Jun 032018
 
 June 3, 2018  Posted by at 9:00 am Finance Tagged with: , , , , , , , , , , , ,  


Andrew Wyeth Christina’s world 1948

 

Why Italy Had To Say Goodbye To The Dolce Vita (David McWilliams)
An Italian Exit May Be Rome’s Best Option – JPMorgan (ZH)
Angela Merkel Rules Out Debt Relief For Italy (CNBC)
New Italy PM Starts Off In Shadow Of His Powerful Deputies (AFP)
Juncker: EU Won’t ‘Meddle’ In Italy’s Affairs (O.)
Political Bruiser Sánchez Stuns Spain To Become PM (Spain Report)
Europe: Confront Trump or Avoid a Costly Trade War (NYT)
US Wants Structural Changes To China’s Economy: Mnuchin
Uber’s ‘Business Is Finished’ In Turkey, Erdogan Says (R.)
Britain’s Low-Paid Face Decade Of Wage Squeeze (O.)
UK Universal Credit Change To Bar 2.6m Children From Free School Meals (Ind.)
Whale Dies From Eating More Than 80 Plastic Bags (AFP)

 

 

Excellent from David McWilliams on what the euro has done to Italy.

Why Italy Had To Say Goodbye To The Dolce Vita (David McWilliams)

Sometimes it is not appreciated quite how industrial Italy is. It has long been Europe’s second-biggest manufacturing power, beaten only by Germany. Italy is far more industrial than France or the UK. In some areas of design and high-quality manufacturing, Italy is still without peer. However, since it gave up the lira and adopted the euro – in effect Germany’s currency – things have gone pear-shaped. This economic calamity is driving Italian politics, leading many to question the euro and Italy’s membership of it. From 1945 to 1995 there was an understanding that Italy would devalue the lira. This is what Italy did. Traditionally, it devalued the lira every few years. This kept Italian industry competitive.

For example, when Italy joined the European Monetary System, in 1979, the exchange rate was 443 lire per Deutschmark. By 1990, the year of German reunification, the rate was 750 lire to the Deutschmark. By 1995 it was 1,000 lire to the Deutschmark. In the 1992 currency crisis the lira fell to a low of 1,250 against the Deutschmark before recovering a bit. The gradual fall in the value of the lira was a price that the Italians were prepared to pay for industrial success. Contrary to the dogma spouted by Europe’s central bankers, Italian devaluations worked particularly well. From 1979 to 1998, Italian industrial production outpaced that of Germany by more than 10%. Italian equities outperformed German equivalents by 16% – after having taken into account the devaluations.

So not only was Italian industry growing faster than German industry, aided by lira devaluations, but also the return on capital in Italy was higher than in Germany. This is because if the stock market of a country is outperforming another country’s, it implies that the capital that is deployed in the faster-growing country is being deployed more efficiently. Therefore, not only was Italy growing more quickly than Germany, but it was more efficient too. Then came the euro. Since Italy joined the single currency, almost to the day, its industry has gone backwards. Having outperformed German stocks during the period of the lira, Italian stocks have underperformed German stocks by a whopping, bankruptcy-inducing 65%.

During the half-century when Fellini was writing the story of postwar Italian success, the Italian stock market almost always returned more than the German stock market. Once Italy joined the euro that stopped almost overnight. Deep in the economy, the strictures imposed by the euro have destroyed much of Italian industry. For example, having outgrown Germany’s industrial output in the 1980s and 1990s by 10%, Italian factory output since Italy joined the euro has lagged Germany’s by 40%.

Read more …

Hard to summarize this long Zero Hedge piece. Depending on where you look, Italy may not be all that weak.

“If you owe the ECB €10 billion, you have no leverage. If you owe the ECB €426 billion, you have all the leverage.”

An Italian Exit May Be Rome’s Best Option – JPMorgan (ZH)

[..] with €426BN, Italy has the highest Target2 deficit with the Eurosystem (Spain is a close second with €377BN) any discussion about an Italian euro exit raises concerns about costs. [..] due to QE induced cross border flows since 2015, Target2 balances have exploded since the launch of the ECB’s QE (and third Greek bailout in 2015), and surpassed the previous extremes from the depths of the euro debt crisis in the summer of 2012.

[..] a euro exit by a debtor country would represent more of a cost to creditor countries such as Germany rather than to the exiting country itself. And, as shown in the chart above, Germany sure has a lot of implicit accumulated costs, roughly €1 trillion to be precise, as a result of preserving a currency union that allowed German exporters to benefit from a euro dragged lower by the periphery, relative to where the Deutsche Mark would be trading today. But here the analysis gets slightly more complex, as Target2 does not provide the full picture of potential costs (or benefits, assuming a scorched earth approach). As JPMorgan writes, the Target2 liabilities of a debtor country give only a partial picture of the cost to creditor nations from that debtor country exiting.

This is because Target2 balances represent only one component of the Net International Investment Position of a country, i.e. the difference between a country’s total external financial assets vs. liabilities. The broader metric that one must use, is of the Net International Investment Position for euro area countries and is shown in the chart below. It shows that contrary to the Target2 imbalance, Italy leaving the euro would inflict a lot less damage to creditor nations than Spain leaving the euro. This is because Spain’s net international investment liabilities stood at close to €1tr as of the end of last year, almost three times as large as its Target2 liabilities. In contrast Italy’s net international investment liabilities were much smaller and stood at only €115bn at the end of last year, around a quarter of its €426bn Target2 liabilities. This, as JPM explains, is because Italy has accumulated over the years more external assets than Spain and should thus be overall more able to repay its external liabilities.

[..] Ironically, the surprisingly low net international investment liabilities of Italy are the result of the persistent current account surpluses the country has been running since the euro debt crisis of 2012, and smaller current account deficits compared to Spain before the crisis. The flipside is that the current account surplus – in theory – also makes it easier for a country like Italy to exit the euro relative to a current account deficit country. This is because the higher the current account deficit of a debtor country, the higher the cost of an exit for this country as the current account deficit would have to be closed abruptly following an exit. Most importantly, this means that as a result of Italy’s decent current account surplus, from a narrow current account adjustment point of view, its own cost of a euro exit should be relatively small.

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Merkel has weakened a lot. Italy knows it.

Angela Merkel Rules Out Debt Relief For Italy (CNBC)

German Chancellor Angela Merkel appeared on Saturday to rule out debt relief for Italy, saying in a newspaper interview that the principle of solidarity among members of the euro zone should not turn the single currency bloc into a debt-sharing union. “I will approach the new Italian government openly and work with it instead of speculating about it intentions,” Merkel told the Frankfurter Allgemeine Sonntagszeitung in an interview to be published on Sunday.

On Friday, Italy swore a populist coalition into power, ending months of political uncertainty that hit global markets in the last week. Newly designated Prime Minister Giuseppe Conte will lead Western Europe’s first anti-establishment government with the aim of cutting taxes, boosting spending on welfare and overhauling EU rules on budgets and immigration. Italy accounts for 23.4 percent of the euro zone’s public debt and 15.4 percent of the bloc’s GDP, according to Eurostat.

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Conte has a full agenda.

New Italy PM Starts Off In Shadow Of His Powerful Deputies (AFP)

Italy’s new prime minister Giuseppe Conte mostly kept quiet on his full first day in office Saturday, while his two powerful deputies took centre stage in setting the tone of the populist government’s policy. Conte, a political novice, was finally sworn in on Friday as the head of a government of ministers from the anti-establishment Five Star Movement and the far-right League, ending months of uncertainty since elections in March. But Conte was a compromise candidate between Five Star leader Luigi Di Maio and the League’s Matteo Salvini – both of whom are now his deputy prime ministers – and he will have to walk a delicate line to push through the anti-austerity and pro-security promises their populist parties campaigned on.

The 53-year-old academic also inherited a daunting list of issues from his predecessor Paolo Gentiloni, including the financial travails of companies such as Ilva and Alitalia, a Group of Seven summit in Canada and a key EU summit at the end of the month, as well as the thorny question of immigration. Immigration is the bugbear of Conte’s interior minister, Salvini, the 45-year-old leader of the anti-immigrant, anti-Islam League. Salvini announced Friday that he would visit Sicily to see the situation for himself at one of the main landing points for refugees fleeing war, persecution and famine across North Africa and the Middle East. “The good times for illegals is over – get ready to pack your bags,” Salvini said at a rally in Italy’s north on Saturday, adding however that he wants to economically assist migrants’ countries of origin.

His comments come after more than 150 migrants, including nine children, disembarked from a rescue ship late Friday in Sicily. Conte attended a military parade alongside President Sergio Mattarella on Saturday, marking Republic Day for the foundation of the Italian Republic in 1946. However the new prime minister has issued few public statements since being appointed. On Saturday he did post on Facebook that he had spoken with German Chancellor Angela Merkel and French President Emmanuel Macron and would meet the two leaders at the G7 summit, where he will be a “spokesman for the interests of Italian citizens”. Conte has also opted to keep the country’s intelligence services under his personal control.

Deputy premier Di Maio, who is serving as economic development minister, also took to Facebook, calling for “entrepreneurs to be left alone”. “Employers and employees in Italy must not be enemies,” he said, promising “I will not disappoint you”. On Saturday evening Five Star held a rally in the centre of Rome with thousands of supporters and all its ministers to celebrate “the government of change”. Di Maio told the crowd that “from today, the state is us”. Five Star’s founder, former comic Beppe Grillo, rang a bell in front of the crowd, saying the sound “marks the fracture between a world that is going away and a new one that is arriving”.

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Right. Sure.

Juncker: EU Won’t ‘Meddle’ In Italy’s Affairs (O.)

Italy, the third-largest economy in the eurozone, has a public debt second only to Greece’s and there was a negative reaction from the financial markets to the League-M5S coalition, which plans to significantly raise public spending. Juncker offered a more placatory tone, suggesting that Brussels and Berlin had learned the lessons of the Greek crisis. He also denied that the eurozone was set on a course for another economic downturn: “The Italians cannot really complain about austerity measures from Brussels. However, I do not now want to lecture Rome. We must treat Italy with respect. Too many lectures were given to Greece in the past, in particular from German-speaking countries. This dealt a blow to the dignity of the Greek people. The same thing must not be allowed to happen to Italy.”

Juncker said that the financial markets’ reaction was “irrational”: “People should not draw political conclusions from every fluctuation in the stock market. Investors have been wrong on so many occasions.” Neither of the coalition parties in the new Italian government campaigned on leaving the euro or the EU, but both have backed such calls in the past and are scathing about the rules that underpin the eurozone. Mujtaba Rahman, a former European commission and UK Treasury official who now works for consultancy the Eurasia Group, warned that as the cornerstone of the coalition government’s platform was fiscal expansion, it was liable to clash with the commission this autumn.

“Though no official estimates have been produced, independent estimates suggest the proposed measures would cost, combined, upwards of €100bn per annum, around 6% of GDP.“If the government were to propose a very expansionary budget, the commission – which provides its opinions and recommendations on member states’ draft budgetary plans – would have to reject it in September. This would be a first, and would set the stage for a real confrontation with Rome,” he said. “A significant deviation from EU-mandated fiscal targets may prompt the commission to open a new Excessive Deficit Procedure, a process designed to give the EU more power to enforce austerity on Rome. Yet the symbolism of this move would only strengthen the Italian government’s domestic standing.”

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Poker player?!

Political Bruiser Sánchez Stuns Spain To Become PM (Spain Report)

Forget about what the new socialist government’s policies are going to be, because no one really knows yet. Forget about who the new ministers are going to be, because no one really knows yet. And forget about how long this government is going to last. No one has a clue right now. What is worthy of note is how Pedro Sánchez has just crushed all of his political opponents in a week. Last Friday, the PSOE had slowly slumped to less than 20% in the polls and he was being written off by columnists and commentators. This Saturday, he will be driven to Zarzuela Palace to be sworn in as the new socialist Prime Minister of Spain [..]

Mr. Rajoy is likely not the only political leader who needs a stiff drink this weekend. Pedro Sánchez has just left Pablo Iglesias—who nine days ago thought his biggest problem was an absurd internal ballot about his new luxury home—sitting in the dust in the fight for the Spanish left. Two years ago, with the sudden appearance and meteoric rise of Podemos, Mr. Iglesias’s stated strategic goal was not to win the election but to dominate the Spanish left. He just lost that race. Pedro Sánchez has just left Ciudadanos leader Albert Rivera rabbiting on incessantly about wanting a new general election instead of the socialists “unfairly” grabbing power, because Mr. Rivera is—or was—doing rather better in the polls than the rest.

But rabbit on is all he can do for now because, just like nine days ago, in the real world Ciudadanos still only has 32 seats in Congress. And Pedro Sánchez has just left the powerful leader of the Socialist Party in Andalusia, Susana Diaz, well, in Andalusia. This might be the sweetest victory of all for the new Prime Minister, because it was she who wielded her considerable internal and establishment influence in October 2016 to oust Mr. Sánchez as leader of the PSOE, allowing Mariano Rajoy to be reappointed Prime Minister after a year of national stalemate unbroken by two general elections.

Again: Pedro Sánchez, written off by some as being too handsome to have any interesting ideas, has, somewhere along the way, learnt to execute political hit jobs that have left all of his major political opponents staggering, and sent what was a confident conservative party that had only just passed a new budget—two days previously—scurrying into opposition, wounded. In a week. Whatever happens next in Spanish politics, do not underestimate Pedro Sánchez.

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More division.

Europe: Confront Trump or Avoid a Costly Trade War (NYT)

Despite its name, the European Union is not generally a model of unity. If Mr. Trump was banking on internal division stymieing the European response, he picked an opportune moment. Britain is consumed with domestic sniping over its pending departure from the European Union, making it a bit player in these proceedings. Italy has been immersed in the operatic political drama at which it excels, only Friday swearing in a new government after inconclusive elections in March. The incoming government presents a coalition of two populist parties that have expressed disdain for the European Union and the shared euro currency, stoking fears that the bloc will be presented with a new challenge to its cohesion.

Spain just swapped governments. Germany is headed by a chastened chancellor Angela Merkel following her own lengthy struggles to form a government after elections last fall. The French president has been frustrated in his attempts to forge greater political unity within the bloc. “Europe is in disarray,” said Nicola Borri, a finance professor at Luiss, a university in Rome. “It’s even difficult to understand who is in power in Europe.” In deliberating how to respond to Mr. Trump’s tariffs, the key schism appears to run between Germany and the rest of the bloc. “I don’t think there is a unified consensus for how to deal with the Americans,” said Meredith Crowley, an expert on international trade at the University of Cambridge in England. “The Germans benefit from open markets globally, so they don’t want to throw up more barriers to free trade.”

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That’s quite the statement. What if Beijing said the same about the US?

US Wants Structural Changes To China’s Economy: Mnuchin

The United States wants trade talks in Beijing this weekend to result in structural changes to China’s economy, in addition to increased Chinese purchases of American goods, U.S. Treasury Secretary Steven Mnuchin said on Saturday. U.S. Commerce Secretary Wilbur Ross arrived in Beijing on Saturday with an interagency team of U.S. officials for talks on long-term purchases of U.S. farm and energy commodities, just days after Washington renewed its threats to impose tariffs on Chinese goods.

The purchases are partly aimed at shrinking the $375 billion U.S. goods trade deficit with China. Mnuchin, speaking at a G7 finance leaders meeting in Canada where he was the target of U.S. allies’ anger over steel and aluminum tariffs, said the China talks would cover other issues, including the Trump administration’s desire to eliminate Chinese joint venture requirements and other policies that effectively force technology transfers.

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It’s election time.

Uber’s ‘Business Is Finished’ In Turkey, Erdogan Says (R.)

Turkey’s President Tayyip Erdogan has said ride hailing app Uber is finished in Turkey, following pressure from Istanbul taxi drivers who said it was providing an illegal service and called for it to be banned. About 17,400 taxis operate in Istanbul, home to about a fifth of Turkey’s population of 81 million people, and since Uber entered the country in 2014 tensions have risen sharply. Erdogan’s statement came after new regulations were announced in recent weeks tightening transport licensing requirements, making it more difficult for drivers to register with Uber and threatening a two-year ban for violations.

“This thing called Uber emerged. That business is finished. That does not exist anymore,” he said in a speech in Istanbul late on Friday. “We have our taxi system. Where does this (Uber) come from? It is used in Europe, I do not care about that. We will decide by ourselves,” added Erdogan, who is running for re-election in three weeks. [..] Uber said that about 2,000 yellow cab drivers use its app to find customers, while another 5,000 work for UberXL, using large vans to transport groups to parties, or take people with bulky luggage to Istanbul’s airports.

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The Tories can’t wait to return to Dickens.

Britain’s Low-Paid Face Decade Of Wage Squeeze (O.)

The wages of 10 million low-paid workers have stalled for two decades and face pressure for a decade to come, according to a bleak assessment of Britain’s future jobs market. Global economic competition, automation, the shift to the gig economy and a widening regional divide will see further pressure placed on the incomes of those earning between £10,000 and £15,000, it warns. The analysis by the Centre for Social Justice (CSJ) thinktank, which is on the political right and chaired by the former Tory leader Iain Duncan Smith, also blamed a chronic national failure to boost skills and education. It will be seen as another warning to Theresa May from Conservative figures to kickstart her domestic agenda.

There have been concerns within the party that the focus on Brexit has led to inaction in other crucial areas that could hold Britain back after its exit from the European Union. The analysis, co-written by Boris Johnson’s former economic adviser and Brexit supporter Gerard Lyons, concludes that wages of those on the lowest salaries stalled long before the 2008 financial crash. It warns that the current evidence shows that most never escape a life on low pay. The centre’s support for action on low pay shows that it is now an issue of concern across the political spectrum, with automation expected to place further pressure on jobs in some low-paid sectors unless new skills and opportunities are developed.

The CSJ report states that 20% of Britain’s 33 million workers earn £15,000 a year or less, and that 50% earn no more than £23,200. Only 10% of employees, or about 3 million people, earn above £53,000 a year. Britain does not compare well with other developed nations when it comes to low pay, it states. Taking data from manufacturing, and giving the US a score of 100, Switzerland topped the table with a pay rate of 155, followed by Norway on 126, Germany on 111 and France on 97. However, the UK was much further behind, on 73.

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These people would be better off moving to Poland.

UK Universal Credit Change To Bar 2.6m Children From Free School Meals (Ind.)

Up to 2.6 million children whose parents are on benefits could be missing out on free school meals by 2022, the shadow education minister will warn. Angela Rayner will tell a GMB union conference on Sunday that the Government’s claims on school meals are “falling apart” after changes to eligibility under Universal Credit (UC). When the system was first introduced in 2013, all children of recipients – who were all unemployed – were eligible for free school meals (FSM), as they would have been under the old system. But in April the criteria was tightened based on income. In England, the net earnings threshold will be £7,400 whereas in Northern Ireland it will be £14,000.

A government technical note published in May said that if the change had not been made, “around half of all (state school) children would become eligible for FSM and the meals would no longer be targeted at those who need them the most”. It said that in 2017 around 1.1 million disadvantaged children were eligible and received a free school meal, some 14 per cent of all state-school pupils. But if the change had not been made the number of additional children who would have been eligible was between 2,300,000 and 2,600,000 by 2022.

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And that’s just one animal that we could see.

Whale Dies From Eating More Than 80 Plastic Bags (AFP)

A whale has died in southern Thailand after swallowing more than 80 plastic bags, with rescuers failing to nurse the mammal back to health. The small male pilot whale was found barely alive in a canal near the border with Malaysia, the country’s department of marine and coastal resources said. A veterinary team tried “to help stabilise its illness but finally the whale died” on Friday afternoon. An autopsy revealed 80 plastic bags weighing up to 8kg (18lb) in the creature’s stomach, the department added. People used buoys to keep the whale afloat after it was first spotted on Monday and an umbrella to shield it from the sun. The whale vomited up five bags during the rescue attempt.

Thon Thamrongnawasawat, a marine biologist and lecturer at Kasetsart University, said the bags had made it impossible for the whale to eat any nutritional food. “If you have 80 plastic bags in your stomach, you die,” he said. Thailand is one of the world’s largest users of plastic bags. Thon said at least 300 marine animals including pilot whales, sea turtles and dolphins, perished each year in Thai waters after ingesting plastic. “It’s a huge problem,” he said. “We use a lot of plastic.” The pilot whale’s plight generated sympathy and anger among Thai netizens. “I feel sorry for the animal that didn’t do anything wrong, but has to bear the brunt of human actions,” wrote one Twitter user.

Read more …

Apr 182018
 
 April 18, 2018  Posted by at 9:25 am Finance Tagged with: , , , , , , , , , , , ,  


Franco Fontana Prague 1967

 

Junk Bond Market Still in Total Denial, Fighting the Fed (WS)
World Trade System In Danger Of Being Torn Apart, Warns IMF (G.)
Eurozone Engine Sputters as German Downturn Risk Sharpens (BBG)
Bitcoin Tumbles After Mystery “Whale” Dumps $50 Million In One Trade (ZH)
Japan Asks Rusal To Stop Aluminum Shipments (ZH)
The Deep State And The Big Lie – Douma (Stockman)
Theresa May’s Husband Made A Killing From The Bombing Of Syria (EP)
Trump Tweets Support For American Pastor On Trial In Turkey (R.)
New Refugees In Greece Can Move Freely, Says Court (K.)
Recycling Is Not The Answer (G.)
30 KIlos Of Plastic Bags Killed Whale Washed Ashore On Santorini (KTG)

 

 

The wonderful world of junk.

Junk Bond Market Still in Total Denial, Fighting the Fed (WS)

The Fed’s efforts to raise interest rates across the spectrum have borne fruit only in limited fashion. In the Treasury market, yields of longer-dated securities have not risen (prices fall when yields rise) as sharply as they have with Treasuries of shorter maturities. The two-year yield has surged to 2.41% on Tuesday, the highest since July 2008. But the 10-year yield, at 2.82%, while double from two years ago, is only back where it had been in 2014. So the difference (the “spread”) between the two has narrowed to just 0.41 percentage points, the narrowest since before the Financial Crisis:

This disconnect is typical during the earlier stages of the rate-hike cycle because the Fed, through its market operations, targets the federal funds rate. Short-term Treasury yields follow with some will of their own. But the long end doesn’t rise at the same pace, or doesn’t rise at all because there is a lot of demand for these securities at those yields. Investors are “fighting the Fed”— doing the opposite of what the Fed wants them to do – and the difference between the shorter and longer maturities dwindles, and it dwindles, and it causes a lot of gray hairs, and it dwindles further, until it stops making sense to investors and they open their eyes and get out of the chase, and suddenly long-term yield surge higher, as bond prices drop sharply.

That’s why short sellers have taken record positions against the 10-year Treasury recently: they’re waiting for yields to spike to the next level. But this disconnect – this symptom of investors fighting the Fed – in the Treasury market is mild compared to the disconnect in the junk bond market. There, investors have completely blown off the Fed. At least in the Treasury market, 10-year yields have risen since the Fed started getting serious about rate increases in December 2016. In the junk bond market, yields have since fallen. In other words, despite the Fed’s tightening, the junk bond bubble has gotten bigger. And investors are not yet showing any signs of second thoughts.

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Because the IMF made sure it would be skewed towards the rich.

World Trade System In Danger Of Being Torn Apart, Warns IMF (G.)

The postwar global trading system risks being torn apart, the International Monetary Fund has warned, amid concern over the tariff showdown between the US and China. In a sign of its growing concern that protectionism is being stimulated by voter scepticism, the IMF used its half-yearly health check for the world economy to tell policymakers they needed to address the public’s concerns before a better-than-expected period of growth came to an end. Maurice Obstfeld, the IMF’s economic counsellor, said: “The first shots in a potential trade war have now been fired.” He said Donald Trump’s tax cuts would suck imports into the US and increase the size of the trade deficit 2019 by $150bn – a trend that could exacerbate trade tensions.

“The multilateral rules-based trade system that evolved after world war two and that nurtured unprecedented growth in the world economy needs strengthening. Instead, it is in danger of being torn apart.” Obstfeld said there was more of a “phoney war” between the US and China than a return to the widespread use of tariffs in the Great Depression, but that there were signs that even the threat of protectionism was already harming growth. “That major economies are flirting with trade war at a time of widespread economic expansion may seem paradoxical – especially when the expansion is so reliant on investment and trade,” Obstfeld added.

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Too much surplus?

Eurozone Engine Sputters as German Downturn Risk Sharpens (BBG)

The euro area’s economic expansion is standing on increasingly shaky ground after reports showed German investor confidence tumbling to its lowest level since late 2012 and the risk of a recession in the nation jumping. The sentiment gauge from ZEW showed more investors now see a worsening in Europe’s largest economy than forecast an improvement, a mood swing that ZEW President Achim Wambach blamed on the U.S. trade dispute combined with weak domestic retail and production numbers. The drop in confidence came as the Dusseldorf-based Macroeconomic Policy Institute (IMK) said the probability of a recession in Germany over the next three months has jumped to 32%.

While that outcome remains unlikely, the gauge is up sharply from 6.8% in March. It follows U.S. attempts to rewrite international trade rules by imposing import tariffs, triggering a tit-for-tat response by China. Even though the European Union has temporarily been exempted from the metal levies, risks of far-reaching retaliatory measures could still hurt Germany’s export-driven economy – feeding into signs that growth in the euro area is coming off its peak. At the IMK, the recession gauge, which uses data that have signaled downturns in the past is now orange – the middle of its traffic-light warning system – for the first time since March 2016. That was just as the German economy was entering a mild slowdown.

“Volatility in financial markets, which has been evident for several months, is now accompanied by a noticeable deterioration in sentiment and subdued production,” according to IMK. “This has recently become a typical constellation for the end phase of a cycle.”

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For now, still a casino.

Bitcoin Tumbles After Mystery “Whale” Dumps $50 Million In One Trade (ZH)

The price of several cryptocurrencies took a sudden hit Tuesday over the course of 20 minutes, which some suspect may be the result of a single Bitcoin whale who unloaded over $50 million worth of the digital currency in one Bitfinex trade. The drop comes one day after the third largest bitcoin wallet also unloaded around $50 million of the digital currency. As Marketwatch first noted , “the balance of wallet 3D2oetdNuZUqQHPJmcMDDHYoqkyNVsFk9r — an anonymous digital account which is valued at $1.49 billion — fell by 6,500 bitcoin Tuesday, with the average sale price sale being $8,146.70, a total value of just over $50 million, according to bitinfocharts.”

The sale comes a day after the third-largest wallet, which famously purchased over $400 million in bitcoin in February, let go of 6,600 bitcoin at an average price of $8,026. Combined, the two whales unloaded over $100 million of bitcoin within 24 hours. As there was no immediate news or catalyst, some attributed the sale to Tuesday’s report that New York Attorney General Eric Schneiderman had launched an investigation into 13 cryptocurrency exchanges including Coinbase, Gemini and Bit Trust. The probe seeks information on fees, volume data and procedures governing margin trading among other things. However, the news hit some 4 hours prior to the sale.

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Unintended sanctions consequences?! Aluminum much more expensive for US firms too.

Japan Asks Rusal To Stop Aluminum Shipments (ZH)

One week ago, when the Trump administration unveiled the most draconian Russian sanctions yet which among others targeted Putin-ally Oleg Deripaska and the Russian oligarch’s aluminum giant, Rusal, we said that aluminum prices are going higher, much higher, for one reason: excluding China’s zombie producers, Rusal is the world’s largest producer of aluminum. Well, prices have since surged, largely as expected, and one week later we also learned just how “radioactive’ Rusal’s products have become as a result of the US sanctions: overnight Reuters reported that major Japanese trading houses asked the Russian aluminum producer to stop shipping refined aluminum and other products in light of U.S. sanctions on the world’s No.2 producer and are scrambling to secure metal elsewhere, according to industry sources.

“We have requested Rusal stop shipments of aluminum for our term contracts as we can’t make payment in U.S. dollars and we don’t want to take the risk of becoming a secondary sanction target by the United States,” said a source at a trading house [..] It is unclear how and where Japan can find alternative sources of aluminum: Japan buys about 300,000 tonnes of refined aluminum from Russia, about 16% of the nation’s total import, according to the Japan Aluminium Association. “Everyone has been on a search for substitutes and that pushed local spot premiums to around $200-$250 per tonne by last Friday,” he said. That’s sharply higher than Japan term premiums for April-June quarter shipments at $129 per tonne.

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Pearson Sharp and Robert Fisk were both on the ground in Douma. Both say the same.

The Deep State And The Big Lie – Douma (Stockman)

The contra-narrative about Assad’s alleged gas attack is gaining traction as the evidence comes in. It increasingly seems probable that some folks suffocated or were overcome with smoke inhalation and hypoxia (oxygen deprivation) when buildings, tunnels and underground bunkers collapsed into clouds of dust during the final battle for Douma last Saturday. Then the desperate remnant of the jihadist Army of Islam (Jaysh al-Islam) holed up there piled the bodies in a basement, spread shaving cream on their lips and proceeded to videotape furiously. Thereafter, they charged into a nearby hospital (which was treating hypoxia victims) with their video cameras in hand, yelling “chemical attack” while water-hosing one and all, thereby setting off the pandemonium seen on social media around the world.

We haven’t gotten to Douma yet to check out this contra-narrative, but an intrepid young reporter named Pearson Sharp did. Along with his camera crew, he visited the site of the attack, the hospital and the nearby rebel weapons dump – and interviewed dozens of people in the immediate vicinity. According to Sharp, none of them witnessed the alleged gas attack or believed it happened, and several personnel at the Douma hospital corroborated the phony water-dousing melee. Indeed, the head surgeon insisted to him that no one had died at the hospital from chemical agents. And he also saw and videoed room after room stacked with rockets, mortars and other military gear and filmed the debris and dilapidated remnants of buildings in the town.

[..] Self-evidently, a visiting Martian might have an altogether different interpretation of which nation had ventured down the “dark path” and which one was a “force for stability and peace”. And that would especially be the case with just a few more reports like the new missive from veteran war correspondent, Robert Fisk of the Independent (UK). Unlike young Mr. Pearson Sharp, Fisk has been a war correspondent in the Middle East for four decades and has won endless awards for reporting from the front lines. But his chops were earned when he became one of the few reporters in history to conduct face-to-face interviews with Osama bin Laden on three separate occasions during the 1990s.

Fisk’s dispatch filed Monday night speaks for itself and merits quoting at length because it not only skewers Washington’s narrative about Assad’s gas attack, but also provides vivid context: Whatever happened last Saturday erupted in the fog of war and could not possibly have been instantly assessed objectively or correctly by officials 6,000 miles away, who admit to having no “assets” on the ground in Damascus.

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Yes, this is pretty crazy.

Theresa May’s Husband Made A Killing From The Bombing Of Syria (EP)

The fact that Philip May is both a Senior Executive of a hugely powerful investment firm, and privy to reams of insider information from the Prime Minister – knowledge which, when it becomes public, hugely affects the share prices of the companies his firm invests in – makes Mr May’s official employment a staggering conflict of interest for the husband of a sitting Prime Minister. However, aside from the ease at which he is able to glean insider information from his wife about potential decisions which could go on to make huge profits for his firm, there is a far darker conflict of interest that has so far gone undiscussed.

Philip May is a Senior Executive of Capital Group, an Investment Firm who buy shares in all sorts of companies across the globe – including thousands of shares in the world’s biggest Defence Firm, Lockheed Martin. According to Investopedia, Philip May’s Capital Group owned around 7.09% of Lockheed Martin in March 2018 – a stake said to be worth more than £7Bn at this time. Whilst other sources say Capital Group’s shareholding of Lockheed Martin may actually be closer to 10%. On the 14th April 2018, the Prime Minister Theresa May sanctioned British military action on Syria in response to an apparent chemical attack on the city of Douma – air strikes that saw the debut of a new type of Cruise Missile, the JASSM, produced exclusively by the Lockheed Martin Corporation.

The debut of this new – and incredibly expensive – weapon was exactly what US President Donald Trump was referring to when he tweeted that the weapons being fired on Syria would be “nice and new and ‘smart!’” Every single JASSM used in the recent bombing of Syria costs more than $1,000,000, and as a result of their widespread use during the recent bombing of Syria by Western forces, the share price of Lockheed Martin soared.

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Now let them tell Erdogan about it.

Trump Tweets Support For American Pastor On Trial In Turkey (R.)

U.S. President Donald Trump voiced his support on Tuesday for Pastor Andrew Brunson, who is on trial in Turkey on charges he was linked to a group accused of orchestrating a failed 2016 military coup, in a case that has compounded strains in U.S.-Turkish relations. “Pastor Andrew Brunson, a fine gentleman and Christian leader in the United States, is on trial and being persecuted in Turkey for no reason,” Trump tweeted. “They call him a spy, but I am more a spy than he is. Hopefully he will be allowed to come home to his beautiful family where he belongs!” Brunson, a Christian pastor from North Carolina who has lived in Turkey for more than two decades, was indicted on charges of helping the group that Ankara holds responsible for the failed 2016 coup against President Tayyip Erdogan.

He faces up to 35 years in prison. Brunson has been the pastor of Izmir Resurrection Church, serving a small Protestant congregation in Turkey’s third largest city. Brunson’s trial is one of several legal cases roiling U.S.-Turkish relations. The two countries are also at odds over U.S. support for a Kurdish militia in northern Syria that Turkey considers a terrorist organization. Washington has called for Brunson’s release while Erdogan suggested last year his fate could be linked to that of U.S.-based Muslim cleric Fethullah Gulen, whose extradition Ankara has repeatedly sought to face charges over the coup attempt.

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It’s the EU that demanded refugees would be confined to the islands.

New Refugees In Greece Can Move Freely, Says Court (K.)

New refugee and migrant arrivals in Greece will soon be able to move around the country freely without being restricted to the islands of the eastern Aegean where they arrive from neighboring Turkey, according to a Council of State ruling that emerged on Tuesday and upends a 2016 decision by the Greek asylum service that forced them to remain in so-called hotspots until their asylum application was processed. According to the leaked ruling by the country’s highest administrative court, there are no reasons of public interest or migration policy to justify their geographical restriction to the islands of Lesvos, Chios, Samos, Leros, Kos and Rhodes.

Migration Policy Minister Dimitris Vitsas said he would comment on the ruling once he is informed of it officially. Once the ruling is published, new refugees who apply for asylum will be allowed to reside in any part of the country they choose. The asylum service’s May 2016 decision restricting migrants to the Aegean islands was challenged by the Greek Council for Refugees, an NGO which filed an appeal for its cancellation. “The imposition of restrictions on movement blocked the distribution of those people throughout Greek territory and resulted in their unequal concentration in specific regions and the significant burdening and decline of those regions,” the court said in its reasoning.

However, taking into account the large number of arrivals, the court said the ruling does not have a retroactive effect, which means it will not relate to the refugees who are already languishing in reception centers. The so-called hotspots have been operating beyond capacity and the country is now witnessing a fresh spike in arrivals of often flimsy boats carrying desperate passengers from Turkey.

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Indeed. But plastics are a huge industry.

Recycling Is Not The Answer (G.)

We all know, in theory, that we ought to use less plastic. We’ve all been distressed by the sight of Blue Planet II’s hawksbill turtle entangled in a plastic sack, and felt chastened as we’ve totted up our weekly tally of disposable coffee cups. But still, UK annual plastic waste is now close to 5m tonnes, including enough single-use plastic to fill 1,000 Royal Albert Halls; the government’s planned elimination of “avoidable” plastic waste by 2042 seems a quite dazzling task. It was reported this week that scientists at the University of Portsmouth have accidentally developed a plastic-eating mutant enzyme, and while we wait to see if that will save us all, for one individual the realisation of just how much plastic we use has become an intensely personal matter.

One early evening in mid-2016, Daniel Webb, 36, took a run along the coast near his home in Margate. “It was one of those evenings where the current had brought in lots of debris,” he recalls, because as Webb looked down at the beach from his route along the promenade he noticed a mass of seaweed, tangled with many pieces of plastic. “Old toys, probably 20 years old, bottles that must have been from overseas because they had all kinds of different languages on them, bread tags, which I don’t think had been used for years …” he says. “It was very nostalgic, almost archaeological. And it made me think, as a mid-30s guy, is any of my plastic out there? Had I once dropped a toy in a stream near Wolverhampton, where I’m from, and now it was out in the sea?”

Webb decided that he would start a project to keep all the plastic he used in the course of an entire year. He would not modify his plastic consumption in that time (although he had already given up buying bottled water), and each item would be carefully washed and stored in his spare room.


Daniel Webb in front of his Mural-by-the-Sea. Photo: Ollie Harrop 2018/Everyday Plastic

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Where your plastic ends up. Never again can you say you didn’t know. From now on it’s you didn’t care.

30 Kilos Of Plastic Bags Killed Whale Washed Ashore On Santorini (KTG)

More than 30 kg of plastic, mainly plastic bags, were found in the stomach of the whale that was washed out on the island of Santorini last week. The conducted autopsy showed that the huge mammal died of a gastric shock. The whale was unable to digest or excrete the rubbish through its digestive system. The problem caused peritonitis inflammation in its intestines that led to the animal’s death, local media report. The dead whale brings back to the spotlight the problem of tonnes of plastic landing into the waters, polluting the environment and leading to death of marine life. The body of the 9-meter long sperm whale – or Physeter macrocephalus as the scientific name is – was washed ashore on Akrotiri area on the island of Santorini in the Aegean island group of Cyclades on April 10th. The body weighting more than 7 tones was in condition of advanced sepsis.

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Feb 072017
 
 February 7, 2017  Posted by at 11:08 am Finance Tagged with: , , , , , , , , ,  


Russell Lee Sharecropper mother teaching children in home, Transylvania, LA. 1939

Trump To Be Barred From UK Parliament Over ‘Racism and Sexism’ (BBG)
Trump’s Wall Street Deregulation ‘The Last Thing We Need’ – Draghi (Ind.)
Meet The Men Who Could Topple Donald Trump (G.)
California Is Not ‘Out Of Control,’ Leaders Tell Trump (R.)
Our Part In The Darkness (Alameddine)
The New York Times Just Doesn’t Understand This Economics Stuff (Worstall)
The Fed’s Mortage-Bond Whale (BBG)
When The Money Supply Dries Up (IM)
Army Corps Of Engineers May Decide On DAPL By Week’s End (BBG)
New Bill Would Block EPA From Regulating Greenhouse Gases
Too Late For Couples Therapy? (DiEM25)
Varoufakis: Tsipras Should Prepare To Break Deal With Greece’s Creditors (FR)
Rare Split On IMF Board Puts Greek Bailout At Risk (MW)
Greece Won’t Meet Fiscal Surplus Targets Set By Europe, IMF Says (BBG)
Third Quake Over 5-Richter Magnitude Rattles Lesbos (K.)

 

 

Really dumb stuff. If only because Trump loves it.

Trump To Be Barred From UK Parliament Over ‘Racism and Sexism’ (BBG)

U.S. President Donald Trump must not be allowed to address the U.K. Parliament during a state visit to Britain, House of Commons Speaker John Bercow said. Prime Minister Theresa May invited Trump to visit the U.K., but there have been calls by lawmakers not to give the president the honor of addressing both houses of Parliament after he introduced a ban on people from some majority-Muslim countries traveling to the U.S. “Before the imposition of the migrant ban I would myself have been strongly opposed to an address by President Trump in Westminster Hall; after the imposition of the migrant ban by President Trump I’m even more strongly opposed,” Bercow told lawmakers on Monday.

He added, “I feel very strongly our opposition to racism and to sexism and our support for equality before the law and an independent judiciary are hugely important considerations in the House of Commons.” Trump’s predecessor, Barack Obama, and world leaders including Nelson Mandela, Angela Merkel and Pope Benedict XVI have all been invited to speak to members of the House of Commons and the House of Lords. [..] The announcement was greeted with cheers and – a rare event in the House of Commons – applause from the opposition benches. A motion arguing that Trump shouldn’t be invited to speak has been signed by 163 out of Parliament’s 650 members.

Bercow said he has a veto over a speech in Westminster Hall, the oldest part of the Houses of Parliament, and would block one. It would also be a breach with tradition if Trump spoke in the Royal Gallery behind the Lords without his name on the invitation, he said. “An address by a foreign leader to both houses of Parliament is not an automatic right, it is an earned honor,” Bercow said. “There are many precedents for state visits to take place to our country that do not include an address to both houses of Parliament.”

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Meet Mario the kettle.

Trump’s Wall Street Deregulation ‘The Last Thing We Need’ – Draghi (Ind.)

Donald Trump’s roll-back of Wall Street regulation is “very worrisome” and “the last thing we need” the President of the ECB, Mario Draghi, has warned. Giving evidence to the European Parliament’s Committee on Economic and Monetary Affairs on Monday, Mr Draghi was asked about the American President’s assault on the US post-crisis Dodd-Frank legislation, which had curbed the risk-taking of US banks, raised their capital requirements and introduced more safeguards for consumers. “The last thing we need is a relaxation of regulation,” Mr Draghi said. “The fact that we are not seeing….significant financial stability risk is the reward of the action of supervisors…. Nowadays financial intermediaries are strong. The idea of repeating the conditions of before the crisis is very worrisome.”

Mr Draghi added: “If we were to look at historical experience and ask what are the main reasons for the financial crisis starting in 2007 onwards, well, one can disagree [over] whether it was too expansive monetary policy or the dismantling of financial regulation in previous years – but surely we can agree it was a combination”. Last week President Trump signed an executive order to relax Dodd-Frank, prompting warnings that he is preparing the ground for another financial crisis. Phil Angelides, who served as chair of the Financial Crisis Inquiry Commission, branded President Trump’s decision “insane”. “In the wake of the financial crisis, millions of families lost their homes. Millions of people lost their jobs. The economy was wrecked and communities across the country were devastated. Big Wall Street banks admitted wrongdoing and paid tens of billions of dollars in fines. And now, with bankers at his side, President Trump begins to rip apart protections put in place to protect America’s families and our economy,” he said.

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As I said a few dats ago: “More interesting right now is how strongly this is dividing the White House team. Kelly refused to enact some of Bannon’s demands. Tillerson and Mattis are not sitting comfortable either.”

Meet The Men Who Could Topple Donald Trump (G.)

When Trump began putting together his cabinet, liberals and some in the media expressed concern over the number of retired generals he was appointing to top positions. “Trump hires third general, raising concerns about heavy military influence,” blared a headline in the Washington Post during the presidential transition. “I am concerned that so many of the president-elect’s nominees thus far come from the ranks of recently retired military officers,” the Democratic representative Steny Hoyer told the Washington Examiner in December. The fretting over Trump’s generals was always misplaced, not least because the number of retired generals Trump has appointed to top positions in his administration is hardly unprecedented.

Trump nominated the retired Marine generals James Mattis and John Kelly to lead the Department of Defense and Homeland Security, respectively, and tapped the retired army general Mike Flynn to be his national security adviser. When entering office after winning the 2008 presidential election, Barack Obama also appointed three retired generals to top positions and few batted an eyelid. But those concerned about Trump’s presidency should be thankful that the generals are there, particularly Mattis and Kelly. By all accounts, they are men of great honor and courage with strong backbones. Kelly led men into battle and lost a son fighting in Afghanistan. Mattis may be the most distinguished and respected Marine officer of his generation, revered for his dedication to his troops and his intellect. I had the honor of spending an hour with him one-on-one last May when he was a fellow at the Hoover Institution. Our conversation was off the record, but make no mistake, this is not a man to be trifled with.

Trump may have actually boxed himself in by picking highly respected generals such as Kelly and Mattis to helm top posts in his administration. Even conservatives who publicly stand by the president latch on to the appointments of Mattis and Kelly as their best evidence that Trump’s presidency will not be as problematic as his temperament and actions sometimes suggest, or some of his more troubling White House advisers portend. But if Mattis or Kelly were to resign in protest, that might change everything. There have already been reports that Mattis and Kelly are less than happy with some of what has gone on in the White House. During the transition, Mattis reportedly clashed with the Trump transition team over key appointments to the defense department. Tensions boiled over when Mattis and Kelly weren’t given sufficient consultation over the recent immigration executive order.

The Democratic representative Seth Moulton, a retired Marine who served under Mattis during the Iraq war, says insiders have informed him that after the executive order fiasco, some top appointments like Mattis began thinking about what would make them leave the administration. “What I’ve heard from behind the scenes,’’ Moulton told the Boston Globe: “What will make you resign? What’s your red line?”

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This is the kind of confrontation the country badly needs. Where everyone has to argue and define their viewpoints.

California Is Not ‘Out Of Control,’ Leaders Tell Trump (R.)

California leaders pushed back on Monday against President Donald Trump’s claim that the state is “out of control,” pointing to its balanced budget and high jobs numbers in the latest dustup between the populist Republican and the progressive state. The state’s top Democrats called Trump cruel and his proposals unconstitutional after the businessman-turned-politician threatened to withhold federal funding from the most populous U.S. state if lawmakers passed a so-called sanctuary bill aimed at protecting undocumented immigrants. “President Trump’s threat to weaponize federal funding is not only unconstitutional but emblematic of the cruelty he seeks to impose on our most vulnerable communities,” state Senate Pro Tem Kevin de Leon, a Democrat from Los Angeles, said in a statement on Monday.

State Assembly Speaker Anthony Rendon, an L.A.-area Democrat, said the state has the most manufacturing jobs in the nation, and produces a quarter of the country’s food. “If this is what Donald Trump thinks is ‘out of control,’ I’d suggest other states should be more like us,” Rendon said. The latest war of words between Trump and Democratic leaders in California, where voters chose his opponent, Hillary Clinton, two-to-one in November’s election, began Sunday, in an interview between Trump and Fox News host Bill O’Reilly. During the interview, O’Reilly asked Trump about a bill in the state legislature, authored by de Leon, to ban law enforcement agencies in the state from cooperating with immigration officials in most circumstances. Cities who have enacted similar bans are known as sanctuary cities, and de Leon’s bill, if passed and signed into law by Democratic Governor Jerry Brown, would effectively extend such rules to the entire state.

Trump disparaged the bill as ridiculous, saying that sanctuary cities “breed crime.” “We’ll have to, well, de-fund,” Trump said. “We give tremendous amounts of money to California.” Trump went on to say he viewed funding as a weapon. “California in many ways is out of control,” Trump said to O’Reilly. “Obviously the voters agree or otherwise they wouldn’t have voted for me.” Last week, Trump threatened to withhold federal funding from the University of California at Berkeley, where violent protests led to the cancellation of a speech by an editor for the right-wing Breitbart News. But experts said it would be difficult for the President to withhold funds from either the university or the state. Court rulings have limited the power of the president to punish states by withholding funds, and most appropriations come from the Congress and not the executive branch.

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Really excellent. Don’t miss.

Our Part In The Darkness (Alameddine)

Right after the election, my Twitter feed exploded with shock and moans. It seemed that everyone’s favorite phrase was “We are better than this.” I considered the statement so obviously wrong. I understood the convoluted logic of it, the jolt and hurt that would lead someone to type this, but it was not true. We are not better than this. We are this. The man was elected President. Ipso facto, America is this, we are this. I say this not to suggest that we must be blamed, or that someone who did not vote for Donald Trump is just as culpable as one who did. What I keep trying to point out, to friends, to anyone who will listen, is that too few of us are willing to acknowledge responsibility—not necessarily to accept blame, but to stand up and say, “This thing of darkness, I acknowledge mine.”

I remember when the photographs of torture at Abu Ghraib came to light. The response was similar. This is not us. Those soldiers were rotten. It began at the top, with George W. Bush, and it filtered down. But we would never do such a thing. Of course, we did do those things, and we kept on doing them over and over, and doing worse. Some objected, but most of us simply moved on, chose to forget. “No snowflake in an avalanche ever feels responsible,” the Polish poet Stanislaw Jerzy Lec once wrote. Trump bans Muslims and we claim that this is un-American, that we are not this. I don’t have to talk up “ancient” history to show that we are. I won’t bring up settler colonialism, genocide, and land theft, or harp on slavery, or internment camps for Japanese-Americans.

I won’t refer to the Page Act banning those deemed “undesirable,” the Chinese Exclusion Act, the Asiatic Barred Zone Act, or the Emergency Quota Act. I don’t have to mention the hundreds of thousands of Mexicans deported in the nineteen-thirties, or the thousands of Jews escaping Nazi violence who were turned away. It was F.D.R., not Trump, who claimed that Jewish immigrants could threaten national security. I won’t mention any of this, because this happened so long ago. We can always delude ourselves by saying that America was this but now we are better. Let me just say that in 2010 and 2011, state legislatures passed a hundred and sixty-four anti-immigration laws.

Many were upset when Trump campaigned on a Muslim registry, but I was surprised to find out how few knew that we’d already had one: the National Security Entry-Exit Registration System, or nseers, implemented on September 11, 2002. From the Atlantic: “It consisted of two ‘special registration’ programs: one that required foreign nationals from certain countries to check in with the government before entering and leaving the country, and another that obliged some foreigners living in the United States to report regularly to immigration officials.” Obama did not suspend the program until 2011. He dismantled it right before he left office.

[..] I was in Lesbos a year ago, helping Syrian refugees. At Moria, the biggest camp on the island, thousands of refugees were being processed every day. The crisis had been ongoing for more than six months. I’d heard that every big N.G.O. had taken a turn at leading the camp, but each one failed because of mismanagement, backstabbing, interagency bickering, governmental interference, what have you. But, as horrid as the situation was in the camp, I thought that it was being well managed, as well as it could be with so many people in and out. I met this unassuming man, a retired Mormon from Utah, who had been volunteering at the camp since the first boats arrived. He spoke no Arabic or Farsi, had no medical training of any kind, none of the identifiable skills, yet both volunteers and refugees sought him out with every conceivable question about what to do. It seems that he had arrived to offer whatever help he could. He slowly began to fill in wherever he was needed. As the N.G.O.s began to wash their hands of the camp, he was needed more and more. When I was there, he was running the damn place. We are this. We can be better.

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“That is just a howling error, to talk about the number of jobs and wages as if they are different things.”

The New York Times Just Doesn’t Understand This Economics Stuff (Worstall)

The Editorial Board of the New York Times tells us all that repealing parts of or all of Dodd Frank will damage the economic recovery. It’s possible to see the glimmerings of a point there, no one does think that if half the banks fall over again then all will be toodle dandy. However, they do manage to betray a terrible ignorance of the basics of economics and wages in the same editorial. Really, this is such a basic point that even Karl Marx was able to understand it: Mr. Trump may believe that ending Dodd-Frank will lead to more jobs by making it easier for businesses to get loans. But even if looser credit would help hiring — a very big if — the main problem in the job market today is not too few jobs, but wages that have been too low for too long. A rollback of Dodd Frank will not help that, and will hurt by forfeiting the stability that has helped the economy come this far.

That is just a howling error, to talk about the number of jobs and wages as if they are different things. They are the same thing–it is full employment which lifts the workers’ wages, nothing more and nothing less. As I say this is such a fundamental concept that even Karl Marx was able to get it right. If we have unemployment, that reserve army of the unemployed, then a capitalist can increase his labour force just by hiring some more of those unemployed. He doesn’t have to tempt anyone in with higher wages, he doesn’t need to pay his own workforce more as profits rise. For anyone gets bolshie he can just hire more of those unemployed people. However, the moment that reserve army is exhausted, the moment that there are no unemployed to hire it all changes. Suddenly, to gain access to more labour temptation must be employed.

It is necessary to tempt labour away from the jobs they are already doing. The capitalists, therefore, are in competition with each other for the profits that can be made by employment. At which point of course wages have to rise. To tempt labour into factory B away from factory A then B must pay more than A (in some form, could be shorter hours, better scheduling, more pay, whatever).And factory B had better raise its own wages for the extant workforce to stop A tempting it away. This is how wages rise over time. The capitalists compete for the profits that can be made by employing labour. And in the absence of unemployment they can only do this by raising wages as productivity rises. This process has been going on some 200 years by now, ever since productivity rises became a general feature of the economy.

And there’s no reason to think that it has stopped nor that it will. That is, contrary to the editorial board f the New York Times, it’s not that wages and jobs are different issues. It’s that wages haven’t risen because there haven’t been enough jobs. And seriously, if your understanding of capitalist and market economics is behind even that of Karl Marx are we sure that you should be writing newspaper articles on the subject of economics?

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If you create an artificial recovery, there will be a price to be eventually.

The Fed’s Mortage-Bond Whale (BBG)

Almost a decade after it all began, the Federal Reserve is finally talking about unwinding its grand experiment in monetary policy. And when it happens, the knock-on effects in the bond market could pose a threat to the U.S. housing recovery. Just how big is hard to quantify. But over the past month, a number of Fed officials have openly discussed the need for the central bank to reduce its bond holdings, which it amassed as part of its unprecedented quantitative easing during and after the financial crisis. The talk has prompted some on Wall Street to suggest the Fed will start its drawdown as soon as this year, which has refocused attention on its $1.75 trillion stash of mortgage-backed securities.

While the Fed also owns Treasuries as part of its $4.45 trillion of assets, its MBS holdings have long been a contentious issue, with some lawmakers criticizing the investments as beyond what’s needed to achieve the central bank’s mandate. Yet because the Fed is now the biggest source of demand for U.S. government-backed mortgage debt and owns a third of the market, any move is likely to boost costs for home buyers. In the past year alone, the Fed bought $387 billion of mortgage bonds just to maintain its holdings. Getting out of the bond-buying business as the economy strengthens could help lift 30-year mortgage rates past 6% within three years, according to Moody’s. Unwinding QE “will be a massive and long-lasting hit” for the mortgage market, said Michael Cloherty at RBC Capital Markets. He expects the Fed to start paring its investments in the fourth quarter and ultimately dispose of all its MBS holdings.

Unlike Treasuries, the Fed rarely owned mortgage-backed securities before the financial crisis. Over the years, its purchases have been key in getting the housing market back on its feet. Along with near-zero interest rates, the demand from the Fed reduced the cost of mortgage debt relative to Treasuries and encouraged banks to extend more loans to consumers. In a roughly two-year span that ended in 2014, the Fed increased its MBS holdings by about $1 trillion, which it has maintained by reinvesting its maturing debt. Since then, 30-year bonds composed of Fannie Mae-backed mortgages have only been about a percentage point higher than the average yield for five- and 10-year Treasuries, data compiled by Bloomberg show. That’s less than the spread during housing boom in 2005 and 2006.

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Don’t know if it’s money supply drying up or debts becoming overwhelming. Not the same thing. But the last paragraphs of the piece are interesting:

When The Money Supply Dries Up (IM)

Whenever the ability to enforce draconian legislation goes into decline, the people of a nation suddenly realise that they’ve been living in fear of a paper tiger. It doesn’t take long before some people choose to defy the system. When they’re seen to succeed, others follow in droves. So, what does this say of the US and its power? Well, as Doug Casey has been known to say, “Countries fall from grace with remarkable speed.” Quite so. On an international level, this means that international leaders will be watching the economic decline of the US closely. Countries such as China and Russia have been loading up on precious metals in preparation for a collapse in fiat currency. In addition, they’ve created their own version of the World Bank, the Asian Infrastructure Investment Bank, and have been hard at work inking deals with other nations for international settlement in currencies other than the dollar.

Most people in the world today cannot remember a time before Bretton Woods, yet they may soon witness the Bretton Woods agreement becoming a dead duck. But, if we extend this premise, we also should be questioning the other constructs of the postwar period that have become dinosaurs. What of the United Nations? This organisation was once meant to be a body for arbitration and world planning, but has in latter decades become a quagmire of bickering and gainsaying—with its decisions rarely being adopted by the nations in question. And yet the US alone pays some $8 billion annually to keep the UN afloat. Surely, when the world at large ceases its willingness to carry further US debt, the US government will jettison the expense for the UN before it cuts either its military spending or its entitlement programmes.

Similarly, NATO, which requires $2.8 billion annually (with only five of its 28 members currently meeting the recommended payments) would experience a similar fate. With the above entities heading south, the Wolfowitz Doctrine, which has since 1992 been the basis of US aggression policy, would become unachievable. In addition to the decline or cessation of the above international adventurism, enforcement of revenue pursuit in the guise of FATCA and OECD schemes would equally suffer from a loss of funding. It would not be a question of whether the empire still wished to squeeze the lemon more than ever before—it would. But once the funds to do so dried up, the US and EU would find themselves in the situation that we currently observe in Venezuela: The money to pay for the enforcement is simply not there anymore.

The decline would begin with bounced cheques, followed by massive layoffs in the enforcement departments, followed by a decline in receipts, necessitating further layoffs, and continuing in a downward spiral. At present, countless people live in fear of the present empires and their ever-increasing efforts at usurpation. However, as history shows, once debt has reached its nadir and begins its rapid fall, so does the empire’s ability to enforce draconian confiscations.

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Army vs veterans?!

Army Corps Of Engineers May Decide On DAPL By Week’s End (BBG)

The U.S. Army may decide by week’s end whether to approve construction of the Dakota Access Pipeline across North Dakota’s Lake Oahe and lands claimed sacred by Sioux Indian tribes. Justice Department lawyer Matthew Marinelli outlined the planned timeline for the Army’s decision to a federal judge in Washington hearing a three-way dispute over the planned path of the Energy Transfer Partners LP-led project. Marinelli didn’t say which way the decision might go. President Donald Trump last month issued a memorandum urging the Army Corps of Engineers to expedite its review of the conduit’s path after the federal agency put the brakes on ETP’s nearly complete $3.8 billion, 1,172-mile conduit for shunting crude from northwestern North Dakota to a Patoka, Illinois, distribution center last year amid protests raised by environmental groups and the Sioux.

[..] While U.S. District Judge James Boasberg, and then a federal appeals court, declined to grant the tribes’ request for an order halting the project, the corps stopped construction anyway, stating it was reconsidering whether to issue easements required for tunneling under the lake bed. Jan Hasselman, lead lawyer for the suing Sioux tribes, told the judge that because the Army Corps had already committed to an environmental impact review of the lake crossing, any easement granted before that analysis is complete “would be unlawful.” The Corps turned the decision to the U.S. Army. The tribes will likely file a second bid to halt the project, citing environmental impact concerns, if the pipeline project gets a U.S. government go-ahead, Hasselman said.

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Now use that to get a deal that actually achieves something.

New Bill Would Block EPA From Regulating Greenhouse Gases (EW)

Republican lawmakers have proposed a bill to curtail the U.S. Environmental Protection Agency’s (EPA) ability to address climate change. The “Stopping EPA Overreach Act of 2017” (HR637) would amend the Clean Air Act so that: “The term ‘air pollutant’ does not include carbon dioxide, water vapor, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride.” The bill was introduced by Rep. Gary Palmer (R-Ala.) and has already racked up 114 Republican co-sponsors. Palmer is a climate denier who once said that temperature data used to measure global climate change have been “falsified” and manipulated.

Palmer’s latest proposal would nullify the EPA’s regulation of carbon pollution, stating that “no federal agency has the authority to regulate greenhouse gases under current law” and “no attempt to regulate greenhouse gases should be undertaken without further Congressional action.” Liz Perera, climate policy director at the Sierra Club, told Huffington Post that the resolution would make it nearly impossible for the federal government to fight climate change. “This is the legislative equivalent of trying to ban fire trucks while your house is burning,” she said, adding its sponsors “should be embarrassed for so blatantly ignoring reality and ashamed of themselves for so recklessly endangering our communities.”

[..] Fortunately, the bill does not seem to have any legs. David Doniger, a senior attorney for Natural Resources Defense Council’s climate and clean air program told The Guardian that HR637 does not have much of a chance breaking through a Senate filibuster as Democrats would have near-universal opposition to it and even some moderate Republican Senators would vote against it as well.

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Yes. Annul the wedding. Before someone gets hurt.

Too Late For Couples Therapy? (DiEM25)

For the past seven years, Greece has been stuck in an abusive marriage with its European partners. Of course, she has not been the perfect partner, but who has? No one deserves violence. No one deserves abuse. Everyone deserves hope, and not the delusional “you will be done by 2060, if you can maintain the hilariously unsustainable 3.5% primary budget surplus” kind of hope offered by Mr Schäuble. The hypocrisy and pseudo-morality of European lenders and the IMF is painful. Germany’s “no debt-reduction” stance is particularly exasperating, when that very same country has experienced both the economic, social and political disaster that vindictive, self-righteous hardheadedness can lead to after the Treaty of Versailles in 1919, as well as the miraculous quality of debt-reduction when its own debt was cut by half (!) at the London Debt Agreement of 1953.

The more years pass, the closer Greece and the rest of Europe edge from a post-modern 1919 to a post-modern 1933. And now, with news of Greece’s three-week window to resolve its next instalment before economically imploding – a piece of news which some media outlets appeared surprised about, bless them – many of us cannot help but wonder: when will we get serious about resolving this? The obvious answer is: when there is political will for a resolution. The only place where this seems to be the case is the nation-patient itself. Two summers ago, under remarkable socio-economic pressure, amid capital-controls and an overwhelmingly pro-EU media landscape, 62% of Greeks came out and refused the terms of a third bailout. Anyone with half-an-understanding of economics and finance seems to agree that the current approach to Greek debt is unsustainable economically, socially and politically: all in all, a disaster.

Even the master chef of the entire travesty, the IMF, has come out and admitted that neo-liberalism and austerity simply do not work. So what are we waiting for? Why are millions of Europeans still suffering under utterly misguided political and economic dogmas? Quite simply because to admit defeat at this point would mark the end of a number of powerful careers. Having poisoned European voters against the lazy PIIGS, it would be nothing short of political suicide to turn around and give in to Greek demands. When would be the next electoral victory in Europe for austerity’s architects if it was revealed that the years of financial and social suffering was a pointless self-inflicted wound with only negative economic results?

So it is becoming increasingly obvious that Greece has to work its own way out of this mess. At this stage, that means an immediate halt of repayments to lenders; a stance that will either force its partners to a vital debt-reduction, or will lead the country to an exit from the Euro. With Germany (in clear breach of EU rules) stubbornly maintaining its 9% budget surplus and refusing to increase imports, Europe is at an impasse, and no one is hurt more by this than Greece. Although the former outcome would be preferred – avoiding to rock the European boat at a time of major global instability is a major plus – the latter is still preferable to the status quo.

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Translation of Greek article by Varoufakis I posted about earlier.

Varoufakis: Tsipras Should Prepare To Break Deal With Greece’s Creditors (FR)

Through a recent article at the Efimerida ton Syntakton (Newspaper of Editors), the former Minister of Finance of Greece, Yanis Varoufakis, referred to Tsipras retreat against Greece’s creditors and called him to prepare seriously this time, to break the destructive continuous agreements. As Varoufakis wrote among other things: The night of the Greek referendum, I tried hard to explain to the Greek PM that the submission of Greece to the third memorandum was Schäuble’s real plan (not Grexit). In reality, there was no hope that the 3rd toxic “program” for Greece would be rationalized progressively through the support of the European Commission to Athens. Meaning, there was no hope that IMF’s austerity and anti-social measures could be softened.

The fact that Moscovici, Juncker, Sapin and others made such promises, is no excuse because the Greek government knew since May 2015 that these people know how to tell lies, or, they are unable to keep their promises when they don’t lie. Suddenly, the Schäuble-IMF-ECB attacked on Greece, demanding exhausting measures, while Merkel-Hollande-Commission didn’t do anything. Tsipras then retreated for one more time in order to “save” Greece. This was Schäuble’s plan. With his stance, Tsipras sank Podemos, made an approach with the collapsing (ethically and politically) Social Democracy, disappointed the progressive Europeans. And all these happened at the same time where nationalism triumphs everywhere.

Tsipras promises, one more time, that he will not retreat (this time!) by legislating new austerity even after 2018. If he means it, I remind him what we had agreed that is necessary and which – even today – is the only thing that may prevent the worst things to come. Prepare for unilateral restructuring of Greek bonds held by the ECB, which must be repaid in July (and after). Prepare the electronic system of transactions through Taxisnet which I had designed, I had started building it and even announced it to the new Minister of Finance, Euclid Tsakalotos, when I delivered the Ministry. Therefore, if indeed the Greek PM means it this time that he will not retreat, he should prepare for breaking the deal with the creditors, so that to prevent it. The design of a parallel system for payments is ready since 2014, as he knows.

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Make it stop!

Rare Split On IMF Board Puts Greek Bailout At Risk (MW)

Some members of the IMF are growing concerned with the terms of Greece’s bailout program, fueling fears the fund might pull out of the much-needed rescue plan for the country. The IMF’s annual review of the Greek economy published on Tuesday revealed a rare split among its board members, showing they are in disagreement over the austerity measures imposed on Athens and over the country’s huge debt burden. The report said that “most” of the 24 IMF executive directors agreed Greece is on track to reach a fiscal surplus of 1.5% of GDP. It said Athens does “not require further fiscal consolidation at this time, given the impressive adjustment to date.” However, some of the board members argued that Greece still needs to bring the surplus up to 3.5%, as agreed in the last bailout in 2015.

“Most Executive Directors agreed with the thrust of the staff appraisal, while some Directors had different views on the fiscal path and debt sustainability,” the IMF said in the assessment. The IMF usually keeps its deliberations confidential, so any differences on the board are rarely exposed to the public. The yield on 10-year Greek government debt surged 26 basis points after the report on Tuesday to 7.925%, according to electronic trading platform Tradeweb. Economists consider borrowing costs above 7% unsustainable in the long term.

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This is getting sadistic.

Greece Won’t Meet Fiscal Surplus Targets Set By Europe, IMF Says (BBG)

Greece is on track to fall short of budget-surplus targets set under a bailout by the nation’s euro-zone creditors, the IMF said. Greece’s primary budget surplus will rise to 1.5% over the long run from about 1% last year, amid a modest recovery, the IMF said Monday after executive directors met to discuss the fund’s annual assessment of the nation’s economy. Still, the projected surplus falls short of the 3.1% forecast by the country’s European creditors. The fund reiterated its view that Greece’s debt is unsustainable. Most of the executive directors don’t believe the economy needs more fiscal consolidation, the IMF said. The IMF has said it would consider giving Greece a new loan to supplement the 86 billion euros ($92 billion) it’s receiving from euro-area countries, but only if the nation’s debt-reduction plans are credible.

Greece’s European creditors also want the IMF to sign off before disbursing the next tranche of the euro-zone bailout. Greece’s government debt will reach 275% of its gross domestic product by 2060, when its financing needs will represent 62% of GDP, the IMF said in a draft staff report obtained by Bloomberg last month. Public debt will reach 181% of GDP this year, the IMF projected Monday. Greece’s economy is expected to grow 2.7% this year, up from 0.4% in 2016, the fund said. However, long-run growth is expected to slip to about 1%, the IMF predicts. The IMF’s assumptions aren’t based in reality and don’t take into account the reform of Greece’s public finances, according to a European Union official who spoke on condition of anonymity because the discussions are sensitive.

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Yeah, sure, add some more crap. For some reason this makes me think of George Clinton: “Do Fries Come With That Shake?”

Third Quake Over 5-Richter Magnitude Rattles Lesbos (K.)

Seismologists in Greece are keeping a close eye on activity in the eastern Aegean, as a third quake in 24 hours measuring above 5 Richter rattled the area in the early hours of Tuesday. The tremor hit at 4.24 a.m. and measured 5.3 on the Richter scale, according to the Geodynamic Institute in Athens, with the epicenter located 15 kilometers north of Lesvos. With a depth of just 10 kilometers, the quake was felt quite strongly on the Greek islands of Lesvos and Chios. Seismologist Efthimios Lekkas on Monday said two tremors – with a magnitude of 5.1 and 5.3 respectively – were not linked to the North Anatolian Fault Line, the source of powerful quakes in the past.

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Apr 052016
 
 April 5, 2016  Posted by at 9:14 am Finance Tagged with: , , , , , , , , , ,  


DPC Surf Avenue, Coney Island, NY 1903

Panama Bombshell Spells Demise Of Shadow Finance, And Privacy (AEP)
Tax Havens Don’t Need To Be Reformed. They Should Be Outlawed (Brooks)
Thousands Protest Demanding Icelandic PM’s Resignation (AFP)
German Banks Enmeshed In Panama Papers Leak (DW)
Data From Panama Law Firm Came From Employee, Not Hackers (Rijock)
Panama Papers Cause Guardian to Collapse into Self-Parody (OG)
China State Paper Sees ‘Powerful Force’ Behind Panama Leak (BBG)
The Forces of Globalization Are Sputtering (WSJ)
China Hard Landing Could Trigger Global Market Bloodbath: IMF (Tel.)
Lagarde Says Risks to Weak Global Recovery Are Increasing (BBG)
Subprime Housing Risks Raise Red Flags In China (WSJ)
Bond Market ‘Exhausted’ as Kuroda Stimulus Enters Fourth Year (BBG)
Sperm Whales Found Full of Car Parts and Plastics (NatGeo)
Turkey: The Business Of Refugee Smuggling & Sex Trafficking (ZH)
Italy Pleads For Greek-Style Push To Return Its Migrants (FT)
So The Greece Deportations Are Going ‘Smoothly’? Take A Closer Look (G.)

Ambrose bets on a substantial fall-out.

Panama Bombshell Spells Demise Of Shadow Finance, And Privacy (AEP)

The secret world of offshore banks and money-laundering has been under the microscope ever since the financial crisis. Now it is the turn of lawyers, registrars, and the hidden network of facilitators. The treasure trove of 11.5m documents leaked – or more precisely stolen – from the Panama law firm Mossack Fonseca lifts the lid on the extraordinary practices of the global elites, and on the alleged services of off-shore legal cabinets for terrorist organisations, drug cartels, sanctions busting, and front companies of all kinds. The files on 213,000 firms first slipped to the Suddeutsche Zeitung and then shared with the International Consortium of Investigative Journalists (ICIJ) is the biggest data leak in history. It will have long-lasting ramifications. The avalanche of allegations has barely begun.

The red-hot dossier on US citizens has not even been released. Yet the scandal has already triggered a string of criminal investigations around the world, kicking off in Australia and New Zealand within hours. Germany’s vice-chancellor Sigmar Gabriel said the files go far beyond issues of tax evasion, touching on vital national interests and the rule of law. “It is about organized crime, evasion of UN sanctions, and terrorist finance,” he said. “This shadow economy is a risk for global security. We must ban the anonymous letterbox companies. The international community must ostracize any country that allows these dirty dealings,” said Mr Gabriel. Mossack Fonseca’s clients include 23 people under sanctions for helping North Korea, Russia, Iran, Syria, and Zimbabwe. The Israeli newspaper Haaretz reports that 33 of those named are on the US black list for terrorism.

Panama has cornered the trade in anonymous shell companies that allow owners to disguise their identity and carry out global operations secretly. While this may be a legitimate for those in the limelight trying to protect their privacy or to safeguard sensitive corporate dealings, many use it to avoid detection for money-laundering, tax avoidance, or predatory behaviour. The country has pushed through reforms in a bid to clear its name and to get off the OECD’s ‘grey list’ of uncooperative tax havens, but has clearly not yet done enough. “Panama has an extremely aggressive and obstructive attitude. Dialogue has broken down,” said Pascal Saint-Amans, the OECD’s tax chief. “It is the last financial centre that has refused to implement global standards of fiscal transparency. There has been very strong pressure from the law firms on the Panamanian government.”

Mr Saint-Amans said offshore secrecy in on the wane in most of the world, but becoming more concentrated in Panama. “The majority of undeclared clients are coming clean in other locations, but those who don’t are going to Panama,” he said.

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Thing is, that’s been obvious for ages.

Tax Havens Don’t Need To Be Reformed. They Should Be Outlawed (Brooks)

The Panama Papers are not really about a central American state. They are a glimpse through a Panamanian keyhole of an orgy of tax evasion, money laundering and kleptocracy – amid the legitimate financial planning – hosted by the world’s tax havens. Seven years after world leaders came together at a post-financial crisis G20 summit in London and committed to end tax haven abuse, it is clear from these papers that no such end is in sight. The good intentions have translated into a blizzard of international agreements on sharing information, amnesties through which tax evaders can come clean, and prosecution drives of variable quality to nail the cheats. All are demonstrably inadequate. Information will not, and cannot, be exchanged to any meaningful extent by countries and territories whose “offer” is that they don’t ask for it or will turn a blind eye to being deceived.

Amnesties teach rich tax evaders that, even if they are caught, they will get off far more lightly than somebody overclaiming a few pounds in social security benefits. Criminal pursuit of offenders, certainly in the UK, is little more than a joke. One prosecution from 1,000 tax evaders using HSBC’s Swiss accounts is the now infamously poor punchline. Here, the Panama Papers lay bare another national disgrace: Britain’s longstanding role at the centre of the offshore web. More than half of the 200,000 secret companies set up by the Panama lawyers Mossack Fonseca were registered in the British Virgin Islands, where details of company ownership don’t have to be filed with the authorities, never mind be made public. While this week’s leak is on an unprecedented scale, it exposes a historic as well as current failing.

As the British empire faded away after the second world war and territories such as the British Virgin Islands drifted into the constitutional limbo of semi-independence, they were encouraged to develop financial services as a way of sustaining precarious economies. If this meant a few of the world’s wealthier people paid a little less tax, thought successive British governments, it was a price worth paying for not having to support the territories. Late 20th-century financial liberalisation turned this already complacent calculation into something more lethal. With fortunes sloshing freely across borders, tax havens became voracious parasites on the world economy, most seriously sucking the life out of some of its poorer parts. All the great national robbers of recent decades, such as Nigeria’s Sani Abacha, have used tax haven companies, including British Virgin Islands ones, as the getaway cars.

Despite this long trail of evidence, leading economies refuse to address the problem at its source. The UK has great leverage over its 17 overseas territories and crown dependencies, all of which depend on the mother country for security and happily trade off its legal system. At a stroke our government could shut down the British Virgin Islands corporate system, for example. But under influence from a banking system that thrives on the legal benefits of offshore centres such as the British Virgin Islands and the Cayman Islands, it takes a more relaxed view. Asked recently about whether Britain’s overseas territories should publish registers of beneficial owners of their companies, foreign office minister James Duddridge replied that these were a “direction, rather than an ultimate destination”. The Panama Papers should expose this indifference for the great scandal that it is.

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Gone tomorrow.

Thousands Protest Demanding Icelandic PM’s Resignation (AFP)

Thousands of Icelanders took to the streets late Monday calling for their prime minister’s resignation after leaked tax documents dubbed the “Panama Papers” prompted allegations that he and his wife used an offshore firm to hide million-dollar investments. Protesters filled the square outside Iceland’s parliament in Reykjavik, footage on public television RUV showed, answering a call from opposition parties to demonstrate against Prime Minister Sigmundur David Gunnlaugsson. Police provided no estimate of the size of the crowd, but said the demonstrators outnumbered the thousands who in 2009 brought down the right-wing government over its responsibility in Iceland’s 2008 banking collapse.

“Take responsibility” and “Where is the new constitution?” read some of the signs carried by demonstrators on Monday, referring to the country’s new charter drawn up after the 2009 political crisis and which has since been held up in parliament. Financial records published by the International Consortium of Investigative Journalists showed that Gunnlaugsson, 41, and his wife Anna Sigurlaug Palsdottir bought the offshore company Wintris Inc. in the British Virgin Islands in December 2007. The company was intended to manage Palsdottir’s inheritance from her wealthy businessman father, the amount of which has not been disclosed. Gunnlaugsson transferred his 50% stake to his wife at the end of 2009, for the symbolic sum of one dollar.

But when he was elected a member of parliament for the first time in April 2009 as a member of the centre-right Progressive Party, he neglected to mention the stake in his declaration of shareholdings, as required by law. Gunnlaugsson has meanwhile denied any wrongdoing or tax evasion and insisted Monday he would not step down. He said he never hid any money abroad and that his wife paid all her taxes on the company in Iceland. A motion of no-confidence was presented to parliament by the opposition, and will be submitted to a vote at an as yet undetermined date. Almost 28,000 Icelanders, in a country of just 320,000 inhabitants, have also signed a petition demanding his resignation.

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All global banks are involved.

German Banks Enmeshed In Panama Papers Leak (DW)

The two German financial institutions specifically mentioned in media reports as having helped high-ranking politicians, celebrities and sports stars hide their money abroad were Deutsche Bank, Germany’s largest lender, and the Hamburg-based Berenberg bank. The allegations were part of the so-called Panama Papers, a massive trove of leaked emails, PDFs and other records that expose a world of letterbox companies and business arrangements that until recently had been largely hidden from public view. The Panama Papers were first obtained by reporters at the German daily “Süddeutsche Zeitung,” and on Sunday, the head of the paper’s investigative unit suggested to a German TV host that every bank in Germany was somehow implicated.

“If you were to ask me which German bank hadn’t helped its customers go to Mossack Fonseca, I would have to think long and hard to see if a single one came to mind,” said Georg Mascolo, referring to the Panama-based law firm that is at the center of the leaks because it’s where the documents originated. Mascolo proceeded to single out Deutsche Bank and Berenberg bank, the latter of which he said had “especially distinguished itself.” Both institutions promptly denied any wrongdoing. Speaking to the news agency DPA, a spokesman for Berenberg’s Swiss subsidiary insisted there was nothing inherently illegal about dealing with offshore companies. “This is, of course, done in line with legal regulations, but it does require greater due diligence on the part of the banks,” he said, noting that such accounts were “permanently monitored.”

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Sort of funny. Note that this story had been playing out for a few years already.

Data From Panama Law Firm Came From Employee, Not Hackers (Rijock)

Now it’s Panama Leaks: massive amounts of customer data stored on the computers of the country’s principal provider of corporations, Mossack Fonseca, have been stolen and delivered to foreign journalists, who reportedly are planning on releasing it as early as Monday. The data is believed to contain information on Panama companies, and bank accounts, held by foreign government officials, other politically exposed persons (PEPs) and organized crime syndicates. The public release of this information could result in widespread criminal charges against corrupt heads of state and other officials who have banked the proceeds of illegal bribes and kickbacks they have received.

There will be special attention paid to individuals who accepted money from American and British firms to allow them to participate in lucrative business arrangements, as the US and UK both strictly enforce their foreign corruption laws. Mossack Fonseca, already reeling being implicated in a major corruption case in Brazil, in which present or former government officials at the highest level are under criminal investigation, has also been in the news lately due to allegations that senior officials in Malta hold secret banks accounts in Panama, facilitated by the Mossack firm. Investigative reporters are allegedly already to publish the names, and sordid details, of a large number of corrupt PEPs. Some television media are reportedly planning on running stories early this week.

Panama insiders have said that the source of the information was not, as Mossack is reporting, an intrusion by hackers, but an inside job. A former female employee, with access to the data, was allegedly involved in an intimate relationship with a Mossack name partner. The relationship ended badly some time ago, and the employee exacted her revenge by going public with Mossack client lists and related data. The impact of this leak cannot be underestimated; it will seriously undermine global confidence in the ability of Panamanian financial service providers to assist corrupt government officials, and career criminals in hiding their ill-gotten gains, which is the major segment of the client base in such firms. It is too early to know whether dirty money will now seek a different opaque haven to be hidden.

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To further illustrate the point I made yesterday.

Panama Papers Cause Guardian to Collapse into Self-Parody (OG)

You’d be forgiven for thinking, given the above picture, that the Panama Papers had something to do with Vladimir Putin. Maybe he was a kingpin of the whole thing. Maybe he was, at least, among the 12 world leaders implicated in various shady financial practices – along with Petro Poroshenko, the saviour of Ukrainian democracy, and the King of Saudi Arabia (dad of the recent Légion d’Honneur winner). Luke Harding, a bastion of ethical journalism (and not at all a paranoid lunatic), has churned out 2 articles totaling over 5000 words, each using the word “Putin”, almost as often as they use the phrases “allegedly”, “speculation suggests”, “has been described as” and “may have been”.

Neither of his articles mentions by name any of the 12 world leaders, past and present, actually identified in the documents, nor do they mention David Cameron’s dad, who is also in there. No, they focus on a cellist friend of Putin’s, talk about his daughter’s marriage, and include an awful lot of diagrams with big arrows that point at pictures of…Vladimir Putin. This is, apparently, all evidence of…something …I’m not sure what, but it will probably be discussed at length in the “book” Luke Harding is probably planning to publish in a couple of weeks. That’s if the NSA don’t delete it all while he’s typing. The only important, or even true, phrase Harding uses appears at the very top of this article:

…the president’s name does not appear in any of the records…

That’s a minor detail of course, I mean, they have a video: “How to hide $1 billion”. The title screen is, you guessed it, a photo of Putin. Presumably because he is SO GOOD at hiding his billions that, unlike Petro Poroshenko and David Cameron’s dad:

…the president’s name does not appear in any of the records…

So there you go. The Guardian falls into self parody, pasting up a massive picture, a misleading headline and 5000 words (that Harding presumably copied from someone else), at the merest suggestion of a tenuous connection to the Russian president. It’s a bit odd, really.

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While scrambling to delete any and all references. But still, they do have a point. It’s not as if something financed by Soros is even remotely neutral.

China State Paper Sees ‘Powerful Force’ Behind Panama Leak (BBG)

A “powerful force is behind” the leak of more than 11 million documents detailing the offshore accounts of some of the world’s wealthiest people, and the U.S. government stands to gain the most from the revelations, a state-run Chinese newspaper said. An editorial published by the Global Times newspaper Tuesday provided China’s first official reaction to investigations by more than 100 news organizations, detailing overseas holdings of about 140 politicians, public officials and family members, including President Xi Jinping’s brother-in-law. The editorial, which focused on Russian President Vladimir Putin and didn’t mention any of the Chinese examples, assessed the “eye-catching” revelations as a salvo in an East-West ideological struggle, echoing the Kremlin’s response.

“The Western media has taken control of the interpretation each time there has been such a document dump, and Washington has demonstrated particular influence in it,” said the Global Times, which is published by the Communist Party’s flagship People’s Daily. “Information that is negative to the U.S. can always be minimized, while exposure of non-Western leaders, such as Putin, can get extra spin.” The release of the so-called Panama Papers come at an embarrassing time for Xi, who’s requiring party members to give authorities more information about their family wealth to institutionalize his more than three-year-old war on graft. Mentions of the documents were widely scrubbed from China’s heavily censored Internet and news outlets, which have come under increased pressure from Xi to toe the party line.

Links shared on Tencent Holdings’s WeChat messaging service said the “page could not be found.” Attempts to search “Panama Papers” on Baidu’s Google-like search engine returned only a one-line warning that “search results may not comply with relevant laws or regulations.” The Global Times editorial was published only in English.

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Those forces are waiting for TTP and TTiP to be ratified.

The Forces of Globalization Are Sputtering (WSJ)

On the campaign trail, presidential candidates in both parties depict an America under siege from cheap imports, job-stealing globalization or waves of illegal immigration. The reality since the global recession is far more complicated. Across a range of measures, the forces that once pointed to an inexorable internationalization of the world’s economy have slowed, stuttered or swung into reverse. The slowdown points to deeper economic challenges far different from the political alarms. Much of the world is struggling with a sluggishness that is clouding the U.S. outlook, driven by aging demographics, slumping labor productivity and policy makers lacking the tools or the will to pump more life into the global economy. Whatever the causes, signs abound that the forces of globalization have slowed.

Manufacturing jobs in the U.S. declined every year from 1998 to 2009, regardless of whether the overall economy was expanding or in recession. But over the past six years, manufacturing employment has edged up. It’s hardly a renaissance—the U.S. has regained about 1 million manufacturing jobs after losing 8 million since the late 1970s—but it’s a halt to the decline. The U.S. share of global exports fell sharply, especially from 1998 to 2004, but has held steady over the past 12 years at roughly 8.5%. There’s even evidence the trend of illegal immigration in the 1990s and 2000s, when millions of Mexicans crossed the border for the U.S., has stalled or gone into reverse, despite frequent alarms raised by Republican front-runner Donald Trump. The Pew Research Center estimates that since 2007, the flow of illegal immigrants returning to Mexico has been larger than the number entering the U.S.

“The globalization process, which was firing on all cylinders during the 2000s, has stalled over the past six or seven years,” said Benjamin Mandel, global strategist at J.P. Morgan Asset Management and a former New York Fed economist. The trend isn’t specific to the U.S. Globalization has sputtered around the world. From 1992 to 2008, trade climbed to about 30% of total world economic output, from 20%. That climb has halted, and remains at about 30% of GDP in the latest World Bank estimates. If the historical trend between trade growth and GDP growth had continued, global trade would be $1.8 trillion larger, according to estimates from Eric Lascelles, chief U.S. economist of RBC Asset Management. That’s equivalent to an economy the size of Canada or Russia disappearing from global output.

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From the IMF research department.

China Hard Landing Could Trigger Global Market Bloodbath: IMF (Tel.)

Jitters over the health of the Chinese economy could trigger a bloodbath on financial markets if a hard landing materialises, the IMF has warned. The IMF said policy choices in the world’s second largest economy would also have “increasing implications for global financial stability” in the coming years as the country opens up its bond and equity markets. The fund said emerging market economies such as China, India, Brazil and Russia had driven more than half of global growth over the past 15 years. Stronger trade ties and financial linkages meant spillovers from these countries had become “the norm, not the exception”, increasing the risk that future shocks could send powerful reverberations around the globe. The IMF calculated that emerging market spillovers now accounted for a third of the fluctuations seen in equity and currency markets in advanced nations.

Highlighting last summer’s massive stock market sell-off after China devalued its currency, the IMF noted that Chinese growth had an “increasing” and “significant” impact on global equity prices. “The impact of shocks to China’s fundamentals on global financial markets is expected to grow stronger and wider over time,” the Fund said in a pre-released chapter of its Financial Stability report. “Clear and timely communication of its policy decisions, transparency about its policy goals, and strategies consistent with achieving them will, therefore, be essential to ensure against volatile market reactions, which may have broader repercussions.” The IMF also urged policymakers to do more to rein in corporate debt, which it has previously said could see a wave of defaults as the US hikes interest rates.

“Fire sales” of assets by money managers could also amplify emerging market spillovers in a downturn, if mutual funds rushed to sell illiquid assets, the IMF warned. Financial “spillbacks” triggered by policy actions in advanced economies such as tighter monetary policy in the US underscored “the importance of enhanced international macroeconomic and macroprudential policy co-operation”, the IMF said. The Fund issued a separate warning on the $24 trillion life insurance sector. It said herding behaviour created systemic risks that could make firms “too many to fail”. The IMF said the low interest rate environment had encouraged many firms to increase risk taking in order to “resurrect their fortunes”, particularly among smaller and less capitalised firms. “Jointly firms can propagate shocks, if they act similarly,” the IMF said. “They may be ‘too many to fail’,” it warned.

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From the other IMF orifice. She has absolutely nothing. Zilch. Not a word she utters has any meaning.

Lagarde Says Risks to Weak Global Recovery Are Increasing (BBG)

The global recovery is facing growing risks, and frustration with inequality is increasing the lure of protectionism, IMF Managing Director Christine Lagarde said. The world economy’s outlook has dimmed over the last six months, exacerbated by China’s slowdown, lower commodity prices and the risk of financial tightening in many countries, Lagarde said Tuesday in the prepared text of a speech in Frankfurt. The expected passing of the “growth baton” from emerging markets to advanced economies hasn’t occurred, she added. Lagarde, fresh from winning a new five-year term at the fund’s helm, used the opportunity to caution against being drawn to the kinds of forces that have fueled the populism-driven candidacies of Bernie Sanders and Donald Trump in the U.S. presidential election.

While inequality has been declining on a global scale, the perception remains that “the cards are stacked against the common man – and woman – in favor of elites,” said Lagarde, 60. “To some, the answer is to look inward, to somehow unwind these linkages, to close borders and retreat into protectionism,” she said, without naming any politicians. “As history has told us – time and again – this would be a tragic course.” Lagarde’s comments on the global economy add to signs that the IMF will downgrade its growth forecast when it releases its updated World Economic Outlook on April 12. Finance ministers and central bankers from the fund’s 188 member nations will gather later that week in Washington for the IMF’s spring meetings. “The good news is that the recovery continues; we have growth; we are not in a crisis,” Lagarde said. “The not-so-good news is that the recovery remains too slow, too fragile, and risks to its durability are increasing.”

Lagarde said U.S. growth is flat due partly to the strong dollar, while low investment and high unemployment are weighing on growth in the euro zone. Growth and inflation in Japan have been weaker than expected, she added. China’s transition to a more sustainable economic model involves slower growth, Lagarde said, adding that downturns in Brazil and Russia have been worse than expected and Middle Eastern nations have been hit hard by the decline in oil prices. “Certainly, we have made much progress since the great financial crisis,” Lagarde said. “But because growth has been too low for too long, too many people are simply not feeling it.” The persistent low growth can be “self-reinforcing,” because of negative effects on potential output that can be hard to reverse, she said.

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Beijing is deliberately creating an ever bigger housing bubble. Scary.

Subprime Housing Risks Raise Red Flags In China (WSJ)

China’s efforts to tackle a glut of vacant housing by spurring home lending have triggered a bigger problem: A surge in risky subprime-style loans that is generating alarm among regulators. Home buyers in China normally put down a third of the cost of a new property upfront. But a rapid rise in buyers borrowing for their down payments – an echo of the easy credit that cratered the U.S. housing market and sparked the financial crisis – has prompted authorities to clamp down. Peer-to-peer lenders, who raise money from investors and then lend it out at higher interest rates, made 924 million yuan ($143 million) in down-payment loans in January, more than three times the amount made in July, according to Shanghai-based consultancy Yingcan.

A senior banking executive at one of China’s top four state-owned banks said down-payment loans directly contributed to a recent run-up in housing prices in big cities. “It’s a risky practice that should be contained,” he said. Officials at various levels of government are now stepping on the brakes. The central bank and the housing ministry last month started to crack down on loans enticing home-buyers with “zero-down-payment” slogans. [..] Beijing began easing credit in late 2014 to help cities fill empty apartments — a legacy of a housing-construction boom fueled by a decade of urban population growth and cheap credit. As companies and local governments sag under crippling debt, authorities have seen room for more borrowing among households and have tried to widen the pool of home buyers.

But despite a rise in down-payment loans and lower mortgage barriers for groups such as rural migrant workers, it has proven hard to unleash buying in the right places. Instead, the easing measures and new incentives fed a property frenzy in China’s megacities, with buyers driven by fear of being left behind in a market increasingly out of reach. Shenzhen, where housing prices have soared 57% since last year, according to official data, has tightened down-payment requirements. So has Shanghai, where housing loans more than tripled in January compared with a year earlier. Data on loans used to finance down payments is sketchy, as such financing is a relatively new business. In addition, developers sometimes offer such loans, and banks offer mortgage applicants loans for renovations, taxes or travel that can be channeled toward the down payment, according to property agents. Depending on the housing market, agents say, these loans can attract annual interest rates of up to 24%.

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Until there’s nothing left.

Bond Market ‘Exhausted’ as Kuroda Stimulus Enters Fourth Year (BBG)

Three years since Bank of Japan Governor Haruhiko Kuroda embarked on an unprecedented monetary experiment, yields continue to test new lows even as concern grows that his policies will cripple the world’s second-biggest bond market. Yields have tumbled below zero on maturities up to a decade following the central bank’s surprise decision this year to implement negative interest rates, after unleashing two rounds of quantitative easing since April 4, 2013. As the BOJ’s bond holdings have swelled to one-third of total debt outstanding, the market has begun to seize up amid a dearth of liquidity, causing volatility to soar. Even so, inflation – and inflationary expectations – remain far from Kuroda’s 2% target.

That’s why an overwhelming majority of analysts predict the BOJ will expand stimulus again by July, even while some warn that the technical limits to the asset-purchase program are rapidly approaching. In the BOJ’s latest survey of bond market participants, 41% rated market functioning as “low.” Kuroda said Tuesday the central bank can lower the deposit rate from the current minus 0.1% if needed, and he doesn’t think negative rates will make asset purchases difficult. “The bond market is becoming increasingly exhausted, and increasingly volatile,” said Shuichi Ohsaki at Bank of America Merrill Lynch in Tokyo. “It’s not a properly functioning market anymore. This stimulus can’t go on indefinitely.”

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The achievements of the ‘intelligent’ human species.

Sperm Whales Found Full of Car Parts and Plastics (NatGeo)

Fishing gear and an engine cover are just some of the startling contents found inside the stomachs of sperm whales that recently beached themselves on Germany’s North Sea coast. The 13 sperm whales washed up near the German state of Schleswig-Holstein earlier this year, the latest in a series of whale strandings around the North Sea. So far, more than 30 sperm whales have been found beached since the start of the year in the U.K., the Netherlands, France, Denmark, and Germany. After a necropsy of the whales in Germany, researchers found that four of the giant marine animals had large amounts of plastic waste in their stomachs. The garbage included a nearly 43-foot-long shrimp fishing net, a plastic car engine cover, and the remains of a plastic bucket, according to a press release from Wadden Sea National Park in Schleswig-Holstein.

However, “the marine litter did not directly cause the stranding,” says Ursula Siebert at the University of Veterinary Medicine Hannover, whose team examined the sperm whales. Instead, the researchers suspect that the whales died because the animals accidentally ventured into shallow seas. Male sperm whales normally migrate from their tropical or subtropical breeding grounds to colder waters at higher latitudes. The species is one of the deepest diving animals in the cetacean family, known to plummet as far as 3,280 feet (1,000 meters) in search of squid, its favorite food. The beached whales were all young males between the ages of 10 and 15, and the necropsies revealed that they died of heart failure. The team believes this particular group mistakenly swam into the North Sea, a shallower zone in between the U.K. and Norway. There the whales could not support their own body weights, and their internal organs collapsed.

“It is thought that the sperm whales may have got lost and entered the North Sea (possibly chasing squid), where the sea floor is not deep enough, causing the whales to become disorientated and die,” Danny Groves, a spokesperson for the nonprofit Whale and Dolphin Conservation (WDC), wrote in an email. According to the WDC, whales and dolphins may strand for many reasons, such as excessive noise pollution from ships and drilling surveys or even subtle shifts in Earth’s magnetic field. In addition, pilot whales that beached off the coast of Scotland three years ago showed high levels of toxins from ocean pollution, which scientists linked to stress on their brains that may have caused disorientation.

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The EU-Turket deal is a disgrace on more levels than we can count.

Turkey: The Business Of Refugee Smuggling & Sex Trafficking (ZH)

A detailed report on Syrian women refugees, asylum seekers, and immigrants in Turkey, issued as far back as 2014 by the Association for Human Rights and Solidarity with the Oppressed (known in Turkish as Mazlumder), tells of early and forced marriages, polygamy, sexual harassment, human trafficking, prostitution, and rape that criminals inflicted upon Syrians in Turkey. According to the Mazlumder report, Syrians are sexually exploited by those who take advantage of their destitution. Children, especially girls, suffer most. Evidence, both witnessed and forensic, indicates that in every city where Syrian refugees have settled, prostitution has drastically increased. Young women between the ages of 15 and 20 are most commonly prostituted, but girls as young as thirteen are also exploited.

Secil Erpolat, a lawyer with the Women’s Rights Commission of the Bar Association in the Turkish province of Batman, said that many young Syrian girls are offered between 20 and 50 Turkish liras ($7-$18). Sometimes their clients pay them with food or other goods for which they are desperate. Women who have crossed the border illegally and arrive with no passport are at high risk of being kidnapped and sold as prostitutes or sex slaves. Criminal gangs bring refugees to towns along the border or into the local bus terminals where “refugee smuggling” has become a major source of income. Professional criminals convince parents that their daughters are going to a better life in Turkey. The parents are given 2000-5000 Turkish liras ($700-$1700) as a “bride price” – an enormous sum for a poor Syrian family – to smuggle their daughters across the border.

“Many men in Turkey practice polygamy with Syrian girls or women, even though polygamy is illegal in Turkey,” the lawyer Abdulhalim Yilmaz, head of Mazlumder’s Refugee Commission, told Gatestone Institute. “Some men in Turkey take second or third Syrian wives without even officially registering them. These girls therefore have no legal status in Turkey. Economic deprivation is a major factor in this suffering, but it is also a religious and cultural phenomenon, as early marriage is allowed in the religion.” Syrian women and children in Turkey also experience sexual harassment at work. Those who are able to get jobs earn little – perhaps enough to eat, but they work long and hard for that little. They are also subjected to whatever others choose to do to them as they work those long hours.

[..] The organization End Child Prostitution, Child Pornography and Trafficking of Children for Sexual Purposes (ECPAT) has produced a detailed report on the “Status of action against commercial sexual exploitation of children: Turkey.” ECPAT’s report cites, from the 2014 Global Slavery Index, estimates that the incidence of slavery in Turkey is the highest in Europe, due in no small measure to the prevalence of trafficking for sexual exploitation and early marriage.

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The problem merely shifts.

Italy Pleads For Greek-Style Push To Return Its Migrants (FT)

Italy is pleading for EU help to ramp up the deportation of migrants arriving on its southern shores, warning that the bloc’s immigration system is at risk of collapse without a more aggressive policy on so-called returns. In an interview with the FT, Angelino Alfano, Italy’s interior minister, says the EU should move to secure deals with African nations, which are the source of the vast majority of migrants arriving in Italy, offering economic aid in exchange for taking back their citizens and preventing new flows. His comments come as the EU enacts a scheme with Turkey in which thousands of Middle Eastern refugees will be sent back across the Aegean Sea from Greece in exchange for up to €6bn in EU aid for Ankara. A first group of 135 were returned to Turkey on Monday.

“Europe was able to find the resources when it was urgent – I am referring to Turkey. It’s a matter of political leadership,” Mr Alfano said. “If returns don’t work, the whole Juncker migration agenda will fail,” he said. Mr Alfano’s request reflects renewed nervousness in Rome about the migration crisis following an 80 per cent spike in the number of arrivals to Italy across the central Mediterranean Sea in the first quarter of this year compared to 2015. If that increase holds through the warmer spring and summer months, it would smash the record 170,000 migrants who arrived in Italy in 2014, straining resources and creating a political problem for the centre-left government led by Matteo Renzi. As the Greece plan goes into action, there are worries in Rome that it may compound problems by encouraging Middle Eastern migrants to switch routes and attempt to enter the EU through Italy, boosting the numbers even further.

“If Syrians don’t want to stay in Turkey but want to try the trip to Europe, they will go around and try to get here from Libya,” Mr Alfano said. “We still don’t have any evidence that this is happening, but we are monitoring.” Italy has held talks with Albania about containing a possible surge in flows through the Balkan nation. Mr Alfano also expressed hope that the recent, if wobbly, establishment of a national unity government in Libya could lead to a crackdown against migrant smugglers there. For those who do arrive, Italian officials are hoping that an EU plan to relocate thousands of refugees across its 28 member states will relieve some pressure. So far, only about 500 migrants have been moved from Italy under the plan – “apartment building numbers” – says Mr Alfano, derisively.

Italy last year deported 15,000 people, or about 10 per cent of all arrivals. Officials believe higher figures are essential to alleviate the country’s burden, even if mass returns could trigger concerns about possible violations of human rights and international law. “Irregular [migrants] have to be kept in closed camps from where they cannot escape. So how many tens of thousands of people can you keep, year after year? Without returns, either you organise real prisons, or it’s obvious that the system will collapse,” Mr Alfano said. “It doesn’t take a prophet to glimpse the future”.

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Yesterday’s deportations will prove to be mainly symbolic. From here on in the problems start.

So The Greece Deportations Are Going ‘Smoothly’? Take A Closer Look (G.)

Today had been declared the first day that migrants and refugees would be deported from Greece within the framework of the EU-Turkey deal, and European authorities seemed determined not to miss the date. So as of Sunday, Greek police, along with the EU border agency Frontex, organised a large-scale operation to ensure the smooth handling of today’s returns from the islands of Chios and Lesbos. The operation was initially deemed a success, with reports being limited to the boats and their occupants, which offered some digestible photo ops. There is plenty of evidence, though, that suggests that it has been no more than a media-savvy gesture on behalf of the European commission.

Officials from Frontex clarified that the boats carried mostly Pakistanis, Bangladeshis, Afghans and Moroccans who were going to be deported to Turkey prior to the deal or didn’t request asylum. There were only two Syrians among them who appear not to have requested international protection. Indeed authorities appear to have rushed to identify such people so they could be available for today’s return. Termed “easy cases” by Frontex spokeswoman Eva Moncure, they are perfect material for today’s photo op. As it turns out, more than 90% of people arriving in Greek islands since 20 March – when the EU-Turkey deal was enacted – have opted for asylum, thus complicating their return under the arrangement. It is no surprise then that no further dates have been announced for future deportations.

The first day of deportations has been met with affirmative statements by credible international organisations, including the UN High Commissioner for Refugees (UNHCR), who confirmed that all procedures were regular and rights of deportees were observed. Everything is smooth and tidy, it seems. But this is one version of the story only. There is a second where things have gone less smoothly. Activist lawyers’ accounts and journalist reports from the islands raise the question of whether refugees have been given sufficient time and access to asylum procedures. It appears that many of them do not yet understand the content of the deal or why they have been restricted, and there has been a last-minute rush for asylum claims among the people who are possible deportees. It is also unclear how Turkey plans to handle returnees, how they will be received, and whether they will be able to receive the protection that was previously offered to them there.

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