Feb 052018
 
 February 5, 2018  Posted by at 11:10 am Finance Tagged with: , , , , , , , , , , , , ,  


Horacio Coppola Calle Corientes at the corner of Reconquista, Buenos Aires 1936

 

Global Equity Slump Deepens as Rate Fears Grow (BBG)
Stocks Punished As Inflation Shadow Spooks Bonds (R.)
The Grand Crowded Trade Of Financial Speculation (Noland)
Don’t Panic. This Slump’s Just a Blip (BBG)
This Isn’t the Start of a Major Downturn – JPMorgan (BBG)
Gundlach: ‘Hard To Love Bonds At Even 3%’ Yield (R.)
Oil Rally Is Unraveling On Fears Over A Rise In US Production (BBG)
Yellen Says Prices ‘High’ for Stocks, Commercial Real Estate (BBG)
Overworked Americans Are Stuck In A Financial Groundhog Day (MW)
SYRIZA’s “Success Story”: Austerity By A Different Name (MintPress)
The Beautiful Cure – Immunology And The Heroes Of The Resistance (G.)
Whale And Shark Species At Increasing Risk From Microplastic Pollution (G.)

 

 

Out of stocks but into what?

Global Equity Slump Deepens as Rate Fears Grow (BBG)

Asian equities fell and U.S. stock futures headed lower, extending the biggest selloff for global stocks in two years as investors adjusted to a surge in global bond yields. Shares sank across the region, with Japan’s benchmarks falling the most in 15 months. S&P 500 Index futures pared a drop of as much as 0.9%, signaling Friday’s rout won’t extend for another day. Shares in Hong Kong and Shanghai trimmed declines after China’s securities regulator urged brokerages to help stem the rout. Australia’s 10-year bond yield surged as the 10-year Treasury yield neared 2.87% after solid jobs data on Friday showed rising wages. The yen advanced. “It’s likely the pullback has further to go as investors adjust to more Fed tightening than currently assumed,” said Shane Oliver at AMP Capital Investors.

“The pullback is likely to be just an overdue correction, with say a 10% or so fall, rather than a severe bear market – providing the rise in bond yields is not too abrupt and recession is not imminent in the U.S. with profits continuing to rise.” The re-pricing of markets has come as investors question whether the Federal Reserve will keep to a gradual pace of monetary tightening, and whether it may need to end up boosting interest rates by more than previously expected in coming years. A higher so-called terminal rate for the Fed’s target implies higher long-term yields – raising borrowing costs across the economy. Yields on 10-year Treasuries have climbed to a four-year high from 2.40% at the start of the year. Last week’s decline for global stocks follows one of the best starts to a year on record amid hopes for ever-expanding corporate profits and growth in the world economy that’s broadening. The MSCI All Country World Index tumbled 3.4% last week, its biggest such slide since January 2016.

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If anyone’s scared of inflation, they’re scared of the wrong thing. But perhaps that’s a fitting way to end a make-believe world.

Stocks Punished As Inflation Shadow Spooks Bonds (R.)

Wall Street had already been flashing expensive by many historical measures and sold off in reaction. “It has to be remembered that U.S. shares were priced for perfection at around 19 times earnings,” said Craig James, chief economist at fund manager CommSec, noting the historic average is around 15 times. “Still, U.S. companies have produced stellar earnings over the reporting period. So it is understandable that some ‘irrational exuberance’ would emerge.” With half of the S&P 500 companies having reported, 78% have beaten expectations against an average 64%. Chris Weston, chief market strategist at broker IG, noted the sudden spike in volatility caused some rules-based funds to automatically dump stock as their models required.

“There is talk that volatility targeting annuity funds could have to sell a further $30 billion of stock this week and another $40 billion should realized volatility not retreat lower,” he warned. The lift in U.S. yields provided some initial support to the dollar after a rocky start to the year, though it was starting to lose altitude again in Asian trade. Against a basket of currencies, the dollar was down a fraction at 89.123 having climbed 0.6% on Friday for its biggest single day gain in three months. The dollar backed off to 109.95 yen from an early 110.29, while the euro was barely changed at $1.2461. Any rally in the U.S. dollar is considered a negative for commodities priced in the currency, with the Thomson Reuters CRB index down 0.5%. Gold was off a touch at $1,332.04 an ounce after losing 1% on Friday.

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Minskian fragility pops up its head.

The Grand Crowded Trade Of Financial Speculation (Noland)

Even well into 2017, variations of the “secular stagnation” thesis remained popular within the economics community. Accelerating synchronized global growth notwithstanding, there’s been this enduring notion that economies are burdened by “insufficient aggregate demand.” The “natural rate” (R-Star) has sunk to a historical low. Conviction in the central bank community has held firm – as years have passed – that the only remedy for this backdrop is extraordinarily low rates and aggressive “money” printing. Over-liquefied financial markets have enjoyed quite a prolonged celebration. Going back to early CBBs, I’ve found it useful to caricature the analysis into two distinctly separate systems, the “Real Economy Sphere” and the “Financial Sphere.”

It’s been my long-held view that financial and monetary policy innovations fueled momentous “Financial Sphere” inflation. This financial Bubble has created increasingly systemic maladjustment and structural impairment within both the Real Economy and Financial Spheres. I believe finance today is fundamentally unstable, though the associated acute fragility remains suppressed so long as securities prices are inflating. [ZH: This week’s sudden burst of volatility across all asset-classes highlights this Minskian fragility]. The mortgage finance Bubble period engendered major U.S. structural economic impairment. This became immediately apparent with the collapse of the Bubble. As was the case with previous burst Bubble episodes, the solution to systemic problems was only cheaper “money” in only great quantities.

Moreover, it had become a global phenomenon that demanded a coordinated central bank response. Where has all this led us? Global “Financial Sphere” inflation has been nothing short of spectacular. QE has added an astounding $14 TN to central bank balance sheets globally since the crisis. The Chinese banking system has inflated to an almost unbelievable $38 TN, surging from about $6.0 TN back in 2007. In the U.S., the value of total securities-to-GDP now easily exceeds previous Bubble peaks (1999 and 2007). And since 2008, U.S. non-financial debt has inflated from $35 TN to $49 TN. It has been referred to as a “beautiful deleveraging.” It may at this time appear an exquisite monetary inflation, but it’s no deleveraging. We’ll see how long this beauty endures.

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People need to be reassured, apparently.

Don’t Panic. This Slump’s Just a Blip (BBG)

Is it a blip, a correction or the end of days? Stock markets in Asia tumbled Monday, extending the biggest global selloff in two years. Equity investors are fretting as Treasury yields approach 3%. On Friday, 10-year returns touched 2.85%, and the dollar rallied 0.9%. Some context, however. While the MSCI Asia ex-Japan Index’s 7.5% return in January was good, it’s not unprecedented. In January 2001, the benchmark soared 12.8%. Also, U.S. government bond yields have been on a steady rise since the start of the year, and that hasn’t stopped Asia from partying. A currency’s strength is dictated by interest rate differentials, in theory at least. And it’s unclear the dollar will get much stronger. Based on the Bloomberg Dollar Spot Index, which determines currency weights according to their relative importance to the U.S. in terms of international trade, one-third of the dollar’s value is dictated by the euro.

[..] But five-year bunds finally offered you something last week, after being negative since 2015. Next in line is the Japanese yen, which dictates 18% of the dollar’s value. There have been plenty of murmurings, from this columnist included, that the Bank of Japan will start stealth tightening, especially in a world of rising U.S. interest rates. After all, Japan’s central bank already owns an unprecedented 45% of the nation’s bond market; how much more entrenched can it get? Interest rates have been climbing in emerging Asia as well. Malaysia and Pakistan have both embarked on tightening cycles while the Philippines is expected to hike by 50 basis points this year. Interest rates in China and India are also on the up, as Beijing limits credit expansion and Delhi can’t stop spending. You get my point: Just because U.S. rates are strengthening doesn’t mean the dollar will necessarily follow suit.

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Life in a fantasy world paid for by the Fed through taxpayers.

This Isn’t the Start of a Major Downturn – JPMorgan (BBG)

Equities still feel like the right place to be relative to bonds for multi-asset investors, according to JPMorgan Asset Management. The pullback in risk assets among overbought conditions and stretched sentiment doesn’t look like the start of a major downturn, the money manager said. With economic and earnings growth remaining solid amid a real macro deterioration, “stretched valuations just aren’t enough to cause a big market sell-off,” said Patrik Schowitz, global multi-asset strategist at JPMorgan Asset, in a note. The firm oversees $1.7 trillion in assets. Asian equities fell and U.S. stock futures headed lower Monday, extending the biggest selloff for global stocks in two years as investors adjusted to a surge in global bond yields.

Investors are questioning whether the Federal Reserve will keep to a gradual pace of monetary tightening, and whether it may need to boost interest rates by more than previously expected in coming years. To be sure, the biggest “endogenous” risk the firm has been pointing to is rising bond yields. “The level of yields in absolute terms is not the issue, rather the velocity of the yield moves is what matters. Investors should continue to watch this closely,” said Schowitz. He said the firm has for some time flagged rising risks of a correction in risk assets on the back of increasingly more stretched positive sentiment in markets. “This move may yet turn out to be the start of something more significant, but so far it is pretty limited and it is likely that buyers will step in before we get near ‘real’ correction levels,” he said.

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Because of accelerating US economic growth. Just wait five minutes.

Gundlach: ‘Hard To Love Bonds At Even 3%’ Yield (R.)

Jeffrey Gundlach, the chief executive of DoubleLine Capital, says “it is hard to love bonds at even 3%” yield, given the backdrop for accelerating economic growth in the U.S. “It seems the tradable buy on bonds will need a flight-to-safety bid on a wave of fear washing over risk markets,” Gundlach told Reuters late on Saturday. “Hard to love bonds at even 3% when GDPNow for Q1 2018 is suggesting annualized nominal GDP growth above 7%.” The 10-year Treasury yield hit a four-year high on Friday after the latest jobs report showed solid wage gains, effectively confirming the expected rate increase at the Federal Reserve’s next meeting in March. Friday’s selloff contributed to the broad decline in U.S. government paper within the last week as inflation fears, strong economic data and an announcement of bigger Treasury auctions drove yields higher.

The yield on the 10-year Treasury note climbed 7.9 basis points to 2.852%, the highest since January 2014. “Treasury yields have been rising at a pace above 200 basis points annualized on parts of the (yield) curve since September,” said Gundlach, known as Wall Street’s Bond King. “This is partly caused by the manic mood and partly caused by the falling dollar and related rising commodities. Rates up significantly and dollar down significantly with exploding deficits is a dangerous cocktail reminiscent of 1987.” Last month, Gundlach predicted the S&P 500 may go up 15% in the first part of the year, but “I believe, when it falls, it will wipe out the entire gain of the first part of the year with a negative sign in front of it.”

On Saturday, Gundlach said: ”What matters to success this year is understanding that we entered a mania phase in 2017 that went completely out of control after September with the Bitcoin blowoff exhibiting exactly the same lunacy as the dot com blow off back in late 1999. “Similar to that period, but even more excessive this time -who’d have thought it possible – is the explosion of bullish sentiment, with some surveys registering 96%, 97%, even 100% bullish respondents. Long Island Blockchain. Kodakcoin. Cryptokitties. Sheer madness.” Gundlach said overall, the U.S. stock market is an odds-on favorite to turn in a negative return for 2018. “Whether Friday is the start of a crash or just the first chapter in the topping process is not the issue,” he said.

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Highest production in 40 years.

Oil Rally Is Unraveling On Fears Over A Rise In US Production (BBG)

Oil’s rally is unraveling on fears over a rise in U.S. production after crude’s best January in more than a decade. Futures in New York are extending declines for a second session as Baker Hughes data showed American explorers last week raised the number of rigs drilling for crude to the highest in almost six months. Short-sellers betting against West Texas Intermediate oil increased their positions for a third week, according to figures from the U.S. Commodity Futures Trading Commission. Crude has remained above $60 a barrel this year, extending a rally driven by the extension of an output deal until the end of 2018 by OPEC and its allies. While oil’s best start to the year since 2006 was also helped by falling U.S. inventories and a weaker greenback, Citigroup says the market is underestimating U.S. output growth as a bigger surge is forecast along with an increase capital spending.

“With the higher U.S. oil rig counts and higher oil production sustaining into February, the concerns in the market seem to be valid at this point,” Barnabas Gan, an economist at Oversea-Chinese Banking Corp., said by phone from Singapore. “As these worries resurface, prices are edging lower.” [..] U.S. drillers last week added 6 rigs to raise the number of machines drilling for crude to 765, the highest since Aug. 11, Baker Hughes data showed Friday. That may lead to a further increase in U.S. crude production, which breached 10 million barrels a day to the highest level in more than four decades in November.

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She starts at Bernanke’s think tank today. Good riddance.

Yellen Says Prices ‘High’ for Stocks, Commercial Real Estate (BBG)

Outgoing Federal Reserve Chair Janet Yellen said U.S. stocks and commercial real estate prices are elevated but stopped short of saying those markets are in a bubble. “Well, I don’t want to say too high. But I do want to say high,” Yellen said on CBS’s “Sunday Morning” in an interview recorded Friday as she prepared to leave the central bank. “Price-earnings ratios are near the high end of their historical ranges.” Commercial real estate prices are now “quite high relative to rents,” Yellen said. “Now, is that a bubble or is it too high? And there it’s very hard to tell. But it is a source of some concern that asset valuations are so high.” Yellen, 71, stepped down as Fed chief on Saturday after one term, after President Donald Trump opted to replace her with Republican Jerome Powell, who’s been a Fed governor since 2012.

“I made it clear that I would be willing to serve, so yes, I do feel a sense of disappointment” about not being renominated, Yellen said. The only woman to serve as the head of the U.S. central bank described her work at the Fed as “the core of my existence.” Yellen said she’s supportive of former investment banker Powell, 64, whom she termed “thoughtful, balanced, and dedicated to public service.” The financial system is now “much better capitalized” and the banking system “more resilient” than they were entering the global financial crisis a decade ago, Yellen said. “What we look at is, if stock prices or asset prices more generally were to fall, what would that mean for the economy as a whole?” Yellen said. “And I think our overall judgment is that, if there were to be a decline in asset valuations, it would not damage unduly the core of our financial system.”

Yellen’s final act at the Fed was to hit one of the largest U.S. banks, Wells Fargo, with an unusual ban on growth that follows the lender’s pattern of consumer abuses and compliance lapses. In the interview that aired Sunday, she warned that it would be a “grave mistake” to roll back the regulations put on banks after the previous economic collapse. The current U.S. economic expansion is now approaching nine years and is the third longest in duration since 1945, according to the National Bureau of Economic Research. Yellen said the economy can continue to grow. “Yes, it can keep going,” she said. “Recoveries don’t die of old age.”

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Never no holiday, Try and explain that in Europe.

Overworked Americans Are Stuck In A Financial Groundhog Day (MW)

The U.S. had the fastest wage growth since 2009 in January. But in many other ways, American workers feel like they are working harder to achieve the same result. Does today feel a bit like yesterday, and the day before that? Feb. 2 is Groundhog Day. In the 1993 movie of the same name, Phil (Murray) wakes up at 6 a.m. only to find out that his day is actually exactly the same as the day before and the day before that. “I think people place too much emphasis on their careers,” he says. There may be a reason why that resonates with people in 2018. “Americans are doomed to relive the same reality each year: Forfeited vacation time, burnout, less time for loved ones, and negative consequences for health and well-being,” according to a report by the U.S. Travel Association’s Project Time Off. More than half of Americans (53%) are burned out and overworked, according to this survey of more than 2,000 workers by Staples Advantage, a division of office supplier Staples.

“We found that low pay and more hours is burning employees out and it causes up to half of what employees quit,” says Dan Schawbel, founder of WorkplaceTrends.com. Even so, year after year, most Americans say they are one paycheck away from the street with no emergency savings for a car repair or emergency room visit. But one reason for this exhaustion does not look like it will be changing anytime soon. Some 42% of workers took a vacation last year, according to a separate survey of more than 2,000 American adults released last year by travel site Skift using Google Consumer Surveys. (Nearly 40% only took 10 days or less.) One theory: Roughly one in four workers don’t get any paid vacation from their employers. Many are low-income workers and are the least able to afford to take an unpaid vacation day. Under the The Fair Labor Standards Act, the U.S. is also one of the few developed countries that does not require employers to provide paid time off.

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At least I’m not the only one constantly saying this. Recovery is a mathematical impossibility for Greece.

SYRIZA’s “Success Story”: Austerity By A Different Name (MintPress)

Initially, in May 2016, the Greek parliament passed a 7,500 page omnibus bill, sans any parliamentary debate, that transferred control over all of the country’s public assets to a fund controlled by the EU’s European Stability Mechanism for a period of 99 years – that is, until the year 2115. Not even Marty McFly and Doc Brown traveled that far into the future! Second, Greece’s loan commitments to the “troika” of lenders are set to continue, at the current rate of repayment, until 2059, as reported recently by the German newspaper Handelsblatt. That is the year when Greece is expected to have repaid the balance of the loans it has received, as part of its so-called “bailouts,” since 2010. The same article pointed out that the Greek government has made commitments to implement further austerity measures through 2022.

These measures — totaling €5.5 billion and agreed upon in June 2017 in what is, in essence, a fourth memorandum — include no less than 113 demands on the part of the troika, encompassing new privatizations of public assets and pension reductions. Other measures foreseen as part of this deal include a reduction in the tax- free income threshold and the further dilution of already-decimated worker rights. No increase in the also-decimated minimum wage is foreseen, nor are any new social measures to be implemented until 2023, despite Tsakalotos’ promises to the contrary. In connection with this agreement, assets slated for privatization include such strategic holdings as 25% of Eleftherios Venizelos International Airport in Athens, the remaining regional airports that have not already been privatized, Greece’s national defense industry, and the Corinth Canal.

Third, the SYRIZA-led coalition government has committed to the maintenance of annual primary budget surpluses of 3.5% through 2023, and then 2% annually through 2060. In plain language, what this means is that the state will spend less than it earns in revenues. If revenues therefore decrease, expenditures will be slashed accordingly. And, as foreseen in the 2017 deal between the Greek government and the troika, should there be shortfalls in these fiscal targets, automatic budget and spending cuts are to be immediately implemented through at least 2022. Here it should be noted that the net revenues of the Greek state declined in 2017, falling to €51.27 billion from €54.16 billion in 2016, leading in turn to a reduction in the pre-tax primary budget surplus from €2.78 billion to €1.97 billion. With state expenditures having reached €55.51 billion, Greece now faces a post-interest deficit of €4.24 billion, resulting in an increase in the country’s public debt.

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WHy do people never get smallpox and measles at the same time?

The Beautiful Cure – Immunology And The Heroes Of The Resistance (G.)

In 1989, Charles Janeway, a scientist at Yale University, had an epiphany that would revolutionise immunology. For 50 years, immunologists had subscribed to the dogma that vaccines worked by training the body to recognise molecules that were foreign to the body – “non-self” in immunological jargon. The usual way of doing this was to use vaccines to expose people to a dead or harmless version of a microbe, prompting the activation of antibodies that would be ready to swamp the germ should they encounter the alien entity a second time. But there were exceptions to the rule: sometimes, proteins separated from originating germs proved ineffective as vaccines; at other times, vaccines required the addition of an adjuvant, such as aluminium, to kickstart an immune response and no one could explain why.

What if, wondered Janeway, the presence of something that had never been in your body before was not sufficient to trigger an immune reaction? What if a second signal was required? Today, that second something is known as a pattern-recognition receptor and it is understood that there are countless varieties of them, each equipped to detect specific types of germs and switch on the appropriate immune responses. Together with an alphabet soup of other specialised cells, hormones and proteins, they form part of our innate immune system, helping us to distinguish harmful bacteria and viruses from beneficial ones, such as gut microbes essential for digestion. For Daniel Davis, professor of immunology at the University of Manchester, they constitute a “beautiful cure” more powerful than any product of a pharmaceutical laboratory.

Yet it is only in the past 30 years that immunologists such as Davis and Janeway, who died in 2003, have begun to shed light on these “wonders taking place beneath the skin”. In the process, they have found new ways to treat cancer, diabetes, arthritis and other age-related diseases. Immunologists are even beginning to understand the way in which immune responses are dependent on emotional and psychological states and the role that stress and exposure to light play in fighting disease. Given this, you would have thought that research into the workings of the immune system would be a top scientific priority. But while billions have been poured into the pursuit of the Higgs boson, immunology lacks a similar programmatic call-to-arms. Instead, Davis argues, immunology has always been a curiosity-driven science, a matter of “a few individuals following their nose”.

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Filter feeders. The big boys and girls. Meaning: they ingest lots of plastic.

Whale And Shark Species At Increasing Risk From Microplastic Pollution (G.)

Large filter feeders, such as baleen whales and basking sharks, could be particularly at risk from ingesting the tiny plastic particles, say scientists Whales, some sharks and other marine species such as rays are increasingly at risk from microplastics in the oceans, a new study suggests. Species such as baleen whales and basking sharks, which feed through filtering seawater for plankton, are ingesting the tiny particles of indigestible plastic which now appear to permeate oceans throughout the world. Some of these species have evolved to swallow hundreds or even thousands of cubic metres of seawater a day, but taking in microplastic can block their ability to absorb nutrients, and may have toxic side-effects. The new study, published in the journal Trends in Ecology and Evolution, advises more research on the megafauna of the oceans, as the effects of microplastics on them is currently not well understood.

Scientists have found, for instance through examining the bodies of beached whales, large pieces of plastic in the guts of such creatures, but the effect of microplastics, though less obvious, may be just as harmful. Elitza Germanov, a researcher at the Marine Megafauna Foundation and co-author the study, said: “Despite the growing research on microplastics in the marine environment, there are only a few studies that examine the effects on large filter feeders. We are still trying to understand the magnitude of the issue. It has become clear, though, that microplastic contamination has the potential to further reduce the population numbers of these species, many of which are long-lived and have few offspring throughout their lives.” Many species of whale, filter-feeding shark and rays are already under threat from other problems, such as overfishing and pollution. The added stress from microplastics could push some species further towards extinction, the authors of the study warned.

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Dec 242017
 
 December 24, 2017  Posted by at 10:03 am Finance Tagged with: , , , , , , , , ,  


Jules Bastien-LePage The annunciation to the shepherds 1875

 

Yes, Virginia, There Is A ‘Santa Rally’ (Roberts)
Homelessness In England Rises By 75% Among Vulnerable Groups Since 2010 (G.)
Ten Years In, Nobody Has Come Up With A Use For Blockchain (Hackernoon)
Varoufakis: Bitcoin is The Perfect Bubble, Blockchain A Great Solution (Wired)
Japan Births Plunge To Lowest Level Ever Recorded (ZH)
China Raging Against the Dying of the Light (Hamilton)
US Tax Cut and Rate Hikes Threaten China Currency (Schmid)
Italy’s Ruling PD Slides Further In Polls As Election Nears (R.)
How Sea Shepherd Lost Battle Against Japan’s Whale Hunters In Antarctic (G.)
Climate Change In The Land Of Santa Claus (Ind.)

 

 

Santa = faith in the good of mankind. As is Jesus. Still, hard to rhyme with copious dinners while others starve in the dark and cold, and $900 spent on gifts on average per American. That can’t be it.

Yes, Virginia, There Is A ‘Santa Rally’ (Roberts)

Eight-year-old Virginia O’Hanlon wrote a letter to the editor of New York’s Sun, and the quick response was printed as an unsigned editorial Sept. 21, 1897. The work of veteran newsman Francis Pharcellus Church has since become history’s most reprinted newspaper editorial, appearing in part or whole in dozens of languages in books, movies, and other editorials, and on posters and stamps

THE EDITORIAL
DEAR EDITOR:

I am 8 years old.
Some of my little friends say there is no Santa Claus.
Papa says, ‘If you see it in THE SUN it’s so.’
Please tell me the truth; is there a Santa Claus?

VIRGINIA O’HANLON.
115 WEST NINETY-FIFTH STREET.

“VIRGINIA, your little friends are wrong. They have been affected by the skepticism of a skeptical age. They do not believe except they see. They think that nothing can be which is not comprehensible to their little minds. All minds, Virginia, whether they be men’s or children’s, are little. In this great universe of ours, man is a mere insect, an ant, in his intellect, as compared with the boundless world about him, as measured by the intelligence capable of grasping the whole of truth and knowledge.

Yes, VIRGINIA, there is a Santa Claus. He exists as certainly as love and generosity and devotion exist, and you know that they abound and give to your life its highest beauty and joy. Alas! how dreary would be the world if there were no Santa Claus? It would be as dreary as if there were no VIRGINIAS. There would be no childlike faith then, no poetry, no romance to make tolerable this existence. We should have no enjoyment, except in sense and sight. The eternal light with which childhood fills the world would be extinguished.

Not believe in Santa Claus! You might as well not believe in fairies! You might get your papa to hire men to watch in all the chimneys on Christmas Eve to catch Santa Claus, but even if they did not see Santa Claus coming down, what would that prove? Nobody sees Santa Claus, but that is no sign that there is no Santa Claus. The most real things in the world are those that neither children nor men can see. Did you ever see fairies dancing on the lawn? Of course not, but that’s no proof that they are not there. Nobody can conceive or imagine all the wonders there are unseen and unseeable in the world.

You may tear apart the baby’s rattle and see what makes the noise inside, but there is a veil covering the unseen world which not the strongest man, nor even the united strength of all the strongest men that ever lived, could tear apart. Only faith, fancy, poetry, love, romance, can push aside that curtain and view and picture the supernal beauty and glory beyond. Is it all real? Ah, VIRGINIA, in all this world there is nothing else real and abiding.

No Santa Claus! Thank God he lives, and he lives forever. A thousand years from now, Virginia, nay, ten times ten thousand years from now, he will continue to make glad the heart of childhood.”

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Do they know it’s Christmas time at all?

Homelessness In England Rises By 75% Among Vulnerable Groups Since 2010 (G.)

Homelessness among people with mental and physical health problems has increased by around 75% since the Conservatives came to power in 2010, and there has been a similar rise in the number of families with dependent children who are classed as homeless. According to official figures collated by the Department for Communities and Local Government, the number of homeless households in England identified by councils as priority cases because they contain someone who is classed as vulnerable because of their mental illness, has risen from 3,200 in 2010 to 5,470 this year. Over the same period, the number of families with dependent children – another priority homeless group identified by councils – has increased from 22,950 to 40,130.

The number of homeless households with a family member who has a physical disability has increased from 2,480 to 4,370. After a week in which the prime minister has come under renewed attack over homelessness, housing charities have called on the government to urgently build more affordable housing and reverse a squeeze on benefits which has left vulnerable people unable to pay their rents. “With homelessness soaring, it is no surprise that the number of vulnerable groups – including families with children – who are having to turn to their council for help is on the rise,” said Polly Neate, chief executive of charity Shelter.

“As wages stagnate, rents continue to rise and welfare is cut, many people are struggling to keep a roof over their head. Eviction is now the number one cause of homelessness. “Our services across the country are seeing an increase in the number of people with multiple and complex needs, and we think this may be because other services are failing to provide the help that people need. The solution to our housing crisis must be to urgently build more affordable homes and, in the short term, end the freeze on housing benefit that is increasingly pushing people over the precipice into homelessness.”

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Shaking the tree.

Ten Years In, Nobody Has Come Up With A Use For Blockchain (Hackernoon)

Everyone says the blockchain, the technology underpinning cryptocurrencies such as bitcoin, is going to change EVERYTHING. And yet, after years of tireless effort and billions of dollars invested, nobody has actually come up with a use for the blockchain – besides currency speculation and illegal transactions. Each purported use case – from payments to legal documents, from escrow to voting systems – amounts to a set of contortions to add a distributed, encrypted, anonymous ledger where none was needed. What if there isn’t actually any use for a distributed ledger at all? What if, ten years after it was invented, the reason nobody has adopted a distributed ledger at scale is because nobody wants it?

The original intended use of the blockchain was to power currencies like bitcoin – a way to store and exchange value much like any other currency. Visa and MasterCard were dinosaurs, everyone proclaimed, because there was now a costless, instant way to exchange value without the middleman taking a cut. A revolution in banking was just the start& governments, unable to issue currency by fiat anymore, would take a back seat as individual citizens transacted freely outside any national system. It didn’t take long for that dream to fall apart. For one thing, there’s already a costless, instant way to exchange value without a middleman: cash. Bitcoins substitute for dollars, but Visa and MasterCard actually sit on top of dollar-based banking transactions, providing a set of value-added services like enabling banks to track fraud disputes, and verifying the identity of the buyer and seller.

It turns out that for the person paying for a product, the key feature of a new payment system – think of PayPal in its early days – is the confidence that if the goods aren’t as described you’ll get your money back. And for the person accepting payment, basically the key feature is that their customer has it, and is willing to use it. Add in points, credit lines, and a free checked bag on any United flight and you have something that consumers choose and merchants accept. Nobody actually wants to pay with bitcoin, which is why it hasn’t taken off.

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Crypto vs democracy: “To Varoufakis, money is inherently political. The decisions regarding whether money is produced or not, how it is distributed and who receives it, all have significant political consequences, benefiting certain social groups over others.”

Varoufakis: Bitcoin is The Perfect Bubble, Blockchain A Great Solution (Wired)

While acknowledging the limitations of bitcoin and other technical solutions to political problems, Varoufakis does see potential in blockchain technologies. For him, “the algorithm that operates behind bitcoin, caught my attention right from the beginning. I consider this to be a remarkable technology. As early as 2012, Varoufakis was toying with ideas for using blockchain to help solve Europe’s financial woes. By the time he was appointed Finance Minister of Greece in 2015, within days his anti-austerity programme was met with the direct threat from the Troika to close Greece’s banks. With no banking system, the country would grind to a halt. To counter this threat, Varoufakis devised an audacious plan to keep Greece’s financial system operating. Effectively Varoufakis proposed creating an alternative, peer-to-peer payments system based on the blockchain.

This would disintermediate the financing they were receiving from the Troika and from the money markets. But with no money coming from the Troika, Varoufakis would need to create a parallel payments system, that would leverage the tax that all citizens and companies of Greece need to pay, as a new form of money. This is what he would eventually brand, “fiscal money.” To understand how fiscal money works, imagine that a pharmaceutical company in Greece is owed money by the state. Due to the constraints of the crisis, it may take years to pay the company in normal central bank euros. However what if there was an alternative option? What if the Greek State created a reserve account for the company under its tax file number, in which it placed tax credits of one million euros? This IOU could then also be used by the company to pay other organisations and individuals within the country.

One of the most disruptive aspects of this unrealised plan, was to enable the state to borrow directly from citizens and vice versa. In effect, Varoufakis was attempting to use new digital technologies, such as blockchain, to cut out the European lending authorities and build new lending relationships between citizens, companies and the state. The risk this system faced was the threat of corruption and the subsequent decline in public trust of authorities, something that Varoufakis admits is “in very limited supply” in a country like Greece. For example, what if Greek authorities abused these tax credits and began to distribute this new fiscal money to close allies and friends? This is where Varoufakis saw blockchain’s potential. “If the payments system was based on the blockchain, this would allow the combination of anonymity but perfect transparency, regarding the total aggregate size of the transactions of the currency….blockchain would overcome the trust problem as we know it.”

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Japan and China suffer the same fate: aging populations.

Japan Births Plunge To Lowest Level Ever Recorded (ZH)

Back in 2013 we asked “Why Have Young People In Japan Stopped Having Sex?” And while that might sound like nothing more than a clever headline intended for The Onion, it was prompted by a very serious survey conducted by the Japan Family Planning Association which found that 45% of Japanese women aged 16-24 and 25% of men were “not interested in or despise sexual contact”…a growing trend that has revealed itself via the nation’s persistently declining birth rates. In fact, “celibacy syndrome” has become of such great concern for the Japanese government that it is considered a bit of a looming national catastrophe….a catastrophe that seems to be getting worse at an accelerating rate. According to data released today by Japan’s Ministry of Health, Labor and Welfare, child births in Japan will drop to just 941,000 in 2017, the lowest since data first started being recorded in 1899, and nearly 65% below the peak birth rate from the late 1940’s.

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China is building “..a housing bubble for a population that is never coming..”

China Raging Against the Dying of the Light (Hamilton)

China’s working age population is clearly defined as those aged 16 to 50 years old for females (55 for “white collar” females) and 16 to 60 years old for males. China mandates retirement at these outer age limits. Perhaps of some interest should be that this working age population peaked in 2011 and has been declining since. This decline will continue indefinitely as China has a collapsing childbearing population (detailed HERE), net emigration (outflow), and a still decidedly negative birthrate. There is no evidence to believe the working age declines will abate any decade soon. As the chart below shows, China’s potential workforce will be shrinking indefinitely…and by 2030 China’s potential workforce will be over 100 million fewer than the 2011 peak (an 11% decline)…and only further down from there..

China has one of the youngest average retirement ages in the developed world. On average, according to a recent study (HERE), Chinese leave the work force by age 55 compared to age 63 in the US (Norway has the latest average departure at age 67). So, perhaps China will be raising the retirement age to curb the ballooning 60+yr/old population entering retirement (chart below…chart shows retirement population, 55+ females and 60+ males)? More on that later..

Comparing the working age population versus the 60+yr/old population (chart below…again, showing the 55+ females, 60+ males). A shrinking potential workforce since peaking in 2011 and a rapidly growing elderly population.

[..] While China’s GDP and energy consumption have led the world, they have not responded in kind to China’s debt explosion and exponentially more will be necessary to continue to show “growth”. Over a third and perhaps half of all the debt has been mal-invested in a housing bubble for a population that is never coming. What comes next isn’t going to be good for China nor the rest of the world as China looks to flood a depopulating nation with new debt only creating more housing overcapacity…China will look to beat the Japanese at the debt game.

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Outflows are by no means over.

US Tax Cut and Rate Hikes Threaten China Currency (Schmid)

Seven was the line in the sand. But the Chinese yuan never crossed that line vis-à-vis the U.S. dollar. It only crept up to 6.96 yuan per dollar on Dec. 16, 2016, before starting an impressive comeback, down to 6.5 in the middle of this year. Last year was a bad one for the Chinese economy. Growth was slow, and the world was worried China would finally land the hard way, as many have been predicting for years. And more than GDP growth or any other metric, the Chinese currency was the barometer of whether China could keep things stable – stability is the mantra of the ruling communist regime – or suffer a crisis of debt deflation. If it declined in value, it meant citizens and companies were moving money out of the country in droves because they didn’t believe in the Chinese dream anymore. So another measure of how bad things had gotten in the second-largest economy of the world was capital outflows.

According to the Institute of International Finance (IIF), a record $725 billion left China in 2016, putting pressure on the currency and the Chinese interbank market. All these factors have changed in favor of the dollar in the last quarter, and it’s going to be hard for China to compete. Trying to stem the tide, the central bank sold record amounts of foreign currency. Chinese foreign exchange reserves, $4 trillion at the peak in 2014, went down to $3 trillion, and analysts started to question whether this was enough to finance the world’s largest trading economy. Then, miraculously in time for the 2017 National Congress of the Communist Party, all of this stopped. The yuan never went above 7, the exchange reserves never went below 3 trillion, and capital outflows subsided thanks to draconian regulations making it harder for individuals and companies to move money out of the country.

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Beppe all the way.

Italy’s Ruling PD Slides Further In Polls As Election Nears (R.)

Italy’s ruling Democratic Party (PD), hit by internal divisions and a banking scandal, is continuing to slide in opinion polls, with a new survey on Saturday putting it more than six points behind the anti-establishment 5-Star Movement. The survey by the Ixe agency, commissioned by Huffington Post Italia, comes just days before parliament is expected to be dissolved to make way for elections in March. It gives the center-left PD just 22.8% of voter support, down almost five points in the last two months, compared with 29.0% for 5-Star, which has gained almost two points in the same period. Silvio Berlusconi’s center-right Forza Italia (Go Italy!) is given 16.2%, with its right-wing allies the Northern League and Brothers of Italy on 12.1% and 5.0% respectively.

This bloc is expected to win most seats at the election but not enough for an absolute majority, resulting in a hung parliament. With the PD’s support eroding in virtually all opinion polls, several political commentators have speculated that its leader Matteo Renzi may choose or be forced to announce he will not be the party’s candidate for prime minister at the election. Renzi has given no indication so far he will take this step. The PD has split under his leadership, with critics complaining he has dragged the traditionally center-left party to the right. Breakaway groups united this month to form a new left-wing party called Free and Equal (LeU), which now has 7.3% of support, according to Ixe. The PD’s popularity seems to have also been hurt by a parliamentary commission looking into the collapse of 10 Italian banks in the past two years.

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What kills faith in mankind.

How Sea Shepherd Lost Battle Against Japan’s Whale Hunters In Antarctic (G.)

A fleet of Japanese ships is currently hunting minke whales in the Southern Ocean. It is a politically incendiary practice: the waters around Antarctica were long ago declared a whale sanctuary, but the designation has not halted Japan’s whalers, who are continuing a tradition of catching whales “for scientific research” in the region. In the past, conservation groups such as Sea Shepherd have mounted campaigns of harassment and successfully blocked Japan’s ships from killing whales. But not this year. Despite previous successes, Sea Shepherd says it can no longer frustrate Japan’s whalers because their boats now carry hardware supplied from military sources, making the fleet highly elusive and almost impossible to track. As a result the whalers are – for the first time – being given a free run to kill minke in the Southern Ocean.

“We have prevented thousands of whales from being killed in the past and we have helped ensure that the quota of minkes that Japan can take now is much lower than in the past,” said Peter Hammarstedt, a Sea Shepherd captain. “But they have put such resources into this year’s whaling that we cannot hope to find their fleet and stop them. It is simply a matter of us not wasting our own resources. We have other battles to fight.” Japan is not the only nation to hunt whales. Norway has a commercial operation in its own waters, for example. But what infuriates conservationists is that Japan is hunting and killing whales in a conservation zone, the Southern Ocean whaling sanctuary, that surrounds Antarctica. Japan claims that it does so only for scientific purposes.

“Essentially, they are exploiting a loophole in the rules – introduced in the 80s – that govern the banning of commercial whaling,” said Paul Watson, the founder of Sea Shepherd. Originally Japan set out to catch more than 900 minkes every year, as well as 50 humpbacks and 50 fin whales. However, its fleet was rarely able to reach these quotas because of actions by groups like Sea Shepherd. “We physically got in between the whalers and the whales and stopped the latter being killed,” said Hammarstedt. “One year we stopped Japan getting all but 10% of its quota. Their ships were nearly empty when they got back home.”

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The further north the larger the differences.

Climate Change In The Land Of Santa Claus (Ind.)

Lapland occupies a happy space in the popular imagination as a winter wonderland, occupied by reindeer, elves and Father Christmas. The real life Lapland, however, is increasingly facing up to the grim reality of global warming. Besides being the name of Swedish and Finnish provinces, Lapland is the English name for a region largely above the Arctic Circle that stretches across the north of Norway, Sweden, Finland and Russia. Research has revealed the disproportionate impact of climate change in the Arctic, where temperatures are currently rising at double the rate of the global average. The far north is bearing the brunt of global warming, and, as much of Lapland’s population relies on its polar climate for their livelihoods, the effects are starting to be felt.

Rovaniemi, the administrative capital of the Finnish province of Lapland, has done a good job of capitalising on the region’s Christmas-themed reputation. It is the self-proclaimed “Official Hometown of Santa Claus”, where the man himself can be visited 365 days a year. However, with his official residence there only constructed in 1950, Santa Claus is a relative newcomer to Lapland. The wider region is the ancient home of the indigenous Sami people, who refer to it as Sapmi. Owing to its remote location and freezing temperatures, much of Lapland remains relatively pristine wilderness, and it is this wilderness that provides the Sami with space to practise their ancient tradition of reindeer herding. As temperatures rise and begin to disrupt the unspoiled environment, the future prosperity of all Lapland’s inhabitants – from the Sami to Santa Claus – is at risk.

Dr Stephanie Lefrere first came to Finnish Lapland 18 years ago to study reindeer behaviour. Since then, she has observed dramatic changes in the region’s weather patterns, and subsequent effects on its wildlife. “In my very first fieldwork, 300km (186 miles) above the Arctic Circle, it was 20°C below zero on 31 October – really the Arctic feeling by the end of October,” she said. “We don’t have that any more. “Recently there have been ‘black Christmases’ with no snow at all in the southern part of Finland.” Decades of work in the region have cemented her view that climate change is having far-reaching effects on Lapland’s environment, affecting animal migratory routes, habitats and behaviour. “I became worried as a scientist, and also as an individual who is fascinated by the Arctic,” said Dr Lefrere.


Sami culture is based around reindeer, but only a fraction still keep their animals due to environmental change (Getty)

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Jun 092015
 
 June 9, 2015  Posted by at 10:03 am Finance Tagged with: , , , , , , , , ,  


Russell Lee Tracy, California. Tank truck delivering gasoline to a filling station 1942

The Warren Buffet Economy: Why Its Days Are Numbered-Part 1 (David Stockman)
Robert Prechter Is Warning Of A ‘Sharp Collapse’ In Stocks (MarketWatch)
Iceland Warns Hedge Funds Not to Sue as it Seeks Billions in Taxes (Bloomberg)
Greece, Creditors Discuss Extending Bailout in Bid to Break Deadlock (WSJ)
Grexit Would Be “Start Of The End For The Eurozone,” Says Tsipras (DW)
Greek PM Tsipras Says Accord Possible If Pensions Are Not Cut (Reuters)
Greece Lashes Out at Creditor Demands (Bloomberg)
Greece Is Not Ireland – And It’s Not Just About The Economics (Mason)
Merkel-Schaeuble Differences Over Greece Approach Said to Widen (Bloomberg)
BRICs Hit a Wall, Drag Down Rest of the World (Pesek)
Billionaire Cartier Owner Sees Wealth Gap Fueling Social Warfare (Bloomberg)
Auto Title Lenders Are Snagging Unwary Borrowers In Cycle Of Debt (LA Times)
At Least Two More Illinois Cities Poised for Bankruptcy (Mish)
Who’s The Real Culprit Behind Australia’s Housing Bubble? (ABC.au)
Washington’s Great Game and Why It’s Failing (Alfred McCoy)
The New World Order – A Faustian Bargain (Jeff Thomas)
Pentagon Report Proves US Complicity In ISIS (Nafeez Ahmed)
Richard Branson Peddles Technohappy ‘Remedies’ For Climate Change (Bloomberg)
Shell’s Arctic Drilling Will Harass Thousands Of Whales And Seals (Guardian)
Influx Of Migrants To Greek Islands From Turkey Up Sixfold (Kathimerini)

‘Nice’ overview.

The Warren Buffet Economy: Why Its Days Are Numbered-Part 1 (David Stockman)

During the 27 years after Alan Greenspan became Fed chairman in August 1987, the balance sheet of the Fed exploded from $200 billion to $4.5 trillion. Call it 23X.

Let’s see what else happened over that 27 year span. Well, according to Forbes, Warren Buffet’s net worth was $2.1 billion back in 1987 and it is now $73 billion. Call that 35X.

During those same years, the value of non-financial corporate equities rose from $2.6 trillion to $36.6 trillion. That’s on the hefty side, too—- about 14X.

Corporate Equities and GDP - Click to enlarge

Corporate Equities and GDP – Click to enlarge

When we move to the underlying economy that purportedly gave rise to these fabulous gains, the X-factor is not so generous. As shown above, nominal GDP rose from $5.0 trillion to $17.7 trillion during the same 27-year period. But that was only 3.5X

Next we have wage and salary compensation, which rose from $2.5 trillion to $7.5 trillion over the period. Make that 3.0X.

Then comes the median nominal income of US households. That measurement increased from $26K to $54K over the period. Call it 2.0X.

Digging deeper, we have the sum of aggregate labor hours supplied to the nonfarm economy. That metric of real work by real people rose from 185 billion to 235 billion during those same 27 years. Call it 1.27X.

Further down the Greenspan era rabbit hole, we have the average weekly wage of full-time workers in inflation adjusted dollars. That was $330 per week in 1987 and is currently $340 (1982=100). Call that 1.03X

Finally, we have real median family income. Call it a round trip to nowhere over nearly three decades!

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“..those looking to buy have already done so, leaving fewer buyers to step in if the market starts slipping.”

Robert Prechter Is Warning Of A ‘Sharp Collapse’ In Stocks (MarketWatch)

The president of Elliott Wave International, Rovert Prechter may not be a household name on Main Street, but he’s widely known on Wall Street as the foremost authority on the Elliott Wave principle, a forecasting methodology used by generations of technical analysts that is based on the belief that financial markets trend in five waves, and retrace in three waves. Prechter is also the executive director of the Socionomics Institute, founded to study how those same wave patterns define changes in social mood and govern social events. “If the cycle is still operating, the stock market is at high risk of a sharp collapse. Near term, we’re prepared to see the Dow make one more high. But it doesn’t have to happen.”

Elliott Wave analysis, which was devised by Ralph Nelson Elliott in the 1930s, is much more than a bunch of numbers and letters placed on a chart to denote which wave, or degree of waves, the market is traversing. Those who fully embrace it say it is the only form of technical analysis that can incorporate and explain all the other techniques used by chart watchers. Walter Zimmerman at energy research firm United-ICAP, calls it the “grand unified field theory of chart pattern analysis.” Head-and-shoulders reversals, technical divergences, candlestick charts—they can all be explained within the framework of the Elliott Wave principle, Zimmerman said.

Based on Prechter’s analysis of where the stock market is positioned within its wave structure, he believes the bull market is in a “precarious position.” For one, he said the sentiment indicators he follows have reflected extreme optimism for over two years. That is often viewed as a contrarian signal, because it suggests those looking to buy have already done so, leaving fewer buyers to step in if the market starts slipping. In addition, Prechter said a number of momentum indicators have been revealing a “dramatic lessening” in the number of stocks and indexes that have participated in the rally in recent months.

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A daring plan indeed.

Iceland Warns Hedge Funds Not to Sue as it Seeks Billions in Taxes (Bloomberg)

The prime minister of Iceland said any hedge fund planning to challenge the legal basis of a planned tax on failed bank assets should think again. “If they wanted to make some kind of an example out of Iceland, to threaten people, then this wouldn’t be a good case for them,” Prime Minister Sigmundur David Gunnlaugsson said in an interview in Reykjavik on Monday. “This is founded on solid legal ground.” Iceland has tried to ensure its treatment of creditors caught in an $85 billion banking default won’t drag the island through an Argentine-like period of litigation. The island’s 2008 financial meltdown wiped out its three biggest banks after the government said the $15 billion economy didn’t have the means to save them.

The economic collapse that followed forced Iceland to impose capital controls to stop investors from fleeing its markets. The island’s approach to addressing the crisis won praise from Nobel laureates including Paul Krugman and institutions led by the International Monetary Fund. Iceland’s central bank estimates gross domestic product will grow 4.5% this year, well above the 1.5% the European Commission sees the euro zone expanding. Gunnlaugsson’s administration on Monday unveiled an historic piece of legislation to unwind capital controls in place for almost seven years. But to make sure the measures don’t result in a capital exodus led by hedge funds, the island also imposed a one-time so-called stability tax of 39%.

Only winding-up committees that are able to reach a composition agreement approved by the central bank and finance ministry will be exempt. They have until the end of the year to do so, under the new legislation. Whether hedge funds end up paying the tax or see their claims whittled down through a composition process may end up being largely moot. The government has indicated it expects to get as much as $5.1 billion from creditors in the failed banks before they exit the island. Efforts to defend Iceland’s financial stability mean bank creditors probably need to leave at least 500 billion kronur ($3.8 billion) in the economy, Finance Minister Bjarni Benediktsson said in a separate interview on Monday. He says it’s likely that “the actual stability payment will be lower than the levied stability tax.”

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An easy way out?

Greece, Creditors Discuss Extending Bailout in Bid to Break Deadlock (WSJ)

Greece and its creditors are discussing an extension of the country’s bailout program through March 2016, people familiar with the talks said, an offer aimed at breaking a protracted standoff over the terms for fresh aid and averting a Greek default. The proposal, first presented last week, is part of European officials’ efforts to prod the government in Athens to agree to painful concessions in exchange for rescue funds. But continued disagreements over the economic overhauls and austerity measures demanded by Greece’s lenders risk undermining the plan, people familiar with the plans say. The eurozone’s portion of Greece’s €245 billion rescue program runs out at the end of June, raising questions over how Athens will pay off its debt beyond this month and remain in Europe’s currency union.

With a debt load close to 180% of its gross domestic product and an economy back in recession, Greece is unable to raise money from international bond markets and has been depending on rescue loans from the eurozone and IMF for more than five years. A nine-month extension would help carry Athens over its current funding gap. It would also give both Prime Minister Alexis Tsipras and his country’s creditors—the eurozone and the International Monetary Fund—more time to chart a new path for Greece’s economy. But it leaves open questions over whether the government would, indeed, be able to finance itself beyond March, or need even more support.

To help keep Greece solvent over the proposed bailout extension, Greece would receive financing from some €10.9 billion in aid money that had originally been set aside to prop up Greek banks, three people familiar with the negotiations said. The measures, they said, were discussed at a meeting between Mr. Tsipras and Jean-Claude Juncker, the president of the European Commission, on Wednesday. “What we offered would mean that Greece is fully financed until March 2016,” one of the people said.

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“Europe and international institutions must recognize that austerity has failed..”

Grexit Would Be “Start Of The End For The Eurozone,” Says Tsipras (DW)

In the interview in the Tuesday edition of Italy’s Corriere della Sera, Tsipras said that if Greece were forced out of the eurozone after failing to make a deal on managing its debt, Spain or Italy could soon follow, precipitating the collapse of the currency bloc. “It would be the start of the end for the eurozone,” Tsipras said. “If Europe’s political leadership cannot handle a problem like Greece, which represents 2 percent of its economy, how will the markets react to countries that are facing much bigger problems, like Spain or Italy that has a 2 billion euro public debt?” he said. “If Greece goes bankrupt, the markets will immediately look for the next victim.

If negotiations fail, the cost for European taxpayers will be enormous,” he warned. Tsipras also reiterated comments made in the past few days in which he rejected demands by Greece’s international creditors to cut pensions and other social spending in return for access to the last tranche of a multi-billion-euro bailout. Tsipras feels Greece is being unfairly targeted with harsh austerity measures. But he said Greece could reach a deal if these demands for austerity were dropped. “Europe and international institutions must recognize that austerity has failed,” he said.

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But that is the one point the troika won’t let go of.

Greek PM Tsipras Says Accord Possible If Pensions Are Not Cut (Reuters)

Greece could reach a deal with its international creditors if they dropped demands including cuts to pensions, PM Alexis Tsipras said in an interview with Italian daily Corriere della Sera on Tuesday. Reflecting the more conciliatory tone Athens has adopted in recent days, he said the two sides could find a compromise on key elements in any deal, including the size of a primary budget surplus. But he showed no signs of accepting creditor demands for cuts to pensions or other social spending, repeating comments he has made over recent days. “I think we’re very close to an agreement on the primary surplus for the next few years,” he told the newspaper. “There just needs to be a positive attitude on alternative proposals to cuts to pensions or the imposition of recessionary measures.”

The comments came as Greece’s international partners, including German Chancellor Angela Merkel and European Central Bank officials, have warned that time is rapidly running out. Tsipras is due to meet Merkel and French President Francois Hollande on Wednesday to try to break the impasse that has raised fears Greece could be forced out of the euro zone, with unforeseeable consequences for the single currency and the wider world economy. After dismissing the latest proposal from the EU and IMF as “absurd” last week, the leftwing government in Athens has signaled it is willing to compromise but continues to reject what it sees as unfairly punishing austerity measures. “We cannot continue with a program that has clearly failed,” Tsipras said.

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Varoufakis: “We need to avert an accident that won’t be an accident..”

Greece Lashes Out at Creditor Demands (Bloomberg)

The EU’s frustration with Greece is mounting. While Prime Minister Alexis Tsipras is looking to nail down when Greece is going to receive more financial aid, the country’s creditors are still focused on the policy measures required to qualify for support. German Chancellor Angela Merkel demanded urgent action from the Greek government on Monday after U.S. President Barack Obama voiced his concerns about the standoff at a summit of Group of Seven leaders. EC President Jean-Claude Juncker said Greece is not doing enough to overcome differences with the euro area. “I am still waiting for the Greek part of the bridge,” Juncker said in an interview with Bayerischer Rundfunk. “One can’t endlessly lengthen the EU or Eurogroup part of the bridge.”

Creditors are growing increasingly exasperated with Tsipras’s negotiating tactics after he rejected the terms of an aid package again last week. Tsipras’s government then used a technicality to postpone a payment of about €300 million to the IMF. Tsipras will travel to Brussels on Wednesday for an European Union summit with South American leaders which Merkel and French President Francois Hollande will also attend. “Europe and institutions must understand that austerity has failed,” Tsipras said in an interview with Italy’s Corriere della Sera on Tuesday. “Tomorrow we will enter into a discussion on the merits of progress made so far. We will define a clear timeframe for the deal.”

Greek Minister of State Nikos Pappas and Deputy Foreign Minister Euclid Tsakalotos will hold meetings with creditors in Brussels on Tuesday after sitting down with EU Economic Affairs Commissioner Pierre Moscovici on Monday. A solution to the negotiations could be reached before June 14 but further high-level meetings will only happen if there is a chance of a deal, a French government official told reporters on the condition of anonymity. Relations between Greece and its creditors have soured since last week’s talks between Tsipras and Juncker spurred optimism that a deal might be within reach. The aftermath of that meeting has been marked by mutual recriminations, with Tsipras calling the creditors’ proposal absurd, and Juncker saying the Greek leader had misrepresented the creditors’ position.

In response to the entreaties from Merkel and Juncker, Greek Finance Minister Yanis Varoufakis questioned the good faith of his country’s creditors. Varoufakis said in Berlin late Monday that aid could be released overnight if euro-area officials took the negotiations seriously. “We need to avert an accident that won’t be an accident,” he said at an event that followed a meeting German Finance Minister Wolfgang Schaeuble. “We have a historic duty not to allow this to happen.”

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Mason is learning.

Greece Is Not Ireland – And It’s Not Just About The Economics (Mason)

Why did Greece collapse and Ireland survive? It’s a question that perplexes international policymakers, and the answers are not to be found solely in economics. First, because the Irish crisis was a banking crisis: its banks were bust, the state bailed them out and took on debts it could not sustain. Austerity was harsh – but the economy was globalised. Even as Irish banks went bust, the Irish banking sector – an unofficial conduit of money from London to the tax havens, and full of US investment banks – was still recruiting. Then there’s agribusiness. Irish agriculture, from a country of 3 million people, produces enough to feed 50m worldwide and growing. If you look at the the profile of imports and exports from Ireland to Britain, it’s much the same via mix and per-capita GDP as the trade between the north and south of Britain.

In other words – hugely controversial to say politically – Britain and Ireland are close to being a single economy with two currencies. Ireland, in short, had the English language, an established role to play with the City of London and Frankfurt, and a modern, high-scale agriculture business. That is not to say austerity was popular: even now the water protests are boosting the same kind of radical left party we see ruling Greece, and boosting Sinn Fein, which has aligned itself internationally with Syriza. But in Ireland the kind of austerity enacted did not tank production by 25% and family incomes by 40%. It did not cause ordinary middle class people to vote for a party whose flags are red and methodology Marxist. And there was no mass fascist movement in Ireland.

The difference is: Greece is an unmodernised capitalism where you can’t impose austerity at this level and hope to modernise at the same time. I’ve become an unwilling expert, for example, on its pharmacy regulations. Sure, the law saying pharmacies can’t open within a certain short distance of each other has been repealed, but there is still a rule that says one pharmacy per 1,000 people, one owner for each pharmacy, one pharmacy for each pharmacist. Walgreens, Superdrug and Boots, in other words, are locked out of this sector, whose opening hours are not generous. There is even a massive fight over whether newsagents are allowed to sell aspirin in Greece. To somebody who needs aspirin during pharmacy closing hours this can appear a no brainer: liberalise everything.

It is exactly what the IMF has been arguing for in the Brussels Group talks, even this month: liberalise the pharmacies and bakeries or we withhold 7bn of aid and your country goes bankrupt. The problem is, the deep structures of Greek capitalism mean you can only modernise by unpicking things carefully and with consent. A population used to being seen personally by a pharmacist, to getting their drugs on informal credit when they can’t pay, just will not transform itself overnight into a midwest American consumer group. It’s the same with taxes. Hiking VAT sounds like a no-brainer in a country that needs to raise taxes. When Varoufakis proposed instead to set a low 16% top rate of VAT, on the grounds that it would undermine the culture of evasion, the IMF’s economists reportedly said yes. Somewhere along the line it got hiked to 23%. If the IMF’s negotiators wanted to give the impression their aim is to destroy most of the small businesses that keep Greek capitalism alive, and with it, consent for democracy, they are doing a brilliant job.

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She would do well to throw him out. But his right wing support is strong. How strong does Angela feel?

Merkel-Schaeuble Differences Over Greece Approach Said to Widen (Bloomberg)

A split between German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble is widening over Greece as the funding standoff goes down to the wire, said people familiar with the matter. Merkel is ready to make concessions to keep Greece in the euro because of geopolitical concerns, while Schaeuble is willing to let the country exit the euro unless its government takes measures to ensure the country’s long-term survival in the monetary union, said the people, who asked not be identified speaking about internal party discussions. That divide is also reflected in Merkel’s parliamentary caucus, which is increasingly uneasy with letting the 41-member budget committee decide on disbursing any aid to Greece and is looking instead at a vote of the lower house of parliament on a deal that includes changes to previous agreements, they said.

Greece is deadlocked with creditors over the conclusion of a multi-year bailout program expiring at the end of the month, with Prime Minister Alexis Tsipras calling the latest offer “a bad negotiating trick” in talks that place “clearly unrealistic” demands on the euro region’s most indebted member. While Merkel has repeatedly said she’ll keep working to allow Greece to stay in the euro area, Schaeuble has emphasized that the contagion risk from the country possibly exiting the bloc is “marginal.” Many lawmakers in Merkel’s 311-strong caucus made up of the Christian Democratic Union and Bavarian Christian Social Union are finding it difficult to support the chancellor’s position and would side with Schaeuble if forced to choose, the people said.

Some within her caucus are discussing whether Merkel would need to tie any decision on the bailout program to a confidence vote to rally lawmakers behind her, one of the people said. Any agreement that doesn’t spell out binding reform obligations wouldn’t be accepted even among those siding with Merkel, the people said. Lawmakers from all coalition parties, which also includes the Social Democrats, object to a possible last-minute vote in Germany’s lower house of parliament at the end of the month, the last week the Bundestag is in session before the summer break, one person said. Lawmakers want time to scrutinize any proposal put before them and not be pressured to make a hasty decision, the person said.

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“..emerging markets have accumulated debts in U.S. currency totaling almost $6 trillion.”

BRICs Hit a Wall, Drag Down Rest of the World (Pesek)

Fourteen years ago, Goldman Sachs presented a thesis that quickly gained traction among investors and policy makers: Brazil, Russia, India and China, the bank claimed, would increasingly drive global growth, filling a void left by the West. Today, the opposite case seems far more plausible. The so-called BRIC nations are now threatening to drag down the rest of the world. China’s exports declined in May for the third straight month, while imports slumped for the seventh month in a row. Asia’s biggest economy, in other words, is being hit in two directions: weak demand abroad and a sluggish economy at home. Not to mention the epic stock bubble that is sucking oxygen from its financial system. It’s not just China, though, as Gabriel Stein of Oxford Economics recently told me in Tokyo.

A new report from Oxford’s research team points out that imports are currently declining in Brazil, India and especially Russia. The BRICs are responsible for a drop in annual world trade by about 1.3%age points, the most pronounced deceleration since the 2008-2009 global financial crisis. And these trends extend far beyond the four emerging giants. For the 13 non-BRIC developing economies that Oxford tracks, imports of goods grew by only about 1.5% in the first quarter year-over-year (the long-term average for these countries has been about 8%). And what’s most worrying is that this slowdown is taking place even before the Federal Reserve begins its announced interest rate hikes. (Emerging-market stocks fell for an 11th straight day yesterday, the longest such streak in 24 years, amid concerns about Fed policy.)

Emerging nations have certainly hit a wall before, including Southeast Asia in 1997, Russia a year later and Argentina more times than we can count. But there are good reasons to believe today’s threat could be far more severe and lasting, including emerging markets’ higher debt levels and relatively modest growth in advanced economies. Even with the recent pickup in job creation, today’s 2.7% U.S. growth is about half the pace of the late 1990s, while the euro zone’s 1% pace is only a third of its output back then. And while Japan’s economy expanded 3.9% in the first quarter, the 30% devaluation of the yen is dampening growth prospects across Asia.

The stakes are also higher now than ever before, because emerging economies are more central to the global economy. In 1999, they accounted for roughly 23% of world gross domestic product and 38% on a purchasing-power-parity basis. Today, those shares are 35% and over 50%, respectively. The BRICs alone account for about 20% of world GDP, not much different than America’s 24% in 2007, just before the global crisis. Meanwhile, developed nations are more financially exposed to emerging markets than ever before. In December, the Bank for International Settlements said emerging markets have accumulated debts in U.S. currency totaling almost $6 trillion.

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“We’re in for a huge change in society,” he said Monday. “Get used to it. And be prepared.”

Billionaire Cartier Owner Sees Wealth Gap Fueling Social Warfare (Bloomberg)

Johann Rupert, the South African who has made billions peddling Cartier jewelry and Chloe fashion, said tension between the rich and poor is set to escalate as robots and artificial intelligence fuel mass unemployment. “We cannot have 0.1% of 0.1% taking all the spoils,” said Rupert, who has a fortune worth $7.5 billion, according to data compiled by Bloomberg. “It’s unfair and it is not sustainable.” The founder and chairman of Richemont, whose 20 brands also include Vacheron Constantin and Montblanc, said he expects advances in technology to lead to job losses after having read books on the subject recently. Conflicts between social classes will make selling luxury goods more tricky as the rich will want to conceal their wealth, Rupert said in a speech Monday at the Financial Times Business of Luxury Summit in Monaco.

“How is society going to cope with structural unemployment and the envy, hatred and the social warfare?” he said. “We are destroying the middle classes at this stage and it will affect us. It’s unfair. So that’s what keeps me awake at night.” Rupert, a university dropout whose father made a fortune setting up Rembrandt Tobacco Corp. and selling it off, has in the past made other social critiques. Nicknamed ‘Rupert the Bear’ for his pessimistic views on the economy, the 65-year-old refers to himself as a “reformed prostitute,” having spent a decade as an investment banker. He said in 2008 that the collateral damage from the financial crisis was yet to come. “We’re in for a huge change in society,” he said Monday. “Get used to it. And be prepared.”

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“What they want to do is get you into a loan where you just keep paying, paying, paying, and at the end of the day, they take your car.”

Auto Title Lenders Are Snagging Unwary Borrowers In Cycle Of Debt (LA Times)

Cash-strapped consumers are being shown a new place to find money: their driveways. Short-term lenders, seeking a detour around newly toughened restrictions on payday and other small loans, are pushing Americans to borrow more money than they often need by using their debt-free autos as collateral. So-called auto title loans — the motor vehicle version of a home equity loan — are growing rapidly in California and 24 other states where lax regulations have allowed them to flourish in recent years. Their hefty principal and high interest rates are creating another avenue that traps unwary consumers in a cycle of debt. For about 1 out of 9 borrowers, the loan ends with their vehicles being repossessed.

“I look at title lending as legalized car thievery,” said Rosemary Shahan, president of Consumers for Auto Reliability and Safety, a Sacramento advocacy group. “What they want to do is get you into a loan where you just keep paying, paying, paying, and at the end of the day, they take your car.” Jennifer Jordan in the Central Valley town of Lemoore, Calif., lived that financial nightmare, though a legal glitch later rescued her. Jordan, 58, said she needed about $400 to help her pay bills for cable TV and other expenses that had been piling up after her mother died. She turned to one of a proliferating number of storefront title lenders, Allied Cash Advance, which promises to help “get the cash you need now.” But Jordan said it wouldn’t make a loan that small.

Instead, it would lend her $2,600 at what she later would learn was the equivalent of 153% annual interest — as long as she put up her 2005 Buick Rendezvous sport utility vehicle as collateral. Why would the company want to lend her much more money than she needed? The key reason is that California has no limit on interest rates for consumer loans of more than $2,500, and it otherwise doesn’t regulate auto title loans. “She never said anything about the interest or nothing,” Jordan said of the employee who made the loan in 2012. Six months later, unable to keep up with the loan payments, Jordan said, she was awakened at 5 a.m. “My neighbor came pounding on my door and said, ‘They’re taking your car!'” she recalled.

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Coming to a town near you soon.

At Least Two More Illinois Cities Poised for Bankruptcy (Mish)

On May 29, citing a report mentioned in Bond Buyer, I noted ‘Five Chicago Suburbs Headed for Bankruptcy (More Illinois Cities Will Follow)’. The cities are Maywood, Sauk Village, Blue Island, Country Clubs Hills, and Dolton. The village of Dolton strongly disagrees with the report. The others did not comment. The Bond Buyer report was based on an analysis of state comptroller’s local government Finance Warehouse by Marc Joffe at CivicPartner, a municipal finance research firm. I have since been in contact with Joffe and asked for an opinion of several cities I believe to be seriously troubled. My top two choices were Harvey and Robbins. Joffe responded …

“Hello Mish. Your intuition was correct about both. Harvey and Robbins are at least as bad as the five I listed in the original report. The last publicly available audited Financial Report for the City of Harvey covers the year ended April 30, 2009. In that year, the City reported an unrestricted net position of -$17.6 million and a general fund balance of -$10.4 million. The negative fund balance was equivalent to over half the city’s annual revenue. The city has provided incomplete, unaudited reports for subsequent years. The latest available report, for the year ended April 30, 2013, shows a further deterioration in the general fund balance to -$19.3 million – about 85% of annual revenues.

According to the Chicago Tribune, the city’s 2014 budget also included a deficit, suggesting that Harvey’s fiscal imbalance is even worse today. Harvey’s late reporting and accumulated general fund deficit led Fitch to downgrade the city from BBB- to B in February 2010 and then to withdraw its ratings entirely in November of that year. The city has now been unrated for more than four years.

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“.. if it is illegal to take more than $US50,000 out of China, why are so many Chinese nationals capable of splurging millions of dollars on individual properties?”

Who’s The Real Culprit Behind Australia’s Housing Bubble? (ABC.au)

No one, it seems, has had any interest in reining in the runaway housing market, a point hammered home by Prime Minister Tony Abbott last week when he expressed a desire for prices to keep on rising, despite a blunt warning from new Treasury head John Fraser. The following day, as he ramped up the notion into a political fight – Bill Shorten wants your house to decrease in value – Hockey attempted to argue that soaring house prices and affordability were separate issues. What seems to have eluded our political masters is that market adage – the bigger the boom, the more painful the bust. Then of course there is the constant moan from the business lobby; Australia is too costly, wages are too high. There is a reason for that. It’s called real estate.

For the past 15 years, rents have dictated wages. Not the other way around. No matter how you measure it, Sydney and Melbourne real estate is in dangerous territory, fuelled by a heady mixture of cheap cash from foreign and domestic investors. When it unravels, the pain will reverberate through the banking system, causing enormous damage to the real economy. A major reason for the official inaction is that this is a bubble that has been deliberately contrived. In 2012, when the Reserve Bank began its easing bias, it was determined to create a housing boom – so residential construction could fill the gap created by the decline in resource project construction. But as investors, rather than owner occupiers, plunged in almost from day one, APRA and the RBA should have taken action.

Instead, they were happy to watch the bubble inflate and now, rather than admit a mistake, reluctantly are playing catch-up. A large portion of the investor action emanated from self-funded retirees, taking advantage of changes to superannuation rules that allowed them to gear up their super funds. While as a nation we boast about the extent of our national savings pool, little attention has been devoted to the fact that a significant amount of that pool is now exposed. As the Storm Financial collapse graphically illustrated, the capital losses on a property market bust will be magnified by debt. That could wipe out a significant number of super balances and put more pressure on the federal budget.

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Impressive exposé.

Washington’s Great Game and Why It’s Failing (Alfred McCoy)

For even the greatest of empires, geography is often destiny. You wouldn’t know it in Washington, though. America’s political, national security, and foreign policy elites continue to ignore the basics of geopolitics that have shaped the fate of world empires for the past 500 years. Consequently, they have missed the significance of the rapid global changes in Eurasia that are in the process of undermining the grand strategy for world dominion that Washington has pursued these past seven decades. A glance at what passes for insider “wisdom” in Washington these days reveals a worldview of stunning insularity. Take Harvard political scientist Joseph Nye, Jr., known for his concept of “soft power,” as an example. Offering a simple list of ways in which he believes U.S. military, economic, and cultural power remains singular and superior, he recently argued that there was no force, internal or global, capable of eclipsing America’s future as the world’s premier power.

For those pointing to Beijing’s surging economy and proclaiming this “the Chinese century,” Nye offered up a roster of negatives: China’s per capita income “will take decades to catch up (if ever)” with America’s; it has myopically “focused its policies primarily on its region”; and it has “not developed any significant capabilities for global force projection.” Above all, Nye claimed, China suffers “geopolitical disadvantages in the internal Asian balance of power, compared to America.” Or put it this way (and in this Nye is typical of a whole world of Washington thinking): with more allies, ships, fighters, missiles, money, patents, and blockbuster movies than any other power, Washington wins hands down.

If Professor Nye paints power by the numbers, former Secretary of State Henry Kissinger’s latest tome, modestly titled World Order and hailed in reviews as nothing less than a revelation, adopts a Nietzschean perspective. The ageless Kissinger portrays global politics as plastic and so highly susceptible to shaping by great leaders with a will to power. By this measure, in the tradition of master European diplomats Charles de Talleyrand and Prince Metternich, President Theodore Roosevelt was a bold visionary who launched “an American role in managing the Asia-Pacific equilibrium.” On the other hand, Woodrow Wilson’s idealistic dream of national self-determination rendered him geopolitically inept and Franklin Roosevelt was blind to Soviet dictator Joseph Stalin’s steely “global strategy.” Harry Truman, in contrast, overcame national ambivalence to commit “America to the shaping of a new international order,” a policy wisely followed by the next 12 presidents.

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A topic that warrants much more scrutiny. You don’t need a master plan for things to go horribly awry.

The New World Order – A Faustian Bargain (Jeff Thomas)

The push-and-pull of sociopathic leaders is unending. Their very makeup dictates that each one individually will always be vying for more. In order to achieve that, they will form subversive subgroups that will agree on a separate direction from what has been agreed by the primary group, and along the way, each one, in his lack of conscience and loyalty, might betray both the primary group and the subgroup. In the end, there’s no question that there are those who consider themselves to be part of a New World Order, as so many have publicly stated so themselves, for generations. Also, there can be little doubt that each member expects to come out of the deal as a ruler, not as one of the ruled. Further, the effort is ongoing and growing, and will result in great damage for the average person who, in most cases, simply wishes to be left alone to run his own life.

It has been postulated by many that those who see themselves as an Elite are nearing the completion of what they perceive as world dominance. However, should they succeed, they will betray their partners the very next day, as it’s their nature to do so. Their behaviour would likely be that of a group of cats with their tails tied together. So, what might we take away from this discussion? First, that there most assuredly are extremely domineering forces (regardless of how closely associated they might be), which, in the near future, will do immense damage to the cause of freedom in the world, particularly in those countries where they are most dominant, or will become most dominant. Second, the situation does appear to be reaching a head.

The two greatest uncertainties will be how much damage will be done before the dust has settled, and how protracted the period of destruction and struggle for dominance might be. Ultimately, for the reasons stated above, I don’t believe the New World Order concept can fully prevail, but it can and will do damage of unprecedented proportions in the attempt to implement it. Those involved will not be swayed from their individual or collective objectives (consider Adolf Hitler or Josef Stalin). The best that can be done is to work at placing ourselves as far outside of their sphere of influence as possible.

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This has been obvious for a while.

Pentagon Report Proves US Complicity In ISIS (Nafeez Ahmed)

According to leading American and British intelligence experts, a declassified Pentagon report confirms that the West accelerated support to extremist rebels in Syria, despite knowing full well the strategy would pave the way for the emergence of the ‘Islamic State’ (ISIS). The experts who have spoken out include renowned government whistleblowers such as the Pentagon’s Daniel Ellsberg, the NSA’s Thomas Drake, and the FBI’s Coleen Rowley, among others. Their remarks demonstrate the fraudulent nature of claims by two other former officials, the CIA s Michael Morell and the NSA s John Schindler, both of whom attempt to absolve the Obama administration of responsibility for the policy failures exposed by the DIA documents.

As I reported on May 22nd, the US Defense Intelligence Agency (DIA) document obtained by Judicial Watch under Freedom of Information confirms that the US intelligence community foresaw the rise of ISIS three years ago, as a direct consequence of the support to extremist rebels in Syria. The August 2012′ Information Intelligence Report’ (IIR) reveals that the overwhelming core of the Syrian insurgency at that time was dominated by a range of Islamist militant groups, including al-Qaeda in Iraq (AQI). It warned that the supporting powers to the insurgency – identified in the document as the West, Gulf states, and Turkey – wanted to see the emergence of a Salafist Principality in eastern Syria to isolate the Assad regime.

The document also provided an extraordinarily prescient prediction that such an Islamist quasi-statelet, backed by the region s Sunni states, would amplify the risk of the declaration of an Islamic State across Iraq and Syria. The DIA report even anticipated the fall of Mosul and Ramadi. Last week, legendary whistleblower Daniel Ellsberg, the former career Pentagon officer and US military analyst who leaked Pentagon papers exposing White House lies about the Vietnam War, described my Insurge report on the DIA document as a very important story.

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How to make a bad thing worse.

Richard Branson Peddles Technohappy ‘Remedies’ For Climate Change (Bloomberg)

As talks aimed at slowing global warming drag on, researchers are pushing new ideas that some are calling last-ditch attempts to avert the worst effects of climate change. Some proposals are uncontroversial, such as using charcoal to lock carbon dioxide into soil or scattering carbon-absorbing gemstones. Richard Branson, the billionaire chairman of Virgin, has offered a $25 million prize for the best solution in the field known as geoengineering. Other ideas to cool the planet have scientists worried about unintended consequences. There are proposals, untested at scale and with uncertain costs, to block the sun’s rays with airborne particles or seed the oceans with carbon-absorbing iron. That they’re even being considered reveals both frustration over government inaction and skepticism that policy alone will solve the problem.

“For the last 20 to 30 years, governments, at the back of their minds, have assumed that mitigation is the main way forward,” said Mark Maslin, a fellow at the U.K.’s Royal Geographical Society. Researchers now realize that the planet needs “other urgent ways of dealing with CO2.” Interest in geoengineering comes after two decades of United Nations talks that have yet to produce a global climate-change agreement. Envoys from about 200 nations will meet December in Paris, where they’re expected to finalize a pact to curb carbon emissions. There is a sense of urgency. Researchers are seeking to limit warming to 2 degrees Celsius (3.6 degrees Fahrenheit) from pre-industrial times. “To achieve that we will have to actually do some sort of geoengineering,” Maslin said.

Global surface temperatures have already risen about 0.85 degrees Celsius since 1880, according to a 2014 UN report. The researchers found that while the unintended consequences of manipulating the climate may be significant, “some basic inquiry does seem appropriate.” A National Academy of Sciences panel echoed those concerns. In a February report, it found little evidence that researchers will be able to deploy geoengineering anytime soon. It also concluded that the U.S. should study the technologies as a “last-ditch” tool. Tinkering with the planet’s climate may carry more risk than efforts to reduce carbon emissions, said David Titley, a professor in Pennsylvania State University’s department of meteorology. “Climate intervention involves techniques that are of high and unknown risk,” he said. “The risks for mitigation and adaptation are understood and manageable.”

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Which is of course flatly denied.

Shell’s Arctic Drilling Will Harass Thousands Of Whales And Seals (Guardian)

Royal Dutch Shell’s plans for exploratory drilling in the US Arctic this summer will involve the harassment of whales and seals by the thousands, an application document filed by Shell to the National Marine Fisheries Service (NMFS) reveals. Most notably, Shell estimates its Arctic activities will expose more than 2,500 bowhead whales, more than 2,500 gray whales and more than 50,000 ringed seals to continuous sounds and pulsed sounds, deemed damaging enough to constitute harassment. The bowhead whale is listed under the US Endangered Species Act. By Shell’s own estimate, 13% of the overall population of bowhead whales still alive are potentially harassed .

The number of gray whales potentially harassed also constitutes 13% of the overall population, while the number of ringed seals potentially harassed amounts to 16%. Under the ESA, the ringed seal is classified as threatened. Under the Marine Mammal Protection Act, the government may allow for the “taking” or “harassment” of marine mammals, so long as the number taken is small and the impact on the species negligible. But environmental groups argue the numbers affected by the Shell plans are not small, nor will the impact on species be negligible. “The authorisation that they [Shell] are seeking is a request to be able to harass that amount of animals. Shell has asked the government to authorize the taking of that amount of animals,” said Christopher Krenz, a scientist and Arctic campaign manager with Oceana.

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Turning into a tsunami.

Influx Of Migrants To Greek Islands From Turkey Up Sixfold (Kathimerini)

The influx of undocumented immigrants into Greece from neighboring Turkey has increased dramatically, growing sixfold in the first five months of the year compared to the same period in 2014, according to new figures released by the coast guard on Monday. A total of 40,297 immigrants and refugees were intercepted in the Aegean, particularly on the islands of the eastern Aegean, between January 1 and May 31 as compared to 6,500 in the same period last year, according to coast guard figures. The influx is continuing, and is expected to intensify as the weather improves. Coast guard officers detained 4,046 migrants over the weekend (including Friday). The problem is more intense on some islands, such as Lesvos, which received 18,371 immigrants in the first five months of the year.

On Monday alone two boatloads carrying a total of 78 would-be migrants arrived on the island’s shores. The situation on Chios, Kalymnos and Kos is said to be just as bad. A total of 7,317 migrants arrived on Chios from January to June. The island’s mayor, Manolis Vournous, said authorities have set up a makeshift camp outside the main police precinct as temporary accommodation for hundreds of migrants. Similar stopgap solutions have been sought on other islands. On Lesvos, a drivers’ education center has been transformed into a temporary settlement for migrants. The islands of Samos and Kos, which are popular summer tourist destinations, have also been struggling, having received 4,658 and 4,625 immigrants respectively in the first five months of the year.

Works are under way to repair an abandoned hotel on Kos that suffered serious damage in a recent fire. It will be able to accommodate around 400 migrants once works are complete, local authorities said. A spokesman for the Citizens’ Protection Ministry told Kathimerini that 80% of the incoming migrants are refugees from Syria, adding that Greek Police has boosted personnel and equipment to accelerate the identification process. Last Friday, the United Nations refugee agency said it is boosting its staff presence on several islands in the Aegean.

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