Nov 262018
 November 26, 2018  Posted by at 10:57 am Finance Tagged with: , , , , , , , , , ,  

Vincent van Gogh On the Outskirts of Paris 1887


Russia Seizes Three Ukrainian Naval Ships In The Black Sea (AP)
Not Remotely Possible For May’s Brexit Deal To Pass Parliament – UK MP (CNBC)
UK High Court To Rule If Brexit Vote ‘Void’ As Early As Christmas (Ind.)
Nineteen Months Of Brexit Wrangling – And That’s Just A Taster (BBC)
Business Leaders Rally Behind May’s Brexit Deal Amid Fears Of Crashing Out (G.)
Texas Is About to Create OPEC’s Worst Nightmare (BBG)
Tesla Was Weeks From Dying Earlier This Year – Elon Musk (MW)
Former Greek FinMin Varoufakis To Run In European Election – In Germany (R.)
Give In To The EU, Greek PM Tsipras Counsels Italian Government (K.)
Russia Space Agency To Check If US Moon Landings Really Happened (Ind.)



I would think Ukraine is trying to provoke things, but western politicians and media all disagree.

Russia Seizes Three Ukrainian Naval Ships In The Black Sea (AP)

Russia seized three Ukrainian naval ships off the coast of Russia-annexed Crimea on Sunday after opening fire on them and wounding several sailors, a move that risks igniting a dangerous new crisis between the two countries. Russia’s FSB security service said early on Monday its border patrol boats had seized the Ukrainian naval vessels in the Black Sea and used weapons to force them to stop, Russian news agencies reported. The FSB said it had been forced to act because the ships — two small Ukrainian armored artillery vessels and a tug boat — had illegally entered its territorial waters, attempted illegal actions, and ignored warnings to stop while maneuvering dangerously.

“Weapons were used with the aim of forcibly stopping the Ukrainian warships,” the FSB said in a statement circulated to Russian state media. “As a result, all three Ukrainian naval vessels were seized in the Russian Federation’s territorial waters in the Black Sea.” The FSB said three Ukrainian sailors had been wounded in the incident and were getting medical care. Their lives were not in danger, it said. Ukraine denied its ships had done anything wrong, accused Russia of military aggression, and for the international community to mobilize to punish Russia. The United Nations Security Council is due to discuss the developments on Monday at the request of Russia, said Deputy Russian U.N. Ambassador Dmitry Polyanskiy.

Ukrainian President Petro Poroshenko met with his top military and security chiefs. Poroshenko said he would propose that parliament impose martial law. [..] Earlier on Sunday, Russia’s border guard service had accused Ukraine of not informing it in advance of the three ships’ journey, something Kiev denied. Russia said the Ukrainian ships had been maneuvering dangerously and ignoring its instructions with the aim of stirring up tensions. Russian politicians denounced Kiev, saying the incident looked like a calculated bid by Poroshenko to increase his popularity ahead of an election next year. In another sign of rising tensions, Russia’s state-controlled RIA news agency reported on Sunday night that Ukrainian forces had started heavy shelling of residential areas in eastern Ukraine which is controlled by pro-Moscow separatists.

Read more …

She needs 320+ votes, has 260.

Not Remotely Possible For May’s Brexit Deal To Pass Parliament – UK MP (CNBC)

It is not “remotely possible” that U.K. Prime Minister Theresa May’s Brexit withdrawal agreement would pass the House of Commons, which is the lower house of Parliament, in a crucial vote that will likely take place in December, a member of Parliament said on Monday. Lawmakers on both sides of the debate over the United Kingdom’s future as part of the European Union are unhappy with the proposals set by May in a 585-page, legally-binding document that lays out the terms of the former’s exit, Sarah Wollaston, who is also a member of the prime minister’s Conservative party, told CNBC’s “Squawk Box.”

“I just don’t think it’s remotely possible that this deal would pass the Commons,” she said, adding that it will likely fall short on the numbers needed to move the agreement forward. “That doesn’t necessarily mean that we would crash out with no deal because, certainly, Parliament, British parliamentarians are very opposed to leaving with no deal at all.” [..] May needs a simple majority of the 650 lawmakers in the House of Commons, but experts have indicated it will be an uphill task for the prime minister. Her Conservative Party holds 315 seats and represents the largest party in the House, but a significant number are against the plan, including some pro-Brexit members. Meanwhile, lawmakers in the opposition have mostly indicated that they will vote against the deal.

Read more …

Was the vote fraudulent to begin with?

UK High Court To Rule If Brexit Vote ‘Void’ As Early As Christmas (Ind.)

The High Court will rule as early as Christmas whether Brexit should be declared “void”, in a legal case given a turbo-boost by the criminal investigation into Leave funder Arron Banks. Judges are poised to fast track the potentially explosive challenge, after Theresa May’s refusal to act on the growing evidence of illegality in the 2016 referendum campaign, The Independent can reveal. Lawyers describe that failure as “absolutely extraordinary” – given the National Crime Agency’s (NCA) probe into suspicions of “multiple” criminal offences committed by Mr Banks and the Leave.EU campaign.

Now The Independent understands the case is likely to move to a full hearing and a ruling within weeks of opening on 7 December, with the clock ticking on the UK’s departure from the EU next March. Both its lawyers and a leading academic believe its chances of success have been given a big boost by the unfolding scandal and the government’s refusal to recognise the gravity of what is being exposed. The government is expected to deploy Sir James Eadie QC – the star barrister who led the unsuccessful battle for the government to trigger Article 50 without parliament’s consent – in a sign of the case’s importance.

Read more …

We haven’t even started.

Nineteen Months Of Brexit Wrangling – And That’s Just A Taster (BBC)

There was a definite “battle of the tones” at the seal-the-deal Brexit summit with Theresa May. EU leaders were determinedly sombre, while the UK prime minister had to sound upbeat and positive about her country’s Brussels-free future. It shouldn’t be under-estimated. Sunday was a huge day for the EU, signing off on the divorce papers of a departing key member state for the first time in the history of the bloc. In the eyes of many, Brexit counts as an EU failure. At the summit, French President Emmanuel Macron reminded the press of the fragility of European Union. Which is why, time and again, EU leaders in Brussels continue to make so much of the (unusual) show of unity the Brexit process has provoked in EU ranks.

For now, of course, all European eyes turn to the UK to see if the hard-negotiated Brexit deal passes through the House of Commons. If it doesn’t, the President of the European Commission, Jean-Claude Juncker, insists there will be no deal. “This is the deal. This is THE deal,” he told me emphatically, ruling out the possibility of renegotiating the Brexit texts. If he’s true to his word, and parliament votes down the divorce deal, then all 19 months of painful EU-UK negotiations were for naught. And both sides could find themselves staring at the cost and potential chaos of what the EU’s chief Brexit negotiator Michel Barnier calls a non-orderly Brexit. EU leaders are hell-bent on avoiding that.

Read more …

May sure scared the money.

Business Leaders Rally Behind May’s Brexit Deal Amid Fears Of Crashing Out (G.)

Business leaders have rallied to support Theresa May’s Brexit deal, even as an independent study showed that the prime minister’s agreement meant the UK stood to lose £100bn a year by 2030 in reduced trade and income. Executives in the City of London warned MPs to vote for the deal negotiated by the prime minister to avoid a no-deal Brexit that would harm the UK economy. TheCityUK, which represents banks and insurers in the Square Mile, said parliament had “a straight choice” between the agreement hammered out in Brussels and a no-deal Brexit, “which offers only higher risk, costs and disruption”.

Miles Celic, the organisation’s boss, said: “The focus must now be on securing the withdrawal agreement and the transition period it brings – which is critical for our industry and many others. There is much still to be negotiated to define the future relationship. The sooner that can get started, the better.” His warning echoed those of industry bodies and small business groups, which have become nervous in recent weeks that No10 would fail to overcome the hurdles towards securing a withdrawal agreement. The Institute of Directors, which has found in polls of its members that they split 50:50 over proposals for a second referendum, said they all objected to an outcome that leaves Britain with no deal.

“The deal the EU approved today provokes a wide range of reactions across the political spectrum, and indeed among business leaders, but the steer from our members is that avoiding no deal must be the main priority,” said Stephen Martin, the director general.

Read more …

Hmmm. Problem with shale is debt.

Texas Is About to Create OPEC’s Worst Nightmare (BBG)

OPEC helped create the monster that haunts its sleep. After it flooded the market in 2014, oil prices crashed, forcing surviving U.S. shale producers to get leaner so they could thrive even with lower oil prices. As prices recovered, so did drilling. Now growth is speeding up. In Houston, the U.S. oil capital, shale executives are trying out different superlatives to describe what’s coming. “Tsunami,’’ they call it. A “flooding of Biblical proportions’’ and “onslaught of supply’’ are phrases that get tossed around. Take the hyperbolic industry talk with a pinch of salt, but certainly the American oil industry, particularly in the Permian, has raised a buzz loud enough to keep OPEC awake. “You’ve got an awful lot of production that can come in very economically,’’ said Patricia Yarrington, Chevron’s CFO.

“If you think back four or five years ago, when we didn’t really understand what shale could do, the marginal barrel was priced much higher than what we think the marginal barrel is priced today.’’ That shift makes shale resilient to a price tumble. After touching a four-year high in October, West Texas Intermediate, the U.S. benchmark, has fallen by more than 20 percent. [..] August saw the largest annual increase in U.S. oil production in 98 years, according to government data. The American energy industry added, in crude and other oil liquids, nearly 3 million barrels, roughly the equivalent of what Kuwait pumps, than it did in the same month last year. Total output of 15.9 million barrels a day was more than Russia or Saudi Arabia.

[..] By the end of 2019, total U.S. oil production – including so-called natural gas liquids used in the petrochemical industry – is expected to rise to 17.4 million barrels a day, according to the U.S. Energy Information Administration. At that level, American net imports of petroleum will fall in December 2019 to 320,000 barrels a day, the lowest since 1949, when Harry Truman was in the White House. In the oil-trading community, the expectation is that, perhaps for just a single week, the U.S. will become a net oil exporter, something that hasn’t happened for nearly 75 years.

Read more …

Now he tells us.

Tesla Was Weeks From Dying Earlier This Year – Elon Musk (MW)

Tesla Inc. was “bleeding money like crazy” during its Model 3 production ramp-up and almost went under earlier this year, Elon Musk said Sunday. In an interview aired Sunday night on “Axios on HBO,” Tesla’s chief executive said the electric-car company was “within single-digit weeks” of dying. “Essentially, the company was bleeding money like crazy, and if we didn’t solve these problems in a very short period of time, we would die. And it was extremely difficult to solve them,” Musk said. Earlier this year, Musk described “production hell” as Tesla ramped up production to build 5,000 Model 3 sedans a week by the end of June, and said he had been sleeping on the factory floor.

Musk admitted in Sunday’s interview that he had been stretched to the limit. “People should not work this hard,” he said of his stretch working 22-hour days, seven days a week. “This is very painful.” “It hurts my brain and my heart,” Musk said. “It hurts. It is not recommended for anyone. I just did it because if I didn’t do it… there was a good chance Tesla would die.” In late October, Tesla posted a surprise quarterly profit, and earlier this month, Musk said Tesla is not “staring death in the face” anymore, and it will likely be cash-flow positive for all quarters going forward.

Read more …

Godspeed. Politics? You sure?

Former Greek FinMin Varoufakis To Run In European Election – In Germany (R.)

Former Greek finance minister Yanis Varoufakis, who was outspoken in his criticism of the austerity policies championed by Berlin at the height of the euro zone’s debt crisis, is to stand in European elections next year – in Germany. The Democracy in Europe Movement 2025 (DiEM25), which he launched in 2016 to “democratize” the continent, picked him on Sunday as a candidate for the elections to the European Parliament in May 2019. “I accept [the nomination] because it epitomizes the new trans-national politics we need in Europe,” he told a news conference in Berlin where his colleagues unfurled a banner with the slogan “European Spring.” “I call on all of you to join us in this pan-European quest for democracy in Europe, democracy in Germany as a condition for prosperity and authentic democracy,” he said.

The motorbike-riding academic-economist, who rose to celebrity status in the euro crisis, once described the austerity measures forced on Greece by creditors as “fiscal waterboarding”. Varoufakis, who frequently clashed with his hardline German counterpart at the time, Wolfgang Schaeuble, said the political center in Germany was under threat because of austerity. “On paper, Germany is drowning in money…but the German people have been victims of the same austerity as the rest of Europe. The result is low levels of investment,” he said. This, he argued, boosted inequality, share prices and house prices. He said his movement wanted to pour cash, raised if necessary via bond issuance, into green policies to tackle climate change.

Read more …

‘You’d better do today what they’ll do tomorrow..’

Give In To The EU, Greek PM Tsipras Counsels Italian Government (K.)

Prime Minister Alexis Tsipras has counseled the Italian government to give in to EU demands that it lower its budget deficit, according to newspaper Corriere della Sera. In an analysis piece titled “Tsipras’ advice to Italy: Give in now, then it will be worse,” Federico Fubini writes that Tsipras was sort of apologetic to the Italians for not taking their side in their conflict with the EU Commission. “I can not do anything because I would be the first to arouse suspicion,” Tsipras reportedly said. Rubini adds: “(Tsipras) no doubt remembers that Italy did nothing when he tried desperately to soften the conditions – then draconian – placed by the euro area on Greece.”

“But then Tsipras, mindful of the retreat that he improvised in July 2015 after blocking the bank accounts of the voters to avoid the collapse of the system, has offered advice to Italy. ‘You’d better do today what they’ll do tomorrow,’ he said. ‘If instead you have another idea – he added, perhaps alluding to the euro exit option that he refused – well, then, good luck.’”

Read more …


Russia Space Agency To Check If US Moon Landings Really Happened (Ind.)

The head of Russia‘s national space agency has proposed a mission to the moon to verify whether the American moon landings really took place. Dmitry Rogozin responded to a question about whether Nasa’s Apollo programme actually put men on the moon back in the 1960s and 1970s during a conversation with the president of Moldova, Igor Dodon. He appeared to be joking, as he smirked and shrugged while answering. But conspiracies surrounding Nasa’s moon missions are common in Russia. In a video of their interaction, posted to his 815,000 Twitter followers, Mr Rogozin says: “We have set this objective to fly and verify whether they’ve been there or not”.

Nasa’s six well-documented official manned missions to the surface of the Moon, beginning with astronauts Neil Armstrong and Buzz Aldrin in July 1969 and continuing with Gene Cernan and Jack Schmitt in December 1972, have been dogged with conspiracy theories. In 2015, a former spokesman for the Russian Investigative Committee called for an investigation into the Nasa moon landings. Vladimir Markin said an enquiry should be launched into the disappearance of original footage from the first moon landing in 1969 and the whereabouts of lunar rock, which was brought back to Earth during several missions.

Read more …

Oct 272018
 October 27, 2018  Posted by at 9:42 am Finance Tagged with: , , , , , , , , , , ,  

Pablo Picasso Mandolin and glass of Pernod 1911


Global Selloff Erased $5 Trillion From Stock And Bond Markets In October (MW)
Dow Down 300 Points, S&P 500 1.7% In Another Wild Day On Wall Street (CNBC)
Jeff Bezos Loses $11 Billion In One Day After Amazon Sales Disappoint (F.)
Trump Adds A Global Pricing Plan To Wide Attack On Drug Prices (Tribble)
Swedish Central Bank Makes U-Turn on Cash as NIRP is Ending (DQ)
FBI Reviews Tesla Model 3 Production Numbers As Part Of Criminal Probe (CNBC)
Varoufakis, Bernie Sanders To Launch Progressives International Movement (RT)
Mexico Offers Caravan Migrants Temporary Work Permits, Housing (BBC)
Hundreds Ready To Go To Jail Over Climate Crisis (G.)
US Withdrawal Of Gillnet Protections For Whales, Turtles Ruled Illegal (R.)



Or $8 trillion, depending on who you ask.

Global Selloff Erased $5 Trillion From Stock And Bond Markets In October (MW)

The recent stampede by investors has erased about $5 trillion in value from global stock and bond markets in October alone. But that shouldn’t be severe enough to affect the economy, for now, according to economists at Deutsche Bank. Still, unless the markets regain their footing soon, the pressure for the Federal Reserve to reassess their monetary policy will continue to mount, they said. “Academic studies of the wealth effect find that households and companies don’t react to short-term fluctuations in their wealth but instead react to a moving average of where their wealth levels are,” said Torsten Slok, chief international economist at Deutsche Bank Securities, said in a note to clients.

As the chart below illustrates, global markets shed roughly $5 trillion in market cap just this month, but the total value of equity and debt markets has increased $15 trillion from 2017. “The bottom line is that we need a more significant correction before it will begin to have a meaningful impact on the economic outlook,” he said. The Fed said wages and prices are rising in its 12 districts and overall economic activity expanded at a “modest to moderate” pace, according to the Beige Book released on Wednesday. The report, which compiles anecdotal observations about the economy, by and large suggests that the Fed is likely to stay on course to execute its fourth rate rise of 2018 in December and deliver additional increases next year unless there is a more dramatic unwind in the financial markets.

[..] The sharp selloff this month has prompted at least one market expert to suggest that stocks are in the midst of a sustained downward spiral. “With the S&P 500 only five weeks removed from its all-time high, we’ve not been definitive about labeling this move a new cyclical bear market. But it’s very likely we are experiencing one,” said Doug Ramsey, chief investment officer at Leuthold Group, in a report.

Read more …

At some point, the word ‘momentum’ will come into play.

Dow Down 300 Points, S&P 500 1.7% In Another Wild Day On Wall Street (CNBC)

Stocks fell sharply on Friday as investors slogged through another volatile session on Wall Street. The Dow Jones Industrial Average closed 296.24 points lower at 24,688.31 after dropping 539 points at its lows of the day. The Nasdaq Composite dropped 2.1 percent to 7,167.21. At its lows, the tech-heavy Nasdaq had fallen more than 3 percent. The S&P 500 fell 1.7 percent to 2,658.69 and briefly entered into correction territory, trading more than 10 percent below its record high reached in September. The average stock market correction, since WWII, results in a 13 percent drop and lasts for four months if it does not turn into a full-fledged bear market. Larry Benedict, CEO of The Opportunistic Trader, said traders “don’t want to be long heading into the weekend.”

He added, “S&P now down on the year and people are more afraid to be long today than they were when market was 10 percent higher.” Seven of the 11 S&P 500 sectors are down at least 10 percent from their 52-week highs, including energy, materials and financials. Around three quarters of the index’s stocks are also in a correction. “The 19.7 percent correction in 2011 is as close to a bear market as we’ve had in recent years. I don’t think we’ll get close to that, but I think we’re heading for a deeper correction than the one we had in January and early February,” said Sam Stovall, chief investment strategist at CFRA Research. He noted investors are realizing that earnings growth will slow down moving forward, thus they are pricing this in.

Read more …

How much of Bezos’s wealth comes directly from cheap and easy money?

Jeff Bezos Loses $11 Billion In One Day After Amazon Sales Disappoint (F.)

Easy come, easy go: Jeff Bezos’ fortune dropped by $11 billion on Friday, a day after Amazon came out with quarterly results that fell short of the mark. Shares of the e-commerce behemoth fell almost 8% on Friday, swiftly knocking some $70 billion off the company’s market capitalization. The selloff also dragged down the broader market, which has been flirting with correction territory this week. Bezos’ net worth fell in lockstep, dropping by $11 billion to $135.8 billion. That is down from the $160 billion he was worth as of mid-September. Bezos, who owns 16% of Amazon, is still by far the richest man on the planet. He is trailed by Microsoft cofounder Bill Gates, whose fortune clocks in at $94.8 billion.

Amazon, which briefly became the second U.S. company to fetch a $1 trillion valuation in September, shared third quarter results on Thursday that failed to live up to the high expectations that investors and Wall Street have come to adopt. Sales rose by 29% to $56.6 billion in the third quarter. However, that was a far cry from the $73.9 billion that analysts had projected. Amazon also told investors to brace for a slower holiday season. It expects revenue to grow just 10% to 20% in the fourth quarter, reaching $72.5 billion at most. That would make for Amazon’s worst holiday season since 2014. For the last three straight years it has boasted sales increases of more than 20% during the fourth quarter.

Read more …

Makes sense: “Trump proposed having Medicare base what it pays for some expensive drugs on the average prices in other industrialized countries, such as France and Germany..”

Trump Adds A Global Pricing Plan To Wide Attack On Drug Prices (Tribble)

President Donald Trump’s new pledge to crack down on “the global freeloading” in prescription drugs had a sense of déjà vu. Five months ago, Trump unveiled a blueprin to address prohibitive drug prices, and his administration has been feverishly rolling out ideas ranging from posting drug prices on television ads to changing the rebates that flow between drugmakers and industry middlemen. Thursday, Trump proposed having Medicare base what it pays for some expensive drugs on the average prices in other industrialized countries, such as France and Germany, where prices are much lower. The proposal is in the early stages of rule-making and awaiting public comments. The U.S., Trump said, will “confront one of the most unfair practices, almost unimaginable that it hasn’t been taken care of long before this.”

The proposal was met with hope and skepticism, with several experts saying they were happy the administration was taking on Medicare Part B’s rising drug prices but questioning its approach. Walid Gellad, director of the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh, said in an online post that the administration’s proposed solutions were unclear. And, he said, they would “face insurmountable challenges.” While some industry watchers pointed to the announcement as a political move, Wells Fargo pharmaceutical analyst David Maris said that this is a broader effort by the president and his administration to attack the root causes of high drug prices. “The reality is he could very easily not take this on and do what other administrations have done and let the prices keep rising.”

Read more …

Defeat. Good.

Swedish Central Bank Makes U-Turn on Cash as NIRP is Ending (DQ)

Sweden’s Riksbank has become the first central bank in the 21st century to take concrete measures to ensure that cash does not disappear as a means of payment from the financial system. To that end, the Riksbank proposes, in a document published on its website, to make it mandatory for all banks and financial institutions to offer cash services. The pronouncement comes in response to a recent policy suggestion by the Riksbank Committee that only the country’s six major banks should be obligated to continue offering cash services. That prompted a backlash from Sweden’s competition watchdog, which argued that the plan would distort competition as it would affect only a few of the nation’s banks. In response, the Riksbank has opted to apply the rule to “all banks and other credit institutions that offer payment accounts.”

[..] For years, the government and the Riksbank have been pushing for a “cashless society.” The Riksbank has over 1,000 articles posted on its website on the “cashless society“. The emphasis worked: between 2013 and 2017, the amount of cash in circulation dropped by 35%, earning Sweden a reputation as the world’s “most cashless nation”:

Many of Sweden’s bank branches had stopped handling cash altogether. Now, they will have to begin doing so all over again. Many of them are not happy about it. Nor indeed are Sweden’s competition and financial watchdogs, which both oppose the proposal, arguing that access to cash should be the sole responsibility of the state and not private banks. “To secure access to cash is a collective good that the state should reasonably be responsible for,” the Swedish Financial Supervisory Authority said. It’s an opinion that’s shared by ATM provider Bankomat, which argued that it should be the state’s responsibility to ensure that citizens have access to cash since the handing of notes and coins is such an important — and expensive — part of a country’s infrastructure. Bankomat is jointly owned by the five largest banks in Sweden.

Read more …

To be continued. Forever.

FBI Reviews Tesla Model 3 Production Numbers As Part Of Criminal Probe (CNBC)

The FBI is reviewing Tesla’s Model 3 production numbers as part of an ongoing criminal probe into whether the company misled investors, according to a Wall Street Journal report published Friday. Federal agents are reviewing Tesla’s stated Model 3 numbers dating back to early 2017, the Journal reports, citing unnamed sources. Tesla had previously said it provided documents to the Department of Justice regarding CEO Elon Musk’s controversial take-private tweet — a blunder that ultimately cost Tesla and Musk a combined $40 million in fraud settlement fees. Now Tesla says it also provided information to the Department of Justice regarding Musk’s public statements regarding production numbers of its Model 3 sedan.

Tesla says the company has not received “a subpoena, a request for testimony, or any other formal process,” but the Journal reported Friday that former Tesla employees have received subpoenas and requests for testimony. Tesla struggled to ramp up Model 3 production as promised, plagued by factory issues and reports of unfit working conditions. Musk set lofty goals and insisted on sticking to them, according to countless media reports. Federal agents are probing whether the company knowingly made public statements of impossible production goals, the Journal reported.

Read more …


Varoufakis, Bernie Sanders To Launch Progressives International Movement (RT)

Former Greek Finance Minister Yanis Varoufakis said he and US Senator Bernie Sanders will in a month formally launch a left-wing counterpart to the nationalist movement being forged by Steve Bannon. A Sanders-Varoufakis team-up was suggested in an recent op-ed by the Greek economist published by the Guardian. The formal creation of Progressives International is to happen in Sanders’ home state of Vemont on November 30, Varoufakis announced during a press conference in Rome on Friday. Varoufakis, who led tough negotiation with European lenders in 2015 before resigning after Athens agreed to EU’s austerity terms, says the world today is facing a crisis of leadership similar to what Europe saw in the 1930s.

With the establishment failing the common people, populist nationalist forces are rising to power, offering quick and simple solutions to problems like social inequality, loss of jobs to countries with cheaper labor and mass migration. Steven Bannon, the former strategist for the Donald Trump 2016 campaign, is currently trying to unite such right-wing forces in various nations into a global movement. For Varoufakis figures like Bannon, Italian Interior Minister Matteo Salvini, Hungarian President Viktor Orban and others pose a threat similar to the fascist movements of the 1930s, according to his Guardian op-ed. He and potential allies like Sanders or UK’s Labour leader Jeremy Corbyn can offer an alternative way out of the crisis, he believes.

But if they are to succeed in a struggle for power against both the globalist establishment and the nationalists, they need to unite across borders. “The financiers are internationalists. The fascists, the nationalists, the racists – like Trump, Bannon, [German Interior Minister Horst] Seehofer, Salvini — they are internationalists,” Varoufakis told BuzzFeed News. “They bind together. The only people who are failing are progressives.”

Read more …

Could be part of a solution.

Mexico Offers Caravan Migrants Temporary Work Permits, Housing (BBC)

Mexico has offered temporary work permits to migrants who register for asylum, as a big caravan of Central American migrants makes its way through the country toward the US. The plan also envisages temporary ID cards, medical care and schooling. But to qualify, migrants must remain in Mexico’s southern Chiapas and Oaxaca states. The US has warned that about 800 troops may be sent to the US-Mexico border to stop the migrant caravan. “I am bringing out the military for this National Emergency,” US President Donald Trump said earlier this week. “They [migrants] will be stopped!” The president also threatened cutting aid to Guatemala, El Salvador and Honduras. The caravan set off from Honduras several weeks ago.

The scheme, announced by President Peña Nieto, covers Central Americans who have officially asked for a refugee status in Mexico or are planning to do so in the nearest future. It is called Estas en Tu Casa (“This is Your Home” in Spanish). “Today, Mexico extends you its hand,” President Nieto said. But he added: “This plan is only for those who comply with Mexican laws, and it’s a first step towards a permanent solution for those who are granted refugee status in Mexico.” The plan envisages: • Temporary ID cards and work permits • Medical care • Schooling for migrants’ children • Housing in local hostels. But President Nieto failed to explain what would happen to the migrants if they chose to carry on regardless.

Read more …

But they confuse climate crisis and species extiction. Not the same thing at all.

Hundreds Ready To Go To Jail Over Climate Crisis (G.)

A new group of “concerned citizens” is planning a campaign of mass civil disobedience starting next month and promises it has hundreds of people – from teenagers to pensioners – ready to get arrested in an effort to draw attention to the unfolding climate emergency. The group, called Extinction Rebellion, is today backed by almost 100 senior academics from across the UK, including the former archbishop of Canterbury Rowan Williams. In a letter published in the Guardian they say the failure of politicians to tackle climate breakdown and the growing extinction crisis means “the ‘social contract’ has been broken … [and] it is therefore not only our right, but our moral duty to bypass the government’s inaction and flagrant dereliction of duty, and to rebel to defend life itself.”

Those behind Extinction Rebellion say almost 500 people have signed up to be arrested and that they plan to bring large sections of London to a standstill next month in a campaign of peaceful mass civil disobedience – culminating with a sit-in protest in Parliament Square on 17 November. Roger Hallam, one of the founders of the campaign, said it was calling on the government to reduce carbon emissions to zero by 2025 and establish a “citizens assembly” to devise an emergency plan of action similar to that seen during the second world war. On top of the specific demands, Hallam said he hoped the campaign of “respectful disruption” would change the debate around climate breakdown and signal to those in power that the present course of action will lead to disaster.

“The planet is in ecological crisis – we are in the midst of the sixth mass extinction event this planet has experienced,” he said. “Children alive today in the UK will face the terrible consequences of inaction, from floods to wildfires, extreme weather to crop failures and the inevitable breakdown of society. We have a duty to act.”

Read more …

Make America Great Again MUST start with American nature, with protecting species. Major flaw.

US Withdrawal Of Gillnet Protections For Whales, Turtles Ruled Illegal (R.)

The Trump administration unlawfully withdrew a plan to limit the number of whales, turtles and other marine creatures permitted to be inadvertently killed or harmed by drift gillnets used to catch swordfish off California, a federal judge has ruled. The decision requires U.S. fisheries managers to take steps to implement the plan, which calls for placing numerical limits on the “bycatch” of bottlenose dolphins, four whale species and four sea turtle species snared in swordfish gillnets. As currently written, the regulation in question also would mandate suspension of swordfish gillnet operations altogether off Southern California if any one of the bycatch limits were exceeded.

The Pacific Fishery Management Council endorsed the plan in 2015, and it was formally proposed for implementation by the U.S. Commerce Department’s National Marine Fisheries Service the following year. The rule was expected to gain final approval but was abruptly withdrawn instead in June 2017 under President Donald Trump, whose Commerce Department determined the cost to the commercial fishing industry outweighed conservation benefits. The environmental group Oceana sued, accusing the Commerce Department of violating U.S. fisheries laws and the federal Administrative Procedures Act. Oceana also asked the courts to order the agency to put the bycatch limits into effect.

U.S. District Judge R. Gary Klausner declined to force the National Marine Fisheries Service to immediately implement the restrictions in a decision handed down Wednesday in Los Angeles. But he sided with environmentalists in finding the agency’s reversal exceeded its authority and was “arbitrary, capricious or an abuse of its discretion.”

Read more …

Jun 012018
 June 1, 2018  Posted by at 1:01 pm Finance Tagged with: , , , , , , , , , , , , ,  

Nikolay Dubovsky Became Silent 1890


“European Stocks Surge Celebrating New Spanish, Italian Governments”, says a Zero Hedge headline. “Markets Breathe Easier As Italy Government Sworn In”, proclaims Reuters. And I’m thinking: these markets are crazy, and none of this will last more than a few days. Or hours. The new Italian government is not the end of a problem, it’s the beginning of many of them.

And Italy is far from the only problem. The new Spanish government will be headed by Socialist leader Pedro Sanchez, who manoeuvred well to oust sitting PM Rajoy, but he also recently saw the worst election result in his party’s history. Not exactly solid ground. Moreover, he needed the support of Catalan factions, and will have to reverse much of Rajoy’s actions on the Catalunya issue, including probably the release from prison of those responsible for the independence referendum.

Nor is Spain exactly economically sound. Still, it’s not in as bad a shape as Turkey and Argentina. A JPMorgan graph published at Zero Hedge says a lot, along with the commentary on it:

The chart below, courtesy of Cembalest, shows each country’s current account (x-axis), the recent change in its external borrowing (y-axis) and the return on a blended portfolio of its equity and fixed income markets (the larger the red bubble, the worse the returns have been). This outcome looks sensible given weaker Argentine and Turkish fundamentals. And while Cembalest admits that the rising dollar and rising US rates will be a challenge for the broader EM space, most will probably not face balance of payments crises similar to what is taking place in Turkey and Argentina, of which the latter is already getting an IMF bailout and the former, well… it’s only a matter of time.


And now Erdogan has apparently upped the ante once more yesterday. Last week he called on the Turkish population to change their dollars and euros into lira’s, last night he ‘suggested’ they bring in their money from abroad (to profit from ‘beneficial tax rules’). Such things have, by and large, one effect only: the opposite of what he intends. He just makes his people more nervous than they already were.

It’s June 1, and the Turkish elections are June 24. Will Erdogan be able to keep things quiet enough in the markets? It’s doubtful. He has reportedly already claimed that the US and Israel are waging an economic war on Turkey. And for once he may be right. A few weeks ago Erdogan called on all member states of the Organisation of Islamic Cooperation to boycott all Israeli products (and presumably America products too).

On April 30, the IMF warned that the Turkish economy is showing “clear signs of overheating”. On May 1, Standard & Poor’s downgraded the Turkish economy to double-B-minus. Economic war? Feels a bit more like a political war. Erdogan has three weeks left to win that election. Don’t expect things to quieten down before then. But as the graph above shows, Turkey itself is the problem here first and foremost.

Expect Erdogan to say interest rates -usury- are immoral in Muslim countries. Expect much more pressure from the west on him. Erdogan has also been busy establishing Turkish ‘enclaves’ in Syria’s Afrin territory (where he chased out the original population) and in the Turkish-occupied northern part of Cyprus (where he added 100s of 1000s of Turks).

No, the West wouldn’t mourn if the man were defeated in the vote. They can add a lot more pressure in three weeks, and they will. Will it suffice? Hard to tell.


Back to Italy. Where the optimism comes from, I can’t fathom. The M5S-Lega coalition has never made a secret of its program and/or intentions. Just because pronounced eurosceptic Paolo Savona was shifted from Finance to EU minister doesn’t a summer make. New Finance minster Tria may be less outspoken than Savona, but he’s no europhile, and together the two men can be a woeful pain in Europe’s behind. This is Italy. This is not Sparta.

The essence of the M5S-Lega program is painfully simple: they reject austerity as the basics of economic policy. And austerity is all that Europe’s policy has been based on for the past decade at least. That spells collision course. And there is zero indication that the new coalition is willing to give an inch on this. Tsipras may have in Greece, but Italy’s sheer size means it has a lot more clout.

To begin with, the program wants to do away with the Eurozone’s 3% deficit rule. It speaks of a 15-20% flat tax, and a €780 basic income. These two measures would cost between €109 billion and €126 billion, or 6 to 7% of Italian GDP. As Italy’s public debt stand at €2.4 trillion, 132% of GDP.

“The government’s actions will target a programme of public debt reduction not through revenue based on taxes and austerity, policies that have not achieved their goal, but rather through increased GDP by the revival of internal demand,” the program says. Yes, that is the opposite of austerity.

The parties want a roll-back of previously announced pension measures to a situation where the sum of a person’s age and years of social security contributions reach 100. If someone has worked, and contributed to social security for 40 years, they will be able to retire at 60, not at 67 as the present plans demand.

In an additional plan that will make them very popular at home amongst the corrupt political class, the parties want to slash the number of parliamentarians to 400 MPs (from 630) and 200 senators (from 318). They would be banned from changing political parties during the legislature.


And then there are the mini-Bots, a parallel currency system very reminiscent of what Yanis Varoufakis proposed for Greece. Basically, they would allow the government to pay some of its domestic obligations (suppliers etc.) in the form of IOUs, which could then in turn be used to pay taxes and -other- government services. They would leave what is domestic, domestic.

There’s a lot of talk about this being a first step towards leaving the euro, but why should that be so? The main ‘threat’ lies in the potential independence from Brussels it may provide a country with. But it’s a closed system: you can’t pay with mini-Bots for trade or other international obligations.

Italy, like an increasing number of Eurozone nations, is looking for a way to get its head out of the Brussels/Berlin noose that’s threatening to suffocate it. If the EU doesn’t react to this, and soon, and in a positive manner it will blow itself up. Yes, if Italy started to let its debt balloon, the European Commission could reprimand it and issue fines. But the Commission wouldn’t dare do that. This is Italy. This is not Sparta.

Anyway, risk off, as the markets suggest(ed) this morning? Surely you’re joking. And we haven’t even mentioned Trump’s trade wars yet. Risk is ballooning.



May 292018

Theodoor Rombouts( 1597-1637) Prometheus


On Friday, in This is the End of the Euro, I said: The euro has become a cage, a prison for the poorer brethren. The finance minister proposed by 5-Star/Lega and refused by Italian president Mattarella, Paolo Savona, has called the euro a German cage.

There are now stories spreading that the coalition, Savona first of all, were secretly planning an exit from the euro. A series of slides Savona prepared in 2015 on how to exit the euro is used as evidence of that secret plan. But the slides are not secret. Yes, he has said that it’s good to have a plan to leave ‘if necessary’. But that’s not the same as secretly planning such a move.

Every country should have such a plan, and you would hope they do. A government that doesn’t is being very irresponsible. But it’s true, this is how both the EU and the euro have been designed: not just as a prison, but as a prison without any doors or windows. No way to get out. And that will prove to be its fatal flaw.

It has more such flaws, for sure. The inequality of its members, which allows for the richer to feed on the poorer, is a big one. The US founders were smart enough to provide for transfer payments from rich to poorer, the EU founders couldn’t be bothered with that lesson. They must have studied it, though, and rejected it.

Credit were credit’s due: Yanis Varoufakis said it best when he compared the EU to the Eagles’ Hotel California. A few lines:

Mirrors on the ceiling
The pink champagne on ice
And she said “We are all just prisoners here, of our own device”
And in the master’s chambers
They gathered for the feast
They stab it with their steely knives
But they just can’t kill the beast

Last thing I remember
I was running for the door
I had to find the passage back to the place I was before
“Relax,” said the night man
“We are programmed to receive
You can check-out any time you like
But you can never leave!”

The EU was set up as some kind of eternal prison, a concept most familiar to us in the way Christian churches depict Hell, or the ancient Greek mythological story of Prometheus, who, as punishment for providing man with fire, was condemned by Zeus to being tied to a rock, with an eagle feeding on his liver every day, for eternity.

Rule number 1 for any organization: there must always be an escape, a way out. If there isn’t, that’s what will break the whole thing in the end. Think Leonard Cohen’s “There a crack in everything; that’s where the light comes in.” Every system must always be designed with inbuilt redundancy.

Paolo Savona understands that, and he said there must be a way to leave the euro. For Brussels and Rome, that means he’s not acceptable as a finance minister, no matter his competence, experience or credentials. It reeks of desperation on the ‘establishment’ side more than anything.

And now the entire financial world is in panic and turmoil. It’s ironic to see people decrying the sudden weakness in Italian “sovereign debt” at the same time they see pointed out, as if that were still necessary, that Italy is no longer a sovereign country. Think maybe there’s a clue to be found somewhere in there?



Italian bonds are falling so fast traders get vertigo. At what point will Mario Draghi be held accountable for the enormous losses this causes on the ECB’s books?

But fear not: the elites simply blame the whole thing on the people elected in Italy. Yes, that means they blame democracy. For daring to provide an election result that threatens their powers. And no, there is no other way to define what is happening than as a coup.

Italy will soon have all the characteristics of an emerging market. Which is a market from which no one can emerge in an emergency, according to one Don Cowe. I read that the six largest Italian banks together have €143 billion in Italian debt securities on their balance sheet. Systemic banks in the rest of Europe, mainly France, Spain and Germany, have €137 billion of Italian debt on their balance sheet. God only knows how much Mario Draghi holds:



That is one scary chart. And no, that is not the fault of 5-Star/Lega. It’s the fault of the European Union founders, and of its present ‘leadership’. What 5-Star/Lega have done is expose the stark-naked emperor. And the little boy who called out that sovereign didn’t undress him; he went out without any clothes on all by himself.

Varoufakis called out the naked emperor Brussels in 2015. Paolo Savona did so multiple times as well. The emperor’s reaction? Shut up the little boy, not get dressed. But the lesson contained in The Naked Emperor story is that there will always be another little boy to call him out. Shutting up the boy doesn’t solve the problem.


Greece and Italy are where western civilization was born. It appears wonderfully fitting to picture the EU at present as the German eagle picking at the southern European Prometheus’s liver for eternity. All the more so because Prometheus in Greek mythology was the champion of man: he first made man from clay, stood against the gods in favor of mankind, stole fire to provide it to man, and got punished for eternity for it.

The EU and euro cannot survive in their present state. But those who benefit most from both are also the ones who can stop either from undergoing desperately needed changes. That’s Hotel Europa.



Apr 012018
 April 1, 2018  Posted by at 9:32 am Finance Tagged with: , , , , , , , , , , ,  

Rembrandt van Rijn Christ and St Mary Magdalene at the Tomb 1638


US Homes Become ATMs Again (MW)
The Housing Crisis – There’s Nothing We Can Do… Or Is There? (Steve Keen)
Fear is Back (MW)
The S&P’s 200-DMA: Why It Ain’t No Maginot Line (Stockman)
Trump Renews Amazon Attack, Says ‘Post Office Scam’ Must Stop (BBG)
Senator Warren, In Beijing, Says US Is Waking Up To Chinese Abuses (R.)
Yanis Varoufakis: ‘Greece Is A Debtors’ Prison’ (G.)
Emmanuel Macron On France’s AI Strategy (Wired)
Conservationists Call For Urgent Action To Fix ‘America’s Wildlife Crisis’ (G.)
More Poachers Than Rhinos Killed In India Reserve (BBC)



There’s nonsense and then there’s nonsense. Staying in your home is now a “huge expansion of retirement options”: “We’ve seen a huge expansion of the types of retirement options people have. One is aging in place and retrofitting your house.”

US Homes Become ATMs Again (MW)

As interest rates rise, fewer households refinance their mortgages. And the refinances that do get done are often very different than those initiated during low-rate periods. “When rates are low, the primary goal of refinancing is to reduce the monthly payment,” wrote researchers for the Urban Institute in a recent report. “But when rates are high, borrowers have no incentive to refinance for rate reasons. Those who still refinance tend to be driven more by their desire to cash out.” “Cashing out” is shorthand for taking out a new mortgage that’s bigger than the remaining balance on the old one and using the money that makes up the difference for discretionary purchases.

As of the fourth quarter of last year, the share of all refinances that were cash-outs rose to the highest since 2008, according to Freddie Mac data. Rates have churned higher since the presidential election in late 2016, though they spent much of 2017 reversing the immediate post-election surge. It’s not clear whether the overall volume of cash-out refinances is rising. Right now they’re making up a bigger share of the pie because traditional lower-monthly-payment refis are plunging. Tapping into home equity is often a good way for owners to consolidate or manage other, more expensive, forms of debt like high-interest credit cards or bills for higher education.

“As people stay in their homes longer we see people reinvesting in their homes by using equity to update their homes and do repair work,” said Rick Sharga, executive vice president for Carrington Mortgage Holdings and an industry veteran. That’s especially true for older Americans, he added. “We’ve seen a huge expansion of the types of retirement options people have. One is aging in place and retrofitting your house.”

Read more …

Housing markets need ever more private debt. So then does the overall economy.

The Housing Crisis – There’s Nothing We Can Do… Or Is There? (Steve Keen)

The supply side of the housing market has two main two factors: the turnover of the existing stock of housing, and the net change in the number of houses (thanks to demolition of old properties and construction of new ones). The turnover of existing properties is far larger than the construction rate of new ones, and this alone makes housing different to your ordinary market. The demand side of the housing market has one main factor: new mortgages created by the banks. Monetary demand for housing is therefore predominantly mortgage credit: the annual increase in mortgage debt. This also makes housing very different to ordinary markets, where most demand comes from the turnover of existing money, rather than from newly created money.

We can convert the credit-financed monetary demand for housing into a physical demand for new houses per year by dividing by the price level. This gives us a relationship between the level of mortgage credit and the level of house prices. There is therefore a relationship between the change in mortgage credit and the change in house prices. This relationship is ignored in mainstream politics and mainstream economics. But it is the major determinant of house prices: house prices rise when mortgage credit rises, and they fall when mortgage credit falls. This relationship is obvious even for the UK, where mortgage debt data isn’t systematically collected, and I am therefore forced to use data on total household debt (including credit cards, car loans etc.).

Even then, the correlation is obvious (for the technically minded, the correlation coefficient is 0.6). The US does publish data on mortgage debt, and there the correlation is an even stronger 0.78—and standard econometric tests establish that the causal process runs from mortgage debt to house prices, and not vice versa (the downturn in house prices began earlier in the USA, and was an obvious pre-cursor to the crisis there).

None of this would have happened – at least not in the UK – had mortgage lending remained the province of money-circulating building societies, rather than letting money-creating banks into the market. It’s too late to unscramble that omelette, but there are still things that politicians could do make it less toxic for the public. The toxicity arises from the fact that the mortgage credit causes house prices to rise, leading to yet more credit being taken on until, as in 2008, the process breaks down. And it has to break down, because the only way to sustain it is for debt to continue rising faster than income. Once that stops happening, demand evaporates, house prices collapse, and they take the economy down with them. That is no way to run an economy.

Yet far from learning this lesson, politicians continue to allow lending practices that facilitate this toxic feedback between leverage and house prices. A decade after the UK (and the USA, and Spain, and Ireland) suffered property crashes – and economic crises because of them – it takes just a millisecond of Internet searching to find lenders who will provide 100% mortgage finance based on the price of the property. This should not be allowed. Instead, the maximum that lenders can provide should be limited to some multiple of a property’s actual or imputed rental income, so that the income-earning potential of a property is the basis of the lending allowed against it.

Read more …

Fear is needed.

Fear is Back (MW)

The Dow and the S&P 500 halted a record-setting streak of quarterly wins at nine, and the clearest reason why may be explained by the VIX index, widely known as Wall Street’s “fear gauge.” The Dow Jones Industrial Average posted a quarterly decline of more than 2.3%, snapping the longest streak of quarterly gains for the blue-chip average since an 11-quarter rally that ended in the third quarter of 1997. The S&P 500 index booked a 1.2% quarterly fall, ending its longest such stretch since the first quarter of 2015.

There are perhaps a host of reasons for the surcease of such a lengthy bullish run for the most prominent equity benchmarks: The Federal Reserve’s normalization of monetary policy, with the central bank lifting rates for the fifth time this month since December 2015; Intensifying uncertainty in the makeup and agenda of President Donald Trump’s administration, underscored by a number of high-profile departures; and the intensification of trade-war fears, after the president imposed duties on steel and aluminum imports and leveled more targeted tariffs at the world’s second-largest economy: China.

However, the surge in the Cboe Volatility Index VIX is perhaps the most correlated with the market’s downtrend. According to WSJ Market Data Group, the VIX posted its biggest quarterly rise, up 81% since it jumped in the third-quarter of 2011 following Standard & Poor’s historical downgrade of the U.S. credit rating and European debt-crisis jitters.

Read more …

Rhyme and repeat.

The S&P’s 200-DMA: Why It Ain’t No Maginot Line (Stockman)

For the last five years the S&P 500 has been dancing up its ascending 200-day moving average (200-DMA), bouncing higher repeatedly whenever the dip-buyers did their thing. Only twice did the index actually break below this seeming Maginot Line: In August 2015, after the China stock crash, and in February 2016, when the shale patch/energy sector hit the wall. As is evident below, since the frenzied peak of 2873 on January 26, the index has fallen hard twice—on February 8 (2581) and March 23 (2588). Self-evidently, both times the momo traders and robo-machines came roaring back with a stick-save which was smack upon the 200-DMA.

But here’s the thing. The blue line below ain’t no Maginot Line; it’s just the place where the Pavlovian dogs of Bubble Finance have “marked” the charts. And something is starting to smell. In fact, it’s starting to smell very much like an earlier go-round when Pavlov’s 200-DMA barkers had enjoyed a prolonged ascent – only to find an unexpected cliff-diving opportunity at the end. We refer to the nearly identical five year run-up to the March 2000 top at 1508 on the S&P 500. Back then, too, the 200-DMA looked invincible, and had only been penetrated by the August 1998 Russian bankruptcy and the Long Term Capital Management meltdown a month later.

Indeed, the bounce from the October 8, 1998 interim bottom of 960 was nearly parabolic, rising by 57% to the March 2000 top. That latter point might sound vaguely familiar. That’s because the rebound from the February 11, 2016 interim bottom (1829) to the January 26th top (2873) this year was, well, 57%!

Read more …

This is going to cost Amazon.

Trump Renews Amazon Attack, Says ‘Post Office Scam’ Must Stop (BBG)

President Donald Trump lit into Inc. for the second time in three days with a pair of Twitter messages that said the online retailer “must pay real costs (and taxes) now!” The president on Saturday claimed, citing reports he didn’t specify, that the U.S. Postal Service “will lose $1.50 on average for each package it delivers for Amazon” and added that the “Post Office scam must stop.” Amazon has said the postal service, which has financial problems stretching back for years, makes money on its deliveries. Amazon shed $53 billion in market value on Wednesday after Axios reported that the president is “obsessed” with regulating the e-commerce giant, whose founder and chief executive officer, Jeff Bezos, also owns the Washington Post newspaper.

Those losses were pared on Thursday, the final day of a shortened trading week, even as Trump tweeted that Amazon was using the postal service as its “Delivery Boy.” White House spokeswoman Lindsay Walters said on Thursday that while the president was displeased with the e-commerce giant, and particularly instances where third-party sellers on the site didn’t collect sales tax, there were no administrative actions planned against Amazon “at this time.” Still, Brad Parscale, who’s managing Trump’s 2020 presidential campaign, hinted in a tweet late Thursday that the administration may act to raise Amazon’s postal costs. “Once the market figures out that a single @usps rule change will crush @amazon’s bottom line we will see,” Parscale wrote. and the Washington Post have been regular punching bags for Trump. In July, the president mused about whether the newspaper was “being used as a lobbyist weapon” to keep Congress from looking into Amazon’s business practices. He echoed that comment on Saturday, saying the Post “is used as a ‘lobbyist’ and should so REGISTER.” [..] While full details of the agreement between Amazon and the U.S. Postal Service are unknown – the mail carrier is independently operated, and strikes confidential deals with retailers – David Vernon, an analyst at Bernstein Research who tracks the shipping industry, estimated in 2015 that the USPS handled 40% of Amazon’s volume the previous year.

He estimated at the time that Amazon pays the postal service $2 per package, which is about half what it would pay UPS or FedEx. A sudden increase in postal rates would cost Amazon about $2.6 billion a year, according to a report by Citigroup from April 2017. That report predicted UPS and FedEx would also raise rates in response to a postal service hike. Citigroup also said that the “true” cost of shipping packages for the USPS is about 50% higher than its current rates, leading some editorial writers to conclude that Amazon was receiving the type of subsidy cited in Trump’s Thursday tweet.

Read more …

Wait, wasn’t she supposed to be the anti-Trump?

Senator Warren, In Beijing, Says US Is Waking Up To Chinese Abuses (R.)

U.S. policy toward China has been misdirected for decades and policymakers are now recalibrating ties, Senator Elizabeth Warren told reporters during a visit to Beijing amid heightened trade tensions between the world’s two largest economies. Warren’s visit comes as U.S. President Donald Trump prepares to implement more than $50 billion in tariffs on Chinese goods meant to punish China over U.S. allegations that Beijing systematically misappropriated American intellectual property. The Massachusetts Democrat and Trump foe, who has been touted as a potential 2020 presidential candidate despite rejecting such speculation, has said U.S. trade policy needs a rethink and that she is not afraid of tariffs.

After years of mistakenly assuming economic engagement would lead to a more open China, the U.S. government was waking up to Chinese demands for U.S. companies to give up their know-how in exchange for access to its market, Warren said. “The whole policy was misdirected. We told ourselves a happy-face story that never fit with the facts,” Warren told reporters on Saturday, during a three-day visit to China that began on Friday. “Now U.S. policymakers are starting to look more aggressively at pushing China to open up the markets without demanding a hostage price of access to U.S. technology,” she said.

Read more …

A poisonous political climate.

Yanis Varoufakis: ‘Greece Is A Debtors’ Prison’ (G.)

Yanis Varoufakis is back. He, of course, would say he never went away, but in Greece’s hurly-burly world of politics his is a name prone to triggering toxic reaction. Abroad, the shaven-headed economist is feted as the man who took on Europe’s establishment. At home, the former finance minister is seen, on both left and right, as a reckless incarnation of all that was wrong with Greece at the height of its struggle to remain in the eurozone. In Athens and Brussels, his confrontational style is still blamed for the price the debt-stricken country had to pay to be bailed out in the summer of 2015. Although his resignation now seems a long time ago, the sight of Varoufakis launching his own party in Greece has unleashed emotions that have run the gamut from enthusiasm to anger and disdain.

Media reaction has been cool; so, too, has that of politicians. None of which seems to bother him in the least. “Nobody believes the systemic media in Greece, and they’re all bankrupt,” he told the Observer with typical defiance, days after announcing his new venture in a packed Athens theatre. “To those who say I cost the country, and I’ve heard €30bn, €86bn, €100bn and even €200bn… I say I cost exactly zero. The troika [of creditors] cost Greece two generations and continue to impose cost.” At 57, in his leather bomber jacket and boots, Varoufakis clearly relishes his anti-establishment role and believes the birth of his European Realistic Disobedience Front, AKA MeRA25, is not a moment too late. Greece, almost nine years after the eurozone crisis erupted, is still condemned to being a debtors’ colony, he says.

[..] MeRA 25 has been working behind the scenes for a year now. Its plan is to contest the European elections in May 2019, although Varoufakis acknowledges Tsipras may elect to call a general election before that. After almost a decade under international surveillance, Athens will exit its third international rescue programme – the biggest sovereign bailout in global financial history – in August. With his popularity compromised under the weight of enforcing measures he once vehemently opposed, Tsipras may opt to capitalise on the success of finally exiting the programme and economic oversight. “We have travelled the whole country and held rallies in all major towns,” says Varoufakis, adding that politicians are already expressing interest in jumping ship.

Far from being saved, Varoufakis believes Greece’s future has been put on hold. If anything, he argues, it is in for an even tougher time because Europe has elected to tackle its debt problem by taking the “extend and pretend” approach of prolonging repayment timetables and condemning the country to decades of further austerity. More pension cuts and tax hikes loom, legislated by MPs at the behest of the EU and IMF. Short of measures to stop the rot, Varoufakis quips that he sees Greece becoming another Kosovo, “with beautiful beaches, only it’s a protectorate emptied of its young people. Every month 15-20,000 young Greeks leave. Everywhere I go, I meet them.”

Read more …

Macron knows what’s best for you. He’s your big brother.

Emmanuel Macron On France’s AI Strategy (Wired)

I want to create an advantage for my country in artificial intelligence, directly. And that’s why we have these announcements made by Facebook, Google, Samsung, IBM, DeepMind, Fujitsu who choose Paris to create AI labs and research centers: this is very important to me. Second, I want my country to be part of the revolution that AI will trigger in mobility, energy, defense, finance, healthcare and so on. Because it will create value as well. Third, I want AI to be totally federalized. Why? Because AI is about disruption and dealing with impacts of disruption. For instance, this kind of disruption can destroy a lot of jobs in some sectors and create a need to retrain people. But AI could also be one of the solutions to better train these people and help them to find new jobs, which is good for my country, and very important.

I want my country to be the place where this new perspective on AI is built, on the basis of interdisciplinarity: this means crossing maths, social sciences, technology, and philosophy. That’s absolutely critical. Because at one point in time, if you don’t frame these innovations from the start, a worst-case scenario will force you to deal with this debate down the line. I think privacy has been a hidden debate for a long time in the US. Now, it emerged because of the Facebook issue. Security was also a hidden debate of autonomous driving. Now, because we’ve had this issue with Uber, it rises to the surface. So if you don’t want to block innovation, it is better to frame it by design within ethical and philosophical boundaries. And I think we are very well equipped to do it, on top of developing the business in my country.

But I think as well that AI could totally jeopardize democracy. For instance, we are using artificial intelligence to organize the access to universities for our students That puts a lot of responsibility on an algorithm. A lot of people see it as a black box, they don’t understand how the student selection process happens. But the day they start to understand that this relies on an algorithm, this algorithm has a specific responsibility. If you want, precisely, to structure this debate, you have to create the conditions of fairness of the algorithm and of its full transparency. I have to be confident for my people that there is no bias, at least no unfair bias, in this algorithm.

I have to be able to tell French citizens, “OK, I encouraged this innovation because it will allow you to get access to new services, it will improve your lives—that’s a good innovation to you.” I have to guarantee there is no bias in terms of gender, age, or other individual characteristics, except if this is the one I decided on behalf of them or in front of them. This is a huge issue that needs to be addressed. If you don’t deal with it from the very beginning, if you don’t consider it is as important as developing innovation, you will miss something and at a point in time, it will block everything. Because people will eventually reject this innovation.

Read more …

“..more than 150 US species have already become extinct while a further 500 species have not been seen in recent decades..”

Conservationists Call For Urgent Action To Fix ‘America’s Wildlife Crisis’ (G.)

An extinction crisis is rippling though America’s wildlife, with scores of species at risk of being wiped out unless recovery plans start to receive sufficient funding, conservationists have warned. One-third of species in the US are vulnerable to extinction, a crisis that has ravaged swaths of creatures such as butterflies, amphibians, fish and bats, according to a report compiled by a coalition of conservation groups. A further one in five species face an even greater threat, with a severe risk of being eliminated amid a “serious decline” in US biodiversity, the report warns. “America’s wildlife are in crisis,” said Collin O’Mara, chief executive of the National Wildlife Federation. “Fish, birds, mammals, reptiles and invertebrates are all losing ground. We owe it to our children and grandchildren to prevent these species from vanishing from the earth.”

More than 1,270 species found in the US are listed as at risk under the federal Endangered Species Act, an imperiled menagerie that includes the grizzly bear, California condor, leatherback sea turtle and rusty patched bumble bee. However, the actual number of threatened species is “far higher than what is formally listed”, states the report by the National Wildlife Federation, American Fisheries Society and the Wildlife Society. Using data from NatureServe that assesses the health of entire groups of species on a sliding scale, rather than the case-by-case work done by the federal government, the analysis shows more than 150 US species have already become extinct while a further 500 species have not been seen in recent decades and have possibly also been snuffed out.

Whole classes of creatures have suffered precipitous drops, with 40% of freshwater fish species in the US now vulnerable or endangered, a third of bat species experiencing major declines in the past two decades and amphibians dwindling from their known ranges at a rate of about 4% a year. The true scale of the crisis is probably larger when species with sparse data, or those as yet unknown to science, are considered. “This loss of wildlife has been sneaking up on us but is now like a big tsunami that is going to hit us,” said Thomas Lovejoy, a biologist at George Mason University. Lovejoy was consulted on the study and said it “captures the overall degradation of American nature over recent decades, rather than little snapshots”.

Read more …

The future of wildlife conservation?! in 2015, park guards shot dead more people than poachers killed rhinos.

More Poachers Than Rhinos Killed In India Reserve (BBC)

A census in India’s Kaziranga National Park has counted 2,413 one-horned rhinos – up 12 from 2015. The Unesco World Heritage Site, in Assam state, is home to two-thirds of the world’s population of the species. The census is carried out every three years. It is an incredible conservation success story given the fact that there were only a few hundred rhinos in the 1970s, says the BBC’s South Asia editor Anbarasan Ethirajan. However, the conservation effort has not been without controversy. The government has in recent years given the park rangers extraordinary powers to protect the animals from harm – powers usually only given to soldiers intervening in civil unrest. About 150 rhinos have been killed for their horns since 2006, but in 2015, park guards shot dead more people than poachers killed rhinos.

[..] The census total given is an estimate, with authorities cautioning that the population could be bigger than that counted because some animals were concealed by tall grasses and reeds. This vegetation is usually burnt down to encourage its regeneration but this was hampered by unseasonal rains, said reports. It could mean the census is carried out again next year. Since its foundation in 1905, Kaziranga has had great success in conserving and boosting animal populations. As well as being a haven for one-horned rhinoceroses, the park was declared a tiger reserve by the Indian government, and is also home to elephants, wild water buffalo and numerous bird species. The endangered South Asian river dolphin also lives in the rivers that criss-cross the park.

Read more …

Mar 032018
 March 3, 2018  Posted by at 11:11 am Finance Tagged with: , , , , , , , , , , , ,  

Vincent van Gogh Lilac Bush 1889


Juncker Threatens Tariffs On Harley-Davidson, Bourbon And Levi’s (G.)
Fed’s QE Unwind Marches Forward Relentlessly (WS)
S&P 500 Companies To Buy Back $800 Billion Of Their Own Shares This Year (MW)
End Times at the OD Corral (Jim Kunstler)
Theresa May Unveils Fragile Truce In Third Brexit Offering (G.)
Eliminate Fannie Mae and Freddie Mac (USNews)
Low-Level Courts Turned Into Dickensian “Debt Collection Mills” (ICept)
The Devil Is in the Details of Citi’s Sordid History (Martens)
The Future Of Economic Convergence (WEF)
Elon Musk to Open Tesla R&D Plant in Greece (G.)
EU’s Wieser: Six Months Of Varoufakis Cost Greece €200 Billion (K.)
‘This Is All Stolen Land’: Canadian Offers To Share His With First Nations (G.)



I got this one: Translation: Jean-Claude Juncker finally gets his revenge on the 1960s (probably couldn’t get laid back in the day).

Also note: just about every headline and article says Trump wrote: “ wars are good, and easy to win..” He did not, or only after explaining conditions for that to be true: “..When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with ..” That makes a big difference. And therefore must be included.

Juncker Threatens Tariffs On Harley-Davidson, Bourbon And Levi’s (G.)

The IMF has warned that Donald Trump’s plan to impose stiff new US tariffs on foreign imports of steel and aluminum would cause international damage – and also harm America’s own economy “The import restrictions announced by the US President (Donald Trump) are likely to cause damage not only outside the US, but also to the US economy itself, including to its manufacturing and construction sectors, which are major users of aluminum and steel,” the IMF said on Friday. The terse statement from the global body came as world leaders threatened retaliation against any fresh tariffs and the US president breezily asserted that “trade wars are good”.

In a morning tweet Trump wrote: “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!” The European Union, Germany, Canada and other countries have all threatened retaliation against plans to impose tariffs of 25% on steel and 10% on aluminum. The Canadian prime minister, Justin Trudeau, said US tariffs on steel and aluminum would be “absolutely unacceptable” and the European commission president, Jean-Claude Juncker, warned there would be consequences for the US.

“If the Americans impose tariffs on steel and aluminum, then we must treat American products the same way,” Juncker told German television stations. “We must show that we can also take measures. This cannot be a unilateral transatlantic action by the Americans,” he said. “I’m not saying we have to shoot back, but we must take action. “We will put tariffs on Harley-Davidson, on bourbon and on blue jeans – Levi’s,” he added.

Read more …

The consensus is more QE when this inevitably blows up. But maybe the Fed does see that coming, and has different plans.

Fed’s QE Unwind Marches Forward Relentlessly (WS)

The fifth month of the QE-Unwind came to a completion with the release this afternoon of the Fed’s balance sheet for the week ending February 28. The QE-Unwind is progressing like clockwork. Even during the sell-off in early February, the QE-Unwind never missed a beat. During QE, the Fed acquired Treasury securities and mortgage-backed securities (MBS) guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. During the QE-Unwind, the Fed is shedding those securities. According to its plan, announced last September, the Fed would reduce its holdings of Treasuries and MBS by no more than: • $10 billion a month in Q3 2017 • $20 billion a month in Q1 2018 • $30 billion a month in Q2 2018 • $40 billion a month in Q3 2018 • $50 billion a month in Q4 2018, and continue at this pace.

This would shrink the balance of Treasuries and MBS by up to $420 billion in 2018, by up to an additional $600 billion in 2019 and every year going forward until the Fed decides that the balance sheet has been “normalized” enough — or until something big breaks. For February, the plan called for shedding up to $20 billion in securities: $12 billion in Treasuries and $8 billion in MBS. On its January 31 balance sheet, the Fed had $2,436 billion of Treasuries; on today’s balance sheet, $2,424 billion: a $12 billion drop for February. On target! In total, since the beginning of the QE Unwind, the balance of Treasuries has dropped by $42 billion, to hit the lowest level since August 6, 2014:

[..] to determine if the QE Unwind is taking place with MBS, we’re looking for lower highs and lower lows on a very jagged line. Also today’s movements reflect MBS that rolled off two to three months ago, so November and December, when about $4 billion in MBS were supposed to roll off per month. The chart below shows that jagged line. Note the lower highs and lower lows over the past few months. Given the delay of two to three months, the first roll-offs would have shown up in early December at the earliest. At the low in early November, the Fed held $1,770.1 billion in MBS. On today’s balance sheet, also the low point in the chart, the Fed shows $1,759.9 billion. From low to low, the balance dropped by $10.2 billion, reflecting trades in November and December:

And the overall balance sheet? Total assets on the Fed’s balance sheet dropped from $4,460 billion at the outset of the QE Unwind in early October to $4,393 billion on today’s balance sheet, the lowest since July 9, 2014. A $67-billion drop:

Read more …

“The list includes Dow components Boeing, Coca-Cola, Procter & Gamble, Johnson & Johnson, Citigroup, American Express, Goldman Sachs, Mircrosoft, Apple, Cisco and Intel.”

S&P 500 Companies To Buy Back $800 Billion Of Their Own Shares This Year (MW)

S&P 500 companies will buy back a record $800 billion of their own shares in 2018, funded by savings on tax, strong earnings and the repatriation of cash held overseas, J.P. Morgan said Friday. That will far exceed the $530 billion in share buybacks that was recorded in 2017, analysts led by Dubravko Lakos-Bujas wrote in a note. Companies have already announced $151 billion of buybacks in the year to date. “There is room for further upside to our buyback estimates if companies increase gross payout ratios to levels similar to late last cycle when companies returned >100% of profits to shareholders (vs. 83% now),” said the note. “Corporates tend to accelerate buyback programs during market selloffs.”

The stock market has experienced two bouts of steep declines so far this year, the first in early February, when the Dow Jones Industrial Average fell 1,175 points in a single session to mark its biggest ever one-day point drop, driven by fears about interest rate hikes. There were $113.4 billion of buyback announcements in February, a three-year high, according to Trim Tabs Investment Research. The second selloff was ignited on Thursday, after President Donald Trump said he is planning to impose tariffs on imports of steel and aluminum, triggering a more than 500 point drop in the Dow at its worst level, on fears the move would spark a trade war. The Dow was down another 300 points in early trade Friday.

Read more …

“Enjoy the last few weeks of relative normality.”

End Times at the OD Corral (Jim Kunstler)

Surely, the Deplorables of Flyover Land will not like the dumping of their Golden champion one bit. I’d stay away from post offices and other parcels of federal property for a while. If a bunch decides to march on the nation’s capital, it will be a messier affair than anything the hippies pulled off back in the day, perhaps the first battle of Civil War 2. The financial markets wobbled and puked on Wednesday and Thursday of this week, finally mirroring the tremendous stresses in our politics. They’ve been every bit as jacked on unreality as the two major parties for years now. The markets, after all, are not the economy itself, just indexes of the supposed values of things, stocks, bonds, gold, soybeans, etc., and the Federal Reserve has been jamming hallucinogens down their craw since the last little seizure in 2008.

The markets don’t seem to like the new chairman of the Fed, a cipher named Jay Powell. In his first big public performance since stepping into Janet Yellen’s tiny shoes this week, Powell managed to do a complete 180 in 24 hours on whether his outfit will stick to four rate hikes this year… or maybe just ride to the rescue of the floundering markets with their old tricks of lowering interest rates and “printing” shitloads of new “money” to get those animal spirits going again in the S & P. Absolutely nothing Powell’s Fed might try will work. In fact they will only make the cratering indexes fall deeper and harder, along with the value of the US dollar. Interest rates can’t go any higher, anyway, without blowing up half the paper obligations on earth.

Businesses will be terrified to transact. You can’t do much with a crippled financial system. The authorities and the news media will call it a “recession” but a sore-beset public will know it is the start of something a whole lot worse. As a nice side-dish to this banquet of consequences, the Democratic party will be deprived of its only reason to live the past two years: to shove Donald Trump off-stage. And the Republicans will be blamed twice over: once, for not coming to Trump’s defense, and again for getting behind him in the first place. Enjoy the last few weeks of relative normality.

Read more …

She’s never sounded more hollow. Theresa May is a certified masochist.

Theresa May Unveils Fragile Truce In Third Brexit Offering (G.)

If Theresa May’s first two speeches unfurled the promise of a “red, white and blue” Brexit, a cold grey day in March will be remembered as the moment a more faded flag was fluttered. As the nation took shelter from the beast from the east, this was intended to be May’s “reality bites” speech. Ten times she used the word “recognise” to underline she no longer believed Britain could have it all. “We recognise that we cannot have exactly the same arrangements with the EU as we do now,” she said. “We recognise this would constrain our ability to lower regulatory standards. We need to face up to facts. Our access to each other’s markets will be less”.

Little wonder that by the time it came for questions, and a German newspaper asked: “Is it all worth it?” The prime minister had to pause awkwardly before replying: “We are not changing our minds.” Much attention will focus on the remaining chasm between Downing Street’s hopes and the increasingly intransigent position adopted in Brussels. There was little to explain how they might solve the current crisis over Northern Ireland in the three weeks allotted. It would be churlish though not to acknowledge creeping realism from a politician whose heart has never really seemed in it. The weary call for “pragmatic common sense” was directed at both her own party and Europe.

Read more …

It’s useless to compare GSEs to the private sector. They exist to make ensure government control over the housing bubble.

Eliminate Fannie Mae and Freddie Mac (USNews)

Fannie Mae and Freddie Mac’s recent request for a bailout from the U.S. Treasury (read American taxpayers) has brought back into the public’s eye the unresolved legal status of these two government sponsored enterprises. In this debate, the assumption is that the GSEs, or some replacement entities benefiting from a government guarantee, are necessary for an effective housing finance market. The GSEs, however, do very little that cannot be done – and is not already done – by the private sector. In addition, these institutions pose a significant financial risk to U.S. taxpayers. Weighing this cost against the minimal benefits makes the case that the GSEs should be eliminated.

Without the GSEs, the mortgage market would not look radically different than it does today. Proponents argue that the GSEs lower mortgage rates, ensure the availability of the standard 30-year fixed rate mortgage, support home ownership and lend to people with lower incomes or weaker credit profiles, all of which the private sector presumably would not do. Not true on all fronts. First, the GSEs do not offer lower mortgage rates for consumers despite a government guarantee that allows them to raise capital at a lower cost than the private sector. In the past, the GSEs were able to charge lower mortgage rates by taking risks for which they were not compensated. The result was a massive build-up of housing risk in the run-up to the financial crisis of 2007-08.

Since 2009, the GSEs have been required to recognize risk in their pricing of mortgages, which has driven up their mortgage rates relative to the private sector. As a consequence, since 2014, new research undertaken with my colleague Steve Oliner shows that mortgage rates for private portfolio whole loans have been about one-quarter percentage point below GSE rates – after controlling for risk characteristics. And contrary to Treasury Secretary Steven Mnuchin’s recent statement, the private market could ensure the availability of the 30-year fixed-rate mortgages on its own. Data from CoreLogic show that 76% of private portfolio mortgages originated in 2017 were 30-year mortgages, not much below the GSE’s 85% share.

Read more …


Low-Level Courts Turned Into Dickensian “Debt Collection Mills” (ICept)

Federal law outlawed debt prisons in 1833, but lenders, landlords and even gyms and other businesses have found a way to resurrect the Dickensian practice. With the aid of private collection agencies, they file millions of lawsuits in state and local courts each year, winning 95 percent of the time. If a defendant fails to appear at post-judgement hearings known as “debtors’ examinations,” collectors can seek a warrant for contempt of court — even if the debtor didn’t realize they were being sued. [..] “A Pound of Flesh: the Criminalization of Private Debt,” the ACLU report, sheds light for the first time on the frequency of modern-day debt imprisonment, estimating that courts are issuing tens of thousands of arrest warrants each year for debtors owing as little as $30.

Forty-four states permit judges to issue these warrants, often known as “body attachments,” in civil cases. “This has been a largely invisible problem, because the people it’s happening to typically don’t have lawyers and aren’t speaking out,” says Jennifer Turner, a human rights researcher at ACLU. “Many low-level courts have essentially become debt-collection mills.” One in three Americans has a debt that’s been turned over to a private collection agency, and the ACLU found cases of warrants being issued over almost every kind of consumer debt—payday and auto loans, utility bills, even daycare fees. Many cases begin with an emergency expense that someone is unable to pay, sending them into a spiral of debt and imprisonment.

The use of cash bail often compounds the problem; debtors languish in jail for up to two weeks, according to the report. In some jurisdictions, judges routinely set bail at the exact amount of the debt owed, then surrender it to the collector once paid. In other cases documented by the ACLU, people with outstanding medical debt were too ill to go to court, as in the case of an Indiana mother of three who had been living with family in Florida while she recovered from thyroid cancer. Unbeknown to her, a small claims court had issued three warrants in a suit over her unpaid medical bills, and she was arrested when she returned home.

Read more …

In case anyone starts telling you about Kushner and Citi.

The Devil Is in the Details of Citi’s Sordid History (Martens)

Wall Street On Parade has extensively reported in the past on the dubious dealings of Citigroup in Washington. Citigroup is the bank that pressured the Bill Clinton administration into repealing the depression-era Glass-Steagall Act in 1999. That act had prevented Wall Street’s speculating investment banks and brokerage firms from owning commercial banks that take in FDIC insured deposits in order to prevent another 1929-1932 style Wall Street crash. Just nine years after the repeal of Glass-Steagall, Wall Street experienced another epic crash, with Citigroup playing a major role in the contagion. Citigroup received the largest taxpayer bailout in U.S. history, taking in $45 billion in equity from the U.S. Treasury;

A government guarantee on $300 billion of Citigroup’s dubious assets; the Federal Deposit Insurance Corporation (FDIC) guaranteed $5.75 billion of its senior unsecured debt and $26 billion of its commercial paper and interbank deposits; and the Federal Reserve secretly funneled $2.5 trillion in almost zero-interest loans to units of Citigroup between 2007 and 2010. Citigroup was created by the merger of Citicorp (parent of Citibank) and Travelers Group (which owned investment bank Salomon Brothers and brokerage firm Smith Barney). It would not have been allowed to exist but for the largess of the Clinton administration. And the Clintons needed a lot of financial help when they exited the White House.

In a June 9, 2014 interview with ABC’s Diane Sawyer, Hillary Clinton said this: “We came out of the White House not only dead broke, but in debt. We had no money when we got there, and we struggled to, you know, piece together the resources for mortgages, for houses, for Chelsea’s education. You know, it was not easy.” One institution that had big confidence in the Clintons’ future earning power was Citigroup. “According to PolitiFact, Citigroup provided a $1.995 million mortgage to allow the Clintons to buy their Washington, D.C. residence in 2000. That liability does not pop up on the Clinton disclosure documents until 2011, showing a 30-year mortgage at 5.375% ranging in face amount from $1 million to $5 million from CitiMortgage. The disclosure says the mortgage was taken out in 2001.

“Citigroup also paid Bill Clinton hundreds of thousands of dollars in speaking fees after he left the White House. It committed $5.5 million to the Clinton Global Initiative — a program which brings global leaders together annually to make action commitments. Citigroup employees have also been major campaign funders to Hillary Clinton’s political campaigns.”

Read more …

Oh, no!! Turns out developing markets have borrowed all their growth as well…

The Future Of Economic Convergence (WEF)

The world is now facing what observers are calling a “synchronized” growth upswing. What does this mean for the economic “convergence” of developed and developing countries, a topic that lost salience after the Great Recession began a decade ago? In the 1990s, developing economies, taken as a whole, began to grow faster than their advanced counterparts (in per capita terms), inspiring optimism that the two groups’ output and income would converge. From 1990 to 2007, the developing economies’ average annual per capita growth was 2.5 percentage points higher than in the advanced economies. In 2000-2007, the gap widened, to 3.5 percentage points.

Though not all countries made progress – many small economies did not do well – on an aggregate basis, the structure of the world economy was being transformed. Asian countries were catching up at a particularly rapid clip, driven by the large, dynamic economies of India and, even more so, China (which experienced nearly three decades of double-digit GDP growth). After the global financial crisis began in 2007, however, the dynamic changed. At first, it seemed that convergence was accelerating. With advanced-economy growth having ground to a halt, developing countries’ lead in per capita growth increased to four percentage points.

By 2013-2016, however, growth slowed in many emerging economies – particularly in Latin America, with Brazil experiencing negative growth in 2015 and 2016 – while growth in the United States picked up. Are we, as some observers have claimed, witnessing the end of convergence? The answer will depend on developing economies’ ability to find and tap new, more advanced sources of growth. In the past, the key engine of convergence was manufacturing. Developing countries that had finally acquired the needed skills and institutions applied advanced-country technologies locally, benefiting from plentiful, low-cost labor.

But, as Dani Rodrik has argued, that source of easy copycat catch-up has mostly been exhausted. The low-hanging fruit in manufacturing has already been picked. Technological catch-up is more difficult in the services sector, which now accounts for a larger share of total value-added. Moreover, today’s cutting-edge technologies – such as robotics, artificial intelligence (AI), and bioengineering – are more complex than industrial machinery, and may be more difficult to copy. And, because intelligent machines can increasingly fill low-wage jobs, developing countries’ cost advantage may have been diminished significantly.

Read more …

Musk makes his latest victim. There’s one question that must always be asked in these cases: How much in subsidies does he get for this project? Articles that do not ask this should not be published, because they’re mere propaganda.

Elon Musk to Open Tesla R&D Plant in Greece (G.)

Elon Musk may have plans to colonise Mars but back on planet Earth he is extending his reach to Athens, by opening an engineering facility called Tesla Greece. Musk’s electric car business is an unsung success story for the Greek diaspora, with three of Tesla’s top designers boasting degrees from the National Technical University of Athens. Tesla’s plans for the country have such “game-changing potential” that the head of the Hellenic Entrepreneurs’ Association, Vasilis Apostolopoulos, has pledged to hand over his own industrial plant for free as a testing ground for new products.

Addressing delegates at the annual Delphi economic forum, Apostolopoulos said: “I have personally emailed Musk to welcome Tesla Greece … and to say that for the next 10 years I will give, at zero cost to his company, my group’s own industrial plant outside Corinth so that Greece can be on the frontline of global innovation.” Describing the move as a “vote of confidence” in the debt-stricken country, Apostolopoulos, who is chief executive of the Athens Medical Group, a leading private healthcare provider, said he was also prepared to offer full medical coverage for a year to all of Tesla Greece’s staff members and international staff visiting the country on company business.

“It is the least we can do to thank and welcome Mr Musk’s vote of confidence in Hellenic business, research and technology,” he told the Guardian. Outside the UK, the Netherlands and Germany, the electric car manufacturer has no presence in Europe. Its Greek office is expected to attract at least 50 engineers to run a research and development centre out of the state-run Demokritos Centre for Scientific Research. The centre is expected to act as a base for southeast Europe. “Greece has a strong electric motor engineering talent, and technical universities offering tailored programmes and specialised skills for electric motor technology,” a spokesperson told Electrek, a US news website.

It is understood that Tesla’s three Greek designers – principal motor designer Konstantinos Laskaris; motor design engineer Konstantinos Bourchas; and staff motor design engineer Vasilis Papanikolaou – are preparing to move back to Athens under the company’s plans. Demokritos has welcomed the news. “We are very happy to receive all the talented engineers who are returning to work beside us,” it said in a statement.

Read more …

In his book ‘Adults in the Room’, Yanis had nothing good about ‘the most powerful man in the EU’. Now, Wieser comes with an unverifiable and fully nonsensical story, that he knows even many Greeks will swallow hook line and sinker.

EU’s Wieser: Six Months Of Varoufakis Cost Greece €200 Billion (K.)

The first six months of the leftist-led SYRIZA government cost Greece around €200 billion, former Euro Working Group chief Thomas Wieser told the Delphi Economic Forum on Friday, describing that estimate as “safe” and “conservative.” In a discussion being moderated by the executive editor of Kathimerini, Alexis Papachelas, Wieser noted that the SYRIZA-led government was basically provoking Grexit from its rise in late January to July of that year. Wieser noted that in 2010, the German government decided that the participation of the IMF in the rescue program for Greece was necessary, noting that the Eurozone lacked the technical knowhow for that sort of program. He noted that former US President Barack Obama took an active role during Greece’s crisis, adding that then Treasury Secretary Jack Lew would call the Eurogroup chairman at the time, Jeroen Dijsselbloem up to five times a week.

Read more …

“..Somehow it turns out I’m the first white person to think about giving the land back since Marlon Brando..”

‘This Is All Stolen Land’: Canadian Offers To Share His With First Nations (G.)

Joel Holmberg had been batting the idea around for years. But the final decision came last month, as he scrolled through the online vitriol that erupted after a white farmer was acquitted of killing a young Cree man in the Canadian province of Saskatchewan. Holmberg turned to social media, but instead of joining in the often-vicious debate surrounding that case, he offered to share his family’s five-acre property in northern Alberta with a First Nations family. There would be no bills, no rent, he explained. Instead the family could join him, his wife and two children in living off the land; hunting, fishing and growing food.

“I wanted to offer some sort of hope,” said Holmberg. “It was really disgusting to see the way the racist people were speaking. I wanted to let them know that it’s not everyone in Canada that feels that way.” The invitation to share his acreage near Barrhead, about 100km north-west of Edmonton, seemed like a fair one. “We all know in our heart the truth, that this is all stolen land,” said the 45-year-old. “They’re our hosts and we’re their guests and they’ve been criminally abused for far too long and it has to stop.” Holmberg said his appreciation for First Nations culture began as a child growing up in British Columbia, when members of the Sinixt First Nation began bringing him along as they hunted and fished.

“I had the opportunity to do sweats with them and learn about their culture from them and learn about the real history of Canada,” he said. He continued to delve into Canada’s rich tapestry of indigenous cultures as he moved around the country, from the Northwest Territories to Manitoba and Saskatchewan. “They’re the kindest people I’ve ever met. They’ve been there for me in the worst times in my life when I needed help the most,” he said. “It is very clear to my family and I, that it is us that will be blessed by this thing happening most of all.”

Read more …

Nov 302017

Amedeo Modigliani Elvira Resting at a Table 1919


Many of you are undoubtedly familiar with Naomi Klein’s 2007 book “The Shock Doctrine: The Rise of Disaster Capitalism”, in which she describes how neoliberalism, as developed by Milton Friedman and his Chicago School, wreaks often very brutal and bloody havoc upon societies under the guise of ‘crisis as an opportunity for change’, first in Latin America and later also in Eastern Europe.

One of the most prominent actors in the book, the man behind the term ‘shock therapy’ for economies, is Jeffrey Sachs, a Harvard prodigy. In an interview at the time, Klein had this to say:


Q: You mention the shift from shock therapy to shock-and-awe, but there are also attempts to soften the image of neoliberalism. Jeffrey Sachs, the economist who pioneered shock therapy, wrote his latest book on The End of Poverty. Is there any more to this than a rebranding exercise?

A: A lot of people are under the impression that Jeffrey Sachs has renounced his past as a shock therapist and is doing penance now. But if you read The End of Poverty more closely he continues to defend these policies, but simply says there should be a greater cushion for the people at the bottom. The real legacy of neoliberalism is the story of the income gap. It destroyed the tools that narrowed the gap between rich and poor.

The very people who opened up this violent divide might now be saying that we have to do something for the people at the very bottom, but they still have nothing to say for the people in the middle who’ve lost everything. This is really just a charity model. Jeffrey Sachs says he defines poverty as those whose lives are at risk, the people living on a dollar a day, the same people discussed in the Millennium Development Goals. Of course that needs to be addressed, but let us be clear that we’re talking here about noblesse oblige, that’s all.

[..] Leszek Balcerowicz, the former finance minister who worked with Jeffrey Sachs to impose shock therapy in Poland in 1989, said that the ideology advances in moments of extraordinary politics. He listed these moments of extraordinary politics as ends of war and moments of extreme political transition.

Around the same time, Alexander Cockburn said in a review of the book:


“Shock therapy” neoliberalism really isn’t most closely associated with Milton Friedman, but rather with Jeffrey Sachs, to whom Klein does certainly give many useful pages, even though Friedman remains the dark star of her story. Sachs first introduced shock therapy in Bolivia in the early 1990s. Then he went into Poland, Russia, etc, with the same shock therapy model. Sachs’ catchy phrase then was that “you can’t leap over an abyss step-by-step,” or words to that effect. This is really where contemporary neoliberalism took shape.

I’ve thought for all these years that Jeffrey Sachs, when out there campaigning for the end of poverty and other ostensibly grandiose goals with the likes of Angeline Jolie, should have at least provided a very public and detailed apology for his past endeavors. I’ve never seen one.

Which meant I was very surprised to see his name pop up as a prominent adviser to Yanis Varoufakis during the latter’s time as Greek finance minister, as Yanis describes it in his 2017 book Adults in the Room. Even more surprising than to see Larry Summers in a similar role in the same book.

The mother of all surprises in this regard, however, was to see Varoufakis’ DiEM25 movement announce Naomi Klein as a member of its Advisory Panel yesterday, a panel which also includes the likes of Julian Assange. Because while he’s not on that panel, Jeffrey Sachs has done public presentations for DiEM25. Bien étonné de se trouver ensemble, as the French put it. Strange bedfellows. Maybe Naomi should explain.

I have said multiple times that I am a fan of Yanis, and his departure as finance minister has been a huge loss to Greece, because he was their best, and perhaps their only, chance at salvation from economic disaster, but I’m still not at all convinced about DiEM25 and its intentions (and I don’t mean to say they don’t mean well).

For one, because I think the EU is so throughly rotten to the core it cannot be reformed; its fatal flaws have been continually baked into the cake for decades. Whereas DiEM25 think they can get people elected in various countries across Europe and get Brussels to change direction and become democratic. It was never built to be democratic.


But all this before was merely a build-up to an article Sachs penned for Project Syndicate this week in which he claims to know precisely what Germany and Europe need. He doesn’t.


A New Grand Coalition for Germany – and Europe

With America AWOL and China ascendant, this is a critical time for Germany and the European Union to provide the world with vision, stability, and global leadership. And that imperative extends to Germany’s Christian Democrats.

Friends of Germany and Europe around the world have been breathing a sigh of relief at the newfound willingness of Germany’s Christian Democrats and Social Democrats (SPD) to discuss reprising their grand coalition government. The world needs a strong and forward-looking Germany in a dynamic European Union. A new grand coalition working alongside French President Emmanuel Macron’s government would make that possible.

We have all seen, in Greece, in Italy, in Libya, what leadership Germany has provided. In economics and with regards to the refugee crisis. It has been an unmitigated economic disaster everywhere but in Germany itself (and Holland). And that is no coincidence. It illustrates exactly what is so wrong with the EU. Germany has the power to squeeze the poorer and smaller countries into submission with impunity, and it does just that.

The last thing the EU needs is more such German ‘leadership’. In fact, it needs a whole lot less of that. It needs to find a way to diminish German influence. But to get there, it would require for Berlin to voluntarily step back, and that is not going to happen. Merkel can veto anything she likes, and there’s nothing anyone can do about it.


[..] The world and Europe need an outward-looking Germany that offers more institutional and financial innovation, so that Europe can be a true counterpart to the US and China on global affairs. I say this as someone who believes firmly in Europe’s commitment and pioneering statecraft when it comes to sustainable development, the core requirement of our time.

Not only does Sachs not understand that making Germany some superior power in Europe is the exact wrong way to go, he doesn’t understand sustainable development either. It’s as exasperating as it is predictable.


Economic growth that is socially inclusive and environmentally sustainable is a very European idea, one that has now been embraced globally in the United Nations’ 2030 Agenda and its 17 Sustainable Development Goals, as well as in the 2015 Paris climate agreement. Europe’s experience with social democracy and Christian democracy made this global vision possible. But now that its agenda has been adopted worldwide, Europe’s leadership in fulfilling it has become essential.

A grand coalition government in Germany must help put Europe in a position to lead. French President Emmanuel Macron has offered some important ideas: a European finance minister; Eurobonds to finance a new European investment program; more emphasis on innovation; a financial transactions tax to fund increased aid to Africa, where Europe has a strategic interest in long-term development; and tax harmonization more generally, before the US triggers a global race to the bottom on taxing corporations and the rich.

There is so much wrong in those few lines we could write a book about it. First of all, and let’s bold this once again, there is no such thing as sustainable growth. It’s a lie.

If we want to do something that can actually save our planet, we have to decouple economic growth from environmental sustainability. We can and will not grow our way out of the disaster we have created with -our blind focus on- growth. This is the most dangerous nonsense story there is out there. We have to pick one of the two, we can’t have both. It’s EITHER growth OR a livable planet. Here’s what I wrote on December 16 2016:


Heal the Planet for Profit

If you ever wondered what the odds are of mankind surviving, let alone ‘defeating’, climate change, look no further than the essay the Guardian published this week, written by Michael Bloomberg and Mark Carney. It proves beyond a moonlight shadow of a doubt that the odds are infinitesimally close to absolute zero (Kelvin, no Hobbes).

Yes, Bloomberg is the media tycoon and former mayor of New York (which he famously turned into a 100% clean and recyclable city). And since central bankers are as we all know without exception experts on climate change, as much as they are on full-contact crochet, it makes perfect sense that Bank of England governor Carney adds his two -trillion- cents.

Conveniently, you don’t even have to read the piece, the headline tells you all you need and then some: “How To Make A Profit From Defeating Climate Change” really nails it. The entire mindset on display in just a few words. If that’s what they went for, kudo’s are due.

That these problems originated in the same relentless quest for profit that they now claim will help us get rid of them, is likely a step too far for them; must have been a class they missed. “We destroyed it for profit” apparently does not in their eyes contradict “we’ll fix it for profit too”. Not one bit. It does, though. It’s indeed the very core of what is going wrong.

Jeffrey Sachs can now be added to the list of deluded ‘experts’ on the topic. The COP21 Paris agreement, which I re-dubbed CON21, is full of, and directed by, such people. I always think Trump was very right to withdraw from it, even if it was for all the wrong reasons.

CON21 is a CON. The recent CON23 in Bonn is too. It’s a scheme meant to get to your money under the guise of going green. If they can convince you that you can prosper of off saving the planet, you’ll give them anything, because it’ll make you feel good about yourself.

This is me from December 12 2015:



Protesters and other well-intended folk, from what I can see, are falling into the trap set for them: they are the frame to the picture in a political photo-op. They allow the ‘leaders’ to emanate the image that yes, there are protests and disagreements as everyone would expect, but that’s just a sign that people’s interests are properly presented, so all’s well. COP21 is not a major event, that’s only what politicians and media make of it. In reality, it’s a mere showcase in which the protesters have been co-opted.

They’re not in the director’s chair, they’re not even actors, they’re just extras. I fully agree, and more than fully sympathize, with the notion of saving this planet before it’s too late. But I wouldn’t want to rely on a bunch of sociopaths to make it happen. There are children drowning every single day in the sea between Turkey and Greece, and the very same world leaders who are gathered in Paris are letting that happen. They have for a long time, without lifting a finger. And they’ve done worse -if that is possible-.

[..] you guys are targeting a conference in Paris on climate change that features the exact same leaders that let babies drown with impunity. Drowned babies, climate change and warfare, these things all come from the same source. And you’re appealing to that very same source to stop climate change.

What on earth makes you think the leaders you appeal to would care about the climate when they can’t be bothered for a minute with people, and the conditions they live in, if they’re lucky enough to live at all? Why are you not instead protesting the preventable drownings of innocent children? Or is it that you think the climate is more important than human life? That perhaps one is a bigger issue than the other?

[..] The current economic model depends on our profligate use of energy. A new economic model, then, you say? Good luck with that. The current one has left all political power with those who profit most from it. And besides, that’s a whole other problem, and a whole other issue to protest.

If you’re serious about wanting to save the planet, and I have no doubt you are, then I think you need to refocus. COP21 is not your thing, it’s not your stage. It’s your leaders’ stage, and your leaders are not your friends. They don’t even represent you either. The decisions that you want made will not be made there.

But let’s return to Sachs and his -other- lofty goals: “..a European finance minister; Eurobonds to finance a new European investment program; more emphasis on innovation; a financial transactions tax to fund increased aid to Africa, where Europe has a strategic interest in long-term development; and tax harmonization more generally..”

We all know Europeans don’t want things that infringe even further on their country’s sovereignty. If they were offered the opportunity to vote on them they would defeat them in massive numbers. Which is precisely why they are not offered that opportunity. The only way to push through such measures is by stealth and against the will of the people.

Which already has, and will much further and worse, divide the EU. It’s not even the plans themselves, it’s the notion of the ever increasing erosion of what people have to say about their own lives. The Czech Republic, Hungary, Poland and Slovakia are flaring off bright red warning signs about sovereignty, and they are completely ignored.

If the EU insists on continuing that way, it will be the cause of chaos and violence and right wing resurgence, not the solution to all that. Europe needs to take a step back and reflect upon itself before taking even one single step forward towards more centralization. But centralization is what Brussels is all about, it’s what it was built on.

The EU will never be viable if Germany in the end calls all the important shots. So a new Grand Coalition in Berlin, and its sympathetic stance towards Macron’s grandiosity, is not ‘needed’, it’s Europe’s biggest danger. But yeah, you’re right, it fits right in with Jeffrey Sachs’ neoliberalist dreams.

And there’s more centralization, globalism, neoliberalism and ‘green growth’ where that came from:


Contrary to the Germans who oppose such ideas, a European finance minister and Eurobonds would not and should not lead to fiscal profligacy, but rather to a revival of investment-led green growth in Europe. China has proposed the Belt and Road Initiative to build green infrastructure linking Southeast Asia and Central Asia with Europe.

This is the time for Europe to offer the same bold vision, creating a partnership with China to renovate Eurasia’s infrastructure for a low-carbon future. If Europe plays its cards right, Europe’s (and China’s) scientific and technical excellence would flourish under such a vision. If not, we will all be driving Chinese electric vehicles charged by Chinese photovoltaic cells in the future, while Germany’s automotive industry will become a historical footnote.

We don’t need more vehicles, whatever they run on, we need less, because we need to use less energy. Of any kind. We must not drive differently, in different cars using a different energy source, we must drive less. Much less. This shouldn’t be that hard, because our cities and societies are designed to be as wasteful as possible.

What we need is not green growth, but green shrinkage. We cannot grow our way into a sustainable planet or economic system. It is a fallacy. And it is time people like Jeffrey Sachs and Mike Bloomberg and Mark Carney (and Merkel and Macron etc. etc.) stop spreading such nonsense. If even Lloyd Blankfein supports the Paris Agreement, we should be suspicious, not feel grateful or validated in our warped views.


A European finance minister would, moreover, finally end Europe’s self-inflicted agony in the aftermath of the 2008 financial crisis. As difficult as it is to believe, Greece’s crisis continues to this day, at Great Depression scale, ten years after the onset of the crisis. This is because Europe has been unable, and Germany unwilling, to clean up the financial mess (including Greece’s unpayable debts) in a fair and forward-looking manner (akin to the 1953 London Agreement on German External Debts, as Germany’s friends have repeatedly reminded it).

If Germany won’t help to lead on this issue, Europe as a whole will face a prolonged crisis with severe social, economic, and political repercussions. In three weeks, Macron will convene world leaders in Paris on the second anniversary of the climate accord. France should certainly take a bow here, but so should Germany. During Germany’s G20 Presidency, Merkel kept 19 of the 20 members of the G20 firmly committed to the Paris agreement, despite US President Donald Trump’s disgraceful attempt to wreck it.

Yes, the corruption of US politics (especially campaign funding by the oil and gas industry) threatened the global consensus on climate change. But Germany stood firm. The new coalition should also ensure that the country’s Energiewende (“energy transition”) delivers on the 2020 targets set by previous governments. These achievable and important commitments should not be a bargaining chip in coalition talks.

Oh, c’mon, Jeffrey. You really want anyone to believe that European politics is less corrupt than American? What do you think handed Monsanto its 5-year glyphosate extension this week? Why do you think the entire Volkswagen board is still at liberty? Thing is, all this is about money.

It’s just that Merkel thinks there’s more of it to be made supporting CON21, while Trump, who’s 180º wrong on on the entire topic, thinks otherwise. But they’re both equally focused on money, not polar bears or penguins or elephants. Trump is right for believing green growth is a load of humbug, he’s just right for all the wrong reasons. While Merkel is trying to sell you a CON. Take your pick.


A CDU/CSU-SPD alliance, working with France and the rest of Europe, could and should do much more on climate change. Most important, Europe needs a comprehensive energy plan to decarbonize fully by 2050. This will require a zero-carbon smart power grid that extends across the continent and taps into the wind and solar power not only of southern Europe but also of North Africa and the eastern Mediterranean.

Once again, Eurobonds, a green partnership with China, and unity within Europe could make all the difference. Such an alliance would also enable a new foreign policy for Europe, one that promotes peace and sustainable development, underpinned by new security arrangements that do not depend so heavily on the US.

“Decarbonize fully by 2050”. Our entire societies have been built on carbon. Every single bit of it. Sachs simply doesn’t understand the world he lives in. He envisions bigger where only smaller could possibly help. We can decarbonize, but it will mean the end of our way of life. No amount of solar panels or wind turbines can change that. That are made with and from carbon.

It’s all just snake oil. We want to save the planet, and the life upon it, but we’re not willing to pay the price and bear the consequences. So we make up a narrative that feels good and run with it.

I have a tonic here that will cure all your ills, ladies and gentlemen. Only ten dollars. I know it sounds expensive, and it’s a full month’s wages, but just you think of the benefits. Think of your children!


Europe, a magnet for hundreds of millions of would-be economic migrants, could, should, and I believe would regain control of its borders, allowing it to strengthen and enforce necessary limits on migration. The political terms of a new grand coalition government, it would seem, are clear. The SPD should hold out for ministerial leadership on economic and financial policy, while the CDU/CSU holds the chancellorship.

That would be a true coalition, not one that could bury the SPD politically or deny it the means to push for a truly green, inclusive, EU-wide, sustainable development agenda. With Merkel and SPD leader Martin Schulz in the lead, the German government would be in excellent, responsible, and experienced hands. Germany’s friends and admirers, and all supporters of global sustainable development, are hoping for this breakthrough.

Long story short, Jeffrey Sachs still promotes disaster.



Oct 222017
 October 22, 2017  Posted by at 2:02 pm Finance Tagged with: , , , , , , , , , ,  

Alfred Wertheimer Elvis 1956


New Zealand’s new prime minister Jacinda Ardern calls capitalism a blatant failure. Former Greek finance minister Yanis Varoufakis says capitalism is ‘merely’ coming to an end because it is making itself obsolete. Mathematics professor Bruce Boghosian claims that without redistribution of wealth, our market economy would not be stable, because wealth always tends to concentrate. The people at Artemis Capital Management write that the stock market has begun self-cannibalizing like a snake eating its tail, and the only reason we’re not in a recession already is ‘financial alchemy’.

At the very least we can say that the system is under pressure. But what system is that? It would be nice to have a clearcut definition of capitalism, but alas, there are many, about as many as there are different forms of it. That doesn’t make this any easier. Americans call many European economies ‘socialist’, which seems to mean they are not capitalist. But Scandinavian countries don’t function like the Soviet Union either.

And if you see how much money is involved in transfer payments to citizens in the US, the supposed bastion of free market capitalism, it’s tempting to conclude the system has already failed. But even with transfer payments, inequality is at record levels. That would seem to confirm Boghosian’s statement that “even if a society does redistribute wealth, if it’s too small an amount, “a partial oligarchy will result..” So what then?



Varoufakis and others want a “universal basic dividend”, or “universal basic income”. Would that be the end of capitalism as we know it? Or is it just a -perhaps more extreme- form of ‘state capitalism’? Varoufakis deems it inevitable because technology will eradicate so many jobs from societies that people won’t be able to make money from work. Personally, I’ve long thought that the pending large-scale demise of pensions systems will lead to some form of UBI.

37-year-young Jacinda Ardern is very clear in her assessment of New Zealand’s form of capitalism. If you’ve got the worst homelessness in the developed world, you have a broken system. If the system fails the people, it’s no good. Other people might argue that capitalism never promised to take care of everyone. Or rather, not through state interference. Labour’s Ardern has her view:


New Zealand’s New Prime Minister Brands Capitalism A ‘Blatant Failure’

[Jacinda] Ardern, has pledged her government will increase the minimum wage, write child poverty reduction targets into law, and build thousands of affordable homes. In her first full interview since becoming prime minister-elect, she told current affairs programme The Nation that capitalism had “failed our people”. “If you have hundreds of thousands of children living in homes without enough to survive, that’s a blatant failure,” she said. [..] “When you have a market economy, it all comes down to whether or not you acknowledge where the market has failed and where intervention is required. Has it failed our people in recent times? Yes. How can you claim you’ve been successful when you have growth roughly 3%, but you’ve got the worst homelessness in the developed world?”

So to which extent should a state interfere in markets, and in society at large? There are obviously wide ideological divides when it comes to answering that one. Does that mean there is no answer possible at all? Perhaps not. Perhaps the answer lies in the fact that the system is predestined to fail, as Boghosian’s mathematical models suggest: “Our work refutes the idea that free markets, by virtually leaving people up to their own devices, will be fair..”

That doesn’t necessarily demand a lot of interference, we could ‘simply’ write the rules of the game in such a way that the ‘natural tendency’ towards wealth concentration is blocked. An example is the history of the top US income tax rate. Arguably, the nation was doing a lot better under Eisenhower and Kennedy, with a top rate of 91%, than it is today. If you put a few rules like that in play, perhaps including Varoufakis’ idea of a ‘common welfare fund’, maybe the state doesn’t have to interfere much otherwise.



One of the main underlying claims of capitalism, and of macroeconomics in general, is that markets -and societies- will sort themselves out if left alone. Bruce Boghosian says this is not true, and that he has the math to prove it. The entire notion of markets tending towards a ‘supply-demand equilibrium’ is nonsense, he says (echoing Minsky, Steve Keen et al). Trickle-down economics is a figment of the imagination, while trickle up-economics flourishes.

This refutes much of what our economic systems are based on, which would appear to indicate that we need an urgent revision of these systems. Unless we would agree that Darwin-on-Steroids is a good idea. We don’t and won’t, because it would mean Stephen Foster’s “frail forms fainting at the door” all over the place. A market ideology that causes widespread misery has no future.


The Mathematics of Inequality

Seven years ago, the combined wealth of 388 billionaires equaled that of the poorest half of humanity , according to Oxfam International. This past January the equation was even more unbalanced: it took only eight billionaires, marking an unmistakable march toward increased concentration of wealth. Today that number has been reduced to five billionaires.

Trying to understand such growing inequality is usually the purview of economists, but Bruce Boghosian, a professor of mathematics, thinks he has found another explanation—and a warning. Using a mathematical model devised to mimic a simplified version of the free market, he and colleagues are finding that, without redistribution, wealth becomes increasingly more concentrated, and inequality grows until almost all assets are held by an extremely small percent of people.

“Our work refutes the idea that free markets, by virtually leaving people up to their own devices, will be fair,” he said. “Our model, which is able to explain the form of the actual wealth distribution with remarkable accuracy, also shows that free markets cannot be stable without redistribution mechanisms. The reality is precisely the opposite of what so-called ‘market fundamentalists’ would have us believe.”

While economists use math for their models, they seek to show that an economy governed by supply and demand will result in a steady state or equilibrium, while Boghosian’s efforts “don’t try to engineer a supply-demand equilibrium, and we don’t find one,” he said. [..] The model tracks the data with remarkable accuracy, he said. He and his team will soon publish a paper on how it relates to U.S. wealth data from 1989 to 2013.

“We have also begun to apply it to wealth data from the ECB, and so far it seems to work very well for certain European countries as well,” he said [..] It turns out that when agents do well in early transactions, the odds are so increasingly stacked in their favor that—without redistribution from taxes or other wealth-transfer mechanisms—they will get more money, and keep accruing wealth inevitably.

“Without redistribution of wealth, our market economy would not be stable,” said Boghosian. “One person would run away with all the wealth, and it would keep going until it came to complete oligarchy.” And even if a society does redistribute wealth, if it’s too small an amount, “a partial oligarchy will result,” Boghosian said.

If markets and societies cannot survive under current rules, theories and ideologies, what do we do? The Artemis guys strongly suggest we stop the practice of excessive stock buybacks- even if they’re the only thing propping up the whole market system. Because they’re leading us straight into a recession. Because they’re making that recession a lot worse.


Volatility and the Alchemy of Risk

The Ouroboros, a Greek word meaning ‘tail devourer’, is the ancient symbol of a snake consuming its own body in perfect symmetry. The imagery of the Ouroboros evokes the infinite nature of creation from destruction. The sign appears across cultures and is an important icon in the esoteric tradition of Alchemy. Egyptian mystics first derived the symbol from a real phenomenon in nature. In extreme heat a snake, unable to self-regulate its body temperature,will experience an out-of-control spike in its metabolism. In a state of mania, the snake is unable to differentiate its own tail from its prey,and will attack itself, self-cannibalizing until it perishes. In nature and markets, when randomness self-organizes into too perfect symmetry, order becomes the source of chaos.

The Ouroboros is a metaphor for the financial alchemy driving the modern Bear Market in Fear. Volatility across asset classes is at multi-generational lows. A dangerous feedback loop now exists between ultra-low interest rates, debt expansion, asset volatility, and financial engineering that allocates risk based on that volatility. In this self-reflexive loop volatility can reinforce itself both lower and higher. In a market where stocks and bonds are both overvalued, financial alchemy is the only way to feed our global hunger for yield, until it kills the very system it is nourishing.



[..] At the head of the Great Snake of Risk is unprecedented monetary policy. Since 2009 Global Central Banks have pumped in $15 trillion in stimulus creating an imbalance in the investment demand for and supply of quality assets. Long term government bond yields are now the lowest levels in the history of human civilization dating back to 1285. As of this summer there was $9.5 trillion worth of negative yielding debt globally. Last month Austria issued a 100-year bond with a coupon of only 2.1%(6) that will lose close to half its value if interest rates rise 1% or more. The global demand for yield is now unmatched in human history. None of this makes sense outside a framework of financial repression.

Amid this mania for investment, the stock market has begun self-cannibalizing… literally. Since 2009, US companies have spent a record $3.8 trillion on share buy-backs financed by historic levels of debt issuance. Share buybacks are a form of financial alchemy that uses balance sheet leverage to reduce liquidity generating the illusion of growth. A shocking +40% of the earning-per-share growth and +30% of the stock market gains since 2009 are from share buy-backs. Absent this financial engineering we would already be in an earnings recession.

Any strategy that systematically buys declines in markets is mathematically shorting volatility. To this effect, the trillions of dollars spent on share buybacks are equivalent to a giant short volatility position that enhances mean reversion. Every decline in markets is aggressively bought by the market itself, further lowing volatility. Stock price valuations are now at levels which in the past have preceded depressions including 1928, 1999, and 2007. The role of active investors is to find value, but when all asset classes are overvalued, the only way to survive is by using financial engineering to short volatility in some form.

Yanis Varoufakis doesn’t so much argue that capitalism has already failed, he says it is bound to fail in the near future. Because new technology, including artificial intelligence, will destroy too many jobs for society to continue to function intact. That is already happening, in that we both produce and consume Google’s ‘products’, but we get none of the profits. An example:


Google’s Plan To Revolutionise Cities Is A Takeover In All But Name

Alphabet’s weapons are impressive. Cheap, modular buildings to be assembled quickly; sensors monitoring air quality and building conditions; adaptive traffic lights prioritising pedestrians and cyclists; parking systems directing cars to available slots. Not to mention delivery robots, advanced energy grids, automated waste sorting, and, of course, ubiquitous self-driving cars. Alphabet essentially wants to be the default platform for other municipal services. Cities, it says, have always been platforms; now they are simply going digital.

“The world’s great cities are all hubs of growth and innovation because they leveraged platforms put in place by visionary leaders,” states the proposal. “Rome had aqueducts, London the Underground, Manhattan the street grid.” Toronto, led by its own visionary leaders, will have Alphabet. Amid all this platformaphoria, one could easily forget that the street grid is not typically the property of a private entity, capable of excluding some and indulging others. Would we want Trump Inc to own it? Probably not. So why hurry to give its digital equivalent to Alphabet?

Google aims at taking over our entire communities, and claims this will be to our benefit. We let the new technology companies expand far and wide, to a large extent because our ‘leaders’ don’t understand what is happening any better than we do. But that is not a good thing, for many different reasons. It’ll be very hard to whistle them back later, both because of the wealth they’re building, and because of the intensifying links they have to government, including -or especially- the intelligence community.


Capitalism Is Ending Because It Has Made Itself Obsolete

Former Greek finance minister Yanis Varoufakis has claimed capitalism is coming to an end because it is making itself obsolete. The former economics professor told an audience at University College London that the rise of giant technology corporations and artificial intelligence will cause the current economic system to undermine itself.

Mr Varoufakis [..] said companies such as Google and Facebook, for the first time ever, are having their capital bought and produced by consumers. “Firstly the technologies were funded by some government grant; secondly every time you search for something on Google, you contribute to Google’s capital,” he said. “And who gets the returns from capital? Google, not you. “So now there is no doubt capital is being socially produced, and the returns are being privatised. This with artificial intelligence is going to be the end of capitalism.”

Warning Karl Marx “will have his revenge ”, the 56-year-old said for the first time since capitalism started, new technology “is going to destroy a lot more jobs than it creates”. He added: “Capitalism is going to undermine capitalism , because they are producing all these technologies that will make corporations and the private means of production obsolete. “And then what happens? I have no idea.”

Describing the present economic situation as “unsustainable” and fearing the rise of “toxic nationalism”, Mr Varoufakis said governments needed to prepare for post-capitalism by introducing redistributive wealth policies. He suggested one effective policy would be for 10% of all future issue of shares to be put into a “common welfare fund” owned by the people. Out of this a “universal basic dividend” could be paid to every citizen.

Has capitalism failed already, as Jacinda Ardern claims, or will that happen only in the future, as Varoufakis says? It may be a moot question once the system and the markets start collapsing. That they will, and must, is not a question but a certainty, even a mathematical one. Whatever your ideology, that is not a good thing. And the current ideology has caused this, that much is clear.

If the remaining wealth is not divided better than it is today, those who have gathered most of it will also find themselves in non-functioning societies and communities. Unless perhaps you’re George W. and have property in Paraguay.

But even then. We’re eating our tails.



Oct 172017
 October 17, 2017  Posted by at 8:40 am Finance Tagged with: , , , , , , , , ,  

Rembrandt An Old Scholar Near a Window in a Vaulted Room 1631


Asset Prices & Monetary Policy in an Irrational World (Whalen)
Central Banks Will Cause An Orgy of Blood (Clarmond)
Global Central Banking Leadership Flux Looms (R.)
Kobe Steel Faked Quality Data For Decades (Nikkei)
China’s Impact on Global Markets is About to Get Much Bigger (BBG)
China’s Banks Are Bingeing on Bonds Despite Debt Crackdown (BBG)
China Has Only Taken Baby Steps to Cut Leverage (BBG)
Investigations of Wall Street Have Disappeared from Corporate Media (Martens)
MIT Economist Andrew Lo Wants You To Realize That Traders Are Animals (BW)
Varoufakis Tells Macron To Adopt The ‘Empty-chair’ Tactic (EuA)
The Kurds Have No Friends But The Mountains (David Graeber)
Malta Car Bomb Kills Panama Papers Journalist (G.)
IMF Chief Calls For Implementation Of Greek Program, Debt Relief (K.)
2,000 Refugees, Migrants Landed in Greece Since October 1 (GR)



“.. the logical and unavoidable result of the end of QE is that asset prices must fall and excessive debt must be reduced.”

Asset Prices & Monetary Policy in an Irrational World (Whalen)

[..] Let’s wind the clock back two decades to December 1996. The Labor Department had just reported a “blowout” jobs report. Then-Federal Reserve chairman Alan Greenspan had just completed a decade in office. He made a now famous speech at American Enterprise Institute wherein Greenspan asked if “irrational exuberance” had begun to play a role in the increase of certain asset prices. He said:

“Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? And how do we factor that assessment into monetary policy? We as central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs, and price stability. Indeed, the sharp stock market break of 1987 had few negative consequences for the economy. But we should not underestimate or become complacent about the complexity of the interactions of asset markets and the economy. Thus, evaluating shifts in balance sheets generally, and in asset prices particularly, must be an integral part of the development of monetary policy.”

In the wake of the 2008 financial crisis, the FOMC abandoned its focus on the productive sector and essentially substituted exuberant monetary policy for the irrational behavior of investors in the roaring 2000s. In place of banks and other intermediaries pushing up assets prices, we instead have seen almost a decade of “quantitative easing” by the FOMC doing much the same thing. And all of this in the name of boosting the real economy?

The Federal Reserve System, joined by the Bank of Japan and the ECB, artificially increased assets prices in a coordinated effort not to promote growth, but avoid debt deflation. Unfortunately, without an increase in income to match the artificial rise in assets prices, the logical and unavoidable result of the end of QE is that asset prices must fall and excessive debt must be reduced. Stocks, commercial real estate and many other asset classes have been vastly inflated by the actions of global central banks. Assuming that these central bankers actually understand the implications of their actions, which are nicely summarized by Greenspan’s remarks some 20 years ago, then the obvious conclusion is that there is no way to “normalize” monetary policy without seeing a significant, secular decline in asset prices. The image below illustrates the most recent meeting of the FOMC.

Read more …

Great piece of history.

Central Banks Will Cause An Orgy of Blood (Clarmond)

The Bank of Japan’s current path provides an ominous reminder of a similar era 80 years ago. These policies, which are also being followed by the other world central banks, will lead to disaster. “One man – one kill” railed Inoue Nissho, leader of the Ketsumeidan (the Blood Pledge Corps), a Japanese ultranationalist group of the 1930s committed to cleansing the country of ‘traitors’ – the leaders of business and government. The first name on their death list was Inoue Junnosuke, a former Finance Minister, an austerity advocate and former governor of the Bank of Japan (BOJ); he was shot as he visited a nursery school. The next name was Dan Takuma, head of the Mitsui Group, the Japanese Goldman Sachs; he was shot in front of his office in the fashionable Nihonbashi district.

Further attacks on the BOJ and Mitsubishi Bank followed but were unsuccessful. The “world of cosmopolitan finance had collided with nationalist resentment.” The liberal elite was stunned, unable to provide answers to the social turmoil of the time; and with the establishment paralysed, the public began to sympathise with the killers’ aims. Enter Finance Minister Takahashi Korekiyo. He placated the nationalists by championing massive deficit financing, via the BOJ, to pull Japan out of its economic morass. Japan’s economy soon embarked on a period of economic growth with stable prices, full employment and humming factories, an “economic nirvana.” Seven decades later these results were heralded a success by another central banker trying a similar trick – Ben Bernanke. Korekiyo’s plan was to fund government spending by having the BOJ directly purchase all the government-issued bonds.

The hope was that, when conditions and inflation improved, the bonds would be sold back into the market. Four years later, the BOJ’s balance sheet was 90% of GDP, and the economy (and for “economy” read military) was totally dependent on government spending financed by the BOJ. As the first modest hint of inflation arrived Korekiyo attempted to sell government bonds publicly, but the auction failed. With this failure it became clear that the bonds which had been stuffed onto the BOJ’s balance sheet could never be sold. Korekiyo’s struggle to ‘cut up the credit card’ culminated in him suffering a similar fate to Junnosuke and being cut up in an attack of army machetes. As the BOJ’s balance sheet crossed 100% of GDP, there could be no turning back, the road to conflict had been primed by the BOJ’s swollen balance sheet and the money that had flooded into the military.

The current Bank of Japan’s balance sheet has now again crossed that fabled 100% of GDP and it is getting close to owning 45% of outstanding government bonds. There is no end in sight with the BOJ buying $60 billion a month of government debt. At this current pace the modern BOJ will by 2019 be the proud owner of 60% of the local bond market. There is no longer a market price for a Japanese Government Bond, it is an asset whose price is set by the BOJ. The key difference between today and the 1930s is that Japan now has an open capital account, therefore the only untethered market price is the currency. The Yen’s continued devaluation will be deep and comprehensive, while Japanese equities will continue to rise, adjusting to the currency loss.

Read more …

Musical chairs. Won’t change a thing.

Global Central Banking Leadership Flux Looms (R.)

The leaders of the world’s top central banks who risked trillions of dollars and their reputations to rescue the global economy are now set to walk off stage at a time when the lingering effects of the crisis, evolving technology and a combustible political landscape will challenge their successors. The Fed, the Bank of Japan and the People’s Bank of China may all have new bosses in early 2018 and there will be a new head of the ECB the following year. The new leaders will have to deal with the hangover from the 2007-2009 crisis and its immediate aftermath as well as newly emerging risks. Some $10 trillion in assets bought by the Fed, the ECB and the BOJ to prop up their economies remains on the books and will have to be pared back. Stubbornly low global inflation and weak growth complicate the return to more conventional policies.

There are unfinished reforms in China and Europe, while the rise of nationalism could erode central bank independence. Further ahead, the spread of cryptocurrencies and other technologies threatens to weaken central bank control over the financial system. “The bad news is that in a crisis people learn by doing,” said Vincent Reinhart, chief economist at investment firm Standish Mellon and a longtime official at the Federal Reserve. “Will the next set of people have the set of experiences that allows them to do that? Will they have a test?” The changing of the guard could veer in unpredictable directions. China’s president is considering a provincial official to succeed Zhou Xiaochuan, a veteran policymaker who has led the central bank since 2002 and whom analysts regard as a champion of reforms that could falter without his leadership.

Read more …

Even had a fraud manual. This keeps growing by the day.

Kobe Steel Faked Quality Data For Decades (Nikkei)

Product quality data was falsified for decades at some Kobe Steel plants in Japan, well beyond the roughly 10-year time frame given by the steelmaker, a source with knowledge of the situation said Monday. Employees involved in the data manipulation used the industry term tokusai to refer to shipping of products that did not meet the standards requested by customers, the source said. Though tokusai usually refers to voluntary acceptance of such products, plants sometimes sent substandard goods without customers’ consent. The word was apparently in use at some plants for 40 to 50 years. The cheating procedures eventually became institutionalized in what was essentially a tacit fraud manual, allowing the practice to continue as managers came and went. Data manipulation may have occurred with the knowledge of plant foremen and quality control managers. Some shipments even came with forged inspection certificates.

Kobe Steel has tapped senior officials in the aluminum and copper business – where most of the misconduct took place – to serve on its board. How far up the chain of command knowledge of the fraud may have extended in the past remains an open question. Systemic data falsification took place at four Japanese production sites. The scandal has spread to the manufacturer’s mainstay steel business, with revelations Friday that steel wire was also shipped without inspection or with faked certificates. The number of affected customers has swelled from around 200 to roughly 500. Kobe Steel has said it will complete safety inspections for already shipped products in two weeks or so. A report on the causes of the fraud and measures to prevent a recurrence will come out in a month or so. The steelmaker is conducting a groupwide probe that includes interviews with former senior officials.

Read more …

Yeah, when its Ponzi collapses.

China’s Impact on Global Markets is About to Get Much Bigger (BBG)

China’s ascension as an economic superstar over the past three-plus decades is out of sync with its heft in global financial markets. But things are starting to change, and investors around the world will feel the difference. China makes up more than one-seventh of the global economy, yet its footprint in international portfolios is ludicrously small, with overseas investors owning less than 2% of its domestic stocks and bonds. But its insulated markets are slowly becoming more integrated, as President Xi Jinping loosens rules on foreign participation. That push could get further backing at the Communist Party’s twice-a-decade congress this month, where the leadership will set policy priorities for the coming five years.

China’s capacity to influence global financial markets has been growing incrementally, but the pivotal moment came in 2015, when the yuan’s unexpected devaluation rocked assets worldwide, showing investors beyond Asia that China’s markets are a force to be reckoned with. The surprise move saw the yuan slide the most in two decades on Aug. 11, 2015, as Beijing sought to shore up economic growth and make China’s exports more competitive. Following on from a Chinese stock rout in mid-2015 that also had a ripple effect globally, the devaluation rattled risk assets for weeks as it was seen as an admission the economy was struggling. Fast forward to 2017, and China’s clout has only expanded, with its lion’s share of global trade making the managed yuan an anchor for currencies throughout Asia.

The nation’s status as both the world’s biggest exporter and the largest market of consumers means policy tweaks in Beijing can affect prices for everything from beef to bitcoin. Trading on Shanghai’s commodity futures market is taking on increasing influence beyond China’s borders. The country’s pivot away from the smokestack industries that have been its growth engine for decades toward high-tech production is already shifting the global landscape for manufacturing and consumption. At the same time, China is looking to draw in more foreign capital by opening conduits to its equity and bond markets, among the largest in the world. That makes the 19th party congress, where Xi will unveil the party’s vision for China over the next five years, key for even the most peripheral of investors.

Read more …

It’s almost funny.

China’s Banks Are Bingeing on Bonds Despite Debt Crackdown (BBG)

China’s banks are still bingeing on short-term financing, defying analyst predictions that they would wean themselves off such debt as regulators intensify a crackdown on leverage. Sales of negotiable certificates of deposit — a key funding source for medium and smaller banks — surged 49% from a year ago in the third quarter to a record 5.4 trillion yuan ($819 billion), according to data compiled by Bloomberg. While strategists had predicted in June that the NCD market would shrink, it turned out to be one of the few funding channels left as officials drained cash from the interbank market and asked lenders to strengthen risk controls. China’s deleveraging looms large in debt-market dynamics these days, with government bond yields at two-year highs and the one-week Shanghai Interbank Offered Rate not far from the most expensive since 2015.

Still, officials are also trying to keep the economy humming: they’ve tweaked the rules governing NCD issuance, but haven’t shut off the taps as credit growth accelerates. “The short-term debt is an indispensable fundraising channel for smaller banks,” said Shen Bifan, head of research at First Capital Securities Co.’s fixed-income department in Shenzhen. “As other channels get squeezed, and lenders’ books continue to expand, as is the case now amid solid economic growth, it’d be difficult to see the NCD market size shrink.” Net financing – sales minus maturities – through such securities was at 333 billion yuan in the third quarter, versus a total of 1.7 trillion yuan in the first half, data compiled by Bloomberg show. With more than 8 trillion yuan of contracts outstanding, it’s now the fourth-largest type of bond in China, after sovereign, local government and policy bank debt.

Read more …

Xi only talks the talk.

China Has Only Taken Baby Steps to Cut Leverage (BBG)

China has taken “baby steps” toward cutting leverage as lending from banks slows, but progress has been uneven as borrowing by households and the government has risen, according to S&P Global Ratings. Authorities are adopting both tight and loose policies to try to reduce the country’s dependency on debt without causing a hard landing, analysts led by Christopher Lee wrote in a note dated Oct. 16. S&P last month cut China’s sovereign rating for the first time since 1999, saying it didn’t believe enough was being done to contain credit growth.

The next big test is whether companies can withstand higher funding costs as financial conditions tighten, according to S&P. “Smaller and less-capitalized banks may feel the liquidity squeeze and pressures on their capital, leading to distress; and default risks could also increase for the local government financing vehicles,” the analysts wrote. “Passing the baton of credit-fueled growth in recent years to households also has many obvious risks,” such as a correction in the property market hurting consumption, they said.

Read more …

One system.

Investigations of Wall Street Have Disappeared from Corporate Media (Martens)

Rupert Murdoch’s News Corp. bought Dow Jones & Company in late 2007 after a century of ownership by the Bancroft family. The purchase just happened to come at a time when the Federal Reserve had secretly begun to funnel what would end up totaling $16 trillion in cumulative low-cost loans to bail out the Wall Street mega banks and their foreign counterparts. In 2011, the Pew Research Center released a study on how front page coverage had changed since the News Corp. purchase of the Wall Street Journal. Pew found that “coverage has clearly moved away from what had been the paper’s core mission under previous ownership—covering business and corporate America. In the past three and a half years, front-page coverage of business is down about one-third from what it had been in 2007, the last year of the old ownership regime.”

What is not down but “up” at the Wall Street Journal is its defense of the Wall Street banking giants’ indefensible practices on its editorial and opinion pages. One of the most striking examples of the changing face of corporate media coverage of Wall Street was an October 20, 2013 editorial in the Wall Street Journal headlined:“The Morgan Shakedown.” The unsigned editorial began with this: “The tentative $13 billion settlement that the Justice Department appears to be extracting from J.P. Morgan Chase needs to be understood as a watershed moment in American capitalism. Federal law enforcers are confiscating roughly half of a company’s annual earnings for no other reason than because they can and because they want to appease their left-wing populist allies.”

Actually, there was a very good reason for the $13 billion settlement – but the intrepid investigative reporting on that subject would be done by Matt Taibbi for Rolling Stone – not by the paper still calling itself the “Wall Street” Journal. Taibbi revealed that the U.S. Justice Department had actually settled on the cheap and had failed to reveal to the public that it had the most credible of eyewitnesses to mortgage fraud at JPMorgan Chase – a securities attorney who worked there and had reported the fraud to her supervisors. The attorney, Alayne Fleischmann, told Taibbi that what she witnessed in JPMorgan’s mortgage operations was “massive criminal securities fraud.”

Taibbi’s in-depth report on the matter made the editorial board at the Wall Street Journal appear naïve or captured by Wall Street. It raised the added embarrassing question as to why the Wall Street Journal was out of touch with the details of the Justice Department’s investigation.

Read more …

This year’s Fauxbel for human behavior, next year’s for animal behavior?

MIT Economist Andrew Lo Wants You To Realize That Traders Are Animals (BW)

Every reigning theory of finance has holes. The efficient-markets hypothesis says markets are rational and self-regulating, but it doesn’t account for crashes and crises; behavioral finance blames market breakdowns on investors’ short-term thinking, but it fails to account for group dynamics or predict future markets. Andrew Lo spent his early career studying these flaws. Lo, 57, is the Charles E. and Susan T. Harris professor of finance at the MIT Sloan School of Management, but he’s always been a multidisciplinarian. At the Bronx High School of Science, he excelled in biology, physics, chemistry, and mathematics and liked solving broad problems. “I just really enjoyed the dynamics across all these fields,” he says. “I never thought of myself as, I am an economist or I’m a statistician.”

Eighteen years into his research, Lo had a major insight. One day in 1999 his 4-year-old son took off running toward a gorilla cage at the Smithsonian’s National Zoo. “The mother gorilla jumped right in and growled,” he says. “And as soon as she did that, I did the same thing. I ran to my child and brought him back.” The similarity of their reactions startled Lo and caused him to wonder: Could there be other similarities in the way people and animals react to danger and risk? The insight eventually led to the adaptive-markets hypothesis. “Right now, we tend to collect prices and assume that those are the only things that matter” to predict investor behavior, Lo says, whereas an ecologist would try to understand investors as a population—which means accounting for their animal instincts. Lo’s hypothesis says people act in their own self-interest but frequently make mistakes, figure out where they’ve erred, and change their behaviors.

The broader system also adapts. These complex interactions contribute to our booms and busts. Lo’s book-length exploration of the idea, Adaptive Markets, came out in February. Says Ben Golub, a founding partner at BlackRock Inc. and now co-head of the company’s risk and quantitative analysis group: “It makes you realize that at any time in the market, the people who are there are not there by accident.” Some people survived the last financial crisis and might be more risk-averse, and some people who’ve joined since might be more risk-tolerant. “The cautious guys survive for a while and then get pushed out by the more aggressive risk takers, who then get thrown out when the thing blows up in their faces,” Golub says. He’s made the book required reading for many BlackRock employees.

Read more …

“Varoufakis plans to run for the 2019 European elections, even if he says the European Parliament “is not a real parliament.” But he wants to run in Germany, “to show that federalism is possible, and also that Germany’s current politics is harmful for Germans.”

Varoufakis Tells Macron To Adopt The ‘Empty-chair’ Tactic (EuA)

More than fifty years ago, in 1965, French President Charles de Gaulle withdrew his ministers from the Council of the EU, de facto vetoing all decisions. According to Yanis Varoufakis, former finance minister for Greece, Macron should consider refreshing this tactic – but for the opposite reason. De Gaulle was defending nation states, while Macron wants to push federalism forward. “Macron has got some good ideas, but he already lost, he is done, belittled by Germany” who refuses to create a budget for the Eurozone, according to the economist, who spoke to the French press in Paris. According to him, the success of the far-right party AfD in September’s parliamentary election gives Germany the perfect excuse to retrench on this dossier. And the European Monetary Fund, proposed by Germany as an alternative to a Eurozone budget, is a sham and not a real compromise, according to Varoufakis.

The only way to force Germany into siding with France on relaunching the federalist process is the empty-chair tactic, he says. A form of “constructive disobedience” [..] “Trying to achieve a permanent reduction of the public deficit under 3% of GDP is nonsensical. It is not a problem to run a public deficit: Arizona will always have one, especially if compared to California. In a federation, this happens a lot. But in the case of France, current public spending will condemn the country to permanent stagnation, because the German industry has a monopoly of numerous markets”, he says. The real priority according to him is investment, which should be raised to €500 billion per year. “The Juncker plan is a farce,” he said.

Without a eurozone budget to relaunch the federalist project, the economist proposes that the European Investment Bank (BEI) issue green bonds to finance large infrastructure projects in clean energy and transport – and that the ECB buys them. “We don’t need to change the treaties. It is already feasible – it is just a question of achieving the consensus of the EIB’s board.” On the type of projects that should be financed, Varoufakis echoes Macron who spoke about a way to cross the old continent without polluting: he would like to develop a railway network from the East to the West as well as invest in clean energy. While he sides with Macron’s federalist elements, including a transnational list for the 2019 European elections, Varoufakis is also very critical of his first steps.

“The speech he gave in Greece was pathetic. Coming to tell us that Greece is out of the crisis is an insult, and speaking from [Athens’ Acropolis] where countless dictators spoke to Greeks adds insult to injury,” said the economist. Varoufakis plans to run for the 2019 European elections, even if he says the European Parliament “is not a real parliament.” But he wants to run in Germany, “to show that federalism is possible, and also that Germany’s current politics is harmful for Germans.”

Read more …

Excellent and very educational.

The Kurds Have No Friends But The Mountains (David Graeber)

“The Kurds have no friends but the mountains” — that’s what Mehmet Aksoy used to say. But Mehmet, who was killed Sept. 26 during an attack by the Islamic State in northern Syria, was my friend, and a tireless advocate of the Kurdish freedom movement. He was working on an essay that began with those words when he died. He often used that adage to explain the plight of his people, who have long been used or mistreated by the very powers that claim to spread democracy and freedom through the world. I first met Mehmet at a Kurdish demonstration in London, where he lived. I had come because of my interest in direct democratic movements like the one the Syrian Kurds were building, but ended up feeling as if I was lurking, out of place at the fringe of the gathering, until he walked up and introduced himself.

I came to know him as I’ve now heard many in the community did, as kind and unassuming but somehow larger than life, always juggling a dozen projects, films, essays, events and political actions. Now I think it’s important to tell people about his last project, his writing on the conflict in Kurdistan, so that more of us understand what’s at stake there. He was writing in the shadow of a referendum taking place in neighboring Iraqi Kurdistan that everyone knew would end with a strong endorsement of an independent Kurdish state. But the Syrian Kurdish freedom movement that Mehmet represents has pursued an entirely different vision from that of the Kurds in Iraq: It does not wish to change the borders of states but simply to ignore them and to build grass-roots democracy at the community level.

It frustrated Mehmet that the endless sacrifices of Kurdish fighters against the Islamic State in cities across Syria are being mistakenly seen as justification of more borders and more divisions rather than for less. Too often in the Western news media, the Kurds are grouped together as one homogeneous people, with Syrian Kurds often an afterthought of late because of the attention the Iraqi Kurds have received for their referendum. But the Kurds in these two countries have built very different political systems. The Syrian Kurds have built a coalition with Arabs, Syriacs, Christians and others in the northern slice of Syria that they call Rojava (or, more officially, the The Democratic Federation of Northern Syria.).

Read more …

RIP. May your courage shine on others.

Malta Car Bomb Kills Panama Papers Journalist (G.)

The journalist who led the Panama Papers investigation into corruption in Malta was killed on Monday in a car bomb near her home. Daphne Caruana Galizia died on Monday afternoon when her car, a Peugeot 108, was destroyed by a powerful explosive device which blew the vehicle into several pieces and threw the debris into a nearby field. A blogger whose posts often attracted more readers than the combined circulation of the country’s newspapers, Caruana Galizia was recently described by the Politico website as a “one-woman WikiLeaks”. Her blogs were a thorn in the side of both the establishment and underworld figures that hold sway in Europe’s smallest member state.

Her most recent revelations pointed the finger at Malta’s prime minister, Joseph Muscat, and two of his closest aides, connecting offshore companies linked to the three men with the sale of Maltese passports and payments from the government of Azerbaijan. No group or individual has come forward to claim responsibility for the attack. Malta’s president, Marie-Louise Coleiro Preca, called for calm. “In these moments, when the country is shocked by such a vicious attack, I call on everyone to measure their words, to not pass judgment and to show solidarity,” she said. After a fraught general election this summer, commentators had been fearing a return to the political violence that scarred Malta during the 1980s.

In a statement, Muscat condemned the “barbaric attack”, saying he had asked police to reach out to other countries’ security services for help identifying the perpetrators. [..] Caruana Galizia, who claimed to have no political affiliations, set her sights on a wide range of targets, from banks facilitating money laundering to links between Malta’s online gaming industry and the Mafia. Over the last two years, her reporting had largely focused on revelations from the Panama Papers, a cache of 11.5m documents leaked from the internal database of the world’s fourth largest offshore law firm, Mossack Fonseca.

Read more …

This is theater. And it’s empty.

IMF Chief Calls For Implementation Of Greek Program, Debt Relief (K.)

Managing Director of the IMF, Christine Lagarde, has praised Greece’s progress on reforms while saying that implementation of the adjustment program coupled with an agreement on debt relief are key to leading the debt-wracked country out of the crisis. The IMF chief made the comments after a meeting with Greek Prime Minister Alexis Tsipras in Washington Monday to discuss recent developments in Greece and key issues ahead. “I was very pleased to welcome Prime Minister Tsipras to the IMF today. I complimented him and the Greek people on the notable progress Greece has achieved in the implementation of difficult policies, including recent pension and income tax reforms. We had an excellent and productive meeting,” Lagarde said in a statement after the meeting.

“The IMF recently approved in principle a new arrangement to support Greece’s policy program. Resolute implementation of this program, together with an agreement with Greece’s European partners on debt relief, are essential to support Greece’s return to sustainable growth and a successful exit from official financing next year,” Lagarde said. “The prime minister and I are committed to working together towards this goal,” she said. In his comments, Tsipras said that “after several years of economic recession Greece has turned a page.” The Greek prime minister said that it is in everyone’s interest to wrap up the third bailout review as swiftly as possible.

Read more …

Numbers rising as we speak.

2,000 Refugees, Migrants Landed in Greece Since October 1 (GR)

A total of 1,877 migrants and refugees crossed into the northern Aegean islands from the Turkish coast during the first 15 days of October. According to official figures, 1,148 have arrived in Lesvos; 572 in Chios, and 117 in Samos. In addition to this, on Monday morning, 44 people arrived in Lesvos and 157 in Chios. Between October 1 and 13, the Turkish coast guard announced that it had located 25 incidents involving dinghies with migrants and refugees on board, that had attempted to reach the Greek waters. 907 people have been returned back to Turkey.

Read more …

Oct 082017
 October 8, 2017  Posted by at 2:26 pm Finance Tagged with: , , , , , , , , ,  

Fred Lyon Barbary Coast 1950


A friend sent me a post from the DiEM25 website last week, entitled Critique of DiEM25 policy on immigrants and refugees. DiEM25 is a pan-European political movement of which former Greek finance minister Yanis Varoufakis is a co-founder.

I started writing some lines as a response to my friend. Then it became a bit more. Wouldn’t you know… And then it was a whole article. So here’s my comments to it first, and then the original by someone calling themselves ‘dross22′. Now, in case I haven’t made this sufficiently abundantly clear yet, in my view Yanis’ knowledge and intellect is probably far superior to mine, and I’m a fan. But…

I don’t mean to imply that the views in the comment posted at DiEM25 are those of Yanis, but I do think it’s good to point out that these views exist within the movement. Moreover, as I wrote a few days ago, Yanis himself also thinks the EU should become ‘a federal state’. And I don’t agree with that. In fact, I think that’s a sure-fire way to absolute mayhem. Catalonia is only the latest example of why that is. Greece is an obvious other.


From that post on the DiEM25 site (see full text below):

[..] .. local European nationalism must be eradicated by creating a common European state. But a progressive European state would inevitably require a sense of identity that, in true progressive spirit, is radically opposed to religion. It would be hypocrisy to exclude Islam. Pluralism of values is a weapon of the establishment and we have to do away with it. In a Europe that is green nobody can afford pluralism in regards to lifestyle choices.

That’s quite the hand- and mouthful. Nationalism must be eradicated and religion radically opposed. Yeah, that should get you elected… You don’t want Islam in Europe, and therefore you want to do away with Christianity too. “..a sense of identity that, in true progressive spirit, is radically opposed to religion.” That’s 2000 years of often deeply ingrained history and culture out the door and down the toilet. And don’t even get me started on statues. Don’t you dare.

Look, I‘m not a religious person, but I would never want to even try to take anyone’s faith away from them. That’s the Soviet Union, China. That’s not Europe. Nor do I see what’s wrong with pluralism, seems kind of Orwellian to me. “..local European nationalism must be eradicated by creating a common European state.”  Say what? Why? What kind of movement is this? That’s not thinking, that’s dogma. And not a very clever kind of it.

Pluralism (differences) is the essence and the beauty of Europe. Plus, because of its divergence in language, culture etc., forget about unifying the whole continent, if that was ever desirable. I know the author specifically narrows it down to pluralism of values and lifestyle choices, but the EU already has enough rules and laws that regulate the worst of that.

Moreover, Europe has bigger issues than ‘pluralism in lifestyle choices’. Europe is in very troubled economic times, even if the media won’t tell you that. Because of that it’s all oil on fire, pluralism, immigration, the lot. People that do have jobs have much shittier jobs (gig economy my donkey) than those who went before them. Much of the EU is mired in way over-leveraged mortgages and other household and state debt, it’s just that you wouldn’t know it to listen to politicians and media. 

And that’s without mentioning bank debt, corporate debt, non-performing loans. Greece is paying the price right now for the credit casino (the house always wins) run by French/German banks. Other countries will be too in the near future. As soon as interest rates go up, there’ll be a mushroom cloud on the financial horizon. And Draghi will have emptied all his guns when it happens, saving EU banks but not EU citizens.

If by values and lifestyle you mean only that Islam should not replace Christianity in Europe, I’m your man. But that doesn’t mean Christianity should be suppressed or obliterated because of this. What you do instead is make it clear that you can be muslim, but only in as far as what it teaches does not contradict various European laws. And you actively enforce that.


[..] .. there can be no doubt that our stance on the migrants is jeopardizing our electoral prospects and our ability to influence society.. [..] This Europe will certainly not put the migrants to good use or treat them well and this will lead them to open up further to the influence of Islamic radicalism with the usual consequences.

[..] The Islamic migrants and the minorities are rather insignificant pawns that are best sacrificed as our current political situation demands. The establishment sacrifices pawns, and even rooks for its own political ends. We have to do the same.

The language is nigh unpalatable. As for (im-)migrants, it is obvious that wanting to incorporate too many of them too fast can only lead to trouble. Apart from all other discussions about values etc. After the financial crisis, it’s Europe’s main problem today. Or perhaps it’s a toss-up between finance and politics.

Perhaps what’s an even bigger issue is that what Merkel says happens, does in the EU. In economics, and in politics, and on the migration question. There is no sovereignty left. No democracy. As I’ve written before, tell the French, or Italians, that they have no say left in their own country, that Berlin controls it all. And then wait for their response. They have not a clue. Nobody told them. They sure never signed up to be ruled by Germany. But they are.

Ergo: The EU continues to exist only by the grace of media deception. And that’s an awfully thin veneer. I don’t know the ins and outs of DiEM25, but these lines make me seasick. Prediction: It’ll all fall apart at the first serious challenge and/or debate. Too many differing views from too many different locations and languages, and not nearly sufficient critical thought. 

Love Yanis though. And love him for trying. But what he must have experienced is what we at the Automatic Earth did too in 2010/11/12. That is, when the Automatic Earth’s Nicole Foss spoke in numerous locations in Italy, and we’re very grateful to our friends all over the country to make it happen, we needed translators at every talk. What I mean is you can get the big ideas across, but the details will always fall by the wayside. And that is Europe. 


A common European state is therefore neither desirable nor practical. The model of the European Parliament, with more translators than members of parliament, is as wrong as it is overkill. The EU is a step too far, a bridge too far. It serves a centralization dream, and the politics and economics that come with it, but it doesn’t serve the European people. 

Catalunya is just one more example of that. Greece is still the main eyesore, but you just wait till Spanish tanks appear on Barcelona’s Ramblas and Brussels has nothing. Their official response is that the use of ‘Proportionate Force’ is fine, but if that’s how you label having police in full battle gear beat up grandmas, how can you condemn tanks in the streets? Where’s the dividing line?

The EU is a giant failure. Ironically, it has done a lot of good on issues like food standards -though it tends to produce far too much paperwork on everything-, but the essence is it has -predictably- fallen victim to its upper echelons’ power grabbing. EU leaders don’t give a hoot what Europeans think, the way the important posts are divided means they don’t have to. And in the end, Germany wins (old British soccer joke).

Berlin, the European Commission, the ECB, they’re actively killing the Union, democracy, and all the good that has come out of Brussels. There’s no stopping it. And then Yanis Varoufakis and DiEM25 come along and say they ‘must’ “.. eradicate local European nationalism by creating a common European state.” 

Sorry boyos, wrong time, wrong place. Europe today must find a way to function without being anywhere near a common state, because it won’t have one for a long time. Focusing on that common state can only lead to the opposite: trouble, battle, even war between the different and numerous nation states.


To repeat myself once again: centralization, like globalization, only works as long as people feel they economically profit from it. In the current global and European economy, they do not, no matter what any media or politician tell you. Therefore, the focus should be on countries working together, not on becoming one state (or fiscal union, banking union). It’s not going to work, it’s going to cause major trouble, including war.

Greece may have bent over and let Berlin screw it up its donkey, but not all countries will react that way. Watch Catalonia, Hungary, Poland. And then what can Brussels do? It doesn’t have an army. Germany has a feeble one, for good reasons. NATO? The Visograd nations, Hungary etc, have different ideas about issues like immigration than Brussels and Berlin do.

How do Merkel et al plan to force them to change their ideas? Or, come to think of it, why would they want to? What Europe should be doing, but isn’t, and what a movement like DiEM25 should actively propagate, but isn’t either, is an immediate end to the deliberate creation of utter chaos in Libya, Iraq, Syria. But the European arms industry makes too much money off that chaos.

If that doesn’t stop, immigrants will keep coming. And that can only lead to more chaos in Europe too. It’s not sufficient to say you want immigration to stop. You need to take a stand against the forces that make it happen, starting with the forces in your own countries and societies (this very much includes your governments).

If you don’t focus on the basic conditions that must be fulfilled to ‘save Europe’, you will not save it. Europe is in such a crisis, or crises rather, that talking about programs and ideas from comfortable chairs is no longer a real option. Europe is very much like the orchestra on the Titanic: it keeps playing as if there is no threat ahead. And you have to tell them to stop playing. That’s your job.

Talking about what so and so would like to see by 2025 is a waste of time. But yeah, it’s comfortable, and comforting, to do it with a group of like-minded souls who fool themselves into thinking they’re smart and doing a good job. But the problem is here, now, not in 2025. And if you don’t work to solve it now, today, 2025 won’t look anything like what you have in mind.

Europeans must put a halt to European companies making billions on arms sales and oil in North Africa and the Middle East. And since these companies are protected and supported by the current leadership in Brussels and all other EU capitals, these will have to go too. That should be the focus. All the rest is the orchestra continuing to play.

Europeans don’t want a federal EU state. They don’t want to be forced to give up their national indentities, and they don’t want to lose their religions. Cue REM.



Still, Yanis has excellent ideas. As I said, I’m a fan. The way he describes his concept of parallel payment systems in the latter part of this recent video is outstanding, if you ask me. It’s the idea he never got to put into practice in Greece.




Here’s dross22’s full comment:

Critique of DiEM25 policy on immigrants and refugees (from DiEM 25’s official forum)

In my humble opinion the liberal way we’re approaching the refugee issue is very hard to market to the European demos. If Europe were one country and if the political climate were different, we’d have the resources to deal with the matter in the decent way we propagate. But unfortunately, Europe is currently at an advanced stage of disintegration making any discussion of a federal European state idle talk. As you all know, our mission here at DiEM is to get Europe out of the mire the establishment has got it into and then proceed to make of it a federal state. All of our very sensible and very realistic proposals take into account the fact that we’re not where we’d like to be. Yet when it comes to the refugee issue, we propagate a treatment that assumes away the current state of Europe.

Germany’s periphery and near east is divided between a collection of right-wing authoritarian states (Poland, Hungary, Ukraine etc.) and German industrial clients (Netherlands, Austria, Czech Republic, Slovakia, Slovenia, Estonia, Finland). In the Balkan South we have Brussels-Berlin protectorates (Kosovo, Montenegro, Bosnia-Herzegovina, Croatia), a debt colony and testing ground of the establishment’s policies (Greece) and states ruled by criminal syndicates (Albania, Serbia, Bulgaria). In the Romance countries (including France) we have states on the verge of fiscal breakdown, and in Germany and Brussels, the core of the establishment, we have a host of ruling incompetents that can only survive by feeding the monster they created in 2010. The feces of that monster feeds nationalistic flies and worms everywhere.

This is not a Europe that can handle the refugee issue. Indeed, all it has managed to do is let Germany bear the burden of adjustment, hence contributing significantly to AfD’s resonance in German society and forcing a desperate establishment to go as far as to bribe Turkey to stem the flow. The establishment did this hideous thing for tactical reasons and the case can be made that, in part, they owe their political survival to how they instrumentalize and adapt to the reality of xenophobia. We too have to understand quickly that racism is here to stay.

This unfortunate development is due to two things. It’s Islamist radicalism in the Mid-East and Africa, where the migrants come from, leading to terrorist activity within Europe, and a widespread plebian racism against which, given an environment where a strong left has been absent for many decades, no sufficient immune defenses exist. This is even more so in the illiberal states that succeeded the Soviet Empire. Notwithstanding their relative lack of migrants, the masses there are saturated with an almost autistic sense of nationalism.

This being the situation of the Europe we live in, there can be no doubt that our stance on the migrants is jeopardizing our electoral prospects and our ability to influence society. It’s beneficial to continue to expose the unethical deal that the establishment has with Turkey but other than that we must cease with our polemic. Instead I propose adopting a different, more sophisticated electoral strategy. We should point out that we’re not opposed to migration in principle. That in fact migration empowers, not weakens a society. But that the surrounding situation is not always the same. When European masses went to America, they were going to a place where employment was in high demand and that had familiar institutions. Today we have a Europe in the midst of an existential crisis where unemployment is high and set to rise.

This Europe will certainly not put the migrants to good use or treat them well and this will lead them to open up further to the influence of Islamic radicalism with the usual consequences. The strong patriarchalist values of the Islamic masses are a social impediment too. Even the most passionate activists must admit that those people don’t share our progressive values and breed too much, which is an ecologically unsustainable behavior. Their values can change only in a progressive environment that we don’t yet have. So what we can immediately do is subject all migrants to review and keep those with valuable skills and small families. The rest should be escorted to their countries of origin. Until Europe changes we shall enforce a moratorium on unqualified migration from those countries.

In a green Europe consumption is limited and breeding is not encouraged. Immigration from failed states, motivated (among other factors) by the desire to consume more and breed more with better safety, is undesirable. It is a liability that exposes us to the heavy ammunition from vast areas of a right-wing that, lest we forget, is stronger than we, the defeated left. In a progressive Europe, borders are internally shot down and Europeans can move and settle everywhere. But we still require European borders. There is no reason to burden ourselves with masses that are unaccustomed to the institutions of advanced societies, pose a lingering threat to our security and come with strong reactionary values. Instead of denying that fact we should point to the structural similarities of their ideology with that of the far right.

Migrants from areas within reach of the Islamist terrorist network pose a danger to our domestic security in three ways. First of all, by bringing their tribal and religious rivalries within our borders, secondly by their potential terrorist activity against European citizens and thirdly by helping our local nationalism gain ground. That local European nationalism must be eradicated by creating a common European state. But a progressive European state would inevitably require a sense of identity that, in true progressive spirit, is radically opposed to religion. It would be hypocrisy to exclude Islam. Pluralism of values is a weapon of the establishment and we have to do away with it. In a Europe that is green nobody can afford pluralism in regards to lifestyle choices. In a Europe where capital has no rights over the public, where it serves human potential and not unbridled, wasteful consumerism, there can be no pluralism.

We should give up on the migrants. I understand the sorrows of those people forced to flee their countries. But I am not willing to sacrifice the progressive future of Europe, to let bigots win and see them screw this place for good just for the sake of a small minority of people that don’t share our values and that, should the bigots win, will be subject to mass abuse anyway. The surest way to protect people with such backgrounds from the worst scenarios is to defeat the nationalist international. But this won’t be done unless we become psychologically detached from the minorities and from political correctness which are tools the establishment uses.

Let’s don’t forget that people with a migration background are vulnerable to racism too once they get comfortable. For example Turks in Germany vote en masse in favor of right-wing parties, even the AfD. I look up to people that have the remarkable courage to actively help those in need but I don’t believe this advances our movement at all. The Islamic migrants and the minorities are rather insignificant pawns that are best sacrificed as our current political situation demands. The establishment sacrifices pawns, and even rooks for its own political ends. We have to do the same.

I understand what co-founder Yanis said about the global wall and how borders divide the planet. But, in spite of their truth content, expressions such as ”borders are wounds on the face of the planet” are Soviet-era anti-colonialist slogans that today only serve to discredit those who use them. I admire someone who has the moral courage for such unorthodox opinions but these things sound crazy to the masses, especially today. There is much at stake with DiEM’s new deal and it is imperative to be more careful with our choice of words and positions. When Yanis was finance minister, he was careful not to be as open and frank as he would have been as an outsider. But he is no longer the outsider he was before 2015. None of us are. We are here to do politics and our actions and words should be subordinated to the pursuit of success in the political arena. Only success can materialize our agenda and defeat the monster of the establishment and the nationalist international.



And if you still don’t have enough then, read the Mises Institute’s Why Small States are Better.

In small states the government is closer to its citizens and by that better observable and controllable by the populace. Small states are more flexible and are better at reacting and adapting to challenges. Furthermore, there is a tendency that small states are more peaceful, because they can’t produce all goods and services by themselves and are thereby dependent on undisturbed trade.