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Jeremy Corbyn is railing against “cuts, closures and poverty”. He’s campaigning to build more homes, and to fight fewer wars. He’s condemning the Tories for creating a “divided and unequal society”. But these are snippets not from his 2019 bid for Downing Street. They were his slogans in 1983, when he first ran for Parliament.The simple fact is the Labour leader has never changed his views. In the late 1970s and 1980s he and his staunch left-wing colleague John McDonnell, now the shadow chancellor, promised a revolution to upend the Western capitalist order. And yet, in 2015, as he was fighting to take over the leadership of the party, he was pledging the same: “Capitalism is in its death throes!”

It’s not mere sloganeering. His policy agenda over the past year has been: renationalise British utilities and trains, cap all wages, and force large companies to transfer 10 per cent of their equity to their employees. It says something about the depths of the austerity cuts in Britain that Mr Corbyn was not only backed into the Labour leadership, but went on to gain the largest increase in the party’s share of the vote in the 2017 election since World War II. And in the torrid political climate that followed, many would have expected Labour to romp home this time around. Over the past three years, the Conservative Party has imploded, with grave wounds struck to much of its credibility. Once Theresa May was torn down and replaced by Boris Johnson, a man with a public reputation as a liar, perhaps in any other generation of politics Labour would have been a shoo-in. But this time around, Mr Corbyn has been found deeply unelectable.

The antisemite slur has worked miracles. Ley me repost the graph that shows 0.08% of Labour members are.

• Ideology or Popularity: How Will Britain Vote? (CP)

It’s not news that Jeremy Corbyn isn’t a popular figure. It’s also not news that Jeremy Corbyn’s policies are hugely popular with the British public. Why should the first of these appear to matter more than the second? [..] The secret to the Tories’ possible success seems to be to focus less on the issues, and not at all on their own leader (who can’t be bothered to turn up for an interview or a debate). Instead, they are focusing on Labour’s unpopular leader. And the odd thing is that it seems to be working. The muckraking includes calling Corbyn an anti-semite, but it doesn’t stop there. (Somehow the fact that Boris Johnson has a habit of making racist comments is irrelevant; Labour is an anti-racist party and therefore must be held to a higher standard.)

A new book by Tom Bower paints a portrait of a power hungry anti-semite who regularly hangs out with Muslim extremists. Anyone with an ounce of sense will struggle to find the Labour leader in this description; for his part Bower had the sense not to source his allegations so there’s no way to check up on which of these might be true and which are blatant fabrications. For anyone interested, Peter Osborn has a thorough debunking. The advantage of mudslinging is that it sometimes sticks. Many British voters can’t say exactly why they don’t like Corbyn, but they know that they don’t like him. Even if these allegations were defendable, Corbyn’s Labour party has effectively won the debate on austerity.

Both parties are promising to protect the NHS from privatization, but only one party is actually selling NHS data to private companies like Amazon. That should matter a lot more than whether or not the British public would like to go on holiday with Jeremy Corbyn. Whatever the outcome, this is one of the most fascinating elections on record. Arguments for the status quo – that the rich should see the biggest gains when capitalism works and the poor should pay when it doesn’t – aren’t working. Demonization of one’s opponents has always been a part of electoral politics, but in this election that’s pretty much the only tactic in play, at least for the Tories. Their victory would be a huge triumph of the British propaganda system. It would also be a huge failure for democracy.

Just not a funny one.

• The Steele Dossier Was Always a Joke (Taibbi)

The Guardian headline reads: “DOJ Internal watchdog report clears FBI of illegal surveillance of Trump adviser.” If the report released Monday by Justice Department Inspector General Michael Horowitz constitutes a “clearing” of the FBI, never clear me of anything. Holy God, what a clown show the Trump-Russia investigation was. Like the much-ballyhooed report by Special Counsel Robert Mueller, the Horowitz report is a Rorschach test, in which partisans will find what they want to find. Much of the press is concentrating on Horowitz’s conclusion that there was no evidence of “political bias or improper motivation” in the FBI’s probe of Donald Trump’s Russia contacts, an investigation Horowitz says the bureau had “authorized purpose” to conduct.

Horowitz uses phrases like “serious performance failures,” describing his 416-page catalogue of errors and manipulations as incompetence rather than corruption. This throws water on the notion that the Trump investigation was a vast frame-up. However, Horowitz describes at great length an FBI whose “serious” procedural problems and omissions of “significant information” in pursuit of surveillance authority all fell in the direction of expanding the unprecedented investigation of a presidential candidate (later, a president). Officials on the “Crossfire Hurricane” Trump-Russia investigators went to extraordinary, almost comical lengths to seek surveillance authority of figures like Trump aide Carter Page. In one episode, an FBI attorney inserted the words “not a source” in an email he’d received from another government agency.

This disguised the fact that Page had been an informant for that agency, and had dutifully told the government in real time about being approached by Russian intelligence. The attorney then passed on the email to an FBI supervisory special agent, who signed a FISA warrant application on Page that held those Russian contacts against Page, without disclosing his informant role. Likewise, the use of reports by ex-spy/campaign researcher Christopher Steele in pursuit of Foreign Intelligence Surveillance Act (FISA) authority had far-reaching ramifications. Not only did obtaining a FISA warrant allow authorities a window into other Trump figures with whom Page communicated, they led to a slew of leaked “bombshell” news stories that advanced many public misconceptions, including that a court had ruled there was “probable cause” that a Trump figure was an “agent of a foreign power.”

Make sure it’s no longer hidden. Put the spotlight on Brennan and Clapper to start with.

• The Hidden Hand (Faddis)

The essence of a coup, which some might refer to as covert action, is the hidden hand. One does not announce that a foreign power is overthrowing the government and installing a new government. One pulls strings as if from behind a curtain, making events that are all part of a carefully orchestrated plan appear disconnected, spontaneous and serendipitous. As I read through the recently released IG report for the second time, as someone with a great deal of experience in military and intelligence matters, I see that hand everywhere. Per the IG report, a single report is delivered to the FBI in the summer of 2016. It concerns a meeting between a cooperative contact of a foreign intelligence service and a junior level employee of the Trump campaign, George Papadopoulos.

The report relates what are frankly very amorphous comments by Papadopoulos concerning the Russian government and its alleged possession of information on Hillary Clinton. On any other day this report would command no attention whatsoever. The source in question has no track record of any kind with the FBI. Papadopoulos has been employed by the Trump campaign for perhaps 90 days at this point, and there is no reason to believe he has contacts of significance in the Kremlin. Not on this occasion. This one report from a foreign intelligence service goes directly to the top of the FBI. The Director himself, James Comey is briefed. A full investigation is launched. Multiple confidential human sources are tasked. Wiretaps are ordered. A task force is organized. Crossfire Hurricane is born.

There is a problem, though. This hand, perhaps because it is controlled by individuals who have made their bones riding desks in Washington, DC and not in the field running actual operations, is clumsy. The information regarding Papadopoulos provided the needed pretext to start an investigation, but most of the people who will now form the investigative team are not in on the plot. They will have to be led to the pre-ordained conclusion, so that it appears that they did so without outside interference. And these investigators have a pesky habit of actually doing their jobs.

Bad for automakers and Big Oil. Other than that, though…

• The Global Auto Market Collapse (ZH)

It is no secret that the auto market worldwide has been mired in recession that looks to not have any plans of decelerating anytime soon. We have covered, at length, the collapse of auto sales not only in the U.S., but in leading global markets like China and Europe over the last 18 months. We have also covered how the “silver lining” of EV sales and investment in electric vehicles, may not be enough to stoke a recovery in the industry, especially with major cities like Beijing starting to shy away from purchase subsidies. The contagion has spread, and a new article by Bloomberg includes four charts that show just how damaging the effects have been globally. The first shows that global auto sales peaked two years ago at slightly under 86 million on an LTM basis. In October, that number stood at 78 million, a decline of about 9%.

The second chart shows trends from across the globe, noting that since China’s market is so big, that it is been obscuring falling trends elsewhere in the world. The chart shows China, Asia ex-China, North America, Europe, Latin America and Africa/Middle East all in steep downtrends.

Europe’s “new growth strategy.” Oh boy…

• EU Lauds New Green Deal As Europe’s ‘Man On Moon Moment’ (DW)

The European Commission signed off on President Ursula von der Leyen’s “European Green Deal” on Wednesday in Brussels, with a promise of money for EU nations that are lagging behind. The European Green Deal will still need to be approved — by the leaders of the EU’s member states and the European Parliament — for the climate policies to be implemented into law. The climate change resolutions will be considered by the leaders of EU countries at their meeting in Brussels on Thursday. Von der Leyen, who has put climate issues at the center of her presidency, described the plan as Europe’s “new growth strategy.”

“We do not have all the answers yet, today is the start of a journey, but this is Europe’s man on the moon moment. The European Green Deal is very ambitious, but it will also be very careful in assessing the impact and every single step we’re taking.” Von der Leyen said an economic growth plan based on fossil fuels and pollution was “out of date and out of touch.” “The European Green deal is on one hand about cutting emissions, but on the other hand, about creating jobs and boosting innovation.”

Can she stay out of the debate and still win?

• “Afghanistan Papers” May Be A Game Changer For Tulsi Gabbard (IDS)

Three very interesting things happened today in Tulsi Gabbard’s campaign for the Democratic nomination for the US Presidency. First, there was a huge story in The Washington Post about the so-called “Afghanistan Papers,” which reveal thousands of pages of confidential interviews with hundreds of key US government officials telling how the Bush, Obama and Trump administrations lied to the American public about the prosecution of the 18-year US war in Afghanistan—how successive US administrations manipulated data about the war to paint a much rosier picture of US and Afghan government achievements throughout the conflict. How big is this story? Think “Pentagon Papers.” Daniel Ellsberg. Think Vietnam big.

The story should suck up a lot of oxygen over the next few weeks, and it is one that should produce some unusually positive coverage for Tulsi, given that the issue of the failures of US military interventionism overseas has been the primary focus of her campaign. The second interesting thing is the story has the potential to tie into another story involving a management consulting firm called McKinsey & Company that performed confidential contract work in Afghanistan and Iraq. The reason McKinsey could be relevant to Tulsi’s campaign is that one of her main rivals for the nomination, Pete Buttigieg, happened to work for McKinsey from 2007 to 2010. Pete has indicated that his stint with McKinsey involved working on “war zone economic development to help grow private sector employment” in Iraq and Afghanistan.

In plain language, Pete appears to have been part of broader effort by the US government to transform Afghanistan into some sort of a mini capitalist democracy—not unlike the silly US plan to create a Jeffersonian democracy in Iraq. Now, there may be nothing to the connection between the first and second stories. However, during Tulsi’s town hall this evening in Nashua, New Hampshire, it is curious that Tulsi specifically mentioned McKinsey in referencing how most of the hundreds of billions of US taxpayer dollars that have been spent in Afghanistan have not gone to fight terrorism but rather to enrich US defense contractors such as the “McKinsey group.” She very slyly slid in McKinsey and moved on.

Gee, we’re surprised…

• Vatican Caught Using Charity Donations To Cover Budget Shortfalls (ZH)

While Pope Francis has long preached about the ills of economic inequality and sins of capitalism, the Catholic church has been robbing Peter’s Pence to the tune of over $50 million annually to plug holes in their out-of-control budget – after paying over $3 billion in pedophile priest settlements around the world over several decades. According to the Wall Street Journal, most of the roughly $55 million the church takes in annually goes towards “plugging the hole in the Vatican’s own administrative budget, while as little as 10% is spent on charitable works.” “The little-publicized breakdown of how the Holy See spends Peter’s Pence, known only among senior Vatican officials, is raising concern among some Catholic Church leaders that the faithful are being misled about the use of their donations, which could further hurt the credibility of the Vatican’s financial management under Pope Francis.” -Wall Street Journal

Of note, Peter’s Pence is an annual collection event held every June, billed as a fundraising event for the needy. It is described as a “gesture of charity, a way of supporting the activity of the Pope and the universal Church in favoring especially the poorest and Churches in difficulty. It is also an invitation to pay attention and be near to new forms of poverty and fragility.” “A section of the website dedicated to “works realized” describes individual grants, such as €100,000 in relief aid to survivors of last month’s earthquake in Albania or €150,000 for those affected by cyclone Idai in southeastern Africa in March.” -WSJ

“The purpose of the Peter’s Pence Collection is to provide the Holy Father with the financial means to respond to those who are suffering as a result of war, oppression, natural disaster and disease,” according to the website of the US Conference of Catholic Bishops. Except that for at least the past five years, just 10% of the money collected (over $55 million in 2018) – actually goes towards the types of charitable causes advertised for the collection, according to ‘people familiar with the matter,’ who added that approximately 2/3 of the funds have been used to help plug the budget shortfall at the Holy See – which consists of the central administration of the Catholic Church as well as the global papal diplomatic network. Last year, the budget deficit reached around $78 million on total spending of around $334 million.

The FBI know where she is.

• ‘She Was So Dangerous’: Where In The World Is The Ghislaine Maxwell? (G.)

Maxwell and Epstein’s relationship seems to have been complex. Sarnoff says Maxwell once told her she wanted very much to marry Epstein. “Maxwell is very clever,” Sarnoff says. “In spite of her personal insecurities, as a result of her father’s death and financial challenges, I believe she nevertheless knew exactly what she was doing when she agreed to solicit girls on his behalf. However, I don’t think that phase of their relationship began until she understood Epstein would not marry her.” Farmer says Maxwell told her they were married. In another interview, this time with the Miami Herald, which has doggedly investigated Epstein, Giuffre alleges Maxwell had asked her to have a child with Epstein and hand the baby over for Maxwell and Epstein to raise; she would be paid an allowance of $200,000 a month.

Ransome, who says she was kept for six months on Epstein’s private island and claims she was raped several times a day, said: “They were never like a couple. Jeffrey and Ghislaine were best friends, or like brother and sister. Never holding hands or kissing. And she wasn’t his employee.” When Maxwell found that Farmer had spoken out, she made threatening calls – Farmer says she has been in hiding “for many years”. “Ghislaine kept threatening my life. She found out where I was living, and she would send messages to me or I would get a call and I would have to move again. Most of her threats were veiled, like: ‘You better look over your shoulder because there’s someone coming for you.’ She told me she was going to burn all my paintings, my career was burned.” In 2015, Giuffre sued Maxwell for defamation, after Maxwell said she was lying about the allegations she had made.

The case was settled out of court and Maxwell began retreating from public view. She was no longer seen in public with Epstein after his 2008 conviction for soliciting an underage girl for prostitution. [..] Kaiser says he has not been able to serve Maxwell with legal papers “because she’s off hiding somewhere”. Does he have any idea where she is? “No, I wish I did. We’ve looked various places so far to no avail. We thought we had a lead in some compound in Colorado, a very good friend of hers, a wealthy family – we thought she might be there, but we’re not sure. I expect the FBI knows exactly where she is. They may be building a case. I don’t believe they’ve given up on pursuing some of [Epstein’s] enablers and I have to believe that would include Maxwell.”

Is there a media shift? There does seem to be a small one in Oz politics.

• Assange’s Father Hopeful Of Son’s Release (9News)

The father of Wikileaks founder Julian Assange is confident a tide of public opinion is turning in support of the Australian languishing in a UK cell. As Assange awaits an extradition hearing which could eventually result in him facing criminal charges in the US, his father John Shipton is campaigning for his diplomatic release. The 75-year-old has visited about eight countries this year raising support for his son’s release During that time his son has won increasing support from politicians on all sides both at home and overseas. The Australian group concerned about Assange’s health and potential extradition includes conservative MPs George Christensen and Barnaby Joyce, independent Andrew Wilkie and Green politicians.

“Basically the malice and spite demonstrated by the United Kingdom and Sweden is of concern to every Australian,” Mr Shipton told AAP. “We are working towards the government involving itself diplomatically to ensure Julian’s return home to Australia and the prosecution stopping immediately.” He said filmmaker James Ricketson and journalist Peter Greste were both brought back to Australia from Cambodia and Egypt respectively via diplomatic intervention and Assange’s case was no different. “There’s no difference whatsoever,” Mr Shipton said. Mr Shipton said the media played a part in a decline in support for Assange while he sought asylum in the Embassy of Ecuador in London for almost seven years.

“The mobbing and smearing (of Assange) is only possible with the permission, participation, of the media,” he said. “But it seems to have stopped and is reversing itself as the media realises their position is subsequently very tenuous. “What will happen if Julian is dragged away in a yellow jumpsuit with chains around him is the prestige of every journalist in the western world will fall to zero.” Despite the persistence of the UK and US and what he describes as “procedural malfeasance and abrogations of all Julian’s human rights”, Mr Shipton remains optimistic about his son’s release. “I think we’ll win,” he said.

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Debt Rattle December 10 2018

Dec 102018

December 10, 2018 Posted by Raúl Ilargi Meijer at 9:58 am Finance Tagged with: Adam Curtis, bear market, Big Pharma, Brexit, carbon targets, climate change, Comey, hypersonic, Steele dossier, Vatican 7 Responses »

Jerry Bywaters Oil Field Girls 1940

• Investors Managing $32 Trillion In Assets Call For Climate Change Action (R.)

• BP, Chevron, ExxonMobil Face Shareholder Challenge Over Carbon Targets (G.)

• Bear Market Is Here, Stocks To Plunge At Least 20% – Ned Davis Research (CNBC)

• Everyone Is Bearish But No-One Is Short (ZH)

• Senior Tory Vultures Circle With May On Brink (Ind.)

• EU’s Top Court Says UK Can Unilaterally Stop Brexit (R.)

• UK Government Funds Secret Anti-Corbyn, Labour Unit (DR)

• Comey: FBI Never Verified Steele Dossier Used To Justify Special Counsel (ZH)

• Russian Stealth Jets To Be Armed With New Hypersonic Missiles (ZH)

• Medical Researchers Still Routinely Hiding Funding From Big Pharma (RT)

• Italian Priests Vow To Open Church Doors To Evicted Immigrants (G.)

• Why Greeks Traditionally Decorate a Boat Instead of a Christmas Tree (GR)

• The Antidote To Civilisational Collapse (Adam Curtis)

Right. Questions: How much of the $32 trillion was made doing things that increased emissions? How much of it is presently invested in polluting companies? And how much are the investors prepared to lose in order to comply with whatever it takes to lower emissions?

To put it simply: these people are talking their books. They got rich by polluting. They intend to get even richer by going green.

If you’re serious about the topic, don’t join them.

• Investors Managing $32 Trillion In Assets Call For Climate Change Action (R.)

Global investors managing $32 trillion in assets have called on governments to accelerate steps to combat climate change, as policymakers meet for talks at a United Nations conference in Poland. A total of 415 investors from across the world including UBS Asset Management and Aberdeen Standard Investments signed the 2018 Global Investor Statement to Governments on Climate Change demanding urgent action. “The global shift to clean energy is underway, but much more needs to be done by governments to accelerate the low carbon transition and to improve the resilience of our economy, society and the financial system to climate risks,” the statement said.

The intervention is the single largest on the topic to date, the Institutional Investors Group on Climate Change said, as talks continue in the Polish city of Katowice to agree how to slow global warming to below 2ºC. That goal was agreed at a 2015 meeting in Paris, but investors said national governments were being too slow in enacting the policies needed to help the world transition to a low-carbon economy. Failure to act could lead to permanent economic damage three or four times the scale of the impact of the financial crisis, British asset manager Schroders said.

As well as ramping up the involvement of the private sector, governments needed to commit to improving climate-related financial reporting, a move that would help investors better assess the risk and allocate capital to the right companies. “The reality is that the long-term nature of the challenge has, in our view, met a zombie-like response by many,” said Chris Newton, Executive Director Responsible Investment, IFM Investors. “This is a recipe for disaster as the impacts of climate change can be sudden, severe and catastrophic.”

If these activist shareholders succeed, the value of their shares will plunge. That’s why in an earlier vote at Shell, 94% of shareholders votied against and 5% abstained. That reduces this to window dressing.

• BP, Chevron, ExxonMobil Face Shareholder Challenge Over Carbon Targets (G.)

BP, Chevron and ExxonMobil face a shareholder challenge to set carbon targets in line with the Paris climate agreement, as a green group seeks to repeat its success in pressuring Shell to set environmental benchmarks. When Shell’s chief executive, Ben van Beurden, laid out an ambitious long-term carbon target last year, he acknowledged the role played by a resolution on carbon targets submitted by Dutch activist shareholders Follow This. Follow This is hoping to use investor power to push other major oil and gas firms into setting similar goals. The organisation has bought shares in several major fossil fuel groups and has submitted two resolutions to the European firms BP and Shell. It will file identical resolutions with the US companies Chevron and ExxonMobil later this week if other parties do not submit a similar demand.

Investors at the firms’ annual general meetings next year will be asked to vote in favour of them publishing climate change targets in alignment with the international goal of keeping the rise in global temperatures well below 2C. Mark van Baal, the founder of Follow This, said: “Targets should be on the agenda of every oil company, given that the oil industry can make or break the Paris climate agreement.” The group has little chance of winning by persuading a majority of the four companies’ shareholders to back the resolution but it believes the tactic can put public and investor pressure on firms. Although backed by the Church of England and major pension funds, the resolution filed for Shell’s AGM on carbon targets failed in 2017, with 94% of shareholders voting against and 5% abstaining.

New Davis have no idea how big the fall will be, no more than you or I. And besides, they think that by spring, “the pain will be largely behind the Street”.

• Bear Market Is Here, Stocks To Plunge At Least 20% – Ned Davis Research (CNBC)

The wild trading that’s gripped Wall Street may be no ordinary correction. According to Ned Davis Research’s Ed Clissold, a bear market is officially here. “If you take this as a typical bear market, not associated with a recession, it’s going to take you down around 20% — maybe a little bit more,” the firm’s chief U.S. market strategist told CNBC’s “Futures Now” last week. “That’s what we need to be thinking about over the next several months.” A bear market is defined as an environment when overwhelming pessimism sparks a 20% drop or more from recent highs. In this case, it would wipe out 588 points from the S&P 500’s all-time high of 2940.91 hit on Sept. 21. The index closed Friday in correction territory at 2,633.08. That’s down 10% from the high and 4.6% for the week.

Originally, Clissold called for a bear market to hit Wall Street in 2019, due to jitters over interest rate hike risks, U.S.-China trade tensions and slowing growth in earnings and the economy. However, he decided to move up his forecast due to “severe” technical damage from the October correction. Now, it appears the market may soon get hit with another batch of discouraging news. “Earnings growth is becoming a front-burner issue. Everybody expected it to slow down next year because we don’t have the benefit of tax cuts. But the slowdown is probably going to be more than expected,” said Clissold. [..] He may be predicting a deep pullback, but he does not see any signs of a recession. By spring, Clissold said, the pain will be largely behind the Street.

Everyone still relies on central banks.

• Everyone Is Bearish But No-One Is Short (ZH)

In the past two months we have written extensively on how most market participants got caught offside by the dramatic reversion in risk assets, and which after several attempts at bottom-fishing – attempts which have failed because as Morgan Stanley first noted two months ago the Buy The Dip trade no longer works…

… increasingly more traders have thrown in the towel, resulting in YTD returns which are truly “historic” with not one single asset generating positive returns for the first time since the Nixon presidency.

Well, that’s not exactly right: one asset is outperforming – the one which usually does best just as the economy slides into a recession or worse: cash. As Bank of America notes, the YTD score for the top global assets is the following: • equities -4.2%, • bonds -2.3%, • commodities -6.2%, • cash 1.7%, • US$ 4.9%.

Drilling down reveals an even uglier picture: the 2018 bear market has spared nobody with US Treasuries down -4.9%, the 5th largest loss since 1970, US IG bonds -3.3%, their 4th largest loss since 1970, meanwhile 1881 of 2767 global stocks are in a bear market, down more than 20%, 86 of 94 equity indices underwater, and the cherry on top – the FAANG bull market “leader” is down -26% from highs, which according to BofA’s Michael Hartnett is “a big nasty bear market.” The result, per Bank of America, is that “capitulation to lower credit & equity allocations begins but from high allocations to risk assets.” That’s the good news: the bad news is that even as investors are bailing out of risk assets, they are also dumping safe havens like treasuries, and in the last week we saw broad based risk-off flows, including $5.2BN outflow from equities, and $8.1BN outflow from bonds this week

By the day, it becomes more like one of those Shakespeare plays with gossiping and backstabbing and all that. Love it.

• Senior Tory Vultures Circle With May On Brink (Ind.)

Theresa May is set for the bleakest week of her time in power after leadership rivals publicly positioned themselves to grab the Tory crown if her Brexit plans collapse. Ex-cabinet ministers Boris Johnson, Dominic Raab and Esther McVey all signalled a willingness to bid for the leadership amid speculation that Ms May faces a heavy defeat in the crunch Commons vote on her proposed Brexit deal. More resignations were expected from the front bench in the run-up to the vote, with government insiders indicating it could still be delayed. If she survives the first half of the week, Ms May is expected to head to Brussels where she will implore the EU to offer a concession on the hated “Irish backstop” so that she can try to sell the deal to Tory rebels one last time.

The prime minister spoke to president of the European Council Donald Tusk on Sunday, who said afterwards that it would be “an important week for the fate of Brexit”. In London thousands of protestors waving union jacks joined a “Brexit betrayal” march sponsored by Ukip and addressed by far-right activist Tommy Robinson, while even more were said to have turned up to an anti-fascist counter-march. The febrile atmosphere as the week starts is only set to intensify as MPs return to Westminster on Monday, with talk of Conservative plots and leadership challenges filling the air. One Tory backbencher told The Independent: “No one knows if the prime minister is still going to be in Downing Street at the end of the week.

Ha ha! Don’t forget to say thank you to the EU for your freedoms, Brits! Rumor has it May’s Plan B will include a second vote that does not have a Remain option.

• EU’s Top Court Says UK Can Unilaterally Stop Brexit (R.)

The European Union’s top court ruled on Monday that the United Kingdom can unilaterally revoke its divorce notice, raising the hopes of pro-Europeans ahead of a crucial vote in the British parliament on Prime Minister Theresa May’s divorce deal. Just 36 hours before British lawmakers vote on May’s deal, the Court of Justice said in an emergency judgement that London could revoke its Article 50 formal divorce notice with no penalty. May’s government says the ruling means nothing because it has no intention of reversing its decision to leave the EU on March 29. But critics of her deal say it provides options — either to delay Brexit and renegotiate terms of withdrawal, or cancel it altogether if British voters change their minds. “The United Kingdom is free to revoke unilaterally the notification of its intention to withdraw from the EU,” the court said.

Surprised? Don’t be.

• UK Government Funds Secret Anti-Corbyn, Labour Unit (DR)

A secret UK Government-funded infowars unit based in Scotland sent out social media posts attacking Jeremy Corbyn and the Labour Party. On the surface, the cryptically named Institute for Statecraft is a small charity operating from an old Victorian mill in Fife. But explosive leaked documents passed to the Sunday Mail reveal the organisation’s Integrity Initiative is funded with £2million of Foreign Office cash and run by military intelligence specialists. The “think tank” is supposed to counter Russian online propaganda by forming “clusters” of friendly journalists and “key influencers” throughout Europe who use social media to hit back against disinformation.

But our investigation has found worrying evidence the shadowy programme’s official Twitter account has been used to attack Corbyn, the Labour Party and their officials. [..] David Miller, a professor of political sociology in the School for Policy Studies at the University of Bristol, added: “It’s extraordinary that the Foreign Office would be funding a Scottish charity to counter Russian propaganda which ends up attacking Her Majesty’s opposition and soft-pedalling far-right politicians in the Ukraine. “People have a right to know how the Government are spending their money, and the views being promoted in their name.”

That’s not legal, is it?

• Comey: FBI Never Verified Steele Dossier Used To Justify Special Counsel (ZH)

Former FBI Director James Comey didn’t know a lot during Friday’s congressional testimony – claiming hundreds of times (245 according to Trump) that he simply couldn’t remember various things. What Comey did remember, however, confirms that the FBI could not verify the dossier submitted by former UK spy Christopher Steele – which the agency used as the foundation of a spy warrant application to surveil the Trump campaign. While Comey said the dossier came from “a reliable source with a track record, and it’s an important thing when you’re seeking a PC warrant,” he also admitted that the FBI was unable to corroborate the document’s claims.

“But what I understand by verified is we then try to replicate the source information so that it becomes FBI investigation and our conclusions rather than a reliable source’s,” Comey said, adding “That’s what I understand it, the difference to be. And that work wasn’t completed by the time I left in May of 2017, to my knowledge.” The FBI is required to fully vet information they submit to FISA courts, which they of course did not do in their haste to deploy a counterintelligence dragnet on the Trump campaign during the final months of the 2016 US election. Steele, meanwhile, was fired by the FBI for leaking information to the press while the agency was using him as a source. To get around this, the FBI went through former #4 DOJ official Bruce Ohr – who was demoted twice for lying about his contacts with Steele.

Ohr’s wife, Nellie Ohr, worked for the embattled research firm Fusion GPS on the Trump dossier. Fusion GPS hired Steele as part of their ongoing effort to investigate the Trump campaign and any ties with Russia. It was discovered in 2017 that Fusion GPS was being paid by the Hillary Clinton campaign and the Democratic National Committee through the campaign’s law firm Perkins Coie to investigate any alleged ties between Trump and Russia. More importantly, the FBI used information from Steele, a foreign source who was openly antagonistic about Trump. In fact, Ohr told FBI officials that he “was desperate that Donald Trump not get elected and was passionate about him not being president,” as stated in the House Intelligence Committee investigation memo. -Sara Carter

Comey’s confirmation echoes comments made in a string of emails quietly requested by House Republicans for declassification – as reported last week by The Hill’s John Solomon. The emails – kept from Congressional investigators for over two years, “included then-FBI Director James Comey, key FBI investigators in the Russia probe and lawyers in the DOJ’s national security division,” according to the report – and took place in early to mid-October of 2016, prior to the FBI successfully securing a FISA warrant to spy on Trump campaign adviser Carter Page.

In a worst case scenario, the US will use this as a reason to attack now, before Americans figure out they can’t win.

• Russian Stealth Jets To Be Armed With New Hypersonic Missiles (ZH)

The advanced Sukhoi Su-57 multipurpose jet, Russia’s first domestically produced fifth-generation stealth fighter, will be armed with new hypersonic missiles, according to a Russian military source. “In accordance with Russia’s State Armament Program for 2018-2027, Su-57 jet fighters will be equipped with hypersonic missiles,” a Russian defense industry source toldTASS news agency on December 06. “The jet fighters will receive missiles with characteristics similar to that of the Kinzhal missiles, but with inter-body placement and smaller size,” the source added. Moscow said the new Kinzhal (“Dagger”), a nuclear-capable air-launched ballistic missile, can hit speeds of up to Mach 10 and can perform evasive maneuvers that can render NATO’s US-led missile defense system completely “useless.”

The missile can carry both conventional and nuclear warheads with a range of about 1,200 miles. The new hypersonic missile will be much smaller than the current Kinzhal; this is due to size constraints of fitting the weapon inside the stealth aircraft’s weapons bay. The alternative would be mounting the missile on the outside of the plane, but that would increase the jet’s radar signature. No details within the report explain about a timetable for the development or the planned specifications for the new missiles. The Defense Ministry would neither confirm nor deny the information. The Kinzhal missile is currently being tested in field training exercises.

The US needs to clean up its pharma, along with the entire healthcare system.

• Medical Researchers Still Routinely Hiding Funding From Big Pharma (RT)

A huge proportion of scientists and doctors publishing in major medical magazines continue to conceal ties to corporations relevant to their research, while punishment for not declaring interests remains weak, says a new report. “The system is broken,” Mehraneh Dorna Jafari, assistant professor of surgery at the University of California, Irvine, told the New York Times and ProPublica, an investigative journalism non-profit. Jafari was one of the authors of a landmark study published back in August that took the names of the 100 doctors receiving the most funding from medical equipment and drug manufacturers, and then studied whether they declared a potential conflict of interest in their published research. Only 37 did.

For example, Dr. Howard A. Burris III, has been elected as the president of the American Society of Clinical Oncology (ASCO) that includes 40,000 members, and can make influential recommendations on cancer drugs worth tens of billions of dollars. Companies where Burris is an employee have been paid $114,000 in speaking fees, and $8 million in research funding by private corporations. Yet in none of his last 50 articles did the man, whose bio boasts that he “was selected by his peers as a ‘Giant of Cancer Care’ for his achievements in drug development,” think it was necessary to declare any potential biases resulting from corporate involvement.

In the latest investigation, the Times and ProPublica revealed that Dr. Robert J. Alpern, the dean of the Yale School of Medicine, writing about an experimental kidney disease drug failed to state that he was on the board of the company producing it. When journalists approached the publisher of the article, the Clinical Journal of the American Society of Nephrology, its editor discovered that all 12 authors of the article in question had interests they failed to declare.

Really? Salvini is about to take on the Pope?

• Italian Priests Vow To Open Church Doors To Evicted Immigrants (G.)

Italian priests have declared their willingness to “open the church doors of every single parish” to people expelled from reception centres as an anti-immigration law from Italy’s rightwing government threatens to make thousands homeless. The so-called “Salvini decree” – named after Matteo Salvini, the interior minister and leader of the far-right League – left hundreds in legal limbo when its removal of humanitarian protection for those not eligible for refugee status but otherwise unable to return home was applied by several Italian cities soon after its approval by parliament earlier this month. The Catholic church expressed its profound disapproval immediately after the vote.

The Vatican’s position is “very clear”, its secretary of state, Cardinal Pietro Parolin, said last week. “You don’t leave migrants in the street … A profound sense of solidarity must prevail. You cannot put people in this position. You must always focus on people and their rights.” According to Italy’s ministry of the interior, between 2016 and 2017 Italy provided humanitarian protection to 39,145 asylum seekers, who under the Salvini decree risk being made homeless within weeks. In early December, a letter announcing the expulsion of 50 people was sent to the reception centre in Mineo, Sicily: the largest in Europe after the Moria camp in Greece.

The bishop of Caltagirone, Monsignor Calogero Peri, said he was prepared to provide 40 beds in nearby facilities owned by the church to welcome people who risk expulsion. “And if there are not enough beds? I have already spoken with other bishops: we will open the church doors of every single parish under our control,” he said. “It’s not a question of politics. It’s a matter of protecting individuals. Imagine this: in Italy now it is a crime to abandon dogs, but it is not a crime to abandon people. Even worse, abandoning men, women and children is now the law.”

A little nothing news. But cute.

• Why Greeks Traditionally Decorate a Boat Instead of a Christmas Tree (GR)

The most traditional symbol you will find in Greece during the holidays is a small boat decorated with lights, usually placed in the main square of a town and close to the more international Christmas tree. To karavaki, or small boat is rooted in the traditions of a country with a symbiotic relationship with the sea. In fact on the many Greek islands the Christmas boats remain the most popular ornament of the holiday season. Different legends explain the tradition of the Christmas Greek boat. One of them is related to Saint Nicholas (Agios Nikolaos), the Patron Saint of Sailors. This saint is celebrated on December 6, the day when many households start decorating their houses for Christmas. Some agree that this is why boats are decorated, in order to honor the saint.

It’s also true that Greece is proud of the large amount of sailors, fishermen and intrepid captains the country has, which makes them as a symbol of local identity. Men would often be away for months at a time, and those back home would be anxiously waiting for their return. On the islands, the wives, mothers, and daughters of seaman used to spend the cold and dark winter months with their heart and mind at sea. There, their men were battling the stormy seas during the holiday season. These were months of expectation, hope, and prayer for their safe return. The joy of seeing the boats coming back, approaching the shores, made the women celebrate in relief. The boat is a symbol to honor those brave men coming back home.

The tradition wanted the small wooden boats placed inside close to the fireplace and pointing towards the center of the house, never towards the door. They were also lovingly decorated to give a warm welcome to the men of the household. Even kids prepared their own boats with paper and chips of wood, and on Christmas Eve, they used these little boats to collect the treats they had received when singing the carols (kalanda) from house to house.

Don’t miss the fantastic Adam Curtis. He knows more about what makes our world go round than just about anyone. Watch his docs, all of them.

• The Antidote To Civilisational Collapse (Adam Curtis)

Adam Curtis: “HyperNormalisation” is a word that was coined by a brilliant Russian historian who was writing about what it was like to live in the last years of the Soviet Union. What he said, which I thought was absolutely fascinating, was that in the 80s everyone from the top to the bottom of Soviet society knew that it wasn’t working, knew that it was corrupt, knew that the bosses were looting the system, knew that the politicians had no alternative vision. And they knew that the bosses knew they knew that. Everyone knew it was fake, but because no one had any alternative vision for a different kind of society, they just accepted this sense of total fakeness as normal. And this historian, Alexei Yurchak, coined the phrase “HyperNormalisation” to describe that feeling.

I thought “that’s a brilliant title” because, although we are not in any way really like the Soviet Union, there is a similar feeling in our present day. Everyone in my country and in America and throughout Europe knows that the system that they are living under isn’t working as it is supposed to; that there is a lot of corruption at the top. But whenever the journalists point it out, everyone goes “Wow that’s terrible!” and then nothing happens and the system remains the same. There is a sense of everything being slightly unreal; that you fight a war that seems to cost you nothing and it has no consequences at home; that money seems to grow on trees; that goods come from China and don’t seem to cost you anything; that phones make you feel liberated but that maybe they’re manipulating you but you’re not quite sure. It’s all slightly odd and slightly corrupt.

[..] No one is really sure what Trump represents. My working theory is that he’s part of the pantomime-isation of politics. Every morning Donald Trump wakes up in the White House, he tweets something absolutely outrageous which he knows the liberals will get upset by, the liberals read his tweets and go “This is terrible, this is outrageous,” and then tell each other via social media how terrible it all is. It becomes a feedback loop in which they are locked together. In my mind, it’s like they’re together in a theatre watching a pantomime villain. The pantomime villain comes forward into the light, looks at them and says something terrible, and they go “Boo!!”. Meanwhile, outside the theatre, real power is carrying on but no one is really analysing it.

This is the problem with a lot of journalism, especially liberal journalism at the moment. It’s locked together with those people in the theatre. If you look at the New York Times, for example, it’s continually about that feedback loop between what Trump has said and the reaction of liberal elements in the society. It’s led to a great narrowing of journalism. So in a way, he is part of the hypernormal situation because it’s a politics of pantomime locked together with its critics. [..] ..It’s not a conspiracy. It’s a distraction from what’s really happening in the world. I would argue that there is a sense—in a lot of liberal journalism—of unreality. They’re locked into describing the pantomime politics and they’re not looking to what Mr Michael Pence is really up to, and what’s really happening outside the theatre.

Debt Rattle December 7 2014

Dec 072014

December 7, 2014 Posted by Raúl Ilargi Meijer at 11:53 am Finance Tagged with: archbishop, heat, hunger, MH17, modern art, oil, Russia, sociopathy, Ukraine, Vatican 6 Responses »

Arthur Rothstein Accident on US 40 between Hagerstown and Cumberland, Maryland Nov 1936

• OPEC And American Shale Keep The Oil Price Spiralling Downwards (Guardian)

• Oil Poised to Extend Drop After Hitting Five-Year Low (Bloomberg)

• Fossil Fuel Companies “The Sub-Prime Assets Of The Future” (Telegraph)

• Osborne Oversees Biggest Fossil Fuel Boom Since North Sea Oil (Guardian)

• Delinquent US Car Loans Up 27% From Last Year (NY Times)

• Goldman Needs Volcker Delay to Avoid Private-Equity Losses (Bloomberg)

• Wells Fargo Breaks Citigroup’s 2001 Record for Bank Value (Bloomberg)

• Russia Braces For An Economic Winter (Observer)

• Why A Moscow Meltdown Could Spread Around The Globe (Observer)

• Clashes At Greek Protests To Mark Police Shooting (BBC)

• Angry Families Of MH17 Crash Victims Seek UN Investigation (Reuters)

• Ukraine’s Made-in-USA Finance Minister (Robert Parry)

• Prosecutor Freezes Accounts Of Former Vatican Bank Heads (Reuters)

• Australian Banks Seen Needing $25 Billion After Inquiry (Bloomberg)

• Minimum Viable Sociopathy (Dmitry Orlov)

• Archbishop Calls For £150 Million State-Backed Food Bank System (Daily Mail)

• Hunger in UK Shocks Me More Than Africa (Archbishop Of Canterbury)

• Has Modern Art Exhausted Its Power To Shock? (BBC)

• California’s ‘Hot Drought’ Ranks Worst in at Least 1,200 Years (Bloomberg)

” .. the Chicago Mercantile Exchange reported a huge increase in the number of investors hedging on crude hitting $40.

• OPEC And American Shale Keep The Oil Price Spiralling Downwards (Guardian)

Oil prices were back near five-year lows – below $70 per barrel – at the end of last week as commodity traders, analysts and governments struggled to come up with new forecasts for 2015. The benchmark, Brent blend, had recovered from a major drop in the aftermath of last month’s meeting of the oil producers’ cartel, Opec. However, it was back down at $69.17 on Friday as the market bet on a prolonged low in prices. Igor Sechin, Russia’s most senior oil official, warned that Opec’s unwillingness to cut production could push oil down to $60, while the Chicago Mercantile Exchange reported a huge increase in the number of investors hedging on crude hitting $40. Forecasting the future price of oil has always been fraught.

There were few warnings in the first half of the year that prices were set to plunge by 40% from a June high of $115. Analysts at Citi are now expecting Brent to average $80 over the next 12 months, while their counterparts at Natixis believe it could fall as low as $74 – and that the US benchmark, West Texas Intermediate, will slump below $70. Standard Chartered described Opec’s decision to keep the production target unchanged as “extremely negative for oil prices for 2015” and has cut next year’s Brent price forecast by $16 a barrel to $85. The reasons for the cuts are faltering growth in demand as the global economy continues to stutter, plus soaring production from the shale fields of Texas and Pennsylvania.

Lower prices have also been supported by a relatively benign geopolitical environment, because energy supplies have not been endangered by the Russian stand-off with the west over Ukraine or Islamic State’s advances in Syria. A divided Opec is now hoping that falling prices will be devastating for higher-cost US frackers, forcing them to shut down output and gradually bring balance to the wider oil markets. But according to Paul Stevens, oil expert at Chatham House, a similar strategy in the late 1980s did not encourage North Sea and other producers to halt production and the price continued to slide downwards.

“We’re way oversold in both Brent and WTI, not to mention the products, and the market’s not responding ..”

• Oil Poised to Extend Drop After Hitting Five-Year Low (Bloomberg)

West Texas Intermediate and Brent crudes are poised to decline from the lowest closing levels in more than five years after shrugging off a sign that the market has dropped too fast. The 14-day relative strength index (BCOM) for WTI slipped to 27.0364 yesterday, according to data compiled by Bloomberg. Investors typically start buying contracts when the reading is below 30. The 14-day RSI for Brent slipped to 23.6843. The move highlights the extent of the bear market in the face of technical support. “We’re way oversold in both Brent and WTI, not to mention the products, and the market’s not responding,” Bob Yawger, director of the futures division at Mizuho Securities said by phone yesterday. “A market that ignores these bullish signals is heading much lower.”

Futures fell 1.5% in New York and 0.8% in London yesterday. State-run Saudi Arabian Oil extended its discount for Arab Light sales to Asia next month to $2 a barrel below a regional benchmark, according to a company statement Dec. 4. That’s the lowest in at least 14 years. The slide in prices accelerated as the dollar surged to a five-year high, curbing the appeal of commodities as a store of value. WTI for January delivery dropped 97 cents to $65.84 a barrel on the New York Mercantile Exchange yesterday. It was the lowest settlement since July 29, 2009. Prices are down 33% this year.

There’s a lot of uncertainty about how and to what extent climate agreements will result in stranded assets. Investment in fossil fuels carries a lot of risk, for yet another reason.

• Fossil Fuel Companies “The Sub-Prime Assets Of The Future” (Telegraph)

Investing in fossil fuels is becoming increasingly risky because global action to tackle climate change will curb demand, forcing companies to leave unprofitable reserves in the ground, Ed Davey, the energy secretary, has warned. Financial authorities must examine the risks posed by coal, oil and gas companies to prevent pension funds investing in what could become “the sub-prime assets of the future”, Mr Davey said. The comments are Mr Davey’s first intervention into the debate over the “carbon bubble”, the theory that the world’s existing fossil fuel reserves are overvalued because the majority must be left unburned in the ground if extremes of global warming are to be avoided.

Mr Davey told the Telegraph: “One has got to worry about the investments for pensioners. “If pension funds are investing in companies or banks have on their balance sheets huge amounts of assets in fossil fuels, and those assets don’t give the return that people expect – because of changes in technology where low-carbon becomes cheaper or because of the world having to take action against carbon emissions – one has got to protect those pensioners and those investments.”

Keeping global warming within 2C (3.6F), the level scientists say is necessary to prevent catastrophic climate change, will require the world to slash its carbon dioxide emissions, phasing out the unabated burning of fossil fuels for electricity. UN talks are ongoing in Lima this week with the aim of achieving a global emission reduction agreement next year. Mr Davey singled out coal – the dirtiest of the fossil fuels – as “the short-term biggest worry by a long way” as countries including China commit to cap their coal use. “Investing in new coal mines is going to get very risky,” he said.

The timing is exquisite.

• Osborne Oversees Biggest Fossil Fuel Boom Since North Sea Oil (Guardian)

George Osborne has sparked the biggest boom in UK fossil fuel investment since the North Sea oil and gas industry was founded in the 1970s. Analysis of new Treasury data also shows investment in clean energy has plummeted this year and is now exceeded by fossil fuels, while road and airport building is soaring. After years of coalition infighting over green energy, the stark shift marks a major victory for the chancellor. But it conflicts with David Cameron’s recent statement that climate change is “a threat to our national security and to economic prosperity” and his 2010 pledge to the lead the “greenest government ever”. UK ministers are currently at UN climate talks in Peru arguing for strong action against global warming.

In Wednesday’s autumn statement, Osborne added £430m to the billions in tax breaks he has granted the fossil fuel sector since 2012. Taxpayers will also now fund seismic exploration to help companies find more oil and gas and will pay £31m for shale gas research drilling plus another £5m to “ensure the public is better engaged” with fracking. Osborne said the North Sea tax breaks “demonstrate our commitment to the tens of thousands of jobs that depend on this great British industry”. Joan Walley MP, who heads parliament’s environmental audit committee, said: “Taxpayers should not be propping up the fossil fuel industry in the 21st century.

Tax breaks should be used to support firms that come up with innovative clean energy solutions, not to keep us drilling for the fossil energy fuelling climate change.” Matthew Spencer, the director of the thinktank Green Alliance, whose experts performed the new analysis, accused Osborne of political manoeuvring before the general election. “A series of short-term tactical decisions have reversed what was a very encouraging picture for UK infrastructure. These stark figures show that you can’t focus on oil extraction and road building and expect to deliver a cleaner, leaner economy.”

But all is well?!

• Delinquent US Car Loans Up 27% From Last Year (NY Times)

An increasing number of borrowers are falling behind on their car payments, even as the total amount of outstanding debt reaches new heights, according to the latest report by Experian, the credit and research firm. In a presentation on Wednesday, Experian said the balance of loans that were 60 days delinquent increased 27%, to roughly $4 billion, in the third quarter from the same period a year ago. Signs of trouble in the market come after a significant increase in lending to people with damaged credit and limited financial means. Analysts have warned that a loosening of underwriting standards for subprime auto loans could cause widespread losses in the financial system because much of the debt has been securitized and bought by investors around the globe. Some of the highest delinquency rates in the quarter are concentrated across the South in Mississippi, South Carolina and Alabama. North Dakota had the lowest delinquency rate.

Finance companies, which tend to focus more on subprime customers than traditional banks, had the largest increases in delinquencies in the third quarter. As the delinquencies have mounted, so has the regulatory scrutiny. Subprime auto lenders have faced an onslaught of scrutiny from regulators and prosecutors, worried that the high-cost loans take advantage of some of the nation’s most vulnerable borrowers. The examinations have touched on virtually every player in the broader subprime auto lending ecosystem from used car dealers to lenders. In the latest chapter, the American Honda Finance Corporation, a lending unit of the automaker, disclosed on Tuesday that the company was bracing for an enforcement action from the Justice Department and the Consumer Financial Protection Bureau over concerns that it gives more costly loans to minority borrowers. The authorities, the company said in a regulatory filing on Tuesday, notified the lender last month about the looming action.

Here’s betting they’ll get it.

• Goldman Needs Volcker Delay to Avoid Private-Equity Losses (Bloomberg)

Goldman Sachs has $7 billion invested in private equity that it might have to sell at a loss. For Morgan Stanley, it’s $2.5 billion. The big sums explain why Wall Street has been lobbying regulators to delay a July deadline for complying with the Volcker Rule, which restricts banks from investing in private equity as part of a ban on making market bets with their own capital. Banks argue that if they dump holdings quickly, they will have to accept discount prices. Analysts and lawyers for the financial industry say Wall Street’s concerns have begun to make headway with the Federal Reserve, which plans to decide on an extension soon. “There’s considerable pressure the Fed is feeling in that they don’t want institutions to have a bloodbath trying to divest funds,” said Kevin Petrasic, a partner at Paul Hastings in Washington. “The Fed has been indicating flexibility.”

The Volcker deadline underscores the tension regulators face between enforcing rules meant to curb risk-taking and responding to banks’ complaints that many Dodd-Frank Act reforms aren’t workable. The Fed is deciding what to do after lawmakers lambasted it at congressional hearings last month for weak oversight of Wall Street. Before the 2008 financial crisis, banks purchased shares in thousands of private-equity and venture-capital funds. The money invested was used to buy stakes in private companies, meaning it’s locked up for years until the businesses are sold. When Congress included the Volcker Rule in the 2010 Dodd-Frank law, it realized banks might have difficulty dumping holdings. As a result, lawmakers authorized the Fed to put the deadline off for several years. Banks want an extension until 2022, which would allow them to keep their private-equity investments until they expire. Fed General Counsel Scott Alvarez told a conference of banking lawyers last month that the central bank will make a decision soon.

Hardly a recovery, if there’s one at all, but banks are worth more than before the crisis. This is us. This is what we do.

• Wells Fargo Breaks Citigroup’s 2001 Record for Bank Value (Bloomberg)

Wells Fargo finished trading yesterday as the most valuable U.S. bank ever, surpassing Citigroup’s 2001 record. Wells Fargo closed with a market capitalization of $285.5 billion, based on 5.19 billion shares outstanding on Oct. 31, according to data compiled by Bloomberg. That beats the previous record set by Citigroup on Feb. 5, 2001, when its value reached $283.4 billion, the data show. Wells Fargo, which counts Warren Buffett’s Berkshire Hathaway as its largest shareholder, doubled its size in 2008 by outmaneuvering New York-based Citigroup to purchase Wachovia Corp. Chief Executive Officer John Stumpf made one of out every four U.S. mortgages last year and now oversees the most U.S. bank branches.

“Our focus is on doing what is right for our customers every day, and we are pleased our investors place their confidence in Wells Fargo,” Ancel Martinez, a bank spokesman, said in a statement. Wells Fargo rose 1% to $55.03 in New York, and the stock’s 21% gain this year tops the 7.7% advance for the KBW Bank Index of 24 U.S. lenders. Berkshire’s stake in the San Francisco-based bank is valued at more than $25 billion, according to data compiled by Bloomberg.

Russia will act when it’s had enough of this.

• Russia Braces For An Economic Winter (Observer)

A website that was going viral on Russian social networks last week shows the rouble-dollar exchange rate, the rouble-euro exchange rate and the price of Brent crude changing in real time against a backdrop of slowly breaking waves, as soothing music plays in the background. “Russian zen: meaningless and merciless”, reads the bottom of the page Zenrus.ru. It is a play on a famous quote that Russian revolt is “meaningless and merciless.” A zen-like calm is probably hard to come by for those watching the exchange rate and the price of oil: the rouble fell to new all-time lows of more than 54 to the dollar last week after the Opec oil producers’ group decided not to reduce production, which would have bolstered sinking oil prices. Russia is especially vulnerable to those prices, since energy exports make up half of its budget, and on Monday its currency recorded its largest single-day decline since the Russian financial crisis of 1998.

In all, the rouble has sunk by more than 40% this year as Russia has been buffeted by sanctions over its role in the Ukraine crisis and steep falls in the oil price. By the end of the week Brent was hovering below $70 a barrel, down from more than $105 at the start of the year. The picture of Russia’s economic future is grim, despite the rosy outlook President Vladimir Putin tried to put on it in his annual address to the federal assembly on Thursday. Inflation has been rising, and recession next year is all but certain. On Tuesday, the economic development ministry reduced its GDP growth forecast for 2015 from 1.2% to –0.8%. State-owned banks have sought help from the government after the Ukraine sanctions cut them off from the western financial industry and its cheaper credit.

According to Vladimir Tikhomirov, an economist at Russian bank BKF, the two main factors responsible for Russia’s economic woes – sanctions and a low oil price – probably won’t change any time soon. “Oil has a stronger effect on the economy than sanctions, and the oil price and sanctions are speeding up macroeconomic processes that were already there,” Tikhomirov says. “The economy was slowing down due to structural difficulties even when oil prices were high. I think that next year there won’t be new sanctions but the current sanctions will remain; I think next year the oil price will be around $80 a barrel; and I think that the economy will shrink.”

Merkel herself has said it would be a bad thing if Russia goes into a financial crisis.

• Why A Moscow Meltdown Could Spread Around The Globe (Observer)

Russia matters. It mattered in 1998 when the shock waves from its debt default reverberated around the world. And it would matter again should the plunging oil price lead to economic collapse. That’s despite the fact that Russia is a massive land mass with a relatively small economy. It accounts for only 3% of global GDP and it is dominated by an energy sector that is responsible for 70% of exports. To an extent, the structure of Russia’s economy should mitigate contagion risks. Lacking a modern manufacturing sector, it is not vital for global supply chains and, in theory, any other energy producer could make good the disruption to oil and gas supplies in the event of a deep and damaging recession. But there are at least five ways in which a crisis for Russia could spread. Russia’s immediate problems have been caused by the sharp drop in the price of crude and it is not the only one to be suffering. Venezuela and Iran are finding it hard to cope with oil down at $70 a barrel. If Russia goes, it will be a case of: who’s next?

Second, Russia still has close economic links with eastern Europe, so a collapse would have serious consequences for countries such as Poland and an already imploding Ukraine. Western Europe, too, would be affected if for any reason gas supplies through Russia’s pipeline were cut off. Third, confidence would be hit. Germany’s weak economic performance since the spring can, in part, be attributed to the gloomier economic mood. The slowdown in the rest of the eurozone has probably had a bigger impact on German activity but the tension between Moscow and Kiev has certainly not helped. Russia might be enough to tip Germany into recession, which in turn would be enough to ensure that the European Central Bank began a quantitative easing programme.

Fourth, nobody is quite sure how Vladimir Putin, pictured, would respond to the most challenging economic circumstances since 1998. Any confidence effects from an economic crisis would be exacerbated by the knowledge that Russia is controlled by a president able to make felt his country’s still considerable geo-political and military clout. Finally, the assumption is that financial market exposure to Russia is relatively limited given that overseas banks had $209bn (£134bn) of loans to Russia when sanctions were imposed in March. On the face of it, western investors do not look all that vulnerable and have had time to get their money out. But that was also the assumption in 1998, when Barclays had to set aside £250m to cover its Russian losses. Financial trades are now so complex and leveraged, it is impossible to know for sure how big losses might be this time.

Is Greece set to explode again?

• Clashes At Greek Protests To Mark Police Shooting (BBC)

Clashes have erupted in the capital of Greece during protests marking six years since police shot dead an unarmed teenager. At least 5,000 demonstrators marched in Athens on Saturday. Some attacked shops and hurled petrol bombs at riot police. Police officers used tear gas and a water cannon to disperse protesters. The demonstrators had been marking the anniversary of 15-year-old Alexis Grigoropoulos’ death. He was shot by an officer who has since been jailed. Mr Grigoropoulos’ killing on 6 December 2008 sparked violent riots across Greece, with cars being set alight and shops looted in a number of cities. Clashes have also broken out on previous anniversaries of his death. On Saturday, anti-establishment protesters attacked banks and damaged shops and bus stops.

At one point, demonstrators looted a clothes shop and set fire to the merchandise in the street, the Associated Press news agency reported. According to Reuters, police said they detained close to 100 protesters. Clashes primarily took place in Athen’s Exarchia neighbourhood, but violence was also reported in Thessaloniki, in northern Greece. No injuries were reported in either city. Protesters have also been expressing support for Nikos Romanos, a friend of Mr Grigoropoulos who witnessed his death. Romanos, 21, has been jailed for attempted bank robbery. He is currently on hunger strike, demanding study leave after he was accepted onto a university course.

WHile the government can’t stop blabbing about respect for vistims and their families, the familes themselves say: “The Netherlands “has completely botched” the fact-finding investigation and the legal framework of the case..” “There is no coordination, there is no leadership whatsoever (by) Holland.”

• Angry Families Of MH17 Crash Victims Seek UN Investigation (Reuters)

Relatives of MH17 crash victims, angered by what they see as Dutch mishandling of inquiries into the disaster, want a special U.N. envoy to launch an international investigation. A letter sent to Prime Minister Mark Rutte on Friday, a copy of which was seen by Reuters, said Dutch officials had failed to build a case. They asked that inquiries by the Safety Board and prosecution service be handed over to the United Nations. Rutte should “request the U.N. to appoint a special envoy to take over,” said the letter written by Van der Goen Attorneys. Malaysia Airlines flight MH17 was downed on July 17 over eastern Ukraine, killing all 298 passengers and crew, two-thirds of them Dutch. Experts say the most likely cause was a ground-to-air missile fired from territory held by pro-Russian separatists. The Dutch launched the largest criminal investigation in their history after the crash. This week, trucks are carrying pieces of the plane home, but much of the wreckage still lies in Ukrainian fields.

Dutch investigators, leading a case involving 11 countries, have not concluded how the plane was shot down or identified suspects. The Netherlands “has completely botched” the fact-finding investigation and the legal framework of the case, said the letter, sent on behalf of 20 relatives from Belgium, Germany, the Netherlands and the United States. Dutch prosecutors have been unable to access the crash site, in a war zone disputed by Ukrainian troops and Russian-backed rebels, or not met international requirements to secure evidence, the letter said. “Nobody knows who is doing what,” said Bob van der Goen, a spokesman for the law firm. “There is no coordination, there is no leadership whatsoever (by) Holland.” Rutte said on Friday the Dutch teams were returning to the Netherlands. “We have done everything we could. In view of the safety situation and the weather, we cannot do anything more right now,” he said. An international inquiry is the only way to identify who shot down the plane and ensure they are brought to court, the letter said.

What a story, the recent – foreign – additions to the Kiev government.

• Ukraine’s Made-in-USA Finance Minister (Robert Parry)

Ukraine’s new Finance Minister Natalie Jaresko, a former U.S. State Department officer who was granted Ukrainian citizenship only this week, headed a U.S. government-funded investment project for Ukraine that involved substantial insider dealings, including $1 million-plus fees to a management company that she also controlled. Jaresko served as president and chief executive officer of Western NIS Enterprise Fund (WNISEF), which was created by the U.S. Agency for International Development (U.S. AID) with $150 million to spur business activity in Ukraine. She also was cofounder and managing partner of Horizon Capital which managed WNISEF’s investments at a rate of 2 to 2.5% of committed capital, fees exceeding $1 million in recent years, according to WNISEF’s 2012 annual report.

The growth of that insider dealing at the U.S.-taxpayer-funded WNISEF is further underscored by the number of paragraphs committed to listing the “related party transactions,” i.e., potential conflicts of interest, between an early annual report from 2003 and the one a decade later. In the 2003 report, the “related party transactions” were summed up in two paragraphs, with the major item a $189,700 payment to a struggling computer management company where WNISEF had an investment. In the 2012 report, the section on “related party transactions” covered some two pages and included not only the management fees to Jaresko’s Horizon Capital ($1,037,603 in 2011 and $1,023,689 in 2012) but also WNISEF’s co-investments in projects with the Emerging Europe Growth Fund [EEGF], where Jaresko was founding partner and chief executive officer.

Jaresko’s Horizon Capital also managed EEGF. From 2007 to 2011, WNISEF co-invested $4.25 million with EEGF in Kerameya LLC, a Ukrainian brick manufacturer, and WNISEF sold EEGF 15.63% of Moldova’s Fincombank for $5 million, the report said. It also listed extensive exchanges of personnel and equipment between WNISEF and Horizon Capital. Though it’s difficult for an outsider to ascertain the relative merits of these insider deals, they could reflect negatively on Jaresko’s role as Ukraine’s new finance minister given the country’s reputation for corruption and cronyism, a principal argument for the U.S.-backed “regime change” that ousted elected President Viktor Yanukovych last February.

Small fish.

• Prosecutor Freezes Accounts Of Former Vatican Bank Heads (Reuters)

The Vatican’s top prosecutor has frozen €16 million in bank accounts owned by two former Vatican bank managers and a lawyer as part of an investigation into the sale of Vatican-owned real estate in the 2000s, according to the freezing order and other legal documents. Prosecutor Gian Piero Milano said he suspected the three men, former bank president Angelo Caloia, ex-director general Lelio Scaletti, and lawyer Gabriele Liuzzo, of embezzling money while managing the sale of 29 buildings sold by the Vatican bank to mainly Italian buyers between 2001 and 2008, according to a copy of the freezing order reviewed by Reuters. The money in the three men’s bank accounts “stems from embezzlement they were engaged in,” Milano said in the October 27 sequester order.

Milano’s investigation follows an audit of the Vatican bank by non-Vatican financial consultants commissioned last year by the bank’s current management. The Vatican bank earlier this year also filed a legal complaint against the three men. The men have not been charged. The Vatican spokesman on Saturday issued a statement confirming the freezing but gave no names, amounts or other details. The Vatican bank said in a separate statement that it had pressed charges against the three as part of its “commitment to transparency and zero tolerance, including with regard to matters that relate to a more distant past”. The bank statement also gave no details, citing “the ongoing judicial enquiry”.

For starters.

• Australian Banks Seen Needing $25 Billion After Inquiry (Bloomberg)

Commonwealth Bank of Australia and its three main competitors may need as much as A$30 billion ($25 billion) after a government-commissioned inquiry called for “unquestionably strong” capital levels, analysts said. The shortfall is based on lenders needing to boost levels to within the top quartile of their global peers and set aside additional funds against potential losses on home mortgages, as recommended by the Financial Systems Inquiry report released today in Sydney by Treasurer Joe Hockey. Australia’s major lenders hold about 10% to 11.6% of their assets as Tier 1 capital compared with at least 12.2% at the world’s safest banks, the government’s first inquiry into the financial system since 1997 said. Given banks’ reliance on overseas investors for debt funding, the financial system must be robust, the report said,

“The onus on capital is in line with global changes and Australia has to fall in line,” John Buonaccorsi, a Sydney-based analyst at CIMB Group Holdings Bhd. said in a phone interview after the report was released. “I don’t expect a straight capital raising yet.” Australia’s largest banks are initially more likely to resort to dividend reinvestment plans, where investors swap all or part of their dividend for new shares, and limiting increases in payout ratios, he added. Buonaccorsi expects a shortfall between A$25 billion and A$30 billion. Omkar Joshi, who helps oversee A$1 billion as an investment analyst at Watermark Funds Management, estimated a A$15 billion to A$20 billion gap. Their predictions were based on an average mortgage risk weight of 25% to 30% and systemically important bank buffer of 2%.

“.. if the progress of our lives starts looking too much like a random walk, then we tend to start asking ourselves difficult questions, like “What’s it all about?” and drinking too much. And that causes our walk to get even closer to random. ”

• Minimum Viable Sociopathy (Dmitry Orlov)

If you simply wander aimlessly through life, breathing oxygen and eating and excreting organic matter, then you will still get somewhere. Statistically, a blind-drunk sailor who walks out of a bar will, on average, while stumbling along on his way to nowhere in particular, cover the distance of √n steps for every n steps he takes. This is known as a random walk, or Brownian motion, which is fine for molecules at anything above 0ºK, and perhaps for drunken sailors too, but most of us sentient beings want our lives to have a bit of meaning. And if the progress of our lives starts looking too much like a random walk, then we tend to start asking ourselves difficult questions, like “What’s it all about?” and drinking too much. And that causes our walk to get even closer to random. And therein lies a great danger, because this sort of downward spiral inevitably ends with somebody else telling you “What’s it all about” and what it is you have to do, supposedly for your own good, though it hardly ever is.

There is also the opposite danger. If you keep your eyes fixed on your goal and make a concerted effort to make n steps of progress in its direction for every n steps you take, then you will quickly happen upon a wall with a gate in it, and a guard at that gate will demand to see your permit, degree, qualification or certificate before letting you pass through that gate. And the process of you getting that permit, degree, qualification or certificate will end with somebody else telling you what your goal ought to be. The goal is, universally, to accumulate things: dollars or stripes on your uniform or publications and citations, or earwax. Details don’t matter, but what matters is that these things never have much of anything at all to do with your original goal.

We need more people like Welby.

• Archbishop Calls For £150 Million State-Backed Food Bank System (Daily Mail)

A new row over food banks erupted last night after a report backed by the Archbishop of Canterbury called for a £150 million state-backed system to combat hunger in Britain. The Most Reverend Justin Welby appeared to be on course for a clash with David Cameron after calling on the Prime Minister to reverse his decision not to take European funds to boost UK food banks. Writing in today’s Mail on Sunday, Archbishop Welby makes a powerful call for more help to prevent families going hungry. The Archbishop is to launch a Parliamentary report in Westminster tomorrow, and calls on the Government to take ‘quick action’ to implement its recommendations in full. Separately, this newspaper has obtained details of the report’s radical proposals, which call for:

A new publicly funded body, Feeding Britain, involving eight Cabinet Ministers, to work towards a ‘hunger free Britain’.

Bigger food banks, called Food Banks Plus, to distribute more free food and advise people how to claim benefits and make ends meet.

A rise in the minimum wage and the provision free school meals during school holidays for children from poor families.

New measures to make it harder to strip people of benefits for breaking welfare rules – including soccer style ‘yellow cards’ instead of instant bans.

Action to make supermarkets give more food to the poor.

The report by the All-Party Parliamentary Inquiry into Hunger in Britain comes amid an intense debate over welfare and poverty. Experts claimed that Chancellor George Osborne’s Autumn Statement last week would mean massive cuts in welfare in the coming years. Praising food bank volunteers who have rescued the poor from hunger, the Welby-backed report says they have achieved the ‘equivalent to a social Dunkirk.’ Notably, it adds: ‘This extraordinary achievement has been done without the assistance of central government. If the Prime Minister wants to meet his Big Society it is here.’

The growing poverty in Britain is indeed a disgrace.

• Hunger in UK Shocks Me More Than Africa (Archbishop Of Canterbury)

In one corner of a refugee camp in the Democratic Republic of Congo was a large marquee. Inside were children, all ill. They had been separated from family, friends, those who looked after them. Perhaps, mostly having disabilities, they had been abandoned in the panic of the militia attack that drove them from their homes. Now they were hungry. It was deeply shocking but, tragically, expected. A few weeks later in England, I was talking to some people – a mum, dad and one child – in a food bank. They were ashamed to be there. The dad talked miserably. He said they had each been skipping a day’s meals once a week in order to have more for the child, but then they needed new tyres for the car so they could get to work at night, and just could not make ends meet. So they had to come to a food bank.They were treated with respect, love even, by the volunteers from local churches. But they were hungry, and ashamed to be hungry. I found their plight more shocking. It was less serious, but it was here.

And they weren’t careless with what they had – they were just up against it. It shocked me that being up against it at the wrong time brought them to this stage. There are many like them. But we can do something about it. Two weeks ago, people in churches up and down the land listened to the passage in St Matthew’s Gospel where Jesus describes who will enter the Kingdom of Heaven. When Christ returns, He will say: ‘Come, you that are blessed by my Father, inherit the kingdom… for I was hungry and you gave me food, I was thirsty and you gave me something to drink.’ The good people are surprised, they don’t remember helping anyone so powerful, and think He has mixed them up with someone else. Jesus tells them: ‘Just as you did it to one of the least of these… you did it to me.’ Those who did not give food to the hungry or a drink to the thirsty find out God has taken their lack of kindness into account too.

Art reflects society before society reflects upon itself.

• Has Modern Art Exhausted Its Power To Shock? (BBC)

Modern art’s desire to shock and to defy cliche has become a cliche in itself, and spawned a culture of fakery, argues Roger Scruton. “To thine own self be true,” says Shakespeare’s Polonius, “and thou canst be false to no man.” Live in truth, urged Vaclav Havel. “Let the lie come into the world,” wrote Solzhenitsyn, “but not through me.” How seriously should we take these pronouncements, and how do we obey them? There are two kinds of untruth – lying and faking. The person who is lying says what he or she does not believe. The person who is faking says what he believes, though only for the time being and for the purpose in hand. Anyone can lie. It suffices to say something with the intention to deceive. Faking, however, is an achievement. To fake things you have to take people in, yourself included. The liar can pretend to be shocked when his lies are exposed, but his pretence is part of the lie. The fake really is shocked when he is exposed, since he has created around himself a community of trust, of which he himself is a member.

In all ages people have lied in order to escape the consequences of their actions, and the first step in moral education is to teach children not to tell fibs. But faking is a cultural phenomenon, more prominent in some periods than in others. There is very little faking in the society described by Homer, for example, or in that described by Chaucer. By the time of Shakespeare, however, poets and playwrights are beginning to take a strong interest in this new human type. In Shakespeare’s King Lear the wicked sisters Goneril and Regan belong to a world of fake emotion, persuading themselves and their father that they feel the deepest love, when in fact they are entirely heartless. But they don’t really know themselves to be heartless – if they did, they could not behave so brazenly. The tragedy of King Lear begins when the real people – Kent, Cordelia, Edgar, Gloucester – are driven out by the fakes.

The fake is a person who has rebuilt himself, with a view to occupying another social position than the one that would be natural to him. Such is Molière’s Tartuffe, the religious impostor who takes control of a household through a display of scheming piety. Like Shakespeare, Moliere perceives that faking goes to the very heart of the person engaged in it. Tartuffe is not simply a hypocrite, who pretends to ideals that he does not believe in. He is a fabricated person, who believes in his own ideals since he is just as illusory as they are. Tartuffe’s faking is a matter of sanctimonious religion. With the decline of religion during the 19th Century there came about a new kind of faking. The romantic poets and painters turned their backs on religion and sought salvation through art. They believed in the genius of the artist, endowed with a special capacity to transcend the human condition in creative ways, breaking all the rules in order to achieve a new order of experience. Art became an avenue to the transcendental, the gateway to a higher kind of knowledge.

At least.

• California’s ‘Hot Drought’ Ranks Worst in at Least 1,200 Years (Bloomberg)

Record rains fell in California this week. They’re not enough to change the course of what scientists are now calling the region’s worst drought in at least 1,200 years. Just how bad has California’s drought been? Modern measurements already showed it’s been drier than the 1930s dustbowl, worse than the historic droughts of the 1970s and 1980s. That’s not all. New research going back further than the Viking conquests in Europe still can’t find a drought as bad as this one. To go back that far, scientists consulted one of the longest records available: tree rings.

Tighter rings mean drier years, and by working with California’s exceptionally old trees, researchers from University of Minnesota and Woods Hole Oceanographic Institute were able to reconstruct a chronology of drought in southern and central California. They identified 37 droughts that lasted three years or more, going back to the year 800. None were as extreme as the conditions we’re seeing now. One of the oddities of this drought is that conditions aren’t just driven by a lack of rainfall. There have been plenty of droughts in the past with less precipitation. (The drought of 1527 to 1529, for example, was killer.) What makes this drought exceptional is the heat. Extreme heat.

Higher temperatures increase evaporation and help deplete reservoirs and groundwater. The California heat this year is like nothing ever seen in modern temperature records. The chart above shows average year-to-date temperatures in the state from January through October for each year since 1895. California’s drought has withered pastures and forced farmers to uproot orchards and fallow farmland. It may cost the state $2.2 billion this year, with 17,100 jobs lost and 428,000 acres of land left unplanted. Tensions are still running high between farmers and salmon fishers, who rely on the same waters. Young salmon even qualified for migration assistance this year – via tanker truck – when river levels were too low to make the swim. The effects of prolonged drought are cumulative. Maps from the U.S. Drought Monitor below show the worsening of conditions over the last three years.

More than half of the state remains in “exceptional drought” (crimson). It’s a distinction marked by crop and pasture losses and water shortages that fall within the top two percentiles. Record rainfalls recorded across the state this week — including in San Francisco and Los Angeles — did little to overcome the state’s moisture deficit, the National Drought Mitigation Center reported yesterday.

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