Jul 032020

Theodor Horydczak Washington Monument 1933 (soon to be renamed)


US Economic Reboot Menaced By Bug In The System (R.)
Florida Shatters Records With Over 10,000 New COVID19 Cases In Single Day (R.)
China Didn’t Alert WHO To Coronavirus Outbreak — The Internet Did (DC)
House Dems, Liz Cheney Restrict Trump’s Planned Troops Withdrawal (Greenwald)
Gilead Is Profiteering Off A COVID Drug We Already Paid For (Sirota)
Ghislaine Maxwell, Longtime Jeffrey Epstein Associate, Arrested (NYP)
Virginia Giuffre, Alan Dershowitz Both Lose In New Court Ruling (NYPost)
The Strategies of Dementia Politics (NR)
FedEx Asks Washington Redskins To Change The Team’s Name (NBC)



It’s Julian Assange’s birthday today. Light a candle.



Again, both the world and the US set new highs.

















How Fauci shot his credibility:



Is a virus a bug?

US Economic Reboot Menaced By Bug In The System (R.)

Like a computer suffering from a pesky virus, the U.S. economy has been shut off and turned back on. This reboot seems to be working. The economy added almost 5 million jobs in June, on top of the roughly 3 million added in May, bringing the unemployment rate down over two percentage points to 11.1%. But as frustrated tech users know, short-term fixes are usually just that. Beyond the decent headline numbers, the labor force participation rate also increased to 61.5%, and around two-fifths of the job gains were in the hard-hit leisure and hospitality sector. Also, the Bureau of Labor Statistics actually revised the net jobs added over the previous two months upwards to 90,000.

But the root source of the economic woes – Covid-19 infections and deaths – is also moving northward. The U.S. reported almost 50,000 new cases on Wednesday, the fifth daily record in a little over a week, according to the New York Times. Texas hit a whopping 8,000 new daily cases. What these relatively decent jobs numbers may actually show is an economy that reopened too quickly. In fact, recent JPMorgan data from around 30 million of its credit- and debit-card holders shows that increased spending in restaurants appeared to be correlated with a rise in new infections three weeks later.

So the fragile recovery could easily crash – or at the very least, freeze. The virus spikes are prompting states and cities to stall or reverse reopenings. Texas has closed bars and limited restaurant occupancy. California shut down bars and indoor dining in 19 counties. And even New York City, which has dramatically reduced infections, decided on Wednesday to delay bringing back indoor dining at restaurants, which had been slated to restart next week.

Ultimately, it’ll be impossible to assess the depth of the lasting economic damage until reopening is mostly complete. In the topsy-turvy world of 2020, jobs numbers are not the best way to predict how the economy will perform. Until the bug is removed from the system, or brought under control, medical statistics will provide perhaps the most important information. With almost 2.7 million confirmed Covid-19 cases and 128,000 deaths, and rising, these numbers aren’t looking good.

Read more …

Time for a holiday…

Florida Shatters Records With Over 10,000 New COVID19 Cases In Single Day (R.)

Florida shattered records on Thursday when it reported over 10,000 new coronavirus cases, the biggest one-day increase in the state since the pandemic started, according to a Reuters tally. Outbreaks in Texas, California, Florida and Arizona have helped the United States break records and send cases rising at rates not seen since April. In June, Florida infections rose by 168% or over 95,000 new cases. The percent of tests coming back positive has skyrocketed to 15% from 4% at the end of May. Florida, with 21 million residents, has reported more new daily coronavirus cases than any European country had at the height of their outbreaks.

To contain the outbreak, Florida has closed bars and some beaches but the governor has resisted requiring masks statewide in public or reimposing a lockdown. Only one other state has reported more than 10,000 new cases in a single day. New York recorded 12,847 new infections on April 10, three weeks after the state implemented a strict lockdown that closed most businesses. While the state has relaxed many measures, it requires masks in public and mandates anyone arriving from 16 other U.S. states with high infections self-quarantine for two weeks. Once the epicenter of the U.S. epidemic, New York saw cases rise by about 6% in June – the lowest rate in the entire country.

Read more …

Let’s see how this plays out.

China Didn’t Alert WHO To Coronavirus Outbreak — The Internet Did (DC)

China didn’t alert the World Health Organization (WHO) to the coronavirus outbreak, a new timeline released by the WHO shows. China’s propaganda machine has claimed that China quickly reported the viral outbreak to the WHO, a claim that the WHO’s initial timeline supported. But the WHO found out about the outbreak from the internet, not from Chinese officials contacting them, according to the new timeline. The updated timeline, which was released June 29, says the WHO “picked up a media statement by the Wuhan Municipal Health Commission from their website” and also picked up a report on an American website, though it doesn’t say in what order those two events occurred.

The WHO doesn’t link to the Wuhan health commission’s media statement that it says tipped the organization off to the outbreak. Rep. Michael McCaul, the top Republican on the House Foreign Affairs Committee, expressed skepticism that the statement even exists. “Even if the Commission posted something on their website – which we have seen no proof they have – the CCP still did not report the outbreak to the WHO as required by the International Health Regulations,” McCaul said in a statement to the Daily Caller News Foundation. “As the updated WHO timeline clearly states, WHO staff ‘picked up a media statement…from their website’ – it was not sent to them by any officials in China,” the Texas Republican continued.

“I have repeatedly requested information from the WHO about what they knew and when they knew it, and I would welcome any clarity from them on this. But, so far, they have refused to answer any of those requests,” McCaul added. Dr. Michael Ryan, a top WHO official, previously said in an April 20 news conference that the American website, ProMED, gave the WHO its first indication of the coronavirus outbreak. “On 31st December information on our epidemic intelligence from open-source platform partners, PRO-MED, was received indicating a signal of a cluster of pneumonia cases in China. That was from open sources from Wuhan,” Ryan said.

Read more …

As I was saying yesterday. How did we ever come to see such acts as normal? I have no doubt that a vast a majority of Americans want to bring the troops home.

House Dems, Liz Cheney Restrict Trump’s Planned Troops Withdrawal (Greenwald)

Last night, the House Armed Services Committee voted overwhelmingly in favor of an amendment — jointly sponsored by Democratic Congressman Jason Crow of Colorado and Congresswoman Cheney of Wyoming — prohibiting the expenditure of monies to reduce the number of U.S. troops deployed in Afghanistan below 8,000 without a series of conditions first being met. The imposed conditions are by no means trivial: for these troop reductions from Afghanistan to be allowed, the Defense Department must be able to certify, among other things, that leaving Afghanistan “will not increase the risk for the expansion of existing or formation of new terrorist safe havens inside Afghanistan” and “will not compromise or otherwise negatively affect the ongoing United States counter terrorism mission against the Islamic State, al Qaeda, and associated forces.”

The Crow/Cheney amendment to the National Defense Authorization Act (NDAA) last night passed by a vote of 45-11. The NDAA was then unanimously approved by the Committee by a vote of 56-0. It authorizes $740.5 billion in military spending — roughly three times more than the world’s second-highest spender, China. President Trump throughout the year has insisted that the Pentagon present plans for withdrawing all troops from Afghanistan prior to the end of 2020. Last week, reports indicated that “the Trump administration is close to finalizing a decision to withdraw more than 4,000 troops from Afghanistan by the fall.” Trump’s plan “would reduce the number of troops from 8,600 to 4,500 and would be the lowest number since the very earliest days of the war in Afghanistan, which began in 2001.”

In February, Trump announced an agreement with the Taliban to end the war completely. Shortly after those White House withdrawal plans were reported, anonymous intelligence officials leaked a series of claims to the New York Times regarding “bounties” allegedly being paid by Russia to Taliban fighters to kill U.S. troops. Those leaks emboldened opposition to troop withdrawal from Afghanistan on the ground that it would be capitulating to Russian treachery. It was that New York Times leak that Liz Cheney, along with GOP Congressman Mac Thornberry, cited in a joint statement on Monday to suggest troop withdrawal would be precipitous:

“After today’s briefing with senior White House officials, we remain concerned about Russian activity in Afghanistan, including reports that they have targeted U.S. forces. It has been clear for some time that Russia does not wish us well in Afghanistan. We believe it is important to vigorously pursue any information related to Russia or any other country targeting our forces. Congress has no more important obligation than providing for the security of our nation and ensuring our forces have the resources they need. We anticipate further briefings on this issue in the coming days.”

[..] The NDAA that was approved last night by the Committee also imposed restrictions on Trump’s plan to withdraw troops from Germany. Trump’s plan called for the removal of roughly 9,500 troops from German soil, reducing the number of U.S. troops in this extremely prosperous and rich European nation from 34,500 to 25,000. But by an overwhelming vote of 49-7, the Armed Service Committee approved an amendment to the NDAA that “bans the administration from lowering troop levels below current levels until 180 days after Pentagon leaders present a plan to Congress and certify it will not harm U.S. or allied interests.”

Read more …

Never let a crisis go to waste.

Gilead Is Profiteering Off A COVID Drug We Already Paid For (Sirota)

This is a story of cause and effect — a tale of repeated and calculated public policy decisions that have now led to a predictable outcome. This story begins 25 years ago, when the Clinton administration rescinded a rule that required pharmaceutical companies to charge Americans reasonable prices for medicines developed at government expense. Some progressive lawmakers tried to reinstate the rule, but Republicans and Democrats joined together to halt those initiatives. In the ensuing years, the Obama administration refused Democratic lawmakers’ demand to invoke existing federal laws to force down the price of critical medicines.

Meanwhile, the GOP also blocked legislation to let Medicare use its purchasing power to negotiate lower prices for prescription drugs All of that reflected the lobbying, campaign contributions and indomitable bipartisan power of the pharmaceutical industry in Washington. And it led to a result that this newsletter has been warning about, as Gilead just announced that it will charge privately insured Americans more than $3,000 each for a 5-day COVID treatment that was developed with financial support from the government. That’s a $3,000 price tag for a government-sponsored drug treatment that experts say the company could offer at $10 and still make a profit.

Read more …

Wonder what happened to make it happen at this particular time. She seemed safe holed up in Paris.

Bookmakers are now taking your bets on her suicide.

Ghislaine Maxwell, Longtime Jeffrey Epstein Associate, Arrested (NYP)

Longtime Jeffrey Epstein associate Ghislaine Maxwell was arrested Thursday on a six-count indictment charging her with grooming young girls for sex. The British socialite, 58, was arrested by the FBI in New Hampshire around 8:30 a.m., authorities said. The just-unsealed indictment charges stem from Maxwell’s role “in the sexual exploitation and abuse of multiple minor girls by Jeffrey Epstein” as early as 1994, court papers say. “The victims were as young as 14 years old when they were groomed and abused by Maxwell and Epstein, both of whom knew that certain victims were in fact under the age of 18,” the indictment says.

She is specifically accused of grooming three underage victims for sex with Epstein in places including his Upper East Side townhouse, Florida, New Mexico and London. Maxwell is charged with six counts — conspiracy to entice minors to travel to engage in illegal sex acts, enticement of a minor to travel to engage in illegal sex acts, conspiracy to transport minors with intent to engage in criminal sexual activity, transportation of a minor with intent to engage in criminal sexual activity and two counts of perjury. Prosecutors also accuse Maxwell — a one-time girlfriend of Epstein’s — of repeatedly lying about her involvement in the financier’s sex trafficking ring during a 2016 deposition.

Read more …

From Wednesday, before Ghislaine was arrested. I’m thinking there is probably a connection, but I don’t know which.

There’s a curious line in here:

“The 13-page ruling said Cooper & Kirk “has not, from what the Court can tell, been actively working on the case.”

She has to destroy all the evidence because her lawyers were not working? What?

Virginia Giuffre, Alan Dershowitz Both Lose In New Court Ruling (NYPost)

Attorneys for alleged Jeffrey Epstein “sex slave” Virginia Roberts Giuffre were ordered Wednesday to destroy evidence from her case against Ghislaine Maxwell — as lawyer Alan Dershowitz was also denied access to the potentially explosive information. Manhattan federal Judge Loretta Preska said she was “troubled” to learn during oral arguments last week that Giuffre’s lawyers, from the firm of Cooper & Kirk, had been given sealed records from her since-settled suit against Maxwell, who Giuffre claims recruited her to have sex with Epstein and his pals while she was underage.

The other men allegedly include Dershowitz, whom Giuffre is suing for defamation over his public denials of her accusations, including calling her a “certified, complete, total liar,” and who is counter-suing Giuffre for causing “serious harm … to his reputation, his business and his health.” “As a practical matter, the Court would be surprised — shocked, even — if Cooper & Kirk was not in some sense ‘using’ the Maxwell discovery in its representation of Ms. Giuffre in her action against Mr. Dershowitz,” the judge wrote.

Preska also rejected claims by Giuffre’s lawyers that they were entitled to the evidence, obtained from her former attorneys at Boies Schiller Flexner, because they’d been hired to represent her in the Maxwell case. The 13-page ruling said Cooper & Kirk “has not, from what the Court can tell, been actively working on the case.” Preska directed the Cooper & Kirk lawyers to destroy the evidence, along with “any material, including work product, derived from” it, and to submit an affidavit afterward.

Read more …

I know I’m not supposed to quote right wing media, but this is just too funny. And it raises a valid point: they can’t keep Biden hidden from view forever, and now when he does come out, he’ll be nervous.

The Strategies of Dementia Politics (NR)

Stoke chaos, obstruct economic recovery, and hide Biden in the basement till Election Day.

Joe Biden is tragically suffering a mental eclipse and sliding away at a geometric rate. Understandably, his handlers have kept him out of sight. He stays off the campaign trail on the pretext of the virus and his age-related susceptibility to COVID-19 morbidity. I say “pretext” without apology. Quarantine should not have otherwise stopped Biden over the past three months from doing daily interviews, speeches, and meetings. But each occasion, however scripted, rehearsed, and canned, would only have offered further daily proof that Biden is cognitively unable to be president or indeed to hold any office. Often Biden cannot finish a sentence. Names are vague eddies in his mind’s river of forgetfulness.

He is in a far more dire mental state than a physically failing FDR was in his 1944 campaign for a fourth term. The earlier career of a healthy Biden illustrates that he was not especially sharp even when in control of most of his faculties. We recall the former sane/nutty Biden of Neal Kinnock plagiarism, his “put y’all in chains” demagoguery, the studied racism of Biden’s riffs about a “clean” and well-spoken Obama, and the sane/insane Corn Pop stories. All are the trademark of a once fool Joe Biden, who was at least alert when compared with his current catalepsy. If Donald Trump can be ungrammatical, Biden is agrammatical — he simply streams together half-thoughts without syntax and then abandons the sentence entirely.

If Trump repeats vocabulary, Biden increasingly searches for words, any noun, whatever its irrelevance to the point he is making. Biden seems to suffer dyscognitive seizures, in which for moments he has no idea what he is doing or saying or where he is — a tragic, nearly epileptic condition. In scary episodes, the pale, scaly, and frozen visage of Biden appears almost reptilian, like a lizard freezing and remaining stationary as it struggles to process signals of perceived danger. Inserting memorized answers into rehearsed questions, as if the entire con was spontaneous, only reveals how his once episodic dementia has become chronic as he loses his prompt and place. It was understandable that his handlers saw opportunity in secluding Biden during Trump’s tweeting, alongside the contagion, the lockdown, the recession, and the rioting that in voters’ minds had equated fear of chaos with the culpability of the current commander in chief.

Read more …

Redskins was always a problem. But while you’re toppling Washington statues, you want to keep his name linked to the team, the city? Can anyone explain the logic?

FedEx Asks Washington Redskins To Change The Team’s Name (NBC)

FedEx has asked the Washington Redskins to officially change their name, long condemned as an anti-Indigenous slur. The shipping company has communicated to the team a request that it change its name, FedEx confirmed Thursday in a statement to NBC News. FedEx owns the naming rights to the Maryland field where the team plays, and its chief executive, Fred Smith, owns a minority stake in the team. FedEx’s request comes a day after Adweek reported that 87 investment firms and shareholders worth $620 billion sent a letter urging FedEx, Nike and PepsiCo to stop doing business with the team until the name is changed.

In 2017, the Supreme Court struck down part of a law that bans offensive trademarks, which helped the team get the Redskins trademark back in 2018. The Trademark Trial and Appeal Board had canceled the registration as offensive to American Indians. [..] Mayor Muriel Bowser said last month on Washington radio station WTEM that the name has been an obstacle in getting the city its own stadium. “I think it’s past time for the team to deal with what offends so many people,” Bowser said. “And this is a great franchise with a great history that’s beloved in Washington, and it deserves a name that reflects the affection that we’ve built for the team.” [..] Dan Snyder, the team’s majority owner, told USA Today in 2013 that he would “never change the name.” “It’s that simple. NEVER — you can use caps,” he said.

Read more …



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Jun 112020

Cy Twombly Achilles’ Shield 1978


Virtue signaling in the US of A has already reached new heights, and there’s little reason to believe it won’t reach even much higher as we happily signal along. In the process, we will find that applying logic to the undertaking will take us to unanticipated, and highly undesirable (for most protesters), places. But by then a lot of damage, whether we think that’s a good thing or not, will have been done.

HBO opened a Pandora’s Box all of its own when it pulled Gone With the Wind, despite that fact that Hattie McDaniel was the first black American Oscar nominee AND winner. Let’s erase that too. Along with ALL other films that depict slavery in the “wrong” light, or, better yet, that depict slavery at all.

Let’s ban all links to slavery, let’s pretend it never existed, because if we don’t we will find it’s impossible to decide between what we do and do not want to last. not all people have the same preferences or opinions, and neither do all black people.

And while we’re talking movies, and Columbus statues are toppled across the nation because Christopher (before there were any “Americans”) treated indigenous Americans poorly, do let’s ban all Hollywood westerns in which “Indians” are depicted as cannon fodder. No more John Wayne for you. Gone even the few non-westerns Wayne appeared in, because his name and face are forever linked to killing “Indians”. No more Duke.


And why stop there? Just to name an example, Harper Lee’s To Kill a Mockingbird, arguably a great book and a good movie, depicts a white man “being compassionate” to a black man oppressed by other white men. Can’t have that, the oppression is obviously racist and so is the good(!) white(!) man who’s the protagonist of the story, written by a white woman(!).

Let’s leaf through all American and other world literature of the past half millennium that describes slavery, including that which talks about “good white” men. There are no good white men!

Anything to do with native Americans must go. Because they were badly treated throughout the 500 years of history they share with white people (Europeans). They still are, just like African Americans. Same difference. Phillis Wheatley, Harriet Beecher Stowe, Alice Walker, Toni Morrison? Don’t think so. They were all talking about slavery. And we’re toppling statues in order to stop that talk.

Frederick Douglass? You got to be kidding. His autobiography is called “Narrative of the Life of Frederick Douglass, an American Slave“. Isn’t that enough to topple him? James Baldwin, Ralph Ellison, they all remind us of a period we don’t want to be reminded of anymore. It’s enough! No more slavery!

Martin Luther King? Get serious, he talks about nothing but oppression. He even claims black people in his lifetime were still slaves. Muhammad Ali is obviously not welcome anymore, he spoke just about exclusively from the viewpoint of an oppressed man.


Washington, D.C. is the capital of the United States of America. George Washington was a slaveholder, he’s obviously out. D.C. stands for District of Columbia, named after Columbus, so that needs a new name. The country gets its name from a Columbus contemporary and fellow explorer who was a slave holder and treated indigenous populations of the countries he “visited” no better than Columbus did. Wikipedia:

Amerigo Vespucci wrote his will in April 1511. He left most of his modest estate, including five household slaves, to his wife.

[..] After Hispaniola they made a brief slave raid in the Bahamas, capturing 232 natives and then returned to Spain.

There once was a time when Washington, D.C. was the capital of the United States of America. But those days must soon be gone. How can you hold on to a name for your capital city that belongs to a man who was a brazen slave holder? Or the district the capital is in? And how can you breathe in a country named after a despicable Italian slaveholder and slave trader?

The US constitution was largely written by slave holders. We’re going to need a new one.



There are 1747 “symbols of the Confederacy” in the US. I’m guessing Pelosi, once those 11 statues at the Capitol have been toppled, will start work on getting rid of the other 1736 too. And mind you, this doesn’t yet include Columbus, Vespucci, or anyone else who’s “mistreated”, enslaved, murdered, native Americans. We will easily have twice the 1747 number once we include those.

For that matter, if you’re Nancy Pelosi, how and why do you dress up in the “kente cloth” fabrics that originate with the Asanthi people that ruled in present-day Ghana from mid-1600s to mid-1900s, and were themselves … slaveholders and slave traders? Who sold god knows how many African slaves to European slave traders? How can you dress up in the garb of slave traders to protest the mistreatment of the grandchildren of slaves? Short circuit? Temporary?



For all the protesters other than Pelosi, who herself obviously joined in only for political reasons, here’s a question: Do you oppose slavery, or only slavery on US soil? Because, you know, the Romans had slaves, many African tribes had slaves, present day Chinese people did. Australia? Slave country if I ever saw one. The deeper you dig into history, the more you will find. I don’t want to bore you with an extensive list, because it would be too extensive.



Or maybe a second question, though it has mostly already been answered: Is this protest only about slavery, or about the oppression of people(s) in general? It’s already been answered in toppling the Columbus statues, since Christopher was not a slavetrader as far as we know, so, see above, we’re talking about both “indians” and “negroes”.

I use both derogatory terms on purpose, precisely because they paint the picture of what things used to be like. That they are no longer tolerated tells a story all by itself. And yes, much more is needed, but can that be achieved by toppling statues and banning books and movies? Is that how those two terms were banned?

We cannot escape our past and probably that’s the reason we shouldn’t try. What we need to do, what our role in the story is, is to not follow in the “footsteps of wrong”, and to do better. Do we have a better chance at doing better and escaping “wrong” if and when we ban all symbols of it, so we can no longer see it?

Or is our best chance to let all these things last so we can point at them to say: that is wrong!? If all the statues and books and movies are gone, how will our children know?

And I haven’t even mentioned the music yet, the unique melting pot of European melodies and African beats that gave the world blues and jazz and rock, all born from the plantation life that so many stories depict, and the music itself, growing under the statuesque eyes of the likes of Jefferson Davis or George Washington.

Maybe if you like your blues and jazz and rock and rap, you should call for the statues and books to remain standing, because without the narratives they bear witness to, there would be no blues, or anything that came after. Maybe you should celebrate your ancestors’ genius that gave America (or whatever you wind up calling it soon) its music, which, accidentally, has conquered all the countries of all the slavetraders of the past.

Maybe the music, the books, represent your ancestors’ victory over their oppressors, and maybe you risk tainting that hard-fought victory by trying to erase the memories of those they fought against to attain it.

And no, you can’t just pick the books and statues and music you would like and dump everything else. It doesn’t work that way. Your neighbor might have slightly different criteria and pick other favorites, and so on.

You can’t say we’ll hold on to Toni Morrison and throw out Harper Lee, you can’t dump Gone With the Wind but keep Guess Who’s Coming to Dinner, because each of these are part of the exact same story.

It’s a package deal, called history. And you’re not going to get the best end of that deal by pretending history doesn’t exist.




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Mar 192019

Leonardo da Vinci First anatomical studies c1515



Sometimes we find ourselves merely pondering, not so much solving big problems. Is there playing out, in the world at large, or at least the world of men, something akin to the Kondratieff cycle in economics, a larger cycle, a force, a tide, an energy, that we mostly ignore, but which drives our ‘affairs’? Dr. D. thinks there may well be. But if so, what happens to free will?

Dr. D.:



Dr. D.: I seem to have taken a dark and grumpy turn lately.  Probably the winter, but as I get older, I find the present state of the world more and more frustrating.

I fear with the present madness it’s just de rigor to 1) label people as something they’re not, even the OPPOSITE of what they are, 2) furiously fight that strawman and 3) not care.  I have no explanation for it, but there are times and tides in the affairs of men (as Shakespeare would say) which flood you out and cost a fortune.  …Or something like that.

And it’s certainly flooding in Europe right now, as darkness falls as the shutters of censorship and totalitarianism are bolted up everywhere, every bit as clear and methodical as was done in 1935, even with a call for a shiny new army.  …To use on no one, of course, because we all know broke nations fund and create armies for no ill intent whatsoever.  But these things happen regularly.

“If…any person had told me that there would have been such [chaos] as [now] exists, I would have thought them a bedlamite, a fit subject for a madhouse.”
– George Washington, 1786 (after a fiat money blowoff in the states)

My belief is that these things happen from forces outside ourselves and are sadly predictable, as “the lesson of history is that no one learns anything from history.”  There may be the “Fourth Turning” of generations, but a 4th-of-4 turning is some 200 years, the next cycle, the next fractal up, and things crack quite a bit wider. 

As this follows exactly the weather, earthquake, and volcanic cycles, it suggests far more its external origin, the way birds grow senselessly restless and flock in fall, or animals are agitated and predict earthquakes.  In this case, my guess is the human nervous system is very sensitive to the fluctuations in the sun, or possibly further, the wing of the galaxy we fly through like sand ripples 240 years apart.  What else could it be to affect men, weather, and volcanoes all at once?


But I suspect the additional energy flooding into all men gives them a very hard time, hyping them up, and those who don’t know how to shed and direct the energy appropriately — which is most of us — become manic and unthinking, and to some extent collectively go mad.  As events on the ground direct them, so it can be channeled into grandeur, like the industrial revolution, or into a suicidal bloodbath like Jacobin France.

We appear to desire the latter right now, where the most astonishing, easily falsifiable accusations are made, and followed through just as thoughtlessly by the mob.  They attack and hang one man one day, then the next his accuser comes under scrutiny and is hanged in turn, yet no one makes a call to sense and order, but rather to more ghosts, more bogymen, and more panic that chases them in turn like the devil of Sir Thomas More. …Thankfully merely murder-by-reputation so far, but it would be shocking indeed if that lasted long.

I also believe men know this, and far from stopping it, prefer to make fortunes by going with the tide and pushing it along, tirelessly undermining nations they can short, and then supporting the kings rising on the wheel of fortune and hitching to their star until in the next cycle they will be undermined in turn. 

Unfortunately, it is Europe and America’s time down on the wheel, and they are doing everything they can — spending trillions, directing Facebook and the Guardian, buying ministers and judges, undermining every pillar of our society, economic, social, moral — in their quest to drive us down, and therefore buy us up cheap in “Disaster Capitalism.”  And being in the lowering tide, we don’t need any additional help.


However, with such sturm und drang, there’s just shouting man to man everywhere, sheer bedlam, and otherwise good people get caught up in it, accusing you, accusing me, and exhausting and ruining themselves at a time we most need to pull together, make forgiveness, and apply what limited forces we have to the task of saving ourselves and our values.

So what do we do? Well if indeed we are each being over-energized and overloaded as it seems, we need to calm and ground ourselves in deeper principles that are unchanging — a thing far easier said than done. 

However, if we can see that all of us are in the same dilemma, we are all ill-at-ease, and it’s not the other guy, it’s ourselves too that is short tempered, short-sighted, jumping to conclusions — in a word: short — then we can go through the day and this time better, and address it better, redress it better, and make more accurate, more practical and productive responses than if we didn’t know where our new trouble and new agitation is coming from.

Because history shows these things happen, and we’re in it now and it’s clearly happening to us. Perceiving all this years ago, I took myself to a humble place and planted trees, as the Stoics at the fall of Rome retreated to walled gardens and enjoyed what life they could, and although it’s a hard life and everyone’s answer is different, these things pass and all men have troubles and die even in the best of times.

So while I find it as frustrating as anyone, to be outrageously accused, to not be heard day after day, I try to keep perspective as well.  It may not be a help to them, but it’s a help to me at least, so I can possibly answer the call to help someday, should any someday come.

But I don’t think so.  Like Robespierre or Washington, I expect it to vent its madness on me and on us all with little restraint instead.  My job is to weather it as I can and wait for better springs to come, which they will, but decades from now.


“There is a tide in the affairs of men, Which taken at the flood, leads on to fortune.”
– Julius Caesar Act 4 Scene 3



Aug 192017
 August 19, 2017  Posted by at 10:00 am Finance Tagged with: , , , , , , , , ,  6 Responses »

Fred Stein Man in pushcart, New York 1944


We’re Racing Towards Another Private Debt Crisis (Graeber)
China Moves To Curb Overseas Acquisitions As Firms’ Debt Levels Rise (G.)
Wells Fargo Troubles Shift From Phony Bank Accounts To Real Ones (R.)
Total Eclipse (Jim Kunstler)
A House Divided Against Itself Cannot Stand (Paul Craig Roberts)
The Truth Will Not Be Googled (Connelly)
Greek Pensioners Set For Another Blow (K.)
The Super Gangs Behind Africa’s Poaching Crisis (G.)
Want To Fight Climate Change? Don’t Invest In Tesla (MW)



David Graeber on the all too obvious. So yeah, let’s have that inquiry.

We’re Racing Towards Another Private Debt Crisis (Graeber)

This is a call for a public inquiry on the current situation regarding private debt. For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And – this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That’s what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don’t do something about it, the results will, inevitably, be another catastrophe. These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.” As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt. We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened. Now, if this seems to have very little to do with the way politicians talk about such matters, there’s a simple reason: most politicians don’t actually know any of this. A recent survey showed 90% of MPs don’t even understand where money comes from (they think it’s issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

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It’s getting serious.

China Moves To Curb Overseas Acquisitions As Firms’ Debt Levels Rise (G.)

The Chinese government has served notice on the country’s foreign investment spree in football clubs, skyscrapers and Hollywood as it moves to curb rising levels of debt among domestic companies. The announcement of restrictions in a range of sectors follows a buying spree around the globe during which Chinese firms and business tycoons have taken control of assets including Legendary Entertainment, the US film producer behind Jurassic World and Warcraft, buildings such as the Cheesegrater in London, and English football clubs including Southampton and Aston Villa. The curbs were announced in a document released on Friday by the state council, China’s cabinet, in the latest move to halt a string of foreign acquisitions. This week the IMF described China’s credit-fuelled economic strategy as dangerous, in a strongly worded statement warning that the country’s approach risks financial turmoil.

Raising concerns that some of the companies involved may be taking on too much debt, the council said: “There are great opportunities for our nation’s companies to embark on foreign investment, but they also face numerous risks and challenges.” It added that through the new guidance, the government hopes to promote the “rational, orderly and healthy development of foreign investment while effectively guarding against risks”. The document limits overseas investments in areas such as hotels, cinemas, the entertainment industry, real estate and sports clubs. It also bans outright investments in enterprises related to gambling and the sex industry. The Chinese government had already flagged hotels as an area of concern, having reportedly asked the insurance group Anbang to sell the Waldorf Astoria hotel in New York.

One of China’s biggest conglomerates, Wanda Group, also bowed to pressure from the government when it abandoned the $1bn (£780m) purchase of the entertainment company Dick Clark Productions earlier this year. In 2016 Wanda bought Legendary Entertainment for $3.5bn, having become the world’s biggest cinema operator in 2012 with its purchase of a majority stake in US chain AMC for $2.6bn. At the same time, the document encourages companies to plough money into projects related to the “Belt and Road” project, President Xi Jinping’s signature foreign policy initiative that seeks to link China with other parts of Asia and eastern Europe through multibillion-dollar investments in ports, highways, railways, power plants and other infrastructure.

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Why is Wells Fargo a going concern? Close it.

Wells Fargo Troubles Shift From Phony Bank Accounts To Real Ones (R.)

After paying customers millions of dollars for opening phony accounts they did not want, Wells Fargo has said it is now grappling with the possibility it harmed customers by closing real accounts they needed, leaving them without access to funds. Wells, the third-largest U.S. bank, disclosed in a regulatory filing on Aug. 4 that the Consumer Financial Protection Bureau (CFPB) is looking into the matter, one of many regulatory probes the bank faces over its treatment of depositors and borrowers. A Reuters review of the regulator’s complaints database found several instances of customers reporting financial hardship in recent years after Wells Fargo unexpectedly froze or closed their accounts. Some of the complaints described fraudulent deposits of unknown origin.

Others said they were victims of identity theft and Wells Fargo closed their accounts and refused to reopen them or open new ones. One customer said the bank closed an account after a hacker changed personal information, and then Wells Fargo improperly sent funds to the wrong address. The complaints had consistent themes of confusion about why accounts were frozen or closed, and reflected desperation over being unable to access money, as well as frustration over not getting help from Wells Fargo’s customer service. “I moved money from my mother’s savings account into her checking account the day before she passed away,” one Wells Fargo customer wrote. “This checking account has been ‘locked’ by the fraud department for almost 3 months … Now her debts are delinquent and mortgage about to go into foreclosure.”

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Rename the capital!

Total Eclipse (Jim Kunstler)

I’d like to hear to hear an argument as to why the Washington Monument should remain dedicated to that vicious slave-driver and rebellious soldier, and indeed the name of the city that is the federal seat of government. Or the District of Columbia (after Columbus, who initiated the genocide of Native Americans). Or America, cribbed out of Amerigo Vespucci, the wicked Florentine cartographer who ascertained that the place called Brazil today was not the east coast of Asia but actually a New World — and so all our troubles began![..] Just as empires tend to build their most grandiose monuments prior to collapse, our tottering empire is concocting the most monumentally ludicrous delusions before it slides down the laundry chute of history.

It’s as if the Marx Brothers colluded with Alfred Hitchcock to dream up a melodramatic climax to the American Century that would be the most ridiculous and embarrassing to our posterity. In the meantime, many citizens await Monday’s spectacle of a total solar eclipse in parts of the country. They apparently don’t realize that another eclipse has been underway for months: the total eclipse of reality across the entire landscape of the USA. Now that has been an event to behold, not just some twenty-minute freak of astronomy. What’s being blacked out is the perilously fragile condition of the financial system — a great groaning Rube Goldberg contraption of accounting fraud, grift, statistical deceit, and racketeering that pretends to support the day-to-day activities of our national life.

For months, the recognition of this oncoming financial monster has been blocked by the hallucination of gremlins from the Kremlin infiltrating the recent presidential election. But just as that mirage was dissolving, along comes the treacherous invasion of the Confederate statues. It begins to look like the final piece of the puzzle in the Deep State’s quest to eject Donald Trump from the oval office. His response to the deadly statue situation (“…why not Washington and Jefferson…?”) was deemed so obtuse and unfeeling that even the rodents of his own nominal Republican Party want to jump his ship of state.

So, the set-up could not be more perfect! The country will now get down to the business of a months-long 25th Amendment circle-jerk at the very moment that the financial system flies apart. The damage from the financial clusterfuck will be much more real, and much worse, than anything that might be spun out of the anti-statue crusade hogging the headlines today. It will be interesting to see whether the old legacy media even reports on it as it happens, or whether they will cook up new and more bizarre entertainments to distract the public from what might be the ultimate swindling of a lifetime.

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The echo chamber causes hearing damage.

A House Divided Against Itself Cannot Stand (Paul Craig Roberts)

The liberal/progressive/left are enjoying their drunkfest of denunciation. I can’t say I have ever witnessed anything like it. These are the people who sat on their hands for 16 years while Washington destroyed in whole or part seven countries. Not being satisfied with this level of warmongering and crimes against humanity, Washington orchestrated a conflict situation with Russia. Americans elected a president who said he would defuse this dangerous conflict, and the liberal/progressive/left turned on him. In contrast, one person is killed after the hated Charlottesville protest event was over, and there is endless absurd outrage against the president of the US. Three New York Times presstitutes yesterday blamed the crisis on Trump, declaring him “increasingly isolated in a racial crisis of his own making.”

Apparently, Trump is responsible for the crisis because he blamed both protest groups for the violence. But isn’t that what happened? Wasn’t there violence on both sides? That was the impression I got from the news reporting. I’m not surprised that Trump got the same impression. Indeed, many readers have sent emails that they received the same impression of mutual violence. So Trump is being damned for stating the truth. Let’s assume that the impression Trump and many others got from the news is wrong. That would make Trump guilty of arriving at a mistaken conclusion. Yet, he is accused of instigating and supporting Nazi violence. How is it possible to transform a mistake into evil intent? A mistaken impression gained from news reporting does not constitute a “defense of white nationalist protesters.”

An assertion by the New York Times cannot turn the absence of intent into intent. What the Establishment is trying to do is to push Trump into the arms of white supremacists, which is where they want him. Clearly, there is no basis for this charge. It is a lie, an orchestration that is being used to delegitimize President Trump and those who elected him. The question is: who is behind this orchestration? The orchestration is causing people to run away from Trump or is being used as an excuse by them to further the plot to remove him from office. Trump’s Strategic and Policy Forum headed by Stephen A. Schwarzman ran away, just as members of the Carter Center’s board deserted President Jimmy Carter when he criticized Israel for its apartheid policy toward the Palestinians. The New York Times says that the armed services chiefs are running away. And the entire Republican Party.

The hypocrisy is stunning. For 16 years the armed services chiefs, the New York Times and the rest of the presstitute media, both political parties and the liberal/progressive/left have participated actively or passively in massive crimes against humanity. There are millions of dead, maimed, and displaced people. Yet one death in Charlottesville has produced a greater outpouring of protest. I don’t believe it is sincere. I don’t believe that people who are insensitive to the deaths of millions at the hands of their government can be so upset over the death of one person. Assume that Trump is responsible for the death of the woman. How much blood is it compared to the blood on the hands of Bill Clinton, George W. Bush, and Obama?

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Too much monopoly, too much power.

The Truth Will Not Be Googled (Connelly)

While web-hosting services have been criticised for cancelling the registration of neo-Nazi website, Daily Stormer, progressive left-leaning sites are losing Google ranking and traffic because of a deliberate move to censor “fake” news by the internet search giant. New data released by World Socialist Websites (WSWS) revealed that sites such as Wikileaks, The Intercept, Electronic Frontiers Foundation, the American Civil Liberties Organisation, CounterPunch and many other organisations with the audacity to provide context about the activities of federal governments not reported in mainstream publications have experienced a significant drop in traffic after Google altered its algorithm. (WSWS is an online news and information service founded by the International Committee of the Fourth International, the leadership of the world socialist movement).

Earlier this week, internet hosting provider, GoDaddy, announced it had cancelled US neo-Nazi website, Daily Stormer, for posting an attack on Heather Heyer, the protester who was murdered at the Klan rally in Charlottesville last week. Google and CloudFlare likewise cancelled its registration after the site tried to move its hosting over to their respective services. But while these hosting services are being congratulated by some – and condemned by others on free-speech grounds – for ensuring that those looking to commit violence have to work slightly harder to get access to their like-minded Nazi communities, those who own the means of transmission – namely Google, Facebook and Twitter – are still preventing the rest of us from accessing information that allows people to make sense of the world around us.

Earlier this month, Google altered its algorithm – allegedly in an attempt to address the ‘fake news’ problem – and in doing so, a broad array of anti-establishment news organisations, whistleblower, civil-rights and anti-war websites were censored from its search listings. But most people were too distracted by the opinions of some low-level engineer on Google’s diversity hiring policies and its intolerance of conservative views in the workplace to take notice. The data released by WSWS shows that since Google altered its algorithm, Wikileaks experienced a 30% decline in traffic from Google searches. Democracy Now fell by 36%. Truthout dropped by 25%. Its own traffic dropped by 67% percent over the same period. Alternet saw a 63% decline in traffic. Media Matters saw a 36% drop in traffic. Counterpunch.org fell by 21%. The Intercept fell by 19%.

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Greek Pensioners Set For Another Blow (K.)

Pension applications submitted after May 13, 2016 – after the so-called Katrougalos law was legislated – reveal significant cuts in pension payments. According to the relevant data, five categories of pensioners will suffer cuts due to the new way pensions are calculated. Overall, experts estimate that by the year 2020 some 200,000 retirees will receive pensions that do not correspond to the amount of money they contributed to the funds during their working lives. In some cases, pensioners will receive 30% less than what they would have received had the Katrougalos law not come into effect. The overall reduction is estimated at 12 to 16%. The hardest hit will be civil servants, especially those who have worked for more than 30 years and belong to the categories of University and Technological Education. Other categories of pensioners that will be negatively impacted are those who made above-average contributions to the IKA social security foundation for more than 30 years.

Meanwhile, those who made medium or large contributions to the TEVE fund for the self-employed will also lose out. Others who can expect to be affected by pension cuts are people who contributed for 30 years to the retailer’ insurance fund (TAE) or the professional drivers’ pension fund (TSA). The new pension system, however, will favor retirees with monthly gross earnings below €700 and less than 30 years of insurance – in line with the declaration made by former labor minister Giorgos Katrougalos that the new system would be classless and favor people with low incomes. This category includes people insured for 20 to 30 years with IKA, who will retire with a gross remuneration of around €1,000, or the former social security fund for professional drivers (TSA). Those insured at several public enterprises (DEKO) and bank funds will also be entitled to an increase in their pension because they pay very high contributions.

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Man is losing the world to his own greed. Selling mother earth.

The Super Gangs Behind Africa’s Poaching Crisis (G.)

“It’s not hundreds of groups involved in ivory trafficking – there are just a handful of networks operating across Africa,” says Paula Kahumbu, a conservationist and elephant expert who runs Wildlife Direct, a Kenyan organisation working to stop the ivory trade and which deploys teams to closely observe trials such as Ali’s. lose scrutiny of cases – including making copies of court documents and video recording proceedings – keeps courts and judges honest and prevents the disappearance of files that so often scuppers trials. Wildlife Direct’s pressure was instrumental in ensuring Ali’s case went the distance. At the end, says Kahumbu, there was “a phenomenal sense of achievement”. “It was a huge surprise,” says Ofir Drori, an Israeli wildlife activist and co-founder of the Eagle Network, a group responsible for the prosecution of hundreds of traffickers, big and small, over the years, and who was involved in tracking Ali.

“Every Kenyan will tell you: what’s supposed to happen is that if you belong to a strong syndicate, you’re out.” It was the syndicate aspect that interested Gretchen Peters. A former foreign correspondent in Afghanistan and Pakistan, Peters had become fascinated by the links between drugs and terrorism that she saw in the Taliban’s heroin operation, and by the hidden connections between other forms of criminality. Ditching journalism, she decided to tackle wildlife crime. Peters set up the Satao Project – named after one of Kenya’s magisterial “tusker” bull elephants, killed by a poacher’s poisoned arrow in 2014 – to investigate criminal gangs in 2015 but quickly ran into the underlying problem: corruption. “If there’s a network that is moving illegal goods from one country to another, there are inevitably government officials involved, protecting them or looking the other way,” she says. “It is impossible for that not to be happening.”

Hired by the US department of state, Peters began by studying ivory supply chains in Tanzania and Kenya, but her investigations quickly enveloped Uganda too and spread into other forms of trafficking. There is in East Africa, she says, “a regional ecosystem moving ivory, drugs and guns … a matrix of different organisations that collaborate to move illegal goods along the Swahili coast.” The overlap between drugs and ivory smuggling came as no surprise to her. “I’m not aware of any syndicate trafficking ivory transnationally that is only moving ivory,” she says. No illicit commodity is as profitable as drugs, so: “When you get up to the traffickers they’re almost inevitably moving narcotics too.”

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Thermodynamics 101.

Want To Fight Climate Change? Don’t Invest In Tesla (MW)

Morgan Stanley identified 39 stocks that generate at least half their revenue “from the provision of solutions to climate change,” something it said was a central component of investing to make a difference, as opposed to just a making a buck. “In our view, impact investing needs to begin with companies whose products and services have a notable positive environmental or social impact,” wrote Jessica Alsford, an equity strategist at the investment bank. Not surprisingly, alternative-energy companies ranked the highest in terms of their positive impact, and the “top five climate-change impact stocks” were all manufacturers of solar and wind energy: Canadian Solar, China High Speed Transmission, GCL-Poly, Daqo New Energy and Jinko Solar. Not among the top companies? Electric-car makers, including Tesla. Elon Musk’s company has been an investor favorite for years, even eclipsing Ford and General Motors in market cap.

Tesla shares are up nearly 66% so far this year, but the good it may have been doing for portfolios may not translate to it doing good for the planet. Morgan Stanley said this was one of the “biggest surprises” of its study. The bank grouped the “climate-change impact stocks” into four sector categories: utilities, renewable manufacturers, green infrastructure companies and transportation stocks. It then analyzed them on a number of metrics, including “the CO2 [carbon dioxide] savings achieved from the products and services sold by the companies,” as well as secondary and tertiary factors centered around the environmental impact of the making of these products. This is where Tesla, along with China’s Guoxuan High-Tech, fall short.

“Whilst the electric vehicles and lithium batteries manufactured by these two companies do indeed help to reduce direct CO2 emissions from vehicles, electricity is needed to power them,” Morgan Stanley wrote. “And with their primary markets still largely weighted towards fossil-fuel power (72% in the U.S. and 75% in China) the CO2 emissions from this electricity generation are still material.” In other words, “the carbon emissions generated by the electricity required for electric vehicles are greater than those saved by cutting out direct vehicle emissions.” Morgan Stanley calculated that an investment of $1 million in Canadian Solar results in nearly 15,300 metric tons of carbon dioxide being saved every year. For Tesla, such an investment adds nearly one-third of a metric ton of CO2.

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Jan 032015
 January 3, 2015  Posted by at 10:24 pm Finance Tagged with: , , , , , , ,  10 Responses »

James F. Gibson Tent of A. Foulke, Horse Artillery, Brandy Station, Virginia 1864

Iran has a – very – long running dispute with the US about its nuclear technology. The US wants Assad (Bashar Al-Assad) out of Syria, while Iran and Russia support Assad (Russia’s sole proper base in the Middle East), who’s an Alawite (a Shi-ite branch), a people historically persecuted by Sunni’s. ISIS (or Daesh in the region) is Sunni. So are the Saudi’s. Iran is Shi’ite. Bahrain is ruled by Sunni but has a majority Shi’ite population. And I could go on for a while. A long while.

All this plays into the oil game, the falling oil prices. Blaming OPEC for the recent price fall is seeing the world from a child’s perspective. OPEC and its major voteholder, Saudi Arabia, are no more to blame for the plunge than the US, Russia or other non-OPEC producers. Everybody produces as if there’s no tomorrow, and the Saudi’s have merely concluded that their only choice is to do the same. It’s a race to the bottom.

The reason is the fast declining demand for oil; China is nowhere near as mighty as we seem to think, Europe is a basket case, emerging economies are being strangled as we speak by the surging dollar and the Fed taper, and we’re just getting started. It’s cute and all that nobody wonders how much virtual money has vanished into the great beyond as both oil itself and the companies that get it out of the earth have lost half of their ‘values’ in Q4 2014, let alone the countries that depend on oil for their very existence. But cute doesn’t cut it.

Oliver Stone talks about ‘Ukraine: The CIA Coup’. I’ve talked about exactly that all of last year. While on vacation, Obama declares new sanctions on North Korea for hacking a Japanese company only the FBI claims it was guilty of. While US sanctions against Iran are ongoing.

America is trying to control the world by throwing it into confusion, emboldened by poorly understood theories about military superiority, and creating conflicts all over the place that look like they will never be solved. Whereas all it would need to do is make sure it secures itself, its own territory, not control the entire planet.

That was always a stupid idea. No big dream empire has ever lasted long enough to truly enjoy the fruits of its dreams for more than ten minutes or so. They’ve all ended in horrific bloodshed. The dark visions of impotent power hungry masters and servants have thrown overstretched empires into lethal turmoil for many thousands of years. It’s just that now, for the first time, it’s happening on a truly global scale.

The result will be the same; only, it’ll all go even more spectacularly wrong. It’s the way things go. But they won’t go the way our deluded powerbrokers think they will. That ‘mission accomplished’ message from W. back in the day is going to start sounding a lot more stupider as time goes by. You just wait and watch.

I found this bit interesting, from Reuters, it paints a good picture of how the confusion-all-around ‘strategy’ is supposed to supposedly work:

Iran Says Saudi Arabia Should Move To Curb Oil Price Fall

The Iranian deputy minister also criticised Saudi military involvement in Bahrain, which has been gripped by tension since 2011 protests led by majority Shi’ite Muslims demanding reforms and a bigger role in running the Sunni-ruled country. Abdollahian said Bahraini authorities’ continued detention of Shi’ite opposition leader Sheikh Ali Salman would have “serious consequences” for the government there.

Tehran and Riyadh accuse each other of interfering in the pro-Western Gulf island kingdom, one of several countries where their power struggle has played out. They also support opposing sides in wars and disputes in Iraq, Syria, Lebanon and Yemen. Abdollahian dismissed United States efforts to fight Islamic State, also known by its Arabic acronym Daesh, as a ploy to advance U.S. policies in the region. “The reality is that the United States is not acting to eliminate Daesh (ISIS). They are not even interested in weakening Daesh, they are only interested in managing it,” he said.

The United States and its allies have carried out hundreds of air strikes against Islamic State in Iraq and Syria. Washington has also sent military support to Baghdad’s Shi’ite-led government but its role in Syria – where it has called for President Bashar al-Assad to step down – is more limited. Iran has sent Revolutionary Guard commanders to help its Shi’ite and Alawite allies in Baghdad and Damascus battle Islamic State and other Sunni fighters. But Abdollahian denied that Iran conducted aerial attacks on Iraqi sites.

“On the ground, where the U.S. should take serious action, there are no serious actions taking place. The US is not doing anything,” he said, accusing Washington of pursing a contradictory policy towards Islamist militants. “One day they support Daesh, another day they are against terrorism,” he said.

Abdollahian reaffirmed Iran’s commitment to Assad, saying the Syrian president must be involved in any political transition aimed at ending more than three years of conflict. He also criticized the latest U.S. sanctions on Iranian individuals and entities, saying they would not have a good impact on Tehran’s talks with world powers over its disputed nuclear program. “The United States must know that these actions make them bear a greater responsibility should the negotiations fail,” he said. “If the other side is honest in their actions, then we should expect these talks to reach a desirable conclusion.”

And then why not throw in a helping of Ambrose for good measure:

The Year Of Dollar Danger For The World

A sated China is as much to “blame” for the crash in oil prices as America’s shale industry. Together they have knouted Russia’s Vladimir Putin. The bear market will short-circuit at Brent prices of $40, but not just because shale capitulates. Marginal producers in Canada, the North Sea, West Africa and the Arctic will share the punishment. The biggest loser will be Saudi Arabia, reaping the geostrategic whirlwind of its high stakes game, facing Iranian retaliation through the Shia of the Eastern Province where the oil lies, and Russian retaliation through the Houthis in Yemen.

Mr Putin will achieve his objective of crippling Ukraine’s economy and freezing the conflict in the Donbass, but only by crippling Russia in the process. Controls will not stem capital flight. Mr Putin will have to choose between a dangerous loss of foreign reserves and a dangerous chain of corporate bankruptcies. He will continue to pawn Russia’s national interest to Beijing in order to save his Siloviki regime, but wiser heads in Moscow will question how a perpetual dispute with Europe and the revival of a dying NATO can possibly be in Russia’s interest. They will check his folly.

Ambrose sees only what fits his preconceived notions; pity, he could have been a great journalist. Putin didn’t seek a fight with the west, and his people, wiser heads or not, won’t blame him for being in one, quite the contrary. The most pervasive emotion in Russia today is deep-seated anger, versus the US, EU and NATO, for their blatant betrayal of both the country itself and the deals that were made ‘when the wall came down’.

Obviously, there’s plenty folk in Moscow, as there are in Kiev, that look to sell out to the US and scrape a million left and right out of that, but Russia is not Ukraine. You can’t just send in Victoria Nuland with $5 billion, organize a street party and expect to change another regime. Pepe Escobar clarifies why, to an extent:

2015 Will Be All About Iran, China And Russia

[..] it will be all about further moves towards the integration of Eurasia as the US is progressively squeezed out of Eurasia. We will see a complex geostrategic interplay progressively undermining the hegemony of the US dollar as a reserve currency and, most of all, the petrodollar.[..] Internationally, the Chinese will accelerate their overwhelming push for new ‘Silk Roads’ – both overland and maritime – which will underpin the long-term Chinese master strategy of unifying Eurasia with trade and commerce.

Global oil prices are bound to remain low. All bets are off on whether a nuclear deal will be reached by this summer between Iran and the P5+1. If sanctions (actually economic war) against Iran remain and continue to seriously hurt its economy, Tehran’s reaction will be firm, and will include even more integration with Asia, not the West.

Washington is well-aware that a comprehensive deal with Iran cannot be reached without Russia’s help. That would be the Obama administration’s sole – and I repeat – sole foreign policy success. A return to the “Bomb Iran” hysteria would only suit the proverbial usual (neo-con) suspects. Still, by no accident, both Iran and Russia are now subject to Western sanctions. No matter how it was engineered, the fact that stands is that the current financial/strategic oil price collapse is a direct attack against (who else?) Iran and Russia. [..]

Russia’s government debt totals only 13.4% of its GDP. Its budget deficit in relation to GDP is only 0.5%. If we assume a US GDP of $16.8 trillion (the figure for 2013), the US budget deficit totals 4% of GDP, versus 0.5% for Russia. The Fed is essentially a private corporation owned by regional US private banks, although it passes itself off as a state institution. US publicly held debt is equal to a whopping 74% of GDP in fiscal year 2014. Russia’s is only 13.4%.

The declaration of economic war by the US and EU on Russia – via the run on the ruble and the oil derivative attack – was essentially a derivatives racket. Derivatives – in theory – may be multiplied to infinity. Derivative operators attacked both the ruble and oil prices in order to destroy the Russian economy. The problem is, the Russian economy is more soundly financed than America’s. [..]

Moscow’s key mistake was to allow Russia’s domestic industry to be financed by external, dollar-denominated debt. Talk about a monster debt trap which can be easily manipulated by the West. The first step for Moscow should be to closely supervise its banks. Russian companies should borrow domestically and move to sell their assets abroad. Moscow should also consider implementing a system of currency controls so the basic interest rate can be brought down quickly.[..]

Russia does not need to import any raw materials. Russia can easily reverse-engineer virtually any imported technology if it needs to. Most of all, Russia can generate — from the sale of raw materials – enough credit in US dollars or euros.[..]

Replacing imports with domestic Russian manufacturing makes total sense. There will be an inevitable “adjustment” phase – but that won’t take long. German car manufacturers, for instance, can no longer sell their cars in Russia due to the ruble’s decline. This means they will have to relocate their factories to Russia. If they don’t, Asia – from South Korea to China — will blow them out of the market.

The EU’s declaration of economic war against Russia makes no sense whatsoever. Russia controls, directly or indirectly, most of the oil and natural gas between Russia and China: roughly 25% of the world’s supply. The Middle East is bound to remain a mess. Africa is unstable. The EU is doing everything it can to cut itself off from its most stable supply of hydrocarbons, prompting Moscow to redirect energy to China and the rest of Asia. What a gift for Beijing [..]

Now imagine Russia and China jointly investing in a new gold, oil and natural resource-backed monetary union as a crucial alternative to the failed debt “democracy” model pushed by the Masters of the Universe on Wall Street, the Western central bank cartel, and neoliberal politicians. They would be showing the Global South that financing prosperity and improved standards of living by saddling future generations with debt was never meant to work in the first place. Until then, a storm will be threatening our very lives – today and tomorrow.

Escobar is nowhere near right on all accounts, but he has some good points. The US enters this self-fabricated and self-desired ‘battle’ with a huge debt disadvantage. However, it holds the reserve currency, and stories about the demise of the petrodollar are way premature. That petrodollar rules well over 90% of all international trade, and it’s going to take a lot of time before that changes in a substantial way.

But countries like Russia and China have plenty revenue coming in in dollars, plus they have huge dollar reserves. It’s not a winnable fight for the power behind the power in Washington, but they’ll fight anyway, partly because that’s all they want and understand, and partly because they won’t do the actual fighting. The way we’ve set up our societies assures the worst possible people rise to the top. That’s just the way it is. And the way we are.

Still, America is never going to control the entire world. And any attempt to achieve that goal will take it further away from it. But a lot of people will be killed in that doomed attempt. And down the line the fighting will go on until there are so few people left, and so little organization, that all that remains is communities of a scale people can actually comprehend. That seems to be the only possible outcome as long as we allow for the psychopaths among us to decide who gets to have their fingers on the nuclear buttons.

But before that, we’ll have other shades of entertainment, we’re not done yet by any means. Angela Merkel just told Der Spiegel that she can live with Greece leaving the eurozone. Though that would blow up the entire edifice. I don’t know that I would call her a psychopath, but I have no confidence in anyone who floats to the top in any of our present political systems. And Europe can’t stomach any one country leaving.

It’s high time for a new model and for new people. But the old ones, and their utterly and dramatically failed economies, hold the power, the media, the money, everything. So what other way out is there but mass fighting, mass casualties, a complete overthrow of everything that exists today, probably nuclear bombs dropping, and in the end a world none of us would recognize, let alone be able to survive in?

It’ll take a while yet to get there, and it won’t be a pretty while by any stretch of the imagination. The powers that be are not done yet pretending to rule the universe and playing God. We should kick ’em all out today, but we won’t. Because we’re all too much like them.

Aug 112014
 August 11, 2014  Posted by at 4:51 pm Finance Tagged with: , , , , ,  9 Responses »

John Vachon General store and post office in Little Creek, Delaware Jul 1938

Boy, what a day so far; hard to keep up. tell me, is it just me, or has the US really started another round of regime change in Iraq?

Washington wants a new government in the capital, Baghdad, a national unity one, ostensibly to respond to the Islamist State threat.

PM Maliki doesn’t want to go, but also can’t lead such a government (nobody likes him). Iraqi President Fuad Masum then tells him off, so does a court. Maliki sends loyal troops into Baghdad, threatens to take the President to court, and the latter names deputy parliament speaker Haider Al-Abadi as new PM.

Meanwhile, the US pulls their support from Maliki, and the Islamist State conquers another city not far from the capital, and not anywhere near where the Americans are bombing them.

And most of that was before America had even woken up.

BTW, the President is Kurd, Maliki is Shi’ite, and the parliament chairman is Sunni. Lovely. National unity? You would need a nation first.

The US yesterday started directly arming the Kurds under siege where they are indeed bombing, and the Kurds took back some ground from the IS.

Wait a minute! The US is arming the Kurds? For real? Did they forget the longstanding fight between the Kurdish PKK and the Turks over Kurdistan? The Turks who yesterday elected Erdogan as their president?

That’s the same Erdogan who is hated by all his neighbors, Israel, Syria, Iraq, Iran, and who’s said some ugly things about America too, but who they need to keep the IS from moving north.

Erdogan might be at least a little bit nervous that these US arms may someday be used against him to make Kurdistan a sovereign nation after all.

Kurdistan, which for many decades has been a nation on paper only, stretches across Iraq and Turkey (where 18% are Kurds). And Iran, Syria, Armenia and Azerbaijan.

In the middle of the – clickable – map, you see Mosul (the dam the IS took), Erbil (the town the US is shelling) and Kirkuk, near which one of the world’s main mega oilfields is located.

And isn’t it interesting to know that the Kurds forcibly took control of that oilfield on July 11, 2014, from the Iraqi government? It all adds to the intrigue. Who shall we support today? If today is Monday …

Wikipedia on Kurdistan and its oil and gas reserves, in particular the Kirkuk field:

• Kurdistan Regional Government (KRG)-controlled parts of Iraqi Kurdistan are estimated to contain around 45 billion barrels of oil, making it the sixth largest reserve in the world. Extraction of these reserves began in 2007. Gas and associated gas reserves are in excess of 2,800 km3. Notable companies active in Kurdistan include Exxon, Total, Chevron, Talisman Energy, Genel Energy, Hunt Oil, Gulf Keystone Petroleum, and Marathon Oil. In July 2012, Turkey and the Kurdistan Regional Government signed an agreement by which Turkey will supply the KRG with refined petroleum products in exchange for crude oil.

• Kirkuk Field is an oilfield near Kirkuk, Iraq. It was discovered by the Turkish Petroleum Company at Baba Gurgur in 1927. The oilfield was brought into production by the Iraq Petroleum Company in 1934. It has ever since remained the most important part of northern Iraqi oil production with over 10 billion barrels of proven remaining oil reserves in 1998. After about seven decades of operation, Kirkuk still produces up to 1 million barrels per day, almost half of all Iraqi oil exports. Oil from the Kirkuk oilfield is now exported through the Kirkuk-Ceyhan Oil Pipeline, which runs to the Turkish port of Ceyhan on the Mediterranean Sea.

On 11 July 2014 Kurdistan Regional Government forces seized control of the Kirkuk mega oilfield, together with the Bai Hassan field, prompting a condemnation from Baghdad and a threat of “dire consequences,” if the oilfields were not returned to Iraq’s control.

That’s right, Iraq lost – control over – about half of its oil exports one month ago. To an army that belongs to that part of the population the President belongs to!

And that takes us right back to why the US is meddling in Iraq. And Ukraine too, of course. Kirkuk is in Kurdish hands now, and it must be a nightmare for all of those oil companies active in Kurdistan to even ponder the IS conquering those parts of Kurdish Iraq that they are active in. A nightmare, but by no means impossible. They’re just about literally on the doorstep:

Oil and gas were always important, they’ve been the reason for the majority of all US and European wars and invasions of the past 150 years, But control over fossil fuels has gotten a lot more important recently, ever since everyone (well, everyone …) has acknowledged that conventional peak oil indeed happened in 2005, and that shale oil and gas won’t last long (less people understand this last bit, admittedly, but TPTB do).

The fight over oil has now literally become the fight for power, as I’ve said more than once recently. That is what we see develop here. The 2003 invasion of Iraq gave Big Oil access to a lot of oil and gas, but it also left behind an unparalleled chaos. And now they’re forced back in. I see Washington plan a lot of mayhem and chaos, but I doubt they wanted this at this particular point in time. This is not a powder keg, this is Pandora’s box.

But there’s no way back. The US doesn’t want Putin in control of Russian resources, even though, as I said yesterday, they’re going to need him dearly if they want to prevent Iraq from blowing up in their faces, and they don’t want the Islamist State in control of 45 billion+ barrels of oil in Kurdistan and the greater Iraq area.

By the by, when I read reports of children being buried alive etc., I think of patterns. These accusations are always used against new enemies. I don’t know how out there the IS is, but it does make me wonder.

In my view, America doesn’t sufficiently understand the region, and therefore chooses the Wrong Friends, Wrong Enemies, Wrong Fights . And I think that is due to pure American hubris and arrogance.

Washington thinks it has the by far best, most expensive, most advanced army, and that that alone will make it ultimately victorious no matter what happens. So why then pay too much attention to what happens? What that idea disregards is that the US hasn’t actually won a war or an invasion since 1945, though it had the numero uno army the whole time.

Creating chaos may be a tried and tested approach, but not if you yourself get confused and no longer oversee what is going on. Then you’re merely yet another part of the chaos.

The only way left to go then is ever heavier weapons, trying to spread ever more death and fear among the ‘enemy’. But Washington doesn’t even always now who the enemy is. And if you don’t know that, you can’t win.

Still, we’re in it for keeps. Here are two things from a few days ago that tell you why; they come on top of countless other examples The Automatic Earth has served you lately. BusinessWeek:

China’s 2020 Shale Gas Production Target Cut In Half

Tapping China’s vast shale-gas reserves has proved more difficult than government planners in Beijing once hoped. In 2012, China’s National Energy Administration projected that, by 2020, from 60 billion to 80 billion cubic meters (bcm) of domestic shale gas would be pumped annually. Earlier this week the country’s energy chief, Wu Xinxiong, slashed the goal in half, to 30 billion bcm by 2020.

In the US, the Monterey play was cut by 90-odd%. In Poland, no.1 EU shale prospect, close to nothing was ever found. China’s just getting started cutting expectations and targets.

And from the Wall Street Journal:

Statoil Fails to Make Commercial Discoveries in Arctic Drilling Campaign

Norwegian energy company Statoil said Thursday it was disappointed by the results of an Arctic drilling campaign in the Barents Sea after making no commercial discoveries of oil or gas. Statoil said it had ended its three-well drilling campaign in the Hoop area, and the Apollo, Atlantis and Mercury wells all contained noncommercial volumes of oil and gas.

Shell left the Arctic. Statoil now does. That leaves Exxon, in its recently announced sanction-busting deal with Russia.

Still, even that doesn’t leave much hope, as becomes clear – once again – in the following by Ambrose Evans Pritchard, who’s late to the game in reporting on the same EIA review we covered two weeks ago in Say Bye To The Bubble with help from Wolf Richter, information we expanded on last week in Debt and Energy, Shale and the Arctic.

But hey, it’s Ambrose, and he does numbers well.

Oil And Gas Company Debt Soars To Danger Levels To Cover Cash Shortfall

• The EIA said revenues from oil and gas sales have reached a plateau since 2011, stagnating at $568bn over the last year as oil hovers near $100 a barrel. Yet costs have continued to rise relentlessly.

• … the shortfall between cash earnings from operations and expenditure – mostly CAPEX and dividends – has widened from $18bn in 2010 to $110bn during the past three years. [..] .. to keep dividends steady and to buy back their own shares, spending an average of $39bn on repurchases since 2011.

• The agency, a branch of the US Energy Department, said the increase in debt is “not necessarily a negative indicator”

• … “continued declines in cash flow, particularly in the face of rising debt levels, could challenge future exploration and development”.[..] upstream costs of exploring and drilling have been surging, causing companies to raise long-term debt by 9pc in 2012, and 11pc last year. Upstream costs rose by 12pc a year from 2000 to 2012 due to rising rig rates, deeper water depths, and the costs of seismic technology.

• Global output of conventional oil peaked in 2005 despite huge investment.

• … the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120 ..

• Analysts are split over the giant Petrobras project off the coast of Brazil, described by Citigroup as the “single-most important source of new low-cost world oil supply.” The ultra-deepwater fields lie below layers of salt, making seismic imaging very hard. They will operate at extreme pressure at up to three thousand meters, 50pc deeper than BP’s disaster in the Gulf of Mexico.

• Petrobras is committed to spending $102bn on development by 2018. It already has $112bn of debt. The company said its break-even cost on pre-salt drilling so far is $41 to $57 a barrel. Critics say some of the fields may in reality prove to be nearer $130. Petrobras’s share price has fallen by two-thirds since 2010.

• … global investment in fossil fuel supply rose from $400bn to $900bn during the boom from 2000 and 2008, doubling in real terms. It has since levelled off, reaching $950bn last year. [..] Not a single large oil project has come on stream at a break-even cost below $80 a barrel for almost three years.

• … companies are committing $1.1 trillion over the next decade to projects requiring prices above $95 to make money. Some of the Arctic and deepwater projects have a break-even cost near $120.

• The IEA says companies have booked assets that can never be burned if there is a deal limit to C02 levels to 450 (PPM), a serious political risk for the industry. Estimates vary but Mr Lewis said this could reach $19 trillion for the oil nexus, and $28 trillion for all forms of fossil fuel.

• “Exxon must be doing a lot of soul-searching as they get drawn deeper into this,” said one oil veteran with intimate experience of Russia. “We don’t think they ever make any money in the Arctic. It is just too expensive and too difficult.”

“It is just too expensive and too difficult.”. Or as we say where I come from: There Is No There There.

Oil companies already lose $110 billion a year (aka ‘the shortfall between cash earnings from operations and expenditure’). They’re now committing that exact same amount to new projects, money they’ll also have to borrow. What if interest rates go up to 5%? Will they still drill? Or are we going to take someone else’s oil by force?

As I said, hardly new for Automatic Earth readers, but this is so important in understanding what is happening geo-politically these days that it bears repeating. There is no way back. Oil has become ultimate power. And will lead to the ultimate fight. Having bigger and better guns and tanks won’t win that fight.

But Washington, by the look of things, doesn’t seem to understand that. Arrogance and hubris tend to be costly. In ultimate fighting, they can be deadly. America’s not exactly making a lot of friends these days, and the ones they do make are the wrong friends. Even the New York Times now reports on the fine folk gunning down the people of east Ukraine. Will Putin let them do as they please? And if not, what will “we” do?

Oil And Gas Company Debt Soars To Danger Levels To Cover Cash Shortfall (AEP)

The world’s leading oil and gas companies are taking on debt and selling assets on an unprecedented scale to cover a shortfall in cash, calling into question the long-term viability of large parts of the industry. The US Energy Information Administration (EIA) said a review of 127 companies across the globe found that they had increased net debt by $106bn in the year to March, in order to cover the surging costs of machinery and exploration, while still paying generous dividends at the same time. They also sold off a net $73bn of assets. This is a major departure from historical trends. Such a shortfall typically happens only in or just after recessions. For it to occur five years into an economic expansion points to a deep structural malaise. The EIA said revenues from oil and gas sales have reached a plateau since 2011, stagnating at $568bn over the last year as oil hovers near $100 a barrel. Yet costs have continued to rise relentlessly.

Companies have exhausted the low-hanging fruit and are being forced to explore fields in ever more difficult regions. The EIA said the shortfall between cash earnings from operations and expenditure – mostly CAPEX and dividends – has widened from $18bn in 2010 to $110bn during the past three years. Companies appear to have been borrowing heavily both to keep dividends steady and to buy back their own shares, spending an average of $39bn on repurchases since 2011. The agency, a branch of the US Energy Department, said the increase in debt is “not necessarily a negative indicator” and may make sense for some if interest rates are low. Cheap capital has been a key reason why US companies have been able to boost output of shale gas and oil at an explosive rate, helping to lift the US economy out of the Great Recession.

The latest data shows that “tight oil” production has jumped to 3.7m barrels a day (b/d) from half a million in 2009. The Bakken field in North Dakota alone pumped 1m b/d in May, equivalent to Libya’s historic levels of supply. Shale gas output has risen from three billion cubic feet to 35 billion in just seven years. The EIA said America will increase its lead as the world’s largest producer of oil and gas combined this year, far ahead of Russia or Saudi Arabia. However, the administration warned in May that “continued declines in cash flow, particularly in the face of rising debt levels, could challenge future exploration and development”. It said that upstream costs of exploring and drilling have been surging, causing companies to raise long-term debt by 9pc in 2012, and 11pc last year. Upstream costs rose by 12pc a year from 2000 to 2012 due to rising rig rates, deeper water depths, and the costs of seismic technology.

Read more …

China’s 2020 Shale Gas Production Target Cut In Half (BW)

Tapping China’s vast shale-gas reserves has proved more difficult than government planners in Beijing once hoped. In 2012, China’s National Energy Administration projected that, by 2020, from 60 billion to 80 billion cubic meters (bcm) of domestic shale gas would be pumped annually. Earlier this week the country’s energy chief, Wu Xinxiong, slashed the goal in half, to 30 billion bcm by 2020. According to the U.S. Energy Information Administration, China’s holds the world’s largest reserves of theoretically recoverable shale gas. But much of it is locked in mountainous regions in western China.

While China’s leaders – concerned about steeply rising energy demand accompanying rapid urbanization – dearly want to emulate the U.S.’s shale-gas boom, it turns out Americans have several practical advantages. For starters, the U.S. shale-gas revolution kicked off in fairly accessible regions: the flatlands of Texas, North Dakota, and Pennsylvania. So far, explorations in China have identified only one clearly promising shale play: Fuling shale gas field, near the western megalopolis of Chongqing. Sinopec, which controls the Fuling field, projects that its annual shale gas production will reach 5 bcm by 2015 and 10 bcm by 2017. With no other comparable sites yet identified, it’s not clear where the other 20 bcm may come from. While Sinopec is currently at the forefront of China’s shale-gas development, two foreign companies, Royal Dutch Shell and Hess, have secured production-sharing contracts for other potential sites.

Read more …

Iraqi PM Maliki Digs In, Sends Loyal Forces Into Baghdad (Reuters)

Iraqi Prime Minister Nuri al-Maliki was battling to keep his job on Monday, deploying forces across Baghdad as some parliamentary allies sought a replacement and the United States warned him not to obstruct efforts to form a new government. Widely accused of a partisan obstinacy that has fuelled the communal violence tearing Iraq apart, the Shi’ite Muslim premier went on television late on Sunday to denounce the ethnic Kurdish president for delaying the constitutional process of naming a prime minister following a parliamentary election in late April. However, President Fouad Masoum won a rapid endorsement from Washington. With Sunni fighters from the Islamic State making new gains over Kurdish forces north of Baghdad, the United States renewed its call for Iraqis to form a consensus government to try and end bloodshed that has prompted the first U.S. air strikes since the U.S. occupation ended in 2011.

And in pointed remarks aimed at Maliki, Secretary of State John Kerry said: “The government formation process is critical in terms of sustaining stability and calm in Iraq, and our hope is that Mr. Maliki will not stir those waters. “There will be little international support of any kind whatsoever for anything that deviates from the legitimate constitution process that is in place and being worked on now.” Complicating efforts to propose a replacement from among fellow Shi’ites, who appear to have some support from both the country’s leading cleric and from the Shi’ite establishment of neighbouring Iran, the country’s highest court ruled that Maliki’s State of Law bloc is the biggest in the new parliament. That, a senior Iraqi official said, was “very problematic” for attempts to have President Masoud offer the premiership to an alternative candidate to Maliki – an alternative that one senior member of his party said had been close to being chosen.

Read more …

US Begins Directly Arming Kurdish Forces In Iraq (IBT)

The administration of US president Barack Obama has begun directly providing weapons to Kurdish forces who have started to make gains against Islamic militants in Iraq. The US previously insisted on selling arms only to the Iraqi government. US officials say the administration is close to approving plans for the Pentagon to arm the Kurds. Recently the US military has been helping facilitate weapons deliveries from the Iraqis to the Kurds, who had been losing ground to the Islamic State militant group, formerly known as Isis. The move to directly aid the Kurds underscores the level of US concern about the Islamic State militants’ gains in the north, and reflects the persistent administration view that the Iraqis must take the necessary steps to solve their own security problems. A senior US state department official would only say that the Kurds are “getting arms from various sources. They are being rearmed”. To bolster that effort, the administration is also very close to approving plans for the Pentagon to arm the Kurds, a senior official said.

In recent days, the US military has been helping facilitate weapons deliveries from the Iraqis to the Kurds, providing logistic assistance and transportation to the north. The move comes as Iraqi prime minister Nuri al-Maliki is battling to keep his job today, deploying forces across Baghdad as some parliamentary allies sought a replacement and the United States warned him not to obstruct efforts to form a new government. Widely accused of a partisan obstinacy that has fuelled the communal violence tearing Iraq apart, the Shi’ite Muslim premier went on television late on yesterday to denounce the ethnic Kurdish president for delaying the constitutional process of naming a prime minister following a parliamentary election in late April. However, president Fouad Masoum won a rapid endorsement from Washington. With Sunni fighters from the Islamic State making new gains over Kurdish forces north of Baghdad, the United States renewed its call for Iraqis to form a consensus government to try and end bloodshed that has prompted the first US air strikes since the US occupation ended in 2011.

Read more …

US Pulls Support for Iraqi PM Maliki as Militants Gain (Bloomberg)

U.S. Secretary of State John Kerry pulled support from Iraq’s Prime Minister Nouri al-Maliki today, telling him not to hinder the political process amid reports that Islamic State militants had seized a town northeast of Baghdad.Kerry said that the U.S. was backing Iraq’s President Fouad Masoum and that Maliki wasn’t even among the three candidates Iraqis wanted as the next prime minister.“We stand absolutely, squarely behind President” Fouad Masoum, Kerry said in Sydney. “He has the responsibility for upholding the constitution of Iraq, he is the elected president, at this moment Iraq has clearly made a statement that they are looking for change.”

Political haggling in Iraq is hurting government attempts to curb advances by an al-Qaeda breakaway group that ravaged the north of the country and drew U.S. air strikes. U.S. President Barack Obama has said that greater U.S. assistance in pushing back Islamic State forces would only come if a more inclusive government was formed that didn’t marginalize Sunni and other minorities.While U.S. strikes have slowed Islamic State advances in the north, the group still holds vast swaths of territory in Syria and Iraq, including key installations such as dams, military outposts and Iraq’s biggest northern city. Kurdish forces on Sunday were able to retake the towns of Makhmour and Gwer, south of Erbil, where militants retreated after U.S. airstrikes, according to the Kurdish news agency Rudaw, citing officials.

Read more …

Blowback coming right up.

New York Times Discovers Ukraine’s Neo-Nazi Shock Troops In Action (Parry)

The New York Times reported almost in passing on Sunday that the Ukrainian government’s offensive against ethnic Russian rebels in the east has unleashed far-right paramilitary militias that have even raised a neo-Nazi banner over the conquered town of Marinka, just west of the rebel stronghold of Donetsk. That might seem like a big story – a U.S.-backed military operation, which has inflicted thousands of mostly civilian casualties, is being spearheaded by neo-Nazis. But the consistent pattern of the mainstream U.S. news media has been – since the start of the Ukraine crisis – to white-out the role of Ukraine’s brown-shirts. Only occasionally is the word “neo-Nazi” mentioned and usually in the context of dismissing this inconvenient truth as “Russian propaganda.” Yet the reality has been that neo-Nazis played a key role in the violent overthrow of elected President Viktor Yanukovych last February as well as in the subsequent coup regime holding power in Kiev and now in the eastern offensive. On Sunday, a NYT article by Andrew E. Kramer mentioned the emerging neo-Nazi paramilitary role in the final three paragraphs:

“The fighting for Donetsk has taken on a lethal pattern: The regular army bombards separatist positions from afar, followed by chaotic, violent assaults by some of the half-dozen or so paramilitary groups surrounding Donetsk who are willing to plunge into urban combat. “Officials in Kiev say the militias and the army coordinate their actions, but the militias, which count about 7,000 fighters, are angry and, at times, uncontrollable. One known as Azov, which took over the village of Marinka, flies a neo-Nazi symbol resembling a Swastika as its flag. “In pressing their advance, the fighters took their orders from a local army commander, rather than from Kiev. In the video of the attack, no restraint was evident. Gesturing toward a suspected pro-Russian position, one soldier screamed, ‘The bastards are right there!’ Then he opened fire.”

In other words, the neo-Nazi militias that surged to the front of anti-Yanukovych protests last February have now been organized as shock troops dispatched to kill ethnic Russians in the east – and they are operating so openly that they hoist a Swastika-like neo-Nazi flag over one conquered village with a population of about 10,000. Burying this information at the end of a long article is also typical of how the Times and other U.S. mainstream news outlets have dealt with the neo-Nazi problem in the past. When the reality gets mentioned, it usually requires a reader knowing much about Ukraine’s history and reading between the lines of a U.S. news account.

Read more …

Never a dull moment for Vladimir V.

Putin in Push to Douse New Discord on Russia’s -Other- Doorstep (Bloomberg)

Russian President Vladimir Putin, staring down the deepening unrest in Ukraine, tried the role of peacemaker by brokering the first meeting in nine months between the leaders of Armenia and Azerbaijan following the deadliest clashes between the ex-Soviet republics in 20 years. The talks, which yielded little beyond a promise of more negotiations, showed Putin playing statesman with a war raging next door in Ukraine, where he’s faced accusations of stoking the conflict. Two days of meetings at his retreat in Sochi were marked by another fatality on the frontlines of the disputed region of Nagorno-Karabakh, with an Azeri soldier killed late on Aug. 9 by Armenian fire, according to the Defense Ministry in Baku. That brought the death toll to 24 since July 26.

“No way do they need a war in Karabakh,” Thomas de Waal, senior associate at the Carnegie Endowment for International Peace in Washington, said by e-mail yesterday. “Russia has a strong incentive in preventing a new conflict, as it would cause massive instability in its southern tier. It also has treaty obligations to defend Armenia militarily and would therefore also destroy its carefully developed relationship with Azerbaijan.” Failure to break the deadlock threatens to unleash war in a region where companies led by BP have invested more than $40 billion to develop Azerbaijan’s oil and gas fields. Russia’s role in Ukraine is complicating an effort by Putin to assert his sway in the former Soviet Union, according to Matthew Bryza, the U.S. ambassador to Azerbaijan in 2010-2011. The government in Moscow has repeatedly denied any involvement in the unrest in eastern Ukraine.

[..] The South Caucasus countries, which border Turkey and Iran, signed a cease-fire brokered by Russia in 1994 after more than 30,000 people were killed and more than 1.2 million were displaced. Armenians took over Nagorno-Karabakh and seven surrounding districts from Azerbaijan in a war after the Soviet breakup in 1991. The truce left 20,000 Armenian and Azeri troops, dug into World War I-style trenches sometimes only 100 meters (330 feet) apart, according to the Carnegie Endowment for International Peace. The conflict is part of the region’s “Soviet legacy,” Putin said as he opened negotiations yesterday. “We must show patience, wisdom and respect for each other to find a solution,” he said. The Azeri and Armenian leaders traded accusations in Putin’s presence, blaming each other for violating international agreements on Karabakh. Even so, both presidents said they support a peaceful solution to the conflict and praised Putin for his mediation efforts. About 700,000 Azeris were forced to leave the districts, 200,000 Azeris left Armenia and more than 360,000 Armenians fled Azerbaijan.

Read more …

Oh yes, it will.

Brace For Japan GDP, It’s Going To Be Ugly (CNBC)

Japan’s economy is expected to have lost all the ground it gained earlier this year during the second quarter as the April consumption tax hike appears to have thrown the fragile recovery off its tracks. Asia’s second-largest economy, which is set to release gross domestic product (GDP) data on Wednesday, shrunk an annualized 7.1% in the April to June quarter, according to a Reuters poll, down sharply from a 6.7% gain in the previous three months. “The consumption tax hike that started in April will have a broad-based impact on demand components with consumption, residential investment and capex [capital expenditure] in particular expected to decline sharply,” Yoshiro Sato, economist at Credit Agricole wrote in a note. “That said, it is inevitable given the tax hike that the economy will contract following the robust growth thanks to the front-loaded increase in demand,” he said.

In April, Japan raised its consumption tax to 8% from 5%, the first increase in 17 years, as part of efforts to rein in mounting public debt. When Japan last lifted the sales tax to 5% from 3% in 1997, the economy fell into recession not too long afterwards. A raft of disappointing economic data in recent weeks has raised concerns that the April sales tax hike could prove more damaging than initially thought. Industrial output, for example, fell 3.3% on month in June – the fastest rate since the devastating earthquake and tsunami in March 2011 as companies scaled back production to offset a build-up in inventories.

Read more …

Costly, Angela?

German Economy Backbone Bending From Lost Russia Sales (Bloomberg)

MWL Apparate Bau, based in the eastern German town of Grimma, has relied on strong ties with Russia to bolster business. Today, those links don’t mean much. The maker of equipment such as pressure vessels and hot water tanks for the chemical and petrochemical industries has seen a “significant” decline in orders in the last six months due to the crisis, sales chief Reinhard Weber said. The company has annual revenue of about €20 million ($27 million). “There are two contracts from Russia we didn’t get and we think that’s for political reasons,” Weber said in a telephone interview. “They’re afraid of sanctions being extended — that they will make an order and that we won’t be able to fulfill it because of political decisions in Germany or Europe.”

MWL is one of many businesses in Germany’s Mittelstand, the thousands of small- and medium-sized companies that form the backbone of Europe’s largest economy, that are already getting pinched as Russian customers put off purchases. With the crisis now intensifying through deeper European Union and U.S. sanctions and retaliatory measures from Russia banning EU and U.S. food imports, they’re preparing for an even bigger hit. Take Amandus Kahl. The maker of food processing and recycling machinery near Hamburg had expected to bring in about €10 million in revenue this year from Russia. Sales to the country “have pretty much evaporated because our clients can’t get financing,” Rochus Mecke, a Kahl’s sales director, said in an interview. “We still get inquiries, but it’s only inquiries.”

Read more …

Yup. No matter who you define it.

Sanctions Will Deepen Euro Area Deflation (CNBC)

France’s powerful farm lobby asked last Friday for an immediate removal from the market of all EU fruits and vegetables that can no longer be exported to Russia. A similar action was urged with regard to milk, milk products, meat and fish. The fear is that excess supply would crush food prices and a heavily subsidized EU farm sector. The European media are abuzz about sanction effects. Dutch News.nl, for example, reported today (Sunday, August 10) that last Friday one kilogram (2.2 pounds) of spinach in the city of Zaltbommel was down to €0.30 from €1.1 when the sanctions hit the market on Wednesday, August 6. At this writing, an expert group is working at the EU Commission to assess the impact of this initial round of economic warfare with Russia. A broader group of national farm officials is expected to meet next Thursday, and Brussels is promising that “up to €400 million” could be paid out to compensate the sanctions-hit farmers.

Looking at all this, several things come to mind. First, this should have come as no news to the EU. Russia has been repeating for months that it would respond to Western sanctions. After the third wave of crippling measures directed at several sensitive sectors of Russian economy in mid-July, Moscow warned that it would target the EU farm business, and that further action will affect trade in automobile, aircraft and shipbuilding industries. Russia delivered on the first part of its counter-sanctions on August 6, 2014. In spite of all the warnings, the EU now seems totally surprised and indignant that Russia dared to respond. That is an unfortunate lack of EU preparedness to play this deadly serious sanctions game. As a result, a number of countries (Finland, Poland and some Baltic states) have already asked Brussels to compensate them for their trade losses.

Second, the compensation of “up to $400 million euros” promised by Brussels is wholly inadequate. Russia is the second-largest market for EU farm exports. It takes 10% of EU farm products representing annual sales of €12 billion. France alone accounts for about €1 billion of that export trade with Russia. No wonder the influential German and French media are now turning on their governments. Witnessing the sinking of their equity market (down 11% since its peak in late June), the Germans are reminding themselves of how much their government ignored the teachings of their own war strategist (General Carl von Clausewitz) about the management of hostilities. And in an apparent dig at Chancellor Merkel, her Foreign Minister Steinmeier complained recently that “sanctions alone are not a policy.” The raw nerve was apparently also touched by the news last Friday that the company Rheinmetall is now asking the government to use taxpayers’ money to compensate it for a €100 million contract it was forced to cancel with Russia.

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They’ll step out soon.

Punishing Russia Provokes Finnish Dismay as Fallout Seen Unfair (Bloomberg)

After backing the European Union in expanding sanctions against Russia, Finland is now regrouping to consider what it describes as the disproportionate fallout of the crisis on its own economy. No other euro nation is as hard hit by the aftermath of the crisis in Ukraine as Finland, trade figures for the single currency bloc show. Prime Minister Alexander Stubb last week underscored the need for “solidarity” in the EU, making clear he expects any measures to “treat EU members similarly. If the impact isn’t equal, we’ll consider what kind of solutions we will seek.” The 28-nation EU has repeatedly struggled to speak with one voice, from how to handle the debt crisis and most recently with its economic response to the political turmoil at its eastern border.

Finland already has a proven track record of successfully carving out special rights within European accords. During the sovereign debt crisis, Finland was the only country to seek and obtain compensation for its contribution to bailouts in the form of collateral. “It creates an image of a country that engages in politics very much from its own perspective rather than a common European point of view,” Pasi Kuoppamaeki, chief economist at Danske Bank A/S in Helsinki, said by phone. “Of course, many others do that too.” In a counter-move to western sanctions, President Vladimir Putin slapped import bans on an array of foods last week, compounding the economic pain for Finland of faltering Russian demand and a weaker ruble. With 14% of Finland’s trade coming from Russia, those developments are exacerbating the Nordic country’s efforts to exit its second recession since 2008. “I hope the sanctions aren’t broadened,” Stubb told reporters on Friday. “This isn’t a trade war.”

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Europe? Where’s that?

Europe’s Growth Engine Stutters as Spain Beats Germany (Bloomberg)

Germany probably underperformed Spain last quarter for the first time in more than five years as the euro-area recovery almost ground to a halt. After leading the currency bloc out of its longest-ever recession last year, Europe’s largest economy contracted in the three months through June, according to a Bloomberg News survey. The downturn in the region’s powerhouse highlights the fragility of a revival that European Central Bank President Mario Draghi has described as modest and uneven. The 18-nation euro area is struggling to boost growth and inflation even amid unprecedented ECB stimulus, with Draghi citing inadequate structural reforms as a key reason. While the German data is distorted by mild winter weather that front-loaded output earlier in the year, Bundesbank President Jens Weidmann has warned the country must also adjust or risk losing its role as a growth engine. This week’s reports “will probably underline that the problems in the euro zone have moved north,” said Ralph Solveen, an economist at Commerzbank AG in Frankfurt.

“The weak recovery will definitely provide the doves in the ECB Governing Council with a weighty argument to demand further expansionary measures.” German GDP shrank 0.1% in the three months through June, the first contraction since 2012, according to the median estimate in the Bloomberg survey. The economies of the euro area and France grew 0.1%, separate surveys show. The reports will be published on Aug. 14 along with those for the Netherlands, Austria and Portugal. Spain posted an expansion of 0.6% in the same period, the National Statistics Institute said last month. Italian GDP fell 0.2%, after a 0.1% decline in the previous quarter, taking the country into its third recession since 2008. Draghi took aim at Italy last week for lack of progress in reforms. “It’s pretty clear that the countries that have undertaken a convincing program of structural reforms are performing better, much better, than the countries that have not done so,” he said on Aug. 7 in Frankfurt after the ECB left interest rates unchanged at record lows.

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Sounds good, will look awful.

PM Matteo Renzi Defends Pace Of Italian Reform (FT)

Matteo Renzi, Italy’s prime minister, says the eurozone’s third-largest economy is on track to hit its EU-mandated budget targets this year despite falling back into recession in the second quarter and, in a pugnacious interview with the Financial Times, defended the speed at which his reforms are moving. Mr Renzi, speaking in the prime minister’s office in Rome, rejected suggestions made by European Central Bank president Mario Draghi last week that the EU should intervene in countries where reforms were not being implemented fast enough to spur economic growth. “I agree with Draghi when he says that Italy needs to make reforms but how we are going to do them I will decide, not the Troika, not the ECB, not the European Commission,” he said. “I will do the reforms myself because Italy does not need someone else to explain what to do.” On Wednesday it was revealed that Italy unexpectedly fell back into recession in the second quarter for the third time since 2008.

The economy shrank 0.2% quarter-on-quarter between April and June, after contracting 0.1% in the first three months of the year, having only briefly emerged from two years of recession at the end of 2013. Economists have said the fall in gross domestic product may result in the general government budget deficit breaching the EU’s 3% of GDP threshold for 2014. Fabio Fois, an economist at Barclays in Milan, expects the deficit will pass the 3% limit unless the government cuts spending by between €1.2bn and €3.2bn. Mr Renzi, who took power in a party coup in February and whose centre-left democratic party won a landslide victory in the European elections in May with an unprecedented 40% of the vote, vowed to take personal control of Italy’s ongoing spending review to ensure compliance with the EU targets. “I have absolutely no intention of breaking the 3% ceiling. We hope to have better [growth] figures in the second half and as a result will be at 2.9% [of GDP].

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Struggling to make it all look rosy?

ECB Struggling To Process Banks’ Stress-Test Data (MarketWatch)

The European Central Bank is having problems processing the large amount of data it receives from banks for the industry’s current health check of the industry, according to a report in the German media. The ECB has told Germany’s Bundesbank that it is “technically unable” to handle the adjusted data sets it had previously ordered banks to submit for the stress test, German weekly Euro am Sonntag reports, citing an email sent by the German central bank to domestic lenders. It added the ECB now wants banks to resubmit the data in a template format. A spokesman for the ECB said the “comprehensive assessment is on track to be concluded as planned, with results in the second half of October.” He added the ECB has been engaging with the banks and is refining its approach “to ensure we manage the process as effectively as is possible for all involved” where appropriate.

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Just step into the shadows.

Chinese Banks Get Serious About Risk Of Bad Debts (Reuters)

Chinese banks are scrambling to get on top of bad debts they have downplayed for years, cutting off riskier borrowers, further tightening lending terms and, in one case, deploying teams of investigators to assess the risk of loan defaults. China’s banks keep reporting bad loan levels well below what most analysts consider realistic, but their recent actions suggest the slowing economy may be squeezing borrowers and lenders harder than thought only a few months ago. China’s fifth-largest lender, Bank of Communications, assembled research teams last month to look over the assets of troubled borrowers in Zhejiang province, according to bank sources and an internal document. The province is a hotbed of China’s credit stress. BoCom denied that special teams had been set up or that there was any surge in potential bad loans in an email to Reuters. The bank said it had always placed great importance in its risk control efforts.

Bankers from other major listed lenders said they were further cutting lending to riskier borrowers, in particular smaller private companies. “We’re lending almost exclusively to state-owned enterprises in our department at the moment, because it’s just seen as the least risky,” said a senior loan officer at the Bank of China. The banker, who would not be named because he is not authorized to speak to the media, added that the bank had also raised the bar for state-owned firms, in particular by demanding more collateral. Lawyers for banks say increasing numbers of transactions fall through because of lenders’ last-minute risk worries. A senior lawyer, who works for Industrial and Commercial Bank of China among others, said only a third of the financing deals she had been asked to work on were actually completed this year. This compares to 70% in the last two years, she said. [..]

In March, Reuters reported that Chinese banks had become unsettled by some highly publicized defaults and were toughening terms for highly indebted borrowers or those plagued by overcapacity. Now it appears that banks are moving one step further, effectively cutting off many private firms from financing. Regulators may welcome signs that banks have become more diligent in assessing risk, but it is bad news for policymakers and China’s near-term economic prospects. Beijing has been counting on consumption and a services sector dominated by private firms to take up the slack as it aims to cut industrial overcapacity and China’s over-reliance on large state-financed investment projects.

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China Property Defaults Seen as Financing Stresses Mount (Bloomberg)

China’s slumping property market is fueling speculation the industry is set for a shakeout as small developers face difficulty raising funds to pay off debt. Yield premiums on Chinese real-estate bonds denominated in dollars have jumped 35 basis points this month to 582 basis points over Treasuries, the sharpest increase among emerging Asian countries, according to Bank of America Merrill Lynch indexes. That compares with a 19 basis-point advance for Indonesian builders. Moody’s Investors Service and Standard & Poor’s said some smaller Chinese developers may default in the second half amid falling sales and shrinking access to credit. China’s real-estate industry poses the biggest near-term risk to growth in the world’s second-largest economy after new home prices dropped in the most cities in two years in June, according to JPMorgan Chase & Co. While government steps to ease property curbs helped builder bonds rally in July, they’re giving up those gains ahead of housing-price data due next week.

“The operating environment is still tough for Chinese developers,” said Franco Leung, a senior analyst in Hong Kong at Moody’s. “Banks in China have become more selective in lending to developers. Those weaker developers still face liquidity pressure.” “Given the fragmented nature of the property market in China and the sheer number of developers, it wouldn’t be surprising if there are news of developers being in financial difficulty or of outright defaults,” said Swee Ching Lim, a Singapore-based credit analyst at Western Asset Management Co. Home prices fell in 55 of 70 cities in June from May, the National Bureau of Statistics said on July 18, the most since January 2011 when the government changed the way it compiles the data. The inventory of unsold new homes in 20 large cities jumped to an average equivalent of more than 23 months of sales in June, according to Shenzhen World Union Properties Consultancy Inc. The floor space of unsold new apartments nationwide as of June 30 surged 25% from a year earlier, government data show.

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What can I say? Farrell!

100% Risk Of 50% Crash If Hillary Clinton Wins In 2016 (Paul B. Farrell)

OK, we get it. Everybody gets it. Big crash coming. Been trending all over the news. For months. Blogs. Cable. Networks. Social media. Hour after hour. Minute after minute. We get it. Crash ahead. Third big one of the century. Bet on it. But so what? Hillary? Jeb? Chris? Doesn’t matter. Markets don’t care who wins. Big crashes happen, about every eight years. Everybody knows it. Nobody really cares. Why? We love playing the game of musical chairs, in the race to the 2016 presidency. And everyone’s playing. 95 million Main Street investors. Millions of Wall Street pros. Super Rich billionaires, private-equity firms, hedge funds, pension managers. Every CEO, trader, adviser, broker, fund. Everybody loves playing with hundreds of trillions. Everybody. Yes, the market’s going to crash. Again. Crashes are part of the game. In fact, knowing a big crash is coming makes the game more exciting. We’re playing to squeeze out another point, maybe time our exit before the inevitable collapse.

The bull run is up over 250% since 2009. Maybe it’s time to get out. But the economy’s looking up, so we’ll risk going for more gains, more thrills, racing to the 2016 top. This new musical chairs game reminds us of that upbeat bank CEO in our favorite Robert Mankoff New Yorker cartoon: The CEO is at a podium motivating shareholders. Imagine Michael Douglas in Oliver Stone’s classic “Wall Street”: “While the end-of-the-world scenario will be rife with unimaginable horrors, we believe that the pre-end period will be filled with unprecedented opportunities for profit.” That’s the spirit driving another exciting game of musical chairs till 2016. Next crash: $10 trillion like dot-com 2000? Subprime 2008? Play the game .. How big a drop? Truth is, nobody really knows. But everybody has an opinion. First using this or that favorite theory, cycle, index, data, algorithm. Then they guess. And millions of investors pile in the trending herd, all chasing the same news media, alerts, opinions, guesses. As gigabytes of data endlessly overload us all day, every day, 24/7.

How big? Even the pros don’t really have a clue. They make consensus guesses. All over the map. This one up. Next down. A roller coaster. Not much help in today’s algorithm driven news business that’s more like a scattergun when we wish we had a sniper rifle. All that in a mess of contradictions hidden in a war zone of mental land mines. But we are absolutely certain something is coming. Bigger than the Silicon Valley’s dot-com crash after the 2000 millennium celebrations. That triggered a 30-month recession. Bigger than the 2008 Wall Street banks subprime credit collapse that put America in virtual bankruptcy. Does anyone really care, about the future? No, only today. What’s trending now? Our brains have lost the capacity to think long-term. We drift from trend to trend: The latest buzz. Rarely going deep, never into the future. Nor ask the moral questions, what’s the right thing to do? What counts: Today’s trends. That’s all. We’re playing the musical chairs game.

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Rat race to the bottom.

Public Pensions Cannot Stop Chasing Performance (BW)

Two basic principles of investing hold up remarkably well: Past results really don’t predict future performance, and high fees eat away at your returns. Smart investors don’t chase performance (as much as they can help themselves) and keep costs to a minimum. Unfortunately for taxpayers, the experts who run public pension funds aren’t following these rules. What’s more, they have little incentive to start.First, the good news: Public pensions in California, Ohio, and New Jersey have been reducing their investments in hedge funds, noting high fees and poor performance, the Wall Street Journal reported. The Los Angeles Fire and Police fund invested $500 million in a hedge fund that returned less than 2% over the last seven years; the fund had comprised just 4% of Fire & Police’s portfolio but 17% of investment fees paid.

The pension plans reconsidering these high-fee, low-performance investments include those with allocations to hedge funds ranging from 1.6% to 15% of assets, according to the Journal. What they share, though, is dismal returns: The average hedge fund return for public pensions was 3.6% for the three years ended March 31, a period when returns from stocks were up more than 10%. But for all the griping about hedge funds’ high costs and lousy performance, it doesn’t appear pension funds have learned their lesson: They are maintaining their investment in private equity, in some cases, even expanding it. Private equity funds invest in non-publically traded assets; like hedge funds, they also promise higher returns—in exchange for high fees and often more risk. And historically, private equity has been a bust for pensions, too.

Research by economists Josh Lerner, Antoinette Schoar, and Wan Wong found public pensions underperformed in private equity relative to other institutional investors such as endowments, private pensions, and insurance companies. In the period they looked at (funds raised from 1991 to 2001), the pension funds’ private equity investments didn’t do much better than an equity index fund. So why the preference for private equity? It sure looks like performance chasing. According to the Journal, private equity investments returned more than 10% to large pension funds in the last three years. Accordingly, pension funds have dived in.

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Basic Income, citizens’ income. Sounds good to me.

Would A Citizen’s Income Be Better Than Our Benefits System? (Guardian)

Photo: Fraser Gray/Rex Features

One radical suggestion is for everybody to receive a citizen’s income. Under this scheme, waged and unwaged, children and adults, the working aged and pensioner, rich and poor alike would receive the same basic income financed by the phasing out of virtually every tax relief and allowance. Those on benefits would not face high marginal tax rates if they took a job, but merely pay PAYE at the current standard rate of 20% on every pound they earned. Those working 20 hours a week on the minimum wage could work 40 hours a week without losing more than 50% of their extra earnings in lost tax credits. There would be other advantages from such a system. First, it would be universal and hence avoid the stigma attached to benefits. Secondly, people taking a job or starting a business would have the security of knowing that they would still have their citizen’s income if the venture did not work out.

Concerns that a citizen’s income would encourage the idle to sit at home all day watching daytime TV do not appear to be supported by evidence from pilot schemes in other countries. Even so, there would be cases where this did happen and they would doubtless be highlighted as an example of a something-for-nothing culture. Other drawbacks include the failure so far to construct a citizen’s income that obviates the need for housing benefit, and the political difficulty in persuading voters that a millionaire should be getting the same citizen’s income as a milkman. So far support for a citizen’s income is limited to the Green party, although the government’s switch to a flat-rate state pension is a step in that direction. The truth is that no tax and benefit system is perfect. But the one we have is costly, bureaucratic, ineffective – and ripe for reform.

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Australia’s ‘Wait For The Dole’ For Under-30s ‘Deeply Disturbing’ (Guardian)

More than 100,000 young people will have to wait six months for unemployment benefits under the government’s proposed budget measure, with social services advocates warning they face “deeply disturbing” knock-on effects. Briefings given to various groups by the Department of Social Services show that 113,000 people a year aged under 30 will be denied the Newstart and Youth Allowance payments for six months. After this period young jobseekers will have to commit to 25 hours a week in a work-for-the-dole scheme. The government will also require those on unemployment benefits to apply for 40 jobs a month, double the current requirement. The government is facing difficulty in getting Senate support for its changes to the unemployment benefits system. Labor and the Greens are opposed to the changes while Clive Palmer, whose Palmer United party holds three crucial Senate seats, has said the proposals simply punish the jobless, with the majority of unemployed people “already trying desperately to find work”.

The Australian Council of Social Service said the scope of the measure would leave many young people suffering severe monetary and mental distress. “The human impact will be deeply disturbing, as this isn’t a small number of people,” Cassandra Goldie, chief executive of Acoss, told Guardian Australia. “When you look at other places that have experimented this, such as the UK, you see tragic examples of people in deep depression, overwhelmed by a lack of hope. “We should be proud of the social safety net we have in Australia. We shouldn’t be a country where if you can’t get a job you face the prospect of not being able to eat, turn on the light, or losing your housing altogether.” Goldie said the government was misguided if it thought young people were not trying hard enough to find jobs. “At the moment there are 165,000 jobs available out there and 800,000 people looking for work. The competition is very hard, especially for those who face barriers such as discrimination.

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