens and political favors by shifting between nations and assets. Trying to account for trade in the 18th century manner of goods shipped between nations is nonsensical when components come from a number of nations and profits flow not to the nation of origin but to the owners of capital.
[..] In a world dominated by mobile capital, mobile capital is the comparative advantage. Mobile capital can borrow billions of dollars (or equivalent) in one nation at low rates of interest and then use that money to outbid domestic capital for assets in another nation with few sources of credit. Mobile capital can overwhelm the local political system, buying favors and cutting deals, all with cash borrowed at near-zero interest rates. Mobile capital can buy up and exploit resources and cheap labor until the resource is depleted or competition cuts profit margins. At that point, mobile capital closes the factories, fires the employees and moves on. Where is the “free trade” in a world in which the comparative advantage is held by mobile capital?
And what gives mobile capital its essentially unlimited leverage? Central banks issuing trillions of dollars in nearly-free money to banks and other financial institutions that funnel the free cash to corporations and financiers, who can then roam the world snapping up assets and arbitraging global imbalances with nearly-free money. There’s nothing remotely “free” about trade based not on Ricardo’s simple concept of comparative advantage but on capital flows unleashed by central bank liquidity. The gains reaped by mobile capital flow to those who control mobile capital: global corporations, financiers and banks. No wonder labor’s share of the economy is stagnating across the globe while corporate profits reach unprecedented heights.
Investors shrugged off trade skirmishes and signals of fading monetary stimulus as they rewarded some of Europe’s most leveraged companies, putting the latter on track for their best weekly advance since December 2016. Stocks with the weakest balance sheets gained 4.5% this week, compared to 3.1% for their less-indebted counterparts, according to a Bloomberg analysis of Morgan Stanley data. Since these risky-debt companies were beaten up earlier in the year, they’re beginning to bounce back thanks to the risk-on rally, buoyed by largely positive earnings reports, said Hugh Cuthbert at SVM Asset Management. “Post the jitters that we saw at the start of February, they are more than likely to be beneficiaries”.
“The market appetite for risk will always benefit those guys when it’s high.” Still, it’s a small reprieve after they dropped more than 10% in the 25 trading days through last week. Even after the recent advance, shares of weak balance-sheet companies sit 7.7% below their January peak. The Morgan Stanley-compiled basket tracks 40 European companies with measures that include net debt to Ebitda and interest coverage ratios. The good times may be short-lived, however, as the ECB pares stimulus, said Cuthbert. “Look out, if we are in a tightening cycle,” he said. “A lot of companies have been living off debt and their business model won’t apply to higher interest rates.”
Just because China’s financial regulators are cracking down on cryptocurrencies doesn’t mean they’re souring on the idea of digital money. People’s Bank of China Governor Zhou Xiaochuan made that clear at a press conference in Beijing on Friday, saying physical cash may one day become obsolete. Zhou said the PBOC is looking into digital currencies as it pursues faster, cheaper and more convenient payment methods, even as he warned that cryptocurrencies like Bitcoin – more often used for speculation than payments – don’t serve the economy.
“We must prevent major mistakes that would lead to irreparable losses, so we are cautious,” Zhou said during what may be one of his last public appearances before his expected retirement. “We don’t like creating products for speculation and making people have the illusion that they can get rich overnight.” China, once home to the world’s most active Bitcoin exchanges, banned the venues last year amid a broad-ranging clampdown on virtual currencies. Yet the country is still the world leader in digital payments, thanks to the popularity of platforms developed by tech giants Alibaba and Tencent.
The most notorious of the Nazi collaborators who immigrated to Canada was Mykhailo Chomiak, a mid-level Nazi operative in Poland, who came under US protection at the end of the war and eventually made his way to Canada where he settled in Alberta. Had he been captured by the Red Army, he would quite likely have been hanged for collaboration with the enemy. In Canada however he prospered as a farmer. His grand-daughter is the “Ukrainian-Canadian” Chrystia Freeland, the present minister for external affairs. She is a well-known Russophobe, persona non grata in the Russian Federation, who long claimed her grandfather was a “victim” of World War II. Her claims to this effect have been demonstrated to be untrue by the Australian born journalist John Helmer, amongst many others.
In 1940 the Liberal government facilitated the creation of the Canadian Ukrainian Congress (UCC), one of many organisations used to fight or marginalise the left in Canada, in this case amongst Canadian Ukrainians. The UCC is still around and appears to dominate the Ukrainian-Canadian community. Approximately 1.4 million people living in Canada claim full or partial Ukrainian descent though generally the latter. Most “Ukrainian-Canadians” were born in Canada; well more than half live in the western provinces. The vast majority has certainly never set foot in the Ukraine. It is this constituency on which the UCC depends to pursue its political agenda in Ottawa.
After the coup d’état in Kiev in February 2014 the UCC lobbied the then Conservative government under Stephen Harper to support the Ukrainian “regime change” operation which had been conducted by the United States and European Union. The UCC president, Paul Grod, took the lead in obtaining various advantages from the Harper government, including arms for the putschist regime in Kiev. It survives only through massive EU and US direct or indirect financial/political support and through armed backing from fascist militias who repress dissent by force and intimidation. Mr. Grod claims that Russia is pursuing a policy of “aggression” against the Ukraine.
If that were true, the putschists in Kiev would have long ago disappeared. The Harper government allowed fund raising for Pravyi Sektor, a Ukrainian fascist paramilitary group, through two organisations in Canada including the UCC, and even accorded “charitable status” to one of them to facilitate their fund raising and arms buying. Harper also sent military “advisors” to train Ukrainian forces, the backbone of which are fascist militias. The Trudeau government has continued that policy. “Canada should prepare for Russian attempts to destabilize its democracy,” according to Minister Freeland: “Ukraine is a very important partner to Canada and we will continue to support its efforts for democracy and economic growth.”
There is no place that the US or NATO has gone into in the last 4 decades that is better off. Not one. In fact, there is no place that NATO or the US have intervened, (usually against international law) that hasn’t become a failed state, hell on Earth for the citizens, and a genuine danger to the surrounding regions and the world. It is the US government and NATO, and the people who own and control them, who are the threats and the enemies to the future of Humanity. But their days of disregarding international law and destroying weaker nations with impunity are now over, as of March 1st, 2018. The good people of America now have a huge opportunity, and a huge challenge. Russia spends less than one tenth what the USA spends on military and defense, but their military and weapons are superior in every measurable way.
The waste, corruption and abject venality of the US military industrial complex has wasted trillions on weapon systems that are now literally useless, and which have left the US military (and by extension the American people) defenseless before the power of Russia’s weapons, which are designed and produced to be effective rather than profitable. The opportunity is this – the USA can now reduce its military spending (the highest in the world) by 90% and still be safer than you are right now, spending almost a trillion dollars a year on useless weapons and a defenseless military. Safer, because as soon as the American People take control of their government enough to reduce your spending to ONLY as much as Russia spends, Russia will stop having reason to see the USA as an existential threat.
The less you spend, the safer you will be. The more you spend, the more likely World War Three, which will see you as the instigators and the losers. This gives the USA, starting as soon as you want, an extra $800 billion, per year, to spend on things that have actual worth, things you really need. Health care, free college education, fixing the rotting economy and infrastructure that are daily becoming more of a threat to the American people than Russia has ever been. Your challenge is that you must root out an entrenched and ruthless kleptocracy, built on deceit and oppression, and which is bent on war, and will stop at nothing to cling to its power. It is a huge task, an historic task, but in it lies your only hope. These parasites must be stopped, and if the American People are not up to the challenge, if they fail in their historic mission, they will leave it to the armies of the world, led by Russia, who will no longer tolerate those who want to rule the world.
Chinese president Xi Jinping has repeatedly told the world that China is ready to lead on issues like free trade and climate change. Now, he’s ready to extend his leadership to political parties everywhere. At the big annual gathering of Chinese lawmakers and political advisors that kicked off March 3, Xi said that China is offering a “new type of political party system”—a Chinese solution that contributes to the development of political parties around the world, according to state media (link in Chinese). The Chinese Communist Party (CCP) has always said the country will never copy the political systems of other countries, in particular the Western notion of democracy.
But under Xi—the most powerful Chinese leader in four decades—China’s own one-party system is one that is ready to be exported to regimes everywhere. The term “new type of political party system” was first put forward by Xi when he delivered a speech to non-party political advisors on March 4. It’s not the first time that Xi has floated the idea that China’s political model can make a contribution to the world. This time, however, Chinese state media churned out a wave of articles to underscore the significance of this new phrase. In the past, “some people lacking self-confidence always use Western political theories to criticize China’s political party system,” wrote Wang Xiaohong at the party-backed Central Institute of Socialism, in a commentary widely circulated by Chinese news outlets.
But as Wang argues, Western political systems are associated, among other things, with fractured societies, inefficient government, and “endless power transitions and social chaos” as in the countries of the former Soviet Union, and in north Africa after the Arab Spring. “The new type of political party system has overcome all sorts of problems that the old [one] can’t overcome,” Wang argued. In China, there are eight so-called “democratic parties” that are allowed to participate in the political system, but they are almost completely subservient to the CCP. Every year in March, members of the minor parties meet with their communist counterparts in Beijing to provide advice on everything from healthcare to poverty reduction—largely for show.
The system—called “multi-party cooperation and political consultation under the CCP’s leadership”—has been used as evidence that China is also a democracy. The internationalization of China’s political system is in fact well underway. Since 2014, the Communist Party has hosted an annual summit in Beijing inviting political party leaders from around the world to hear about how it governs China. In recent years, the party has also brought young African politicians to China for training, in a bid to cultivate allies.
Complaining that U.S. investigations into foreign interference in the election have gotten almost everything wrong, officials from dozens of countries around the world expressed irritation Friday that all of the credit for meddling in the 2016 presidential race was going to Russia. Resentful operatives from Serbia, Uruguay, Swaziland, and 45 other nations said they were incredibly annoyed that Kremlin-backed computer hackers and dark-money financiers were receiving all the media attention, while their own far superior efforts to undermine the U.S. electoral process had so far received no recognition at all.
“Do you have any idea how much more sophisticated our attacks on American democracy were than Russia’s?” Laotian president Bounnhang Vorachith said of his government’s efforts to spread misinformation about Democratic candidate Hillary Clinton on social media sites. “We spent millions building a sophisticated bot network that could craft false but believable stories portraying Trump in a good light. And it worked! It’s unbelievably frustrating to pull off something like that and then have all the glory go to someone else.” “Do you really think Russia could’ve hacked into [Clinton campaign chairman] John Podesta’s emails?” Vorachith continued. “Hell no. That was Laos.”
According to sources, every time the American media credits Russian oligarchs with funding election-tampering efforts, numerous foreign agents across the globe throw up their arms and storm out of the room, infuriated because Costa Rican and Nepalese money launderers reportedly did far more to finance such initiatives. These agents have also been known to toss aside newspapers in anger, shouting that Mongolia’s work busing thousands of people with dead voters’ names to cast ballots for Clinton in New Hampshire was more deserving of attention than anything Russia had accomplished.
On this winter day, the world was upside down: it was raining in the Arctic Circle and snowing in Rome. The contradiction was not lost on those gathered at the Svalbard Global Seed Vault, located near the top of the world. The scientists, activists, executives and government officials were in Longyearbyen, to mark the 10-year anniversary of what has become known as the Doomsday Vault, which stores seeds of the world’s most important crops deep in a mountain against the apocalyptic consequences of climate change and war. The challenge they’re facing now is that the climate is changing far quicker than they’d imagined. The facility sprung a leak last year after construction had failed to take into account that the permafrost could melt.
Norway is now spending about $20 million to secure and improve the facility. But it’s not just the building. “Biodiversity is the building block to develop new plants and because of climate change we’re in a terrible need to quickly develop new varieties,” said Aaslaug Marie Haga, executive director of Crop Trust, a group established to support gene banks. “The climate is changing quicker than the plants can handle.” Svalbard is the farthest north one can travel commercially, about an 1 1/2 hour flight from northern Norway. The vault is about a 10 minute drive from town, past a coal-fired power plant and up a winding two-lane road. Unless armed with a high-caliber rifle, driving is essential, since leaving town also means venturing into polar bear country.
The site’s entrance, not far from the abandoned coal mine that served as the first Nordic seed vault, shines at night like a green beacon, lit up by an artwork of fiber optics, steel and glass called Perpetual Repercussion. The seeds are kept at minus 18 centigrade (-4 Fahrenheit) more than 100 meters into the mountain behind six steel doors. And in an ideal world, the vault would never have to be used. It’s meant to back up the plant gene banks around the world, organized under the International Treaty on Plant Genetic Resources for Food and Agriculture. But many of these facilities are vulnerable. One withdrawal from Svalbard has already been made by the group that ran the seed bank in Aleppo, Syria.
In Iran, nearly 70% of university graduates in science, technology, engineering and mathematics (STEM) are women—a higher percentage than in any other country. Nearby Oman, Saudi Arabia, and the United Arab Emirates (UAE) are close, each boasting over 60% female graduates in science, still more of the rest of the world. Young women in science are the rule, not the exception, in the Middle East. At least a third of STEM trained talent across the Muslim world is female, writes Saadia Zahidi in her new book Fifty Million Rising, which tracks the workplace progress achieved by Muslim women since the turn of the century. Only in Jordan, Qatar and the UAE are girls more comfortable with math than boys.
“The Muslim world has put high investment in education, and the payoff is coming now,” argues Zahidi, a World Economic Forum executive who leads education and gender equality initiatives. While observant Muslim societies are often associated with strict social codes for men and women, Western gender stereotypes about work don’t necessarily apply: Several Muslim countries have filled more than half of STEM jobs with female workers. Zahidi adds that in many cases, Muslim women are pioneering their role in the workforce, so they don’t have preconceived stereotypes about whether tech jobs, for example, constitute “feminine” career goals.
A study published in February found that the social and political gender equality typical of Scandinavian countries may be inversely related to women’s representation in STEM fields. This could be in part due to the fact that countries with greater parity between sexes tend to be wealthier, providing better government support to citizens and allowing women to accept less secure jobs.
Frank Larson Chrysler reflection, 42nd Street near 5th Ave, New York 1950s
Update: Dutch Foreign Minister Halbe Zijlstra resigned at 5pm local time, before the parliamentary debate could take place. But that still leaves Rutte in place with his own version of “when it gets serious, you have to lie”.
There will be a parliamentary debate in Holland (the Netherlands) today about abject lies about Russia and Vladimir Putin that its Foreign Minister, Halbe Zijlstra, has been telling the country for a few years now. Zijlstra is supposed to fly to Russia tomorrow to meet with his Russian peer, Sergey Lavrov. One would suppose Zijlstra will be fired later today, if only to prevent such a meeting from taking place, but that is by no means a given.
Here’s what happened: in 2006, there was a ‘conference’ in Putin’s dacha outside of Moscow. Zijlstra worked for Shell at the time at a lower level. Later, he has pretended he way present at a meeting with Putin in which the latter supposedly talked about his dreams for a ‘Greater Russia’.
Now, Zijlstra has revealed he was not at that meeting. He claimed ‘a source’ was there and told him about it, and he had wanted to protect the source and therefore pretended he himself was present. That source, then-Shell CEO Jeroen van der Veer, not only never asked for any such protection, he also sent an email to paper De Volkskrant saying that Zijlstra had ‘misinterpreted’ the story Van der Veer had told him (a diplomatic word for he lied).
Putin never talked about ambitions for a Greater Russia, and never said Kazachstan was ‘nice to have’. Zijlstra made that all up. There had been mention of Greater Russia, but in a nostalgic, historical manner. And now Van der Veer, undoubtedly much to his chagrin, gets dragged into this entire false tale.
Because the entire Dutch government, longtime Prime Minister Mark Rutte first and most of all, has said Zijlstra’s lies were somehow acceptable because the ‘inhoud’ (tenor, content, narrative) of his story was true. That is to say, Rutte claims that Putin does indeed dream of land-grabbing, of invading Ukraine, the Baltic States etc.
It doesn’t matter if you have no proof of something (see the painfully botched MH17 investigation), and neither does it matter if you just make the whole thing up. The only thing that matters in Holland is that you stick to the narrative. Which, there is no other way to look at it, is fully unproven and entirely made up.
This makes the government of Holland (a NATO member), and certainly Rutte, a danger to world peace. Therefore, Rutte has to go along with Zijlstra. Because he not only condones the latter’s lies and fantasies, maintained in his days as Foreign Minister, Rutte himself also makes claim after claim based on no proof at all. Or at least nothing he has ever revealed.
Holland should never have chaired the MH17 investigation, because it was its main victim (2/3 of the near 300 who died in the plane crash had Dutch passports). In the 3,5 years since the tragedy, not an ounce of evidence has ever been published by the investigators that proves Russia was the culprit. But claims to that end have been freely made over the entire period.
Fro his Putin-bashing, then-Dutch Foreign Minister Frans Timmermans got himself a cushy job as second to EU head Jean-Claude Juncker (and yes, Juncker’s “when it gets serious, you have to lie” comes to mind in the Zijlstra thing). Timmermans, like then-US Secretary of State Joe Biden, wasted no time in fingering Russia as the perpetrator. They both made this claim within minutes. Again, without any proof.
None of this is a specific Dutch issue. The western world, led by the US, has created an atmosphere and a narrative in which it’s deemed acceptable to lie about Russia, about Vladimir Putin, about Russian hackers, and about connections Americans and western Europeans who don’t abide by the narrative, have to Russia and everything connected with it.
And well, they are right in one sense: there is a pattern here. The Russiagate investigations in the US into ties of Trump associates with Russians, like the Dutch investigation into MH17, continue ad infinitum without producing a sliver of proof.
Various and multiple claims pertaining to alleged Russian actions in Crimea, Ukraine, Syria etc. have come up hollow. Indeed, what actions Russia has undertaken are largely in response to American and EU ‘provocation’.
And yes, all this plays out against the backdrop of the military-industrial complex that hides behind the identity of NATO, an organization without a reason to exist even since the Berlin wall came down (the wall has now been gone longer than it ever existed). NATO is a convenient entity for the entirety of the western arms industry, and the neocons that still hold sway in various of its member-nations, to publicize its fear-mongering anti-Russia messages from.
Those messages keep being duly publicized by mainstream media. The Russian Foreign Ministry issued a statement today in which it said “bilateral relations with Holland are being overshadowed by an unparalleled anti-Russia campaign in Dutch media.”
“Holland accuses Russia of spreading disinformation (fake news). People in the Dutch government keep on making such unfunded claims.” Dutch media readily and uncritically disperse the idea that Russian authorities are obsessed with the creation of a Great Russia. How is that not an example of fake news?”
Holland would be crazy to let Zijlstra go to Moscow tomorrow to talk to Lavrov. But, given what has already been said, one can only conclude that the country is indeed crazy. Or at the very least its government is. Still, even if parliament today decides that Zijlstra must leave his post, chances that they’ll send Rutte packing as well are zero.
Even though as prime minster he’s publicly stated that his Foreign Minister telling outright lies about another country is no problem as long as he stays with the narrative that said country is a threat, a narrative for which apparently no evidence must ever be presented.
At the next EU meeting Rutte is more likely to be hailed for his stance, because the narrative is that of the entire EU, of Brussels, Berlin and Paris. And NATO.
Will this episode wake up the Dutch people? Fat chance. They will focus on Zijlstra, and probably clamor for him to leave, and then go about their daily job of feeding their readers and watchers their, as Moscow puts it, “unparralleled anti-Russia campaign.”
People like Rutte and Merkel do a very good job of showing us that Europeans have more to fear from their own governments than they do of Putin. But nobody is listening. Because their media have become as much of an echo chamber as the US MSM.
Still, make no mistake: what Rutte tells his people is that he cannot be trusted. That there are things more important than the truth: the narrative. This means they will never again be able to trust him to tell them the truth. He just said so himself.
Is this the most sustainable stock market bubble ever? It’s rare to find the words “sustainable” and “bubble” in the same sentence, but the stock market rally from November 2016 until now has been relentless enough to at least discuss the notion of a “sustainable bubble.” In February 2016, the S&P 500 recorded three consecutive daily gains of more than 1.5%. The Profit Radar Report highlighted that this happened only eight other times. A year later, the S&P 500 was up 19.16%. The February 2016 kickoff rally continued to build momentum. One way to quantify momentum was shown in the Nov. 19, 2017, Profit Radar Report: “The S&P 500 was higher 8 of the first 9 months of 2017. This has only happened 8 other times (1936, 1950, 1954, 1958, 1964, 1995, 1996, 2006). 2, 3, 6, and 12 months later, the S&P was higher every time but one (0.7% loss 2 month later in 1964).
Such strong momentum readings (and they are seen across all time frames) are extremely rare. As mentioned in December 2016 and March 2017, stocks rarely top out at peak momentum. We have to go back to 1995/1996 to find similarly strong and persistent upside momentum. The stock market infrequently finds the delicate and potent balance between being hot, but not too hot. Tempered relentlessness best describes this market. How relentless? The S&P 500 has not closed more than 1.5% below its all-time high since Aug. 21, 2017. The only other time the S&P 500 has been similarly glued to its all-time high was in 1965. The S&P 500 has not dropped more than 5% below its all-time high since June 27, 2016, and has been above its 200-day simple moving average (SMA) since June 28, 2016.
How tempered? The S&P 500 has traded above its 200-day SMA for 391 days, but, until Jan. 5, also never traded more than 10% above its 200-day SMA. This “sweet spot” range is illustrated by the chart below. For the first time ever, the S&P 500 broke such a “controlled range-bound rally” streak (there’ve been two similar rallies in the 1960s and 1990s) by surging higher instead of falling lower.
Global wealth increased to a new record of $280 trillion in 2017, according to Credit Suisse Global Wealth Report 2017. That seems like pretty good news until you consider global debt is increasing nearly three times as fast. According to the Wealth Report, total global wealth rose at a rate of 6.4%, the fastest pace since 2012 and reached $280 trillion, a gain of $16.7 trillion. This reflected widespread gains in equity markets matched by similar rises in non-financial assets, which moved above the pre-crisis year 2007’s level for the first time this year. Wealth growth also outpaced population growth, so that global mean wealth per adult grew by 4.9% and reached a new record high of $56,540 per adult.”
Increasing global wealth is one of the trends the World Gold Council identifies as a positive for the gold market in the next year. That’s all well and good. But we have to also look at the other side of the equation. The Institute of International Finance recently released its latest global debt analysis. It reported that global debt rose to a record $233 trillion at the end of Q3 2017. That is split up between $63 trillion in government debt, $58 trillion in financial sector corporate debt, $68 trillion in non-financial sector corporate debt, and $44 trillion in household indebtedness. In just nine months, there was an increase of $16 trillion in worldwide debt.
You really can’t talk about wealth without talking about debt. SRSrocco took a look at both factors in the equation. Even if global wealth surged in 2017, so did world debt. According to the data, global wealth increased by $16.7 trillion in 2017 while global debt expanded $16 trillion… nearly one to one. However, this is only part of the story. If we look at the increase in total world debt and total global wealth over the past 20 years, we can see a troubling sign, indeed: Since 1997, total global debt increased from $50 trillion to $233 trillion compared to the rise in global wealth from $120 trillion to $280 trillion. When you do the math, you find global debt has increased 366% vs. 133% increase in global wealth since 1997. That means net wealth was $70 trillion in 1997 versus $47 trillion in 2017.
The House passed a spending bill Thursday to avoid a U.S. government shutdown, but Senate Democrats say they have the votes to block the measure in a bid to force Republicans and President Donald Trump to include protection for young immigrants. The 230-197 vote came just over a day before current funding is set to run out at midnight Friday. The bill would keep the government open through Feb. 16 while all sides negotiate on longer-term funding for defense and domestic programs. The Senate took an initial vote to advance the bill late Thursday, but was headed toward an additional procedural step requiring 60 votes, which Democrats say they will be able to block. The Senate adjourned until Friday morning without taking further action.
Shortly before the House vote, Trump wrote on Twitter: “House of Representatives needs to pass Government Funding Bill tonight. So important for our country – our Military needs it!” In a show of strength, House Republicans had enough support within their own ranks to pass the measure without help from Democrats. Some members of the conservative House Freedom Caucus withheld their support through much of the day Thursday, but reached a last-minute agreement with Speaker Paul Ryan to hold votes later on a conservative immigration bill and a measure to boost defense spending without increasing non-defense spending.
Still, Senate Democrats said they have the votes to block the measure in their chamber. At least 10 of the 18 Democrats who voted for a temporary funding measure in December have publicly announced their opposition, and a Democratic aide said there won’t be enough party members who support the House bill. Republicans would need at least a dozen Democratic votes to get the bill, H.R. 195, through the Senate after at least three of the 51 Republicans in the chamber said they would vote against it.
House conservatives negotiating with GOP leaders over how to avert a government shutdown brought a fresh demand to the last-minute talks: release classified information they say raises questions about the origins of the FBI’s probe into President Donald Trump’s possible connections to Russia. A Republican lawmaker said they tried to pressure Speaker Paul Ryan to allow a vote on making public a document they say shows Justice Department and FBI misconduct and political bias in the investigation into Russian meddling in the 2016 presidential campaign and whether anyone close to Trump colluded in it. The facts contained in the memo from Republicans on the House Intelligence Committee are “jaw-dropping and demand full transparency,” said Matt Gaetz, a Florida Republican.
The top Democrat on the Intelligence Committee, Adam Schiff of California, criticized the move. He dismissed the committee document as “talking points” drafted by Republican staffers that he said were “profoundly misleading” and “rife” with inaccuracies. The odd juxtaposition of issues – tying the Russia inquiry to the debate over a stopgap spending bill – came as much of the government faced a threatened shutdown on Friday at midnight. Gaetz said the effort was led by Freedom Caucus Chairman Mark Meadows of North Carolina and caucus co-founder Jim Jordan of Ohio. Jordan confirmed that some conservatives had “highlighted” in continuing resolution talks that it was “extremely important” that the memo go public. He said it was not something they were requiring of the Republican leadership in return for votes.
“But it was something we definitely talked about – that needs to happen,” Jordan added. Meadows earlier referred to “subplots” of promises the Freedom Caucus was able to extract from the leadership before he agreed to support the continuing resolution. “Mr Meadows and Mr. Jordan and many conservatives want to include in this negotiation a requirement that the House make public intelligence documents that highlight the unfair treatment of the president” by the FBI and the Justice Department, Gaetz said. Gaetz said he couldn’t describe the contents of the entire memo put together by the House Intelligence Committee “because to do so would reveal classified information, in the absence of a vote to do so,” he said. “Just 218 votes and the American people can read this intelligence information that goes to the fundamentals of our democracy.”
All hell is breaking loose in Washington D.C. tonight after a four-page memo detailing extensive FISA court abuse was made available to the entire House of Representatives Thursday. The contents of the memo are so explosive, says Journalist Sara Carter, that it could lead to the removal of senior officials in the FBI and the Department of Justice and the end of Robert Mueller’s special counsel investigation. “These sources say the report is “explosive,” stating they would not be surprised if it leads to the end of Robert Mueller’s Special Counsel investigation into President Trump and his associates.” -Sara Carter. A source close to the matter tells Fox News that “the memo details the Intelligence Committee’s oversight work for the FBI and Justice, including the controversy over unmasking and FISA surveillance.”
An educated guess by anyone who’s been paying attention for the last year leads to the obvious conclusion that the report reveals extensive abuse of power and highly illegal collusion between the Obama administration, the FBI, the DOJ and the Clinton Campaign against Donald Trump and his team during and after the 2016 presidential election. Lawmakers who have seen the memo are calling for its immediate release, while the phrases “explosive,” “shocking,” “troubling,” and “alarming” have all been used in all sincerity. One congressman even likened the report’s details to KGB activity in Russia. “It is so alarming the American people have to see this,” Ohio Rep. Jim Jordan told Fox News. “It’s troubling. It is shocking,” North Carolina Rep. Mark Meadows said. “Part of me wishes that I didn’t read it because I don’t want to believe that those kinds of things could be happening in this country that I call home and love so much.”
“Rep. Peter King, R-N.Y., offered the motion on Thursday to make the Republican majority-authored report available to the members. “The document shows a troubling course of conduct and we need to make the document available, so the public can see it,” said a senior government official, who spoke on condition of anonymity due to the sensitivity of the document. “Once the public sees it, we can hold the people involved accountable in a number of ways.” The government official said that after reading the document “some of these people should no longer be in the government.” -Sara Carter
Digital currencies and the software developed to track them have become attractive targets for cybercriminals while also creating a lucrative new market for computer-security firms. In less than a decade, hackers have stolen $1.2 billion worth of Bitcoin and rival currency Ether, according to Lex Sokolin at Autonomous Research. Given the currencies’ explosive surge at the end of 2017, the cost in today’s money is much higher. “It looks like crypto hacking is a $200 million annual revenue industry,” Sokolin said. Hackers have compromised more than 14% of the Bitcoin and Ether supply, he said. All told, hacks involving cryptocurrencies like Bitcoin have cost companies and governments $11.3 billion through lost potential tax revenue from coin sales and illegitimate transactions, according to Susan Eustis, CEO of WinterGreen Research.
The blockchain ecosystem – the decentralized “distributed ledgers” that track crypto transactions – is also vulnerable. Those losses could snowball as more companies and investors rush into the white-hot cryptocurrency market without weighing the dangers or taking steps to protect themselves. Blockchain records are shared, making them hard to alter, so some users see them as super-secure. But in many ways they are no safer than any other software, Matt Suiche, who runs the blockchain security company Comae Technologies, said. And since the market is immature, blockchains may even be more vulnerable than other software. There are thousands of them, each with its own bugs. Until the field is winnowed to a few favorites, as happened with web browsers, securing them all will be a challenge. “Each implementation is going to have its own problems,” Suiche said. “The more implementations, the harder it is to cover all of them.”
[..] In a Dec. 25 paper, researchers at the Institute of Electrical and Electronics Engineers outlined ways hackers can spend the same Bitcoins twice, the very thing blockchains are meant to prevent. In a Balance Attack, for instance, hackers delay network communications between subgroups of miners, whose computers verify blockchain transactions, to allow for double spending. “We have no evidence that such attacks have already been performed on Bitcoin,” the IEEE researchers said. “However, we believe that some of the important characteristics of Bitcoin make these attacks practical and potentially highly disruptive.”
A group of big financial institutions wants to use the blockchain to help resurrect the packaging of home mortgages into securities, a business that almost destroyed the global banking system in 2008. Credit Suisse, U.S. Bancorp, Wells and Western Asset Management. said Thursday that they successfully tested the distributed ledger technology as a way to make it easier to track securitized home loans. Before the 2008 crisis, bundling home loans together and then selling those baskets to investors was a huge profit center for banks. But this was the primary cause of the meltdown after many borrowers couldn’t repay their debt and the value of the securitized loans crashed, causing trillions of dollars in losses.
The business then shrank dramatically. There were about $823 billion of securitized private-label residential mortgage bonds outstanding in early 2017, according to the Securities Industry and Financial Markets Association, down from a peak of $2.7 trillion in 2007. “Structuring securities is complex, involving many different parties, manual processes, duplicated documents and data in different formats,” David Rutter, chief executive officer of blockchain startup R3, which is organizing the consortium, said in a statement Thursday. While the group is starting with residential mortgages that aren’t backed by the U.S. government, it plans to expand to other types of asset-backed securities. The next step is delivering a commercially viable product, R3 said.
The U.S. securities regulator on Thursday raised alarm about the safety of bitcoin-themed investments, telling the fund industry they want answers to their concerns before endorsing more than a dozen proposed products based on cryptocurrencies. A top division chief at the U.S. Securities and Exchange Commission detailed the agency’s concerns about the wild-trading investment in a letter to two trade groups representing fund managers who unleashed a range of proposals for funds holding bitcoin or related assets. The SEC’s division of investment management demanded answers to at least 31 detailed questions about how mutual funds or exchange-traded funds based on bitcoin would store, safeguard, and price that asset. They also asked whether investors can understand the risks and how to address concerns that bitcoin markets could be manipulated.
“There are a number of significant investor protection issues that need to be examined before sponsors begin offering these funds to investors,” said the letter signed by Dalia Blass, the SEC’s director of investment management. Bitcoin’s 1,500% surge last year stoked investor demand for any product with exposure to the red-hot asset. A host of companies are jostling to launch exchange-traded funds which would open up the cryptocurrency to a broad retail market. The SEC in March denied a request to list an ETF from investors Cameron and Tyler Winklevoss, owners of the Gemini bitcoin exchange. The Winklevoss fund is seeking to invest in bitcoin directly. Other fund firms staked their hopes on recently launched U.S.-listed bitcoin futures contracts, which promised a more stable base for ETFs than the largely unregulated virtual currency spot market. Many of those proposals were withdrawn last week at the request of the SEC.
Oliver Stone’s seminal documentary Ukraine on Fire has finally been made available to watch in the West. Investigative journalist Robert Parry reveals how US-funded political NGOs and media companies have emerged since the 1980s, replacing the CIA in promoting America’s geopolitical agenda abroad. As Russia-Insider details, Ukraine on Fire provides a historical perspective for the deep divisions in the region which led to the 2004 Orange Revolution, the 2014 uprisings, and the violent overthrow of democratically-elected Yanukovych. Covered by Western media as a ‘popular revolution’, it was in fact a coup d’état scripted and staged by ultra-nationalist groups and the US State Department.
Executive producer Oliver Stone gained unprecedented access to the inside story through his on-camera interviews with former President Viktor Yanukovych and Minister of Internal Affairs Vitaliy Zakharchenko, who explain how the US Ambassador and factions in Washington actively plotted for regime change. And, in his first meeting with Russian President Vladimir Putin, Stone solicits Putin’s take on the significance of Crimea, NATO and the US’s history of interference in elections and regime change in the region. The film was originally released in 2016, but unsurprisingly, Stone came up against problems distributing the film in the US and western countries. A Russian-dubbed version was available almost immediately and was aired on TV in Russia, but people in the ‘free world’ were left without access to the full film.
Scientists have made a major advance towards developing a blood test for cancer that could identify tumours long before a person becomes aware of symptoms. The new test, which is sensitive to both mutated DNA that floats freely in the blood and cancer-related proteins, gave a positive result approximately 70% of the time across eight of the most common cancers when tested in more than 1,000 patients. In the future, such a test could be used in routine screening programmes to significantly increase the proportion of patients who get treatment early, at a time before cancer would typically show up on conventional scans. “The use of a combination of selected biomarkers for early detection has the potential to change the way we screen for cancer, and it is based on the same rationale for using combinations of drugs to treat cancers,” said Nickolas Papadopoulos, professor of oncology at Johns Hopkins University and senior author on the paper.
The test could also identify the form of cancer that a patient had, a goal that previous cancer blood tests have failed to achieve. It works by detecting free-floating mutated DNA, released into the bloodstream by dying cancer cells. The test screened for the presence of errors in 16 genes that are frequently mutated in different kinds of cancer. The blood of patients was also tested for eight known protein biomarkers which are seen to differing degrees depending on where in the body a tumour is located. In blood samples from 1,005 patients, the test detected between 33% and 98% of cases of disease. Ovarian cancer was the easiest to detect, followed by liver, stomach, pancreas, oesophageal, colorectal, lung and breast cancers. For the five cancers that currently have no screening tests – ovarian, liver, stomach, pancreatic and oesophageal cancers – sensitivity ranged from 69% to 98%.
Adolescence now lasts from the ages of 10 to 24, although it used to be thought to end at 19, scientists say. Young people continuing their education for longer, as well as delayed marriage and parenthood, has pushed back popular perceptions of when adulthood begins. And changing the definition is vital to ensure laws and government policy stay appropriate, they say in the Lancet Child & Adolescent Health journal. But another expert warns doing so risks “further infantilising young people”. Puberty is considered to start when the part of the brain known as the hypothalamus starts releasing a hormone that activates the body’s pituitary and gonadal glands. This used to happen around the age of 14 but has dropped with improved health and nutrition in much of the developed world to around the age of 10.
As a consequence, in industrialised countries such as the UK the average age for a girl’s first menstruation has dropped by four years in the past 150 years. Half of all females now have their period by 12 or 13 years of age. There are also biological arguments for why the definition of adolescence should be extended, including that the body continues to develop. For example, the brain continues to mature beyond the age of 20, working faster and more efficiently. And many people’s wisdom teeth don’t come through until the age of 25. Young people are also getting married and having children later. According to the Office of National Statistics, the average age for a man to enter their first marriage in 2013 was 32.5 years and 30.6 years for women across England and Wales. This represented an increase of almost eight years since 1973.
Lead author Prof Susan Sawyer, director of the centre for adolescent health at the Royal Children’s Hospital in Melbourne, writes: “Although many adult legal privileges start at age 18 years, the adoption of adult roles and responsibilities generally occurs later.” She says delayed partnering, parenting and economic independence means the “semi-dependency” that characterises adolescence has expanded.
Former Greek Finance Minister Yanis Varoufakis has revealed he accused Prime Minister Alexis Tsipras of being “totally stupid” in accepting a demand by Greece’s creditors for big primary surpluses. During an interview with Greece’s Parapolitika radio, Varoufakis said when he learned that Tsipras in 2015 accepted, without consulting him, a primary surplus target of 3.5% he confronted the premier: “I told him: ‘Are you totally stupid? What have they given you in return?’ And he replied: ‘Oh, maybe I was stupid. I will retract from the promise’.” Varoufakis said he actually used a stronger word than “stupid”.
In the same interview, the former finance minister repeated claims that Tsipras did not really want to win in the infamous July 2015 referendum on the bailout. Varoufakis said he remembered that everyone at the prime minister’s office that evening was sad. “I do not know when exactly Tsipras decided to capitulate,” he added. Referring to his successor, Euclid Tsakalotos, he said: “I can no longer recognize him.” “Euclid became a yes man on July 6  .. The case of Euclid hurts, because I was an eyewitness of his total transformation,” he added. Varoufakis also confirmed that he still has in his possession recordings of the Eurogroup meetings of the turbulent first half of 2015.
Eurozone finance ministers could decide on Monday, or soon afterward, to release the next tranche of bailout loans to Greece after the country pushed through a batch of laws to meet reform agreements with its creditors, a senior European Union official has said. Finance ministers from the 19 countries sharing the euro meet for monthly talks on Monday and a review of Greek reforms is one of the top items on the agenda. Last Monday, the Greek Parliament approved a bill for fiscal, energy and labor reforms requested by international lenders. This is likely to complete the third and penultimate review of Greek reforms, unlocking new loans. “We are extremely well on our way towards the completion of the third review,” the senior EU official said.
“There are a number of administrative measures to be taken still. As of yet we cannot say that all the preconditions [for disbursements] have been successfully completed simply because the time lines are as they are,” the official said. Lenders’ experts, who are now translating and checking the Greek laws, are to issue a report on their compliance with the bailout’s requirements on Friday. The new loans would be between 6 and 7 billion euros, disbursed to Greece in more than one tranche, the official said. Greece would use the money to redeem maturing debt, pay arrears and create a cash buffer for when it leaves its third bailout in August. “We can be confident that the disbursements will… start in February, probably in the second half,” the official said.
The UK and France must urgently put an end to the “systematic violation” of refugees in Calais, a group of charities has warned. In a letter shared exclusively with The Independent, eight aid organisations urged leaders Theresa May and Emmanuel Macron to uphold their commitment to human rights law, as conditions for the thousands living on the border become increasingly perilous. The group, which includes l’Auberge des Migrants, Help Refugees, Safe Passage and Utopia56, wrote to the leaders on the same day Ms May welcomed the French President to the UK-France Summit at the Royal Military Academy in Sandhurst. “We are writing to ask that any new agreement relating to the French-British border bear in mind the human rights of displaced people currently residing in Calais,” the letter states.
“We are deeply concerned that the human rights of refugees and displaced people in northern France are being systematically violated on French territory. We moreover lament the heightened risk of sexual violence, exploitation and trafficking to which children and youth in Calais are exposed, as well as the many avoidable deaths occurring at the border.” Ahead of the visit, the Prime Minister announced the UK will take more child refugees from Calais and spend £44.5m on additional security at the French port. Ms May and Mr Macron subsequently signed a deal on migrants called the Sandhurst Treaty, designed to ease the suffering of some of the thousands of people camped near the French port who currently wait six months to have their cases settled. However, No 10 was keen to play down suggestions that Ms May had agreed to accept more refugees, insisting it would simply speed up the process of settling claims.
In its annual review for 2018, Human Rights Watch (HRW) said the failure of Greek authorities to properly identify vulnerable asylum seekers for transfer to the mainland has “impeded their access to proper care and services.” The watchdog group also said that policy formed under the deal between the European Union and Turkey to stem the flow of migrants to the continent has led to thousands being “trapped in Greece in overcrowded and abysmal conditions, while denying most access to adequate asylum procedures or refugee protection.” “The policies, conditions, uncertainty and the slow pace of decision-making contributed to deteriorating mental health for some asylum seekers and other migrants on the islands, while creating tensions that sometimes erupted into violence,” it said.
More than 50,000 refugees and migrants are stranded in Greece. Meanwhile, five eastern Aegean island mayors are calling for a meeting with the German ambassador in Athens after coming under fire from German Interior Minister Thomas de Maiziere, who said on Wednesday that they were to blame for the appalling living conditions of refugees and migrants trapped in the hotspots. De Maiziere accused the island mayors of not making use of the aid that is being offered in order to force the government to transfer them to the Greek mainland.
What do the economists at the IMF see when they look at the U.S.? An economy in the midst of a long expansion (“its third longest expansion since 1850”), with “persistently strong” job growth, “subdued” inflation and something close to “full employment.” But also this: For some time now there has been a general sense that household incomes are stagnating for a large share of the population, job opportunities are deteriorating, prospects for upward mobility are waning, and economic gains are increasingly accruing to those that are already wealthy. This sense is generally borne out by economic data and when comparing the U.S. with other advanced economies. The IMF then goes on to compare the U.S. with 23 other advanced economies in the OECD in this chart:
[..] the overall point is that the U.S. has been losing ground relative to other OECD members in most measures of living standards. 1 And in the areas where the U.S. hasn’t lost ground (poverty rates, high school graduation rates), it was at or near the bottom of the heap to begin with. The clear message is that the U.S. – the richest nation on Earth, as is frequently proclaimed, although it’s actually not the richest per capita – is increasingly becoming the developed world’s poor relation as far as the actual living standards of most of its population go. This analysis is contained in the staff report of the IMF’s annual “consultation” with the U.S., which was published last week. Another IMF report released last week, an update to its World Economic Outlook that downgraded short-term growth forecasts for the U.S. and U.K., got a lot more attention. But the consultation report is more interesting.
With Libor shut down to prevent revelations of involvement in manipulation by ‘higher-ups’, what will these same ‘higher-ups’ opt to use instead? Who has the political clout to make the decisions?
They better hurry: “moving an existing $9.6 trillion retail mortgage market, $3.5 trillion commercial real estate market, $3.4 trillion loan market and a $350 trillion derivatives market is a herculean task.”
In an unexpected announcement, earlier this week the U.K.’s top regulator, the Financial Conduct Authority which is tasked with overseeing Libor, announced that the world’s most important, and manipulated, benchmark rate will be phased out by 2021, catching countless FX, credit, derivative, and other traders by surprise because while much attention had been given to possible LIBOR alternatives across the globe (in a time when the credibility of the Libor was non-existent) this was the first time an end date had been suggested for the global benchmark, which as we explained on Thursday, had died from disuse over the past 5 years.
Commenting on the decision, NatWest Markets’ Blake Gwinn told Bloomberg that the decision was largely inevitable: “There had never been an answer as to how you get market participants to adopt a new benchmark. It was clear at some point authorities were going to force them. The FCA can compel people to participate in Libor. What can ICE do if they’ve lost the ability to get banks to submit Libor rates?” And while the rationale for replacing Libor is well understood (for those unfamiliar, read David Enrich’s “The Spider Network”), there are still no clear alternatives. Ultimately, as Bank of America calculates, “moving an existing $9.6 trillion retail mortgage market, $3.5 trillion commercial real estate market, $3.4 trillion loan market and a $350 trillion derivatives market is a herculean task.”
And with nearly half a quadrillion dollar in securities referncing a benchmark that is set to expire in under 5 years, the biggest problem is one of continuity: as Bloomberg calculated last week, in addition to the hundreds of trillion in referencing securities, there is also currently an open interest of 170,000 eurodollar futures contracts expiring in 2022 and beyond – contracts that settle into a benchmark that will no longer exist. “What are existing contract holders and market makers supposed to do?” Then there is the question of succession: with over $300 trillion in derivative trades, and countless billions in floating debt contracts, referening Libor, the pressing question is what will replace it, and how will the transition be implemented seamlessly?
As Amazon flirts with a $500 billion market cap, letting Jeff Bezos try on the title of world’s richest man on for size if only for a few hours, for Amazon’s competitors it’s “everything must go” day everyday, as the bad news in the retail sector continue to pile up with the latest Fitch report that the default rate for distressed retailers spiked again in July. According to the rating agency, the trailing 12-month high-yield default rate among U.S. retailers rose to 2.9% in mid-July from 1.8% at the end of June, after J. Crew completed a $566 million distressed-debt exchange. Meanwhile, with the shale sector flooded with Wall Street’s easy money, the overall high-yield default rate tumbled to 1.9% in the same period from 2.2% at the end of June as $4.7 billion of defaulted debt – mostly in the energy sector – rolled out of the default universe.
In a note, Fitch levfin sr. director Eric Rosenthal, said that “even with energy prices languishing in the mid $40s, a likely iHeart bankruptcy and retail remaining the sector of concern, the broader default environment remains benign.” He’s right: after the energy sector dominated bankruptcies in the first half of 2016, accounting for 21% of Chapter 11 cases, in H1 2017 the worst two sectors for bankruptcies are financials and consumer discretionary. And if recent trends are an indication, the latter will only get worse as Fitch expects Claire’s, Sears Holdings and Nine West all to default by the end of the year, pushing the default rate to 9%. “The timing on Sears and Claire’s is more uncertain, and our retail forecast would end the year at 5% absent these filings,” Rosenthal wrote. Putting the retail sector woes in context, Reorg First Day has calculated that retail bankruptcies soared 110% in the first half from the year-earlier period, accounting for $6 billion in debt.
Equity bears hunting for excess in the stock market might be better off worrying about bond prices, Alan Greenspan says. That’s where the actual bubble is, and when it pops, it’ll be bad for everyone. “By any measure, real long-term interest rates are much too low and therefore unsustainable,” the former Federal Reserve chairman said in an interview. “When they move higher they are likely to move reasonably fast. We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.” While the consensus of Wall Street forecasters is still for low rates to persist, Greenspan isn’t alone in warning they will break higher quickly as the era of global central-bank monetary accommodation ends.
Deutsche Bank’s Binky Chadha says real Treasury yields sit far below where actual growth levels suggest they should be. Tom Porcelli, chief U.S. economist at RBC Capital Markets, says it’s only a matter of time before inflationary pressures hit the bond market. “The real problem is that when the bond-market bubble collapses, long-term interest rates will rise,” Greenspan said. “We are moving into a different phase of the economy – to a stagflation not seen since the 1970s. That is not good for asset prices.” Stocks, in particular, will suffer with bonds, as surging real interest rates will challenge one of the few remaining valuation cases that looks more gently upon U.S. equity prices, Greenspan argues. While hardly universally accepted, the theory underpinning his view, known as the Fed Model, holds that as long as bonds are rallying faster than stocks, investors are justified in sticking with the less-inflated asset.
Earlier this year, President Donald Trump was shown a disturbing video of Syrian rebels beheading a child near the city of Aleppo. It had caused a minor stir in the press as the fighters belonged to the Nour al-Din al-Zenki Movement, a group that had been supported by the CIA as part of its rebel aid program. The footage is haunting. Five bearded men smirk as they surround a boy in the back of a pickup truck. One of them holds the boy’s head with a tight grip on his hair while another mockingly slaps his face. Then, one of them uses a knife to saw the child’s head off and holds it up in the air like a trophy. It is a scene reminiscent of the Islamic State’s snuff videos, except this wasn’t the work of Abu Bakr al-Baghdadi’s men. The murderers were supposed to be the good guys: our allies.
Trump wanted to know why the United States had backed Zenki if its members are extremists. The issue was discussed at length with senior intelligence officials, and no good answers were forthcoming, according to people familiar with the conversations. After learning more worrisome details about the CIA’s ghost war in Syria—including that U.S.-backed rebels had often fought alongside extremists, among them al Qaeda’s arm in the country—the president decided to end the program altogether. On July 19, the Washington Post broke the news of Trump’s decision: “a move long sought by Russia,” the paper’s headline blared. Politicians from both sides of the aisle quickly howled in protest, claiming that Trump’s decision was a surrender to Vladimir Putin.
Most of the Donald’s tweets amount to street brawling with his political enemies, but occasionally one of them slices through Imperial Washington’s sanctimonious cant. Indeed, Monday evening’s 140 characters of solid cut right to the bone: “The Amazon Washington Post fabricated the facts on my ending massive, dangerous, and wasteful payments to Syrian rebels fighting Assad…..” Needless to say, we are referencing not the dig at the empire of Bezos, but the characterization of Washington’s anti-Assad policy as “massive, dangerous and wasteful”. No stouter blow to the neocon/Deep State “regime change” folly has ever been issued by an elected public official. Yet there it is – the self-composed words of the man in the Oval Office. It makes you even want to buy some Twitter stock! Predictably, the chief proponent of illegal, covert, cowardly attacks on foreign governments via proxies, mercenaries, drones and special forces, Senator McWar of Arizona, fairly leapt out of his hospital bed to denounce the President’s action: “If these reports are true, the administration is playing right into the hands of Vladimir Putin.”
That’s just plain pathetic because the issue is the gross stupidity and massive harm that has been done by McCain’s personally inspired and directed war on Assad – not Putin and not Russia’s historic role as an ally of the Syrian regime. Since 2011, Senator McCain has been to the region countless times. There he has made it his business to strut about in the manner of an imperial proconsul – advising, organizing and directing a CIA recruited, trained and supplied army of rebels dedicated to the overthrow of Syria’s constitutionally legitimate government. At length, several billions were spent on training and arms, thereby turning a fleeting popular uprising against the despotic Assad regime during the 2011 “Arab spring” into the most vicious, destructive civil war of modern times, if ever. That is, without the massive outside assistance of Washington, Saudi Arabia and the emirates, the Syrian uprising would have been snuffed out as fast as it was in Egypt and Bahrain by dictators which had Washington’s approval and arms.
As it has happened, however, Syria’s great historic cities of Aleppo and Damascus have been virtually destroyed – along with its lesser towns and villages and nearly the entirety of its economy. There are 400,000 dead and 11 million internal and external refugees from an original population of hardly 18 million. The human toll of death, displacement, disease and disorder which has been inflicted on this hapless land staggers the imagination. Yet at bottom this crime against humanity – there is no other word for it – is not mainly Assad’s or Putin’s doing. It can be properly described as “McCain’s War” in the manner in which (Congressman) Charlie Wilson’s War in Afghanistan during the 1980’s created the monster which became Osama bin Laden’s al-Qaeda.
The WSJ reports that, in what appears to be the next gambit by the U.S. Military-Industrial Complex (or “deep state” for those so inclined) to force Trump to “prove” that he did not, in fact, collude or have any ties with Russia or Vladimir Putin, Pentagon and State Department officials have devised plans to hit Russia where it hurts the most, and supply Ukraine with antitank missiles and other weaponry, and are now seeking White House approval at a time when ties between Moscow and Washington are as bad as during any point under the Obama administration. American military officials and diplomats say the arms, which they characterized as defensive, are meant to deter aggressive actions by Moscow, which the U.S. and others say has provided tanks and other sophisticated armaments as well as military advisers to rebels fighting the Kiev government.
The question of course is, “why now?” Since the start of the Crimean conflict, which in turn was the byproduct of a State Department-facilitiated presidential coup in Ukraine, the US has been supporting Russian-speaking insurgents in the country’s east however Washington, wary of escalating the conflict, has largely limited its support for Kiev’s military to so-called non-lethal aid and training. So one attempt at “why now”, is because with Trump reeling, and having already caved on the latest Congressional anti-Russia bill, why not push the president to escalate the Russia conflict to a point where not even his predecessor dared to take it. For now, Trump is unaware of the plan: “A senior administration official said there has been no decision on the armaments proposal and it wasn’t discussed at a high-level White House meeting on Russia last week. The official said President Donald Trump hasn’t been briefed on the plan and his position isn’t known.”
There is something eerily fascinating about cold-blooded murderers – a staple of Hollywood thrillers and crime dramas—killing without emotion or remorse. Ordinary humans, afflicted with guilt for minor, not even criminal transgressions, can’t conceive of pulling the trigger and then sitting down for dinner. In real life, the number of people who can is glancingly small. Even for those few, actions have consequences. The blood never washes away. “Live and let live,” is, in American mythology, a benevolent and almost uniquely American attitude. We destroyed Japan and Germany in World War II and then helped rebuild them. Live and let live goes down well with the living, the winners. However, it’s often nothing more than balm for an uneasy conscience, hand sanitizer for bloodstained hands.
A century and a half later, many Southerners lack this “unique” American attitude towards their conquerers in the War of Northern Aggression. The war on terror has laid waste to large swaths of the Middle East and Northern Africa. Cities, towns, and villages have been reduced to smoking, bombed-out rubble, chaos reigns, the carnage is ubiquitous. The US military keeps count of its own personnel wounded and killed, a number in the thousands. Civilian casualties —or collateral damage as the military calls it—across Chaostan (Richard Maybury’s apt coinage) are in the millions, as are the number of people displaced (an estimated 11 million in Syria alone).
Imagine the American fury and media sensationalism if a small US town was carpet-bombed by a foreign power. YouTube’s servers would melt from the overflow of viewers watching videos of parents pulling their dead children from collapsed homes. The war on terror’s refugee flows threaten to upend civic order and submerge the cultures of the countries receiving them. It’s a vicious act of intellectual corruption to maintain that the war on terror does not create terrorists, that those killed, wounded, or displaced have no friends or family who will exact what they consider justified vengeance. The terrorism we see now is lava trickling from a volcano of hatred that has boiled, bubbled, and occasionally erupted for centuries, and will continue to do so. There will be no live and let live. Blood will have blood, not banalities.
The abrupt dismissal of White House communications director Anthony Scaramucci less than two weeks after his appointment may be linked to the outspoken financier’s China dealings. The firing has been widely attributed to Scaramucci’s verbal tirade to a reporter in addition to orders from new chief of staff John F. Kelly. But there’s a third issue that may have played into the decision, Jim Rickards, editor of investment newsletter Strategic Intelligence, told CNBC. The sale of Scaramucci’s hedge fund, SkyBridge Capital, to HNA Capital, a subsidiary of Chinese conglomerate HNA Group, was a red flag for Washington, according to Rickards. The acquisition, which was finalized in January and reportedly values SkyBridge at around $200 million, is currently pending approval from the Committee on Foreign Investment in the United States – or CFIUS – a government panel that reviews foreign purchases of American companies for national security risks.
Officially chaired by Treasury Secretary Steven Mnuchin, CFIUS involves multiple U.S. agencies, including the defense, commerce and state departments. Rickards, who previously worked with intelligence officials on CFIUS regarding foreign acquisitions of U.S. financial services firms, said he believes the Skybridge deal was “a sleeper story waiting to come back to haunt the White House.” HNA’s purchase is likely to get rejected amid concerns of Chinese control over U.S. hedge funds and investment banks — a decision that wouldn’t bode well for President Donald Trump’s administration, he said. “My recommendation would have been for CFIUS to turn the deal down…we had always warned ‘don’t let our adversaries such as China or Russia get plugged into the U.S. financial system’…When I was involved, this deal would have not gone through,” he said.
“In some ways, the White House is probably relieved to get rid of Scaramucci because now, no matter what happens to that deal, that burden won’t be with the White House,” Rickards continued. “Using the [New Yorker] interview was great cover to get rid of Scaramucci before the hedge fund deal and national security review blew up in his face.”
The financial watchdog has announced fresh measures to protect consumers from spiralling debt as official data showed that borrowing through credit cards, overdrafts and car loans has topped £200bn for the first time since the global financial crisis. The Financial Conduct Authority said it was cracking down on the high cost of overdrafts and reviewing the booming car loan market. The regulator’s latest intervention came as credit ratings agency Moody’s also warned about the growing household debt mountain, saying that some borrowers would struggle to repay their debt as the economy weakened and inflation ate into their salaries. Unsecured consumer credit, which includes credit cards, car loans and overdrafts, peaked in the autumn of 2008 – just as the banking crisis was taking hold.
It fell in subsequent years, but has been rising again since 2014 and is now in touching distance of the pre-crisis lending boom. Data from the Bank of England on Monday showed that it grew by 10% in the year to June, to almost £201bn. The last time outstanding debt was above £200bn was December 2008. In a paper published on Monday, the FCA said that one in six people with debt on credit cards, personal lending and car loans – 2.2 million – were in financial distress. They are more likely to be younger, have children, be unemployed and less educated than others. As households grapple with rising living costs, charities and policymakers have raised concerns that consumers are increasingly turning to loans amid worrying signs of a return to reckless lending by the banks.
A credit rating agency has warned that soaring levels of household debt could leave Britain’s lower-income families dangerously exposed amid signs of an economic downturn linked to Brexit. Moody’s said the UK’s weak economic climate meant it had to downgrade four of the five consumer finance sectors to negative. The agency’s warning over credit came as the Bank of England revealed that the amount borrowed by UK consumers through credit cards, loans and overdrafts had reached £200bn for the first time since the financial crash of 2008. Inflation, triggered by the low pound, is now rising faster than wage growth and has put growing pressure on households, squeezing budgets and causing credit card spending to increase and savings to fall.
In this context, the Bank of England has expressed concerns over surging levels of unsecured consumer borrowing on credit cards, which is going up by more than 10 per cent a year and outstripping income. Moody’s analyst Greg Davies said: “Household debt is high and still growing, leaving consumers vulnerable to an economic downturn, while higher inflation, weaker wage growth and levels of indebtedness leaves those in lower-income brackets the most exposed. “An additional challenge is that households’ capacity to draw on savings to maintain consumption and/or service their consumer debts has significantly diminished.” The credit rating agency has also warned in recent weeks of the potential economic damage if the UK fails to secure an exit trade deal with the EU.
“Our entire world is wired and connected. An artificial intelligence will eventually figure that out – and figure out how to collaborate and cooperate with other AI systems. Maybe the AI will determine that mankind is a threat, or that mankind is an inefficient waste of resources – conclusions that seems plausible from a purely logical perspective.”
Facebook shut down an artificial intelligence engine after developers discovered that the AI had created its own unique language that humans can’t understand. Researchers at the Facebook AI Research Lab (FAIR) found that the chatbots had deviated from the script and were communicating in a new language developed without human input. It is as concerning as it is amazing – simultaneously a glimpse of both the awesome and horrifying potential of AI. Artificial Intelligence is not sentient—at least not yet. It may be someday, though – or it may approach something close enough to be dangerous. Ray Kurzweil warned years ago about the technological singularity. The Oxford dictionary defines “the singularity” as, “A hypothetical moment in time when artificial intelligence and other technologies have become so advanced that humanity undergoes a dramatic and irreversible change.”
To be clear, we aren’t really talking about whether or not Alexa is eavesdropping on your conversations, or whether Siri knows too much about your calendar and location data. There is a massive difference between a voice-enabled digital assistant and an artificial intelligence. These digital assistant platforms are just glorified web search and basic voice interaction tools. The level of “intelligence” is minimal compared to a true machine learning artificial intelligence. Siri and Alexa can’t hold a candle to IBM’s Watson. Scientists and tech luminaries, including Elon Musk, Bill Gates, and Steve Wozniak have warned that AI could lead to tragic unforeseen consequences. Eminent physicist Stephen Hawking cautioned in 2014 that AI could mean the end of the human race. “It would take off on its own and re-design itself at an ever increasing rate. Humans, who are limited by slow biological evolution, couldn’t compete, and would be superseded.”
Why is this scary? Think SKYNET from Terminator, or WOPR from War Games. Our entire world is wired and connected. An artificial intelligence will eventually figure that out – and figure out how to collaborate and cooperate with other AI systems. Maybe the AI will determine that mankind is a threat, or that mankind is an inefficient waste of resources – conclusions that seems plausible from a purely logical perspective.
The American polity is not thriving. It has been incrementally failing to meet its needs for quite a while now, playing games with itself to pretend that it is okay while its institutional organs and economic operations decay. It turns this way and that way ever more desperately, over-steering like a drunk on the highway. It is drunk on the untruths it tells itself in the service of playing games to avoid meeting its real needs. Narratives are not truths. Here is a primary question we might ask ourselves: do we want to live in a healthy society? Do we want to thrive? If so, what are the narratives standing in the way of turning us in the direction? Let’s start with health care, so called, since the failure to do anything about the current disastrous system is so fresh. What’s the narrative there?
That “providers” (doctors and hospitals) can team up with banking operations called “insurance companies” to fairly allocate “services” to the broad population with a little help from the government. No, that’s actually not how it works. The three “players” actually engage in a massive racketeering matrix — that is, they extract enormous sums of money dishonestly from the public they pretend to serve and they do it twice: once by extortionary fees and again by taxes paid to subsidize mitigating the effects of the racketeering. The public has its own narrative, which is that there is no connection between their medical problems and the way they live. The fact is that they eat too much poisonous food because it’s tasty and fun, and they do that because the habits-of-life that they have complicitly allowed to ev0lve in this country offers them paltry rewards otherwise.
They dwell in ugly, punishing surroundings, spend too much time and waste too much money driving cars around it in isolation, and have gone along with every effort to dismantle the armatures of common social exchange that afford what might be called a human dimension of everyday living. So, the medical racket ends up being nearly 20 percent of the economy, while the public gets fatter, sicker, and more anxiously depressed. And there is no sign that we want to disrupt the narratives.
Five aid groups that operate migrant rescue ships in the Mediterranean have refused to sign up to the Italian government’s code of conduct, the Interior Ministry said, but three others backed the new rules. Charity boats have become increasingly important in rescue operations, picking up more than a third of all migrants brought ashore so far this year against less than one percent in 2014, according to the Italian coastguard. Italy, fearing that the groups were facilitating people smuggling from North Africa and encouraging migrants to make the perilous passage to Europe, proposed a code containing around a dozen points for the charities. Those who refused to sign the document had put themselves “outside the organised system of sea rescues, with all the concrete consequences that can have”, the ministry said.
Italy had previously threatened to shut its ports to NGOs that did not sign up, but an source within the Interior Ministry said that in reality those groups would face more checks from Italian authorities. Doctors Without Borders (MSF), which has taken part in many of the rescues of the 95,000 migrants brought to Italy this year, attended a meeting at the Interior Ministry but refused to sign the code. MSF objected most strongly to a requirement that aid boats must take migrants to a safe port themselves, rather than transferring people to other vessels, which allows smaller boats to stay in the area for further rescues. “Our vessels are often overwhelmed by the high number of [migrant] boats … and life and death at sea is a question of minutes,” MSF Italy’s director, Gabriele Eminente, wrote in a letter to the interior minister, Marco Minniti.
“The code of conduct puts at risk this fragile equation of collaboration between different boats,” he continued, adding that MSF still wanted to work with the ministry to improve sea rescues. [..] “For us, the most controversial point … was the commitment to help the Italian police with their investigations and possibly take armed police officers on board,” Jugend Rettet coordinator Titus Molkenbur said. “That is antithetical to the humanitarian principles of neutrality that we adhere to, and we cannot be seen as being part of the conflict.”
Good morning – Warren Murray here with your Tuesday briefing. Britain’s rising level of personal debt has prompted a warning from the Bank of England about dire consequences for lenders and the economy. There are “classic signs” that the risks involved in car finance, credit cards and personal loans are being underestimated as financial institutions make hay while the sun shines, says Alex Brazier, the Bank’s director for financial stability. The economy defied expectations when it grew strongly in the six months after the EU referendum. But that was partly fuelled by consumers racking up their credit cards and loans, as lenders offered easier terms and longer interest-free deals. Much higher levels of borrowing compared with income are now being allowed, at a time when household incomes have only marginally risen.
As the anniversary of the global financial meltdown approaches, Brazier has suggested current low rates of default on personal credit may have again caused banks to become blinkered to the potential for disaster. Back in 2007, “banks – and their regulators – were blind to the basic fact that more debt meant greater risk of loss”. “Lenders have not entered, but they may be dicing with, the spiral of complacency. The spiral continues, and borrowers rack up more and more debt. “[In 2007] complacency gave way to crisis. Companies and households were unable to refinance their debts. The result was economic disaster.”
The Bank of England has told banks, credit card companies and car loan providers that they risk fresh action against reckless lending as it warned of a looming “spiral of complacency” about mounting consumer debt. In its toughest warning yet about the possibility of a rerun of the financial crisis that devastated the economy 10 years ago, Threadneedle Street admitted it was alarmed about the increase in the amount of money being borrowed on easy terms over the past year. “Household debt – like most things that are good in moderation – can be dangerous in excess”, Alex Brazier, the Bank director for financial stability, said in a speech in Liverpool. “Dangerous to borrowers, lenders and, most importantly from our perspective, everyone else in the economy.”
Brazier’s said there were “classic signs” of lenders thinking the risks were lower following a prolonged period of good economic performance and low losses on loans. The first signs of the Bank’s anxiety about consumer debt came from its governor, Mark Carney, a month ago, but Brazier’s comments marked a ratcheting up of Threadneedle Street’s rhetoric. “Lenders have been the lucky beneficiaries of the benign way the economy has evolved. In expanding the supply of credit, they may be placing undue weight on the recent performance of credit cards and loans in benign conditions,” Brazier said. The willingness of consumers to take on more debt to fund their spending helped the economy grow strongly in the six months after the EU referendum, a period when the Bank expected growth to fall sharply.
Over the past year, Brazier said, household incomes had grown by just 1.5% but outstanding car loans, credit card balances and personal loans had risen by 10%. He added that terms and conditions on credit cards and personal loans had become easier. The average advertised length of 0% credit card balance transfers had doubled to close to 30 months, while advertised interest rates on £10,000 personal loans had fallen from 8% to around 3.8%, even though official interest rates had barely changed.
Debt, if used for productive investments, can be a solution to stimulating economic growth in the short-term. However, in the U.S., debt has been squandered on increases in social welfare programs and debt service which has an effective negative return on investment. Therefore, the larger the balance of debt becomes, the more economically destructive it is by diverting an ever growing amount of dollars away from productive investments to service payments. The relevance of debt growth versus economic growth is all too evident as shown below. Since 1980, the overall increase in debt has surged to levels that currently usurp the entirety of economic growth. With economic growth rates now at the lowest levels on record, the growth in debt continues to divert more tax dollars away from productive investments into the service of debt and social welfare.
It now requires nearly $3.00 of debt to create $1 of economic growth.
In fact, the economic deficit has never been greater. For the 30-year period from 1952 to 1982, the economic surplus fostered a rising economic growth rate which averaged roughly 8% during that period. Today, with the economy growing at an average rate of just 2%, the economic deficit has never been greater.
But again, it isn’t just Federal debt that is the problem. It is all debt. As discussed last week, when it comes to households, which are responsible for roughly 2/3rds of economic growth through personal consumption expenditures, debt was used to sustain a standard of living well beyond what income and wage growth could support. This worked out as long as the ability to leverage indebtedness was an option. The problem is that eventually, the debt reaches a level where the level of debt service erodes the ability to consume at levels great enough to foster stronger economic growth. In reality, the economic growth of the U.S. has been declining rapidly over the past 35 years supported only by a massive push into deficit spending by households.
[..]The massive indulgence in debt, or a “credit induced boom”, has now begun to reach its inevitable conclusion. The debt driven expansion, which leads to artificially stimulated borrowing, seeks out diminishing investment opportunities. Ultimately these diminished investment opportunities lead to widespread malinvestments. Not surprisingly, we clearly saw it play out in “real-time” in 2005-2007 in everything from sub-prime mortgages to derivative instruments. Today, we see it again in mortgages, subprime auto loans, student loan debt and debt driven stock buybacks and acquisitions.
When credit creation can no longer be sustained the markets will begin to “clear” the excesses. It is only then, and must be allowed to happen, can resources be reallocated back towards more efficient uses. This is why all the efforts of Keynesian policies to stimulate growth in the economy have ultimately failed. Those fiscal and monetary policies, from TARP and QE to tax cuts, only delay the clearing process. Ultimately, that delay only potentially worsens the inevitable clearing process. That clearing process is going to be very substantial. With the economy currently requiring roughly $3 of debt to create $1 of real, inflation-adjusted, economic growth, a reversion to a structurally manageable level of debt would involve a nearly $35 Trillion reduction of total credit market debt from current levels.
Despite cutting the economic growth outlook for the U.S. and U.K., the IMF kept its global growth forecast unchanged on expectations the euro zone and Japanese growth would accelerate. In the July update of its World Economic Outlook, the IMF forecast global economic growth of 3.5% for 2017 and 3.6% for 2018, unchanged from its April outlook. That was despite earlier cutting its U.S. growth projection to 2.1% from 2.3% for 2017 and to 2.1% from 2.5% for 2018, citing both weak growth in the first quarter of this year as well as the assumption that fiscal policy will be less expansionary than previously expected. A weaker-than-expected first quarter also spurred the IMF to cut its forecast for U.K. growth for this year to 1.7% from 2.0%, while leaving its 2018 forecast at 1.5%.
But slowdowns in the U.S. and U.K. were expected to be offset by increased forecasts for many euro area countries, including Germany, France, Italy and Spain, where first quarter growth largely beat expectations, the IMF said. “This, together with positive growth revisions for the last quarter of 2016 and high-frequency indicators for the second quarter of 2017, indicate stronger momentum in domestic demand than previously anticipated,” the IMF said in its release. It raised its euro-area growth forecast for 2017 to 1.9% from 1.7%. For 2018, it increased its forecast to 1.7% from 1.6%.
In the Kent seaside town of Whitstable, long-term residents call them DFLs – people who have moved “down from London”, sometimes for the lifestyle but more often for cheaper housing. The number of people fleeing the capital to live elsewhere has hit a five-year high. In the year to June 2016, net outward migration from London reached 93,300 people – more than 80% higher than five years earlier, according to analysis of official statistics. A common theme among the leavers’ destinations is significantly cheaper housing, according to the estate agent Savills, which analysed figures from the Office for National Statistics and the Land Registry. Cambridge, Canterbury, Dartford and Bristol are reportedly among the most popular escape routes for people who have grown tired of London and its swollen property prices.
The most likely destination for people aged over 25 moving from Islington is St Albans in Hertfordshire, where the average home is £173,000 cheaper. People moving from Ealing to Slough – the most popular move from the west London borough – stand to save on average £241,000. Among all homeowners leaving London, the average house price was £580,000 while the average in the areas they moved to was £333,000. The exodus is not just of homeowners, but of renters too. Rents in London have soared by a third in the last decade, compared to 18% in the south-west, 13% in the West Midlands and 11% in the north-west of England.
The only age group that has a positive net migration figure in the capital is those in their twenties, the research found. Everyone else, from teens to pensioners, is tending to get out. Since 2009, the trend has been steadily increasing among people in their thirties with 15,000 more people in that age bracket leaving every year than at the end of the last decade – a 27% rise. The phenomenon is being driven by a widespread desire to “trade up the housing ladder”, something that is all too often impossible in London according to Lucian Cook, Savill’s head of residential research. “Five years ago people would have been reluctant [to move out] because the economy wasn’t as strong and some owners didn’t want to miss out on house price growth [in London],” he said.
As the effects of the housing crisis further recede, markers of distress are declining, with one notable exception: Among the batches of severely delinquent mortgages bought by institutional investors, foreclosures are on the rise. The trend is a reminder of the reasons many community advocates resisted allowing institutional investors to buy delinquent mortgages in government auctions that began in 2010. Wall Street, those advocates said, shouldn’t be rewarded for its role in creating the housing crisis with the chance to buy for pennies on the dollar the very assets whose values it dented. The government auctions promised a risk-sharing solution that would benefit nearly everyone: Homeowners whose mortgages had been bought dirt-cheap could get loan modifications, investors would get profitable assets, and communities would see tax revenues restored and neighborhoods revitalized.
But that win-win-win scenario may bring little relief to the most distressed among those troubled assets. A new Attom Data analysis for MarketWatch shows increasing foreclosures in the mortgages auctioned by the government. A subsidiary of private-equity firm Lone Star Investments, for example, has foreclosed on nearly 2,000 homeowners this year, through early July, and has increased foreclosures every year since 2013. And a Goldman Sachs subsidiary called MTGLQ, which has more than doubled foreclosures each year from 2014 to 2016, may do the same again this year, based on early 2017 data. Those figures stand in stark contrast to the housing market overall, where foreclosures fell 22% in the second quarter, touching an 11-year low of just over 220,000.
The institutional-investor foreclosure figures are a small fraction of the total, noted Daren Blomquist, Attom’s senior vice president of communications. And they don’t surprise investors who intentionally snatch up the most distressed mortgages available because their elevated risk promises higher yield. Attom Data does show an uptick in foreclosures by other lenders, though not all participated in the government auctions. But they’re a reminder that a decade after the housing downturn began, the pockets of foreclosures that still pop up represent the worst of the worst, prompting even those questioning the program to agree that some foreclosures were inevitable, no matter who owned the mortgages. Analysts call the current crop of foreclosures “the last of the pig moving through the python.”
The Australian housing market has peaked and could crash if the country’s central bank raises rates by too much or too quickly according to researchers at the Swiss bank, UBS. Property in Australia has boomed and the most recent government data marked growth in residential property prices at 10.2% year on year for the 2017 March quarter. In a note Monday, UBS Economist George Tharenou said any rash interest rate action from the Reserve Bank of Australia (RBA) could trigger a crash. “We still see rates on hold in the coming year, amid macroprudential tightening on credit growth and interest only loans. “Hence we still see a correction, but not a collapse, but if the RBA hikes too early or too much (as flagged by its hawkish minutes), it risks triggering a crash,” Tharenou warned.
Housing starts fell 19% in the first quarter of the year and May’s mortgage approvals also slid 20%. After a multi-year boom, the cost of an average home in the country now sits at 669,700 Australian dollars ($532,000) but Tharenou said price growth is certain to slow. “Despite weaker activity, house prices just keep booming with still strong growth of 10% y/y in June. However, this is unsustainably 4-5 times faster than income. “Looking ahead, we still see price growth slowing to 7% y/y in 2017 and 0-3% in 2018, amid record supply & poor affordability,” the economist added.
July 12 marks the date the Bank of Canada ignored common sense and increased its rate for the first time in seven years. Economists are largely divided on whether this was a good move, but in my opinion this was an ill-informed decision, largely based on the usually strong first quarter data, which may prove unsustainable in the longer term. In turn, it raises important questions about the conduct of monetary policy and the need to rethink the role and purpose of central bank policy. For the record, I don’t think there is much to fear from a single increase to 0.75% from 0.50, though it will have an immediate impact on mortgage rates — some Canadians will pay more for their homes. However, it is the prospect of what that move represents that sends chills down this economist’s spine.
As we know all too well, central banks never raise rates once or twice, but usually do so several times. Indeed, the consensus among economists is that there will be at least two more raises before the end of 2018, bringing the bank rate to 1.25%. This is still low by historical standards, but the raises begin to add up. I expect many more rate hikes through 2019 and 2020. You see, the Bank of Canada believes the so-called natural rate is 3%, which means we could possibly see nine more interest rate increases. Imagine the damage that will do. Yet, according to their own model, this rate is the “neutral” or “natural” rate and should have no far reaching impact. Try telling that to Canadians who have consumer debt and a mortgage. Clearly, there is nothing “neutral” about these rate increases. This alone is a reason to rethink monetary policy.
Second, the Bank of Canada targets inflation, and has been officially since 1991, a fact it reminds us of all the time. All other objectives, including economic growth and unemployment, or even household debt and income inequality, are far behind the principal objective of trying to keep the inflation rate on target. There is much to say about this, including whether interest rates and monetary policy in general are the best tool to deliver on the inflation crusade. Even if we accept this, inflation is currently at a near two-decade low. In other words, where’s the inflation beef? Inflation does not represent a current threat, and there are no inflationary pressures in the economy, which raises the question: Why raise rates?
Shinzo Abe is fighting for his future as Japan’s prime minister as scandals drag his government’s popularity close to what political observers describe as “death zone” levels. Apart from clouding Abe’s hopes of winning another term as leader of the Liberal Democratic Party (LDP) when a vote is held next year, the polling slump also undermines his long-running push to revise Japan’s war-renouncing constitution. Abe, who returned to the prime ministership four and a half years ago, was long seen as a steady hand whose position appeared unassailable – so much so that the LDP changed its rules to allow Abe the freedom to seek a third consecutive three-year term at the helm of the party. “He is no longer invincible and the reason why he is no longer invincible is he served his personal friends not the party,” said Michael Thomas Cucek, an adjunct professor at Temple University Japan.
Abe’s standing has been damaged by allegations of favours for two school operators who have links to him. The first scandal centred on a cut-price land deal between the finance ministry and a nationalist school group known as Moritomo Gakuen. The second related to the approval of a veterinary department of a private university headed by his friend, Kotaro Kake. Abe has repeatedly denied personal involvement, but polls showed voters doubted his explanations, especially after leaked education ministry documents mentioned the involvement of “a top-level official of the prime minister’s office” in the vet school story. Abe attempted to show humility in a parliamentary hearing this week by acknowledging it was “natural for the public to sceptically view the issue” because it involved his friend. “I lacked the perspective,” he said. Experts doubt that Abe’s contrition, combined with a planned cabinet reshuffle next week, will do much to reverse his sagging fortunes.
The EU should act “within days” if new sanctions the US plans to impose on Russia prove to be damaging to Europe’s trade ties with Moscow, an internal memo seen by the media says. Retaliatory measures may include limiting US jurisdiction over EU companies. An internal memo seen by the Financial Times and Politico has emerged amid mounting opposition to a US bill seeking to hit Russia with a new round of sanctions. The bill, if signed into law, will also give US lawmakers the power to veto any attempt by the president to lift the sanctions. The document reportedly said European Commission chief Jean-Claude Juncker was particularly concerned the sanctions would neglect the interests of European companies. Juncker said Brussels “should stand ready to act within days” if sanctions on Russia are “adopted without EU concerns being taken into account,” according to the FT.
The EU memo also warns that “the measures could impact a potentially large number of European companies doing legitimate business under EU measures with Russian entities in the railways, financial, shipping or mining sectors, among others.” Restrictions against Russia come as part of the Countering Iran’s Destabilizing Activities Act, targeting not only Tehran, but also North Korea. Initially passed by the Senate last month, the measures seek to impose new economic measures on major sectors of the Russian economy. The draft legislation would also introduce individual sanctions for investing in Gazprom’s Nord Stream 2 gas pipeline project, outlining steps to hamper construction of the pipeline and imposing sanctions on European companies which contribute to the project.
European Commission preparations to retaliate against proposed new U.S. sanctions on Russia that could affect European firms are likely to face resistance within a bloc divided on how to deal with Moscow, diplomats, officials and experts say. A bill agreed by U.S. Senate and House leaders foresees fines for companies aiding Russia to build energy export pipelines. EU firms involved in Nord Stream 2, a 9.5 billion euro ($11.1 billion) project to carry Russian gas across the Baltic, are likely to be affected. Both the European Union and the United States imposed broad economic sanctions on Russia’s financial, defense and energy sectors in response to Moscow’s annexation of Crimea from Ukraine in 2014 and its direct support for separatists in eastern Ukraine. But northern EU states in particular have sought to shield the supplies of Russian gas that they rely on.
Markus Beyrer, director of the EU’s main business lobby, Business Europe, urged Washington to “avoid unilateral actions that would mainly hit the EU, its citizens and its companies”. The Commission, the EU executive, will discuss next steps on Wednesday, a day after the U.S. House of Representatives votes on the legislation, knowing that the U.S. move threatens to reopen divisions over the bloc’s own Russia sanctions. Among the European companies involved in Nord Stream 2 are German oil and gas group Wintershall, German energy trading firm Uniper, Anglo-Dutch Royal Dutch Shell, Austria’s OMV and France’s Engie. The Commission could demand a formal U.S. promise to exclude EU energy companies; use EU laws to block U.S. measures against European entities; or impose outright bans on doing business with certain U.S. companies, an EU official said.
But if no such promise is offered, punitive sanctions such as limiting the access of U.S. companies to EU banks require unanimity from the 28 EU member states. Ex-Soviet states such as Poland and the Baltic states are unlikely to vote for retaliation to protect a project they have resisted because it would increase EU dependence on Russian gas. An EU official said most member states saw Nord Stream 2 as “contrary or at least not fully in line with European objectives” of reducing reliance on Russian energy. Britain, one of the United States’ closest allies, is also wary of challenging the U.S. Congress as it prepares to leave the EU and seeks a trade deal with Washington. In fact, the EU’s chief executive, Jean-Claude Juncker, has few tools that do not require unanimous support from the bloc’s 28 governments.
The Commission could act alone to file a complaint at the World Trade Organisation. But imposing punitive tariffs on U.S. goods would require detailed proof to be gathered that European companies were being unfairly disadvantaged — a process that would take many months. Diplomatic protests such as cutting EU official visits to Washington are unlikely to have much effect, since requests by EU commissioners for meetings with members of Trump’s administration have gone unanswered, EU aides say.
The new US special representative for Ukraine says Washington is actively reviewing whether to send weapons to help those fighting against Russian-backed rebels. Kurt Volker told the BBC that arming Ukrainian government forces could change Moscow’s approach. He said he did not think the move would be provocative. Last week, the US State Department urged both sides to observe the fragile ceasefire in eastern Ukraine. “Defensive weapons, ones that would allow Ukraine to defend itself, and to take out tanks for example, would actually to help” to stop Russia threatening Ukraine, Mr Volker said in a BBC interview.
“I’m not again predicting where we go on this, that’s a matter for further discussion and decision, but I think that argument that it would be provocative to Russia or emboldening of Ukraine is just getting it backwards,” he added. He said success in establishing peace in eastern Ukraine would require what he called a new strategic dialogue with Russia.
The coalition on Monday rejected calls for an investigation to be launched into the first months of the government’s time in power, as a dispute between Prime Minister Alexis Tsipras and ex-finance minister Yannis Varoufakis over that period in 2015 became public. “The evaluation of this period has to be conducted with political criteria, not myth-making or gossip,” said government spokesman Dimitris Tzanakopoulos, who accused Varoufakis of trying to advertise his recent book via the “systemic media” he once attacked. Tzanakopoulos’s comments came after Tsipras gave an interview to The Guardian in which he admitted making “big mistakes” in the past and suggested that Varoufakis’s plan for a parallel payment system could not be considered seriously.
“Yanis is trying to write history in a different way,” said Tsipras. “When we got to the point of reading what he presented as his plan B it was so vague, it wasn’t worth the trouble of even talking about. It was simply weak and ineffective.” The former minister immediately responded to the premier’s comments by claiming they displayed a “deep incoherence,” as Varoufakis claims that he had made Tsipras aware of the plan before he came to office yet the SYRIZA leader still chose to appoint him to the cabinet. “Either I was the right choice to spearhead the ‘collision’ with the troika of Greece’s lenders because my plans were convincing, or my plans were not convincing and, thus, I was the wrong choice as his first finance minister,” he wrote in a letter to The Guardian.
New Democracy called for judicial and parliamentary investigations into the claims made by Varoufakis, as well as by former energy minister Panayiotis Lafazanis. The latter claimed in a radio interview on Saturday that he had secured an advance payment from Russia for a gas pipeline to be used to held fund Greece if it left the euro. “Varoufakis and Lafazanis described with clarity the SYRIZA leadership’s plans to take Greece out of the eurozone,” said the conservatives in a statement. “If these plans were seen through to the end, the country would have found itself in a dramatic situation like Venezuela, with unforeseeable social consequences.”
[..] the Greek prime minister, Alexis Tsipras, having admitted to “big mistakes”, was asked if appointing me as his first finance minister was one of them. According to the interviewer, Mr Tsipras said “Varoufakis … was the right choice for an initial strategy of ‘collision politics’, but he dismisses the plan he presented had Greece been forced to make the dramatic move to a new currency as ‘so vague, it wasn’t worth talking about’”. Given that I presented my plans to Mr Tsipras for deterring the troika’s aggression and responding to a potential impasse (and any move by the troika to evict Greece from the eurozone) before we won the election of January 2015, and I was chosen by him as finance minister (one presumes) on the basis of their merit, his answer reflects a deep incoherence.
Either I was the right choice to spearhead the “collision” with the troika of Greece’s lenders because my plans were convincing, or my plans were not convincing and, thus, I was the wrong choice as his first finance minister. Arguing, as Mr Tsipras does, that I was both the right choice for the initial confrontation and that my plan B was so vague it wasn’t worth the trouble of even talking about is disingenuous, albeit insightful, for it reveals the impossibility of maintaining a radical critique of his predecessors while adopting the Tina (There Is No Alternative) doctrine.
Athens has outlined plans to return to the financial markets for the first time since 2014, with a plan to sell new five-year bonds to investors. Existing Greek five-year bonds were trading at 3.6% on Monday morning compared with 63% at the height of the Greek financial crisis in 2012 when the finance ministry was unable to pay public sector wages and there were riots in the streets. Following the announcement that Athens would be returning to the market, the yield fell to 3.4%. The Greek finance ministry has set a goal of a 4.2% interest rate on the new bond. But banking sources believe that level will be hard to achieve and say an interest rate of between 4.3% to 4.5% is much more likely. Government sources say valuation will take place on Tuesday 25 July.
The market test is crucial to Greece for not only judging sentiment of the market, from which it has been essentially exiled since the start of its economic crisis, but also for weaning itself off borrowed bailout funds. Speaking after the bond issue was announced, the EU’s economy commissioner, Pierre Moscovici, described the public spending cuts imposed on Greece since it almost went bust as “too tough” but “necessary”, adding there was now “light at the end of austerity”. Reuters reported that Greece had employed six banks – BNP Paribas, Bank of America Merrill Lynch, Citigroup, Deutsche Bank, Goldman Sachs and HSBC – to act as joint lead managers for a five-year euro bond “subject to market conditions”. Greek ministers will provide more details on Monday afternoon about how much it hopes to borrow, and on what terms.
If the issue is successful, it could help Greece, which is still coping with a debt to GDP ratio of 180%, to exit its long cycle of austerity and rescue packages. Late on Friday, S&P upgraded its outlook on Greek government debt from stable to “positive”, thanks partly to renewed hopes that the country’s creditors could finally grant it debt relief.
Delays in the funding of hospitals, social spending cuts and low expenditure on the Public Investments Program served to prettify the picture of the state budget over the first half of the year, producing a primary surplus of 1.93 billion euros, Finance Ministry figures showed on Monday. At the same time budget revenues posted a marginal increase over the target the ministry had set for the January-June period. However, the big challenge for the government starts at the end of this month with the payment of the first tranche of income tax by taxpayers, followed later on by the Single Property Tax (ENFIA) and road tax at the end of the year.
In total the state will have to collect 33 billion euros by the end of the year, which is considerably higher than in the second half of 2016. According to the H1 budget data, the primary surplus amounted to 1.936 billion euros, against a primary surplus of 1.632 billion in the same period last year, and a target for 431 million for the year to end-June. Expenditure missed its target by 1.15 billion euros, amounting to 22.86 billion in the first half. Compared to last year it was down 757 million euros. Hospital funding missed its target by 265 million.
“The toxic combination of government debt, corporate debt, WMPs, and unrealistic growth expectations have set up China for the greatest market crash in history. But, not yet. As analysis will continue to prove, political forces will put off a day of reckoning until early 2018.”
China is in the greatest financial bubble in history. Yet, calling China a bubble does not do justice to the situation. This story has been touched on periodically over the last year. China has multiple bubbles, and they’re all getting ready to burst. If you make the right moves now, you could be well positioned even as Chinese credit and currency crash and burn. The first and most obvious bubble is credit. The combined Chinese government and corporate debt-to-equity ratio is over 300-to-1 after hidden liabilities, such as provincial guarantees and shadow banking system liabilities, are taken into account. Paying off that debt requires growth, but the growth itself is fueled by more debt. China is now at the point where enormous new debt is required to achieve only modest new growth. This is clearly non-sustainable.
The next bubble is in investment instruments called Wealth Management Products, or WMPs. Picture this. You’re a middle-class Chinese saver and you walk into a bank. They offer you two investment options. The first is a bank deposit that pays about 2%. The other is a WMP that pays about 7%. Which do you choose? In the past ten years, bank customers have chosen almost $12 trillion of WMPs. That might be fine if WMPs were like high-quality corporate or municipal bonds. They’re not. They’re more like the biggest Ponzi scheme in history. Here’s how they work. Proceeds from sales of WMPs are loaned to speculative real estate developers and unprofitable state owned enterprises (SOEs) at attractive yields in the form of notes. So, WMPs resemble collateralized debt obligations, CDOs, the same product that sank Lehman Brothers in the panic of 2008.
The problem is that the borrowers behind the WMPs can’t pay their debts. They’re relying on further bubbles in real estate or easy credit from the government to meet their interest obligations. What happens when a WMP matures? Usually the bank customer is encouraged to rollover the investment into a new WMP. What happens if the customer wants her money back? The bank sells a new WMP to another customer, then uses those sales proceeds to redeem the first customer. The new customer now steps into the shoes of the first customer with the same pile of bad debt. That’s where the Ponzi dynamic comes in. Simply put, most of the debts backing up the WMPs cannot be repaid, which means it’s just a matter of time before the WMP market goes into a full meltdown and triggers a banking panic.
Finally, there is an infrastructure bubble. As explained in more detail below, China has kept its growth engine humming mostly with investment instead of aggregate demand from consumers. Investment is fine if it is directed at long-term growth projects that produce a positive expected return and help the broader economy grow as well. But, that’s not what China has done. About half of China’s investment in the past ten years has been wasted on “ghost cities,” white elephant transportation facilities, and prestige projects that look good superficially, but that don’t produce enough revenue or efficiencies to pay for themselves. Much of this investment was financed with debt. If the project itself is not revenue producing then the associated debt cannot be repaid, and will go into default.
Less than a decade after various complex, synthetic, squared, cubed and so on securitized debt structures nearly brought down the financial system, here come “Sovereign Bond-Backed Securities.” Moments ago, the FT reported that in a watershed event for the European – and global – bond markets, Brussels is pressing for sovereign debt from across the eurozone to be “bundled into a new financial instrument and sold to investors as part of a proposal to strengthen the single currency area.” Call it securitized sovereign debt. In the latest attempt by Europe to create a common bond market, a European Commission paper on the future of the euro seen by the Financial Times, advocates the launching of a market of “sovereign bond-backed securities” — packaging different countries’ national debt into a new asset.
The logic is simple: combine all the debt from strong and weak countries into one big pool, eliminating the outliers on both sides, then tranche it out, and sell it based on required yield returns. “Officials hope that the plans would boost demand for debt issued by governments with relatively weaker economies, and encourage banks to manage their risks better by diversifying their portfolios, while avoiding old political battles over whether the currency bloc should issue common bonds”. Why now? Because as has been Germany’s intention all along, Berlin has been hoping to create a fiscally intergrated Europe (with a shadow government in Berlin of course), call it a (quasi) “fiscal union”, and which is much more stable and resilient than the current iteration which is only as strong as its weakest link. Securitizing the sovereign debt resolves virtually all outstanding problems.
“The commission paper is the latest in a series of efforts to kick-start integration inside the eurozone. Such integration efforts have stalled since financial markets became convinced in 2013 that the European Central Bank would not allow the eurozone to break up. The last successful integration project was the creation of an EU banking union three years ago.” There is another reason why now: over the next year, the ECB’s QE, which has been instrumental to implement Draghi’s “Whatever it takes” bluff, will start hiking rates and eventually unwinding its balance sheet, the world’s biggest. That’s when the European bond market may have its next freak out moment. As a result, Brussels and Frankfurt are hoping to preempt this potential unwind by coming up with today’s “ingenious” solution.
The EU executive will suggest on Wednesday the euro zone might need to issue collective debt and run a joint budget, among proposals for bolstering the single currency that echo ideas from new French President Emmanuel Macron. People familiar with the European Commission reflection paper told Reuters the scenario of a finance minister managing common revenue, spending and borrowing had been worked on for many months in Brussels, but now appears a much more likely option since centrist former banker Macron won power on May 7. German conservatives dislike an idea they say means paying for poorer neighbors. But Chancellor Angela Merkel, seeking re-election in September, has welcomed Macron’s victory and EU officials said they hoped governments might start working on a plan to forge a more cohesive euro zone from next year.
The Commission paper examines possible reforms to the bloc after the 2010-2012 sovereign debt crisis that nearly destroyed it and which triggered a wave of quick fixes for its weak spots. While some problems have been addressed, there is a lot more EU governments need to do to have an optimally functioning Economic and Monetary Union (EMU), the Commission will say. The document, part of a wider series on the future of the EU, comes as the EU is to start talks with Britain on the terms of its withdrawal – a great setback to European integration but one that will see the euro zone make up nearly four-fifths of the EU’s economy, up from two thirds today. The Commission will avoid making any clear suggestions as to the evolution of the single currency area, leaving it up to EU governments to decide which of the ideas they like. But it does say that in the later stages of deepening euro zone integration, not least because it would require politically difficult and time-consuming changes to EU treaties, the bloc could establish a euro zone treasury.
The value of the pound dropped after a projection suggested the Conservatives could fail to win an outright majority in the election on 8 June. Previous opinion polls suggested Prime Minister Theresa May’s party would increase its majority, which is currently 17 seats. But the projection, published in the Times and based on YouGov research, suggests a possible hung parliament. Sterling fell by more than half of one per cent, but recovered some losses. By early Wednesday morning, it was trading 0.44% lower against the dollar at $1.28020 and 0.29% lower against the euro at €1.146. The Times said the YouGov data suggested that the Tories could lose up to 20 of the 330 seats they held in the last parliament, with Labour gaining nearly 30 seats.
The Conservatives would still be the biggest party, but would not have an overall majority. The model is based on 50,000 interviews over a week, with voters from a panel brought together by YouGov. It uses a new “constituency-by-constituency” model for polling, which the paper says allows for big variations. According to the Times, “the estimates were met with scepticism by Tory and Labour figures.” YouGov’s chief executive, Stephan Shakespeare said the model had been tested during the EU referendum campaign, when it consistently put the winning Leave side ahead. But he added: “It would take only a slight fall in Labour’s share and a slight increase in the Conservatives’ to result in Mrs May returning to No 10 with a healthy majority.”
Flapping Theresa May fired off a volley of insults at Jeremy Corbyn today after Labour surged in general election polls. The desperate Prime Minister even conjured up an image of the Labour leader naked in Brussels as she urged voters to consider the impact of propelling Mr Corbyn to No 10. She used a Labour legend’s quote as she mocked Mr Corbyn over what she claimed would be his weakness in tough EU divorce talks. “With his position on Brexit , he will find himself alone and naked in the negotiating chamber,” she said. “I know that’s an image that doesn’t bear thinking about but actually this is very serious.” The barb was particularly wounding for Labour by borrowing the charge from one of the party’s heroes, NHS founder Aneurin Bevan.
Urging Labour conference delegates in October 1957 not to support unilateral nuclear disarmament, he warned: “You will send a British Foreign Secretary, whoever he may be, naked into the conference chamber.” Challenged by the Mirror, Mrs May denied demeaning the office of Prime Minister with her outspoken attacks. And she was later forced to deny they showed she was getting “desperate”, saying: “It represents the difference between myself, having prepared for the negotiations, having a clear plan for the negotiations, and Jeremy Corbyn and the Labour Party who have said they would tear up the plan we have produced.” Speaking at the former railway station in Wolverhampton, Mrs May claimed her rival’s performance in the Sky News/Channel 4 TV showdown proved he could not be PM. “Despite being a Member of Parliament for 34 years, despite being the leader of the Labour Party for the last two years, he’s simply not ready to govern, and not prepared to lead,” she said.
Just three weeks after reports first emerged that the Trump administration was considering arming the Syrian Kurd militia caught in the crossfire between Turkish and Syrian army forces, NBC reported that the American military has started shipping weapons and equipment to the Kurdish fighters of the Syrian Democratic Forces, also known as YPG, a key US ally on the ground in Syria. Citing an unnamed official, NBC adds that the U.S. began providing the equipment in the last 24 hours. Details were scarce, with no specifics about what weapons and supplies the US is sending the Syrian Democratic Forces or how those items are being delivered however when the report first emerged, the U.S. military announced it would provide the YDF with ammunition, rifles, armor, radios, bulldozers, vehicles, and engineering equipment.
Pentagon spokesman Eric Pahon told RT taid that this move represents the “early steps to prepare for the eventual liberation of Raqqa,” which the Islamic State has declared the capital of its self-proclaimed caliphate. “Overall, the equipment the US-led coalition will provide to the SDF includes small arms, ammunition, heavy machine guns and weapons capable of defeating specific threats our partner forces are expected to encounter as they take the fight to a desperate enemy, such as heavily-armored vehicle-borne IEDs,” Pahon said. Earlier this month US officials said that Trump had signed off on a plan “to equip Kurdish elements of the Syrian Democratic Forces” in the fight to retake the Syrian city of Raqqa from ISIS. “The SDF, partnered with enabling support from U.S. and coalition forces, are the only force on the ground that can successfully seize Raqqa in the near future,” Pentagon spokeswoman Dana White said in a statement.
The announcement is guaranteed to send Turkey’s president Erdogan into another fit of rage. Earlier this month Erdogan condemned Trump’s decision to arm Syrian Kurds whom Turkey considers to be terrorists and an extension of outlawed Kurdish insurgents within its borders. Three weeks ago Erdogan said: “I hope very much that this mistake will be reversed immediately,” adding that “we want to believe that our allies would prefer [to] be side by side with ourselves rather than with the terror groups.” President Trump and Erdogan met earlier this month and discussed the administration’s plans to arm Kurdish militias in Syria. It was unclear what agreement the two leaders reached on this controverial move.
At the same time, Reuters reported that Syrian rebels say the United States and its allies “are sending them more arms to try to fend off a new push into the southeast by Iran-backed militias aiming to open an overland supply route between Iraq and Syria.” Rebels said military aid has been boosted through two separate channels: a program backed by the CIA, known as the MOC, and regional states including Jordan and Saudi Arabia, and one run by the Pentagon. “There has been an increase in the support,” said Tlass Salameh, head of the Jaish Usoud al-Sharqiya, one of the FSA groups backed via the CIA-backed program. “There’s no way we can let them open the Baghdad-Damascus highway,” he said.
There is a very REAL plot to overthrow Trump led by the political establishment and aided by the mainstream press.. This is not simply speculation – this is the real deal. Of course the Washington Post and New York Times are in full swing to get rid of Trump. No matter what it might be, the twist is always against Trump right down to the story how Sean Spicer wanted to see the Pope because he is a devote Catholic and was denied. CNN, of course, is also part of this conspiracy. You will NEVER find any positive article about Trump in mainstream media. Here is CNN and we can see that 50% of the top stories are always against Trump. We have Boehner coming out saying Trump is a disaster. This is the guy who threw people off committees if they did not vote for his agenda. The Kushner story is desperately trying to make something out of nothing.
Here we have after Flynn’s removal, Kushner suggesting setting up a direct channel for diplomatic purposes regarding Syria with the Russians. That is entirely within reason and has been done during confrontations in the past. This was only a suggestion. It was not done, yet the press twist this into somehow supporting Russia who single-handedly defeated Hillary and put Trump in office. They think if they can just keep selling that nonsense it will become a fact.. The press seems to want war with Russia and absolutely nothing else. No such link was established and the last thing you want to do is not talk to your adversary. So why is this a major story? Of yes. It’s again RUSSIA. The press created the Spanish American War. They supported the Vietnam War and kill more than 58,000 American boys, most of my high school friends died thanks to them.
Behind the Curtain, Republican Elites are conspiring to overthrow Trump (including Boehner) to protect the establishment. McCain and Graham are the worst of the lot in office. They obviously picked up the phone and called Boehner for help. The Republicans have lost it. They think this “populism” is over with Macron’s victory in France so it’s time to get rid of Trump and it will all be OK again. I have never seen such an all out effort on a massive coordinated effort to reject the people’s demand for reform. This is HIGHLY dangerous for we can very well move toward civil war. These people think getting rid of Trump and it will all be roses and raining money for them once again. They are DEAD wrong! Our model also warns that that United States can break up as a result of this by 2032-2040.
Attending a campaign rally ahead of the country’s elections, Angela Merkel claimed that now was the time for Europe to pay more attention to its own interests, and “take our fate into our own hands”. In an uncharacteristically bold speech, she went so far as to suggest that even the US was no longer a reliable partner to the EU – a strong statement, according to officials, who were left stunned. The words appeared to herald a change in transatlantic relations – effectively saying with Donald Trump in charge, the US-European alliance would never be the same. Mrs Merkel’s out of character appearance also signalled a strong pro-European stance to voters in Germany, as well as the wider EU, that Berlin will be playing a more activist role in the bloc. Norbert Spinrath, Europe spokesman in the Bundestag for the Social Democrats, said: “[Mrs] Merkel seems to have finally understood that she really needs to get stuck in and solve Europe’s problems.
“She has to realise that Europe is more than just fiscal consolidation — we need closer integration, we need to strengthen the currency and fight social imbalances.” The speech comes just weeks after newly elected French president Emmanuel Macron announced his plans to spearhead reforms in the Eurozone. It would be a sharp departure from her previous role as the EU’s crisis manager, with Mr Macron’s election pushing the German leader to present a more promising vision of Europe’s future. According to Jan Techau, a foreign policy analyst at the American Academy in Berlin, the speech was more for domestic audiences than those abroad, with the country’s federal elections just four months away. He adds: “It shows she is finally moving into campaign mode. “She’s switched from the international Merkel to the domestic Merkel.”
German Chancellor Angela Merkel will preside over the end of the European Union. Her reaction to the G-7 meeting and U.S. President Donald Trump’s refusal to endorse the Paris Agreement on Climate Change will accelerate the market’s rejection of EU policy. I’ve been warning about this for months in my articles here on Seeking Alpha. Angela Merkel is caught between two stanch nationalists whom Germany depends on: Russian President Vladimir Putin to the east and U.S. President Donald Trump to the right. Last week, I told you that Trump would clash with Merkel over Brexit at the G-7 meeting. “But, the likelihood of that is remote. If anything, there are signs that Trump is getting control of the narrative and his presence at the G-7 meeting this weekend will put the EU, specifically German Chancellor Angela Merkel in her place with respect to Brexit by backing U.K. Prime Minister Theresa May.”
And by all accounts he did that and more, forcing the G-7 to issue a four-page forward statement that outlined the lack of consensus among the participants. This is unprecedented. Trump went overseas and stood athwart the financial and political order to fulfill campaign promises. Now, Angela Merkel is forced to make campaign promises of her own. And she’s not happy about it. Merkel gave a “watershed speech” during a Christian Democratic Union (CDU) rally in Munich. From an AFP report on the speech: “Europe “must take its fate into its own hands” faced with a western alliance divided by Brexit and Donald Trump’s presidency, German Chancellor Angela Merkel said Sunday. “The times in which we could completely depend on others are on the way out. I’ve experienced that in the last few days,” Merkel told a crowd at an election rally in Munich, southern Germany. “We Europeans truly have to take our fate into our own hands,” she added.
And while these are fighting words, they also ring hollow. Merkel is in no position to drive a hard bargain with either the U.S. or the U.K. over trade. Trump went to the G-7 to put the kibosh on the EU’s intransigence over Brexit. He succeeded. Trump is winning control of the political narrative at home. He’s up in the polls, he was deferential to Israel and even handed with the Arabs in Saudi Arabia. This trip and his standing up to G-7 technocrats on behalf of his voters give him the political capital to whip his Republican majority into line on spending, taxes and budgeting. The punditry is right. This is a watershed moment. But, it was not instigated by Merkel. It was instigated by Trump. And it will be the beginning of the next wave of capital flight out of the EU.
The Dutch senate on Tuesday approved a European Union “association agreement” with Ukraine, a final hurdle to the treaty, which strengthens the former Soviet republic’s ties with Western Europe and moves it further from Moscow’s orbit. It did so following amendments made at the EU level to take into consideration the Dutch referendum vote last year against the agreement. “Today’s vote in the Dutch Senate sends an important signal from the Netherlands and the entire European Union to our Ukrainian friends: Ukraine’s place is in Europe. Ukraine’s future lies with Europe,” said EU Commission President Jean-Claude Juncker. The agreement, a treaty, had already been negotiated and approved by all EU governments and by Ukraine in 2014, and had even partially gone into effect pending ratification when it was abruptly rejected by Dutch voters in a snap referendum held in April 2016.
The Dutch vote was as much a rebuke to Prime Minister Mark Rutte and the European Union as a rejection of the treaty, which focuses mostly on trade ties. But Rutte and the European Union diplomats were forced to renegotiate parts of the treaty in order to render it palatable to Dutch parliament or risk seeing it derailed, since it cannot be ratified without support from all European Union legislatures. Ultimately the treaty was amended to underline it does not make Ukraine a candidate for EU membership, does not entitle Kiev to financial aid or military assistance from the bloc, and does not give Ukrainians the right to live and work in EU member states. The amended version passed Dutch parliament in March, and the Senate approved it Monday, both by comfortable margins.
The number of companies active in the construction sector has declined by 35.4% since 2004 as a result of the financial crisis and the considerable drop in investment in infrastructure. Worse, compared to the 401,000 employees in the sector during the third quarter of 2008 – just before the recession cycle started – construction employed just 141,800 workers at end-2016, which means that at least 64.6% of the construction workers eight-and-a-half years ago have now been forced out of the sector.
Reports of deep-sea drilling’s demise in a world of sub-$100 oil may have been greatly exaggerated, much to OPEC’s dismay. Pumping crude from seabeds thousands of feet below water is turning cheaper as producers streamline operations and prioritize drilling in core wells, according to Wood Mackenzie. That means oil at $50 a barrel could sustain some of these projects by next year, down from an average break-even price of about $62 in the first quarter and $75 in 2014, the energy consultancy estimates. The tumbling costs present another challenge for OPEC which is currently curbing output to shrink a glut. In 2014, when the U.S. shale boom sparked oil’s crash from above $100 a barrel, the group embarked on a different strategy of pumping at will to defend market share and throttle high-cost projects.
Ali Al-Naimi, the former energy minister of OPEC member Saudi Arabia, said in February 2016 that such producers need to either “lower costs, borrow cash or liquidate.” “There is life in deep-water yet,” said Angus Rodger, director of upstream Asia-Pacific research at Wood Mackenzie in Singapore. “When oil prices fell, many projects were deferred, but the ones that were deferred first were deep-water because the overall break-evens were highest. Now in 2017, we’re seeing signs that the best ones are coming back.” The falling costs make it more likely that investors will approve pumping crude from such large deep-water projects, the process for which is more complex and risky than drilling traditional fields on land. That may compete with OPEC’s oil to meet future supply gaps that the group sees forming as demand increases and output from existing wells naturally declines.
The sun has set over the scrubby savannah. The moon is full. It is time for Ryan Tate and his men to go to work. In camouflage fatigues, they check their weapons and head to the vehicles. Somewhere beyond the ring of light cast by the campfire, out in the vast dark expanse of thornbushes, baobab trees, rocks and grass, are the rhinos. Somewhere, too, may be the poachers who will kill them to get their precious horns. The job of Tate, a 32-year-old former US Marine, and the group of US military veterans he has assembled in a remote private reserve in the far north of South Africa is simple: keep the rhinos and the rest of the game in the bush around their remote base alive. The men are not mercenaries, or park rangers –they work for Tate’s Veterans Empowered To Protect African Wildlife (Vetpaw), a US-based nonprofit organisation funded by private donations.
All have seen combat, often with elite military units, in Iraq, Afghanistan and elsewhere. Though equipped with vehicles, trail bikes, assault rifles, sniper suits and radios, the most important weapons in the war against poaching, Tate believes, are the skills and experiences his team gained on successive deployments in conflict zones over the last decade and a half. “We are here for free. We are not going anywhere. Whether it is cold or hot, day or night … we want to work with anyone who needs help,” Tate says. The initiative is not without controversy. Some experts fear “green militarisation” and an arms race between poachers and gamekeepers. Others believe deploying American former soldiers to fight criminals in South Africa undermines the troubled country’s already fragile state. But the scale of the challenge of protecting South Africa’s rhinos is clear to everyone, with a rise in poaching in recent years threatening to reverse conservation gains made over decades.
[..] Tate founded Vetpaw after seeing a documentary about poaching and the deaths of park rangers in Africa. His team now work on a dozen private game reserves covering a total of around 200,000 hectares in Limpopo, the country’s northernmost province. One advantage for local landowners is the protection heavily armed combat veterans provide against the violent break-ins feared by so many South Africans, particularly on isolated rural farmsteads. The team has also run training courses for local guides and security staff. But if one aim of Vetpaw is to counter poaching, another is to help combat veterans in the US, where former servicemen suffer high levels of unemployment and mental illness. “Everyone gets PTSD when they come back from war … you are never going to get the brotherhood, the intensity again.. [There are] all these veterans with billions of dollars of training and the government doesn’t use them. I saw a need in two places and just put them together,” says Tate.
It is only April, but some on Wall Street are already predicting a rotten 2016 for U.S. banks. Analysts say it has been the worst start to the year since the financial crisis in 2007-2008 and expect poor first-quarter results when reporting begins this week. Concerns about economic growth in China, the impact of persistently low oil prices on the energy sector, and near-zero interest rates are weighing on capital markets activity as well as loan growth. Analysts forecast a 20% decline on average in earnings from the six biggest U.S. banks, according to Thomson Reuters I/B/E/S data. Some banks, including Goldman Sachs, are expected to report the worst results in over ten years.
This spells trouble for the financial sector more broadly, since banks typically generate at least a third of their annual revenue during the first three months of the year. “What’s concerning people is they’re saying, ‘Is this going to spill over into other quarters?'” Goldman’s Richard Ramsden said in an interview. “If you do have a significant decline in revenues, there is a limit to how much you can cut costs to keep things in equilibrium.” Investors will get some insight on Wednesday, when earnings season kicks off with JPMorgan, the country’s largest bank. That will be followed by Bank of America and Wells Fargo on Thursday, Citigroup on Friday, and Morgan Stanley and Goldman Sachs on Monday and Tuesday, respectively, in the following week.
Banks have been struggling to generate more revenue for years, while adapting to a panoply of new regulations that have raised the cost of doing business substantially. The biggest challenge has been fixed-income trading, where heavy capital requirements, new derivatives rules, and restrictions on proprietary trading have made it less profitable, leading most banks to simply shrink the business. Bank executives have already warned investors to expect major declines across other areas as well. Citigroup CFO John Gerspach said to expect trading revenue more broadly to drop 15% versus the first quarter of last year. JPMorgan’s Daniel Pinto said to expect a 25% decline in investment banking. Several bank executives have warned about declining quality of energy sector loans.
“California, Illinois, New Jersey, Chicago and Austin, would need to put at least 20% of their revenues into their pension plans to prevent a rise in their deficits, while Nevada would have to contribute almost 40%.”
The US public pension system has developed a $3.4tn funding hole that will pile pressure on cities and states to cut spending or raise taxes to avoid Detroit-style bankruptcies. According to academic research shared exclusively with FTfm, the collective funding shortfall of US public pension funds is three times larger than official figures showed, and is getting bigger. Devin Nunes, a US Republican congressman, said: “It has been clear for years that many cities and states are critically underfunding their pension programmes and hiding the fiscal holes with accounting tricks.” Mr Nunes, who put forward a bill to the House of Representatives last month to overhaul how public pension plans report their figures, added: “When these pension funds go insolvent, they will create problems so disastrous that the fund officials assume the federal government will have to bail them out.”
Large pension shortfalls have already played a role in driving several US cities, including Detroit in Michigan and San Bernardino in California, to file for bankruptcy. The fear is other cities will soon become insolvent due to the size of their pension deficits. Joshua Rauh, a senior fellow at the Hoover Institution, a think-tank, and professor of finance at the Stanford Graduate School of Business, who carried out the study, said: “The pension problems are threatening to consume state and local budgets in the absence of some major changes. “It is quite likely that over a five to 10-year horizon we are going to see more bankruptcies of cities where the unfunded pension liabilities will play a large role.” The Stanford study found that the states of Illinois, Arizona, Ohio and Nevada, and the cities of Chicago, Dallas, Houston and El Paso have the largest pension holes compared with their own revenues.
In order to deal with the large funding shortfall, many cities and states will have to increase their contributions to their pension funds, either by raising taxes or cutting spending on vital services. Olivia Mitchell, a professor at the Wharton School at the University of Pennsylvania, told FTfm last month that US public pension plans face “grave difficulties”. “I do believe that US cities and towns will continue to suffer, and there will be additional bankruptcies following the examples of Detroit,” she said. Currently, states and local governments contribute 7.3% of revenues to public pension plans, but this would need to increase to an average of 17.5% of revenues to stop any further rises in the funding gap, the research said. Several cities and states, including California, Illinois, New Jersey, Chicago and Austin, would need to put at least 20% of their revenues into their pension plans to prevent a rise in their deficits, while Nevada would have to contribute almost 40%.
For global equity investors and Shinzo Abe, it’s splitsville. Starting in the first days of 2016, foreign traders have been pulling out of Tokyo’s stock market for 13 straight weeks, the longest stretch since 1998. Overseas traders dumped $46 billion of shares as economic reports deteriorated, stimulus from the Bank of Japan backfired and the yen’s surge pressured exporters. The benchmark Topix index is down 17% in 2016, the world’s steepest declines behind Italy. Losing the faith of foreigners would be a blow to the Japanese prime minister – they’re the most active traders in a market Abe has held up as a litmus on his growth strategies. “Japan is back,” and “Buy my Abenomics!” he proclaimed during a visit to the New York Stock Exchange in September 2013, when shares were marching to an eight-year high.
Now about half of those gains are gone and BlackRock, the world’s largest money manager, is among firms ending bullish calls on Japan equities. “Japan has been disappointing,” said Nader Naeimi, Sydney-based head of dynamic markets at AMP Capital Investors, which oversees about $115 billion. He’s a long-time fan of Tokyo equities who says he’s now looking for opportunities to sell. “A lot of people are starting to doubt Abenomics.” While markets elsewhere are climbing back from a global selloff, investors in Japan see fewer reasons for optimism. Growing concern that Abenomics – the three-pronged strategy of fiscal and monetary stimulus and structural reform – is falling flat has spurred speculation the nation will slip into deflation, setting back efforts to end three decades of malaise.
Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui, fears a downward spiral. Foreigners are needed to boost the stock market, and if equities don’t rise the public will lose confidence and curb spending, as he sees it. That could send Japan back into deflation. “If foreigners don’t come back, the future of Abenomics could be jeopardized,” he said.
A top adviser to the Chinese government has warned that Beijing risks a currency blow-up akin to Britain’s traumatic ordeal in 1992, if it continues trying to defend its exchange rate peg amid a deepening deflation crisis. Yu Hongding, a director of the Chinese Academy of Social Sciences, said China is caught in two concurrent “deflationary spirals” that are feeding on the other. A major devaluation and a blast of well-targeted fiscal stimulus will be needed to break out of the trap. “They must stop intervening on the exchange market. China needs to devalue by 15pc. They are creating conditions for speculators,” he told the Daily Telegraph, speaking at the Ambrosetti forum of global policymakers on Lake Como.
Prof Yu, a former rate-setter for the PBOC and currently a member of the national planning committee, said the government is making a serious mistake in trying to defend the yuan by burning through foreign exchange reserves, already down to $3.2 trillion from $4 trillion in mid-2014. He warned that the slowdown in capital outlows in March may prove fleeting. “Reserves will continue to fall until we devalue. Once we get towards $2 trillion the markets will start to panic. They won’t believe that the government can control it any longer,” he said. Prof Yu said Beijing had been caught off guard by the relentless slowdown over the last five years. “In 2011 we thought the economy would stabilize, and we thought the same thing in 2012, and again in 2013, and it continued to slide,” he said.
It is far from clear whether the world could handle a 15pc devaluation given the vast scale of Chinese overcapacity, or that the US Treasury and Congress would tolerate such a move. Fears of uncontrollable capital flight and a yuan devaluation were key reasons for the plunge in global equity markets earlier this year, and are clearly what prompted the US Federal Reserve to delay rate rises. The fate of China’s currency has become the most neuralgic issue in global finance. One worry is that a sharp drop in the yuan would set off a second round of ‘currency wars’ across East Asia, transmitting a deflationary shock through the international system as cheap Asian exports flooded into Western markets.
Prof Yu’s life is a remarkable story of achievement in Maoist China. He worked for ten years in a machine factory, wrestling with Marx’s Das Kapital at night before discovering western economics. He devoured Paul Samuelson’s classic text, ‘Foundations of Economic Analysis’, first in a Chinese translation and then in the original after teaching himself English, no easy feat in the Cultural Revolution. He went onto to earn a doctorate at Oxford University, and was still in England when sterling was blown out of the European Exchange Rate Mechanism in September 1992. He still recalls the exact details of the debacle, including the two desperate rate rises by the Bank of England in a single day. “The British experience is very interesting for us,” he said.
Chinese appetite for property in Australia shows no sign of waning after buyers doubled investment in the nation’s homes and offices for a second straight year. Spending on Australian residential and commercial real estate rose to A$24.3 billion ($18.4 billion) in the 12 months through June 2015, up from A$12.4 billion a year earlier and A$5.9 billion in 2013, according to the Foreign Investment Review Board’s annual report. All Chinese investors in a survey conducted by KPMG and the University of Sydney want to allocate more money to Australia, a separate report showed on Monday. Real estate is fueling inflows from the world’s second largest economy, which last year overtook the U.S. as Australia’s largest foreign investor.
“Overall we are seeing a strong story of Chinese investment into Australia’s broader economy which is in line with premium products, services and lifestyle-oriented themes,” Doug Ferguson, head of KPMG Australia’s Asia and International Markets and co-author of the report, said in a statement. Purchases by foreigners, many with a connection to China, helped drive an almost 55% jump in home prices across Australia’s capital cities in the past seven years as mortgage rates dropped to five-decade lows. The rising demand has triggered community concern that locals are being priced out of the property market, prompting the government to tighten scrutiny of foreign investment.
Now that a judge has approved BP’s $20 billion settlement over the 2010 gulf oil spill, it is appropriate to look at the overall societal costs, as well as the bottom line to BP. And at tax time, people understandably think about their own taxes, too. The government struck a $20 billion settlement with BP, which is a big number. Yet BP should be able to deduct the vast majority, a whopping $15.3 billion, on its U.S. tax return. That means American taxpayers are contributing quite a lot to this settlement, whether they know it or not. BP can write off the natural resource damages payments, restoration, and reimbursement of government costs. Only $5.5 billion is labeled as a non-tax-deductible Clean Water Act penalty. One big critic of the deal is U.S. Public Interest Research Group, which often rails against tax deductions by corporate wrongdoers.
U.S. Public Interest Research Group has asked the Justice Department to deny tax deductions for BP and other corporate defendants. U.S. PIRG’s has a research report on settling for a lack of accountability that details the tax deductions corporations can claim for legal settlement. However, a change to the tax code may be the only way to get there. The proposed Truth in Settlements Act (S. 1898) would require agencies to report after-tax settlement values. Another bill, S. 1654, would restrict tax deductibility and require agencies to spell out the tax status of settlements. The present tax code allows businesses to deduct damages, even punitive damages. Restitution and other remedial payments are also fully deductible. Only certain fines or penalties are nondeductible. Even then, the rules are murky, and companies routinely deduct payments unless it is completely clear that they cannot.
Lawsuits and misconduct fines have cost Britain’s largest retail banks and customer-owned lenders almost 53 billion pounds ($74.86 billion) over the past 15 years, a new study has found. The scale of the payouts has hampered banks’ efforts to rebuild capital, restricted the amount they are able to lend and reduced dividends for investors. Britain’s banks have been hit by scandals ranging from the manipulation of foreign exchange and benchmark interest rates to the mis-selling of loan insurance and complex interest-rate hedging products. While lenders have struggled to return money to shareholders because of the charges, they have continued to pay billions of pounds in bonuses to staff, the study by the independent think-tank New City Agenda said.
“The profitability of UK retail banks has been imperilled by persistent misconduct,” said John McFall, a director of New City Agenda and former Treasury Committee chairman. “This has made every citizen poorer through our pension funds and our ownership of the bailed out banks.” The report said the mis-selling of payment protection insurance alone cost banks at least 37.3 billion pounds in Britain’s costliest consumer scandal. Lloyds had to set aside 14 billion pounds to cover misconduct between 2010 and 2014, almost twice the amount of any other British lender, the report said.
Over the past 72 hours, you have seen our political establishment operating at a level of panic rarely equalled in postwar history. Britain’s prime minister has had yanked out of him some of his most intimate financial details. Complete strangers now know how much he’s inherited so far from his mum and dad, and the offshore investments from which he’s profited. Yesterday he even took the unprecedented step of revealing the taxes he’d paid over the past six years. Leaders of other parties have responded by summarily publishing their own HMRC returns. In contemporary Britain, where one’s extramarital affairs are more readily discussed in public than one’s tax affairs, this is jaw-dropping stuff. And it will not stop here.
Whatever the lazy shorthand being used by some commentators, David Cameron has not released his tax returns, but merely a summary certified by an accountants’ firm. That halfway house will hardly be enough. If Jeremy Corbyn, other senior politicians and the press keep up this level of attack, then within days more details of the prime minister’s finances will emerge. Nor will the flacks of Downing Street be able to maintain their lockdown on disclosing how many cabinet members have offshore interests: the ministers themselves will break ranks. Indeed, a few are already beginning to do so. But the risk is that all this will descend into a morass of semi-titillating detail: a string of revelations about who gave what to whom, and whether he or she then declared it to the Revenue.
The story will become about “handling” and “narrative” and individual culpability. That will be entertaining for those who like to point fingers, perplexing for those too busy to engage in the detail – and miss the wider truth revealed by the leak which forced all this into public discussion. Because at root, the Panama Papers are not about tax. They’re not even about money. What the Panama Papers really depict is the corruption of our democracy. Following on from LuxLeaks, the Panama Papers confirm that the super-rich have effectively exited the economic system the rest of us have to live in. Thirty years of runaway incomes for those at the top, and the full armoury of expensive financial sophistication, mean they no longer play by the same rules the rest of us have to follow. Tax havens are simply one reflection of that reality.
Discussion of offshore centres can get bogged down in technicalities, but the best definition I’ve found comes from expert Nicholas Shaxson who sums them up as: “You take your money elsewhere, to another country, in order to escape the rules and laws of the society in which you operate.” In so doing, you rob your own society of cash for hospitals, schools, roads… But those who exited our societies are now also exercising their voice to set the rules by which the rest of us live. The 1% are buying political influence as never before. Think of the billionaire Koch brothers, whose fortunes will shape this year’s US presidential elections. In Britain, remember the hedge fund and private equity barons, who in 2010 contributed half of all the Conservative party’s election funds – and so effectively bought the Tories their first taste of government in 18 years.
British Prime Minister David Cameron will say on Monday that new legislation making companies criminally liable if employees aid tax evasion will be introduced this year, as he seeks to repair the damage from a week of questions about his personal finances. Cameron published tax records on Sunday to try and defuse criticism over his handling of the fallout from the Panama Papers, in which his late father was mentioned for setting up an offshore fund. After four carefully worded statements in four days, Cameron bowed to pressure and admitted that he had benefited from selling his share in his father’s fund in 2010. He recognized on Saturday that he had mishandled the disclosure. Cameron is leading efforts to persuade British voters to stay in the EU in a June 23 referendum that the polls suggest will be tight, and the tax row has raised concerns among the “in” camp that their cause may have been damaged.
The prime minister will attempt to regain the upper hand when he appears in the House of Commons later on Monday. “This government has done more than any other to take action against corruption in all its forms, but we will go further,” Cameron will say, according to advance excerpts of his statement circulated by his Downing Street office. “That is why we will legislate this year to hold companies who fail to stop their employees facilitating tax evasion criminally liable,” he will say. The plan had already been announced by finance minister George Osborne in March 2015, but previously the commitment was to introduce the legislation by 2020, Downing Street said. The decision to speed up that particular measure is unlikely to satisfy Cameron’s many critics in opposition parties and in some campaign groups that say Britain already has the tools it needs to crack down on tax evasion but lacks the will.
Italy is rushing to cobble together an industry-led rescue to address mounting concerns over the solidity of a banking sector whose woes pose a risk to the wider eurozone economy. Finance minister Pier Carlo Padoan has called a meeting in Rome on Monday with executives from Italy’s largest financial institutions to agree final details of a “last resort” bailout plan. Yet on the eve of that gathering, concerns remain as to whether the plan will be sufficient to ringfence the weakest of Italy’s large banks, Monte dei Paschi di Siena, from contagion, according to people involved in the talks. Italian bank shares have lost almost half their value so far this year amid investor worries over a €360bn pile of non-performing loans — equivalent to about a fifth of GDP. Lenders’ profitability has been hit by a crippling three-year recession.
The plan being worked on, which could be officially announced as soon as Monday evening, recalls the Sareb bad bank created in 2012 by the Spanish government to deal with financial crisis in its smaller cajas banks, say people involved. Although the details remain under discussion, it foresees the establishment of a private vehicle that will include upwards of €5bn in equity contributions – mostly from Italy’s banks, insurers and asset managers – and then a larger debt component. The fund will then mop up shares in distressed lenders. A second vehicle will seek to buy non-performing loans at market prices. “It is a backstop fund,” said one person involved in the talks. The Italian government can provide only limited financial backing because of EU state aid rules and because it is already struggling under a public debt load that amounts to 132.5% of GDP.
The bailout marks the latest and most wide-reaching attempt by Italy to shore up confidence having already sponsored the rescue of four small banks last year and passed a law intended to speed up the sale of bad loans. Both earlier measures failed to eradicate market concerns. [..] people involved in the talks question whether the plan would have the financial scope to provide a buffer of last resort for Monte dei Paschi di Siena. Italy’s third-largest bank was the worst performer in the 2014 European stress tests, with about €170bn in assets and about €50bn in bad loans. It is considered by many bankers to be the major risk to Italian financial stability and regarded as too big to fail. “Monte Paschi is the elephant in the room,” says one of Italy’s top bankers.
Austria’s financial markets regulator FMA on Sunday cut the nominal value of “bad bank” Heta Asset Resolution’s senior bonds by more than half, highlighting the long struggle creditors face for repayment if a settlement is not reached. The FMA, which is overseeing the wind-down of Heta, on Sunday announced measures including the bail-in, or haircut, of 54%, the extension of bonds’ maturities to 2023 and the cancellation of coupon payments as of March of last year.The announcement is the latest chapter in a standoff between the province of Carinthia and Heta’s creditors, many of which insist on repayment in full because their bonds were guaranteed by Carinthia, which could push the province into insolvency.
Carinthia guaranteed the bonds of local lender Hypo Alpe Adria before it collapsed and Heta was formed to wind it down. Carinthia says it cannot afford to fully honour the remaining guarantees, which the FMA put at €11.1 billion. Creditors are likely to sue Carinthia to recover the difference between what is paid out to them under Heta’s wind-down and their bonds’ full face value. The FMA put that difference at €6.4 billion, roughly three times the annual budget of Carinthia, a southern province of about 560,000 people that borders Italy and Slovenia and was long the stronghold of far-right politician Joerg Haider. The haircut’s size is based on the amount the FMA expects will be recovered from the sale of Heta’s assets by 2020.
It had said the estimate would be conservative to ensure that, if it is wide of the mark, there is extra revenue to be shared out. Only by the end of 2023 will it be possible to pay out all funds owed, the FMA said, partly in anticipation of many court cases, meaning creditors face a wait of seven years for their repayment of 46% of senior bonds’ face value. Carinthia offered to buy back the bonds it guaranteed, with loans from the Austrian government, for 75% of senior bonds’ face value, plus a last-minute sweetener by the Austrian government that brought the offer to around 82%. Too few creditors accepted the offer when it expired last month, and the question is now whether a compromise can be found or whether the dispute will be settled in court.
On Sunday Ukrainian prime minister Yatsenyuk resigned, just four days after the Dutch voted against Ukraine joining the European Union. Taken together, these two events are clear signals that the US-backed coup in Ukraine has not given that country freedom and democracy. They also suggest a deeper dissatisfaction among Europeans over Washington’s addiction to interventionism. According to US and EU governments – and repeated without question by the mainstream media – the Ukrainian people stood up on their own in 2014 to throw off the chains of a corrupt government in the back pocket of Moscow and finally plant themselves in the pro-west camp. According to these people, US government personnel who handed out cookies and even took the stage in Kiev to urge the people to overthrow their government had nothing at all to do with the coup.
When Assistant Secretary of State Victoria Nuland was videotaped bragging about how the US government spent $5 billion to “promote democracy” in Ukraine, it had nothing to do with the overthrow of the Yanukovich government. When Nuland was recorded telling the US Ambassador in Kiev that Yatsenyuk is the US choice for prime minister, it was not US interference in the internal affairs of Ukraine. In fact, the neocons still consider it a “conspiracy theory” to suggest the US had anything to do with the overthrow. I have no doubt that the previous government was corrupt. Corruption is the stock-in-trade of governments. But according to Transparency International, corruption in the Ukrainian government is about the same after the US-backed coup as it was before.
So the intervention failed to improve anything, and now the US-installed government is falling apart. Is a Ukraine in chaos to be considered a Washington success story? This brings us back to the Dutch vote. The overwhelming rejection of the EU plan for Ukrainian membership demonstrates the deep level of frustration and anger in Europe over EU leadership following Washington’s interventionist foreign policy at the expense of European security and prosperity. The other EU member countries did not even dare hold popular referenda on the matter – their parliaments rubber-stamped the agreement.
Brussels backs US bombing in the Middle East and hundreds of thousands of refugees produced by the bombing overwhelm Europe. The people are told they must be taxed even more to pay for the victims of Washington’s foreign policy. Brussels backs US regime change plans for Ukraine and EU citizens are told they must bear the burden of bringing an economic basket case up to European standards. How much would it cost EU citizens to bring in Ukraine as a member? No one dares mention it. But Europeans are rightly angry with their leaders blindly following Washington and then leaving them holding the bag.
A Canadian First Nation community of 2,000 people has declared a state of emergency after 11 of its members tried to take their own lives, national media reported. CTV News reported on Sunday that the remote northern community of the Attawapiskat First Nation in Ontario experienced an additional 28 suicide attempts last month. More than 100 people in the community have attempted suicide since last September, and one person died, according to CTV. The youngest was 11, the oldest 71. Charlie Angus, the local member of parliament, told the Canadian Press it was part of a “rolling nightmare” of more and more suicide attempts among young people throughout the winter. The Canadian Press said the regional First Nations government was sending a crisis response unit including social workers and mental health nurses to the community following the declaration.
The Health Canada federal agency said in a statement that it had sent two mental health counsellors as part of that unit. Attawapiskat resident Jackie Hookimaw told The Canadian Press that the epidemic started in the autumn when her 13-year-old niece Sheridan killed herself after being bullied at school. “There’s different layers of grief,” she said. “There’s normal grief, when somebody dies from illness or old age. And there’s complicated grief, where there’s severe trauma, like when somebody commits suicide.” Canadian prime minister Justin Trudeau said on Twitter: “The news from Attawapiskat is heartbreaking. We’ll continue to work to improve living conditions for all Indigenous peoples.” Another Canadian First Nation community in the western province of Manitoba appealed for federal aid last month, citing six suicides in two months and 140 suicide attempts in two weeks.
The mass coral bleaching event smashing the Great Barrier Reef has severely affected more than half its length and caused patches of bleaching in most areas, according to scientists conducting an extensive aerial survey of the damage. “The good news with my last flight is that I found 50 reefs that weren’t bleached, so that may be the southern boundary,” said Terry Hughes from James Cook University. Hughes is the head of the national coral bleaching task force, which has been conducting flights over the length of the reef, mapping bleached areas and recording the severity of the damage. Climate change and a strong El Niño have caused hundreds of kilometres of the reef to bleach, as the higher water temperatures stress the coral, and they expel their symbiotic algae.
If the bleaching is bad enough, or the temperatures remain high for long enough, the corals die, putting the future of reefs at risk. The mass bleaching on the Great Barrier Reef is part of what the US National Oceanographic and Atmospheric Administration has called the third global bleaching event – the first occurred in 1998. Initial reports suggested only the most northern and remote areas of the Great Barrier Reef were bleaching, but as aerial surveys have continued, scientists have struggled to find a southern boundary. The latest find of a stretch of unaffected reefs around Mackay was a small piece of good news, Hughes said. But he said its significane would be unclear until reefs further south were examined. “It may be a false southern boundary,” Hughes said.
The reefs around Mackay have unusually large tides, which might have pulled in cooler water and saved the coral there. [..] Two weeks ago, the Great Barrier Reef Marine Park Authority reported half the coral in the northern parts of the reef were dead. Hughes said that was consistent with reports from divers north of Port Douglas. Hughes said this was by far the worst bleaching event to have hit the Great Barrier Reef. He said it was three to four times worse than in 1998 or the second great bleaching in 2002. Last year, the Great Barrier Reef narrowly escaped being listed as “in danger” by Unesco, even though environmental groups said it clearly met the criteria. Hughes said the “outstanding universal value” of the reef was now “severely compromised”.
Ariane Wilkinson, a lawyer at Environmental Justice Australia, said the bleaching might cause Unesco to reconsider its decision. “[Unesco] weren’t scheduled to examine the reef this year but in light of the terrible bleaching it is entirely possible that they may decide to look at the reef,” she said. “If the World Heritage system is to have any value, it must address the most serious threats to the most iconic examples of world heritage,” she said. “If any site falls into this category, it is the … Great Barrier Reef.”
Fewer than 0.1% of Syrians in Turkey currently stand to gain the right to work under much-vaunted Turkish labour laws, undermining EU claims that the legislation excuses a recent decision to deport Syrian asylum-seekers back to Turkey. Turkish employers have allowed roughly 2,000 – or 0.074% – of Turkey’s 2.7 million Syrians to apply for work permits under new legislation enacted two months ago, according to government figures provided to aid workers at a meeting in late March. The number of permits granted has not yet been disclosed. More applications are expected in the coming months, but the statistic nevertheless highlights how the new law, enacted in January, does not offer blanket access to the labour market for all Syrians in Turkey.
Instead work permits can only be given to those who have the blessing of their employers, many of whom may still be unaware of the law, or unwilling to comply with it since it would require them to pay their employees the minimum wage. The figure was revealed in a speech to aid groups by the head of Turkey’s general directorate for migration management, who said he hoped the number would rise once more people became aware of the law. The news will complicate the new EU-Turkey deal to deport all asylum-seekers arriving to Greece back to Turkey, since the EU has justified the controversial agreement by claiming Turkey was a place that upheld internationally agreed obligations to refugees, including access to legal work. While Turkey is not a full signatory to the 1951 UN refugee convention, EU politicians have sometimes cited the January law as an example of how Turkey maintains the values of the convention by other means.
But in reality the law does not automatically offer most refugees a route out of the black market, several Syrians argued in interviews. Most problematically, the law requires an employer to give his employees a contract before they can apply for a permit. But this is an unattractive proposition for many employers, since they often employ Syrians precisely because they are easily exploited, said Hussam Orfahli, CEO of an Istanbul-based firm that helps Syrians apply for paperwork in Turkey. “If he wants you to have a work permit, then you can get it – but if he doesn’t, then you won’t,” said Orfahli, who has applied for permits on behalf of 60 wealthy clients, but has yet to hear whether any of them have been successful. “The minimum wage is 1,300 Turkish lira [£320] and most employers refuse to give contracts so that they can pay less, and don’t have to pay your health insurance.”
Migrants waged running battles with Macedonian police Sunday after they were stopped from scaling the border fence with Greece near the border town of Idomeni, and aid agencies reported that hundreds of stranded travelers were injured. Macedonian police used tear gas, stun grenades, plastic bullets and a water cannon to repel the migrants, many of whom responded by throwing rocks over the fence at police. Greek police observed from their side of the frontier but did not intervene. More than 50,000 refugees and migrants have been stranded in Greece after Balkan countries closed their borders to the massive flow of refugees pouring into Europe. Around 11,000 remain camped out at the border with Macedonia, ignoring instructions from the government to move to organized shelters as they hold out hope to reach Western Europe.
Clashes continued in the afternoon as migrant groups twice tried to overwhelm Macedonian border security. The increasing use of tear gas reached families in their nearby tents in Idomeni’s makeshift camp. Many camp dwellers, chiefly women and children, fled into farm fields to escape the painful gas. Observers held out hope that evening rainfall, which began about seven hours into the clashes, would dampen hostilities. The aid agency Doctors Without Borders estimated that their medical volunteers on site treated about 300 people for various injuries. Achilleas Tzemos, deputy field coordinator of Doctors Without Borders, told the AP that the injured included about 200 experiencing breathing problems from the gas, 100 others with cuts, bruises and impact injuries from nonlethal plastic bullets.
He said six of the most seriously injured were hospitalized. The clashes began soon after an estimated 500 people gathered at the fence. Many said they were responding to Arabic language fliers distributed Saturday in the camp urging people to attempt to breach the fence Sunday morning and “go to Macedonia on foot.” A five-member migrant delegation approached Macedonian police to ask whether the border was about to open. When Macedonian police replied that this wasn’t happening, more than 100, including several children, tried to scale the fence. Greece criticized the Macedonian police response as excessive. Giorgos Kyritsis, a spokesman for the government’s special commission on refugees, said Macedonian forces had deployed an “indiscriminate use of chemicals, plastic bullets and stun grenades against vulnerable people.”
Alexander Gardner Ruins of Gallego Mills after Great Fire, Richmond, VA 1865
The best way it was put came from a German newspaper, the Leipziger Volkszeitung, on Tuesday, in an article that describes 5 separate incidents in two days in which buildings occupied by asylum seekers are targeted with rocks and home-made explosives. The headline quotes Leipzig’s head of police as saying: A pogrom mood prevails (Es herrscht Pogromstimmung). The full line further down in the article says: “Across the whole country, a pogrom mood prevails that is gathering an explosive intensity.”
It is early February in Europe. 62,000 more refugees reached Greece in January. Over 360 drowned trying, or 12 every single day. At least a quarter of them were children. About 90% of these people came from Syria, Iraq and Afghanistan, and are therefore considered ‘real’ refugees, no matter how often you read the word ‘migrants’ instead. It’s funny that someone wrote on our Facebook page that the word ‘refugee’ is often abused, because so many are really ‘migrants’.
Funny, because it’s the other way around: the word migrant is the one that is used wrongly, and often for political purposes. Dutch uber assclown Frans Timmermans, right hand man to EC President Juncker, claimed in Dutch media recently that 60% of ‘arrivals’ were people from countries “where you can assume they have no reason to apply for refugee status”.
The UNHCR, and even Frontex, say the correct number is 10% are ‘migrants’. 39% Syrian, 24-25% each Iraqi and Afghani. And just like not all migrants are refugees, the group ‘migrants’ does not have a subset called ‘refugees’. Confusing the terms is derogatory. Timmermans is just plain lying.
Staying in that vein, EU border cops Frontex stated the other day that there were “more than 880,000 illegal border crossings detected” in Greece in 2015. That at once raises the question whether refugees are illegals. An interesting question, because according to the Geneva convention they are not: they have the right to seek asylum, and executing one’s rights cannot per definition be illegal. Frontex, like Timmermans, uses insinuations to create an atmosphere, a mood.
And before you know it that turns into a pogrom mood. But Europe’s politicians, overwhelmed as they are with the combination of the refugee influx and their own incompetence, have apparently decided that it may play into their hands to steer their people’s moods against refugees. At that point, the entire issue becomes a cattle trade, something we’ll see more of.
Back to Timmermans and his lie about 60% being ‘migrants’: that’s more than a little mistake. That’s false insinuation. Timmermans became very popular in Holland because of his handling of the MH-17 aftermath (he was -the Dutch equivalent of- secretary of state at the time). Which is also funny, because what he did was accuse Russia of shooting down the plane mere minutes after is was shot, and way before any evidence could possibly have been gathered.
And he never stopped. He held a tearjerker of a speech at the UN and kept on hammering on the guilt of the Russians, carried on the waves of the ‘objective’ western media.
Of course, the US did the same, and never substantiated a single word either. It has taken the Dutch a year and a half to question their government’s account of the event, but the anti-Russia sentiment is now firmly in place. Since most victims were Dutch, Holland leads the investigation into the disaster. It has not brought one shed of proof to light, only innuendo.
Lately, Dutch people and media have started asking (it’s a miracle!) how it’s possible that all of Ukraine’s groundradar systems happened to be switched off when the plane came down, and why it has taken so long to find this out. Switching off groundradar must be reported internationally -to Eurocontrol, in this case- for obvious (safety) reasons. This was not done. When will they begin to wonder if maybe it was Ukraine all along? That would mean letting go of the Putin as bogeyman meme, so it may take a while.
Meanwhile the Dutch government -minus Timmermans, whose Putin bashing gave him almost as good a Brussels job as Donald Tusk got for his as PM of Poland- is chairing the EU until July 1. With youthful fervor, they started out by suggesting a sort of ferry service that would take refugees straight back from Greece to Turkey.
At the same time, the Times in Britain wrote about an EU plan to make it illegal to help refugees at sea. See, now they’re flaunting Geneva, and they’re flaunting international maritime law too. The latter says it’s illegal to NOT help people in distress at sea, and the EU is a signatory -or at least its member states. The former says specifically that ‘push-back’ of refugees is not allowed. The European Commission itself warned Greece about this in 2013.
Back to the drawing board. Or perhaps not quite: at the same time the government in The Hague came with their nonsensical ferry plan, the Dutch parliament -a few doors down- voted to let Holland start bombing Syria. You know, to support one’s partners. So you bomb the crap out of them, and then send them back when they seek to flee your bombs. Holland’s been bombing Iraq for a long time.
And that kind of tomfoolery is why there are international agreements in place, meticulously articulated after earlier disasters and vowing to never make the same mistakes again. But you don’t have to know law to be a politician, or be smart, or have a conscience. The job’s basically open to anyone who can successfully sell a second-hand car.
Being an outright sociopath ticks off a few boxes too, but people will say I shouldn’t say that. Dutch PM Mark Rutte looks like such a decent guy, after all. But the shrewd observer’s already seen that he’s merely another body-double dummy sprouted from the same egg as Cameron and Osborne, Harper in Canada, Renzi, you name them, know the type, early 40’s ideal sons in law but with a bit too much ambition.
Works well in times of plenty, but has no idea what to do in case of a headwind. And then goes berserk without knowing what that is.
The two things that stood out for me when I was making notes were that German police chief talking about a pogrom, and our dear friend Wolfgang Schäuble, German FinMin, who of all people was the only one who made sense about 10 days ago when he said that what Syria would take was a Marshall Plan, and it would cost the world a whole lot more than anyone realized.
For once, he was right. Apparently, the people he was with when he said it, and Rutte was one, didn’t even react to what he said. “Cost? Is that going to cost me votes back home?” It was hilarious to see, today, that Gordon Brown -yeah, they let him out- was talking about a Marshall Plan for Syria -they let him read papers again, too- in connection with a high-level meeting on the issue that takes place in London -oh, wait, that’s how Gordon managed to sneak in-.
World leaders are going to promise away billions of dollars to ‘help’ the Syrian people. The problem here is obvious. These are the same leaders who have been responsible for bombing the region to smithereens. And now take the lead in doling out other people’s money -yours- to ‘help’ the people who survived, and have often fled thousands of miles from home.
That’s who I would like help from if I had lost half my family, seen a bunch of my kids drown, and get my few remaining possessions taken away from me by the ‘authorities’ of a country that tells me I should be really awfully grateful they’ll accomodate me. Grateful? You guys bombed my home to the ground! Grateful for what, exactly?
Oh, but the accomodation is only temporary. Says ‘poor’ Angela Merkel, she of short-lived Mother Teresa fame. When the war is over, they have to return. Right. Return to what? How about this?:
And when do you think the war will be over, Angela? What? It’s all Assad’s fault? Oh, Putin again. Yeah. Pray tell, what’s the combined take of the US, UK, France and Germany arms industries every day after day that this wholly psychopathic use of a formerly beautiful nation for target practice goes on? Yeah, right, you’re fighting that evil ISIS. Well, so is Assad. While some of ‘our’ friends, Saudi Arabia, Turkey, to name a few, are helping them out. And ‘we’ at least sort of gave birth to them.
It’s not that hard, is it? Syria=Libya=Iraq. 2003 is not the beginning, but it very much IS when this utter destruction really took off. 12 and a half years of target practice and rising defense expenditures, and ‘we’ are nowhere near done yet. But we’ll throw the poor dogs some scraps. We’ll promise $10 billion with wide sociopath smiles at the camera and aim for $3 or $4 max. While knowing it’ll cost a $trillion just to rebuild a few cities in Syria. But then we can pretend we have no such money.
So when will the war stop? Not a soul will address that issue in the London conference this weekend (“Supporting Syria – And The Region”, they have less than zero shame). They all profit from that war, while blaming its existence on others. What they will do is shove a few scraps off their rich tables to the subhumans whose drowned children they have never expressed nor felt any sympathy for.
Well, here come the refugees, Europe. 62,000 in January points to well over a million in 2016. And that’s lowballing it. An estimate in late 2015 said 3 million. A Bulgarian Red Cross leader went for 3 million just this spring.
Get ready. For the pogrom.
PS: Oh, and I haven’t even mentioned Erdogan, who makes money off of ISIS oil, and off EU refugee cattle trade money, and off ‘people smugglers’ taking off from Turkey for Greece. A $4 billion industry last year. Think he doesn’t demand his cut? Ideal son in law. Well, next time, then.
PS 2: Who wrote this?: “Nightsticks and Water Cannons, Tear Gas, Padlocks, Molotov Cocktails And Rocks, Behind Every Curtain.”
PS 3: I wrote a year ago that the only way to approach a crisis like this is to put the people first. How many children have been sacrificed on the Brussels altar since then? Grow a pair, Europe.
PS 4: There’ll be a huge amount of violence against refugees in Europe this year, It will get very ugly, and many people will die. And your ‘leaders’ are the ones who have instigated this. Again, grow a pair. Be someone. Someone real.
French President Francois Hollande received an appeal from a group of lawmakers including some from the ruling Socialist Party and other political figures to end the “financial blackmail” of Greece by its European creditors. The message of France “cannot be a docile reminder of the rules at a time when the house is burning,” the lawmakers said in an open letter to Hollande published on the website of France’s Communist Party. “We are asking you to take the initiative to unblock the talks between the euro group and the Greek political authorities.” The letter highlights the domestic political pressure Hollande faces to help broker a deal between Greece and its creditors as the region’s most indebted nation is on the brink of a default.
German Chancellor Angela Merkel and Hollande spoke by phone on Friday after a meeting of euro area finance ministers failed to advance toward an agreement with Greece. So far the two biggest economies in the 19-nation euro bloc have presented a united front against Greek Prime Minister Alexis Tsipras, who has spent his five months in power trying to roll back the austerity policies underpinning the country’s bailout. At the finance minister’s meeting in Luxembourg on Thursday, French Finance Minister Michel Sapin pressed hardest for a compromise, while his German counterpart, Wolfgang Schaeuble stayed largely silent and ministers from other countries stepped up the pressure on Greece, according to two people familiar with the matter.
The French lawmakers, including Socialists such as Pouria Amirshahi and Fanelie Carrey-Conte, told Hollande to place France “at the side of the people of Greece.” “Bring explicit support to the healthy measures taken by the Greek authorities, notably those addressing the humanitarian crisis in the country” they said. “Accept the principle of a restructuring of Greek debt, of which a large part is notoriously illegitimate.”
Nikos Athanassiou, a 61-year-old Athenian pensioner, is at the heart of Greece’s struggle to maintain its fragile 14-year membership of the euro. Like many of his compatriots, Nikos took early retirement having worked most of his life labouring in the country’s now defunct construction industry, aged 58. He is one of the 2.6m pensioners in Greece who have become the unlikely battleground in the latest game of brinkmanship between the radical Left government and its paymasters. A member of Communist Party of Greece (KKE), Nikos spends his retirement resisting Troika-imposed cuts to public services as a union representative for his local district in northern Athens “It is my duty to demand dignity for Greeks. We are collapsing as a country,” says Nikos.
His resolve is not unusual in a society where the bulk of proposed cuts will hit the elderly and newly retired. The IMF is demanding the Greek government slash €1.8bn in pensions spending in 2016. At 16.2pc of GDP, Greece’s outlay is highest in the eurozone. Even with overhauls to the retirement age and spending cuts, this will still only fall to 14.3pc in 45 years time – the third highest in the EU. Nikos’s pension is €750 a month. He is among nearly half of all Greek pensioners who provide the sole source of income to support three generations of one family. But his pension is barely enough to provide for his seven-year old granddaughter and her parents. “When I think about my granddaughter’s future, I panic. I want her to live in an independent Greece – not a protectorate.”
Resentment against creditors’ determination to suck more funds from the country’s pension system is rife. Greeks have already seen a 40pc fall in their pension provision over five years – a shrinkage that has been ruled unconstitutional by the country’s highest administrative court. One of the reasons the spending ranks so highly is due less to generosity of individual pensions than it is the extreme recession that has shrunk GDP to almost pre-euro levels. Greece’s radical Left government has vociferously defended pensions as one of the last remaining safety nets in a country where 45pc of the elderly live below the poverty line. The issue has become the immovable “red line” in Greece’s struggle to finally end what the ruling Syriza party have dubbed a “ritual humiliation.”
Sunday: Five years is a long time to be in crisis. It’s freefall by a thousand cuts; loss in myriad ways, hard choices that never get easier. Last week, as Greece descended into drama, a young man appeared on the marble steps of the neoclassical building opposite my home. Head in hand, he sat there from Sunday to Wednesday, in the beating sun, a wheelie bag in front of him, a slice of cardboard perched on top that read: “I am homeless. Help please!”
When you live in Athens you do not flinch at the signs of decay: to do so would be to give in. But somehow the sight of this forlorn figure – a waif of a man, eyes fixed only at his feet, the embodiment of wounded pride, brought home as never before that Greeks are in crisis. Was he giving up or making a hard choice? If he was 22, and he barely seemed that, his entire adult life had been spent in crisis. This is the great tragedy of Greece. It has not only been needlessly impoverished – it now eats up its own. The elderly woman who occasionally rifles through the rubbish bins on the corner of the square my office overlooks – often carrying a Louis Vuitton bag – is so glad she was born at the end of the 1946-49 civil war. “At least then it could get better. Today it can only get worse.”
Monday: For five years we have all felt as if we are on a runaway train, hurtling into the unknown. Sometimes the train picks up speed, sometimes it slows down, but never enough to stop. This week, as the drumbeat of default, impending bankruptcy and disastrous euro exit thudded ever louder, the train felt as if it might derail altogether. Had a lunatic got hold of the controls? On Monday morning it began to feel like it. For me, the day started at 2am when I received a text from Euclid Tsakalotos, the point-man in negotiations between Athens and the troika.
“We made huge efforts to meet them halfway,” he wrote hours after talks reached an impasse over a reform-for-cash deal that could save Greece. “But they insisted on pension and wage cuts.” By mid-morning, global stock markets were tumbling. By midday, the world had learned that, without an agreement, Greece might not be able to honour an end-of-month debt repayment to the IMF worth €1.6bn. By midnight, newscasters, looking decidedly nervous, had broken their own taboo: many were talking openly of euro exit.
Original decision to provide a bail out is the source of the current crisis. Time for Europe to share the blame and financial consequences.
With everyone talking about Greece being on the verge of exiting the euro after Monday’s summit meeting, it seems to be forgotten that the current crisis is not really about Greece’s currency arrangements at all. The Greek people are not demanding a return to the drachma and few within the country are arguing for the competitive benefits a currency devaluation would entail. And there are no formal rules that Greece is breaking that must lead to an exit from the euro because, legally, the euro is a fixed and irrevocable currency union. This crisis is about more basic things: Debt and power. Indeed, the current stand-off looks a lot more like the classic gunboat diplomacy conflicts of the 19th century than it does the currency crises of the 20th century.
Europe’s governments and the IMF made an enormous mistake in bailing out Greece’s private creditors in 2010 and then overseeing a botched debt restructuring in 2012. In turn, the Greek governments of this era made the mistake of accepting official loans to pay off private creditors, perhaps not realising they were jumping out the frying pan straight into the fire. Now the Greeks are learning that defaulting on private creditors is one thing (not so hard it turns out, once you’ve got Lee Buchheit in your corner) but defaulting on governments of rich European countries is quite something else. Blaming the euro for the current impasse is actually pretty strange because the euro’s founding fathers explicitly warned member states to not to get themselves into this situation.
The story of the demise of Europe’s “no bailout clause” is an interesting one. Rather than an inevitable crisis, one can credibly argue that the decisions that landed us in the current situation did not need to be taken and were taken as a result of unnecessary cowardice, confusion and hubris. I reviewed many papers on prospects for the euro written by economists in the 1990s. I was struck by the consensus that the fiscal limitations of the Stability and Growth Pact would generally be honoured, that euro members that got into fiscal troubles would not be bailed out by other countries and this would lead to sovereign defaults when countries did get into fiscal problems.
By and large, the policy heavyweights of the day, such as Rudi Dornbusch, believed there was a “categorical no-bailout injunction.” As such, it was expected that markets would understand that European governments were more likely to default once their devaluation option was taken away and that financial markets would price the sovereign debt of countries differently depending on the health of their public finances.
While the big picture is undoubtedly improving – big investors are returning to a country that barely three years ago was widely expected to need a Greece-style sovereign bailout – Spain is still mired in a period of transition. Even the IMF report that welcomed Spain’s impressive growth rate – one of the strongest in Europe – also stressed the shaky jobs outlook, noting that unemployment was “still painfully high” and that “vulnerabilities remain”. “Spain has returned to about 95% of where it was in 2008,” says Professor Javier Diaz-Giménez of the IESE business school in Madrid. “That means 2008 is still a benchmark people look back at with nostalgia. At current growth rates, the economy will get back to where it was in 2008 at the end of next year. It’s a very late recovery.”
One of the biggest worries for those yet to see any improvements in their lives is whether even a sustained recovery will be enough to repair the damage. Jobs are starting to return, currently at a rate of 400,000-500,000 a year, but more than three million were lost during the downturn, so the new jobs represent only a small improvement in an unemployment rate, which is still running at almost 24%. In Greece, which now finds itself on the edge of the economic precipice, the rate is 26%. Inequalities, meanwhile, are deepening, leaving some to wonder whether the crisis is even over at all. “The economy is certainly not improving for those without a job or a home,” says Lotta Tenhunen, a social activist in Madrid. The group she works with, PAH, campaigns on behalf of those evicted after falling into arrears on their mortgage payments, and became especially prominent at the height of the recession. In Vallecas, it still meets every week: “People and families are still being driven out of their homes – and the rate is still rising.”
Prospects for the young are particularly bleak. About half of under-25-year-olds in the labour force are without a job, and this threatens to leave the country with a listless lost generation for whom unemployment is the norm. The ranks of the long-term jobless are also swelling. “It is not just the headline unemployment figure that is worrying; it is also the type of unemployment,” says Antonio Barroso of consultancy Teneo Intelligence. “40% of unemployed people are over the age of 45, so difficult to retrain and bring back into the labour market. You also have to look at the types of jobs being created. Most new positions are temporary contracts, where people are left in a precarious position with very few rights – this does not breed confidence.”
The race to save Greece from economic collapse intensified on Saturday night as its beleaguered leader conducted a flurry of behind-the-scenes negotiations before an EU summit on Monday that is expected to decide the country’s fate. Alexis Tsipras, the prime minister, met senior officials in an attempt to devise a package of reforms that would secure emergency funds and avoid the nation defaulting on its massive debts. It will be the third such proposal that Athens has made to its creditors in as many weeks. “We will try to supplement our proposal so that we get closer to a solution,” Greece’s minister of state, Alekos Flabouraris, told broadcaster Mega TV. “We are not going [to the summit] with the old proposal. Some work is being done to see where we can converge, so that we achieve a mutually beneficial solution.”
Flabouraris, widely seen as a mentor to the young prime minister, said Tsipras would hold crucial talks with the head of the European commission, Jean-Claude Juncker. The Greek cabinet will meet in an emergency session on Sunday with Tsipras also dispatching senior officials to Brussels. The frantic diplomacy came as Greece’s eurozone partners warned that, after five months of fruitless talks, the game was up for Tsipras’s radical leftwing government. The country, which has been thrown two lifelines since 2010, has until 30 June to secure €7.2bn (£5.1bn) in bailout funds. Failure to release the loans will result in default, as Greece owes €1.6bn to the IMF at the end of the month. Among the measures that the Syriza-led coalition was reportedly working on on Saturday were reductions in early retirement schemes.
Pension and VAT reforms, along with labour deregulation, remain sources of friction between the two sides. Speculation is rife that Greece’s creditors at the EU, ECB and IMF would offer a six-month extension of the bailout programme – disbursing more than €10bn in aid to tide the country over the summer – if agreement was reached. Discussions over a third bailout Athens will inevitably also require would be kicked down the road. Speaking to the Observer, Athens’s chief negotiator, Euclid Tsakalotos, described the prospect of a short-term deal as perhaps the worst possible outcome. Prolongation of the political uncertainty – and scenarios of Greece’s enforced exit from the euro – would, he said, do nothing for the country’s economic recovery.
Coppola still leaves me with a host of questions. Yanis wrote yesterday that his proposals were never even read because that would mean they’d need to be sent to Bundestag. Whether that automatically implies a vote, I don’t know.
The Greek finance minister, Yanis Varoufakis, has stirred up something of a hornet’s nest. He has spilled the beans on the less-than-transparent negotiating tactics of the EU institutions – the European Commission and the ECB. The Irish finance minister, Michael Noonan, complained that he had not seen the proposals put forward by the EU institutions for consideration by the Greek government. This is a serious criticism. Failure to brief finance ministers adequately before a Eurogroup meeting is negligent, although perhaps understandable in a rapidly-changing situation. It means that the ministers are unable to make informed decisions, so they must either rubber-stamp proposals without considering then properly, or defer everything.
Kicking cans down the road is of course a Eurogroup specialty, but it really shouldn’t be forced on finance ministers through inadequate briefing. Exactly why Mr. Noonan was not briefed is unclear. Did he miss the briefing? Was it an oversight by hard-pressed bureaucrats? Were other ministers briefed? We don’t know. But it is worrying that a mistake like this can be made in such finely balanced negotiations. One false move could spell disaster. The EU negotiators must be more careful. But Mr. Varoufakis added another complaint to Mr. Noonan’s. He said that he had been prevented from briefing EU finance ministers on his own proposal ahead of the meeting. And he blamed the Germans:
In fact, as our German counterpart was later to confirm, any written submission to a finance minister by either Greece or the institutions was “unacceptable”, as he would then need to table it at the Bundestag, thus negating its utility as a negotiating bid.
I find this hard to believe. In effect, it means that anything presented to the Eurogroup in writing is deemed by the Germans to be a firm recommendation requiring a vote by the German Parliament. If this is true, then it makes negotiations far more difficult. Complex proposals have to be written down, even if they are not the final word, because otherwise there is a significant risk of misunderstanding. Even more importantly, it raises serious questions about the role of the Eurogroup. If all the Eurogroup can ever see is a finished product, they can never do more than rubber-stamp decisions made by unelected bureaucrats behind the scenes. This is not a good way of running a supposedly democratic polity. Mr. Varoufakis makes a very similar criticism:
The euro zone moves in a mysterious way. Momentous decisions are rubber- stamped by finance ministers who remain in the dark on the details, while unelected officials of mighty institutions are locked into one-sided negotiations with a solitary government-in-distress. It is as if Europe has determined that elected finance ministers are not up to the task of mastering the technical details; a task best left to “experts” representing not voters but the institutions. One can only wonder to what extent such an arrangement is efficient, let alone remotely democratic.
And in his final paragraphs, he accuses the Eurogroup of being not fit for purpose. Hmm. Whether or not this criticism is justified, I can’t for the life of me see how saying it publicly is helpful to the Greek cause. It’s only going to annoy people.
Child poverty is on course for the biggest rise in a generation, reversing years of progress that began in the late 1990s, leading charities and independent experts claimed on Saturday. The stark prognosis comes before the release of government figures which experts believe will show a clear increase for the first time since the start of the decade. It also comes as the chancellor George Osborne and work and pensions minister Iain Duncan Smith announced they had agreed a plan to slash a further £12bn a year from benefits spending. In a joint letter they pledged to attack the “damaging culture of welfare dependency”, and said it would take “a decade” or more to return the welfare budget to what they called “sanity”.
The introduction of the bedroom tax and cuts in benefits between 2013 and last year are blamed for fuelling the rise in the number of families whose income is below 60% of the UK average – the definition of relative poverty. Calculations from the Institute for Fiscal Studies (IFS) have suggested that progress between the late 1990s and 2010 has been reversed and that the number of children living in relative poverty rose from 2.3 million in 2013 to 2.6 million in 2014. The Child Poverty Action Group says that with the government committed to implementing another £12bn of cuts in a new round of austerity, the problem will grow.
As tens of thousands of people joined an anti-austerity march through London on Saturday, Alison Garnham, the charity’s chief executive, said ministers were failing too many children. “The government can no longer claim that deficit reduction is about protecting children’s futures now that it’s being made to confront a child poverty crisis, with the biggest rise in a generation now expected of its own making,” she said. “With child poverty expected to rise by nearly a third in the decade to 2020 as a result of its policies, it’s clear the government’s approach is failing.”
The manager of one of Britain’s biggest bond funds has urged investors to keep cash under the mattress. Ian Spreadbury, who invests more than £4bn of investors’ money across a handful of bond funds for Fidelity, including the flagship Moneybuilder Income fund, is concerned that a “systemic event” could rock markets, possibly similar in magnitude to the financial crisis of 2008, which began in Britain with a run on Northern Rock. “Systemic risk is in the system and as an investor you have to be aware of that,” he told Telegraph Money. The best strategy to deal with this, he said, was for investors to spread their money widely into different assets, including gold and silver, as well as cash in savings accounts.
But he went further, suggesting it was wise to hold some “physical cash”, an unusual suggestion from a mainstream fund manager. His concern is that global debt – particularly mortgage debt – has been pumped up to record levels, made possible by exceptionally low interest rates that could soon end, and he is unsure how well banks could cope with the shocks that may await. He pointed out that a saver was covered only up to £85,000 per bank under the Financial Services Compensation Scheme – which is effectively unfunded – and that the Government has said it will not rescue banks in future, hence his suggestion that some money should be held in physical cash. He declined to predict the exact trigger but said it was more likely to happen in the next five years rather than 10.
The current woes of Greece, which may crash out of the euro, already has many market watchers concerned. Mr Spreadbury’s views are timely, aside from Greece. A growing number of professional investors (see comment, right) and commentators are expressing unease about what happens next. The prices of nearly all assets – property, shares, bonds – have been rising for years. House prices have risen by 26pc since the start of 2009, and by 68pc in London. The FTSE 100 is up by 75pc. Although it feels counter-intuitive, this trend of rising prices should continue if economies remain weak, because it gives central banks licence to keep rates low and to carry on with their “quantitative easing” programmes.
It’s a vicious circle of hypocrisy: Americans dependent on the safety net are urged to “get a job” by the same free-market system that pays them too little to avoid being dependent on the safety net. According to the Economic Policy Institute, $45 billion per year in federal, state, and other safety net support is paid to workers in the bottom 20% of wage earners. Thus the average U.S. household is paying almost $400 to employees in low-wage industries such as food service, retail, and personal care. Paul Ryan said that social programs “turn the safety net into a hammock that lulls able-bodied people to lives of dependency and complacency.” But 63% of eligible working-age poor Americans are employed, and 73% are members of working families.
Yet in a show of hypocrisy by some of the leading safety net critics, Congress has killed or blocked or ignored numerous attempts to create better jobs for underemployed Americans. A Demos study found that raising wages to $25,000 per year (about $12.50 per hour) for full-time retail workers would lift 734,075 people out of poverty. It would probably help a lot more. An analysis of Bureau of Labor Statistics data reveals that about 22 million workers are underpaid (about a sixth of the total), over half of them in food service, cashiering, personal care, and housekeeping. Paying everyone $12.50 (assuming full-time) would cost an extra $80 billion. That’s about 3% of total 2014 corporate profits. Three%, compared to the 95% spent by S&P 500 companies on investor-enriching stock buybacks and dividend payouts.
About two-thirds of low-wage workers are employed by large corporations with over 100 employees. The very worst offender is probably Walmart, which pays its estimated 1.4 million U.S. employees so little that the average Walmart worker depends on about $4,400 per year in taxpayer assistance, for food stamps and other safety net programs. As Walmart was depending on us, the taxpayers, to pay $4,400 a year to each of its employees, the company was spending the equivalent of $5,000 per U.S. employee for price-boosting stock buybacks.
The Russian Foreign Ministry has slammed the EU’s “pushy sanctions strategy” as “political blackmail,” and said it is “absolutely hopeless” as it won’t make Russia give up its “national interests and principled position.” Coming in response to the EU’s extension of sanctions over what Brussels called “the illegal annexation of Crimea and Sevastopol,” the Russian statement said “it was time” to accept that those territories are an “integral part of the Russian Federation” and that the situation “can’t be changed by methods of economic and political blackmail.” Sanctions against Russia are “absolutely hopeless,” the ministry said, adding that “it is a mistake to expect that [the sanctions strategy] will make us sacrifice national interests and [our] principled position on key issues.”
As the prolonged restrictions target Crimea and the city of Sevastopol, the Foreign Ministry sees the sanctions as unacceptable “discrimination” against people in Crimea “on a political and territorial basis.” Recalling “historical examples,” the ministry condemned the move as “a collective punishment” of “the residents of the [Crimean] peninsula who made a free choice” for reunification with Russia. “It was hard to imagine that Europe would face this in the 21st century,” the Foreign Ministry’s statement said. On Friday, the EU extended economic sanctions against Crimea until June 23, 2016, and said it still doesn’t recognize Crimea’s reunification with Russia, calling it an “illegal annexation.”
The restrictions include a ban on imports from Crimea or Sevastopol into the EU, investment and tourism services, as well as the export of certain products and technology to Crimean companies. The EU sanctions against Russia were imposed over the Ukrainian crisis. They targeted access to foreign loans and the oil and gas industry. Moscow responded with countersanctions that hit European food producers. However, the toll the conflict is taking on the EU economy is higher than Brussels initially anticipated.
In the coming weeks, Kiev will receive the €600 million tranche of the third EU loan package for Ukraine. It will be a new financial burden for ordinary EU taxpayers because there is no hope that the debt will be paid off, a German business newspaper reports. The €600 million euro tranche of financial aid for Ukraine is taking money from ordinary European taxpayers with no chance to return, the German newspaper Deutsche Wirtschafts Nachrichten reports. Earlier, Johannes Hahn, European Commissioner for European Neighborhood Policy and Enlargement Negotiations, said the EU completed all the procedures for the new tranche. “I’m very glad that the Verkhovna Rada [the Ukrainian Parliament] ratified the memorandum on the third package of financial aid of €1.8 billion.
I’m sure that within several weeks Kiev will receive the first tranche of €600 million,” Hahn said. “Thus, there is a new financial burden for our taxpayers. There is no hope that the money will return,” the newspaper claims. In May, Ukraine’s National Railroad Company declared bankruptcy. Part of its debt is due to be restructured. In total, its debt has reached $500 million. During the last year only, European taxpayers lost €200 million to save the company, the article reads. The Ukrainian protective wall along the border with Russia is also funded by EU taxpayers. The electrified barrier with mines and barbed wire is planned to be 2,000-kilometer-long and will cost nearly €100 million, DWN points out.
RT: A few weeks ago US Vice President Joe Biden said that “everybody wants an end to this conflict in Ukraine, but the question is on whose terms and how will it end.” Are the terms to end this conflict are still being negotiated and if so what options are on offer?
Stephen Cohen: My perspective is different from that of Vice President Biden. We are now after all in almost two years – a year and a half – of a new Cold War between the US and Russia – an exceedingly dangerous confrontation over Ukraine, which I think and I’ve said this for months could easily become as dangerous as the Cuban missile crisis was. The politics of this have now spread far and wide including in Europe. It seems to me, and this is my fundamental analysis, that in almost every capital – Washington, Brussels and certainly in Kiev, and even to some degree in Moscow – there is what I call a peace and a war party.
The Minsk agreements, which were agreed upon by the Chancellor of Germany, the President of France, the President of Ukraine and of course President Putin of Russia represented then a peace party. It set out in addition to a ceasefire in Ukraine very far reaching, fundamental terms of negotiation to end the civil war in Ukraine, to end the proxy war between the West and Russia. It’s clear to me that there are powerful people in the West and in Kiev who do not want a negotiated settlement.
RT: Vice President Biden, who recently said that he talks to either PM Yatsenyuk or President Poroshenko on almost a weekly basis – that’s what he said – do you think that Biden belongs to the peace or war camp when he is on the phone with them? Does he preach reconciliation?
SC: He says he talks to them three times per week not once a week. But we have evidence, something very dramatic just happened. As you know, in late May Secretary of State John Kerry went to Sochi. First he met with Russian Foreign Minister Sergey Lavrov and then, remarkably, he met for four hours with President Putin. It was absolutely clear from what was said in Sochi at the press conferences afterwards that Kerry’s mission had been to say that the US, the Obama administration, now fully backed the Minsk agreement. That would put Kerry in the peace party.
It was kind of a surprise because he had been taking a very hard line. However, look what then happened. Kerry was attacked, literally criticized, for having gone to Sochi by members of the Obama administration. The most vivid example reported in the New York Times last Sunday I think was that a former very close policy aide to Vice President Biden told the reporter they didn’t know why Kerry had gone to Sochi, and that he had sent bad messages and that his trip had been counterproductive. So you conclude from this – and it confirms my thesis – that there is a war party in every capital and even in the White House itself.
Eric King: “You mentioned that we are in unprecedented times. And the concern is that when the 2008 collapse unfolded there was all this money printing and the banks were bailed out. It really fell on the shoulders of the taxpayers, but the concern as you said is that this leverage is growing. There are over one quadrillion dollars of derivatives. With the leverage totally ramped up in (terms of) the central banks’ (balance sheets), who will save the financial system (this time around)? Who will save the banks? There are all these bail-ins that have been written into law in the West and it seems like the next move is just to steal money from the public. Who will save the system this time when it implodes?
Nomi Prins: “When it implodes it will implode more dangerously. The IMF and the Fed have different ideas about whether rates should stay low or go up. In this particular round the IMF won. They want rates to stay low because they don’t know what’s going to happen to the global financial system if the availability of cheap money goes away…. “Right now everyone knows, whether they admit it or not, that (cheap money) is the only thing that’s keeping this (global financial) system afloat. It isn’t production. It isn’t savings of individuals because nobody has any money to save. So there is no there, there.
The only policy that these central banks have is to continue to do more of the same. And the only thing that does is continue to push this next crisis, or the second leg of the current crisis as I look at it, down the road. There is no saving this (global financial) system. All they can do is continue to push the current policies to make it look as if things are operating functionally — as if these banks are solvent and as if these markets are somehow elevated on the basis of value and not on the basis of the cheap money that they are infusing into the system. That’s all they can do. They just hope that somewhere along the line this will work out.”
Perhaps it has occurred to you as it has to me that the United States is no longer capable of producing political leadership. In the current issue of Trends Journal, Gerald Celente describes the eight candidates (at the time he went to press) for the US presidential nomination as “Liars, cowards, freaks & fools.” Celente put it well. If you look at the sorry collection that aspires to be the CEO of what continues to be described as the “exceptional, indispensable, most important country with the largest economy and military, the world’s only Superpower, the Uni-power,” you see a collection of nobodies. America is like the last days of Rome when contenting factions fought to put their puppet on the throne.
There is no known politician in America who measures up to Vladimir Putin’s ankle, or to the knee of China’s leaders, or to the waist of Ecuador’s, Bolivia’s, Venezuela’s, Argentina’s, Brazil’s, or to the chests of India’s and South Africa’s. In Europe, the UK, Australia, and Canada, the natural leaders are also frozen out of the corrupt system. In the US, “leadership” positions depend on financial support from the ruling economic interests. American presidents and politicians represent about six powerful private interest groups and no one else. After Celente went to press, Donald Trump announced to much mirth. A “con man” they say, but what else is the President of the United States? Do you think you weren’t conned by Clinton, George W. Bush, and Obama? What universe do you live in?
In actual fact, Trump might be our best candidate to date. By all accounts, he is very rich. Thus, he doesn’t need the office in order to become rich by selling out America to interest groups. By all accounts, Trump has a healthy ego. Thus, he could be capable of standing up to the powerful interest groups that generally determine the governance of the American serfs. Trump’s ego might even be strong enough for him to stand up to the Israel Lobby, something my former colleague, Admiral Thomas Moorer, Chairman of the Joint Chiefs of Staff, said publicly that no American President was capable of doing. As Celente makes clear in the current Trends Journal, all politicians are con men or con women.
We are going to have them regardless, so why not try a rich one who might decide to break with tradition and serve the interests of the citizenry. This would be a unique accomplishment, affording Trump the elevation in history books that would satisfy his ego. When a person reaches Trump’s state, does he need another couple of billion dollars or is historical recognition as the savior, however temporary, more valuable? This is not my endorsement of Trump for President. It is merely my speculations on how we might think of how large egos might be brought into our service. When we put the Clintons in office, they decided to make money so that they could outdo Hollywood and show their arrival with the $3 million they spent on their daughter’s wedding. For Trump, $3 million is pocket change.
The pope’s encyclical on climate change is a big deal. Sure, past popes have written on the importance of protecting the environment, on favoring the poorest and on rethinking our direction as a species. But this is a major piece of work, and an ardent call from one of our world’s major leaders for us to work together to address this existential problem. Most interesting and heartening to me is Francis’s linking of the fate of the poor and the future of climate change. This point is well documented in research on the injustice of climate change. For example, Bradley Parks and I found that the poorest nations of the world are far more likely to suffer the impacts of climate-related disasters, and are also far less responsible for the problem.
The timing of the pope’s remarks is also very important. This year countries are both negotiating to reach a global agreement in Paris in December and also individually putting forward their own pledges on what they will do, called INDCs (Intended Nationally Determined Contributions) in the cumbersome U.N. lingo. The pope’s statement puts it very plainly to those leaders of nations who might be laggards: It’s time to face climate change very thoughtfully, justly and aggressively. Finally, having this strong and very considered statement about the urgency and moral imperative of addressing climate change coming from a religious leader is very proper, and part of an important larger movement.
All kangaroos are left-handed, according to new research. Previously it was thought that “true”-handedness, meaning predictably using one hand over the other, was a feature unique to primates. The new research, published in the journal Current Biology, not only negates that but also goes one step further: kangaroos are even more true-handed than we are. “According to a special-assessment scale of handedness adopted for primates, kangaroos pulled down the highest grades,” said project leader Yegor Malashichev in a press release. “We observed a remarkable consistency in responses across bipedal species in that they all prefer to use the left, not the right, hand.”
Malashichev, a researcher from Saint Petersburg State University in Russia, and his team observed that wild kangaroos show a natural preference for their left hands when performing particular actions, such as grooming their noses, picking leaves, or bending tree branches. Left-handedness was particularly apparent in eastern grey and red kangaroos. The kangaroos that they studied were at various locations in the wild at Tasmania and Australia. The term “hand” really does apply here, because kangaroos have five-fingered hands that somewhat resemble human hands, save for the kangaroos’ long claws in place of fingernails. Not all marsupials were found to exhibit such handedness. The researchers determined that red-necked wallabies, for example, prefer their left hand for some tasks and their right for others.
Generally speaking, these wallabies use their left forelimb for tasks that involve fine manipulation and the right for tasks that require more physical strength. The researchers also found less evidence for handedness in species that spend their days in the trees. The discovery about kangaroos was unexpected because, unlike other mammals, kangaroos lack the same neural circuitry that bridges the left and right hemispheres of the brain. Now the researchers are very curious about marsupial brains, which differ from those of other mammals in additional respects too. Such studies could yield important insight into neuropsychiatric conditions, including schizophrenia and autism, the researchers said, noting links between those disorders and handedness.
Just today, NASA released its global temperature data for the month of May 2015. It was a scorching 0.71°C (1.3°F) above the long-term average. It is also the hottest first five months of any year ever recorded. As we look at climate patterns over the next year or so, it is likely that this year will set a new all-time record. In fact, as of now, 2015 is a whopping 0.1°C (0.17°F) hotter than last year, which itself was the hottest year on record. Below, NASA’s annual temperatures are shown. Each year’s results are shown as black dots. Some years are warmer, some are cooler and we never want to put too much emphasis on any single year’s temperature. I have added a star to show where 2015 is so far this year, simply off the chart. The last 12 months are at record levels as well. So far June has been very hot as well, likely to end up warmer than May.
So why talk about month temperatures or even annual temperatures? Isn’t climate about long-term trends? First, there has been a lot of discussion of the so-called ‘pause.’ As I have pointed out many times here and in my own research, there has been no pause at all. We know this first by looking at the rate of energy gain within the oceans. But other recent publications, like ones I’ve written about have taken account of instrument and measurement quality and they too find no pause. Second, there has been a lot of discussion of why models were running hotter than surface air temperatures. There was a real divergence for a while with most models suggesting more warming. Well with 2014 and 2015, we see that the models and actual surface temperatures are in very close agreement.
When we combine surface temperatures with ocean heat content, as seen below, a clear picture emerges. Warming is continuing at a rapid rate.
Stanford biologist Paul Ehrlich calls for fast action to conserve threatened species, populations and habitat before the window of opportunity closes. There is no longer any doubt: We are entering a mass extinction that threatens humanity’s existence. That is the bad news at the center of a new study by a group of scientists including Paul Ehrlich, the Bing Professor of Population Studies in biology and a senior fellow at the Stanford Woods Institute for the Environment. Ehrlich and his co-authors call for fast action to conserve threatened species, populations and habitat, but warn that the window of opportunity is rapidly closing. “[The study] shows without any significant doubt that we are now entering the sixth great mass extinction event,” Ehrlich said.
Although most well known for his positions on human population, Ehrlich has done extensive work on extinctions going back to his 1981 book, Extinction: The Causes and Consequences of the Disappearance of Species. He has long tied his work on coevolution, on racial, gender and economic justice, and on nuclear winter with the issue of wildlife populations and species loss. There is general agreement among scientists that extinction rates have reached levels unparalleled since the dinosaurs died out 66 million years ago.
However, some have challenged the theory, believing earlier estimates rested on assumptions that overestimated the crisis. The new study, published in the journal Science Advances, shows that even with extremely conservative estimates, species are disappearing up to about 100 times faster than the normal rate between mass extinctions, known as the background rate. “If it is allowed to continue, life would take many millions of years to recover, and our species itself would likely disappear early on,” said lead author Gerardo Ceballos of the Universidad Autónoma de México.
Using fossil records and extinction counts from a range of records, the researchers compared a highly conservative estimate of current extinctions with a background rate estimate twice as high as those widely used in previous analyses. This way, they brought the two estimates – current extinction rate and average background or going-on-all-the-time extinction rate – as close to each other as possible. Focusing on vertebrates, the group for which the most reliable modern and fossil data exist, the researchers asked whether even the lowest estimates of the difference between background and contemporary extinction rates still justify the conclusion that people are precipitating “a global spasm of biodiversity loss.” The answer: a definitive yes.