Oct 042018
 
 October 4, 2018  Posted by at 9:17 am Finance Tagged with: , , , , , , , , , ,  


Pablo Picasso Man with arms crossed 1909

 

World Economy At Risk Of Another Financial Crash – IMF (G.)
Soaring US dollar Threatens Trouble For Emerging Markets (G.)
Stocks To Plunge More Than 40% During Next Bear Market – Stovall (CNBC)
Powell Has Cost Stock-Market Investors $1.5 Trillion In 2018 – JPMorgan (MW)
Senate Sets Key Kavanaugh Nomination Vote For Friday (ZH)
White House Finds No Support in FBI Report for Claims Against Kavanaugh (WSJ)
Theresa May Pledges End To Austerity In Tory Conference Speech (G.)
India’s Rupee Sinks To Record Lows., Central Bank Won’t Save It (CNBC)
Amazon Cuts Bonuses And Stock Awards As Minimum Wage Increases (CNBC)
Estonia Says Over $1 Trillion Flowed Through The Country In 2008-2017 (R.)
Grizzly: The Canary in Our Coal Mine (CP)
Attenborough: ‘Population Growth Must Come To An End’ (BBC)
Humanity Is Waging A War Of Terror On Wildlife (G.)

 

 

Why? Lack of reforms. Yeah.

World Economy At Risk Of Another Financial Crash – IMF (G.)

The world economy is at risk of another financial meltdown, following the failure of governments and regulators to push through all the reforms needed to protect the system from reckless behaviour, the International Monetary Fund has warned. With global debt levels well above those at the time of the last crash in 2008, the risk remains that unregulated parts of the financial system could trigger a global panic, the Washington-based lender of last resort said. Much has been done to shore up the reserves of banks in the last 10 years and to put in place more rigorous oversight of the financial sector, but “risks tend to rise during good times, such as the current period of low interest rates and subdued volatility, and those risks can always migrate to new areas”, the IMF said, adding, “supervisors must remain vigilant to these unfolding events”.

A dramatic rise in lending by the so-called shadow banks in China and the failure to impose tough restrictions on insurance companies and asset managers, which handle trillions of dollars of funds, are highlighted by the IMF as causes for concern. The growth of global banks such as JP Morgan and the Industrial and Commercial Bank of China to a scale beyond that seen in 2008, leading to fears that they remain “too big fail”, also registers on the IMF’s radar. The warning from the IMF Global Financial Stability report echoes similar concerns that complacency among regulators and a backlash against international agreements, especially from Donald Trump’s US administration, has undermined efforts to prepare for another downturn.

Read more …

There’s the US, which is booming, and then there’s everyone else, who are not.

Soaring US dollar Threatens Trouble For Emerging Markets (G.)

The US dollar continued to soar in value over Wednesday night, signalling the likelihood of more interest rate rises and spelling trouble for developing countries that have borrowed heavily in the greenback. With impressive service sector data published on Wednesday and strong jobs figures in the non-farm payrolls expected on Friday, the dollar hit an 11-month high against the yen and drove US treasury yields to their highest since mid-2011. The pound slipped below $1.30. Rising US bond yields indicate that the Federal Reserve, under its hawkish chairman Jerome Powell, is likely to keep raising interest rates from their current 2.25% well into 2019. They are also unfavourable for emerging markets as they tend to draw away much-needed foreign funds while pressuring local currencies.

The Australian dollar, which is seen as a proxy for emerging Asian markets, slipped below US$0.71 and seems set to dip further. The Indian rupee fell to an all-time low against the dollar on Thursday morning of 73.77 while the Indonesian rupiah has plunged to a 20-year low. China’s currency, which has suffered as the trade war with the US has intensified, was not immune. The offshore yuan rate reached above 6.9 to the dollar. “This is a perfect storm for the rising dollar,” said Chris Weston of the online trading firm Pepperstone in Melbourne. “Strong economic performance and the Fed seen [as] happy to take rates higher. “Lots of countries have issued dollar-denominated debt and as the dollar goes higher, debt levels are exaggerated.”

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What happens after bubbles.

Stocks To Plunge More Than 40% During Next Bear Market – Stovall (CNBC)

Wall Street veteran Sam Stovall is warning stock investors the longest bull market on record will end with an epic meltdown. According to the CFRA chief investment strategist, it’s a side effect of an unprecedented business cycle. “Three conditions: Very long, very high, very expensive,” Stovall said Tuesday on CNBC’s “Futures Now.” “History would imply that be careful because now we’re likely to fall into a very deep bear market when it does finally hit with the average decline being close to 40 percent plus.” His latest thoughts came as the Dow was hitting record highs. The blue chip index is now up more than 8 percent this year. The S&P 500 is performing a tad better — up more than 9 percent for 2018.

Since the bull market began on March 9, 2009, the Dow and S&P 500 have soared more than 300 percent each. For now, Stovall doesn’t see any near-term signs that the win streak is about to end. He remains confident stocks will see a fresh string of new highs in the final months of the year. Referring to history as a guide, Stovall noted that the fourth quarter is pretty strong during midterm election years, and seasonality points to more gains. He believes it will be easy for the S&P to grab another 80 points and break above 3,000 by year-end. However, 2019 may be where the troubles begin. “A lot of the euphoria, a lot of the optimism, is already built into share prices,” he said. “How much more [in earnings] can companies deliver? Expectations are for a 22 percent gain for the entire calendar year 2018. Then it slips to a 10 percent gain in 2019. Those optimistic numbers are already built into the market.”

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What nonsense. His policies blow a huge bubble, and his speeched deflate that bubble just a little bit.

Powell Has Cost Stock-Market Investors $1.5 Trillion In 2018 – JPMorgan (MW)

Federal Reserve Chairman Jerome Powell has exacted a mighty toll from stock market investors this year, according to analysts from JPMorgan Chase. According to researchers led by quantitative analyst Marko Kolanovic, stocks have suffered around $1.5 trillion in losses following speeches from the Fed’s top dog. Powell has hosted three news conferences this year following meetings of the rate-setting Federal Open Market Committee. Kolanovic & Co. said they were followed by an average decline of 0.44 percentage point in the S&P 500. Other talks and speeches have resulted in an average fall of 0.40 percentage point, with losses coming in five of the past nine prominent speeches or Congressional testimonies he has delivered. The JPMorgan Chase chart below illustrates the moves, with testimonies represented in red and FOMC news conferences in blue, before and after the start of Powell’s comments:

To be sure, the research team acknowledges that directly attributing a market reaction to Powell’s comments is folly—in other worlds, correlation doesn’t mean causality, as former Fed Chairwoman Janet Yellen was known for saying—but the researchers note that there is an uncanny relationship between Fed chief’s remarks and market action. “While we acknowledge that it is not possible to attribute the market impact of each speech with certainty, simple math indicates that ~$1.5 trillion of U.S. equity market value was lost this year following these speeches,” they wrote in the Wednesday research note.

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Confirmation or not, there will be mayhem.

Senate Sets Key Kavanaugh Nomination Vote For Friday (ZH)

Senate Majority Leader Mitch McConnell filed a cloture on the Supreme Court nomination of Brett Kavanaugh late Wednesday, paving the way for a Friday procedural vote and – if Kavanaugh clears the procedural hurdle – a final vote as early as Saturday. McConnell touched off the process late Wednesday and announced that sometime during the evening, the FBI would deliver to an anxious Senate the potentially fateful document on claims that Kavanaugh sexually abused women, according to the AP. With Republicans clinging to a razor-thin 51-49 majority and five senators — including three Republicans — still vacillating, the conservative jurist’s prospects of Senate confirmation remained in doubt and potentially dependent on the file’s contents, which are supposed to be kept secret.

“There will be plenty of time for Members to review and be briefed on this supplemental material before a Friday cloture vote. So I am filing cloture on Judge Kavanaugh’s nomination this evening so the process can move forward, as I indicated earlier this week,” McConnell said. So far, no Democrat has said they will support Kavanaugh though Sens. Heidi Heitkamp (N.D.) and Joe Manchin (W.Va.) remain undecided. Meanwhile, GOP Sens. Susan Collins (Maine) and Lisa Murkowski (Alaska) have yet to say how they will vote on Kavanaugh. Sen. Jeff Flake (R-Ariz.) previously said he would support Kavanaugh and absent new information from the FBI’s background investigation into several sexual misconduct allegations is expected to be a yes vote, although Flake may revised his initial contract and claim that the FBI probe was not exhaustive enough.

Republicans would need two of out of the three swing votes to support Kavanaugh if every Democrat opposes him in order to get the 50 votes needed to let Vice President Pence break a tie and confirm him.

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It’s not about the White House.

White House Finds No Support in FBI Report for Claims Against Kavanaugh (WSJ)

The White House has found no corroboration of the allegations of sexual misconduct against Supreme Court nominee Brett Kavanaugh after examining interview reports from the FBI’s latest probe into the judge’s background, according to people familiar with the matter. It was unclear whether the White House, which for weeks has raised doubts about the allegations, had completed its review of the FBI interview reports. Officials were expected to be sending the FBI report to the Senate Judiciary Committee late Wednesday. Still, the White House’s conclusions from the report are not definitive at this point in the confirmation process. Senators who will decide Mr. Kavanaugh’s fate are set to review the findings on Thursday, and some of them may draw different conclusions.

The result could leave senators in much the same position as last week—faced with two witnesses providing mutually exclusive accounts and forced to decide between them. The investigation, which concluded two days before its Friday deadline, has faced mounting criticism in recent days from Democrats who have said the probe wasn’t appropriately comprehensive. Investigators spoke to one of the three women who made accusations of sexual misconduct against Judge Kavanaugh. Raj Shah, spokesman for the White House, said in a statement early Thursday morning: “The White House has received the Federal Bureau of Investigation’s supplemental background investigation into Judge Kavanaugh, and it is being transmitted to the Senate.”

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A country in mortal moral decline. The level of cynical lying is astounding. The press doesn’t call her on it. The picture(s) say it all.

Theresa May Pledges End To Austerity In Tory Conference Speech (G.)

Theresa May has made a bold pledge to bring a decade of austerity to a close, as she appealed to the public over the heads of her squabbling party to back her to deliver a Brexit deal. Speaking in Birmingham on Wednesday at the end of the Conservatives’ annual conference, which was marred by repeated clashes over Europe, May cast aside the chancellor’s concerns about the health of the country’s finances and signalled Brexit would mark an end to public spending cuts. Despite widespread speculation about her future, May also made several domestic policy announcements in an attempt to show she has not been blown off course by Brexit or noisy critics led by Boris Johnson.

They include: • Lifting the cap on local authorities borrowing to build new council homes. • Setting new targets for early cancer detection as part of a new “cancer strategy”. • Freezing fuel duty for the ninth consecutive year. But her most eye-catching pledge was the promise to bring to an end the decade-long programme of spending cuts imposed after the banking bailouts. “When we’ve secured a good Brexit deal for Britain, at the spending review next year we will set out our approach for the future,” she said. “A decade after the financial crash, people need to know that the austerity it led to is over and that their hard work has paid off.

“There must be no return to the uncontrolled borrowing of the past. No undoing all the progress of the last eight years. No taking Britain back to square one. But the British people need to know that the end is in sight. And our message to them must be this: we get it.”

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India is a huge oil importer. Rupee sinks, oil prices rise.

India’s Rupee Sinks To Record Lows., Central Bank Won’t Save It (CNBC)

The rupee’s plunge into record-low territory this year is unlikely to slow — even if India’s central bank hikes its rate this week, according to experts carefully watching the Reserve Bank of India. Analysts largely expect India, Asia’s third-largest economy, to raise its benchmark rate by 25 basis points at its meeting this week, with more increases to come this and next year. But while an interest rate hike would normally be expected to support a currency, the rupee “is in for continued losses ahead,” according to Prakash Sakpal, VP of research at Dutch bank ING. “Even if it hikes by 25 (basis points) as expected that’s unlikely to help the currency … The RBI will have to do more, though that looks unlikely on the grounds of on-target inflation and stress in the financial sector,” he said. Sakpal predicted the central bank will merely match the three U.S. Federal Reserve rate hikes this year without giving the rupee any leeway to gain against the dollar.

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Many people end up worse off.

Amazon Cuts Bonuses And Stock Awards As Minimum Wage Increases (CNBC)

Amazon’s minimum-wage increase for its hourly workers comes with a trade-off: no more monthly bonuses and stock awards. Amazon confirmed in an email to CNBC that the company is getting rid of incentive pay and stock option awards as it increases the minimum wage to $15 per hour. The company, however, stressed that the wage increase “more than compensates” for the loss in other benefits. “The significant increase in hourly cash wages more than compensates for the phase out of incentive pay and [restrictive stock units],” Amazon’s spokesperson said in an emailed statement.

“We can confirm that all hourly Operations and Customer Service employees will see an increase in their total compensation as a result of this announcement. In addition, because it’s no longer incentive-based, the compensation will be more immediate and predictable.” Additionally, workers affected by the change will get a chance to review the new pay structures and share any concerns they might have with the company, according to a person familiar with the matter. The confirmation follows multiple reports on Wednesday that some of Amazon’s warehouse employees say they will make less as a result of this change.

The Guardian said warehouse workers currently receive one Amazon share (worth $1,959) at the end of every year, on top of another single share reward every five years. Yahoo News noted that warehouse workers can earn up to 8 percent of their monthly income every month, which could be as much as $3,000 a year for some workers. Workers were notified of the change on Wednesday, according to Bloomberg. Amazon disclosed in its announcement on Tuesday that it is replacing the stock awards program with the minimum-wage increase because employees prefer the “predictability and immediacy of cash” compared with stock awards. The company didn’t say anything about the monthly bonuses.

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Laundromat.

Estonia Says Over $1 Trillion Flowed Through The Country In 2008-2017 (R.)

Banks doing business in Estonia, which has been at the center of a money-laundering scandal involving Danske Bank, handled more than $1 trillion in cross-border flows between 2008 and 2017, according to the country’s central bank. The European Union member country of just 1.3 million people has been rocked by revelations that banks there laundered money from Russia, Moldova and Azerbaijan via non-resident bank accounts. The scandal has forced lenders in Estonia and neighboring Latvia to shut down. The data on cross-border flows, first reported by Bloomberg, suggests that the scale of the money laundering through the small Baltic country may have been larger then previously thought. The news sent Nordic banking shares sharply lower.

The central bank said that between 2008 and 2017, cross-border transactions totaled 1.1 trillion euros ($1.27 trillion). The number includes all flows, including resident and non-resident transactions, a spokesman said. Estonia’s entire economic output came to about $25 billion last year – roughly the same as that of Uganda or Nepal – suggesting that much of the money flow was not directly linked to economic activity in the country. The central bank did not say whether it considered any of the flows suspicious. Bloomberg on Wednesday reported figures from the central bank saying that Estonia handled about 900 billion euros in non-resident cross-border transactions between 2008 and 2015.

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“Far greater than the threat of human depredation on grizzlies, grim as it is, is the largely ignored imminent elimination of the habitat they must have to survive.”

Grizzly: The Canary in Our Coal Mine (CP)

The decision was of tremendous import and was not made quickly but it was made decisively. Judge Dana Christensen ruled against the U.S. Fish and Wildlife Service delisting of the Yellowstone Grizzly, and stopped the trophy hunt proposed by Wyoming and Idaho, those retro redneck havens of braindead racism, industrial serfdom, and furious, moron machismo. In shutting down this corrupt, deeply cynical piece of ecological crime on the part of the U.S. Fish and Wildlife Service targeting the Yellowstone grizzly population of 700 bears, the judge kept unerringly to existing law, and ruled narrowly to render his decision unassailable. The key point is that, by law, no delisting action may be taken on a subpopulation of a threatened or endangered species that does not consider the effects on the species as a whole.

In other words, no action can be mandated on one population that does not include all others. This ruling, while it does not prevent a hunt of the entire species should such a despicable act of depravity ever be mandated, does prevent the kind of fatal assault on bear viability that killing them piecemeal–as would have been the case had the Yellowstone hunt gone ahead–represents. Because those who back this sort of blind madness are both stupid and relentless in their twisted perversity, this decision may well be appealed, and when that appeal is lost, the same lunacy may be tested in the NCDE or Cabinet-Yaak, regardless of the dead certainty that it will fail in court. This is the kind of minds one confronts in the fight for ecological sanity.

Beyond the relief and satisfaction and, yes, sheer elation, this decision has evoked in those who care about the viability of the Griz, it is impossible to ignore the dark future that looms for this world iconic creature due directly to human inability to love and live in symbiosis with the natural world. Far greater than the threat of human depredation on grizzlies, grim as it is, is the largely ignored imminent elimination of the habitat they must have to survive. It’s not complicated: without vast, connected areas of truly wild country where all the fatally destructive apparatus of human organization is absent, the bear and all top predators will be swiftly driven to extinction. This is not news. It has been common scientific knowledge for decades. And yet the combination of the utter corruption of our Capitalist politics with obscenely complicit sham enviro outfits known in the trade as Gang Green, has prevented passage of sane, adequate, and sufficient habitat legislation.

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Not in his hands, not in ours.

Attenborough: ‘Population Growth Must Come To An End’ (BBC)

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End all trade in wildlife body parts.

Humanity Is Waging A War Of Terror On Wildlife (G.)

Humanity is waging a war of terror on wildlife across the globe, according to the head of a world-leading research institute who was previously a counter-terrorism expert for the UK government. Dominic Jermey, director general of the Zoological Society of London (ZSL), also spent years in Afghanistan supporting the fight against terror, until leaving his post of UK ambassador in 2017. “Coming to ZSL, I am in a front row seat on a different kind of war, this time on wildlife,” he said in an article for the Guardian. “[It is] a war with catastrophic impacts on people and animals.” “While war and terror atrocities make daily headlines, the terror being waged on wildlife slides under the radar,” said Jermey, ahead of a global summit on tackling the illegal wildlife trade in London in October.

Other leaders are urging rapid action, with Gabon’s president, Ali Bongo, calling the crisis “a blight on humanity” and UK environment secretary Michael Gove saying the “massive global problem” needs the same scale of international response being taken to fight climate change. Illegal hunting and the destruction of wild habitat has resulted in the start of what many scientists consider the sixth mass extinction of life to occur in the Earth’s four-billion-year history. Over 80% of all mammals and half of plants are thought to have been lost since the rise of human civilisation.

Wildlife crime harms both people and animals, said Jermey: “The annihilation of wildlife by organised criminal gangs is violent, bloody, corrupt and insidious. It robs communities of their resources, their opportunities and their dignity. And we are all losers as the creatures with which we share this planet are pillaged to extinction.” One hundred million sharks are killed every year, mostly for their fins, and 20,000 African elephants for their ivory, he said. Losses have been greatest in recent decades, Jermey said, with a 58% decline in wildlife since 1970: “That’s like losing the entire [human] population of Asia from the world.”

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Jul 042018
 


Edward Hopper People in the sun 1963

 

The Velocity of Money… and Revolution (Brin)
Ecology: The Keystone Science (Hawes)
Facebook Flags, Removes Declaration of Independence Text as Hate Speech (Rea.)
Theresa May To Pitch ‘Softest Possible Brexit’ Plan (R.)
UK Government ‘Will Miss Fuel Poverty Target By More Than Six Decades’ (G.)
‘Unknown Substance’ Leaves Pair Critically Ill In Salisbury Hospital (G.)
As The State Is Dismantled, Who Will Save Britain’s Wildlife? (Monbiot)
City Properties Should Be Homes For People First – Not Investments (G.)
Ecuador Wants Ex-President Correa Extradited (DW)
Most Of Europe’s Rivers And Lakes Fail Water Quality Tests (G.)
More Than 200 Migrants Drown In Mediterranean In Three Days (G.)
Albatross

 

 

Lowest since 1949.

The Velocity of Money… and Revolution (Brin)

A recent Mauldin missive correctly cites the most disturbing symptom of trouble in the U.S. economy: a plummet in Money Velocity (MV). To quote John: “You may be asking, what exactly is the velocity of money? Essentially, it’s the frequency with which the same dollar changes hands because the holders of the dollar use it to buy something. Higher velocity means more economic activity, which usually means higher growth. So it is somewhat disturbing to see velocity now at its lowest point since 1949, and at levels associated with the Great Depression.” Somewhat… disturbing? That’s at-best an understatement, since no other economic indicator is as telling. MV is about a bridge repair worker buying furniture, that lets a furniture maker get dentures, so a dentist can pay her cleaning lady, who buys groceries….

There are rare occasions when MV can be too high, as during the 1970s hyper-inflation, when Jimmy Carter told Paul Volcker “Cure this, and to hell with my re-election.” But those times are rare. Generally, for all our lives, Money Velocity has been declining into dangerous sluggishness, falling hard since the 80s, rising a little in the 90s, then plummeting. Alas, while fellows like Hunt and Mauldin are at last pointing at this worrisome symptom, they remain in frantic denial over the cause. Absolutely, it is wealth disparity that destroys money velocity. Bridge repair workers and dentists would spend money – if they had any. We have known – ever since Adam Smith gazed across the last 4000 years – that a feudal oligarchy does not invest in productive capacity.

Nor does it spend much on goods or services that have large multiplier effects (that give middle class wage earners a chance to keep money moving). Instead, aristocrats have always tended to put their extra wealth into rentier (or passive rent-seeking) property, or else parasitic-crony-vampiric cheating through abuse of state power. Do not let so-called “tea party” confederate lackeys divert you. The U.S. Revolution was against a King and Parliament and royal cronies who commanded all American commerce to pass through their ports and docks and stores, who demanded that consumer goods like tea be sold through monopolies and even paper be stamped to ensure it came from a royal pal. Try actually reading the Declaration of Independence. “Taxation without representation” was about how an oligarchy controlled Parliament through jiggered districts and cheating, and used that power to funnel wealth upward.

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“The gravy train is running out of steam..”

Ecology: The Keystone Science (Hawes)

A missing piece from most critiques of modern capitalism revolves around the misunderstanding of ecology. To put it bluntly, there will be no squaring the circle of mass industrial civilization and an inhabitable Earth. There is no way for energy and resource use, along with all the strife, warfare, and poverty that comes along with it, to continue under the business as usual model that contemporary Western nations operate under. There is also the problem of constructing millions of solar panels and gigantic wind farms to attempt to bring the entire world’s population to a middle class existence based on a North American, or even European levels of energy use.

All of the hypothetical robots and artificial intelligence to be constructed for such a mega-endeavor needed to enact such a project would at least initially rely on fossil fuels and metals plundered from the planet, and only lead to more rapacious destruction of the world. The dominant technological model is utterly delusional. Here I would urge each of us to consider our “human nature” (a problematic term, no doubt) and the costs and the manner of the work involved: if each of us had to kill a cow for food, would we? If each of us had to mine or blast a mountain for coal or iron, or even for a wind turbine, would we do it? If each of us had to drill an oil well or bulldoze land for a gigantic solar array next to many endangered species or a threatened coral reef, would we?

My guess would be no, for the vast majority of the population. Instead, we employ corporations and specialists to carry out the dirty work in the fossil fuel industries and animal slaughtering, to name just a few. Most of us in the West have reaped the benefits of such atrocities for the past few centuries of the industrial revolution. That era is coming to a close, and there’s no turning back. The gravy train is running out of steam, and our age of comfort and the enslavement of a global proletariat to produce and gift-wrap our extravagances will hopefully be ending shortly, too. Some may romanticize loggers, factory workers, oil drillers, coal miners, or steel foundries but the chance is less than a needle through a camel’s eye that those jobs are coming back in a significant way.

Overpopulation in much of the world continues to put strain upon habitat and farmlands to provide for the Earth’s 7.5 billion and growing humans. Tragically, many with the most influence on the Left today, such as Sanders, Corbyn, and Melenchon want to preserve industrial civilization. Theirs is an over-sentimental outlook which warps their thinking to want to prop up a dying model in order to redistribute wealth to the poor and working classes. Empathy for the less fortunate is no doubt a good thing, but the fact remains that the real wealth lies in our planet’s natural resources, not an artificial economy, and its ability to regenerate and provide the fertile ground upon which we all rely. If we follow their narrow path, we are doomed.

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Happy 4th of July, Zuck.

Facebook Flags, Removes Declaration of Independence Text as Hate Speech (Rea.)

America’s founding document might be too politically incorrect for Facebook, which flagged and removed a post consisting almost entirely of text from the Declaration of Independence. The excerpt, posted by a small community newspaper in Texas, apparently violated the social media site’s policies against hate speech. Since June 24, the Liberty County Vindicator of Liberty County, Texas, has been sharing daily excerpts from the declaration in the run up to July Fourth. The idea was to encourage historical literacy among the Vindicator’s readers. The first nine such posts of the project went up without incident.

“But part 10,” writes Vindicator managing editor Casey Stinnett, “did not appear. Instead, The Vindicator received a notice from Facebook saying that the post ‘goes against our standards on hate speech.'” The post in question contained paragraphs 27 through 31 of the Declaration of Independence, the grievance section of the document wherein the put-upon colonists detail all the irreconcilable differences they have with King George III. Stinnett says that he cannot be sure which exact grievance ran afoul of Facebook’s policy, but he assumes that it’s paragraph 31, which excoriates the King for inciting “domestic insurrections amongst us, and has endeavored to bring on the inhabitants of our frontiers, the merciless Indian Savages.”

The removal of the post was an automated action, and Stinnett sent a “feedback message” to Facebook with the hopes of reaching a human being who could then exempt the Declaration of Independence from its hate speech restrictions. Fearful that sharing more of the text might trigger the deletion of its Facebook page, The Vindicator has suspended its serialization of the declaration. In his article, Stinnett is remarkably sanguine about this censorship. While unhappy about the decision, he reminds readers “that Facebook is a business corporation, not the government, and as such it is allowed to restrict use of its services as long as those restrictions do not violate any laws. Plus, The Vindicator is using Facebook for free, so the newspaper has little grounds for complaint other than the silliness of it.”

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Time to place a bet that Brexit will not happen.

Theresa May To Pitch ‘Softest Possible Brexit’ Plan (R.)

British Prime Minister Theresa May will present to her team a new proposal for trade with the European Union that in effect comprises the “softest possible Brexit”, ITV’s political editor reported on Tuesday, citing sources. Britain’s exit from the bloc next year will mark its biggest trading and foreign policy shift in almost 50 years. But May has struggled to unite pro- and anti-Brexit camps in her cabinet and party around a plan for future trade with the EU. So far, May’s advisers have come up with two options, neither of which have the full support of her party. Both have already been dismissed in principle by EU officials.

With the clock ticking toward a March departure date and passions running high, May is holding a meeting of senior ministers on Friday at which she will pitch a compromise third option, ITV political editor Robert Peston said. She will ask her cabinet to back a plan that would see Britain collect duties on imports at the rate of the EU’s common customs tariff, in effect making Britain the EU’s tax collector, according to Peston. May and her officials believe this would avoid the need for border checks between the Republic of Ireland and Northern Ireland, Peston wrote in a Facebook post.

Opposition lawmaker Hilary Benn, who chairs parliament’s Brexit committee, said he thought it was “unlikely that the EU will agree to outsource the collection of its own tax revenues to a third country”. Peston also said May’s proposal would include IT and camera technology to help reduce bureaucracy around the border, as well as British alignment with EU standards for goods and agricultural products. On services, which make up the bulk of Britain’s economy, Peston said May wants to offer the EU preferential rights for its citizens who want to live and work in Britain, in exchange for better access to the EU’s services market.

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Thatcher on steroids.

UK Government ‘Will Miss Fuel Poverty Target By More Than Six Decades’ (G.)

The government will miss a key fuel poverty target by more than half a century at the current rate homes are being insulated and upgraded, a leading thinktank has warned. Ministers are drastically off course on ensuring as many fuel-poor homes – those which people cannot afford to keep adequately heated – as possible are upgraded to energy efficiency band C by 2030 in England, according to the IPPR. The target will not be met by 2091 at the earliest, a report by the thinktank found. England has about 2.5m fuel-poor households, and the hardship they face paying energy bills is set to rise this year because of price hikes.

“At its current rate of delivery, hundreds of thousands of fuel-poor households will be left out in the cold until the end of the century,” said Luke Murphy, associate director for energy, climate, housing and infrastructure at IPPR. The thinktank said the main scheme for tackling the problem – the energy companies obligation (ECO) – was not working, and called on the government to reform it. It is estimated only 11% fuel-poor homes had reached band C by 2017, up from 8% in 2015. The IPPR looked at the rate that energy efficiency measures were installed under the ECO between April 2017, when the scheme was rebooted, and February 2018.

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Give me a break.

‘Unknown Substance’ Leaves Pair Critically Ill In Salisbury Hospital (G.)

A major incident has been declared in Wiltshire after it was suspected two people might have been exposed to an unknown substance in Amesbury. The man and woman, both in their 40s, were in a critical condition at Salisbury district hospital, Wiltshire police said. A number of scenes in the Amesbury and Salisbury area were cordoned off as a precaution, although the force said it was not yet clear if they were the victims of a crime. One of the sites cordoned off and guarded by three officers was the town’s baptist church, a modern red brick building, a few minutes’ drive away from the address where the man and woman were found.

Local radio station Spire FM reported that Queen Elizabeth Gardens in the centre of Salisbury had also been sealed off as part of the investigation. Public Health England (PHE) advised that it did not believe there to be a “significant health risk” to the wider public, although its advice was being continually assessed. The incident comes exactly four months after the former Russian spy Sergei Skripal and his daughter, Yulia, were left poisoned on 4 March by a suspected military nerve agent in Salisbury, around eight miles from Amesbury. Police said the man and woman were found unconscious at an address in Muggleton Road on Saturday evening and it was initially believed that they had taken illegal drugs, however further tests were being carried out.

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Absolutely nobody.

As The State Is Dismantled, Who Will Save Britain’s Wildlife? (Monbiot)

It feels like the collapse of the administrative state – and this is before Brexit. One government agency after another is losing its budget, its power and its expertise. The result, for corporations and the very rich, is freedom from the restraint of law, freedom from the decencies they owe to other people, freedom from democracy. The public protections that constrain their behaviour are being dismantled. An example is the cascading decline in the protection of wildlife and environmental quality. The bodies charged with defending the living world have been so enfeebled that they now scarcely exist as independent entities. Natural England, for example, has been reduced to a nodding dog in the government’s rear window.

Its collapse as an autonomous agency is illuminated by the case that will be heard next week in the high court, where two ecologists, Tom Langton and Dominic Woodfield, are challenging its facilitation of the badger cull. That the cull is a senseless waste of life and money is well established, but this is only one of the issues being tested. Another is that Natural England, which is supposed to assess whether the shooting of badgers causes wider environmental harm, appears incapable of discharging its duties.

As badger killing spreads across England, it intrudes upon ever more wildlife sites, some of which protect animals that are highly sensitive to disturbance. Natural England is supposed to determine whether allowing hunters to move through these places at night and fire their guns has a detrimental effect on other wildlife, and what the impact of removing badgers from these ecosystems might be. The claimants allege that it has approved the shooting without meaningful assessments.

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Sadiq Khan and Ada Colau, mayors of London and Barcelona. Don’t understand that social housing doesn’t solve the problem.

City Properties Should Be Homes For People First – Not Investments (G.)

For a number of years, cities around the world have been facing increasingly global and aggressive speculation in their property markets – from speculators who see housing in our cities as an asset from which to profit, rather than homes for the people we represent. In many cases, speculators take decisions from thousands of miles away. Yet for us their impact on the life and soul of our cities is very close to home. Our city centres risk being hollowed out as vibrant communities are displaced, local shops are closed, and the cost of housing rises exorbitantly. Our community groups and local government, as the part of civic life closest to local people and the most sensitive to their everyday problems, have often been the first to warn of the risks that these practices bring with them regarding the very survival of our cities.

For city leaders to be able to tackle this problem, they urgently need greater resources and powers both to increase their stocks of social-rented and other genuinely affordable housing and to strengthen tenants’ rights. Cities are not simply a collection of buildings, streets and squares. They are also the sum of their people. They are the ones who help create social ties, build communities and evolve into the places where we are so proud to live.

That is why we are determined to change the way that housing works in the cities we represent. We are building more social-rented and other genuinely affordable homes, doing all we can to strengthen the rights of tenants, and clamping down on bad practices of developers and landlords wherever we are able to. But we face a complex problem and one that operates at a global level. We still lack the powers and resources that would allow us properly to regulate the housing market, to protect tenants’ rights to remain in their homes, and to make homelessness and rough sleeping things of the past.

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Punished for supporting Assange?!

Ecuador Wants Ex-President Correa Extradited (DW)

Ecuador requested an Interpol red notice for ex-President Rafael Correa on Tuesday, hoping to have him extradited from Belgium. Correa claims the decision to request his detention and extradition from Belgium are part of an attempt by his former ally, the current president Lenin Moreno, to humiliate him and make him suffer. Correa had been ordered by Ecuadorean Judge Daniella Camacho to present himself before an Ecuadorean court every two weeks as part of the proceedings into the attempted kidnapping in Colombia of former opposition lawmaker Fernando Balda in 2012.

The former premier, whose wife is Belgian, has been living in Belgium since July last year, and has reported to the consulate in Brussels every 15 days starting June 2. On Tuesday, the judge claimed her orders for Correa to present himself to a court had been violated. According to a statement on Twitter, the public prosecutor requested the pre-trial detention of Correa for non-compliance. He called for Interpol to be notified through a red alert for Correa’s capture and extradition.

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Our waters are for dumping garbage.

Most Of Europe’s Rivers And Lakes Fail Water Quality Tests (G.)

The vast majority of Europe’s rivers, lakes and estuaries have failed to meet minimum ecological standards for habitat degradation and pollution, according to a damning new report. Only 40% of surface water bodies surveyed by the European Environmental Agency (EEA) were found to be in a good ecological state, despite EU laws and biodiversity protocols. England was one of the poorer performers to emerge from the State of Our Waters report, which studied 130,000 waterways. The EU’s environment commissioner, Karmenu Vella, said there had been a slight improvement in freshwater quality since 2010. “But much more needs to be done before all lakes, rivers, coastal waters and groundwater bodies are in good status,” he added. “Tackling pollution from agriculture, industry and households requires joint efforts from all water users throughout Europe.”

Scotland dramatically outperformed England in the clean water stocktake which covers the 2010-15 period, with water standards similar to much of Scandinavia. Precise comparisons are difficult as reporting methodologies vary across Europe but water quality in England was in the bottom half of the European table, and had deteriorated since the last stocktake in 2010. Peter Kristensen, the report’s lead author told the Guardian that higher population densities, more intensive agricultural practices, and better monitoring of waterways had all contributed to the result. “England is comparable to countries in central Europe with a high proportion of water bodies failing to reach good status,” he said. “The situation is much better in Scotland, where only around 45% of sites failed [to meet minimum standards].”

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It’s actually getting worse.

More Than 200 Migrants Drown In Mediterranean In Three Days (G.)

More than 200 migrants have drowned at sea in the Mediterranean in the past three days, taking the death toll for the year to more than 1,000 and prompting fears that human traffickers are taking greater risks because of a crackdown imposed by the Italian government and the Libyan coastguard. The UN refugee agency in Tripoli reported on Monday that 276 refugees and migrants were disembarked in the Libyan capital on Monday, including 16 survivors of a boat carrying 130 people, of whom 114 were still missing at sea. Further shipwrecks were found at the weekend. On Tuesday the Libyan coastguard reported a further seven deaths and a further 123 migrants rescued.

The 1,000 deaths landmark was reached on 1 July. It is the fourth year in succession that more than 1,000 migrants have died trying to reach Europe via the Mediterranean Sea. Othman Belbeisi, the chief of mission in Libya at the International Organization for Migration (IOM), claimed the “alarming increase” in deaths at sea was out of the ordinary. “Smugglers are exploiting the desperation of migrants to leave before there are further crackdowns on Mediterranean crossings by Europe,” he said. Overall the number of migrants reaching Italy by sea is down on last year’s figures, but the proportion of those trying to reach Italy that are drowning is rising, prompting claims that the stricter Italian government policy is to blame.

Figures prepared by Matteo Villa, a research fellow at the Italian thinktank ISPI, show that so far in 2018 only half of those leaving Libya have made it to Europe, down from 86% last year. The data shows 44% have been brought back by the Libyan coastguard, compared with 12% last year. A total of 4.5% died or had gone missing, compared with 2.3% last year. But in June, almost one in 10 died or went missing upon departure from the Libyan coast – the highest proportion ever.

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I can’t watch this.

Albatross

In the heart of the great Pacific, a story is taking place that may change the way you see everything. ALBATROSS is offered as a free public artwork. Watch the 3-minute trailer now:

Read more …

Mar 242018
 
 March 24, 2018  Posted by at 10:07 am Finance Tagged with: , , , , , , , , , ,  


Pablo Picasso Don Quixote 1955

 

EU In ‘State Of Denial’ Over Destructive Impact Of Farming On Wildlife (G.)
End the Fed. Are You Nuts? (Claire Connelly)
Stocks Suffer Biggest Weekly Drop In More Than 2 Years (BI)
The Stuff The US Imports From China That Causes A Huge Trade Deficit (MW)
Unspooling (Kunstler)
The Rise of the Trembling Hands (David Stockman)
2.8 Million Hongkongers To Get Cash Handout Of Up To HK$4,000 Each (SCMP)
Seven Days That Shattered Facebook’s Facade (G.)
UK Parties Spend Big On Facebook (G.)
Death Of The High Street (Ind.)

 

 

Denial my ass. What’s happening is the EU spends billions in taxpayers money to subsidize the complete demise of their ecosystems as well as their food supplies. The taxpayers may be in denial, but Brussels is not. The Bayer/Monsanto decision is not some stand-alone story.

EU In ‘State Of Denial’ Over Destructive Impact Of Farming On Wildlife (G.)

Europe’s crisis of collapsing bird and insect numbers will worsen further over the next decade because the EU is in a “state of denial” over destructive farming practices, environmental groups are warning. European agriculture ministers are pushing for a new common agriculture policy (CAP) from 2021 to 2028 which maintains generous subsidies for big farmers and ineffectual or even “fake” environmental or “greening” measures, they say. In a week when two new studies revealed drastic declines in French farmland birds – a pattern repeated across Europe – the EU presidency claimed that the CAP continued to provide safe food while defending farmers and “protecting the environment”.

“The whole system is in a state of denial,” said Ariel Brunner, head of policy at Birdlife Europe. “Most agriculture ministers across Europe are just pushing for business as usual. The message is, keep the subsidies flowing.” Farm subsidies devour 38% of the EU budget and 80% of the subsidies go to just 20% of farmers, via “basic payments” which hand European landowners £39bn each year. Because these payments are simply related to land area, big farmers receive more, can invest in more efficient food production – removing hedgerows to enlarge fields for instance – and put smaller, less intensive farmers out of business. France lost a quarter of its farm labourers in the first decade of the 21st century, while its average farm size continues to rise.

A smaller portion – £14.22bn annually – of EU farm subsidies support “greening” measures but basic payment rules work against wildlife-friendly farming: in Britain, farmers can’t receive basic payments for land featuring ponds, wide hedges, salt marsh or regenerating woodland. Signals from within the EU suggest that the next decade’s CAP – which will be decided alongside the EU budget by 2019 – will continue to pay farmers a no-strings subsidy, while cash for “greening”, or wildlife-friendly farming, may even be cut. Birdlife Europe said the “greening” was mostly “fake environmental spending” and wildlife-friendly measures had been “shredded” by “loophole upon loophole” introduced by member states.

[..] This week studies revealed that the abundance of farmland birds in France had fallen by a third in 15 years – with population falls intensifying in the last two years. It’s a pattern repeated across Europe: farmland bird abundance in 28 European countries has fallen by 55% over three decades, according to the European Bird Census Council. Conservationists say it’s indicative of a wider crisis – particularly the decimation of insect life linked to neonicotinoid pesticides.

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Not a general opinion.

End the Fed. Are You Nuts? (Claire Connelly)

We often see comments on this website from people who want to ‘end the Fed’ because they think it would address the rampant corruption and collusion of governments, central banks and the private sector. In reality, ending the Fed – or any one of the central banks outside of the European Union – would simply give more power to the banks and wealthy elites whose relationships with governments and central banks are already inappropriate. Abolishing central banks would simply formalise this arrangement, undermining democracy and removing the ability of governments to respond to changes in the domestic and global economy.

The claim that banks are privately owned is factually incorrect. With the exception of the EU which began life as an industrial cartel, created and controlled by Europe’s major heavy industries (coal, steel, car manufacturers and farmers), central banks are created by and belong to federal governments. Even the ECB is owned by the central banks of EU member countries, which in turn are owned by their governments, even if most do not have the right to issue their own currencies. The US Federal Reserve was created by Congress, and its chairman is appointed by the President; the Treasury receives nearly all its profits. The same applies to the Bank of England, the Reserve Bank of Australia, Bank of Canada etc which were created by their respective Parliaments.

What do advocates of ‘ending the Fed’ think will happen if the US got rid of central banking altogether? What currency would it use exactly? The only possibility would be to replace the Fed with another, private ‘Fed’ in which case central banks would go from being co-opted by the private sector, to being formally controlled by it. Ending the Fed would make central banks the property of the private sector, which, ironically, some people believe is already the case. So it’s a little bizarre that they think demolishing central banks would somehow address corruption and malfeasance. One need only look at what happened to Greece to understand what happens when a government gives up its central bank, and the right to issue its own currency. Ending central banking is the nail in the coffin of democracy. It is giving capitalism exactly what it wants: the complete takeover of the state by the market.

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What happens inside bubbles.

Stocks Suffer Biggest Weekly Drop In More Than 2 Years (BI)

US stocks sank in trading on Friday afternoon, pushing the S&P 500 to its biggest weekly decline in two years amid concerns about US trade policy and retaliation from China. The Dow Jones industrial average fell 360 points, or 1.5%, to its lowest level since November 22. The S&P 500 fell 56 points, or 2.13%, while the Nasdaq fell 148 points, or 2.23%. On Thursday, China announced planned to impose reciprocal tariffs on 128 US products that had an import value of about $3 billion last year. US President Donald Trump had earlier announced new tariffs on $50 billion worth of Chinese goods, with the aim of reducing the $375 billion trade deficit the US has with China.

The financials sector was the biggest loser among the 11 on the S&P 500. On the Dow, Boeing and Nike were the only stocks in positive territory. The drop on Friday pushed the S&P 500 9% below its peak in late January, just short of the 10% threshold at which the index enters a correction. Meanwhile, Dropbox soared during its trading debut. Shares of the cloud-computing company gained by as much as 44% in trading amid the broader market’s weakness. Treasurys rose slightly, with the 10-year yield up by less than 1 basis point, at 2.823%.

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The US will want to halt the selling off of technology.

The Stuff The US Imports From China That Causes A Huge Trade Deficit (MW)

President Donald Trump intends to apply tariffs on Chinese goods worth up to $60 billion in an effort to slash the huge U.S. trade deficit with China and protect sensitive technologies. It won’t be easy. It might even be impossible. The U.S. has run large deficits with China for years and in some cases no longer produces certain goods such as consumer electronics that are popular with Americans. In 2017, the U.S. posted a $375.2 billion deficit in goods with China. Most glaring is the huge deficit in computers and electronics, but the U.S. is a net importer from China in most market segments except for agriculture. China has been a big buyer of American-grown soybeans and other crops. Planes made by BA also are a product in demand in China.

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Little by little, the pieces fall together.

Unspooling (Kunstler)

With spring, things come unstuck; an unspooling has begun. The turnaround at the FBI and Department of Justice has been so swift that even The New York Times has shut up about collusion with Russia — at the same time omitting to report what appears to have been a wholly politicized FBI upper echelon intruding on the 2016 election campaign, and then laboring stealthily to un-do the election result.

The ominous silence enveloping the DOJ the week after Andrew McCabe’s firing — and before the release of the FBI Inspector General’s report — suggests to me that a grand jury is about to convene and indictments are in process, not necessarily from Special Prosecutor Robert Mueller’s office. The evidence already publicly-aired about FBI machinations and interventions on behalf of Hillary Clinton and against Donald Trump looks bad from any angle, and the wonder was that it took so long for anyone at the agency to answer for it.

McCabe is gone from office and, apparently hung out to dry on the recommendation of his own colleagues. Do not think for a moment that he will just ride off into the sunset. Meanwhile, Peter Strzok, Lisa Page, Bruce Ohr, have been sent to the FBI study hall pending some other shoes dropping in a grand jury room. James Comey is out hustling a book he slapped together to manage the optics of his own legal predicament (evidently, lying to a congressional committee). And way out in orbit beyond the gravitation of the FBI, lurk those two other scoundrels, John Brennan, former head of the CIA (now a CNN blabbermouth), and James Clapper, former Director of National Intelligence, a new and redundant post in the Deep State’s intel matrix (and ditto a CNN blabbermouth). Brennan especially has been provoked to issue blunt Twitter threats against Mr. Trump, suggesting he might be entering a legal squeeze himself.

None of these public servants have cut a plea bargain yet, as far as is publicly known, but they are all, for sure, in a lot of trouble. Culpability may not stop with them. Tendrils of evidence point to a coordinated campaign that included the Obama White House and the Democratic National Committee starring Hillary Clinton. Robert Mueller even comes into the picture both at the Uranium One end of the story and the other end concerning the activities of his old friend, Mr. Comey. Most tellingly of all, Attorney General Jeff Sessions was not shoved out of office but remains shrouded in silence and mystery as this melodrama plays out, tick, tick, tick.

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The old Washington insider doesn’t mince words.

The Rise of the Trembling Hands (David Stockman)

We call it State-Wreck and its been heading this way for a long-time. But the Donald is the coup d’ grace in flesh and blood. He will soon have the Imperial City tied in knots, and that’s even if he doesn’t fire Robert Mueller, which most surely he should and might. Either way, there is a massive partisan blood-letting coming and the ordinarily trans-partisan Deep State will be right in the middle of the brawl. That’s because partisan Democratic hacks – led by the detestable former CIA director John Brennan – got way beyond their skis, and baldly high-jacked the tools of the Deep State in a desperate effort to prevent the election and inauguration of Donald Trump. But the unveiling of what lies in its vasty deep is now beyond recall.

The very real attempt by the Obama/Clinton leadership of the CIA/FBI/NSC/NSA/DNI/State/Homeland Security complex to meddle in the 2016 election against the Donald will all come out – even as the Dems and their legal trolls on Mueller’s witch-hunting squad become ever more shrill in their McCarthyite hysteria about the Russians. Moreover, the coming quasi-civil war will potentially bring both indictments of Obama’s election meddlers and a counter-reaction from a Mueller based campaign to oust the Donald. Indeed, what portends in the months ahead is more incendiary than anything to rock the Imperial City during the last century, at least. But here’s the thing. This is not happening in a splendid vacuum with no import for the other end of the Acela Corridor.

In fact, the entire state-driven economic and financial fantasy that has been building for more than 30 years is now squarely in harm’s way. The former always depended upon Washington based stimulus, subventions, bailouts and booty. But now having attained an asymptotic high, the Great Bubble is stranded with no Washington fixers to keep it going; instead, it is fixing to slide into a long night of deflation, disorder and decay. That is to say, we printed 2870 on the S&P 500, $19.7 trillion of GDP and $97 trillion of household net worth, but those stats weren’t the embodiment of sustainable capitalist prosperity; they were the fruit of a $68 trillion national LBO, a central bank-driven financial asset bubble that has no historical antecedent and the rise of an Imperial Deep State in Washington that is a mortal threat to both democracy and national solvency.

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“..an effort to try to respond to the needs of the community in a proactive manner.”

2.8 Million Hongkongers To Get Cash Handout Of Up To HK$4,000 Each (SCMP)

Over one-third of Hongkongers, or 2.8 million people who did not benefit from the budget announced last month, will get a cash handout of up to HK$4,000 (US$510) each from the government, Financial Secretary Paul Chan Mo-po said on Friday. Chan’s announcement confirmed reports – including one by the Post – that the government would share the city’s HK$138 billion surplus more broadly. While it faced intense political and public pressure to do more for the needy, the government’s decision to fork out an extra HK$11 billion in handouts was not a U-turn, Chief Executive Carrie Lam Cheng Yuet-ngor insisted.

“First of all, I wouldn’t say that we are bowing to pressure, and secondly, we have not said we would not do something which we describe as a ‘share and care’ programme,” she said. Chan said he had heard the community “loud and clear”. “I think as government officials we need to have the capacity to step back and reflect the various views expressed and see how we may be able to better serve our people,” he explained. “So this scheme … is an effort to try to respond to the needs of the community in a proactive manner.” The money will be given to Hong Kong residents aged 18 years or above (as of December 31 this year) who do not own property, do not receive any government allowances, and will not pay income tax for the financial year ending next week.

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The Guardian is gradually shifting its story away from Cambridge Analytica. A bit late?

Seven Days That Shattered Facebook’s Facade (G.)

There are thousands of other developers, including the makers of dating app Tinder, games such as FarmVille as well as consultants to Barack Obama’s 2012 presidential campaign, who slurped huge quantities of data about users and their friends – all thanks to Facebook’s overly permissive “Graph API”, the interface through which third parties could interact with Facebook’s platform. Facebook opened up in order to attract app developers to join Facebook’s ecosystem at a time when the company was playing catch-up in shifting its business from desktops to people’s smartphones. It was a symbiotic relationship that was critical to Facebook’s growth.

“They wanted to push as much of the conversation, ad revenue and digital activity as possible and made it extremely friendly to app developers,” said Jeff Hauser, of the Center for Economic and Policy Research. “Now they are complaining that the developers abused them. They wanted that. They were encouraging it. They may now regret it but they knowingly unleashed the forces that have led to this lack of trust and loss of privacy.” The terms were updated in April 2014 to restrict the data new developers could get hold of, including to people’s friends’ data, but only after four years of access to the Facebook firehose. Companies that plugged inbefore April 2015 had another year before access was restricted.

“There are all sorts of companies that are in possession of terabytes of information from before 2015,” said Jeff Hauser of the Center for Economic Policy and Research. “Facebook’s practices don’t bear up to close, informed scrutiny nearly as well as they look from the 30,000ft view, which is how people had been viewing Facebook previously.” [..] “This is the biggest issue I’ve ever seen any technology company face in my time,” said Roger McNamee, Zuckerberg’s former mentor. “It’s not like tech hasn’t had a lot of scandals,” he said, mentioning the Theranos fraud and MiniScribe packing actual bricks into boxes instead of hard drives. “But no one else has played a role in undermining democracy or the persecution of monitories before. This is a whole new ball game in the tech world and it’s really, really horrible.”

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Isn’t it wonderful? When are people going to demand they stop doing this? But no political party can resist the temptation of influencing voters behavior, by whatever means.

UK Parties Spend Big On Facebook (G.)

Figures released this week by the Electoral Commission are the simplest way to demonstrate the growing influence of Facebook on British politics. Political parties nationally spent about £1.3m on Facebook during the 2015 general election campaign; two years later the figure soared to £3.2m. In each election it was the Conservatives that spent the most, with decidedly mixed results. For David Cameron’s successful re-election in 2015, the party spent £1.2m; that rose to £2.1m in 2017, but it was far less help to Theresa May. Sam Jeffers, the co-founder of Who Targets Me, a body that tries to monitor political Facebook advertising, says the difference stems from the fact that the Conservatives had a better overall strategy in 2015.

“In 2015 they targeted Lib Dem seats in the south-west; in 2017 they targeted Labour seats in London boroughs, spending money on seats they thought they would win but didn’t,” he says. Nevertheless, the Conservative success was so striking in 2015 that every other political party and campaign group felt it had to follow suit. The idea of marketing on Facebook was brought to the UK by the US political consultant Jim Messina, the campaign manager for Barack Obama in 2012, who Tory officials like to say boasted he had “1,000 pieces of data on every voter in the UK”.

It was a big change on the traditional model of supplementing canvass returns with broad demographic data supplied by Experian’s Mosaic, which divides people into groups such as “metro high flyers”, “classic grandparents” and “disconnected youth” – the kind of data used by all the main parties to help deliver targeted mailshots. The idea rapidly took hold – and was arguably tailor-made for the EU referendum in 2016. One of the reasons why the Conservatives made heavy use of Facebook marketing was because its canvassing operation is far weaker than Labour’s, forcing it to try to identify potential voters using technology.

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All sorts of theories and explanations; just admitting that people are dead broke remains a big taboo.

Death Of The High Street (Ind.)

On Friday, Next – broadly considered a bellwether of the UK fashion retail market – reported a punishing slump in profits, attributing the fall to a weak clothing market coinciding with “self-inflicted product ranging errors and omissions”. “In many ways,” Next said, “2017 was the most challenging year we have faced for 25 years.” Earlier in the week data from the Office for National Statistics showed that retail sales volumes had picked up by 0.8 per cent in February – which was significantly ahead of analyst expectations – but forecasters and economists are pessimistic. Volumes contracted in January, meaning that British retailers this year suffered their worst start to any year since 2013 and the headwinds are still raging.

Commenting on the latest data, economists Sreekala Kochugovindan and Fabrice Montagne at investment bank Barclays said that despite some relief in February, the rebound was not enough to offset the “Christmas drag”, when consumers largely shunned the high street in favour of the internet. And HSBC economist Elizabeth Martins dubbed February’s reading “the bounce before the beast”. She warned that figures next month would likely be additionally burdened by adverse weather conditions that disrupted transport links and kept shoppers from leaving their homes during the early part of March. “The data are better than expected, but considering they do not take into account the effects of the snow at all, they are not brilliant,” she said. “They reflect a small increase after two months of falls, and still point to underlying weakness in household spending.”

The British Retail Consortium, the trade association representing the UK retail sector, has also warned that sales are likely to remain sluggish throughout the rest of the year – a prognosis that will particularly pain shops like Ali’s on Oxford Street that sell items considered non-essential, like clothes, furniture and electronics, and those with a with a large bricks-and-mortar presence. Sarah Garrett, a 51-year old self-employed company director who lives in Notting Hill, speaks for many when she says that she’s of the opinion that “the high street is now a thing of the past”. “Online is definitely where it is at. Maybe I am lazy, but I just prefer home deliveries [from the likes of] Amazon,” she says. “Who wants to lug heavy bags from the supermarket anyway?”

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Mar 312017
 
 March 31, 2017  Posted by at 8:59 am Finance Tagged with: , , , , , , , , , ,  Comments Off on Debt Rattle March 31 2017


Rene Magritte Memory 1944

 

Last Two Times After US Reported Data Like This, Stocks Crashed (WS)
One Third Of US Car Loans Is Deep Subprime (Roberts)
The Fed Is Bedeviled by Keynes’s Paradox (DiMartino Booth)
Flynn Lawyer: Client Wants Assurances Against ‘Witch-Hunt’ Prosecution (USAT)
Who Gains When Income Grows? (Tcherneva)
Puerto Rico Is Starting To Look An Awful Lot Like Greece (Setser)
Former Australia PM: Neo-Liberalism Has Run Into A Dead End (SMH)
Why Australia Hasn’t Had a Recession in Over 25 Years (BBG)
Why Australia Is Addicted To Interest-Only Loans (AFR)
Juncker In Jaw-Dropping Threat To Trump Over Support For Brexit (Exp.)
The European Central Bank Doesn’t Understand The Economy (Steve Keen)
Why Italy’s Banking Crisis Has Gone Off the Radar (DQ)
Global Reshuffle Of Wildlife Will Have Huge Impacts On Humanity (G.)
More Than 5 Million Syrian Refugees In Neighbouring Countries Now (G.)

 

 

Many scary graphs today. Let’s start here.

Last Two Times After US Reported Data Like This, Stocks Crashed (WS)

The BEA offers various measures of corporate profits, slicing and dicing them in different ways. One of them is its headline number: “Corporate profits with inventory valuation and capital consumption adjustments.” It estimates “profits from current production,” based on profits before taxes, not adjusted for inflation, but with adjustments for inventory valuation (IVA) and capital consumption (CCAdj).These adjustments convert inventory withdrawals and depreciation of fixed assets (as they appear on tax returns) to the current-cost economic measures used in GDP calculations. It’s a broad measure, taking into account profits by all corporations, not just the S&P 500 companies. This measure is reflected in the first chart below.

Later, we’ll get into after-tax measures without those adjustments. They look even worse. In Q4, profits rose to $2.15 trillion seasonally adjusted annual rate. That’s what the annual profit would be after four quarters at this rate. But profits in the prior three quarters were lower. And so Q4 brought the year total to $2.085 trillion. This was down from 2015, and it was down from 2014, and it was up only 2.6% from 2013, not adjusted for inflation. This 20-year chart shows that measure. Note that the profits are not adjusted for inflation, and there was a lot of inflation over those 20 years:

Things get even more interesting when we look at after-tax profits on a quarterly basis. The chart below shows two measures: Dark blue line: Corporate Profits after tax without adjustments for inventory valuation and capital consumption (so without IVA & CCAdj). Light blue line: Corporate Profits after tax with adjustments for inventory valuation and capital consumption (so with IVA & CCAdj). Q4 profits, at a seasonally adjusted annual rate, but not adjusted for inflation, were back where they’d been in Q1 2012:

By this measure, corporate profits have been in a volatile five-year stagnation. However, during that time – since Q1 2012 – the S&P 500 index has soared 70%. [..] The chart also shows that there were two prior multi-year periods of profit stagnation and even decline while the stock market experienced a massive run-up: from 1996 through 2000, leading to the dotcom crash; and from 2005 through 2008, which ended in the Financial Crisis. This peculiar phenomenon – soaring stock prices during years of flat or declining profits – is now repeating itself. The end point of the prior two episodes was a lot of bloodletting in the markets that then refocused companies – the survivors – on what they needed to do to make money. For a little while at least, it focused executives on productive activities, rather than on financial engineering, M&A, and similar lofty projects. And it showed in their profits.

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People have no money to spend. But they do need a car in the US.

One Third Of US Car Loans Is Deep Subprime (Roberts)

Given the lack of wage growth, consumers are needing to get payments down to levels where they can afford them. Furthermore, about 1/3rd of the loans are going to individuals with credit scores averaging 550 which carry much higher rates up to 20%. In fact, since 2010, the share of sub-prime Auto ABS origination has come from deep subprime deals which have increased from just 5.1% in 2010 to 32.5% currently. That growth has been augmented by the emergence of new deep sub-prime lenders which are lenders who did not issue loans prior to 2012. While there has been much touting of the strength of the consumer in recent years, it has been a credit driven mirage.

With income growth weak, debt levels elevated and rent and health care costs chipping away at disposable incomes, in order to make payments even remotely possible, terms are often stretched to 84 months. The eventual issue is that since cars are typically turned over every 3-5 years on average, borrowers are typically upside down in their vehicle when it comes time to trade it in. Between the negative equity of their trade-in, along with title, taxes, and license fees, and a hefty dealer profit rolled into the original loan, there is going to be a substantial problem down the road. [..] Auto loans, in general, have been in a huge boom that reached $1.11 trillion in the fourth quarter 2016. As noted above, 33.5% of those loans are sub-prime, or $371.85 billion.

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And that’s in a country in crisis. People are scared. “Some $11.7 trillion is sitting in bank deposits, up from $7.23 trillion at the start of 2009..”

The Fed Is Bedeviled by Keynes’s Paradox (DiMartino Booth)

The economist John Maynard Keynes warned that ultra-low interest rates would backfire on central banks seeking to spur borrowing and spending, yet they seemed surprised that the current recovery is the weakest in postwar history after cutting rates to near zero, or even below in some cases. Keynes is credited with popularizing the “paradox of thrift,” which is the economic theory that posits people tend to save more during recessions as rates fall to offset the income their savings is not generating. Of course it is the case that when you save more, you spend less. Since the U.S. economy is fueled by consumption, it also stands to reason that growth suffers as a result.

It’s been two years since Swiss Re produced a report that calculated U.S. savers had foregone some $470 billion in interest income. The analysis was based on what rates would have been had the Federal Reserve followed the Taylor Rule, which would have put rates, then at zero, at 1.7%. Even as the Fed has begun to raise rates, it is clear that hundreds of billions of dollars have been squirreled away as savers play defense to counteract the Fed’s ultraloose monetary policy. Some $11.7 trillion is sitting in bank deposits, up from $7.23 trillion at the start of 2009 shortly after the Fed cut rates to near zero, central bank data show.

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The WSJ was first, then all the media ran with it. But Flynn did NOT ask for immunity. At least not that we know. Both Nunes and Schiff deny it’s been discussed. Flyn’s lawyer doesn’t mention it. Smells like fake news. There’s so much wrong with the man, why make things up? Everyone’s salivating over potential problems he could cause for Trump, but we’ll get to that when it’s time.

Flynn Lawyer: Client Wants Assurances Against ‘Witch-Hunt’ Prosecution (USAT)

The attorney representing President Trump’s former National Security Adviser Michael Flynn said late Thursday that his client would not submit to questioning in the ongoing investigations into Russian interference in the 2016 election without protection against possible prosecution. “No reasonable person, who has the benefit of advice from counsel, would submit to questioning in such a highly politicized, witch-hunt environment without assurances against unfair prosecution,” attorney Robert Kelner said in a written statement. Describing his client as the target of “unsubstantiated public demands by members of congress and other political critics that he be criminally investigated,” Kelner confirmed that there have been “discussions” regarding Flynn’s possible appearances before the House and Senate Intelligence committees now conducting formal inquires into Russia’s attempts to disrupt the American political system.

“Gen. Flynn certainly has a story to tell, and he very much wants to tell it, should the circumstances permit,” Kelner said. “Out of respect for the committees, we will not comment right now on the details of discussions between counsel for Gen. Flynn and the . . . committees.” Jack Langer, spokesman for the House Intelligence Committee Chairman Devin Nunes, R-Calif., said a deal for immunity has not been discussed. An aide to California Rep. Adam Schiff, the panel’s ranking Democrat, also said there had been no discussions about an immunity deal for Flynn. Earlier this week, Senate Intelligence Committee Chairman Richard Burr, R-N.C., signaled that the committee was seeking testimony from Flynn. “You would think less of us if Gen. Flynn wasn’t on that list’’ of potential witnesses, Burr told reporters Wednesday.

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It’s gotten so out of hand you’d almost think it would be easy to mitigate.

Who Gains When Income Grows? (Tcherneva)

Growth in the US increasingly brings income inequality. A striking deterioration in this trend has occurred since the 80s, when economic recoveries delivered the vast majority of income growth to the wealthiest US households. The chart illustrates that with every postwar expansion, as the economy grew, the bottom 90% of households received a smaller and smaller share of that growth. Even though their share was falling, the majority of families still captured the majority of the income growth until the 70s. Starting in the 80s, the trend reverses sharply: as the economy recovers from recessions, the lion’s share of income growth goes to the wealthiest 10% of families. Notably, the entire 2001-2007 recovery produced almost no income growth for the bottom 90% of households and, in the first years of recovery since the 2008 Great Financial Crisis, their incomes kept falling during the expansion, delivering all benefits from growth to the wealthiest 10%. A similar trend is observed when one considers the bottom 99% and top 1%% of households.


Figure 1: bottom 90% vs. top 10%, 1949-2012 expansions (incl. capital gains)

[..] Finally, Figure 6 shows how income growth has been distributed over the different business cycles (peak to peak, i.e., including both contractions and expansions). The data for the latest cycle is incomplete, as we are still in it. The graph indicates that in the current cycle, incomes for all groups are still lower than their previous peak in 2007, however the loss is disproportionately borne by the bottom 90% of households.


Figure 6: bottom 90% vs. top 10%, 1953-2015 business cycles, (incl. capital gains)

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I made the same comparison a while back.

Puerto Rico Is Starting To Look An Awful Lot Like Greece (Setser)

About two weeks ago, Puerto Rico’s oversight board approved Puerto Rico’s revised fiscal plan. The fiscal plan is roughly the equivalent in Puerto Rico’s case of an IMF program—it sets out Puerto Rico’s plan for fiscal adjustment. Hopefully it will make Puerto Rico’s finances a bit easier to understand.* I have been a bit slow to comment on the updated fiscal plan, but wanted to offer my own take:

1) Best I can tell, the new plan has roughly 2 percentage points of GNP in fiscal adjustment in 2018 and 2019, and then a percentage point a year in 2020 and 2021. The total consolidation is close to 6% of GNP (using a GNP of around $65 billion, and netting out the impact of replacing Act 154 revenues with new tax).

2) The board adopted a more conservative baseline. Puerto Rico’s real economy is projected to contract by between 3 and 4% in 2018 and 2019 and by 1 to 2% in 2020 and 2021. I applaud the board for recognizing that the large fiscal consolidation required in 2018 and 2019 will be painful. The risks to the growth baseline—and thus to future tax revenues—should be balanced. There though is a risk that the board may still be understating the drag from consolidation. If Puerto Rico is currently shrinking by 1.5% a year without any fiscal drag, and if the multiplier is 1.5, then growth might contract by 2 to 3% in 2020 or 2021.

3) While creditors have complained that Puerto Rico isn’t doing enough, I worry that there is still too much consolidation too fast: Puerto Rico’s output is projected to fall by another 10 percentage points over the next five years, which would make Puerto Rico’s ten year economic contraction as deep as that experienced by Greece.

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“We have a comatose world economy held together by debt and central bank money..”

Former Australia PM: Neo-Liberalism Has Run Into A Dead End (SMH)

Former prime minister Paul Keating – architect of some of the most profound economic reforms in the country’s history during the 1980s – has launched a surprise critique of the liberal economic philosophy he once championed, declaring it has “run into a dead end”. Mr Keating made his remarks in response to a speech delivered by the new leader of the ACTU, Sally McManus, at the National Press Club in Canberra on Wednesday. Ms McManus declared that “neo-liberalism” had run its course, and that experiments in privatisation had failed, slamming the government over mooted penalty rate cuts, accusing many employers of adopting “wage theft” as a business model, and declaring war on growing inequality.

“We are not saying that the people who introduced some of the policies that you could name as being neo-liberal were bad people, we are saying the experiment has run its course,” Ms McManus said, in response to questions. Earlier in her speech she had declared that “the Keating years created vast wealth for Australia but it has not been shared”. While many saw her remarks as a partial slapdown of the economic reforms of the Hawke/Keating years, Mr Keating told Fairfax Media he supported some of her assessments. “Liberal economics had [in the past] dramatically increased wealth around the world, as it had in Australia – for instance a 50% increase in real wages and a huge lift in personal wealth,” Mr Keating said.

“But since 2008, liberal economics has gone nowhere and to the extent that Sally McManus is saying this, she is right.” “We have a comatose world economy held together by debt and central bank money,” Mr Keating added.”Liberal economics has run into a dead end and has had no answer to the contemporary malaise.”

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Simple story. China and private debt.

Why Australia Hasn’t Had a Recession in Over 25 Years (BBG)

Australia is close to seizing the global crown for the longest streak of economic growth thanks to a mixture of policy guile and outrageous fortune. But the nation is creaking under the weight of its own success. While growth is being underpinned by population gains and resource exports to China, failure to spur productivity has meant stagnant living standards and electoral discontent; a property bubble fueled by record-low interest rates has driven household debt to levels that threaten financial stability; and a timid government facing political gridlock could lose the nation’s prized AAA rating as early as May because of spiraling budget deficits. Australia’s last recession – defined locally as two straight quarters of contraction – occurred in 1991 and was a devastating conclusion to eight years of reform designed to create an open, flexible and competitive economy. But it also proved cathartic, paving the way for a low-inflation, productivity-driven expansion.

As momentum started waning, China’s re-emergence as a pre-eminent global economic power sent demand for Australian resources skyrocketing, helping shield the nation from the worst of the global financial crisis. But the post-crisis return of the boom proved ephemeral, failing to boost government coffers and pushing the local currency higher, eroding competitiveness and driving another nail into the coffin of a fading manufacturing sector. [..] “There’s no country on Earth that’s derived more benefit from the rapid growth
and industrialization of China over the last 30-odd years than Australia,” said Saul Eslake, an independent economist who’s covered Australia for over three decades. “After the end of the mining-investment boom, high immigration is helping us avoid a statistical recession, but it’s also contributing to other problems” like soaring property prices and household debt.

[..] A record-low 1.5% cash rate designed to steer Australia from mining investment back toward services is creating problems of its own. Sydney house prices have more than doubled since 2009 and Melbourne’s have also soared, sending private debt to a record 187% of income. The RBA frets that anemic wage growth will force heavily indebted households to slash consumption, which could prove disastrous given their spending accounts for more than half of GDP. Australia’s banking regulator further tightened lending curbs Friday to try to cool investor demand for residential property that’s helped drive up prices. Data released hours later showed investor lending increased 6.7% in February from a year earlier, the fastest growth in 12 months.

[..] iron ore prices have more than halved since 2011, when the local dollar hit a post-float record of $1.10. The Aussie would hover at or above parity with the greenback for the next two years. The currency’s strength then saw off the car industry: two of the three manufacturers in 2013 said they were quitting Australia, with the last following suit the next year. While the currency would eventually retreat to the 70s, the damage had been done. Worse still, the trillion-dollar windfall from the boom had been spent, not saved, leaving no cash to plug yawning budget deficits or build much-needed infrastructure for an expanding population that would also support growth.

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Right. No crisis in 25 years.

Why Australia Is Addicted To Interest-Only Loans (AFR)

When the head of one of America’s largest real estate firms was shown a chart tracking the rising share of interest-only loans in Australia, he gasped in horror. As a man that has “seen many cycles”, he told an Australian bank investor that a rise in interest-only loans was a classic indicator of a dangerously over-heating market. Friday’s move by the prudential regulator to combat the rise of interest-only loans shows they tend to agree with that assessment. High but rising household debt levels, elevated property prices and ultra low interest rates has made Australian Prudential Regulation Authority Wayne Byres decidedly uneasy about the nation’s preference not to repay their loans but simply service the interest.

They have therefore told the banks that less than 30% of new mortgages can be “interest only” – which is substantially below the last reported figure of 38% of total loans. In fact, the percentage of interest-only loans has not been below 30% since 2008. And while many would dismiss comparisons between the rise of interest only lending in Australia and the teaser rate loans that lured in sub-prime borrowers in the US ahead of its 2008 housing crash, a market propped up by artificially low borrowing rates is a recipe for disaster. Australia is of course different and there have been unique forces that have fuelled our historic addiction to interest-only loans. The first is a hot-button issue – negative gearing. Since Australia’s tax code allows households to tax deduct interest payments on investor loans, the incentive is to opt for interest only loans.

It’s in the investment lending area where interest only loans are most prevalent. The banks are also aware that most interest only loans are to investors that own two or more properties and are managing their overall cash flows by servicing the interest. In fact, interest only loans reached a peak of 45% of new loans in 2014 before APRA’s 10% cap on investor lending was introduced. That coincided with a decline to an average of around 35%. The other driver behind the rise of interest only loans has been the mortgage broking industry – which intermediates about half of all loans by the big banks.

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For once he’s joking and they take him serious. When Juncker says he’s “..going to promote the independence of Austin, Texas..”, He doesn’t mean he’s literally going to do it.

Juncker In Jaw-Dropping Threat To Trump Over Support For Brexit (Exp.)

EU boss Jean-Claude Juncker this afternoon issued a jaw-dropping threat to the United States, saying he could campaign to break up the country in revenge for Donald Trump’s supportive comments about Brexit. In an extraordinary speech the EU Commission president said he would push for Ohio and Texas to split from the rest of America if the Republican president does not change his tune and become more supportive of the EU. The remarks are diplomatic dynamite at a time when relations between Washington and Brussels are already strained over Europe’s meagre contributions to NATO and the US leader’s open preference for dealing with national governments. They are by far the most outspoken intervention any senior EU figure has made about Mr Trump and are likely to dismay some European leaders who were hoping to seek a policy of rapprochement with their most important ally.

Speaking at the centre-right European People Party’s (EPP) annual conference in Malta this afternoon, the EU Commission boss did not hold back in his disdain for the White House chief’s eurosceptic views. He said: “Brexit isn’t the end. A lot of people would like it that way, even people on another continent where the newly elected US President was happy that the Brexit was taking place and has asked other countries to do the same. “If he goes on like that I am going to promote the independence of Ohio and Austin, Texas in the US.” Mr Juncker’s comments did not appear to be made in jest and were delivered in a serious tone, although one journalist did report some “chuckles” in the audience and hinted the EU boss may have been joking. The remarks came in the middle of an angry speech in which the top eurocrat railed widely against critics of the EU Commission.

[..] Mr Juncker did not criticise Britain at all during his speech, and only made reference to Brexit in relation to Mr Trump and the opportunities it presents for Europe to reform itself. However his conservative colleague Antonio Tajani, the EU Parliament president, received a rapturous ovation as he launched an impassioned defence of Europe’s “Christian values”. In a series of thinly veiled comments about immigration, a major political issue in his homeland and Malta, the Italian official said Europe should do more to defend its historic identity. He said: “We shouldn’t be ashamed of saying we’re Christian. We’re Christian, it is our history. “If we leave our identity we will have in Europe all identities but not European identities. For this we need to strengthen our identity.”

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The European Central Bank Doesn’t Understand The Economy (Steve Keen)

In 1992, Wynne Godley predicted that the Euro would amplify any future economic downturn into a crisis: ” If a country or region has no power to devalue, and if it is not the beneficiary of a system of fiscal equalisation, then there is nothing to stop it suffering a process of cumulative and terminal decline leading, in the end, to emigration as the only alternative to poverty or starvation…”

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It’s inconvenient with the threat of elections and Beppe Grillo surging in the polls. And even without Beppe Italy is a huge threat to the EU economy.

Why Italy’s Banking Crisis Has Gone Off the Radar (DQ)

[..] an article published in the financial section of Italian daily Il Sole lays out just how serious the situation has become. According to new research by Italian investment bank Mediobanca, 114 of the close to 500 banks in Italy have “Texas Ratios” of over 100%. The Texas Ratio, or TR, is calculated by dividing the total value of a bank’s non-performing loans by its tangible book value plus reserves – or as American money manager Steve Eisman put it, “all the bad stuff divided by the money you have to pay for all the bad stuff.” If the TR is over 100%, the bank doesn’t have enough money “pay for all the bad stuff.” Hence, banks tend to fail when the ratio surpasses 100%. In Italy there are 114 of them. Of them, 24 have ratios of over 200%.

Granted, many of the banks in question are small local or regional savings banks with tens or hundreds of millions of euros in assets. These are not systemically important institutions and can be resolved without causing disturbances to the broader system. But the list also includes many of Italy’s biggest banks which certainly are systemically important to Italy, some of which have Texas Ratios of over 200%. Top of the list, predictably, is Monte dei Paschi di Siena, with €169 billion in assets and a TR of 269%. Next up is Veneto Banca, with €33 billion in assets and a TR of 239%. This is the bank that, together with Banco Popolare di Vicenza (assets: €39 billion, TR: 210%), was supposed to have been saved last year by an intervention from government-sponsored, privately funded bank bailout fund Atlante, but which now urgently requires more public funds. Their combined assets place them seventh on the list of Italy’s largest banks.

Some experts, including the U.S. bank hired last year to save MPS, JP Morgan Chase, have warned that Popolare di Vicenza and Veneto Banca will not be eligible for a bailout since they are not regarded as systemically important enough. This prompted investors to remove funds from the banks, further exacerbating their financial woes. According to sources in Rome, the two banks’ failure would send shock waves through the wider Italian financial industry. [..] almost all of Italy’s largest banking groups, with the exception of Unicredit, Intesa Sao Paolo and Mediobanca itself, have Texas Ratios well in excess of 100%. But, as Eisman recently pointed out, the two largest banks, Unicredit and Intesa Sanpaolo, have TRs of over 90%. As long as the other banks continue to languish in their current zombified state, they will continue to drag down the two bigger banks. And if either Unicredit or Intesa begin to wobble, the bets are off.

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“Land-based species are moving polewards by an average of 17km per decade, and marine species by 72km per decade..”

Global Reshuffle Of Wildlife Will Have Huge Impacts On Humanity (G.)

Rising temperatures on land and sea are increasingly forcing species to migrate to cooler climes, pushing disease-carrying insects into new areas, moving the pests that attack crops and shifting the pollinators that fertilise many of them, an international team of scientists has said. They warn that some movements will damage important industries, such as forestry and tourism, and that tensions are emerging between nations over shifting natural resources, such as fish stocks. The mass migration of species now underway around the planet can also amplify climate change as, for example, darker vegetation grows to replace sun-reflecting snow fields in the Arctic. “Human survival, for urban and rural communities, depends on other life on Earth,” the experts write in their analysis published in the journal Science. “Climate change is impelling a universal redistribution of life on Earth.”

This mass movement of species is the biggest for about 25,000 years, the peak of the last ice age, say the scientists, who represent more than 40 institutions around the world. [..] “Land-based species are moving polewards by an average of 17km per decade, and marine species by 72km per decade” said Prof Gretta Pecl at the University of Tasmania in Australia, who led the new analysis. There are many documented examples of individual species migrating in response to global warming and some examples of extinctions. But Pecl said: “Our study demonstrates how these changes are affecting ecosystems, human health and culture in the process.” The most direct impact on humans is the movement of insects that carry diseases, such as the mosquitoes that transmit malaria shifting to new areas as they warm and where people may have little immunity.

Another example is the northward spread in Europe and North America of the animal ticks that spread Lyme disease: the UK has seen a tenfold rise in cases since 2001 as winters become milder. Food production is also being affected as crops have to be moved to cooler areas to survive, such as coffee, which will need to be grown at higher, cooler altitudes, causing deep disruption to a global industry. The pests of crops will also move, as will their natural predators, such as insects, birds, frogs and mammals. Other resources are being affected, with a third of the land used for forestry in Europe set to become unuseable for valuable timber trees in the coming decades. Important fish stocks are migrating towards the poles in search of cooler waters, with the mackerel caught in Iceland jumping from 1,700 tonnes in 2006 to 120,000 tonnes in 2010…

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Another ‘species’ on the move.

More Than 5 Million Syrian Refugees In Neighbouring Countries Now (G.)

The number of refugees who have fled Syria for neighbouring countries has topped five million people for the first time since the civil war began six years ago, according to the UN’s refugee agency. Half of Syria’s 22 million population has been uprooted by a conflict that has now lasted longer than the second world war, the figures released by the UNHCR show, with 6.3 million people who are still inside the country’s borders forced from their homes. The figure of five million refugees “fails to account for the 1.2 million people seeking safety in Europe”, the International Rescue Committee, an aid organisation, noted. Nearly 270,000 of these applied for asylum in Germany last year. The UN agency urged Europeans not to “put humanity on a ballot” in elections in France and Germany this year, where far-right candidates opposed to refugee arrivals could make gains.

A surge in violence in Aleppo, as government forces backed by Russian airstrikes retook Syria’s second city at the end of 2016, resulted in 47,000 people fleeing to neighbouring Turkey, it said. Camps for internally displaced people close to the Turkish border also hold those who have fled the fighting in northern Syria. The latest arrivals into Turkey mean the number of Syrians who have fled the country for neighbouring states stands at more than five million, four years after the UNHCR announced that one million people had fled. The five million figure includes refugees who have been resettled in Europe, but the UN high commissioner for refugees urged Europeans to do more to help share a burden that is still largely falling on countries bordering Syria, such as Turkey, Lebanon and Jordan, with more in Iraq and Egypt.

Turkey alone has nearly three million Syrians, the UNHCR pointed out. In Jordan, 657,000 Syrian refugees are registered with the UN, but the government says the true figure is 1.3 million. Tens of thousands of Syrians live in two large camps, Zaatari and Azraq, but the majority live in homes and flats, able to access the job market but competing for scarce employment.

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Mar 222015
 
 March 22, 2015  Posted by at 8:06 am Finance Tagged with: , , , , , , , , ,  


Jack Delano “Untitled” 1940

We’re All Hedge Funds Now (John Rubino)
Why Has Germany Bailed Out A Tiny Bank? (Coppola)
The Perfect Storm For Oil Hits In Two Months (Zero Hedge)
The ‘Natural Interest Rate’ Is Always Positive And Cannot Be Negative (Mises)
The Federal Reserve Bank Must Be Destroyed! (Patrick Barron)
We’re Much Worse Off Than Just Before The Last Economic Crisis (Michael Snyder)
Draghi To Go To Italian Committee But Not Irish Bank Inquiry (Irish Times)
China To Curb Risks From Short-Term Local Debt (Reuters)
Why Do American Weapons End Up In Our Enemies’ Hands? (Ron Paul)
Nazi Extortion: Study Sheds New Light on Forced Greek Loans (Spiegel)
Michael Hudson: Europe Tilts East Towards China (NC/TRRN)
Abe-Kuroda Honeymoon Soured By Fiscal Friction (Reuters)
‘Abandoned’ French Working Class Ready To Punish Left, Vote Le Pen (Guardian)
The Idea of “Basic Income” Takes Root (CP)
Wild Anti-Austerity Strike in Québec (Printemps2015.org)
Moral Hazard: Ukraine New Spy Law Designed As Provocation (RT/RonPaul Inst.)
Russia Urges Germany, France To Safeguard Peace In Ukraine (Reuters)
France Decrees New Rooftops Must Be Covered In Plants Or Solar Panels (Guardian)
Africa Is Centre Of A ‘Wildlife War’ That The World Is Losing (Observer)
Australia PM Tony Abbott Unveils Plan To Save Great Barrier Reef (Guardian)
The Global Extraction Industry: Plunder, Violence And Corruption (Observer)

“Will this time around be any different? Definitely. It will be much worse because the numbers are so much bigger.”

We’re All Hedge Funds Now (John Rubino)

As negative interest rates spread from Switzerland, Japan and Germany to the rest of the developed world, people with money to invest face some life-defining choices. Retirees who need to generate 6% to avoid dipping into principal can’t get there with bank CDs. Pension funds that have promised an 8% return in order to meet obligations to future retirees can’t get anywhere near that with government bonds. Same thing for insurance companies and money market funds, whose business models require positive returns with low risk. What to do? Well, a retiree can either stop being a retiree — that is, go back to work — or invest a lot more aggressively to meet the required 6% return.

That means loading up on equities and junk bonds, either blithely because she doesn’t know what they are (only that they’ve been going up) or with trepidation because she’s aware that every five or so years these things tend to crash. For public companies, building new factories no longer pays as well as borrowing money and using the proceeds to buy back their own common stock. Pension funds, meanwhile, have more options though the end result is the same. They can, like our hypothetical retiree, load up on equities, as Japanese pension funds are reportedly doing…[..] …or they can wander even further into the “alternative” investing universe by hiring hedge funds to generate “alpha.”[..]

In the world of aggressive investing, retirees, corporations and pensions funds are all “dumb money.” They don’t do this kind of thing regularly so they have no institutional or personal experience to draw upon. The result, for pension funds and retirees, is the quintessential beginner strategy of trend following, buying what was hot last year because that’s where the biggest returns are being generated, while public companies are being even dumber, buying stocks on margin (i.e., with borrowed money) without regard for valuation. Similar things happened during the previous bubble, when individuals became real estate speculators, pension funds embraced alternative investments, and corporations ramped up their share repurchase programs. All got creamed in 2008. Will this time around be any different? Definitely. It will be much worse because the numbers are so much bigger.

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Moral hazard?!

Why Has Germany Bailed Out A Tiny Bank? (Coppola)

The first German bank has died from Austrian contagion. Duesseldorfer Hypothekenbank (“Duesselhyp”), a tiny mortgage lender, has been seized by the Bundesverband Deutsche Banken (BDB), Germany’s association of private banks. According to Reuters, The BDB had hammered out a deal over the weekend with financial market watchdog Bafin, the Bundesbank and resolution authority FMSA to provide a guarantee for DuesselHyp’s holdings of around 350 million euros ($370 million) in Heta bonds that are subject to a debt moratorium imposed by Austrian financial regulators.Duesselhyp’s core tier1 (CT1) capital of €233m was not enough to allow it to continue trading after the expected 50% haircut on its holdings of senior unsecured HAA/Heta bonds.

Under German law, Lone Star, the private equity group that owned Duesselhyp, was not obliged to contribute more capital, and the planned sale of Duesselhyp to Attestor Capital could not proceed. The BDB’s seizure of Duesselhyp is therefore understandable: the alternative was disorderly collapse.But it is not immediately clear why the BDB opted to bail out Duesselhyp rather than forcing bail-in of its creditors. After all, Germany has already adopted the European Bank Resolution & Recovery Directive (EBRRD). True, Duesselhyp is tiny: bailing it out could be done entirely from existing funding without recourse to taxpayers. But bailing out a tiny, over-leveraged and under-capitalized bank seems contrary to the spirit if not the law of the EBRRD. So why did the BDB do it?

The reason is the nature of Duesselhyp’s liabilities. Duesselhyp is an issuer of Pfandbriefe, the super-safe covered bonds that are the bedrock of the German financial system. A look at Duesselhyp’s 2014 interim balance sheet shows that Pfandbriefe backed by public sector loans are by far the largest proportion of Duesselhyp’s liabilities: it has issued a rather smaller number of mortgage Pfandbriefe too. The remainder of Duesselhyp’s liabilities are institutional deposits (it has no retail deposits), which are covered by unlimited guarantees from the German deposit fund. In short, almost all of Duesselhyp’s liabilities are covered by explicit or implicit German government guarantees.

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Storage issue once more.

The Perfect Storm For Oil Hits In Two Months (Zero Hedge)

This is what we said back in early March when the BTFDers were hoping WTI in the low $40s would never again be seen: “Come June, when all available on-land storage is exhausted, each incremental barrel will have to be dumped on the market forcing prices lower and inflicting further pain on the entire US shale complex (just as Q1 results are released which will invariably show huge writedowns as companies will no longer be able to hide behind the SEC-mandated accounting trick that made Q4 results appear respectable).”

Since then, as expected, crude tumbled to new post-Lehman lows, confirming the global deflationary wave is raging (for more details please see China), and WTI only posted a rebound on quad-witching Friday as another algo-driven stop hunt spooked all those who were short the energy complex. The problem is that despite the latest “dead oil bounce” we have since had to revise our forecast for full US oil storage, and pulled forward the date when this will happen in the aftermath of the latest API inventory data. Recall that earlier this week API reported, and EIA later confirmed, that for the 10th week in a row there was a “massive 10.5 million barrels (far bigger than the 3.1 million barrel expectation) and a 3 million barrel build at Cushing. If this holds for DOE data tomorrow (and worryingly API has tended to underestimate the build in recent weeks) it will be the biggest weekly build since 2001.”

It also means that at the current rate of record oil production, storage will be exhausted in under two months, some time in mid-May. At that point, with no more storage to buffer the record oil production, the open market dumping begins and prices of WTI will crater as every barrel will have to be sold at any clearing price, since the producers will have no other choice than to, literally, dump the oil. In other words, a perfect storm is shaping up for oil some time in late May, early June.

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Amen.

The ‘Natural Interest Rate’ Is Always Positive And Cannot Be Negative (Mises)

Some economists have been arguing that the “equilibrium real interest rate” (that is the “natural interest rate” or the “originary interest rate”) has become negative, as a “secular stagnation” has allegedly caused a “savings glut.” The idea is that savings exceed investment, and that a negative real interest rate is required for bringing savings in line with investment. From the viewpoint of the Austrian school, the notion of a “negative equilibrium real interest rate” doesn’t make sense at all. To show this, let us develop the case step by step. To start with, one should make a distinction between two types of interest rates: There is the market interest rate, and there is the originary interest rate. The market interest rate is the outcome of the supply of and demand for savings in the market place.

It can be observed, for instance, in the deposit, bond, or loan market for different maturities and credit qualities. The originary interest rate is a category of human action, saying that acting man values goods available at present more highly than goods available in the future. In other words: Future goods trade at a price discount relative to present goods. For instance, 1 US$ available today is preferred over 1 US$ available in one year’s time. If 1 US$ to be received in one year’s time is valued at, say, 0.909 US$, the originary rate of interest is 10%. (1 US$ divided by 0.909 minus 1 gives you 0.10, or 10%, for that matter.) 10% is here the originary interest rate (disregarding any other premia). The originary interest rate is expressive of a value differential, which results from so-called time-preference.

The term time-preference denotes that acting man prefers an earlier satisfaction of wants over a later satisfaction of wants. Time-preference is always and everywhere positive, and so is the originary interest rate. This is, first and foremost, what common sense would tell us. If the originary interest rate was near-zero, it means that you prefer two apples available in, say, 1,000 years over one apple available today. A truly zero originary interest rate implies that the actor’s planning horizon or “period of provision” is infinitely long, which is another way of saying that he would never act at all but would continually push the attainment of his goals into the future. The notion that time-preference and the originary interest rate could be zero, does not only sound absurd, it is also a logical impossibility: Positive time-preference and a positive originary interest rate are logically implied in the irrefutably true “axiom of human action.”

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“Note that there is nothing that a central bank could provide that could not be provided by another private bank.”

The Federal Reserve Bank Must Be Destroyed! (Patrick Barron)

The Fed was founded under false economic premises–to prevent bank runs by providing temporary liquidity to banks which found themselves unable to redeem their certificates and demand deposits for cash and/or specie. The real cause of illiquid banks–fractional reserve banking–was never seriously addressed. It was assumed that banks had the legal right to invest their customers’ demand funds in loans and that runs were caused by over indulging in this practice. But as Murray N. Rothbard explain in What Has Government Done to Our Money?, loaning demand funds instantly places the bank in an insolvent position, for it cannot redeem all of its demand accounts for cash or specie.

Through the process of lending demand funds, the banks have created fiduciary media out of thin air, reducing their reserve ratio below one hundred percent. If the banks do this on a very modest basis, the public may not be aware of the fraud. However, once the rumor starts that the bank is illiquid, there is a literal “run” to the bank to withdraw demand funds. In such a case, even a bank that only modestly lent its demand funds might find itself unable to honor all withdrawal claims and would be forced to close its doors. (NOTE: Central Banking was established to legitimize counterfeiting fraud, aka – Fractional Reserve Banking) The Federal Reserve Bank, as the lender of last resort, was supposed to prevent such occurrences by providing temporary, penalty rate loans to struggling banks.

Note that there is nothing that a central bank could provide that could not be provided by another private bank. In fact the banking panic of 1907 was stemmed by private bank interventions led by J. P. Morgan. However, Morgan realized that such private bailouts were very risky and presented a case of moral hazard; i.e., that bankers, confident of a bailout by the Morgan banking empire, might book riskier, higher yielding loans. So rather than face the real cause of banking crises and lobby to outlaw fractional reserve banking, the Morgans, Rockefellers, etc.–who did not want to forego the financial benefits of lending demand deposits–lobbied instead for government to create a lender of last resort, a central bank, which we named the Federal Reserve Bank.

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Good graphs. Pity Michael doesn’t understand inflation.

We’re Much Worse Off Than Just Before The Last Economic Crisis (Michael Snyder)

If you believe that ignorance is bliss, you might not want to read this article. I am going to dispel the notion that there has been any sort of “economic recovery”, and I am going to show that we are much worse off than we were just prior to the last economic crisis. If you go back to 2007, people were feeling really good about things. Houses were being flipped like crazy, the stock market was booming and unemployment was relatively low. But then the financial crisis of 2008 struck, and for a while it felt like the world was coming to an end. Of course it didn’t come to an end – it was just the first wave of our problems.

The waves that come next are going to be the ones that really wipe us out. Unfortunately, because we have experienced a few years of relative stability, many Americans have become convinced that Barack Obama, Janet Yellen and the rest of the folks in Washington D.C. have fixed whatever problems caused the last crisis. Even though all of the numbers are screaming otherwise, there are millions upon millions of people out there that truly believe that everything is going to be okay somehow. We never seem to learn from the past, and when this next economic downturn strikes it is going to do an astonishing amount of damage because we are already in a significantly weakened state from the last one.

For each of the charts that I am about to share with you, I want you to focus on the last shaded gray bar on each chart which represents the last recession. As you will see, our economic problems are significantly worse than they were just before the financial crisis of 2008. That means that we are far less equipped to handle a major economic crisis than we were the last time.

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Don’t insult the Irish!

Draghi To Go To Italian Committee But Not Irish Bank Inquiry (Irish Times)

The ECB is holding to its position that its president, Mario Draghi, will not go before the Oireachtas banking inquiry in spite of the fact that he will appear at certain committees of the Italian parliament on March 26th. In a statement released to The Irish Times on foot of a question as to why Mr Draghi will not attend the Irish inquiry but will address committees of the Italian parliament, a spokesman said: “The ECB as a European institution is primarily held to account by the European Parliament as the representation of all the union’s citizens. “Therefore, it does not participate in national parliamentary inquiries and will not take part in the proceedings of the inquiry committee of the Irish parliament.”

It added: “Nevertheless, in line with past practice of interaction between the ECB and national parliaments, the ECB is ready to take part in an informal exchange of views on matters within the remit of the ECB’s mandate with the relevant committees of the Irish parliament.” The spokesman reiterated that deputy president Vítor Constâncio “stands ready” to represent the ECB in “such an exchange of views”, adding he was well placed to do so by being the longest-serving member of the executive board who also attended the relevant Eurogroup/Ecofin meetings during the Irish financial crisis. The ECB president has also appeared before committees of the German, French and Spanish parliaments and the ECB spokesman said Mr Draghi would address the budget, finance and European affairs committees of the Italian parliament later this month.

Irish MEP Brian Hayes said it was “totally unsatisfactory” Mr Draghi was not willing to appear before the banking inquiry but addresses national parliaments in certain situations. Inquiry committee member John Paul Phelan wants the ECB to clarify its position: “We know Mr Draghi already attended a German parliamentary finance committee in late October 2012. It now appears he is attending a similar committee in Italy. The ECB needs to clarify its position. On the one hand it says it is not accountable to member state parliaments and so the ECB won’t attend our inquiry. “But without explanation the president of the ECB appears willing to attend Italy’s parliamentary finance committee.”

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They’re going to try and buy out the shadow system?

China To Curb Risks From Short-Term Local Debt (Reuters)

China will take steps to rein in possible risks from short-term local government bonds, including converting such bonds into long-term debt, the country’s vice finance minister, Zhu Guangyao, said on Saturday. On March 8, the ministry announced local governments would be permitted to swap 1 trillion yuan ($161.2 billion) of maturing, high-interest local debt for new official municipal or provincial bonds, to help cut interest costs. Zhu said local governments were burdened by piles of short-term debt, including that raised through trust products. “In accordance with the State Council’s plans, we will turn such short-term financing into long-term financing, and the size for 2015 is 1 trillion yuan,” Zhu told an international conference on China’s development attended by government officials, business leaders and academics. “This will help reduce the funding costs and reduce risks.”

But the authorities must prevent the problem of “moral hazard” in the process, he said, without elaborating. The government will keep economic growth stable this year while pushing forward financial and fiscal reforms, Zhu added. China has been trying to reduce excess factory capacity, local government debt and risks from a cooling property market, which are likely to drag growth to a quarter-century low of around 7% this year from 7.4% in 2014. “The pre-condition for our deleveraging is to maintain relatively stable economic growth,” Zhu said. The central bank has cut interest rates twice since November, on top of a cut in bank reserve requirements in February, amid concerns about growing deflationary risks, and more such moves are expected. In addition, the government plans to run its biggest budget deficit in 2015 since the global crisis to support spending.

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By design?

Why Do American Weapons End Up In Our Enemies’ Hands? (Ron Paul)

It happens so often you wonder whether it is due to total ineptness or a deliberate policy to undermine our efforts overseas. It’s most likely a result of corruption and unintended consequences, combined with a foreign policy that makes it impossible to determine who are our friends are and who are our enemies. One would think that so many failures in arming others to do our bidding in our effort to control an empire would awaken our leaders and the American people and prompt policy changes.

A recent headline in Mother Jones read: “US Weapons Have A Nasty Habit of Going AWOL.” The report was about $500 million worth of military equipment that is unaccounted for in Yemen. Just as in so many other places, our policy of provoking civil strife in Yemen has been a complete failure. At one time it was announced that there was a great victory in a war being won with drones assisting groups that claimed to be on our side in the Yemen Civil War. As usual, we could have expected that these weapons would end up in the hands of the militants not on the side of United States and would never be accounted for.

There are numerous examples of how our foreign intervention backfires and actually helps the enemy. Just recently a headline announced: “CIA cash sometimes refills al-Qaeda coffers.” This was a story of our government helping pay ransom to al-Qaeda for the release an Afghan diplomat. However this was a measly $5 million so it was not considered a big deal. Another headline just recently announced that, “Iraqi army downs two UK planes carrying weapons for ISIL.” The Iraqi army is supposed to be on our side, and many people believe the UK is also on our side as well. One thing for sure the American taxpayer pays for all this nonsense.

Building weapons and seeing them end up in the hands of the enemy is almost a routine event and one should expect it to continue to happen under the circumstances of the chaos in the Middle East. This represents a cost to the American taxpayer and is obviously a major contributing factor in what will be the ultimate failure of our plan to remake the Middle East. This is bad enough, and the only people who seem to benefit from it are those who are earning profits in the military-industrial complex. But there is something every bit as bad as our weapons ending up in the hands of the jihadists and being used against us. That is, the fact that our presence there, our weapons, and our bombs, are the best recruiting tool for getting individuals to join the fight against America’s presence in so many conflicts around the world.

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See Looks Like Germany May Have To Pay Up .

Nazi Extortion: Study Sheds New Light on Forced Greek Loans (Spiegel)

Last week in Greek parliament, Greek Prime Minister Alexis Tsipras demanded German reparations payments, indirectly linking them to the current situation in Greece. “After the reunification of Germany in 1990, the legal and political conditions were created for this issue to be solved,” Tsipras said. “But since then, German governments chose silence, legal tricks and delay. And I wonder, because there is a lot of talk at the European level these days about moral issues: Is this stance moral?” Tspiras was essentially countering German allegations that Greece lives beyond its means with the biggest counteraccusation possible: German guilt. Leaving aside the connection drawn by Tsipras, which many consider to be inappropriate, there are many arguments to support the Greek view. SPIEGEL itself reported in February that former Chancellor Helmut Kohl used tricks in 1990 in order to avoid having to pay reparations.

A study conducted by the Greek Finance Ministry, commissioned way back in 2012 by a previous government, has now been completed and contains new facts. The 194-page document has been obtained by SPIEGEL. The central question in the report is that of forced loans the Nazi occupiers extorted from the Greek central bank beginning in 1941. Should requests for repayment of those loans be classified as reparation demands – demands that may have been forfeited with the Two-Plus-Four Treaty of 1990? Or is it a genuine loan that must be paid back? The expert commission analyzed contracts and agreements from the time of the occupation as well as receipts, remittance slips and bank statements.

They found that the forced loans do not fit into the category of classical war reparations. The commission calculated the outstanding German “debt” to the Greek central bank and came to a total sum of $12.8 billion as of December 2014, which would amount to about €11 billion. As such, at issue between Germany and Greece is no longer just the question as to whether the 115 million deutsche marks paid to the Greek government from 1961 onwards for its peoples’ suffering during the occupation sufficed as legal compensation for the massacres like those in the villages of Distomo and Kalavrita. Now the key issue is whether the successor to the German Reich, the Federal Republic of Germany, is responsible for paying back loans extorted by the Nazi occupiers. There’s some evidence to indicate that this may be the case.

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Must read/Listen. “..the funding of the World Bank has mainly been to fund infrastructure developments, vastly overpriced, to Third World countries to create money for American engineering firms; also to lend out dollars and to indebt countries to it..”

Michael Hudson: Europe Tilts East Towards China (NC/TRRN)

Real News Network: So, Michael, let’s begin with the Asian Infrastructure Investment Bank. The Chinese have established this bank with a $50 billion investment. Now, is this then a serious challenge to the World Bank?

HUDSON: Well, the idea is to make an alternative development philosophy to the World Bank. From the very beginning, the World Bank has been basically an extension of the U.S. Defense Department, from the first president, John J. McCloy, who is assistant secretary of defense, down through Robert McNamara, 1968 to ’81, and then by the neocon cold warrior Paul Wolfowitz, 2005 to ’07, and Larry Summers, the chief economist, along with Bob Zoellick. So you have the purpose of the World Bank lending essentially for plantation export crops, for export crops to make countries avoid producing anything that might compete with American exports, above all grain, although every single mission of the World Bank, country mission, has recommended that countries undertake land reform and agricultural extension to help promote family farming and countries to feed themselves. The World Bank has not made loans for this.

The World Bank, under U.S. congressional pressure, has said, look, we’re not going to finance countries becoming independent of the United States; our function is to make them export more to the United States and to buy from the United States. So the funding of the World Bank has mainly been to fund infrastructure developments, vastly overpriced, to Third World countries to create money for American engineering firms; also to lend out dollars and to indebt countries to it; and worst of all, to promote privatization. And that’s really the big difference between the Chinese Development Bank’s philosophy and the World Bank.

The World Bank is pressured everywhere for privatization of public utilities, of basic infrastructure, and then it will make loans to the governments to develop this infrastructure or the roads and the external economies, and then sell them cheap to American buyers, who essentially will create monopolies and turn infrastructure into a rent extraction to squeeze out interest, dividends, management fees that are all going to be paid to the Americans. And this has been raising the price of basic utilities–communications, transportation, water, and other things throughout the Third World.

And this has made these economies uncompetitive with the United States that has a mixed economy where the government subsidizes infrastructure. So the Chinese Development Bank is to help make other countries get independent of this sort of neocon, neoliberal, right-wing economic philosophy and work government-to-government, help governments develop infrastructure, so that they can provide basic services at a lower cost or a subsidized cost, or even freely to the populations. That’s how the European countries and American economy got rich. And the only way to help repeat this process is to make a clean break from the United States and the World Bank.

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Abenomics has been a failure from day one. Is the blame game finally taking off?

Abe-Kuroda Honeymoon Soured By Fiscal Friction (Reuters)

A rift is emerging between Prime Minister Shinzo Abe and his hand-picked central bank boss on how to fix Japan’s tattered finances, which could blunt the impact of the “Abenomics” stimulus policies they have worked together to prosecute. Two years into Bank of Japan Governor Haruhiko Kuroda’s tenure, the cracks are becoming hard to conceal and could affect the timing of any further monetary easing and an eventual end to the massive money-printing program he set in train. Their differences over fiscal policy needed to cut Japan’s staggering public debt, which at 230% of GDP is twice the U.S. figure and about 50 points higher than perilous Greece, have so far been masked by their shared determination to end deflation.

The perception of common purpose is critical to giving businesses, markets and consumers the confidence to change behavior and ensure that the stimulus measures and inflation targets are effective. But the mask began to slip last year when Abe decided to delay a sales tax hike, making Japan’s primary fiscal goal harder to achieve. “The honeymoon days are over,” said Izuru Kato, chief economist at Totan Research. “Kuroda must be frustrated over a lack of progress in structural reform and fiscal consolidation.” A former finance ministry bureaucrat, Kuroda feels Japan cannot afford to delay tax hikes and spending cuts given its dire fiscal state, while Abe prefers to focus more on boosting growth to raise tax revenues.

Last month a key policy panel run by Abe’s right-hand man, Economics Minister Akira Amari, began debating proposals that could water down Japan’s fiscal target of returning to a primary budget surplus, excluding debt servicing costs and income from bond sales, in fiscal 2020. Abe has not resiled from that target, but the panel is laying the ground for him to add other goals that give him more wiggle-room on spending, government officials say.

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Too late to stop this. Hollande has turned into Tony Blair.

‘Abandoned’ French Working Class Ready To Punish Left, Vote Le Pen (Guardian)

At an election meeting just days before France’s regional elections, a Japanese journalist asked Marine Le Pen a question: why was her far-right Front National party tipped to do so well? Polls suggest that the FN vote will reach unprecedented levels, with up to 30% of the vote, just ahead of the opposition Union for a Popular Movement (UMP) party and leaving the ruling Socialist party trailing. “The Front National is alone against everyone. The French people have realised for some time now that the Front National’s analysis is right, and the other political parties have failed,” Le Pen responded. The FN had gone from “a party of opposition … to a movement of government” by addressing “the economy, immigration and Islamic fundamentalism”, she added. From Le Pen, a damning analysis of this type might be expected.

But from a member of the leftwing commentariat? A new “state of the nation” tome, L’Insécurité culturelle, by analyst Laurent Bouvet, has caused a storm in Paris salons by suggesting that the country’s working class is ready to vote FN in droves because it has been abandoned by the left and deceived by the country’s Socialist government. Bouvet accuses the left of sparking an identity crisis – “cultural insecurity” – among its core blue-collar electorate, by almost exclusively focusing on the problems of minority groups instead of French society as a whole. This has left the workers feeling cast adrift and alienated, he says. “The economic crisis, unemployment, social problems, globalisation make people afraid, but if it was just about economics we would see these people voting for the radical left, which they are not,” Bouvet told the Observer.

Bouvet is a political science professor and member of the leftwing thinktank the Jean Jaurès Foundation, which advises the Socialist party (PS) and aims to “promote the study of workers’ movements and international socialism and promote democratic and humanist ideas”. He says his latest, decidedly politically incorrect, message is one the left does not want to hear. Bouvet says PC blinkers have prevented the Socialists from addressing working-class anxieties about immigration and the rise of Islam – even in its moderate form – in areas where the so-called Français de souche (born-and-bred French) find themselves outnumbered by those with a different religion and cultural habits. Branded les petits blancs (white trash), and accused of racism or patronised if they express their fears, they have turned en masse to the FN, he says.

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Always a good discussion.

The Idea of “Basic Income” Takes Root (CP)

After years of having relatively few supporters, the idea of Basic Income is now spreading around the world. In Spain – probably “the place on Earth where the debate around Basic Income is most advanced” – after five years of public spending cuts, depressed demand, record unemployment, burgeoning poverty, and a growing public debt now at around 100% of GDP, and after twenty years of discussion in universities, grassroots movements and social networks, Basic Income is finally going mainstream.

Although the new game-changing left-wing political party Podemos has temporarily retreated from its initial Basic Income proposal in favour of “full employment” (more fitting, perhaps, for the welfare states of the 1940s, 1950s, and 1960s), many party members are Basic Income stalwarts. Other political organisations now proposing it include Equo, Pirata and Bildu (a coalition in the Basque Country) and, in Galicia, Anova, while still more small parties have projects which, while not strictly a Basic Income, come close.

A recent number of the Basic Income Earth Network newsletter gives an idea of the worldwide spread of different versions of Basic Income. In Greece the new ruling party Syriza has declared its aim to establish “a closer link between pension contribution and income… and provide targeted assistance to employees between 50 and 65, including through a Guaranteed Basic Income scheme so as to eliminate the social and political pressure of early retirement which over-burdens the pension funds”. In Finland, 65.5% of 1,642 (out of nearly 2,000) candidates for the parliamentary elections on 19 April publicly support the policy. Cyprus has passed a new law giving low income families a Guaranteed Minimum Income of €480 a month.

In 2013, a grassroots movement in Switzerland called for a Basic Income of 2,500 Swiss francs per month and received over 100,000 signatures needed to force a referendum on the proposal. 90% of the members of Hungary’s Green-Left party Párbeszéd Magyarországért (“Dialogue for Hungary”) have voted for a Basic Income to which all citizens would be entitled, €80 per month for children, €160 for adults and €240 for young mothers. The poverty line in Hungary is estimated at around €200 for a single adult. In Portugal, where Basic Income is relatively unknown and misunderstood, the political party LIVRE has included Basic Income in its draft political programme for the autumn elections this year. Now recognising that inequality and social justice are also “green” issues, the fast-growing Green Party of England and Wales has announced that a Basic Income will be included in its manifesto.

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Announcement from my old stomping grouds for the coming week. Québec has a long history of standing up for the poor, since the French were held down for centuries.

Wild Anti-Austerity Strike in Québec (Printemps2015.org)

Like wolves, humans act collectively and form groups in order to survive and defend our common interests. The idea of community is closely related to survival in the face of adversity and to the well being of society. The preservation of our habitat, of our social rights, and of our future depends on solidarity. Acting together in large numbers makes it much easier to defend our rights and our collective needs. That’s why we propose the creation of an alternative to the isolation and individualism pervasive in society by choosing collective action against the aggressive attacks of governments on our collective wellbeing. Both federal and provincial governments are engaged in attacks on the population.

They now demand that we pay more at the same as they are wantonly slashing everywhere: education and health systems, scientific research, pension funds, the environment, social and community programs, housing, arts and culture, union rights… Faced with the bewildering rate at which cuts and austerity measures are announced, action is urgently needed. The Spring 2015 committee calls for a push towards social change, starting this spring. We envision concrete resistance to austerity uniting students, workers, and society as a whole taking root in Québec. While they reach for the last pennies in our pockets, federal and provincial governments increase military spending, invest in prisons, police, and security measures, and roll out the red carpet for the extractive industries.

People with friends in high places, the rich, large companies, multinationals, banks and lobbying firms are running the show. A small minority is strangling the community. If the interests of the majority do not orient the actions and priorities of the government, it is illusory to continue to speak of this as a democracy. In a just and equitable society, wealth should not be accumulated at the expense of our environment and should be fairly redistributed amongst all. Indigenous peoples, Québecers, and Canadians are neither represented nor respected by governments who do not defend their rights. We will amplify popular discontent and launch a WILD STRIKE.

We call for the pillaging of society to be resisted with a general strike! Let’s disrupt this failed economic order which relegates the interests of society to the bottom of the list. An inclusive strike, a strike by any means: the closure of schools and offices, and cities at a standstill until each and every one of us receives what we are collectively owed. We demand that governments stop privatisation and the sabotage of the common good, end the destruction of the environment, and cease to only favour the rich! Otherwise, we’ll bite. This spring, block austerity! The Spring 2015 committees aim to facilitate the organisation of effective struggles for collective and environmental rights. Everywhere across Québec, let’s join together to massively refuse the ideological project of austerity.

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“..they feel they have the US particularly and the West in general behind them. So they feel they can engage in every moral reckless behavior because there are no consequences..”

Moral Hazard: Ukraine New Spy Law Designed As Provocation (RT/RonPaul Inst.)

If a Ukrainian draft law on intelligence comes into force, we might start seeing assassinations, bomb blasts, and psychological attacks in the Donbass region, says Daniel McAdams of the Ron Paul Institute. Ukraine’s parliament has passed a law allowing its intelligence units to carry out military operations in eastern Ukraine. If the President Petro Poroshenko signs the law, it would allow special services to infiltrate and operate in the self-proclaimed Donetsk and Lugansk republics.

RT: How does this current move from Kiev correlate with the current peace process in east Ukraine?
Daniel McAdams: I think it’s a provocation and it is designed to be a provocation. The goal is stated clearly from Kiev and it’s echoed in Washington, and to a degree in Berlin, as well, which is that Ukraine needs to be whole again—that is the point they are making including eastern Ukraine and even Crimea. So it is meant to be a provocation. The problem is the government in Kiev is operating with what in finance circles is called “moral hazard”—they feel they have the US particularly and the West in general behind them. So they feel they can engage in every moral reckless behavior because there are no consequences to the actions that they take. But if it does pass, I think it may give us some information, some indication as to what all of the visits from the CIA director to Kiev over the past year and a half were all about. And then we can probably start seeing things like assassinations in Donetsk and Lugansk, bombs going off, provocations, psychological operations. I think it opens the whole can of worms.

RT: The parliament in Kiev also voted on a bill branding some territories in the east as ‘occupied’ including Crimea. What is Kiev trying to achieve here?
DM: Because they can get away with it. The law on autonomy now is going to be granted only after elections take place under Kiev’s rules and laws which definitely goes against the Minsk agreements. They will be supervised by the OSCE which has hardly shown itself to be objective in this case. You’re basically having a de facto taking over of these regions all over again.

RT: What reaction are we expecting internationally, especially from France and Germany who are part of the Normandy Four?
DM: I don’t think they are going to do that much because they have not been willing to speak up and to reprimand their clients in Kiev so far. Yesterday, President Obama had a talk with Chancellor Merkel. And at least, according to the White House’s reading of the conversation, they are in complete agreement about retaining the sanctions on Russia and that the Minsk agreements needed to be fully implemented. So they are simply interpreting the Minsk agreement to suit their ultimate goal, which is the bringing of the regions of the east back under Kiev’s control.

RT: Do you think Washington and Europe are united on this objective?
DM: I wouldn’t say necessarily united but I think over the past year or so we’ve seen that Germany is ready to break. But aside from whisperers in the German intelligence community that basically half of the US generals are bonkers, there has been no real indication that Germany is ready to break. So I think reluctantly they are going along.

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“.. Lavrov said he was concerned Kiev might stage “provocations” to try to persuade the United States that it should aid Kiev by sending it lethal weapons.” He should be.

Russia Urges Germany, France To Safeguard Peace In Ukraine (Reuters)

Russia appealed to Germany and France on Saturday to ensure Kiev does not try to incite violence in east Ukraine to encourage the United States to send Ukrainian forces lethal weapons. Paris and Berlin helped mediate a peace deal in the Belarussian capital Minsk on Feb. 12 to try to end fighting between government forces and pro-Russian separatists in eastern Ukraine but the truce remains fragile. In an interview with Russian television, Russian Foreign Minister Sergei Lavrov said he was concerned Kiev might stage “provocations” to try to persuade the United States that it should aid Kiev by sending it lethal weapons.

“Provocateurs in Kiev … could try to ‘whip something up’ in the expectation that this will influence the world public and weapons will flow into Ukraine,” he told the new program Vesti on Saturday with Sergei Brilev. “I am convinced that Berlin and Paris, as the most important players …, should prevent such a turn of events.” Lavrov also repeated Russia’s opposition to United Nations peacekeepers being sent to the east.

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Makes sense.

France Decrees New Rooftops Must Be Covered In Plants Or Solar Panels (Guardian)

Rooftops on new buildings built in commercial zones in France must either be partially covered in plants or solar panels, under a law approved on Thursday. Green roofs have an isolating effect, helping reduce the amount of energy needed to heat a building in winter and cool it in summer. They also retain rainwater, thus helping reduce problems with runoff, while favouring biodiversity and giving birds a place to nest in the urban jungle, ecologists say.

The law approved by parliament was more limited in scope than initial calls by French environmental activists to make green roofs that cover the entire surface mandatory on all new buildings. The Socialist government convinced activists to limit the scope of the law to commercial buildings.The law was also made less onerous for businesses by requiring only part of the roof to be covered with plants, and giving them the choice of installing solar panels to generate electricity instead. Green roofs are popular in Germany and Australia, and Canada’s city of Toronto adopted a by-law in 2009 mandating them in industrial and residential buildings.

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Only the death penalty for all involved will help. Hunters, traders, buyers, the whole lot. No mercy.

Africa Is Centre Of A ‘Wildlife War’ That The World Is Losing (Observer)

The northern white rhino is heading the way of the dinosaurs. With only five left on Earth – three in Kenya, one in America, and one in the Czech Republic – extinction is now inevitable. It survived for millions of years, but could not survive mankind. This is just one subspecies, but soon the planet’s remaining 28,500 rhinos could be under threat from the illegal wildlife trade. Worth up to £12bn a year, it has joined drugs, arms and human trafficking as one of the world’s biggest crime rackets. Ground zero in this “wildlife war” is Africa, and the conservationists are losing as animals are slaughtered on an industrial scale to meet demand for horn and ivory in newly affluent Asian countries.

Urgent solutions will be debated this week in Kasane, Botswana, as politicians and environmentalists gather for a follow-up to last year’s much-trumpeted London conference on the crisis. Hosted by the British government and Princes Charles, William and Harry, 46 countries signed up to a “London declaration” that promised to address corruption, adopt legislation for tougher penalties against poachers and recruit more law enforcement officers. William Hague, then the foreign secretary, announced at the time: “I believe today we have begun to turn the tide.” More than a year later, however, when the Kasane summit reviews whether these commitments have been implemented, it seems likely that some will be found wanting.

Despite a celebrity-led drive to raise awareness in China and Vietnam, where horn is coveted as an ingredient in traditional medicine or as a status symbol, a record 1,215 rhinos were killed last year in South Africa, 20% more than in 2013. At least 220 chimpanzees, 106 orang-utans, 33 bonobos and 15 gorillas have been lost from the wild over the past 14 months, according to estimates by the Great Apes Survival Partnership. Elephants also remain under siege – at least 20,000 were poached annually from 2011 to 2013, according to the UN – although countries such as Kenya, Tanzania and Uganda have fought back with some measure of success over the past year. “The numbers are still going up and they don’t make us any happier,” said Dr Patrick Bergin, chief executive of the African Wildlife Foundation.

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About the last person on earth you want to handle the issue.

Australia PM Tony Abbott Unveils Plan To Save Great Barrier Reef (Guardian)

Australia has submitted its long-term plan to arrest the decline of the Great Barrier Reef, with Tony Abbott stressing to the international community that the government is “utterly committed” to the reef’s preservation. The Reef 2050 Long-Term Sustainability Plan has been compiled to allay concerns from Unesco over the fading health of the reef, with the organisation’s world heritage committee set to meet in June to decide whether the reef is to be listed as “in danger.” The plan sets a number of targets to reduce pollution running on to the reef, including an 80% reduction in nitrogen and a 50% cut in sediment by 2025.

The final version of the strategy has been re-written to include the policies of Queensland’s new Labor government, which has pledged to ban the dumping of dredged sediment in the reef’s world heritage area and to provide $100m over five years to improve water quality. For its part, the federal government is banning dumping in the reef’s marine park and announced a further $100m in funding for the Reef Trust, a body that will work with landowners to ensure chemicals are not flowing into the coral ecosystem. There will also be a new independent scientific panel, headed by the government’s chief scientist, Ian Chubb, which will oversee the work of the Reef Trust. Abbott said the government was helping to ensure that the reef is “handed on in the best possible condition to our children and grandchildren”.

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Our biggest crime aginst humanity: “African mining scandals, says Baldwin, “have roots in Mayfair”, while “oil deals in London have links to violence in Congo.”

The Global Extraction Industry: Plunder, Violence And Corruption (Observer)

Index on Censorship could not have awarded one of its Freedom of Expression prizes more estimably than to Angolan reporter Rafael Marques de Morais. In doing so, Index prises open Marques’s principal discourse: the prising open of the land itself by those who plunder for profit without heed. Marques’s writing in Angola on the links between diamond mining and government corruption draws attention to the growing causes for concern around the world in relation to the industry of “extraction” and how it behaves financially, politically and morally as it pursues sought-after minerals and commodities to fuel economic growth.

Across the globe, the management of extraction in poor countries rich in resources – by government and the multinationals they invite in – has become hallmarked by scandal, violence, corruption and environmental calamity. Vast international conglomerates are often faced with allegations that they abet the plundering of natural resources, usually in league with local officials and almost always to the detriment of indigenous communities. Only a fraction of the wealth accrued from extraction is left in the host country – to say nothing of the communities often “resettled” – ergo forcibly removed – from the land concerned. This nexus of politics and capitalism leads invariably to violence and death.

Ovid, who wrote around 10BC about the origins of man, accounted for the genesis of warfare in these terms: “The land, which had previously been common to all, like sunlight and breezes, was now divided up far and wide by boundaries, set by cautious surveyors. Nor was it only corn and their due nourishment that men demanded of the rich earth: they explored its very bowels, and dug out the wealth which it had hidden away, close to the Stygian shades; and this wealth was a further incitement to wickedness. By this time iron had been discovered, to the hurt of mankind, and gold, more hurtful still than iron. War made its appearance, using both metals in its conflict, clashing weapons in bloodstained hands.”

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Oct 192014
 
 October 19, 2014  Posted by at 10:50 am Finance Tagged with: , , , , , , , , , ,  


Edwin Rosskam Service station, Connecticut Ave., Washington, DC Sep 1940

Low Oil Price Means High Anxiety For OPEC As US Flexes Its Muscles (Observer)
Germany’s Tough Medicine Risks Killing Off The European Project (Observer)
Why The Eurozone’s Woes Have Become The World’s Problem (Observer)
Under-30s Being Priced Out Of The UK (Observer)
Britain’s Five Richest Families Worth More Than Poorest 20% (Guardian)
UK Mortgage Battle Hots Up As Banks Prepare To Slash Rates (Guardian)
Why Abenomics Failed: There Was A “Blind Spot From The Outset” (Zero Hedge)
Richard Feynman On The Social Sciences (Tavares)
Orwell Was Only Wrong About The Date (Scott Stantis)
Struggle Against Extinction: The Pictures That Capture The Story (Observer)
The Age Of Loneliness Is Killing Us (Monbiot)
Human Extinction? Not So Much (Ecoshock)
White Rhino Dies In Kenya: Only Six Animals Left Alive In The World (Observer)
Radiation Levels At Fukushima Rise To Record Highs After Typhoon (RT)
Oxfam Calls For Troops In Africa As Ebola Response Is Criticized (Observer)
Ebola Deaths In Liberia ‘Far Higher Than Reported’ (Observer)

Saudi Arabia vs its former partners, but still with the US, in a long established protection racket.

Low Oil Price Means High Anxiety For OPEC As US Flexes Its Muscles (Observer)

During a week of turmoil on the global stock markets, the energy sector played out a drama that could have even bigger consequences: a standoff between the US and the Opec oil-producing nations. While pension holders and investors watched aghast as billions of pounds were lost to market gyrations, a fossil-fuel glut and a slowing global economy have driven the oil price down to a level that could save the world $1.8bn a day on fuel costs. If this is some consolation for households everywhere after last week’s hit on stock market wealth, it means pain for the Opec cartel, composed mainly of Middle East producers. Opec’s 12-member group has largely controlled the global price of crude oil for the past 40 years, but the US’s discovery of shale oil and gas has dramatically shifted the balance of power, to the apparent benefit of consumers and the discomfort of petrostates from Venezuela to Russia.

The price of oil has plummeted by more than a quarter since June but will Opec, which holds 60% of the world’s reserves and 30% of supplies, cut its own production to try to lift prices? Or will the cartel allow a further slide from the current price – in the mid-$80s per barrel – in the hope of making it impossible for US drillers to make a profit from their wells, and so driving them out of business? Saudi Arabia – Opec powerhouse and traditional ally of Washington – and other rich Gulf nations have been building up their cash reserves and have shown themselves willing to slash prices in a bid to retain market share in China and the rest of Asia. The US, the world’s biggest oil consumer, has relied in the past on Saudi to keep Opec price rises relatively low. But now it has the complicating factor of protecting its own huge shale industry.

Even US oil producers see the political benefits of abundant shale resources and the resultant downward pressure on prices. Rex Tillerson, chief executive of Exxon Mobil, the biggest US oil company, said recently that his country had now entered a “new era of energy abundance” – meaning it is no longer dependent on the politically unstable Middle East. So there will be understandable tension next month when the ruling Opec body meets in Vienna and its member states fight over what to do. The cartel would like to reassert its authority over oil prices but some producing countries, such as Saudi, can withstand lower crude values for much longer than others, and the relative costs of production vary wildly between nations.

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That’s what I’m hoping for.

Germany’s Tough Medicine Risks Killing Off The European Project (Observer)

Beppe Grillo, the comedian-turned-rebel leader of Italian politics, must have laughed heartily. No sooner had he announced to supporters that the euro was “a total disaster” than the currency union was driven to the brink of catastrophe once again. Grillo launched a campaign in Rome last weekend for a 1 million-strong petition against the euro, saying: “We have to leave the euro as soon as possible and defend the sovereignty of the Italian people from the European Central Bank.” Hours later markets slumped on news that the 18-member eurozone was probably heading for recession. And there was worse to come. Greece, the trigger for the 2010 euro crisis, saw its borrowing rates soar, putting it back on the “at-risk register”. Investors, already digesting reports of slowing global growth, were also spooked by reports that a row in Brussels over spending caps on France and Italy had turned nasty.

With China’s growth rate continuing to slow, and US data showing the world’s largest economy was not as immune to the turmoil as many believed, it was time to head for the hills. Wall Street slumped and a month of falls saw the FTSE 100 lose 11% of its value. In the wake of the 2008 global financial crisis, voters backed austerity and the euro in expectation of a debt-reducing recovery. But as many Keynesian economists warned, this has proved impossible. More than five years later, there are now plenty of voters willing to call time on the experiment, Grillo among them. And there seems to be no end to austerity-driven low growth in sight. The increasingly hard line taken by Berlin over the need for further reforms in debtor nations such as Greece and Italy – by which it means wage cuts – has worked to turn a recovery into a near recession.

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Given Europe’s size, they always were.

Why The Eurozone’s Woes Have Become The World’s Problem (Observer)

Forget the economic threat posed by Ebola. Pay scant heed to the risk that the Chinese property bubble is about to be pricked. Take with a pinch of salt the risk that an imminent rise in US interest rates will trigger a wave of disruption across the fragile markets of the emerging world. In the end, the explanation for last week’s plunge on global financial markets comes down to one word: Europe. That’s not to say none of the other factors matter. Global pandemics, all the way back to the Black Death in the 14th century, have always been economically catastrophic. The knock-on effects of America starting to jack up the cost of borrowing are uncertain, but potentially problematical. The dangers facing policymakers in China as they seek to move the economy towards lower but better balanced growth are obvious. But it is the worsening condition of the eurozone that has spooked markets in the past couple of weeks.

The problem can be broken down into a number of parts. The first problem is that recovery in Europe appears to have been aborted. A tentative recovery began in the middle of 2013, but appears to have run into the sand. Technically, the eurozone has been in and out of recession since 2008. In reality, the story of the past six years has been of a deep slump followed by half a decade of flatlining. Until now, markets have been able to comfort themselves with the fact that the core of the eurozone – Germany – has been doing fine. Recent evidence has shown that the slow growth elsewhere in Europe, in countries such as France and Italy, is now having an effect on Germany. Exports and manufacturing output are suffering, not helped by the blow to confidence caused by the tension in Ukraine. That’s problem number two.

Until now, opposition from Berlin and the still influential Bundesbank in Frankfurt has made it impossible for the European Central Bank to fire its last big weapon: quantitative easing. The slowdown in Germany should make it easier for the ECB’s president, Mario Draghi, to begin cranking up the electronic printing presses, but are markets impressed? Not really. They are coming to the view that monetary policy – using interest rates and QE to regulate the price and quantity of money – is maxed out. The third facet of the problem is concern that Draghi’s intervention will be too little, too late, and that Europe is condemned to years of nugatory growth.

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This is as crazy and disgraceful as the over 50% youth unemployment in southern Europe.

Under-30s Being Priced Out Of The UK (Observer)

Britain is on the verge of becoming permanently divided between tribes of haves and have-nots as the young increasingly miss out on the opportunities enjoyed by their parents’ generation, the government’s social mobility tsar claim. The under-30s in particular are being priced out of owning their own homes, paid lower wages and left with diminishing job prospects, despite a strong economic recovery being enjoyed by some. Those without the benefits of wealthy parents are condemned to languish on “the wrong side of the divide that is opening up in British society”, according to Alan Milburn, the former Labour cabinet minister who chairs the government’s Commission on Social Mobility. In an illustration of how the less affluent young have been abandoned, Milburn notes that even the Saturday job has become a thing of the past. The proportion of 16- to 17-year-olds in full-time education who also work has fallen from 37% to 18% in a decade.

Milburn spoke out in an interview with the Observer as tens of thousands of people, including public sector workers such as teachers and nurses opposed to a below-inflation 1% pay offer from the government, protested in London, Glasgow and Belfast about pay and austerity on Saturday. The TUC, which organised the protests under the slogan “Britain Needs a Pay Rise”, said that between 80,000 and 90,000 people took part in the London march. Speaking on the eve of the publication of his final annual report on social mobility to ministers before the general election, Milburn demanded urgent action by the state and a change in direction by businesses. He said that only a radical change would save a generation of Britons buffeted by an economic downturn and condemned by a fundamental change in the labour market that left them without hope of better lives.

In a strikingly downbeat intervention, Milburn said: “It is depressing. The current generation of young people are educated better and for longer than any previous one. But young people are losing out on jobs, earnings and housing. “This recession has been particularly hard on young people. The ratio of youth to adult unemployment rates was just over two to one in 1996, compared to just under three to one today. On any definition we are nowhere near the chancellor’s objective of “full employment” for young people. Young people are the losers in the recovery to date.”

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Britain as a mirror to the world.

Britain’s Five Richest Families Worth More Than Poorest 20% (Guardian)

The scale of Britain’s growing inequality is revealed by a report from a leading charity showing that the country’s five richest families now own more wealth than the poorest 20% of the population. Oxfam urged the chancellor George Osborne to use Wednesday’s budget to make a fresh assault on tax avoidance and introduce a living wage in a report highlighting how a handful of the super-rich, headed by the Duke of Westminster, have more money and financial assets than 12.6 million Britons put together. The development charity, which has opened UK programmes to tackle poverty, said the government should explore the possibility of a wealth tax after revealing how income gains and the benefits of rising asset prices had disproportionately helped those at the top. Although Labour is seeking to make living standards central to the political debate in the run-up to next year’s general election, Osborne is determined not to abandon the deficit-reduction strategy that has been in place since 2010.

But he is likely to announce a fresh crackdown on tax avoidance and measures aimed at overseas owners of high-value London property in order to pay for modest tax cuts for working families. The early stages of the UK’s most severe post-war recession saw a fall in inequality as the least well-off were shielded by tax credits and benefits. But the trend has been reversed in recent years as a result of falling real wages, the rising cost of food and fuel, and by the exclusion of most poor families from home and share ownership. In a report, a Tale of Two Britains, Oxfam said the poorest 20% in the UK had wealth totalling £28.1bn – an average of £2,230 each. The latest rich list from Forbes magazine showed that the five top UK entries – the family of the Duke of Westminster, David and Simon Reuben, the Hinduja brothers, the Cadogan family, and Sports Direct retail boss Mike Ashley – between them had property, savings and other assets worth £28.2bn.

The most affluent family in Britain, headed by Major General Gerald Grosvenor, owns 77 hectares (190 acres) of prime real estate in Belgravia, London, and has been a beneficiary of the foreign money flooding in to the capital’s soaring property market in recent years. Oxfam said Grosvenor and his family had more wealth (£7.9bn) than the poorest 10% of the UK population (£7.8bn). Oxfam’s director of campaigns and policy, Ben Phillips, said: “Britain is becoming a deeply divided nation, with a wealthy elite who are seeing their incomes spiral up, while millions of families are struggling to make ends meet. “It’s deeply worrying that these extreme levels of wealth inequality exist in Britain today, where just a handful of people have more money than millions struggling to survive on the breadline.”

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Chasing the last few suckers left.

UK Mortgage Battle Hots Up As Banks Prepare To Slash Rates (Guardian)

The battle to tempt mortgage customers with attractive deals is heating up again as major lenders put more rate cuts into action. Barclays is preparing to offer what it said are some of its lowest ever rates, including a three-year fixed rate at 2.29%, a five-year fix at 2.85% and a 10-year fix at 3.49%. All of these deals are aimed at people with 40% deposits and come with a £999 fee. Barclays is also cutting the rate on its innovative family springboard mortgage, which helps people with only a 5% deposit get on the property ladder by allowing their parents to put some money into a savings account which is then linked to the mortgage. The savings money is later released back to their parents with interest, provided that the mortgage payments are kept up to date. The rate on a three-year fixed family springboard deal, which has no application fee, is to be slashed from 3.79% to 2.99%.

The bank is also cutting rates on deals aimed at people with deposits of 10%, 15%, 20% and 30% in what will be the seventh consecutive round of reductions to its range. Barclays said its “never seen before” rate cuts will come into place early this week and they are likely to be around for only a limited period. Meanwhile, a new 0.99% deal from HSBC will be launched on Monday. HSBC has said the product, which is available for borrowers with a 40% deposit, has the lowest rate it has ever offered. The 0.99% deal is in effect a 2.95% discount off HSBC’s 3.94% standard variable rate (SVR), which lasts for two years. In theory, HSBC could decide to increase its SVR within the two-year discount period, which would mean the rate would move above 0.99% but the borrower would still get a rate of 2.95% below whatever the new SVR rate was for the two years after initially taking out the deal.

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Exactly what I’ve always said all the time about Abenomics. It should be held up as an example for all of our stimulus measures.

Why Abenomics Failed: There Was A “Blind Spot From The Outset” (Zero Hedge)

Ever since Abenomics was announced in late 2012, we have explained very clearly that the whole “shock and awe” approach to stimulating the economy by sending inflation into borderline “hyper” mode in a country whose main problem has to do with an aging population demographic cliff and a global market that no longer thinks Walkmen and Sony Trinitrons are cool and instead can find all of Japan’s replacement products for cheaper and at a higher quality out of South Korea, was doomed to failure. Very serious sellsiders, economists and pundits disagreed and commended Abe on his second attempt at fixing the country by doing more of what has not only failed to work for 30 years, but made the problem worse and worse.

Well, nearly two years later, or roughly the usual delay before the rest of the world catches up to this website’s “conspiratorial ramblings”, the leader of the very serious economist crew, none other than Goldman Sachs, formally admits that Abenomics was a failure, and two weeks after Goldman also admitted that now Japan is informally (and soon officially) in a triple-drip recession, begins the scapegoating process when in a note by its Naohiko Baba, it says that Abenomics failed because all along it was based on two faulty “misconceptions and miscalculations.” Ironically, the same “misconceptions and miscalculations” that frame the Keynesian “recovery” debate in every insolvent developed world country which is devaluing its currency to boost its exports and economy, when in reality all it is doing is propping up its stock market, allowing the 1% of the population to cash out and leaving the 99% with the economic collapse that inevitably follows.

So what happened with Abenomics, and why did Goldman, initially a fervent supporter and huge fan – and beneficiary because those trillions in fungible BOJ liquidity injections made their way first and foremost into Goldman year end bonuses – change its tune so dramatically?

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Bit of a loose argument, since Feynman never specifically talked about economics, but point taken.

Richard Feynman On The Social Sciences (Tavares)

Looking back at his own experience, Feynman was keenly aware of how easy our experiments can deceive us and thus of the need to employ a rigorous scientific approach in order to find the truth. Because of this, he was highly critical of other sciences which did not adhere to the same principles. The social sciences are a broad group of academic disciplines concerned with the study of the social life of human groups and individuals, including anthropology, geography, political science, psychology and several others. Here is what he had to say about them in a BBC interview in 1981:

“Because of the success of science, there is a kind of a pseudo-science. Social science is an example of a science which is not a science. They follow the forms. You gather data, you do so and so and so forth, but they don’t get any laws, they haven’t found out anything. They haven’t got anywhere – yet. Maybe someday they will, but it’s not very well developed. “But what happens is, at an even more mundane level, we get experts on everything that sound like they are sort of scientific, expert. They are not scientists. They sit at a typewriter and they make up something like ‘a food grown with a fertilizer that’s organic is better for you than food grown with a fertilizer that is inorganic’. Maybe true, may not be true. But it hasn’t been demonstrated one way or the other. But they’ll sit there on the typewriter and make up all this stuff as if it’s science and then become experts on foods, organic foods and so on. There’s all kinds of myths and pseudo-science all over the place.

“Now, I might be quite wrong. Maybe they do know all these things. But I don’t think I’m wrong. See, I have the advantage of having found out how hard it is to get to really know something, how careful you have about checking your experiments, how easy it is to make mistakes and fool yourself. I know what it means to know something. “And therefore, I see how they get their information. And I can’t believe that they know when they haven’t done the work necessary, they haven’t done the checks necessary, they haven’t done the care necessary. I have a great suspicion that they don’t know and that they are intimidating people by it. I think so. I don’t know the world very well but that’s what I think.”

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Amen. Word.

Orwell Was Only Wrong About The Date (Scott Stantis)

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Wildlife Photographer of the Year exhibition.

Struggle Against Extinction: The Pictures That Capture The Story (Observer)

Toshiji Fukuda went to extraordinary lengths to photograph an Amur tiger, one of the world’s rarest mammals, in 2011. He built a tiny wooden hut overlooking a beach in Russia’s remote Lazovsky nature reserve, on the Sea of Japan, and spent the winter there. Fukuda was 63 at the time. “Older people have one advantage: time passes more quickly for us than the young,” he said later. Possession of such resilience was fortunate because Fukuda had to wait seven weeks for his only glimpse of an Amur tiger, which resulted in a single stunning image of the animal strolling imperiously along the beach below his hide. “It was as if the goddess of the Taiga had appeared before me,” he recalled.

In recognition of the photographer’s efforts, Fukuda was given a key award at the 2013 Wildlife Photographer of the Year exhibition, an annual event that has showcased the best images taken of the planet’s rarest animals and habitats and which has taken on an increasingly important role in recording their fates. This year’s exhibition, which opens on Friday, is the 50th such exhibition – to be held, as usual, at the Natural History Museum – and a recent study of past winning images has revealed the unexpected twists of fortune that have affected the world’s wildlife. Some animals, which appeared to be doing well, have plummeted towards extinction. Others, which seemed to be doomed, have bounced back. “It still seems to be very much a matter of hit or miss whether a threatened species recovers or instead continues to dwindle towards extinction,” said the museum’s curator of mammals, Roberto Portela Miguez.

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” … a life-denying ideology, which enforces and celebrates our social isolation. The war of every man against every man – competition and individualism, in other words – is the religion of our time…”

The Age Of Loneliness Is Killing Us (Monbiot)

What do we call this time? It’s not the information age: the collapse of popular education movements left a void filled by marketing and conspiracy theories. Like the stone age, iron age and space age, the digital age says plenty about our artefacts but little about society. The anthropocene, in which humans exert a major impact on the biosphere, fails to distinguish this century from the previous 20. What clear social change marks out our time from those that precede it? To me it’s obvious. This is the Age of Loneliness. When Thomas Hobbes claimed that in the state of nature, before authority arose to keep us in check, we were engaged in a war “of every man against every man”, he could not have been more wrong. We were social creatures from the start, mammalian bees, who depended entirely on each other. The hominins of east Africa could not have survived one night alone. We are shaped, to a greater extent than almost any other species, by contact with others. The age we are entering, in which we exist apart, is unlike any that has gone before.

Three months ago we read that loneliness has become an epidemic among young adults. Now we learn that it is just as great an affliction of older people. A study by Independent Age shows that severe loneliness in England blights the lives of 700,000 men and 1.1m women over 50, and is rising with astonishing speed. Ebola is unlikely ever to kill as many people as this disease strikes down. Social isolation is as potent a cause of early death as smoking 15 cigarettes a day; loneliness, research suggests, is twice as deadly as obesity. Dementia, high blood pressure, alcoholism and accidents – all these, like depression, paranoia, anxiety and suicide, become more prevalent when connections are cut. We cannot cope alone.

Yes, factories have closed, people travel by car instead of buses, use YouTube rather than the cinema. But these shifts alone fail to explain the speed of our social collapse. These structural changes have been accompanied by a life-denying ideology, which enforces and celebrates our social isolation. The war of every man against every man – competition and individualism, in other words – is the religion of our time, justified by a mythology of lone rangers, sole traders, self-starters, self-made men and women, going it alone. For the most social of creatures, who cannot prosper without love, there is no such thing as society, only heroic individualism. What counts is to win. The rest is collateral damage. British children no longer aspire to be train drivers or nurses – more than a fifth say they “just want to be rich”: wealth and fame are the sole ambitions of 40% of those surveyed.

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Why anyone would want to do Guy McPherson the honor of talking about his loony tunes is beyond me, but here goes. Nicole gets mentioned.

Human Extinction? Not So Much (Ecoshock)

The case against going extinct soon due to extreme climate change & human impacts.

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The sadness is unspeakably deep.

White Rhino Dies In Kenya: Only Six Animals Left Alive In The World (Observer)

An endangered northern white rhino has died in Kenya, a wildlife conservancy has said, meaning only six of the animals are left alive in the world. Suni, a 34-year-old northern white, and the first of his species to be born in captivity, was found dead on Friday by rangers at the Ol Pejeta Conservancy near Nairobi. While there are thousands of southern white rhinos in the plains of sub-Saharan Africa, decades of rampant poaching has meant the northern white rhino is close to extinction. Suni was one of the last two breeding males in the world as no northern white rhinos are believed to have survived in the wild. Though the conservancy said Suni was not poached, the cause of his death is currently unclear. Suni was born at the Dvur Kralove Zoo in Czech Republic in 1980. He was one of the four northern white rhinos brought from that zoo to the Ol Pejeta Conservancy in 2009 to take part in a breeding programme.

Wildlife experts had hoped the 90,000-acre private wildlife conservancy, framed on the equator and nestled between the snow capped Mount Kenya and the Aberdare mountain range, would offer a more favourable climate for breeding. The conservancy said in a statement: “The species now stands at the brink of complete extinction, a sorry testament to the greed of the human race. “We will continue to do what we can to work with the remaining three animals on Ol Pejeta in the hope that our efforts will one day result in the successful birth of a northern white rhino calf.” Suni’s father, Suit, died in 2006 of natural causes, also aged 34.

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” … levels of the radioactive isotope cesium are now at 251,000 becquerels per liter, three times higher than previously-recorded levels.”

Radiation Levels At Fukushima Rise To Record Highs After Typhoon (RT)

The amount of radioactive water near the Fukushima Daiichi nuclear plant has risen to record levels after a typhoon passed through Japan last week, state media outlet NHK reported on Wednesday. Specifically, levels of the radioactive isotope cesium are now at 251,000 becquerels per liter, three times higher than previously-recorded levels. Cesium, which is highly soluble and can spread easily, is known to be capable of causing cancer. Meanwhile, other measurements also show remarkably high levels of tritium – another radioactive isotope of hydrogen. Samples from October 9 indicate that there are 150,000 becquerels of tritium per liter in the groundwater near Fukushima, according to Japan’s JIJI agency. Compared to levels recorded last week, that’s an increase of more than 10 times.

Additionally, “materials that emit beta rays, such as strontium-90, which causes bone cancer, also shattered records with a reading of 1.2 million becquerels, the utility said of the sample,” JIJI reported. Officials blamed these increases on the recent typhoon, which resulted in large amounts of rainfall and injured dozens of people on Okinawa and Kyushu before moving westward towards Tokyo and Fukushima. While cesium is considered to be more dangerous than tritium, both are radioactive substances that authorities would like to keep from being discharged into the Pacific Ocean in high quantities. For now, extra measures to contain the issue are not on the table, since “additional measures have been ruled out since the depth and scope of the contaminated water leaks are unknown, and TEPCO already has in place several measures to control the problem, such as the pumping of groundwater or walls to retain underground water,” according to the IANS news service.

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A shocking number: “There are some 3,700 Ebola orphans.”

Oxfam Calls For Troops In Africa As Ebola Response Is Criticized (Observer)

Anger is growing over the “inadequate” response to the Ebola epidemic this weekend with the World Health Organisation’s Africa office accused of incompetence and world governments of having failed. Aid charities and the president of the World Bank are among the critics, declaring that the fight against the virus is in danger of being lost. On Saturday Oxfam took the unusual step of calling for troops to be sent to west Africa, along with funding and medical staff, to prevent the Ebola outbreak becoming the “definitive humanitarian disaster of our generation”. It accused countries that did not commit military personnel of “costing lives”. The charity said that there was less than a two-month window to curb the spread of the virus but there remained a crippling shortfall in logistical support. Several African countries have for the last decade been suffering severe shortages of homegrown medics thanks to a “brain drain” to countries such as Britain, which rely on foreign workers.

The executive director of frontline medical charity Médecins Sans Frontières, Vickie Hawkins, said national and global health systems had failed. “We are angry that the global response to this outbreak has been so slow and inadequate. “We have been amazed that for months the burden of the response could be carried by one single, private medical organisation, while pleading for more help and watching the situation get worse and worse. When the outbreak is under control, we must reflect on how health systems can have failed quite so badly. But the priority for now must remain the urgent fight against Ebola – we simply cannot afford to fail.” The worst outbreak on record has claimed 4,500 lives, out of 8,914 recorded cases since the start of the year, mostly in Liberia, Sierra Leone and Guinea. The true number is agreed to be higher. There are some 3,700 Ebola orphans.

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There should be no doubt about this. Too many reasons for too many people to play it down.

Ebola Deaths In Liberia ‘Far Higher Than Reported’ (Observer)

The true death toll from the Ebola epidemic is being masked by chaotic data collection and people’s reluctance to admit that their loved ones had the virus, according to one of west Africa’s most celebrated film-makers. Sorious Samura, who has just returned from making a documentary on the crisis in Liberia, said it is very clear on the ground that the true number of dead is far higher than the official figures being reported by the World Health Organisation. Liberia accounts for more than half of all the official Ebola deaths, with a total of 2,458. Overall, the number of dead across Liberia, Sierra Leone and Guinea has exceeded 4,500. Samura, a television journalist originally from Sierra Leone, said the Liberian authorities appeared to be deliberately downplaying the true number of cases, for fear of increasing alarm in the west African country.

“People are dying in greater numbers than we know, according to MSF [Médecins sans Frontières] and WHO officials. Certain departments are refusing to give them the figures – because the lower it is, the more peace of mind they can give people. The truth is that it is still not under control.” WHO has admitted that problems with data-gathering make it hard to track the evolution of the epidemic, with the number of cases in the capital, Monrovia, going under-reported. Efforts to count freshly dug graves had been abandoned. Local culture is also distorting the figures. Traditional burial rites involve relatives touching the body – a practice that can spread Ebola – so the Liberian government has ruled that Ebola victims must be cremated. “They don’t like this burning of bodies,” said Samura, whose programme will air on 12 November on Al Jazeera English. “Before the government gets there they will have buried their loved ones and broken all the rules.”

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