Apr 012022
 


Rembrandt van Rijn The Anatomy Lesson of Dr. Nicolaes Tulp 1632

 

Ukraine: Transfer of Power Balance from West to East (Leckie)
The New, Resource-Based Global Reserve Currency (Escobar)
Putin Says Russia to Keep Supplying Gas Amid Shift to Rubles (BBG)
German Chemical Giant Warns Of “Total Collapse” If Russian Gas Supply Cut (ZH)
31 Years After End of Warsaw Pact, NATO Continues As Regional Disrupter (GT)
Ukraine Journalist Finds Charred Remains Where War Crime Was Filmed (IC)
Fight With Clinton Campaign And DNC Looms In Sussmann Case (Pol.)
White House Stands By Biden’s Claim That Hunter Didn’t Profit Off China (WE)
Pakistan Warns Of Foreign-backed Regime-change Attempt (M/P)
WSJ Misleads Public on Ivermectin, Ignores Revelations About ‘Hidden Author’ (CHD)

 

 

 

 

 

 

It really is this simple.

Ukraine: Transfer of Power Balance from West to East (Leckie)

The Russian military is running an “economy of effort” operation. It has effectively fixed in place the garrisons defending Ukraine’s major cities leaving them incapable of supporting the troops in the Donbass. Meanwhile Russia is progressively destroying the military infrastructure of the Ukraine (resupply, maintenance and command and control facilities and weapon systems such as air defense, artillery and armored vehicles) through a combination of air strikes, cruise missiles, rockets and traditional artillery across the breadth and depth of Ukraine. Approximately 60,000 of Ukraine’s best trained and equipped troops are located in the Donbass.

It would appear unlikely that this force is capable of anything other than localized tactical level manoeuvre at this point due to a combination of ever dwindling supplies of ammunition, fuel and rations, Russia’s dominance in the air and ground based combat power, and the effects of combat to date. Despite the alleged incompetence of the handling of the initial stages of the war, the Pentagon assesses that the Russian forces still retain nearly 90 percent of the initial combat power assigned to the invasion. With Russian forces on the verge of completing the capture of Mariupol, it will only be a matter of time before the Ukrainian forces in the Donbass are fully encircled and subsequently destroyed or forced to surrender.

Whilst there may be many weeks, or even months of fighting ahead, the writing is on the wall that Russia, barring outside intervention (i.e. NATO — which has repeatedly ruled out direct military intervention), will achieve its military objectives. The direct Russo-Ukraine conflict is however just one level of this conflict. Ukraine is actually an unfortunate pawn in the much bigger conflict. As long time Russia analyst Gilbert Doctorow notes this is a “full-blown proxy war between the United States of America and the Russian Federation, and it is about ending or perpetuating American global hegemony.” Whilst the war in Ukraine will end sooner or later, the implications at a global scale of this proxy war will be of much greater consequence for a much greater period of time.

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“..trifecta (imminent blitzkrieg on Donbass; US bioweapon labs; Ukraine working on nuclear weapons) as the casus belli..”

The New, Resource-Based Global Reserve Currency (Escobar)

The Russian Central Bank nationalized foreign exchange earnings of all major exporters. There was no default. The ruble keeps rising – and is now back to roughly the same level before Operation Z. Russia remains self-sufficient, food-wise. American hysteria over “isolated” Russia is laughable. Every actor that matters across Eurasia – not to mention the other 4 BRICS and virtually the whole Global South – did not demonize and/or sanction Russia. As an extra bonus, arguably the last oligarch capable of influence in Moscow, Anatoly Chubais, is gone. Call it another momentous historical trickery: Western sanction hysteria de facto dismembered Russian oligarchy – Putin’s pet project since 2000. What that implies is the strengthening of the Russian state and the consolidation of Russian society.

We still don’t have all the facts, but a case can be made that after years of careful evaluation Putin opted to really go for broke and break the West’s back – using that trifecta (imminent blitzkrieg on Donbass; US bioweapon labs; Ukraine working on nuclear weapons) as the casus belli. The freezing of foreign reserves had to have been forecasted, especially because the Russian Central Bank had been increasing its reserves of US Treasuries since November last year. Then there’s the serious possibility of Moscow being able to access “secret” offshore foreign reserves – a complex matrix built with Chinese insider help.

The sudden switch from dollars/euros to rubles was hardcore, Olympic-level geoeconomic judo. Putin enticed the collective West to unleash its demented hysteria sanction attack – and turned it against the opponent with a single, swift move. And here we all are now trying to absorb so many in-synch game-changing developments following the weaponization of dollar assets: rupee-ruble with India, the Saudi petroyuan, co-badged Mir-UnionPay cards issued by Russian banks, the Russia-Iran SWIFT alternative, the EAEU-China project of an independent monetary/financial system.

Not to mention the master coup by the Russian Central Bank, pegging 1 gram of gold to 5,000 rubles – which is already around $60, and climbing. Coupled with No Rubles No Gas, what we have here is energy de facto pegged to gold. The EU Chihuahuas and the Japanese colony will need to buy a lot of rubles in gold or buy a lot of gold to have their gas. And it gets better. Russia may re-peg the ruble to gold in the near future. Could go to 2,000 rubles, 1,000 rubles, even 500 rubles for a gram of gold.

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No disruptions, but a lot of support for the ruble. Also from much higher prices. Who’s winning?

Putin Says Russia to Keep Supplying Gas Amid Shift to Rubles (BBG)

Russia aims to keep supplying gas to European customers even as it demands they shift to payment in rubles, President Vladimir Putin said, easing fears that the shift could lead to disruptions from the continent’s biggest supplier. “Russia values its business reputation, we have complied and will comply in the future with obligations under all contracts, including gas contracts,” he told officials in televised comments laying out the new mechanism for ruble payments. “We will continue to supply gas in the volumes and at prices set down in the current long-term agreements,” he added, warning that shipments would be stopped for customers who don’t accept the new terms starting Friday.

European officials said the change isn’t likely to affect supplies. “For us, with regard to Putin’s threat or announcement or plan — one doesn’t really know what to call it anymore — to get paid in rubles, the main point is that the contracts are being kept,” German Economy Minister Robert Habeck said. When Putin first announced the ruble-payment demand last week, European officials rejected it, saying the move would violate contract terms. But the Kremlin Thursday published a presidential decree outlining the mechanism to allow foreign buyers to convert their dollars and euros into the Russian currency through a state-controlled bank. European benchmark gas jumped after the order was published but pared gains later. Fear of a possible cutoff of Russian gas — worsened by the threats on ruble payments — had driven prices higher in recent days.

An official at the French presidency, speaking on condition of anonymity, said the new mechanism doesn’t change the payments as mandated in the contracts, which will continue as before. But the official said France is preparing a contingency plan for gas, given all the uncertainties. Putin initially portrayed the move against “unfriendly countries” as retaliation for sweeping Western sanctions imposed over his invasion of Ukraine. The Kremlin, seeking to use its leverage as Europe’s largest gas supplier, hinted it might cut off countries that refused. But the Group of Seven leading industrial nations flatly rejected the demand, saying it violated contractual terms. Authorities in Germany and Austria warned that the dispute could lead to an interruption in vital supplies.

Gas buyers were still seeking clarity on the change Thursday. Germany’s E.ON SE said it’s not clear which contracts are covered, while Denmark’s Orsted AS said it hasn’t been approached by Russian gas giant Gazprom and until that happens, assumes the contract conditions are unchanged. Payments for gas shipped in April are due late in the month or in May, depending on the contract, according to a person familiar with Russia’s supply deals. German Chancellor Olaf Scholz, who discussed the issue in a call with Putin, said Thursday, “in any case, it remains the case that companies want to, can and will continue to pay in euros.”

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I just said: NO disruptions.

German Chemical Giant Warns Of “Total Collapse” If Russian Gas Supply Cut (ZH)

CEO of Germany’s multinational BASF SE, the world’s largest chemical producer, has warned that curbing or cutting off energy imports from Russia would bring into doubt the continued existence of small and medium-sized energy companies, and further would likely spiral Germany into its most “catastrophic” economic crisis going back to the end of World War 2. Company CEO Martin Brudermuller issued the words in an interview with Frankfurter Allgemeine newspaper just ahead of German officials by midweek giving an “early warning” to industries and the population of possible natural gas shortages, as Russia appears ready to firmly hold to Putin’s recent declaration that “unfriendly countries” must settle energy payments in rubles, related to the Ukraine crisis and resultant Western sanctions.

According to Bloomberg he mused that while “Germany could be independent from Russia gas in four to five years” it remains that “LNG imports cannot be increased quickly enough to replace all Russian gas flows in the short term.” But in the meantime, Brudermuller described that “It’s not enough that we all turn down the heating by 2 degrees now” given that “Russia covers 55 percent of German natural gas consumption.” He emphasized that if Russian gas disappeared overnight, “many things would collapse here” – given that “we would have high levels of unemployment, and many companies would go bankrupt. This would lead to irreversible damage.” He continued:

“To put it bluntly: This could bring the German economy into its worst crisis since the end of the Second World War and destroy our prosperity. For many small and medium-sized companies in particular, it could mean the end. We can’t risk that!” The dire warning of coming disaster in the event Russian gas is shut off came in response being questioned over whether it’s at all possible to abandon Russian energy. Asserting that this issue is not “black and white” – and that the German economy stands on the brink of catastrophe, the BASF CEO said that if this standoff continues to escalate it will “open the eyes of many on both sides”…

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View from China.

31 Years After End of Warsaw Pact, NATO Continues As Regional Disrupter (GT)

It has been 31 years since the formal dissolution of the military structures of the Warsaw Pact on March 31, 1991. NATO, another product of the Cold War era, however, has not dissolved with the end of the Cold War and the disbandment of the Warsaw Pact. NATO’s activities have aroused regional and global insecurities. And the ongoing Ukraine crisis was largely triggered by the bloc’s eastward expansion. The continued existence of NATO is mainly to serve the global military hegemony system of the US. Even in the era of the Cold War, the US-led NATO was not only meant to counter the Warsaw Pact, but also served as a tool to dominate the world militarily. This was reinforced after the end of the Cold War. Through military cooperation, Washington can put a grip on many Western countries, especially those in Europe.

As a member of the military group, Europe has been heavily impacted by the US in terms of defense policy and strategic decisions. As Washington has regarded Moscow as its foe and rival, it has exploited many European countries to contain and deter it. Today, NATO has become an instrument to maintain US’ military hegemony. NATO has set a target of 2 percent of a member state’s GDP to spend on defense. But many countries have failed to meet the target in the past several years, to the annoyance of the US. As a response to the Ukraine crisis, more countries vowed to raise spending to 2 percent. Furthermore, the US took advantage of the Ukraine crisis to sell more weaponry to Europe and ramp up its military deployment against Russia. It can be said that the ongoing Russia-Ukraine crisis has intensified Washington’s control over NATO members in Europe.

After the end of the Cold War, in a bid to prove the value and legitimacy of its existence, NATO has created various imaginary enemies and provoked regional conflicts many times, including the Ukraine crisis. Some experts said that the absolute security of NATO is the absolute insecurity of the rest of the world. With NATO’s eastward expansion, the bloc has intensified conflict with Russia and greatly suppressed its strategic space. This has worsened Russia-Europe relations and threatened the peace and stability of Eastern Europe. The pursuit of absolute security has indeed led to regional and global instability. French President Emmanuel Macron said in 2019 that NATO was experiencing “brain death.” On March 17, he told a press conference that he took “full responsibility” for what he said in 2019, but added that “Russia has just provided an electroshock … the awakening” with its military operations in Ukraine.

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Even the alt media in the west feel obligated to start a report like this with: “Amid overwhelming evidence that Russian forces have committed war crimes during an unprovoked war of aggression in Ukraine.. “

Ukraine Journalist Finds Charred Remains Where War Crime Was Filmed (IC)

Amid overwhelming evidence that Russian forces have committed war crimes during an unprovoked war of aggression in Ukraine, Ukrainian officials were confronted this week with video that appeared to show Ukrainian soldiers shooting captive Russian soldiers in the legs. Although Ukraine’s senior military leader and its domestic intelligence agency both insisted that the video posted on social networks on Sunday was “a fake” produced by Russia, an adviser to Ukrainian President Volodymyr Zelenskyy promised that the government would investigate and punish those responsible if the incident did take place. On Monday, a well-known Ukrainian journalist, Yuri Butusov, published graphic video showing the charred remains of three men he identified as Russian soldiers, as Ukrainian forces recaptured the town of Malaya Rohan, outside Kharkiv, over the weekend.

Although Butusov made no mention of the video of the alleged war crime, a visual analysis of his footage shows that it was clearly filmed in the same location as the video of the prisoners being shot, some time after that incident. Reporting by open-source investigators and BBC News had already established that the video of the alleged war crime was recorded at a dairy processing plant in Malaya Rohan, which is about 3 miles east of Kharkiv. Multiple visual clues in Butusov’s video show that he discovered the burned bodies in precisely the same part of the dairy plant’s courtyard where, in the prior video, at least eight captives were filmed bleeding on the pavement, several with their hands bound behind their backs and bags over their heads.

According to Butusov, the editor of the Ukrainian news site Censor.net, he arrived in Malaya Rohan “a few hours after the battle” there. By that time, his footage shows, several of the buildings at the dairy factory had been partially destroyed by explosions or fire. Those same structures had not yet been damaged when the video showing the prisoners being shot was recorded.

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Durham won’t let go.

Fight With Clinton Campaign And DNC Looms In Sussmann Case (Pol.)

A looming legal battle could reveal new details about the decision by Hillary Clinton’s 2016 presidential campaign to commission a research project that produced a controversial dossier on Donald Trump’s alleged ties to Russia. Prosecutors on special counsel John Durham’s team handling a criminal false-statement case against a top lawyer for Democratic causes, Michael Sussmann, indicated on Thursday that they planned to challenge claims of attorney-client privilege raised by the Democratic National Committee and Clinton’s campaign. The issue has lingered for years, with the Democratic groups claiming that the investigative firm that produced the dossier, Fusion GPS, did so as part of attorney-requested research related to potential litigation.

However, Durham’s prosecution of Sussmann, a former Perkins Coie partner, may bring the question to a head as prosecutors seek to call witnesses from the law firm and Fusion GPS. “It’s obviously a bit of a hornet’s nest,” defense attorney Sean Berkowitz said on Thursday during a pretrial hearing for Sussmann, who’s accused of lying to the FBI by denying he was working for any client when in September 2016 he brought FBI general counsel James Baker computer data that hinted at links between Trump entities and Russia. Berkowitz said that on Wednesday night, Durham’s team indicated that it planned to contest the privilege claims in the lead-up to Sussmann’s trial, set to open May 16 in Washington. The defense attorney denounced the prosecution’s move as “wildly untimely” and “an ambush that could change the entire parameter and focus of the case.”

“We’re very concerned about it,” Berkowitz told U.S. District Court Judge Christopher Cooper. During a House Intelligence Committee investigation in 2017, Clinton campaign general counsel Mark Elias, a Perkins Coie attorney, testified — with permission from the DNC and the campaign — that he selected Fusion GPS to do research on Trump and individuals in his orbit. He said Clinton campaign manager Robbie Mook approved the work, but wasn’t involved in picking the firm. But details of who in Clinton’s orbit knew about the sensitive project, handled primarily by former British intelligence officer Christopher Steele, remain murky. “We have had conversations and have been unable to get comfort as to the grounding and basis of various privilege theories,” Assistant U.S. Attorney Andrew DeFilippis told the judge.

“These issues are unavoidable and we’ve been working for quite some time to get to the bottom of them.” DeFlippis didn’t delve into the details of the dispute during the hearing held by videoconference on Thursday, but he gave one example: He said the Clinton campaign was asserting privilege over communications of Rodney Joffe, a tech executive who compiled the data Sussmann shared with the FBI. The campaign has asserted the privilege even over messages it was not copied on, DeFelippis said. Durham’s team is, to some extent, shooting in the dark. DeFilippis signaled on Thursday that prosecutors didn’t know the details of much of the information they might want to bring up at Sussmann’s trial because those statements are redacted in documents the prosecution team has access to. “We don’t have insight into what’s under the redactions,” DeFilippis said.

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What use is denying at this point?

White House Stands By Biden’s Claim That Hunter Didn’t Profit Off China (WE)

The White House is standing by then-candidate Joe Biden’s October 2020 assertion that his son had not made money in China despite clear evidence that his son had received millions from Chinese businessmen.
When Kristen Welker of NBC News, who moderated the presidential debate in which Biden made the claim, asked White House communications director Kate Bedingfield on Thursday whether the White House stood by Biden’s debate comments that there was nothing unethical about Hunter Biden’s business dealings and that his son had not made any money in China, Bedingfield confirmed the White House would “stand by“ the statement. “We absolutely stand by the president’s comment, and I would point you to the reporting on this, which referenced statements that we made at the time that we gave to the Washington Post who worked on this story,” Bedingfield said.

“But as you know, I don’t speak for Hunter Biden, so there’s not more I can say on that.” But executives from the Chinese Communist Party-linked CEFC energy company “paid $4.8 million to entities controlled by Hunter Biden and his uncle,” James Biden, the Washington Post confirmed earlier this week following reporting by the Washington Examiner and others. New documents, which include “a signed copy of a $1 million legal retainer, emails related to the wire transfers, and $3.8 million in consulting fees that are confirmed in new bank records and agreements signed by Hunter Biden — illustrate the ways in which his family profited from relationships built over Joe Biden’s decades in public service,” the outlet said. Bedingfield was asked whether there had been discussions inside the White House about possible pardons for James or Hunter Biden, a possibility she dismissed as a “hypothetical” she wouldn’t address from the podium.

Welker had asked Joe Biden during the 2020 debate, “There have been questions about the work your son has done in China and for a Ukrainian energy company when you were vice president. In retrospect, was anything about those relationships inappropriate or unethical?” Joe Biden would then falsely deny his son had made money from China. “Nothing was unethical,” Joe Biden replied, arguing at length he had done no wrong during his son’s lucrative time on the board of Ukrainian energy giant Burisma, before adding, “My son has not made money in terms of this thing about — what are you talking about — China. I have not had it. The only guy that made money from China is this guy. He’s the only one. Nobody else has made money from China.”

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A nuclear power.

Pakistan Warns Of Foreign-backed Regime-change Attempt (M/P)

While the world’s attention is understandably focused on the crisis in Ukraine, equally grave developments are taking place elsewhere. Perhaps the most consequential – and underreported – is a regime-change operation underway in Pakistan. This March, opposition lawmakers in Pakistan’s parliament launched a “no-confidence” motion aimed at overthrowing Prime Minister Imran Khan. Khan, who was democratically elected in 2018, has warned that an “effort is being made to topple the government with the help of foreign funds in our country.” “Our people are being used. Mostly unknowingly, but some knowingly are using this money against us,” Khan said at a rally on March 27. He added that the government had proof of these payments. Khan argued that these external interests seek to reverse his independent foreign policy.

He recalled his predecessor Zulfikar Ali Bhutto, a Pakistani prime minister who was overthrown in a US-backed coup in 1977, then executed following a show trial. Bhutto was punished “when he tried to bring in a free foreign policy to the country,” Khan declared. Khan specifically singled out the United States for meddling to try to remove him from power. He said he received a letter from Washington that threatened him for refusing to allow it to establish US military bases in Pakistan. He cautioned that the opposition is collaborating with the United States and other foreign countries in its no-confidence motion against him. These warnings came just over a month after Khan publicly criticized the US government for cynically using Pakistan to advance Washington’s interests. He also simultaneously praised China for always acting as a “friend” of Islamabad.

“Whenever the US needed us, they established relations, and Pakistan became a frontline state [against the Soviet Union], and then abandoned it and slapped sanctions on us,” Khan complained. On the other hand, “China is a friend which has always stood by Pakistan,” he contrasted. The idea that a regime-change plot could even be conceived of, let alone attempted, in a nuclear-armed country of more than 220 million may seem shocking and preposterous. On the surface, it strikes as incredulous considering that Islamabad is a major world capital, arguably the most powerful within the Muslim-majority world. Nevertheless, it is precisely these characteristics that make Pakistan so geopolitically important. The following is an analysis of the principal reasons for why hostile foreign elites have decided that Prime Minister Imran Khan must go

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“..81 separate studies — involving a combined 128,000 participants — that demonstrated an average efficacy of 65% for several different outcomes..”

WSJ Misleads Public on Ivermectin, Ignores Revelations About ‘Hidden Author’ (CHD)

The Wall Street Journal on March 18 published an article with this headline: “Ivermectin Didn’t Reduce Covid-19 Hospitalizations in Largest Trial to Date.” Headline readers will easily reach the seemingly obvious conclusion: Drs. Anthony Fauci and Rochelle Walensky, along with the National Institutes of Health (NIH) and the Centers for Disease Control and Prevention, were right all along. However, for those who read beyond the headline and first few paragraphs, the story begins to morph. The headline clearly states the trial in question was the largest to date. However, this is not the case — as the article’s author, Sarah Toy, explains early in the piece:


“The latest trial, of nearly 1,400 Covid-19 patients at risk of severe disease, is the largest to show that those who received ivermectin as a treatment didn’t fare better than those who received a placebo.” This wasn’t the largest trial to date — it was only the largest trial to date among the subset of trials that have shown no benefit of ivermectin. Was this an oversight? Or was it a deliberate attempt to confuse the 42 million readers of The Wall Street Journal’s digital content? [..] Toy chose not to mention the 81 separate studies — involving a combined 128,000 participants — that demonstrated an average efficacy of 65% for several different outcomes. She also did not mention the 22 studies — involving nearly 40,000 people — around the outcome in question, hospitalization. Those studies showed an average efficacy of 39%.

Read more …

 

 

 

 

 

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Mar 162022
 
 March 16, 2022  Posted by at 5:45 pm Finance Tagged with: , , , , , , , ,  23 Responses »


John Atkinson Grimshaw A moonlit lane 1874

 

 

It’s almost slapstick that people call for Putin to be hauled before some international court for war crimes, but it’s true; they do. It tells you what you need to know about your media, and then some. Because, whether you know it or not, the last 4-5 America presidents have been responsible for the deaths of millions of people in Libya, Syria, Afghanistan etc etc. Just not in Ukraine. Wait, that’s probably not true either. The estimated 15,000 deaths in the Donbass over the past 8 years would likely never have happened without some US help.

And we just see it all as par for the course. The “peace” negotiations between Ukraine and Russia look hopeful, but are they? Russia has always been very clear in what it wants from Ukraine, and that goes back way longer than the start of the “special military operation” 3 weeks ago, or Maidan in 2014. It goes back at least to the fall of the Berlin wall, but it’s really much earlier than that. How about 1945, and then throw in Brzezinski, and Wolfowitz, and Kissinger, and why not Mackinder as well?

But don’t let’s make it a book. To simplify, stop at 1991, when Yeltsin became president of Russia, with an alleged 1000 CIA operatives in his Kremlin tow. The Americans thought they had it made. That the deal with Gorbachev, in which he OK’d German reunification on the condition that NATO boundaries would stop right there, no longer mattered. But in 2000 Yeltsin made Putin his successor. I like the notion that the west promoted Putin because they thought he would do exactly what they wanted. But I also like the more romantic version that Yeltsin installed Putin because he felt remorse over selling out his country, and thought Putin might correct that. Fast forward to the “peace” negotiations. What Russia wants is crystal clear. As Robert Barnes put it:

What we see today is they are discussing “neutrality”. But that can still mean different things. Apparently, Russia has suggested a Sweden or Austria status, but Ukraine doesn’t find that safe enough. The idea becomes that if you are truly neutral, why would you need an army? The world’s most neutral country ever, Switzerland still has “something”, as Swissinfo says: “The Swiss Army largely is a non-career militia. Switzerland has compulsory military service for male citizens, though this and indeed the role of the army altogether have recently been called into question.”

That seems close to what Russia would seek for Ukraine. But why can’t Ukraine decide its status for itself? Well, 1/ it was part of Russia for a very long time, 2/ a lot of Russians live in the country, 3/ Russia doesn’t want NATO on its welcoming mat, 4/ it has allowed US/NATO to use its territory for activities that Russia sees as threatening to itself. Like 30 biolabs. That sort of thing. Oh, and 5/ they share a border.

Both sides said today that the talks appear to go well, there’s room for compromise, and Zelensky said yesterday that Ukraine won’t join NATO. And then today he asks the US Congress (both chambers) for more guns and bombs and planes and also a no-fly-zone, though he knows, and everybody knows, that it would be an all-out war declaration, reaching far beyond the borders of Ukraine. And gets cheered for it. But how does he -and they- think that went down in Russia? How is that supposed to solve the problem, and to end the military operation? “We need your help to start WWII!”. This is Pearl Harbor and 9/11 combined! Applause, applause!

In that speech, he was also addressing House Speaker Nancy Pelosi, of whom we had a clip earlier today, that really should also make you wonder: how do the Russians see this, or the Chinese? We have tons of clips from Joe Biden exhibiting very strange behavior, for everyone to see, and now this from the 2nd most powerful person in Washington?! At a moment in time when one -even mistaken- push of a button could unleash hell on earth, are you sure a couple of feeble octogenarians are the best people for the job?

 

 

Seriously, I know that Americans see this as normal behavior, but you should really ask yourself how the rest of the world sees it. How is Nancy Pelosi’s performance in that clip not something that would scare the heebees out of you, if you’re in Beijing or Moscow, or any capital city for that matter? To put a dark view on it: why would she care about the future? It’s not hers…

Zelensky is hailed as a hero, because he’s an easy on the eye person that’s ideal for the part, But that is the problem: Zelensky is an actor who plays a hero. What the situation needs is not Zelensky or Pelosi or god forbid Joe Biden (he’s flying to Europe next week). Or, you know, Jake Sullivan or Victoria Nuland.

What it needs is people like Lavrov, maybe Jimmy Carter, statesmen, there must be some sane people left in the US. We need people who genuinely seek peace, not trigger happy neocons and warmongers, on either side, on whatever side.

I think neutrality is possible, even if the Americans won’t like it and Zelensky is their puppet, simply because it’s by far the best, and quite likely the only solution. No Nukes is easy; that was never an option. So is No NATO, as Zelensky himself has already conceded. The crux may be No Nazis. Because Russia will want to make sure of that, before they even think of leaving. Theoretically, Ukraine can maintain an army (of sorts), but that would still be likely to have Azov et al elements.

The only acceptable way -to Moscow- would then be to install a court and drag all the “nazis” in front of it. But that would take a very long time, and the Russians would have to stay in the country for the duration. I wonder how they think that Gordian knot can be cut.

As for the news about Russian soldiers firing at people waiting in line for bread, or shooting at a convoy of people fleeing a city, or bombing a theater where 100s of people were sheltering, look we only get western news. And Russians are doing propaganda too, no doubt, but we can’t see that anymore after their news channels were banned over here. Don’t believe a word you hear or see, without solid proof. Indiscriminate targeting of civilians and children does not appear to be their MO. They could have flattened the entire country in just 3 days if it was.

 

 

 

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Apr 032017
 
 April 3, 2017  Posted by at 9:35 am Finance Tagged with: , , , , , , , ,  1 Response »


Paul Wolff Frankfurt Opera House 1934

 

‘Buy Property In Sydney And You’re ‘Pretty Well Set For Life’ (WS)
Sydney Property Prices Rise Almost 20% In Past 12 Months (G.)
Australia Sticks With Blunt Instruments To Battle Housing Bubble (R.)
A ‘Sleeping Beast’ In The Markets Is About To Be Unleashed – SocGen (BI)
Commercial Real Estate Is The Next ”Big Short” (F.)
Euro Is A ‘Knife In The Ribs’ Of The French Says Le Pen (R.)
ECB Leads The Cure For Euro-Pessimism (CNBC)
Scotland Yard Examines Allegations Of Saudi War Crimes In Yemen (G.)
Greek Households Spend €40 Less Per Month On Supermarket Purchases (KTG)
Greece To Accelerate Return Of Migrants To Turkey As Arrivals Pick Up (K.)

 

 

“Once you are in the Sydney housing market, you are pretty well set then for the rest of your life.”

‘Buy Property In Sydney And You’re ‘Pretty Well Set For Life’ (WS)

How far can a desperate government go to keep the whole overleveraged edifice of a housing bubble from tumbling down and doing God-knows-what to the economy and the banks? Australia is trying to find out. The housing bubble in Sydney and Melbourne, by now among the top in the world, is taking on grotesque proportions, not only in price increases, but also in political pronouncements. So much of the economy depends on this bubble that no politician can imagine bringing it down to earth. Prices for all types of homes in Sydney jumped 19% in March year-over-year, according to CoreLogic, with houses up nearly 20% and “units” (we’d call them condos) up 15%. Sydney’s home prices have nearly doubled since 2008. In Melbourne, overall home prices jumped 16%, with houses up 17%, and condos up 5%. The index for all dwellings in Canberra and Hobart also rose in the double-digits.

In Adelaide and Brisbane, prices rose in the mid-single digits. Perth and Darwin showed declines in the 4.5% range. The CoreLogic index is not based on sales pairs, such as the Case-Shiller index in the US, or on median prices, but on its own “hedonic methodology,” which, like the other two methods, has plenty of critics. The government has its own Residential Property Price Indexes. The latest edition, released on March 21, was for Q4 2016, so a little slow. Based on the median price, the index for Sydney jumped 10.3% and for Melbourne 10.8%. Real estate is highly leveraged, and household debt is at an all-time high. Wages even in Sydney haven’t risen at the same pace. So the inevitable is beginning to happen. Affordability becomes a political issue, and delinquencies become a financial issue.

[..] On February 24, Anthony Roberts, New South Wales Minister for Planning and Housing, was speaking at the launch of a 690-unit apartment development at Olympic Park, a suburb of Sydney, heaping praise on the developer for having committed to offer 60 units first to first-time buyers. A new policy on housing affordability would be announced in the “very near future,” Roberts said. But as a first step, he threw in an incentive for first-time buyers. Instead of the normal 10% down payment, they’d only need to make 5%. “This is the beginning, this is the start,” he said. And in hyping the Sydney housing market and the importance of getting in now or be priced out forever, he also said this: “This is about fairness, and this is about enabling people to get into the Sydney housing market. Once you are in the Sydney housing market, you are pretty well set then for the rest of your life.

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Get out while you can.

Sydney Property Prices Rise Almost 20% In Past 12 Months (G.)

Sydney property prices have increased by almost 20% in just 12 months, putting the city at the front of a nationwide trend that has seen dwelling values increase by 12.9% on average. Sydney house values soared by 19.65% in the past year, and unit values increased by 15.27%. New data from CoreLogic, released on Monday, shows house values in Melbourne (up 17.15%), Canberra (13.64%), and Hobart (11.05%) have followed Sydney’s rapid rise. Only homes in Perth (-4.68%) and Darwin (-4.41%) have bucked the trend, slipping backwards over the past year. CoreLogic’s five capital city aggregate – which includes Sydney, Melbourne, Brisbane and the Gold Coast, Adelaide and Perth – shows prices for houses and units rose 12.9% on average last year.

But the news comes as the ratings agency Moody’s warned an increasing number of borrowers have fallen behind on their mortgage and car repayments, saying more borrowers are set to join them amid rising underemployment, record-low wages growth and a more difficult housing market. On Monday, Moody’s said delinquencies for prime residential mortgage-backed securities increased to 1.61% in January, from 1.57% in December, while 30-day delinquencies for car loan asset-backed securities rose to 1.80%, from 1.54% over the same period. “Weaker economic conditions in states reliant on the mining industry, rising underemployment, weak wages growth and less favourable housing market conditions will drive delinquencies higher,” vice president and senior analyst Alena Chen said on Monday.

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More like no instruments at all: “..limit new interest-only loans to 30% of total new mortgage lending..”

Australia Sticks With Blunt Instruments To Battle Housing Bubble (R.)

In their struggle to cool red-hot property prices in Australia’s big cities, authorities are ratcheting up measures that could dent the whole market but avoiding more targeted steps that have had some success in New Zealand and China. Australian regulators first focused on reining in investment loans nationally in 2015, by imposing an annual limit of 10% on how much banks could expand their investor loan book. Those steps worked for a while, but the heat is on again in Sydney, where prices are rising almost 20% a year, having more than doubled since 2008, and Melbourne, where the pace is over 15%, according to property consultant Core Logic.

That and all-time high household debt prompted the Australian Prudential Regulatory Authority (APRA) to move again on Friday, asking banks to limit new interest-only loans to 30% of total new mortgage lending, from 40% now, and promising a lot of “monitoring”, “scrutinizing” and “observing”. Industry players doubt that will do the trick. “I personally don’t think this will have a material impact,” said Simon Orbell at mortgage broker Smartmove, as prices kept rising even though it was already a tough lending market. “Maybe more needs to be done,” he added. [..] There has been market speculation that the Reserve Bank of Australia will be forced to hike interest rates, a yet blunter instrument, though record low inflation and weak wages growth make that an unattractive option. There is also political resistance to measures that could make prices actually fall, with two thirds of households owning their homes.

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Too much uncertainty to unleash it.

A ‘Sleeping Beast’ In The Markets Is About To Be Unleashed – SocGen (BI)

The bond market has been quiet. Too quiet in fact. That’s about to change, says Societe Generale’s fixed income team led by Vincent Chaigneau. “Spring is likely to be more threatening for bond investors as US data improves, political risk in Europe ebbs and investors refocus on a slow central bank exits,” the team wrote in a note to clients on Thursday. The note is titled “The Sleeping Beast.” In the wake of the U.S. Presidential election, traders priced in the prospect that Donald Trump’s agenda of a protectionist trade policy, cutting taxes, rolling back regulations, and massive infrastructure would bring back inflation to the United States. Reflecting this, the yield on 10-year Treasurys rallied more than 80 basis points, reaching a high of 2.64%, in the weeks following the election.

But for the last few months, the yield has been trapped in a tight 35 basis point range as traders take a wait-and-see approach in regards to Trump’s ability to execute his proposed agenda. “We expect that to reverse in spring, especially if Trump proves a little more effective in pushing his agenda through Congress,” Societe Generale wrote. “Treasuries too present some seasonal patterns: the average of the past five years shows the 10yT reaching a low around mid-April before bearish forces start to take over.”

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America turns on the mall.

Commercial Real Estate Is The Next ”Big Short” (F.)

A small but growing group of hedge funds are positioning themselves to profit from the collapse of the real estate market. Sounds like 2007, right? It’s actually happening right now. But this time, hedge funds (along with Deutsche Bank and Morgan Stanley) aren’t targeting subprime mortgages—they’re going after commercial real estate. It’s no secret retailers and malls have been struggling for years, but it looks like the perfect storm is set to hit them in 2017. Bearish bets against commercial loans jumped 50% year-over-year in February—and with problems piling up for malls, it’s no wonder. Around $3.5 billion in retail loans were liquidated in 2016. Investment firm Gapstow Capital said losses on mall loans have been “meaningfully higher than in other areas.” This is because malls are reliant on retailers like Macy’s, J.C. Penny and Sears. Unfortunately for these landlords, their tenants’ businesses are failing, which brings us to…

As a result of falling sales, retailers are shutting up shop at a rate that has not been seen since the 2008 financial crisis.

…and they plan to close hundreds more over the coming years, which is very bad news for malls. Most malls are dependent on one or more of these big retailers. When anchor stores close, it reduces foot traffic, and that hurts other retailers. This begins a cycle of blight, leading other tenants to leave. Alder Hill (a hedge fund started by associates of billionaire David Tepper) is bearish on commercial loans and expects 2017 to be a “tipping point.” Morningstar Credit Ratings estimates roughly 40% of the loans due this year won’t be paid. This comes at a bad time for the industry. Commercial real estate prices have been on a tear since 2009, but with vacancies rising, prices have stagnated.

This, coupled with new rules that came into effect in December (which force banks to hold at least 5% of the loans they make on their books), has caused loan growth to stall. As a result, leading retail analyst Jan Rogers Kniffen expects around one-third of American malls to close in the coming years. So, what are the implications of this commercial collapse?

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But the French love the euro. Hard sell.

Euro Is A ‘Knife In The Ribs’ Of The French Says Le Pen (R.)

French presidential candidate Marine Le Pen told a political rally on Sunday that the euro currency which she wants France to ditch was like a knife in the ribs of the French people. The leader of the eurosceptic and anti-immigrant National Front (FN) also told the rally in the city of Bordeaux that the forthcoming election for president could herald a “change in civilization”. Encouraged by the unexpected election of Donald Trump in the United States and by Britain’s vote to leave the European Union, Le Pen hopes to profit from a similar populist momentum in France, though opinion polls suggest she will lose the May 7 run-off. “We are at the mercy of a currency adapted to Germany and not to our economy. The euro is mostly a knife stuck in our ribs to make us go where others want us to go,” Le Pen said to loud cheers and applause.

Reiterating her anti-globalization and anti-immigration views, she declared: “We do not want France to be open to all commercial and human flows, without protection and borders.” A government under Le Pen’s presidency would take France out of the euro zone and bring back a national currency, hold a referendum on its EU membership and slap taxes on imports and on companies hiring foreigners. Le Pen says she would curb migration, expel all illegal migrants and restrict certain rights now available to all residents, including free education, to French citizens. She hit out at her two main opponents in the French election, independent centrist Emmanuel Macron and conservative candidate Francois Fillon, saying they belonged to “the same system” “The system is panicking because it sees people are waking up,” she said.

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Draghi slays austerity?

ECB Leads The Cure For Euro-Pessimism (CNBC)

The euro-sclerosis and the euro-pessimism are only a few of the old neologisms that got a new lease on life thanks to “reformers” and “crisis managers” who devastated the euro area economy with their – take a deep breath – “austerity growth model,” consisting of deep public spending cuts, tax hikes, jobs-destroying structural reforms and a monetary policy that should look the other way. Predictably, the area’s economy took it on the chin and went down for the count, with millions of lives destroyed by soaring poverty and destitution – until the ECB stepped in to provide the antidote to that cruel nostrum and to begin a long process of healing and recovery.

The ECB’s intervention eventually stiffened the spines, and gave some oxygen, to scared and disoriented political leaders in France, Italy, Spain and Portugal – exactly one-half of the euro area’s GDP – who abandoned the fiscal madness and structural destruction to latch on to the life jacket thrown at them by their lender of last resort. The economic recovery we see now is a result of that policy mix. At 1.7%, the euro area growth last year matched the pace of the U.S. economy and seems poised for further gains in the months ahead. The ECB-driven recovery was also reflected in steadily rising asset values. As of last Friday, the euro area equity prices (Euro Stoxx 50 in dollar terms) were 17.3% above their year-earlier level, with nearly half of that increase (7.6%) recorded since the beginning of this year.

[..] France is the next political test with the first round of elections on April 23. Again, anybody betting against the euro and the EU will lose big. According to the French media, voters are largely indifferent toward the presidential candidates, but the economy is improving and low credit costs have unleashed a real estate boom that’s triggering solid consumer spending. The French are also great fans of the euro: An opinion poll published last Tuesday (March 25) shows that 75% of the French like the European currency, and half of them are pleased with the EU, although they believe that some of their neighbors were greater beneficiaries of the whole project. The French, of course, have Germany in mind. They are looking at Germany’s huge trade surpluses and the industrial takeover by the world-beating manufacturing companies across the Rhine.

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It should be investigating British war crimes.

Scotland Yard Examines Allegations Of Saudi War Crimes In Yemen (G.)

Scotland Yard is examining allegations of war crimes by Saudi Arabia in Yemen, the Guardian can reveal, triggering a possible diplomatic row with Britain on the eve of Theresa May’s visit to the Arab state. The Metropolitan police confirmed that their war crimes unit was assessing whether criminal prosecutions could be brought over Saudi Arabia’s devastating aerial campaign in Yemen. The force’s SO15 counter-terrorism unit revealed to a London human rights lawyer that it had launched a “scoping exercise” into the claims before Maj Gen Ahmed al-Asiri’s visit to the capital last week. The revelation comes as May plans to underline Britain’s close relationship with the Saudi royal family on her visit to the Arab state this week, in which tackling the terror threat from Islamic State will be a key factor.

Speaking in advance of the trip, in which she will also visit Jordan, the prime minister said she wanted to “herald a further intensification in relations between our countries and deepen true strategic partnerships”. She argued that the intelligence relationship with Saudi Arabia had been critical, potentially saving hundreds of lives in the UK, and claimed there were huge possibilities for closer trade links as the UK moves towards leaving the European Union. May plans to stress the need for collaboration in the wake of the Westminster terror attack, while also pledging humanitarian support to Jordan to help it handle the huge volumes of refugees displaced by the Syrian conflict.

But the trip comes under the shadow of a war in Yemen that has killed more than 10,000 civilians and displaced more than 3 million people. The Saudi-led coalition has been accused of killing thousands of civilians and triggering a humanitarian catastrophe in one of the region’s poorest countries. The UK, which along with the US supports the Saudis against the Houthis, has been urged to reconsider its arms exports to Saudi Arabia in light of the bloody air campaign.

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Austerity kills people and economies.

Greek Households Spend €40 Less Per Month On Supermarket Purchases (KTG)

A significant decrease of 13% has been recorded in the amount Greek households spend for daily purchases at the country’s supermarkets. This is the logical consequence caused by low wages, high unemployment rates and increased direct and indirect taxes. Factors that have lead to impoverishment of large groups of the Greek society. Worth mentioning are the extra charges (special consumption fees) imposed as of 1.1.2017 in a variety of supermarket products like coffee. Greek households spend monthly forty euros less for their shopping at the supermarket than in the previous year. The average monthly expenditure of households at the supermarket amounts to 274 euros from 310 last year.

According to research conducted by the Economic University of Athens, the expenditure decrease has been confirmed also by the turnover of the supermarkets. The decrease in sales was 10% in January 2017. The was a slight increase of 2.9% in February, but a serious decline of 15% in March. 63% of respondents said they buy fewer products. 45.8% said they restricted to what is necessary. At the same time, 54.4% said that buy cheaper products especially following a market investigation and that they chase discount offers and products of private label. 81.5% said that they compare prices before they decide which product they will pick up from the supermarket shelf.

99.2% of consumers stated that they do research before going to the supermarket, they know in advance what to buy and they avoid impulse purchases. 38% of respondents said that they would make fewer purchases in 2017, 5% that they will increase their purchases. 57% estimate that their purchases will remain unchanged. The average expenditure per supermarket visit remains almost unchanged. Expenditure in 2017 is at an average of €50.4 euros. It was at 49.5 euros in 2016. However, the frequency of visits has declined down to 6.8 visits per month from 8.5 visits last year.

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Yes, it can still get worse.

Greece To Accelerate Return Of Migrants To Turkey As Arrivals Pick Up (K.)

As the inflow of undocumented migrants to the islands of the eastern Aegean rises with the improving weather, the government is planning action to ease the pressure on increasingly overcrowded reception centers. In the coming days, Migration Minister Yiannis Mouzalas is expected to issue a circular, banning migrants who appeal against a rejection of their application for political asylum from a voluntary repatriation scheme being run by the International Organization for Migration (IOM). Meanwhile police on the islands are boosting efforts to locate and detain migrants who face deportation to Turkey in line with an agreement signed last year between Ankara and Brussels.

Last week, a new detention center opened on Kos, the function of which will be to detain migrants facing deportation. Others awaiting the outcome of asylum applications or inclusion in the IOM’s repatriation scheme are to remain in the island’s main reception center. A similar “closed” center for migrants awaiting deportation is operating on Lesvos. However, police face a problem on Chios, which has seen arrivals from Turkey intensify in recent days, and where local residents vehemently oppose the creation of such a center. A police official told Kathimerini that the main police precinct on the island is already full of migrants and there are no other facilities to accommodate new arrivals. “We don’t know what to do,” he said.

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Aug 192016
 
 August 19, 2016  Posted by at 9:51 am Finance Tagged with: , , , , , , , , ,  2 Responses »


Walker Evans Waterfront in New Orleans. French market sidewalk scene 1935

Paul Singer: Market ‘Breakdown’ To Be ‘Sudden, Intense, And Large’ (CNBC)
Vancouver Housing Market Implodes: Average Price Plunges 20% In 1 Month (ZH)
UK’s £8.8 Trillion Wealth Owes Much to Housing (BBG)
Moody’s Lowers Outlook On Australia Banks To Negative (R.)
China’s Secret Lists of Zombie Borrowers Leave Banks in the Dark (BBG)
As China Shrinks, Mongolia Has an Epic Economic Meltdown (BBG)
Stiglitz: The Euro Is On Course To Fail (Economist)
The Subtle Tyranny of Blockchain (Thomas)
It’s Time to Abolish the DEA and America’s “War on Drugs” Gulag (CHS)
The US Is Promoting War Crimes In Yemen (G.)
Greek Coast Guard Rescues Dozens Of Migrants Stuck On Islet (AP)
The Fishermen of Lesbos (Hakai)

 

 

“Experience doesn’t count for much, and extreme confidence may be fatal.”

Paul Singer: Market ‘Breakdown’ To Be ‘Sudden, Intense, And Large’ (CNBC)

In a bleak new letter to investors, Paul Singer’s Elliott Management warns that the bond market is “broken” and that when the central bank actions of recent years no longer ward off a market downturn, the subsequent loss of confidence could be severe. The fund’s recent investor letter, which covers the second quarter, notes that Elliott’s managers are currently seeing “what is in many ways the most peculiar period we have faced in 39 years.” Too much power has been ceded to central banks, the letter adds, the value of money has been debased, inflation is probably inevitable, and when it happens, it could be swift and impossible to tamp down.

Elliott is a $28 billion fund founded in 1977 by Singer, now its president. The fund is up more than 6% for the year through July, according to an investor. Given the persistence of low or negative yields on government and other bonds and the continued stampede to buy them nonetheless, today’s environment marks “the biggest bond bubble in world history,” and “the global bond market is broken,” the investor letter states. The letter discusses, at some length, the oddity of an investor mentality that flies to an asset class regarded as a “safe haven” even when there are low or nonexistent returns attached to it and no guarantee that current conditions will persist.

In one wry aside, the letter suggests a safety warning be attached to the $12 trillion government bond market now trading at negative yields: “Hold such instruments at your own risk; danger of serious injury or death to your capital!” Trading in this market is particularly difficult, it adds. “Everyone is in the dark,” Elliott notes. “Experience doesn’t count for much, and extreme confidence may be fatal.” Moreover, “the ultimate breakdown (or series of breakdowns) from this environment is likely to be surprising, sudden, intense, and large.”

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Coming soon to a theater near you. Denmark, Holland, Australia, New Zealand, UK, the list is long.

Vancouver Housing Market Implodes: Average Price Plunges 20% In 1 Month (ZH)

It appears that the Vancouver housing market has slammed shut. Which is hardly a surprise: virtually everyone saw it coming, the only question was when. Eilers says he’s been warning of a real estate slow-down for at least a year due to the region’s unsustainable and unsupportable prices. West Vancouver, where he does a large part of his business, had a benchmark detached home price of almost $3.4 million in July according to the Real Estate Board of Greater Vancouver. “The market in West Van is up 450 per cent since 2001. So is everyone making 600 per cent more income than they were so they can pay their taxes and buy their houses? Of course not. So how is this inflation been financed? By off-shore money and record debt.”

Precisely what we said at the start of the year when we first heard horror stories about Chinese buyers paying cash, sight unseen, for any and every local luxury, and not so luxury home. It appears that it is not just the 15% luxury tax implemented on on July 25 that has burst the bubble: according to Eilers sales were dropping even before the tax. According to the data, July was another slow month in West Vancouver with only 44 sales, down from 80 in 2015. June saw 74 sales, also down from 102 the year before. The pattern has left the market “devastated”, Eilers adds. While it may be too early to make a definitive conclusion, after all while earlier this month, the REBGV released its statistics for the month of July, saying the data showed the market had slowed down to “normal levels”, there was still no official August data available, and thus no actual indication of the slowdown.

Fortunately for buyers, real-time data proves otherwise. Zolo, a Canadian real estate brokerage, keeps track of MLS home sales in real-time and reports prices as an average rather than the “benchmark price” used by the REBGV. It currently shows a major correction underway in most Metro Vancouver markets. According to the website, the City of Vancouver currently has an average home price of $1.1 million, down 20.7% over the last 28 days and down 24.5% over the last three months. The average detached home is $2.6 million, down 7% compared to three months ago.

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What a bubble looks like. This is going to be painful. Re: Vancouver.

UK’s £8.8 Trillion Wealth Owes Much to Housing (BBG)

The total net worth of the U.K. at the end of 2015 was £8.8 trillion ($11.6 trillion), the Office for National Statistics said in London on Thursday. Much of the £493 billion jump from a year earlier came from the £355 billion increase in the value dwellings. The data also showed the U.K. was ahead of other G-7 countries in terms of growth of non-financial assets in 2014.

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More housing shock, more pain to come. “The strong price appreciation of residential real estate has been driving an increase in household debt to a record high..”

Moody’s Lowers Outlook On Australia Banks To Negative (R.)

Moody’s has lowered its outlook on Australia’s banks to negative from stable, warning of sluggish profit growth due to slow wage increases, record-low interest rates, strong lending competition and rising household debt. The agency said the banks, whose credit ratings are among the highest in the world, could be hurt by an increase in problem loans among mining companies and households in mining-dependent states. Moody’s action came after S&P in July also placed major Australian banks’ AA- ratings on negative outlook, in a signal that a downgrade was possible. Both agencies rate the banks one rung below the highest, triple-A, investment grade. A downgrade would make financing more expensive for banks at a time when regulators want them to put aside more cash to weather any repeat of the global financial crisis.

Australia’s highly profitable “Big Four” banks – National Australia Bank, ANZ Banking Group, Westpac and Commonwealth Bank – emerged from the financial crisis relatively unscathed but are facing questions over their capital levels, slowing earnings growth and rising bad debts. “The outlook change reflects Moody’s expectation of a more challenging operating environment for banks in Australia for the remainder of 2016 and beyond,” Frank Mirenzi, a vice president and senior analyst at Moody’s, said in a statement. He noted that profit growth could slow and asset quality decline, and make banks and consumers more vulnerable to economic shocks. “The strong price appreciation of residential real estate has been driving an increase in household debt to a record high,” Mirenzi noted.

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China would collapse if not for the shadow banks. It’s fully addicted.

China’s Secret Lists of Zombie Borrowers Leave Banks in the Dark (BBG)

There’s a list Ni Baixiang, head of Industrial & Commercial Bank of China’s Jiangxi branch, would love to get his hands on. Commonly referred to as the “zombie list,” it’s compiled by Jiangxi regional authorities and holds the names of the most deadbeat of borrowers: state-owned companies deemed too weak to survive and destined to be wound down. In short, the kind of enterprises banks already weighed down by rising bad loans want to steer well clear of. Only, neither Ni nor his competitors in Jiangxi are allowed to know who they are. “They won’t tell us because if we know, we’ll lose confidence,” Ni, whose bank is China’s largest, told reporters after a press briefing in Beijing earlier this month.

Ni’s dilemma underscores the challenge China faces as it tries to stem a tide of bad loans while carrying out an orderly restructuring of a state corporate sector burdened by overcapacity and bloated bureaucracies. Several provincial governments are withholding information on zombie borrowers from banks for fear that they’ll cut off financing immediately, according to officials who asked not to be identified. In several provinces, government-compiled lists of zombie companies are also kept secret from local banking regulators, the people said, asking not to be named discussing sensitive information. Knowing which state-owned companies get the “zombie” designation can be crucial for bankers because authorities ultimately decide whether they’ll fail, and local officials often meddle in banks’ lending decisions.

An economy growing at the slowest pace in a quarter century is adding urgency to President Xi Jinping’s push to steer China away from the investment-led model it’s relied on in the past. A key part of that is restructuring industries saddled with overcapacity, such as steel, cement and coal. McKinsey estimates that shedding surplus industrial capacity could add $5.6 trillion to the economy between now and 2030.

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China’s making up the numbers it goes along, but here’s how we find out how it’s really doing.

As China Shrinks, Mongolia Has an Epic Economic Meltdown (BBG)

Back in 2008, Mongolia honored its revered national hero Genghis Khan with an enormous, stainless steel statue on the bank of the Tuul River about a half-hour’s drive outside of the capital of Ulaanbaatar. The 13th century conqueror’s name graces the capital’s international airport and his image is also plastered on the tugrik, the local currency. Right now, Khans aren’t getting much respect. The government, having burned through much of its foreign currency reserves, faces a crushing debt burden and is having trouble meeting its civil service payroll. On Thursday, the central bank hiked its benchmark interest rate by a remarkable 4.5 percentage points to 15% to prop up the tugrik, the world’s worst performing currency in August.

Mongolia, a mineral-rich and landlocked $12 billion economy bordering Russia and China, is staring at a full-blown balance of payments crisis. It’s caused barely a ripple in global financial markets, but the nation’s economic meltdown offers instructive lessons to far bigger resource-reliant economies like Brazil, Venezuela, Russia and Saudi Arabia. This is an economy that gives new meaning to what economists call the resource curse. An overabundance of natural resources can result in lopsided economic growth, government waste and boom-bust cycles that can leave a country’s finances in tatters. “Mongolia should be much richer than it is,” said Lutz Roehmeyer, a money manager at Landesbank Berlin Investment. “There is nowhere else in the world where it is so easy to dig up resources without any problems and sell the commodities to China with such low transportation costs.”

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It’s way too late to save the euro.

Stiglitz: The Euro Is On Course To Fail (Economist)

Those in search of an antidote to the anxieties that arise from Britain’s vote to leave the European Union should avoid the latest book from Joseph Stiglitz. Its subject is the euro, which has hitherto been the main font of fears for Europe and (his analysis suggests) will soon be once again. It is a meaty subject, suited to a big-name economist. Mr Stiglitz has won a Nobel prize, served as a feather-ruffling chief economist for the World Bank and written several books with a fair claim to prescience, notably, “Globalisation and Its Discontents”, published in 2002. The main argument of his new book is that, on its current course, the euro is certain to fail—and indeed, that it was fatally flawed from birth.

It entails a fixed exchange rate and a single interest rate for its members, which means countries must forgo the option to devalue in times of economic weakness. To make up for that loss, the euro’s architects should have created institutions, such as jointly issued bonds, mutual backing of bank deposits and a common fund for unemployment insurance, so the costs of righting each economy are shared. Instead the burden falls on individual countries through austerity policies, such as tax rises and wage cuts. The results have been ugliest in Greece, where national income has shrunk by a quarter since 2007 and where the unemployment rate is 24%. There is still time to put in place better policies, thinks Mr Stiglitz. But an amicable divorce would be preferable to the current situation, which puts the considerable achievement of European integration at risk.

A good chunk of the book is taken up with a critique of policymakers’ efforts to address the euro crisis. Mr Stiglitz rightly takes issue with the blame-the-victim analysis of the euro’s failings that is commonly heard in Germany. The persistent trade surpluses of Germany and the vast deficits of boomtime Spain, Portugal and Greece are two sides of the same coin. Indeed, in a world short of aggregate demand, German thrift is the bigger failing, argues Mr Stiglitz. He favours the remedy, first proposed by John Maynard Keynes, of forcing creditor countries to adjust by taxing their trade surpluses.

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“In any protocol, everyone has to act the same. But in a blockchain like Ethereum, everyone has to think the same.”

The Subtle Tyranny of Blockchain (Thomas)

The past months have become a new chapter in the evolution of blockchain technology. Ethereum’s fork in the wake of the DAO hacks. Bitcoin’s almost-fork in the wake of the (still unresolved) block size debate. All of this is leading to the growing frustration and even disillusionment of key figures in the crypto-currency community. I left the Bitcoin community in 2012 for very similar reasons. In 2011, I was part of the group that helped Gavin Andresen design the Pay-to-Script-Hash (P2SH) feature. The design wasn’t very complex, it was backwards-compatible and provided crucial building blocks for improving Bitcoin’s security and performance. Unfortunately, getting it deployed turned out to be very political.

It was easy to extrapolate from this change to more advanced functionality still on the roadmap and get depressed about our chances to make important progress in the future. As the Bitcoin price rose, the number of stakeholders expanded and the amount of money at stake increasingly dominated the technical discussion. With this context in mind, the recent situation with Ethereum is not surprising in the slightest. As a blockchain grows, the larger and highly vested userbase becomes more and more difficult to shepard. When combined with time pressure (i.e. the 27-day DAO split creation period), something had to give. There wasn’t enough time to get the sort of buy-in and preparation needed to safely hardfork a system like Ethereum.

At the root of the difficulty in updating blockchains is the need to maintain shared state. In any protocol, everyone has to act the same. But in a blockchain like Ethereum, everyone has to think the same. Everyone’s memory (also known as “state” in computer science terms) has to be exactly the same and evolve according to the same rules. Shared state adds tremendous complexity and that has a big impact on developers: Blockchains are a pain to work with. Everyone who has done it knows what I’m talking about. The fact that blockchain has been largely ignored by major tech companies and embraced by the financial industry is partly because that industry has a relatively high tolerance for arcane and complex systems.

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To once again quote Michael Moore: You can’t declare war on a noun.

It’s Time to Abolish the DEA and America’s “War on Drugs” Gulag (CHS)

It’s difficult to pick the most destructive of America’s many senseless, futile and tragically needless wars, but the “War on Drugs” is near the top of the list.Prohibition of mind-altering substances has not just failed–it has failed spectacularly, and generated extremely destructive and counterproductive consequences. What was the result of the Prohibition of alcohol in the 1920s? Prohibition instantly criminalized 40+% of the adult populace and created hugely profitable criminal organizations. What was the result of the “War on Drugs”? This modern-day Prohibition instantly criminalized large swaths of the adult populace and created hugely profitable criminal organizations. If you want to increase drug use, criminalize innocent citizens and spawn gargantuan criminal organizations, then by all means declare “war” via Prohibition.

The results of Prohibition/War on Drugs are so visibly perverse and so destructive that the entire enterprise is sickeningly Orwellian. The well-paid apologists for Prohibition/War on Drugs claim that imprisoning millions of people “helps” them avoid drugs. If you think being tossed in prison for a few years “helps” people, then step right up and accept a fiver (5-year sentence) in an American prison, which is essentially a factory that produces one product: people damaged by imprisonment, deprived of their full citizenship, hobbled by a felony conviction–ex-con beneficiaries of years of tutorials by hardened criminals. This is as Orwellian as the Vietnam War’s famous “It became necessary to destroy the town to save it.”

If you think throwing millions of people in prison “helps” them or society, you are either insane or you’re making a living in the gulag or our sick system of “justice”. If you don’t think America has a “War on Drugs” Gulag, please glance at this chart of Americans in jail and prison – many for drug-related offenses:

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“..inside Yemen this is not perceived to be a Saudi bombing campaign, this is a US bombing campaign..”

The US Is Promoting War Crimes In Yemen (G.)

Saudi Arabia resumed its appalling war in Yemen last week and has already killed dozens more civilians, destroyed a school full of children and leveled a hospital full of sick and injured people. The campaign of indiscriminate killing – though let’s call it what it is: a war crime – has now been going on for almost a year and a half. And the United States bears a large part of the responsibility. This US-backed war is not just a case of the Obama administration sitting idly by while its close ally goes on a destructive spree of historic proportions. The government is actively selling the Saudis billions of dollars of weaponry. They’re re-supplying planes engaged in the bombing runs and providing “intelligence” for the targets that Saudi Arabia is hitting.

Put simply, the US is quite literally funding a humanitarian catastrophe that, by some measures, is larger than the crisis in Syria. As the New York Times editorial board wrote this week: “Experts say the coalition would be grounded if Washington withheld its support.” Yet all we’ve heard is crickets. High-ranking Obama administration officials are hardly ever asked about the crisis. Cable television news has almost universally ignored it. Both the Clinton and Trump presidential campaigns have been totally silent on this issue despite their constant arguing over who would be better at “stopping terrorism”. Beyond the grotesque killing of civilians, it’s clear at this point that the Saudis’ bombing campaign has also boosted al-Qaida in the Arabian Peninsula (Aqap) to a level which Reuters described as “stronger and richer” than anytime in its 20-year history.

Jake Tapper commendably broke the television news blackout about Yemen on his CNN show on Wednesday. Senator Chris Murphy of Connecticut, one of the very few elected representatives talking about the crisis, told Tapper that “it’s wild to me” that the Congress isn’t debating the “unauthorized” war in Yemen. The Saudis “could not do it without the United States”, he said. “We have made the decision to go to war in Yemen” – against Saudi Arabia’s enemies, not ours – without any debate. “If you talk to Yemenis, they will tell you that inside Yemen this is not perceived to be a Saudi bombing campaign, this is a US bombing campaign,” Murphy continued. “What’s happening is we are helping to radicalize the the Yemeni population against the United States.”

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Not from Turkey. Lybia is more likely.

Greek Coast Guard Rescues Dozens Of Migrants Stuck On Islet (AP)

Greece’s coast guard rescued dozens of migrants Friday whose boat ran aground on a deserted islet off the coast of southwestern Greece, hundreds of miles from the usual entry point of migrants into the European Union nation. The boat carrying about 70 people ran aground overnight on the tiny islet of Sapientza, off the southwestern tip of the Peloponnese, the coast guard said. The vast majority of migrants reach Greece’s eastern Aegean islands a few miles from the Turkish coast.

Coast guard vessels picked up the migrants Friday morning, ferrying them to the mainland where they were to be registered. It was not immediately clear what type of boat they had been on, where they had set sail from or where they had been sailing to. Separately, government figures showed 261 migrants or refugees arrived on Greek islands in the 24 hours from Thursday morning to Friday morning – a jump compared to recent figures, which had ranged from a few dozen to about 150 per day. Of those who arrived in the last 24 hours, the vast majority – 139 people – reached the eastern Aegean island of Lesvos. The rest arrived on Chios, Samos, Leros and Karpathos.

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Endearing.

The Fishermen of Lesbos (Hakai)

The Greek island of Lesbos is at the forefront of the refugee crisis as boatload after boatload of men, women, and children fleeing conflict in Syria, Iraq, Afghanistan, and elsewhere arrive on its shores. While citizen volunteers, NGOs, and governments claim much of the spotlight for rescue and recovery efforts, local people—especially those most experienced on the water—play a vital role, even at risk to their livelihoods and, perhaps, personal health. Greek video journalist Nikolia Apostolou introduces us to Lesbos fishermen on the front lines.

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