Oct 212015
 
 October 21, 2015  Posted by at 9:51 am Finance Tagged with: , , , , , , , , ,  


Christopher Helin Federal truck, City Ice Delivery Co. 1934

China: A Debt Balloon With Nowhere to Go But Down (Bloomberg)
China Stocks Down Over 4% In Choppy Trade (CNBC)
China’s Overheated Bond Market Showing Strain for Local Bankers (Bloomberg)
China Bond Defaults Seen Rising After Sinosteel Misses Payment (Bloomberg)
Just How Bad Was the 2009 Global Recession? Really, Really Bad (Bloomberg)
Why Miners May Want To Rethink Record High Output (CNBC)
Barclays Plots Bombshell Ring-Fencing Plan (Sky)
Credit Suisse to Launch $6.3 Billion Capital Increase (WSJ)
Irish Biggest Losers From Financial Crash: ECB (Reuters)
Why There’s No Easy Way Out Of Spain’s Insurmountable Economic Mess (Telegraph)
From European Union to Just a Common Market (Roberto Savio)
Lessons for Draghi From a Land of Sub-Zero Interest Rates (Bloomberg)
Developers in Australia Roll Out Red Carpet for Wealthy Chinese (WSJ)
Britain Addicted To Bombing With The Weary Rationale Of A Junkie (Frankie Boyle)
Number Of London’s ‘Working Poor’ Surges 70% In 10 Years (Guardian)
Food Banks Have Become A Lifeline For Many, But Where Is The Way Out? (Guardian)
Buying Begets Buying: Stuff Has Consumed The Average American’s Life (Guardian)
Slovenia Deploys Troops to Border as Migrant Exodus Swells (AP)
Resettling Migrants From Middle East Camps Could Ease Crisis: Greece (Reuters)
Refugee Boats Wash Up At UK Military Base In Cyprus (Guardian)

“..the real problem will come in U.S. dollar China corporates.”

China: A Debt Balloon With Nowhere to Go But Down (Bloomberg)

Chinese skyscrapers apparently aren’t scaring bond investors, but they probably should. Debt buyers have brushed off concerns about China’s overvalued real estate and slowing growth this year. They have been snapping up speculative-grade bonds of Chinese companies, even those sold in the U.S., where the appetite for risk is waning in general. Consider, for example, a $41.5 billion pool of dollar-denominated bonds sold in large part by deeply indebted Chinese property companies. The debt has gained 9.2% this year, which is equal to $3.8 billion of market gains, according to Bank of America Merrill Lynch index data. These hefty returns are pretty amazing when juxtaposed with losses on U.S. high-yield bonds, which have suffered amid plunging commodity prices and waning economic momentum, especially in China.

Frederic Neumann, HSBC’s co-head of Asian economics research, put it more bluntly. “In many ways, the market is divorced from reality,” he said Monday at a conference in New York. While local-currency Chinese debt may hold its value, “the real problem will come in U.S. dollar China corporates.” Chinese debt markets have benefited from tumult in the nation’s equities, which has pushed local investors into the safety of bonds. A lot of this money is sticky, with institutions wanting to keep their money close to home. But some of these investors have made their way to the U.S., where they’re buying up bonds of Chinese companies. That’s propping up this slice of the dollar-denominated market at an unlikely time.

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Shanghai closed own 3% -after a late surge-, Shenzhen dropped almost 6%.

China Stocks Down Over 4% In Choppy Trade (CNBC)

Asian stocks mostly advanced on Wednesday, but share markets in China were hit by a sudden bout of selling in the afternoon session. Major U.S. averages slipped overnight, with the Dow Jones Industrial Average snapping a three-day winning streak, amid a decline in healthcare and biotech names. The blue-chip Dow and S&P 500 shed 0.1% each, while the Nasdaq Composite closed down 0.5%. Volatility returned to China’s share markets on Wednesday, with the Shanghai Composite index skidding over 4% after weaving in and out of positive territory since the market open. Earlier in the session, the key index touched 3,444 points – its highest level in two months.

“For the Shanghai Composite, the 3,500 level remains the key barrier to break. I expect stiff resistance above this handle as those who bought when the market was above this level, expecting state buying to prop up prices, will be keen to get rid of their stock holdings,” IG’s market strategist Bernard Aw wrote in a note. Shares of Huaneng Power leaped 2% after the listed unit of China’s biggest power generator delivering a 11.2% rise in third-quarter net profit on Tuesday, marking its weakest pace in three quarters amid slowing growth in the mainland. Among other indexes, the CSI300 erased early gains to slide 2.3%. Small-caps underperformed; the Shenzhen Composite tumbled 4% and the start-up ChiNext board plummeted 4.4%, a day after jumping 2%. Hong Kong markets are closed for the Chung Yeung Festival.

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“Repurchase transactions allowing investors to use existing note holdings as collateral to borrow money for one day doubled in the past year..”

China’s Overheated Bond Market Showing Strain for Local Bankers (Bloomberg)

Chinese bankers say a debt-driven bond market rally is starting to show the same signs of overheating that preceded a collapse in equities. Repurchase transactions allowing investors to use existing note holdings as collateral to borrow money for one day doubled in the past year to a record 2.1 trillion yuan ($331 billion) on Tuesday. The cost of such funding in the interbank market has risen to 1.87% from a five-year low of 1% in May and has swung violently before, reaching 11.74% in June 2013. A similar contract on the Shanghai stock exchange climbed to 2.21% as equities rallied. Credit spreads near the narrowest in six years are being questioned after a state-owned steel trader missed a bond payment. “There are signs of an overheating market, and certainly the rally can’t last for long,” said Wei Taiyuan at China Merchants Bank in Shanghai.

“Leverage in the bond market is much higher than at any time in history. If equities continue to perform well, or initial public offerings resume, the liquidity-fueled rally may come to an end.” Among possible triggers for a correction is Sinosteel Co.’s failure to pay interest due Tuesday on 2 billion yuan of bonds maturing in 2017, a default that’s fanned concern about the government’s willingness to meet the obligations of state-owned companies. Competition for funds is increasing as the best weekly rally in stocks since June has led to the biggest growth in margin debt for buying equities in half a year, which risks diverting money away from money markets. The yield premium of five-year AAA rated corporate bonds over similar-maturity Chinese government debt fell to 84 basis points on Sept. 7, the least since 2009. The spread widened to 100 basis points on Tuesday, compared with an average of 144 over the past five years.

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Think UK steel is bad?

China Bond Defaults Seen Rising After Sinosteel Misses Payment (Bloomberg)

China bond defaults are forecast to climb after a state-owned steelmaker missed an interest payment, raising questions about the government’s commitment to stand behind such firms. Sinosteel failed to pay interest due Tuesday on 2 billion yuan ($315 million) of 5.3% notes maturing in 2017 after saying it will extend the deadline as it plans to add a unit’s stock as collateral. That came after the National Development and Reform Commission planned to meet noteholders and ask them not to exercise a redemption option on Tuesday to force full repayment, people familiar with the matter said last week. Chinese authorities are weeding out weak state firms that Premier Li Keqiang called zombies. Australia & New Zealand Bank. warned that rising debt in the sector may drag economic growth down to as low as 3%.

Two state-owned companies, Baoding Tianwei and China National Erzhong reneged on obligations earlier this year, according to China International Capital and China Bond Rating Co. “Sinosteel’s default means we will see more and more real bond defaults, in which investors may not get full repayment, in China,” said Ivan Chung at Moody’s in Hong Kong. “The government may want to reduce its intervention in default cases and let market forces play a bigger role.” Sinosteel’s failure to pay interest on time constitutes a default, according to Industrial Securities, Haitong Securities and China Merchants Securities.

China Bond Rating Co. said in a report Wednesday if Sinosteel bond investors had agreed to the delay of interest payment, it didn’t constitute a default, whereas if they hadn’t, it did. Sinosteel hasn’t said in its statements whether it got permission from investors, and two calls to the company Wednesday went unanswered. Flagging authorities’ balancing act as they try to liberalize markets while preventing turbulence, Li said last week the government will prevent systemic risks and banks should not cut or withdraw lending to companies which are in “temporary” difficulties.

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“How do you define a global recession? For individual countries, the rule of thumb is two consecutive quarters of falling output. That convention is difficult to apply to the world economy, which rarely contracts.”

Just How Bad Was the 2009 Global Recession? Really, Really Bad (Bloomberg)

The global recession that followed the financial crisis was the most severe in half a century, an unusually synchronized shock that paralyzed trade and left 23 million more people out of work. Yet the response by policy makers hasn’t been up to the task, with central banks bearing too much of the burden. And the world may be on the edge of another recession, even though it hasn’t recovered from the last one. Those are the conclusions of a new book on business cycles released Tuesday by the IMF. “The 2009 episode was the most severe of the four global recessions of the past half century and the only one during which world output contracted outright – truly deserving of the ‘Great Recession’ label,” write Ayhan Kose, director of the World Bank’s Development Prospects Group, and Marco Terrones, deputy division chief at the IMF’s research department.

“The possibility of another global recession lingers in light of the persistently weak recovery, even though damage from the previous one has yet to be fully repaired.” The 272-page book, “Collapse and Revival: Understanding Global Recessions and Recoveries,” underscores the challenges policy makers face as they try to jumpstart a sputtering recovery more than six years after the global financial crisis. A slowdown in emerging markets driven by weak commodity prices forced the IMF this month to cut its outlook for global growth in 2015 to 3.1%, which would be the weakest rate since 2009, from a July forecast of 3.3%. Kose and Terrones try to answer a question that has become more pressing as nations become more integrated: How do you define a global recession? For individual countries, the rule of thumb is two consecutive quarters of falling output. That convention is difficult to apply to the world economy, which rarely contracts.

In predicting a global recession next year, Citigroup Chief Economist Willem Buiter recently forecast that world growth would slow to “well below” 2% in 2016. Kose and Terrones define a recession as a contraction in inflation-adjusted output per capita accompanied by a broad, synchronized decline in various measures, such as industrial production, unemployment, trade and capital flows, and energy consumption. By that standard, there have been four world recessions since 1960, starting in 1975, 1982, 1991 and 2009. In only the last case did the global economy shrink. The 2009 downturn was “by far” the deepest, Kose and Terrones found. It was also the broadest, with almost all advanced economies and a large number of emerging and developing countries contracting. About 65% of countries fell into recession, the highest among the four slumps.

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Iron ore is like oil: everyone produces full-tard just to stay alive for another day.

Why Miners May Want To Rethink Record High Output (CNBC)

The world’s top three iron-ore producers continue to consistently churn out record volumes of output, worsening an already dire supply glut, but investors are now wondering just how long that strategy can last. On Wednesday, BHP Billiton—the world’s largest miner by market capitalization—reported a 7% annual rise in September quarter output to 61 million tons, adding to a 6% gain in the June quarter, and maintaining its full-year guidance of 247 million tons. Report cards over the past week confirms other miners are also in high-output mode. Rio Tinto reported a 12% annual rise in third-quarter production to 86 million tons, building on a 9% gain in the previous quarter.

The world’s second largest miner also announced it was on track to meet a full-year target of 340 million tons. Meanwhile, Brazilian giant Vale logged a record performance, with output up 2.9% on year to 88.2 million tons and more increases to come. A low cost of production has been the secret to miners’ profitability despite iron ore prices crashing to $52 a ton from nearly $200 four years ago. Rio Tinto’s unit cash production cost at its Pilbara operation fell to $16.20 a ton during the first half of this year, from $20.40 per ton during the same period last year, while Vale plans to reduce its current unit cost from $15.80 per ton to less than $13 by 2018, according to the companies.

But if miners continue ramping up production at high levels, it could become counterproductive. “So far, miners have been able to withstand commodity price declines but if they keep pushing prices down, and testing the low cost producer-price relationship, margins and cash flow will eventually decline and they’ll get to a point where they can’t escape by cutting costs further,” explained David Lennox, resources analyst at market research firm Fat Prophets.

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Consumer deposits to be owned by investment bankers…

Barclays Plots Bombshell Ring-Fencing Plan (Sky)

Barclays is heading for a showdown with the Bank of England over a secret plan to place its high street operations under the temporary ownership of its investment banking arm. Sky News can reveal that Barclays is preparing to warn regulators that the credit rating of its investment bank could be slashed unless it is allowed to restructure its operations in this way. The development threatens to drop a bombshell into the heart of the debate about banking reform just days after City regulators outlined new measures designed to protect taxpayers in the event of a future banking crisis. John McFarlane, Barclays’ executive chairman, is understood to have briefed more than 100 of the bank’s top executives on the plans at a meeting at a west London hotel this month.

Mr McFarlane, who will revert to a non-executive role after a new chief executive is in place, is said to have acknowledged to colleagues the likely difficulty of securing regulators’ approval for the proposals. But an insider familiar with the meeting said he expressed a belief that the idea was consistent with the blueprint drawn up by the Independent Commission on Banking in 2011 for separating banks’ high street and investment banking operations. One source speculated that a rejection of Barclays’ proposals by the PRA could oblige it to sell large parts of its investment bank or seek to raise many billions of pounds in new capital from investors. Like other lenders – although to a greater degree owing to the size of its investment bank – Barclays’ credit rating derives a diversification benefit from its current structure.

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All big banks are in deep.

Credit Suisse to Launch $6.3 Billion Capital Increase (WSJ)

ZURICH— Credit Suisse nnounced plans on Wednesday to raise roughly 6 billion francs ($6.3 billion) in fresh capital and slash costs, as the Swiss bank delivered a disappointing set of quarterly results. Incoming Credit Suisse Chief Executive Tidjane Thiam took over the top job in July, and has been widely expected to raise capital and reduce what has been a relatively expensive, and relatively high-risk investment banking unit. On Wednesday, Credit Suisse said it would restructure its investment bank and significantly cut the amount of capital allocated to the business. That will be coupled by a proposed rights offering of about 4.7 billion francs to raise capital, and a private placing of roughly 1.35 billion francs, Credit Suisse said.

In addition, Credit Suisse said it plans a partial initial public offering for its Swiss bank unit. Its plans also include cutting 3.5 billion francs in costs by the end of 2018. [..] Credit Suisse has long operated a larger investment bank than that of its Swiss peer, UBS. That has provided Credit Suisse with needed profit during good quarters, but also with a relatively expensive set of businesses that are increasingly impractical due to stricter capital rules. Regulators in Switzerland are expected to unveil new rules for the big banks later this year, including a requirement to maintain a bigger cushion of capital relative to the loans and investments being made.

On Wednesday, Credit Suisse said it would reduce the amount of risk-weighted assets allocated to its investment banking businesses such as foreign exchange and rates by 72%, while the allocation to its so-called “prime” business providing services for hedge funds will be cut by half. On Wednesday, Credit Suisse reported a pretax loss of 125 million francs for its investment bank in the third quarter, compared with a profit of 516 million francs in the period last year. The bank cited challenging market conditions and “reduced client activity.” Overall, Credit Suisse posted a 24% decline in net profit for the third quarter, and an 8% decline in net revenues.

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Germany, Holland came out big winners from the crash. if that doesn’t tell you the EU is a failure, what does?

Irish Biggest Losers From Financial Crash: ECB (Reuters)

The Irish lost more of their personal wealth than any other euro zone country in the aftermath of the financial crash while Germany and the Netherlands gained the most, fresh data from the ECB shows. In an analysis of the years between 2009 and 2013, ECB experts discovered that Ireland lost more than €18,000 per person, while Spaniards saw wealth dwindle by almost €13,000 as property in both nations plummeted. Greeks saw their notional wealth decline by almost €17,000 for the same reason. In the Netherlands and Germany, by contrast, the wealth per capita grew by roughly €33,000 and €19,000 respectively, due in part to a boost to financial investments over that time. The data, which takes a snapshot before the recent economic upswing in Spain and Ireland, illustrates the stark differences between countries in the 19-country euro zone that extends from cities such as Helsinki in the north to Athens in the south.

By presenting the data in this manner, the ECB acknowledges the divergence, although there is little the central bank can do to remedy it. Its money-printing scheme known as quantitative easing is spread out according to euro zone member countries’ relative size and not determined by their economic needs. To fix imbalances between strong industrial nations such as Germany and countries such as Spain, experts have long pushed for a system of financial transfers or payments from rich to poor states. Germany, which fears that this would lumber it with unmanageable costs and believes that handouts would discourage spendthrift countries from reforming, has flatly rejected the suggestion.

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A pumped-up success story.

Why There’s No Easy Way Out Of Spain’s Insurmountable Economic Mess (Telegraph)

Spain is the current superstar economy of the eurozone. The former bail-out country, which became embroiled in one of the worst banking and house price collapses in the euro just four years ago, is now proudly held up as the European Union’s model economic pupil. Spain is set to be the fastest growing economy of the “Big Four” euro economies – Germany, France, Italy and Spain – over the next two years, expanding by 3.2pc and 2.5pc respectively, according to the IMF. This compares to just 1.5pc and 1.6pc in Germany, and a paltry 1.2pc and 1.5pc in France. Madrid’s growth rate will also surpass the eurozone average of 2pc and 2.2pc over 2015-16, as it races ahead of the rest. The secret of this success lies in the implementation of belt-tightening measures and structural reforms, as demanded by Brussels, so the story goes.

But the economic turnaround has attracted high-profile critics. The recently-departed chief economist of the IMF has rubbished any talk of a growth “miracle” in Spain. In a new report, Simon Tilford at the Centre for European Reform also pours cold water over the dominant narrative of the Spanish recovery. “There is no evidence that [growth numbers] are the result of austerity, and not much evidence that they are the product of structural reforms,” writes Mr Tilford. Instead, he paints a picture of a fragile economy that has benefited from a number of headwinds, but remains acutely vulnerable to another global downturn. Here are some of the insurmountable challenges that are set to condemn Spain to more economic pain.

Spain’s export performance has been held up as the backbone of its stellar growth performance since 2013. Bouyed by a cheap euro, exports have boomed over the past two years. Key to this growth has been Spain’s “remarkable cost adjustment process” – where it has managed to slash wage costs – helping to “transform the export sector into a lean and mean machine, able to compete at a high level”, notes Angel Talavera at Oxford Economics. But buoyant exports have also been accompanied by falling imports, as suffering Spaniards have endured lower living standards and high unemployment, notes Mr Tilford. The composition of the exports is also a cause for concern. More than half of the growth has come from “low-value” goods such as food and fuel.

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That’s all that’ll be left. Best case.

From European Union to Just a Common Market (Roberto Savio)

Seventy years ago Europe came out from a terrible war, exhausted and destroyed. That produced a generation of statesman, who went about creating a European integration, in order to avoid the repetition of the internal conflicts that had created the two world wars. Today a war between France and Germany is unthinkable, and Europe is an island of peace for the first time in its history. This is the mantra we hear all the time. What is forgotten is that in fact a good part of Europe did not want integration. In 1960, the United Kingdom led the creation of an alternative institution, dedicated only to commercial exchange: the European Free Trade Association (EFTA), formed by the United Kingdom, Austria, Denmark, Norway, Portugal, Sweden, Switzerland, then later Finland and Iceland.

It was only in 1972 that, bowing to the success of European integration, the UK and Denmark asked to join the EU. Later, Portugal and Austria left EFTA to join the European Union. The UK was never interested in the European project and always felt committed to “a special relation” with United States. Union would mean also solidarity and integration, as the various EU treaties kept declaring. The UK was only interested in the market side of the process. Since 1972, the gloss of European integration has lost much of its shine. Younger generations have no memory of the last war. The EU is perceived far from its citizens, run by unelected officials who make decisions without a participatory process, and unable to respond to challenges. Where is the external policy of the EU? When does it take decisions that are not an echo of Washington?

Since the financial crisis of 1999, xenophobic, nationalistic and right wing parties have sprouted all over Europe. In Hungary, one of them is in power and openly claims that democracy is not the most efficient system. The Greek crisis has made clear that there is a north-south divide, while Germany and the others do not consider solidarity a criterion for financial issues. And the refugee crisis is now the last division in European integration. The UK has openly declared that it will take only a token number of 10,000 refugees, while a new west-east divide has become evident, with the strong opposition of Eastern Europe to take any refugee. The idea of solidarity is again out of the equation.

Germany moved because of its demographic reality. It had 800,000 vacant jobs, and it needs at least 500,000 immigrants per year to remain competitive and keep its pension system alive. But that mentality is even more clear with the East European countries, which experience increasing demographic decline. At the end of communism in 1989, Bulgaria had a population of 9 million. Now it is at 7.2 million. It is estimated that it will lose an additional 7% by 2030, and 28.5% by 2050. Romania will lose 22% by 2050, followed by Ukraine (20%), Moldova (20%), Bosnia and Herzegovina (19.5%), Latvia (19%), Lithuania (17.5%), Serbia (17%), Croatia (16%), and Hungary (16%). Yet, all Eastern Europe countries have followed the British rebellion, and take a strong stance on refusing to accept refugees.

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Fear.

Lessons for Draghi From a Land of Sub-Zero Interest Rates (Bloomberg)

Until not so long ago, the idea of sub-zero interest rates was about as far-fetched as the prospect of a brash real estate tycoon running for U.S. president. These days, the discussion is whether a deposit rate below minus 0.20% is a good trump card to play when dealing with Europe’s sclerotic economy. The ECB meets on Thursday for yet another discussion on how to stimulate growth. Rate cuts are improbable – ECB board member Benoit Coeure recently described the current level as “the effective lower bound.” Should ECB President Mario Draghi and his colleagues nevertheless opt to discuss the matter, they might consider taking this lesson from Denmark: negative rates don’t provide a quick fix. The Danish central bank, whose sole mandate is to guard the krone’s peg to the euro, first cut rates below zero in mid-2012, when investors were looking for havens at the height of Europe’s debt crisis.

The key deposit rate, now minus 0.75%, has been mostly negative since then. Economists recently surveyed by Bloomberg see negative rates continuing into 2017. That’s not necessarily because they expect rates to rise after that, but because their models just don’t go any further. One of the key lessons from Denmark is that banks are reluctant to charge customers for holding their money. While some have raised fees, “real rates for real people were actually never negative,” says Jesper Rangvid, a professor of finance at the Copenhagen Business School. For that reason, Danes haven’t been hoarding cash. According to Rangvid, rates would have to drop as low as minus 10% before people start “building their own vaults.” Experiences in Switzerland and Sweden tell a similar story. Economic theory says interest rates are inversely related to investment.

People are also supposed to spend less when rates are high and spend more when they’re low. Because interest rates determine the value of cash today, they have been described as “a tax on holding money” and “the price of impatience.” And yet, Danes have actually been squirreling away. According to central bank data, Danish households’ have added 28 billion kroner ($4.3 billion) to bank deposits since rates shrank to their record low on Feb. 5. Danish businesses, meanwhile, have barely increased their investments, adding less than 6% in the 12 quarters since Denmark’s policy rate turned negative for the first time. At a growth rate of 5% over the period, private consumption has been similarly muted. Why is that? Simply put, a weak economy makes interest rates a less powerful tool than central bankers would like.

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“People underestimate how much residential construction has been propping up the economy..”

Developers in Australia Roll Out Red Carpet for Wealthy Chinese (WSJ)

Cranes dominate skylines above Sydney and Melbourne, which are popular with Asian migrants. Current rules generally only allow foreign investors to buy real estate before construction, typically in apartment developments. Cracks are emerging in the market, however. On Friday, the country’s central bank warned that risks to residential property developers had risen over the past six months, with inner-city Melbourne and Brisbane particularly exposed to a supply glut of apartments. The central bank has previously warned that any sudden collapse in home prices risks destabilizing the nation’s banks and the economy, which grew by just 0.2% in the second quarter from the first, the slowest pace in four years.

“People underestimate how much residential construction has been propping up the economy,” said Warren Hogan, chief economist at Australia & New Zealand Banking Group. Approvals to build new dwellings hit an all-time high in the year through August, as did the number of permits given to build high-rise apartments, which now account for 31% of the total, up from 11% six years ago, according to government data. China has become the largest source of foreign money flowing into Australian real estate, with Chinese investment in residential property up by more than 60% to A$8.7 billion in the year through June 2014, a Credit Suisse analysis of government data shows.

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“Why is war more palatable than more refugees? Why is the destruction of lives you can’t see easier to live with than someone on your bus making a phone call in a language you don’t understand?”

Britain Addicted To Bombing With The Weary Rationale Of A Junkie (Frankie Boyle)

In every addiction, a part of us is addicted to the process. Laying out the cigarette papers to build the joint; heating the spoon and flicking the syringe; dealing with our emails before our DMs; cueing up Netflix for when the kids go to sleep; methodically polishing the keys to our own prisons. Britain seems to be going through the preliminaries associated with one of its most cherished addictions: bombing. Bombing Syria has probably only been postponed by Russia’s intervention. It was, of course, amusing to see the western press suddenly preoccupied about whether bombs were hitting their intended targets. Perhaps Putin should have avoided such rigorous international scrutiny by bombing only hospitals.

The recent immolation of a Médecins Sans Frontières hospital in Afghanistan presented us with the internal contradiction of our media’s presentation of bombing: that we have technology so precise our weapons can hear their victims begging for a trial, and that we sometimes blow up stuff “accidentally”. It has been suggested that non-white people caught up in our foreign wars are “unpersons reported”. More accurately, they are treated as subpersons. A handful of Afghans dying could make the front pages, but only if they were strangled one by one by Beyoncé as the half-time entertainment at the Super Bowl. Historically, Syria has existed as a place where outsiders come to fight, a bit like Wetherspoon’s.

No one likes Assad: he has the surprised appearance of a man who has just swallowed his own chin, and a bizarre, faint, fluffy moustache, as if he pulled on a cashmere turtleneck just after eating a toffee apple. He has created a hell for his own people that British teenagers seem eager to go to and fight in, just to give you some idea of how shit Leeds is. But if their desire to go to Syria is deluded, how is our government’s any less so? A government that doesn’t believe it should have any responsibility for regulating our banks or even delivering our post thinks it needs to be a key player in, of all things, the Syrian civil war. Somehow, the plight of this strategically significant state has touched their hearts. Britain is so concerned about refugees that it will do anything – except take in refugees – to try to kill its way to a peaceful solution.

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Is that why the Chinese are coming?

Number Of London’s ‘Working Poor’ Surges 70% In 10 Years (Guardian)

More than a million Londoners who are defined as living in poverty are members of households in which at least one adult has a job, according to a new analysis. The figures include 450,000 children who live in such households, and research estimates that cuts in working tax credits to families next April could make 640,000 children worse off. The analysis is contained in the fifth London Poverty Profile, which is compiled by the New Policy Institute thinktank for the charity Trust for London. It indicates that the total number of Londoners in poverty now stands at 2.25 million. Of these, slightly more than half – 1.2 million – qualify as “in-work poor”, representing an increase of 70% in the past 10 years.

The study found that, although the numbers of unemployed adults and the proportion of people in workless households has fallen in the capital, the city’s overall poverty rate is 27%, much as it has been for the past decade. The rate for the rest of England is 20%. The report also illuminates how the poverty picture is changing in some parts of the Greater London area, with two east London boroughs, Newham and Tower Hamlets, seeing significant falls in the numbers and%ages of benefit claimants there, while Brent and Ealing in the west now stand out for their high levels of low pay and unemployment. Just over one fifth of people in London in all types of working households are in poverty, compared with 15% a decade ago.

This is despite the present number of unemployed adults, just over 300,000, being the lowest since 2008, at a time of rapid increases in the capital’s population, and with the proportion of workless households being at a 20-year low of 10%. The poverty threshold is defined as households with incomes of less than 60% of the national median after housing costs are included, consistent with standards used across the EU. The report says: “The increase in the number of people in poverty in London has been almost entirely among those in working families.” It points to low pay, limited working hours and the capital’s notoriously high housing costs as key reasons. The poverty rate among working families where an adult is self-employed, not all adults work or they work only part-time is 35% and among those where all adults work full time or one works full time and one part time is 9%.

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Britain’s only growth industry.

Food Banks Have Become A Lifeline For Many, But Where Is The Way Out? (Guardian)

In a large steel container outside St Philip’s church in north Nottingham, Nigel Webster is taking stock: not just of the thousands of neatly stacked tins of food arrayed there, but of his experience as a food bank volunteer. When we started out three years ago, he reflects, we thought we’d be gone by now. For Webster, the manager of Bestwood and Bulwell food bank, part of the Trussell Trust network, the pressing existential question is not just: “Why food banks?” but: “Food banks for how long?”. The growth of the food bank has been an astonishing achievement, but he regards its continued presence as a kind of social disgrace. It is the search for a food bank exit strategy, as much day-to-day operational problems, that keeps him awake at night.

“We will always seek to help people in need,” he says. His Christian faith means he could not do otherwise. But there must be limits, he says. Food banks cannot simply let the state withdraw from its responsibilities. It is important, he says, to keep in mind the idea that the food bank, essentially, is an “outrage”. “We do not want our food banks to exist. We look forward to a time when they disappear. We do not want to get too comfortable. We must resist the temptation to expand. I do not think having a food bank on every street corner is a way for our society to go. Foodbanks must do their best to remain ‘unusual’”.

If anything, food banks are in danger of becoming mainstream. A series of reports and studies have linked cuts in the social security system to the rise in charity food. Scores of evidence submissions to a Commons work and pensions committee inquiry, opening on 21 October, testify that thousands of vulnerable citizens are forced to rely on food banks as a result of avoidable delays to benefits being paid. Food banks are gearing up for a surge in demand for charity food parcels over the next few months, as proposed cuts to working tax credits and housing benefit, the continuing rollout of universal credit, and the shrinking of local welfare support schemes take effect.

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Slavery 21st century style.

Buying Begets Buying: Stuff Has Consumed The Average American’s Life (Guardian)

The personal storage industry rakes in $22bn each year, and it’s only getting bigger. Why? I’ll give you a hint: it’s not because vast nations of hoarders have finally decided to get their acts together and clean out the hall closet. It’s also not because we’re short on space. In 1950 the average size of a home in the US was 983 square feet. Compare that to 2011, when American houses ballooned to an average size of 2,480 square feet – almost triple the size. And finally, it’s not because of our growing families. This will no doubt come as a great relief to our helpful commenters who each week kindly suggest that for maximum environmental impact we simply stop procreating altogether: family sizes in the western world are steadily shrinking, from an average of 3.37 people in 1950 to just 2.6 today.

So, if our houses have tripled in size while the number of people living in them has shrunk, what, exactly, are we doing with all of this extra space? And why the billions of dollars tossed to an industry that was virtually nonexistent a generation or two ago? Well, friends, it’s because of our stuff. What kind of stuff? Who cares! Whatever fits! Furniture, clothing, children’s toys (for those not fans of deprivation, that is), games, kitchen gadgets and darling tchotchkes that don’t do anything but take up space and look pretty for a season or two before being replaced by other, newer things – equally pretty and equally useless. The simple truth is this: you can read all the books and buy all the cute cubbies and baskets and chalkboard labels, even master the life-changing magic of cleaning up – but if you have more stuff than you do space to easily store it, your life will be spent a slave to your possessions.

We shop because we’re bored, anxious, depressed or angry, and we make the mistake of buying material goods and thinking they are treats which will fill the hole, soothe the wound, make us feel better. The problem is, they’re not treats, they’re responsibilities and what we own very quickly begins to own us. The second you open your wallet to buy something, it costs you – and in more ways than you might think. Yes, of course there’s the price tag and the corresponding amount of time it took you to earn that amount of money, but possessions also cost you space in your home and time spent cleaning and maintaining them. And as the token environmentalist in the room, I’d be remiss if I didn’t remind you that when you buy something, you’re also taking on the task of disposing of it (responsibly or not) when you’re done with it. Our addiction to consumption is a vicious one, and it’s stressing us out.

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Weather getting worse fast. Balkans can get nasty in winter.

Slovenia Deploys Troops to Border as Migrant Exodus Swells (AP)

Led by riot police on horseback, thousands of weary migrants marched across western Balkans borderlands as far as the eye could see Tuesday as authorities cautiously lowered barriers and intensified efforts to cope with a human tide unseen in Europe since World War II. Leaders of Slovenia deployed military units to support police on their overwhelmed southern border with Croatia, which delivered more than 6,000 asylum seekers by train and bus to the frontier in bitterly disputed circumstances between the former Yugoslav rivals. With far too few buses available in Slovenia to cope, most people walked 15 kilometers on rural lanes past cornfields and pastures to reach a refugee camp, a challenge eased by sunny weather after days of torrential rain, fog and frigid winds.

On Slovenia’s frontiers with Croatia and Austria, aid workers toiled to erect enough tents and other emergency accommodation to shelter up to 14,000 travelers, more than five times the tiny nation’s previous official limit. Interior Secretary of State Bostjan Sefic told reporters in the Slovene capital, Ljubljana, that the pressure on border security with Croatia had grown “very difficult with an enormous number of people.” He said Slovenia, an Alpine land of barely 2 million, needed much more help immediately from bigger EU partners to cope or the country might have to adopt border-toughening measures. “If this continues we will have extreme problems. Slovenia is already in dire straits, an impossible situation,” Sefic said as lawmakers debated whether to increase the military’s powers to manage border security.

In Brussels, Slovenian President Borut Pahor met European Union leaders and said he expected his country to apply for emergency financial aid and border patrol reinforcements from EU partners. Hungary, long the most popular eastern gateway for people fleeing conflict and poverty in the Middle East, Asia and Africa, has padlocked its borders for migrants progressively over the past month, forcing the tide west through Croatia and Slovenia. All three nations have expressed fears of ending up stuck accommodating tens of thousands of asylum-seekers indefinitely if other EU nations farther north close their borders too.

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Save them the Aegean trip and the drowning babaies.

Resettling Migrants From Middle East Camps Could Ease Crisis: Greece (Reuters)

Greece said on Tuesday that resettling migrants from camps in the Middle Eastern countries such as Turkey, Jordan and Lebanon, where they first arrive, could ease Europe’s refugee crisis. Greece is struggling to control the influx of more than half a million migrants through its islands bordering Turkey, with arrivals spiking over the past two days in a rush to beat the onset of winter. Some 10,000 people arrived on the island of Lesvos on Sunday and Monday alone, officials said. Reuters witnesses said there had also been a rush on Tuesday of mainly Syrians and Afghans.

“We have a huge problem in not being able to control the flow of arrivals,” migration minister Yannis Mouzalas told Skai TV. The International Organisation for Migration said of an estimated 650,500 arrivals to European Union states this year, almost 508,000 went through Greece, while the United Nations put that figure at 502,000 on Tuesday. “That (resettling) would mean we, and countries like Italy and Hungary, would not be dealing with uncontrolled flows of people, save these people from smugglers and from the prospect of drowning trying to get here,” Mouzalas said.

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“Asked whether the refugees would be able to claim asylum in Britain, the MoD official said: “That’s not our understanding.”

Refugee Boats Wash Up At UK Military Base In Cyprus (Guardian)

Three overloaded boats carrying more than 100 refugees from Syria have washed up at Britain’s military base in Cyprus, potentially opening up a new front line in the migration crisis. The refugees, believed to include women and children, have been transferred to a temporary reception area at the sovereign base at Akrotiri on southern coast of the Mediterranean island. A spokesman for the Ministry of Defence confirmed that three boats had arrived at the base, which has been used to launch airstrikes against Islamic State militants in Iraq and Syria. The MoD is still gathering details about the incident, including the number of refugees involved. “I believe it is more than a hundred, but there is no confirmation of the exact number at the moment,” the spokesman said.

He said it was unclear where the refugees had travelled from but a police official told local media that refugees “appear” to have come from Syria. He added: “At the moment the first priority is to make sure everyone is safe and well before decisions are taken on what’s going to happen to them. We don’t know full numbers. It is happening as we speak so details are still coming in.” Asked whether the refugees would be able to claim asylum in Britain, the MoD official said: “That’s not our understanding.” The base is one of two sovereign territories retained by Britain on Cyprus, a colony until 1960.

Cyprus has received hundreds of refugees from Syria, but if confirmed this would be the first time any have arrived at the Akrotiri base, which is about 150 miles from the Syrian port of Tartus. The news site In-Cyprus quoted George Kiteos, the head of police at the sovereign base area, as saying: “The number of persons has been counted and recorded. The boats were carrying over 100 persons.” He added: “They have received first aid and they all appear to be in good health. We have already alerted all the other necessary services. They appear to have come from nearby Syria.” The site said two small boats had been spotted off the coast of Akrotiri at about 6.30am and were shepherded back to the shore by the Cyprus coastguard.

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May 072015
 
 May 7, 2015  Posted by at 9:55 am Finance Tagged with: , , , , , , , , ,  


Unknown General Patrick’s headquarters, City Point, Virginia 1865

21 Countries Where a 40-Hour Work Week Still Keeps Families Poor (Bloomberg)
Central Bank Driven ‘Markets’ Have Nothing To Do With Economics (Stockman)
Yellen Says Stock Valuations Are ‘Quite High’ (MarketWatch)
El-Erian Warns Of Trouble As Bond Liquidity Dries Up (MarketWatch)
There Will Be No 25-Year Depression (Bill Bonner)
More Pain Ahead For China Steel (CNBC)
Brexit Threat Looms Over Britain’s Election And Europe’s Fate (AEP)
Extreme Secrecy Eroding Support For Obama’s TPP Trade Pact (Politico)
UN Calls For Suspension Of TTIP Talks Over Human Rights Abuses (Guardian)
Defiant Greece Overturns Civil Service Cuts Agreed In Previous Bailouts (FT)
A Blueprint for Greece’s Recovery (Yanis Varoufakis)
European Lenders Dash Greek Hopes For Quick Aid Deal (Reuters)
At Greek Port, ‘Migrants’ Dream And Despair In Abandoned Factories (Reuters)
Greek Banks Are Having Trouble Trading Foreign Currencies (Bloomberg)
ECB Decision on Greek Haircuts Said to Depend on Political Talks (Bloomberg)
Bernanke Inc.: The Lucrative Life of a Former Fed Chairman (Bloomberg)
Canada’s Political Landscape In Seismic Shift On Alberta Election (Guardian)
The Choice Before Europe (Paul Craig Roberts)
California Regulators Approve Unprecedented Water Cutbacks (AP)
Save The Bees To Save The Planet (Giorgio Torrazza)

Progress 21st century style.

21 Countries Where a 40-Hour Work Week Still Keeps Families Poor (Bloomberg)

How often have you felt that no matter how hard and long you work you just couldn’t make ends meet? Turns out life is just that hard for minimum-wage workers pretty much across the globe. A global ranking out Wednesday by the Paris-based Organization for Economic Cooperation and Development painted a grim picture of the situation in member countries straddling continents. The 34-member organization found that a legal minimum wage existed in 26 countries and crunched the numbers to see how they compared. Forget taking a siesta in Spain. There, you’d have to work more than 72 hours a week to escape the trappings of poverty. Turns out that is the norm, not the exception. In the 21 countries highlighted with blue bars in the chart below, a full 40-hour work week still won’t lift families out of relative poverty.

This list includes France, home to the 35-hour work week, which almost met the threshold. Minimum wage workers there who are supporting a spouse and two children need to work 40.2 hours to get their families out of poverty. (The poverty line is defined as 50% of the median wage in any nation.) To gauge the generosity of each country’s floor on hourly pay, you can also look at another measure: The minimum wage as a percentage of the local median wage. Those ratios vary widely across the world. In the U.S., the minimum wage was less than 40% of the median wage in 2013, which meant the country had one of the lowest percentages among the economies the OECD examined. Those ratios are much higher across the Atlantic, but Europe’s sovereign debt crisis has taken its toll. In Ireland, Greece and Spain – three of the hardest-hit countries in the euro area – minimum wage levels as a ratio to the median wage were higher in 2007 than in 2013.

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That’s what I said.

Central Bank Driven ‘Markets’ Have Nothing To Do With Economics (Stockman)

The German bund yield is soaring like a rocket today. After touching on the truly lunatic rate of 5 bps only a few weeks back, it has just crossed the 60 bps marker. Needless to say, when a blue chip 10-year bond widely held on @95% repo leverage moves that far that fast – there is some heavy duty furniture breakage happening in fast money land. But don’t cry for the bond market gamblers. They already made a killing front-running the ECB. During the 16 months between January 2014 and the April peak, speculators in German 10-year bunds would have made a 350% profit using essentially zero cost repo funding. So in the last few days they have given a tad of that back while making a bee line for the exit.

Yet during the uninterrupted march of the bund into the monetary Valhalla depicted above, how many times did you hear that the market was merely “pricing in” a flight to quality among investors and the dreaded specter of “deflation”. That is, what amounted to sheer lunacy – valuing any 10-year government bond at a deeply negative after-tax and after-inflation yield – was attributed to rational economic factors. No it wasn’t. The manic drive to 5 bps was pure speculative caprice, triggered by the ECB’s public pledge to corner the market in German government debt. What gambler in his right mind would not buy hand-over-fist any attempt to corner the market by a central bank with a printing press – especially one managed by a dim bulb apparatchik like Mario Draghi!

Never has an agency of a state anywhere on the planet pleasured speculators with such stupendous windfalls. Yet any day now we will hear from the talking heads on CNBC that, no, massive bond buying by central banks does not repress or distort interest rates because once Europe’s QE started, rates actually backed up. And, furthermore, this is entirely logical because QE will enable the economy to escape its deflationary trap, meaning that investors are discounting an imminent resurgence of growth!

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The spin narrative. “Yellen said that she thought risks to financial stability “are moderated, not elevated, at this point.”

Yellen Says Stock Valuations Are ‘Quite High’ (MarketWatch)

Federal Reserve Chairwoman Janet Yellen on Wednesday used her bully pulpit to warn of the risks from “quite high” stock prices. “I would highlight that equity market valuations at this point generally are quite high,” Yellen said in a conversation with Christine Lagarde, the managing director of the International Monetary Fund, sponsored by the Institute for New Economic Thinking. “They are not so high when you compare the returns on equities to the returns on safe assets like bonds, which are also very low, but there are potential dangers there,” Yellen said. The S&P 500 is up about 12% over the last year and has more than tripled from its March 2009 low. The Fed has kept interest rates near zero since the end of 2008.

The price to earnings ratio of S&P 500 stocks was 20.40 for April, according to data from Haver Analytics, which is near five-year highs. Yellen said her comments were part of the Fed’s new remit in the wake of the Great Recession to monitor and speak publicly about potential risks to financial stability. Yellen noted that long-term bond yields were low due to low term premiums, which can move rapidly. “We saw this in the case of the taper tantrum in 2013,” Yellen said. “We need to be attentive and are to the possibility that when the Fed decides it is time to begin raising rates, these term premiums could move up and we could see a sharp jump in long-term rates,” Yellen said. As a result, the Fed was working overtime not to take markets by surprise, she said.

Yellen also repeated a long-standing concern with the leveraged loan market, saying there was a deterioration in underwriting standards. She also noted that the compression in spreads on high yield debt which looks like “reach-for-yield type of behavior.” Despite these concerns, Yellen said that she thought over risks to financial stability “are moderated, not elevated, at this point.” “We’re not seeing any broad based pickup in leverage, we’re not seeing rapid credit growth, we’re not seeing an increase in maturity transformation,” which are the hallmarks of bubbles, she said.

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More QE!

El-Erian Warns Of Trouble As Bond Liquidity Dries Up (MarketWatch)

The leap in German bund yields over the last two weeks is another sign that liquidity issues could eventually present serious problems for financial markets, former Pimco Chief Executive Mohamed El-Erian on Wednesday warned at the annual SALT investment conference in Las Vegas. “There isn’t the countercyclical risk-taking we need,” said El-Erian, chief economic adviser at Pimco parent Allianz. That could spell trouble when there is a big shift market positioning, he warned at SALT, a gathering of around 1,800 hedge-fund and investment-industry professionals. That is because investors may not be able to reposition at a low cost. Bond liquidity is a “delusion, not an illusion,” he noted.

El-Erian’s remarks came during SALT’s opening panel, which included Peter Schiff, CEO of Euro Pacific Capital, and Gene Sperling, a former economic adviser to President Barack Obama and the Clinton White House. Sperling argued that a lackluster U.S. economic recovery is the aftermath of a financial crisis, which typically gives way to less robust recoveries as banks, businesses and consumers focus on eliminating debt. Meanwhile, the Federal Reserve was left to do much of the heavy lifting as the federal government’s stimulus efforts were offset by fiscal contraction at the state and local level.

Schiff, a persistent Fed critic, charged that the U.S. economy is witnessing a bubble rather than a recovery and that the Fed was crowding out small businesses who would otherwise be creating jobs. Fed Chairwoman may not entirely disagree with Schiff’s bubble assessment, On Wednesday, Yellen referred to stock valuations as “quite high,” and hinted that bond values may be even higher during a conversation with International Monetary Fund head Christine Lagarde sponsored by the Institute for New Economic Thinking.

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And how many times have I said this?: “..the developed economies have been zombified..”

There Will Be No 25-Year Depression (Bill Bonner)

Today, we have bad news and good news. The good news is that there will be no 25-year recession. Nor will there be a depression that will last the rest of our lifetimes. The bad news: It will be much worse than that. On Monday, the Dow rose another 43 points. Gold seems to be working its way back to the $1,200 level, where it feels most comfortable. “A long depression” has been much discussed in the financial press. Several economists are predicting many years of sluggish or negative growth. It is the obvious consequence of several overlapping trends and existing conditions. First, people are getting older. Especially in Europe and Japan, but also in China, Russia and the US. As we’ve described many times, as people get older, they change. They stop producing and begin consuming.

They are no longer the dynamic innovators and eager early adopters of their youth; they become the old dogs who won’t learn new tricks. Nor are they the green and growing timber of a healthy economy; instead, they become dead wood. There’s nothing wrong with growing old. There’s nothing wrong with dying either, at least from a philosophical point of view. But it’s not going to increase auto sales or boost incomes – except for the undertakers. Second, most large economies are deeply in debt. The increase in debt levels began after World War II and sped up after the money system changed in 1968-71. By 2007, US consumers reached what was probably “peak debt.” That is, they couldn’t continue to borrow and spend as they had for the previous half a century. Most of their debt was mortgage debt, and the price of housing was falling.

The feds reacted, as they always do… inappropriately. They tried to cure a debt problem with more debt. But consumers were both unwilling and unable to borrow. Their incomes and their collateral were going down. This left corporations and government to aim only for their own toes. Central banks created more money and credit – trillions of dollars of it. But since the household sector wasn’t borrowing, the money went into financial assets and zombie government spending. Neither provided any significant support for wages or output. So, the real economy went soft, even as the cost of credit fell to its lowest levels in history. Third, the developed economies have been zombified. The US, for example, is way down at No. 46 on the World Bank’s list of places where it is easiest to start a new business. And only one G8 country – Canada – even makes the top 10.

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And for China’s steel suppliers.

More Pain Ahead For China Steel (CNBC)

Sluggish demand at home is driving up the chronic supply surplus at China’s steel mills to critical levels and is set to drive down global prices, analysts warn. “Chinese authorities will be slow to react to the over-capacity,” E&Y’s Michael Elliott told CNBC. In the meantime, “steel prices will remain low for the next five years, until the global industry consolidation starts to take place,” he said. For a decade, China’s mostly state-owned steelmakers have been supplying the country’s building boom with more steel than it needed, while steel prices nearly halved during the same period. Now, with the economy growing at the slowest pace in six years and demand shrinking at home, the excess capacity is hitting critical levels, although China’s steel mills have shown few signs of slowing down production.

The level of excess capacity may be as high as 30% according to E&Y, and little relief is in sight on the domestic front: demand for steel in China contracted for the first time in a decade in 2014, falling by 3.3% on-year, and is set to drop by 0.5% on-year in both 2015 and 2016, according to World Steel Association forecasts. “The need for consolidation has been recognized for some time and the government has set targets for capacity closure in the past,” Capital Economics’ Caroline Bain said in a report on Tuesday. “However, production (and losses and debts) just kept on rising,” she said.

Beijing’s record on keeping to its reduction targets is not entirely stellar, in part because the state-owned steelmakers are major local employers. The government has just recently pushed back its target date for restructuring and consolidating the steel industry by ten years to 2025, according to E&Y’s Elliot. The solution, at least for the Chinese steel mills, has been to ramp up exports. In 2014, Chinese steel exports soared by 50% on-year and continued to grow by 40% on-year in the first-quarter of 2015, according to Capital Economics.

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Ambrose is all Tory. He may not be a happy man come nightfall.

Brexit Threat Looms Over Britain’s Election And Europe’s Fate (AEP)

The subject of Europe has barely crept into the current campaign, which is odd given that UKIP’s primary demand – and its original raison d’etre – is the restoration of British self-government and the end of split parliamentary sovereignty between Westminister and Strasbourg. Yet the inescapable controversy of Britain’s dispensation with Europe looms over everything as we vote.

Whoever is elected will almost certainly have to deal a perpetual running sore in the eurozone. It is clear by now that monetary union is fundamentally deformed and will never be stable until there is a fiscal union and an EMU-wide government to back it up, but there is no democratic support for such a Utopian leap forward in any country. It is sheer fantasy following the Front National’s victory in the European elections in France. The ECB’s Mario Draghi has averted a deflationary collapse – in the nick of time – but the gap in competitiveness between the North and South is wider than ever. The EU Fiscal Compact will force the weakest debtor states to pursue contractionary policies for two decades to come asymmetrically, starving the south of investment and further entrenching the divide.[..]

A recent study by Stephen Jen, at SLJ Macro Partners, found that EMU states have reacted in radically different ways to globalisation and the rise of China. They are now further apart than they were in 1982. Worse yet, the perverse effects of euro itself has set off a self-reinforcing vicious circle. “The combination of a common monetary policy, fixed exchange rates and limited scope for member countries to conduct their own fiscal policies may have led to weak economies weakening further and strong economies strengthening further. We find these results rather alarming,” he said.

The implication is that EMU will lurch from crisis to crisis until the victims of this cruel dynamic rebel through the ballot box, as the Greeks are already doing. Cheap oil, a weak euro and a blast of QE have together lifted the region off the reefs for now, but the deformed structure will be exposed again when the world economy spins into another downturn. The European elites may imagine that a defeat for David Cameron can extinguish the Brexit threat. In reality it is has become a permanent fixture of the British landscape. They over-reached and brought it on themselves.

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There are 1000 reasons support should erode.

Extreme Secrecy Eroding Support For Obama’s TPP Trade Pact (Politico)

If you want to hear the details of the Trans-Pacific Partnership trade deal the Obama administration is hoping to pass, you’ve got to be a member of Congress, and you’ve got to go to classified briefings and leave your staff and cellphone at the door. If you’re a member who wants to read the text, you’ve got to go to a room in the basement of the Capitol Visitor Center and be handed it one section at a time, watched over as you read, and forced to hand over any notes you make before leaving. And no matter what, you can’t discuss the details of what you’ve read. “It’s like being in kindergarten,” said Rep. Rosa DeLauro (D-Conn.), who’s become the leader of the opposition to President Barack Obama’s trade agenda. “You give back the toys at the end.”

For those out to sink Obama’s free trade push, highlighting the lack of public information is becoming central to their opposition strategy: The White House isn’t even telling Congress what it’s asking for, they say, or what it’s already promised foreign governments. The White House has been coordinating an administration-wide lobbying effort that’s included phone calls and briefings from Secretary of State John Kerry, Labor Secretary Tom Perez, Treasury Secretary Jack Lew, Agriculture Secretary Tom Vilsack, Commerce Secretary Penny Pritzker and others. Energy Secretary Ernest Moniz has been working members of the House Energy and Commerce Committee. Housing and Urban Development Secretary Julián Castro has been talking to members of his home state Texas delegation.

Officials from the White House and the United States trade representative’s office say they’ve gone farther than ever before to provide Congress the information it needs and that the transparency complaints are just the latest excuse for people who were never going to vote for a new trade deal anyway. “We’ve worked closely with congressional leaders on both sides of the aisle to balance unprecedented access to classified documents with the appropriate level of discretion that’s needed to ensure Americans get the best deal possible in an ongoing, high-stakes international negotiation,” said USTR spokesman Matt McAlvanah. Obama’s seeking a renewal of fast-track authority, which would empower him to negotiate trade deals that then go to Congress for up-or-down votes but not amendments.

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“We don’t want a dystopian future in which corporations and not democratically elected governments call the shots.”

UN Calls For Suspension Of TTIP Talks Over Human Rights Abuses (Guardian)

A senior UN official has called for controversial trade talks between the European Union and the US to be suspended over fears that a mooted system of secret courts used by major corporations would undermine human rights. Alfred de Zayas, a UN human rights campaigner, said there should be a moratorium on negotiations over the Transatlantic Trade and Investment Partnership (TTIP), which are on course to turn the EU and US blocs into the largest free-trade area in the world. Speaking to the Guardian, the Cuban-born US lawyer warned that the lesson from other trade agreements around the world was that major corporations had succeeded in blocking government policies with the support of secret arbitration tribunals that operated outside the jurisdiction of domestic courts.

He said he would becompiling a report on the tactics used by multinationals to illustrate the flaws in current plans for the TTIP. De Zayas said: “We don’t want a dystopian future in which corporations and not democratically elected governments call the shots. We don’t want an international order akin to post-democracy or post-law.” The intervention by de Zayas comes amid intense scrutiny in the US, Europe and Japan of groundbreaking trade deals promoted by Barack Obama. The European commission, which supports the talks, believes an agreement that would lower tariffs and establish basic health and safety standards would boost trade and add billions of euros to the EU’s income. UK ministers estimate Britain could benefit from a rise in GDP of between £4bn and £10bn a year.

Under the proposed agreement, companies will be allowed to appeal against regulations or legislation that depress profits, resulting in fears that multinationals could stop governments reversing privatisations of parts of the health service, for instance. The investor state dispute settlement (ISDS) scheme that includes the secret tribunals is already a cornerstone of a trade deal between the EU and Canada and is scheduled to be included in the TTIP deal, as well as a trans-pacific deal being negotiated between the US and Japan. EU officials said the ISDS would be part of the package when it is put to a vote in the EU parliament later this year. Cecilia Malmström, the European trade commissioner, has sought to dampen criticism by publishing discussion documents submitted to the TTIP talks.

Following growing calls from environmental groups, unions and MEPs for the deal to be scrapped, she has put forward a series of suggestions to “safeguard the rights of governments to regulate” and protect public service provision from demands for competition. More than 97% of respondents to an official EU survey voted against the deal. However De Zayas, the UN’s special rapporteur on promotion of a democratic and equitable international order, said that while these were helpful initiatives, the adoption of a separate legal system for the benefit of multinational corporations was a threat to basic human rights. “The bottom line is that these agreements must be revised, modified or terminated,” he said. “Most worrisome are the ISDS arbitrations, which constitute an attempt to escape the jurisdiction of national courts and bypass the obligation of all states to ensure that all legal cases are tried before independent tribunals that are public, transparent, accountable and appealable.

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Kudos.

Defiant Greece Overturns Civil Service Cuts Agreed In Previous Bailouts (FT)

Even as the Greek government scrambled to reach an agreement on new economic reforms with its creditors in Brussels, it began reversing similar measures agreed during previous bailout negotiations in a parliamentary session in Athens. A new law proposed by the leftwing Syriza-led government and passed Tuesday night opens the way to rehire thousands of workers cut loose from the country’s inefficient public sector in a reform enacted by the previous government. The move came on the same day the new government announced changes to a finance ministry system of electronic procurements and public payments that was supposed to improve transparency and had been blessed by international lenders.

And it followed legislation passed last week to reopen the state broadcaster, ERT, which was shut down by the previous government as a cost-cutting measure. The moves highlighted the conflicting impulses of Greece’s new left-wing government and creditors bent on securing economic reforms in exchange for their support. They could further complicate already-fraught negotiations aimed at closing the country’s current €172bn bailout and giving Athens access to €7.2bn in desperately needed cash; in February, the new government agreed any economic legislation would be introduced only after consultations with creditors.

Opposition lawmakers accused Syriza of violating that agreement with the new laws, which could expand the government payroll by as many as 15,000 employees. But government ministers remained defiant. “We aren’t going to consult [bailout monitors], we don’t have to, we’re a sovereign state,” Nikos Voutsis, the powerful interior minister, told parliament.

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He keeps on making a lot of sense. But that’s not the picture painted in the media.

A Blueprint for Greece’s Recovery (Yanis Varoufakis)

Imagine a development bank levering up collateral that comprises post-privatization equity retained by the state and other assets (for example, real estate) that could easily be made more valuable (and collateralized) by reforming their property rights. Imagine that it links the European Investment Bank and the European Commission President Jean-Claude Juncker’s €315 billion investment plan with Greece’s private sector. Instead of being viewed as a fire sale to fill fiscal holes, privatization would be part of a grand public-private partnership for development. Imagine further that the “bad bank” helps the financial sector, which was recapitalized generously by strained Greek taxpayers in the midst of the crisis, to shed their legacy of non-performing loans and unclog their financial plumbing.

In concert with the development bank’s virtuous impact, credit and investment flows would flood the Greek economy’s hitherto arid realms, eventually helping the bad bank turn a profit and become “good.” Finally, imagine the effect of all of this on Greece’s financial, fiscal, and social-security ecosystem: With bank shares skyrocketing, our state’s losses from their recapitalization would be extinguished as its equity in them appreciates. Meanwhile, the development bank’s dividends would be channeled into the long-suffering pension funds, which were abruptly de-capitalized in 2012 (owing to the “haircut” on their holdings of Greek government bonds).

In this scenario, the task of bolstering social security would be completed with the unification of pension funds; the surge of contributions following the pickup in employment; and the return to formal employment of workers banished into informality by the brutal deregulation of the labor market during the dark years of the recent past. One can easily imagine Greece recovering strongly as a result of this strategy. In a world of ultra-low returns, Greece would be seen as a splendid opportunity, sustaining a steady stream of inward foreign direct investment. But why would this be different from the pre-2008 capital inflows that fueled debt-financed growth? Could another macroeconomic Ponzi scheme really be avoided?

During the era of Ponzi-style growth, capital flows were channeled by commercial banks into a frenzy of consumption and by the state into an orgy of suspect procurement and outright profligacy. To ensure that this time is different, Greece will need to reform its social economy and political system. Creating new bubbles is not our government’s idea of development. This time, by contrast, the new development bank would take the lead in channeling scarce homegrown resources into selected productive investment. These include startups, IT companies that use local talent, organic-agro small and medium-size enterprises, export-oriented pharmaceutical companies, efforts to attract the international film industry to Greek locations, and educational programs that take advantage of Greek intellectual output and unrivaled historic sites.

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Greece must leave the euro or it will never be it own master.

European Lenders Dash Greek Hopes For Quick Aid Deal (Reuters)

European lenders on Wednesday dashed Greece’s hopes for a quick cash-for-reforms deal in the coming days, leaving Athens in an increasingly desperate financial position ahead of a major debt payment next week. Talks between the two sides have dragged on for months without a breakthrough and EU officials say Greece’s leftist government has failed to produce enough concessions for a deal at next Monday’s meeting of euro zone finance ministers. “Since the last Eurogroup quite a bit of progress has been made,” Eurogroup chief Jeroen Dijsselbloem said. “Still, lots of issues have to be solved, have to be deepened more, with more details, so there will be no agreements on Monday. We have to be realistic.”

Prime Minister Alexis Tsipras’s government remains hopeful the Eurogroup meeting will acknowledge progress in the talks, possibly enabling the ECB to let Greek banks buy more short-term government debt to ease a cash crunch. But there was no sign in Brussels or Frankfurt that any such easing of the squeeze is likely soon without concrete evidence of progress on reforms.The ECB’s governing council extended emergency liquidity assistance to Greek banks by €2 billion at its weekly review on Wednesday, the biggest increase in recent weeks. The governors also debated tightening collateral conditions but were expected to hold off for another week.

Athens managed to scrape together funds to make a €200 million interest payment to the IMF on Wednesday, but faces a more daunting €750 million repayment on May 12. With some municipalities, regional and public entities resisting an order to turn over cash reserves to the central bank, sources close to the government have expressed doubt about whether Athens can make both the IMF payment and pay wages and pensions later this month. A government source said the money raised so far by the decree has fallen short of a target of €2.5 billion and that Athens is expected to continue resorting to other one-off measures such as holding off some payments to suppliers. Monday’s Eurogroup meeting could serve as a “platform” for an eventual accord with lenders, Greek Finance Minister Yanis Varoufakis said after talks with his Italian counterpart.

Tsipras’ government has sought to shift blame onto the euro zone and IMF for a lack of agreement in the three-month-old negotiations, charging that each was setting different “red lines” on multiple issues from pension and labour reforms to the primary budget surplus, making a deal impossible. The three institutions issued a rare joint statement rejecting that accusation and insisting they share the same objective of helping Greece achieve financial stability and growth. German Finance Minister Wolfgang Schaeuble, one of Greece’s harshest critics among euro zone policymakers, also dismissed the accusation and said help for Greece had to “make sense”. “Neither the troika, nor Europe, nor Germany can be blamed for Greece’s problems,” Schaeuble said, referring to the trio of European Commission, ECB and IMF informally dubbed the troika. “Greece lived beyond its means for many years.”

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Let them walk cross the border.

At Greek Port, ‘Migrants’ Dream And Despair In Abandoned Factories (Reuters)

Rapper Mahdi Babika Mohamed’s journey to a better life in Europe started in his native Sudan and passed through Libya and Turkey before abruptly ending in a squalid abandoned factory at Greece’s western port of Patra. There, the 37-year-old is one of hundreds of migrants making desperate attempts to board ferries to Italy by hanging on to the underside of cargo trucks – usually unsuccesfully. “We come from a country in war to another war here in Patra,” said Mohamed. “Every day I try to get on the ferry and it’s dangerous hiding under the trucks, I could die any minute.” Patra is no longer on the frontline of Greece’s migrant crisis as it was six years ago when authorities shut down a makeshift camp in the port where hundreds of migrants had lived in squalid conditions.

Focus has since shifted to the thousands of Syrian and other migrants now breaking through Greece’s eastern sea border, but the refugee problem in Patra is far from over. Today, about 100 Afghan, Iranian and Sudanese migrants live in two deserted textile and wood factories opposite the main ferry terminal, living off food scraps and without electricity. Some arrived recently, others have lived there for as long as two years. Each day, some try to jump over a high fence into the terminal in the hope of sneaking onto a ferry set for Italy, where they dream of a better life than in crisis-hit Greece, where jobs are scarce and sympathy even harder to find.

Others hide by the roadside, dashing to scramble underneath trucks waiting at traffic lights before entering the ferry terminal. One of those is Azam, a 26-year-old from South Sudan who says he boarded a small fishing boat in Egypt with 175 other immigrants earlier this year. He says he paid around $3,000 to go to Italy but the boat took them to Crete instead. Despite several attempts, he has yet to make it on to a ferry to Italy. But he refuses to abandon his dream. “I want to go to northern Europe and find a decent job and live a good life I will try until I make it,” Azam said. “I’ll never give up.”

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“The market has increasingly become aggressive in preparing for a Greek default and in protecting itself from the potential financial impact.”

Greek Banks Are Having Trouble Trading Foreign Currencies (Bloomberg)

Greek banks are increasingly being hampered from trading currencies, one of most liquid markets, as international dealers cut back credit lines and costs soar, according to people with knowledge of the trades. International securities firms are curtailing trading with Greece’s major lenders that may expose them to the risk of a default by the nation and the possible use of capital controls to stem outflows from banks, the people said, asking not to be named because they are not authorized to speak publicly.
Those threats are adding to concern that the euro would decline in the event of a default or a Greek exit from the currency region, leaving counterparties exposed to multiple risks, said the people.

A months-long impasse on Greece’s bailout talks with creditors has prompted depositors to withdraw funds from the nation’s lenders, leaving banks no choice but to rely on emergency funds for liquidity. The ECB on Wednesday raised the limit on Emergency Liquidity Assistance, people familiar with the matter said, a sign the financial system remains under strain. “The latest sign the market is attempting to fortify itself against a Greek default is playing out in the FX market,” said Mark Williams, a former bank examiner for a Federal Reserve bank and now a lecturer at Boston University’s Questrom School of Business. “The market has increasingly become aggressive in preparing for a Greek default and in protecting itself from the potential financial impact.”

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ECB and politics should never appear in the same sentence.

ECB Decision on Greek Haircuts Said to Depend on Political Talks (Bloomberg)

The ECB will decide after next week’s meeting of euro region finance ministers whether to tighten Greek access to emergency liquidity, two people familiar with the matter said. The ECB is prepared to raise the discount demanded on Greek collateral to a level last seen in 2014 unless the country’s government shows a willingness to compromise in bailout talks, said one of the officials, who spoke on condition of anonymity. An ECB spokesman declined to comment. The Governing Council’s stance adds pressure on Prime Minister Alexis Tsipras to make progress with creditors at Monday’s meeting of finance ministers in Brussels, or risk watching his country’s banks being pushed deeper into crisis.

Such is the rate of deposit withdrawals that ECB officials meeting Wednesday in Frankfurt raised their cap on Emergency Liquidity Assistance by €2 billion to €78.9 billion, the people said. The ECB also wants to ensure Greece makes a €767 million payment to the International Monetary Fund due on May 12, one of the officials said. The central bank decided in October to reduce the risk premium charged on Greek securities, citing “overall improved market conditions” for the assets at the time. Since then, the government has changed and the incoming administration has stalled on the reforms needed to access its bailout funds. Early this year, the ECB suspended a waiver on collateral requirements for Greek debt, forcing banks to rely more on ELA from their own central bank.

Increasing the haircuts now would force lenders to post higher collateral in exchange for funding. Even so, more draconian ideas have been floated. An internal ECB proposal circulated in April contained an option that would see haircuts raised to as high as 90%, a level consistent with Greece being in default. Euro-area central bankers are concerned about Greece’s solvency as debt repayments loom, though they remain reluctant to act before politicians have had a chance to salvage the bailout program. Most Governing Council members, led by President Mario Draghi, argued that it would be unfair to restrict access to liquidity before the outcome of Monday’s meeting is clear, one of the people said.

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Morals have nothing to do with it.

Bernanke Inc.: The Lucrative Life of a Former Fed Chairman (Bloomberg)

Between Boyz II Men at The Mirage and Celine Dion at Caesars Palace, a hot new act is playing Vegas: Ben Bernanke. One day only, live from Sin City – the economist formerly known as chairman of the Federal Reserve. Fifteen months after leaving the Fed and its trappings of mystery and power, Bernanke, 61, is settling into the peripatetic and highly lucrative life of a Washington former. Beyond the dancing fountains of the Bellagio, in the gilded splendor of the Grand Ballroom, Bernanke will play to a full house at the SkyBridge Alternatives Conference on Wednesday: 1,800 hedge fund types who used to hang on his every word. Bernanke is, in a sense, one of them now – a well-paid investment consultant who can fete clients, open doors and add a gloss of Fed luster to conferences and meetings.

Call it Bernanke Inc., a post-Fed one-man-show that’s worth millions annually on the open market. While the former chairman hasn’t disclosed his fees and compensation – nor, as a private citizen, is he required to – he is almost certainly pulling down many times what he did while in government. First there are speaking fees, which bring in at least $200,000 per engagement, according to a person who hired Bernanke. Then there are new advisory roles at Pimco, the big bond house; and Citadel, one of the world’s largest hedge funds. Executive recruiters say each is probably worth more than $1 million a year. Finally, there’s a book deal, details of which haven’t been made public. Bernanke’s predecessor, Alan Greenspan, reportedly landed an $8.5 million contract for his memoir in 2006.

Bernanke – who has a day job as a distinguished fellow in residence at the Brookings Institution – used the same Washington lawyer, Robert Barnett, to negotiate his deal. Policy makers like Bernanke are often criticized for going to work for the financial industry, but they are following a well-worn path. Robert Rubin, Lawrence Summers, Timothy Geithner: countless economic policy makers, in the U.S. and elsewhere, have spun through the revolving door, sometimes more than once. Summers –who picked up work at the hedge fund D.E. Shaw – is scheduled to address the SALT conference this week as well. So are former Secretary of State Condoleezza Rice and former Defense Secretary Chuck Hagel. What does someone like Bernanke bring to a Pimco or a Citadel? Both say investment insight and some face time with clients. Many in the industry, however, tend to view such appointments as little more than high-paid marketing jobs.

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“The perception from the market based on their comments is they’re extremely dangerous.”

Canada’s Political Landscape In Seismic Shift On Alberta Election (Guardian)

Canada’s rockbound political landscape has undergone a seismic shift with the election of a leftwing government in oil-rich Alberta, the country’s wealthiest and – until now – most conservative province. The once-marginal New Democratic Party swept to victory in the western province on Tuesday night, humiliating the Progressive Conservative party that has ruled the province since the first term of US president Richard Nixon. “We made a little bit of history tonight,” the province’s New Democrat leader, Rachel Notley, told supporters. The result marks the latest and most surprising setback to prime minister Stephen Harper’s signature diplomatic effort to transport bitumen from Alberta’s tar sands to world markets through the controversial Keystone XL pipeline.

During the campaign, Notley promised to withdraw provincial support for the project, raise corporate taxes and also potentially to raise royalties on a regional oil industry already reeling from the collapse in world prices. Notley led her party from a four-seat toehold in the provincial legislature to a commanding majority of 54 with a buoyant campaign that contrasted sharply with the flatfooted effort of the Progressive Conservatives under leader Jim Prentice, a former Harper cabinet member often touted as a future Conservative prime minister. Despite being one of a handful of PC candidates returned to office, Prentice resigned both his new seat and his leadership after the rout.

Canadian oil stocks slid slightly in response to the NDP win, with tar-sands giant Suncor Energy Inc losing 4.3% of its value in the first few hours of trading in Toronto before recovering half the loss by noon. The election of the NDP is “completely devastating”, declared financier Rafi Tahmazian of Canoe Financial in Calgary, Canada’s oil capital. “The perception from the market based on their comments is they’re extremely dangerous.” [..] .. ordinary Canadians were reeling from the sheer magnitude of the shift in Alberta, which has placed the country’s most notoriously conservative province, taken for granted as an impregnable redneck kingdom, in the hands of its most progressive regional government. To explain the phenomenon, Toronto-based writer Doug Saunders asked his American Twitter followers to imagine socialist presidential candidate Bernie Saunders “becoming Texas governor by a big majority”.

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Do you really want war with Russia?

The Choice Before Europe (Paul Craig Roberts)

Washington continues to drive Europe toward one or the other of the two most likely outcomes of the orchestrated conflict with Russia. Either Europe or some European Union member government will break from Washington over the issue of Russian sanctions, thereby forcing the EU off of the path of conflict with Russia, or Europe will be pushed into military conflict with Russia. In June the Russian sanctions expire unless each member government of the EU votes to continue the sanctions. Several governments have spoken against a continuation. For example, the governments of the Czech Republic and Greece have expressed dissatisfaction with the sanctions. US Secretary of State John Kerry acknowledged growing opposition to the sanctions among some European governments.

Employing the three tools of US foreign policy–threats, bribery, and coercion, he warned Europe to renew the sanctions or there would be retribution. We will see in June if Washington’s threat has quelled the rebellion. Europe has to consider the strength of Washington’s threat of retribution against the cost of a continuing and worsening conflict with Russia. This conflict is not in Europe’s economic or political interest, and the conflict has the risk of breaking out into war that would destroy Europe. Since the end of World War II Europeans have been accustomed to following Washington’s lead. For awhile France went her own way, and there were some political parties in Germany and Italy that considered Washington to be as much of a threat to European independence as the Soviet Union.

Over time, using money and false flag operations, such as Operation Gladio, Washington marginalized politicians and political parties that did not follow Washington’s lead. The specter of a military conflict with Russia that Washington is creating could erode Washington’s hold over Europe. By hyping a “Russian threat,” Washington is hoping to keep Europe under Washington’s protective wing. However, the “threat” is being over-hyped to the point that some Europeans have understood that Europe is being driven down a path toward war.

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Problems that cannot be solved.

California Regulators Approve Unprecedented Water Cutbacks (AP)

California water regulators adopted sweeping, unprecedented restrictions Tuesday on how people, governments and businesses can use water amid the state’s ongoing drought, hoping to push reluctant residents to deeper conservation. The State Water Resources Control Board approved rules that force cities to limit watering on public property, encourage homeowners to let their lawns die and impose mandatory water-savings targets for the hundreds of local agencies and cities that supply water to California customers. Gov. Jerry Brown sought the more stringent regulations, arguing that voluntary conservation efforts have so far not yielded the water savings needed amid a four-year drought. He ordered water agencies to cut urban water use by 25% from levels in 2013, the year before he declared a drought emergency.

“It is better to prepare now than face much more painful cuts should it not rain in the fall,” board Chairwoman Felicia Marcus said Tuesday as the panel voted 5-0 to approve the new rules. Although the rules are called mandatory, it’s still unclear what punishment the state water board and local agencies will impose for those that don’t meet the targets. Board officials said they expect dramatic water savings as soon as June and are willing to add restrictions and penalties for agencies that lag. But the board lacks staff to oversee each of the hundreds of water agencies, which range dramatically in size and scope. Some local agencies that are tasked with achieving savings do not have the resources to issue tickets to those who waste water, and many others have chosen not to do so.

Despite the dire warnings, it’s also still not clear that Californians have grasped the seriousness of the drought or the need for conservation. Data released by the board Tuesday showed that Californians conserved little water in March, and local officials were not aggressive in cracking down on waste. A survey of local water departments showed water use fell less than 4% in March compared with the same month in 2013. Overall savings have been only about 9% since last summer. Under the new rules, each city is ordered to cut water use by as much as 36% compared with 2013. Some local water departments have called the proposal unrealistic and unfair, arguing that achieving steep cuts could cause higher water bills and declining property values, and dissuade projects to develop drought-proof water technology such as desalination and sewage recycling.

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“..[beekeepers and bee-product manufacturers] generate a turnover of somewhere between €57 and €62 million per year. The value of the pollination services provided to the agricultural sector is estimated to run to €2.6 billion.”

Save The Bees To Save The Planet (Giorgio Torrazza)

In 2004, local production of acacia, chestnut, citrus and meadow flower honey in Italy fell by half and the reason for this is very simple: the bees are dying. According to estimates released by the beekeepers associations, every year some 175-thousand tons of chemical substances are sprayed onto the fields, substances that pollute and compromise the ecosystem in which the bees live and reproduce. Here in Italy there are some 40-thousand beekeepers and 12-thousand bee-product manufacturers, and if you include all the associated secondary enterprises, together they generate a turnover of somewhere between €57 and €62 million per year. The value of the pollination services provided to the agricultural sector is estimated to run to €2.6 billion.

What is of inestimable value to mankind instead is that according to the FAO data, bees are responsible for pollinating 71 of the top 100 crops that constitute around 90% of all the foodstuff products worldwide. The multinationals encourage the indiscriminate use of insecticides and weed killers, many of which are currently banned in the European Union, but if the TTIP were to be approved, according to a study conducted by the Center for International and Environmental Law, no less than 82 pesticides currently banned in Europe but approved for use in the USA would flood onto the market, further aggravating an already dire situation. This is total folly. We interviewed a beekeeper by the name of Giorgio Torrazza who loves bees and explains in his own simple way precisely who is causing the problem and how to resolve it. #SavetheBees to save the planet!

The bee emergency is linked to parasites that come in from outside the country. There is the Varroa parasitic mite, which has been around for more than 30 years, then there is also the Asian predatory wasp and now there is also another parasite from Africa, the (Aethina tumida), which has already arrived in Calabria and will undoubtedly get here too. The parasite emergency is causing problems but it is still manageable at this stage. However, one of the things that is very difficult to manage at the moment are the chemical poisons that are being spread about like rose water on all the crops. If you spray a weed-killer, even if it is not classified as a pesticide, do you know what happens?

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Feb 012015
 
 February 1, 2015  Posted by at 12:20 pm Finance Tagged with: , , , , , , ,  


William Henry Jackson Steamboat Metamora of Palatka on the Ocklawaha, FL 1902

Europe’s Creditors Play With ‘Political Fire’ Pushing Greece To The Brink (AEP)
To Escape Economic Hell, Greece Needs Tsipras To Call Germany’s Bluff (Guardian)
As In 1942, Germany Must Show Restraint Over Greece (Cockburn)
The Country That Refuses to Bow Down to Western Bankers (AlterNet)
Greece Hires Lazard To Advise On Debt (FT)
Greece Will Repay ECB, IMF, Reach Deal With EU, Tsipras Says (Bloomberg)
Barricades Down, Ties Off: Welcome To Greece’s Style Revolution (Guardian)
Podemos Looks to Capture Tsipras Momentum to Oust Rajoy (Bloomberg)
Spain’s Anti-Austerity Podemos Stages Show Of Force Before Elections (Reuters)
Merkel’s Unintended Creation: Tsipras Win To Upset EU Power Balance? (Spiegel)
Dijsselbloem To Varoufakis: “You Just Killed The Troika” (Zero Hedge)
Greece Shakes Europe’s Political Kaleidoscope – Expect The Unexpected (Reuters)
China Manufacturing Shrinks For The First Time In Two Years (Guardian)
Beyond GDP: UK Greens Spark Debate On A Better Measure Of Progress (Guardian)
The Rise Of The Working Poor: When Having A Job Cannot Prevent Poverty (Ind.)
10 Reasons You Don’t Hear The Doomsday Clock Ticking (Paul B. Farrell)

“We are ants; the Greeks are grass-hoppers..”

Europe’s Creditors Play With ‘Political Fire’ Pushing Greece To The Brink (AEP)

Spain’s Podemos party – much in evidence at Syriza’s victory party in Athens, and even more mutinously radical – is leading national polls at 27pc. Marine Le Pen’s Front National won the EU elections in France with calls for a return to the franc and a return to sovereign borders. The three biggest opposition parties in Italy are now hostile to the euro. This is not contagion from Greece. It is running in parallel. Yet how it is handled will spill over with emotional force into the internal debates everywhere in Europe. “Syriza has just won a landslide popular mandate from the Greek people to tell the Troika to go to Hell. It is ludicrous to shout at them and tell them they can’t wriggle out of agreements,” said Giles Merritt, head of the Brussels think-tank Friends of Europe. Mr Merritt said the Syriza revolt has exposed the political failure of EMU crisis strategy with refreshing clarity.

“People in Brussels are losing patience with Germany. The real issue at hand is how we are going to rescue the eurozone from economic depression caused by five years of misguided austerity. Tspiras may find that he has more friends in this city than he thinks,” he said. “We cannot possibly risk Grexit at this stage and trigger a fresh eurozone crisis, so the Commission will soon waiver. Jyrki Katainen is toeing the line for now but he is not a fool. It is Greece that really has the whip hand, and the task is to find a face-saving formula for Germany,” he said. Prof Ashoka Mody, a former IMF bail-out chief in Europe and now at Princeton University, said hints by ECB members that they may pull the plug on Greek banks are “extremely irresponsible” and beyond the proper authority of these officials.

“They are supposed to be the guardians of financial stability. I have never heard of such outlandish threats before. The EU authorities have no idea what the consequences of Grexit might be, or what unknown tremors might hit the global payments system. They are playing with fire,” he said. Marc Ostwald from Monument said Grexit would open a Pandora’s Box. “They are all playing down the risk but once you throw Greece out, you are setting a precedent that nobody wanted to set. How could Cyprus stay in the euro given its dependence on Greek banks? As we have just seen with the Swiss franc, once the system buckles the markets will go after the next victim like a plague of locusts,” he said. The ECB would shield Portugal from immediate Grexit fall-out, but corrosive doubts would be planted.

As the Portuguese newspaper Publico wrote in an editorial entitled “Portugal is not Greece, but…”, the country has the same afflictions of crushing debt, low-growth, and lack of competitiveness within EMU. Combined public and private (non-financial) debt is 380pc of GDP, the highest in Europe, making the country acutely vulnerable to debt-deflation dynamics. Nor is it still viewed as an austerity poster child by Berlin. “The reforms have stalled. Behind the scenes they have put a halt to cuts. It is surprising that people haven’t paid attention to this,” said Raoul Ruparel from Open Europe. “We are ants; the Greeks are grass-hoppers,” protests Luís Marques Guedes, Portugal’s presidency minister.

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“Living standards were 85% of the European average before the financial crisis; they are now down to 60%. ”

To Escape Economic Hell, Greece Needs Tsipras To Call Germany’s Bluff (Guardian)

Lovers of Greek myths know the story of Sisyphus, the king of Corinth who as a punishment from the gods was condemned to spend his time in Hades pushing a boulder to the top of a hill. Every time Sisyphus neared the summit, the boulder slipped from his hands and rolled to the bottom of the slope, and he had to start all over again. The parallels between the sad story of Sisyphus and the equally sad story of Greece are too obvious to require comment. Burdened with debts that are worth 175% of its national output and rising, Greece faces a vain struggle to escape from the economic Hades in which it has been struggling these past five years. So when Alexis Tsipras, head of Greece’s new Syriza coalition government, says his country not only needs debt relief but demands it, he is right. Under the austerity conditions of the past half-decade, the Greek economy has shrunk by 25%. Living standards were 85% of the European average before the financial crisis; they are now down to 60%.

The surprising thing about Greece is not that the people have voted for a radical alternative to the status quo, but that they were stoical for so long. Tsipras’s challenge to the economic orthodoxy also makes sense. What Greece – and the indeed the entire eurozone – needs is not more austerity but stronger demand. Two numbers illustrate the abject failure of economic policy in the 19-nation single currency area: -0.6% and 11.4%. The first is the current inflation rate; the second the current jobless rate. The new government in Athens has made its intentions clear. It has shelved privatisation plans. It has raised the minimum wage and announced moves to hire more civil servants. The message from Tsipras is that we want debt relief and an end to the economic squeeze, and we want them now. There is, though, a complication. Greek voters also want to stay in the eurozone and the EU, which means that Tsipras can get what he wants only through negotiations with his country’s creditors. That means doing a deal with the ECB, the other members of the EU and the IMF.

Ultimately, it means doing a deal with Angela Merkel. David Marsh of the Official Monetary and Financial Institutions Forum wonders how Syriza is going to reconcile these three aims. Merkel and the other EU hardliners can see the inconsistency in Tsipras’s negotiating position. They are relatively relaxed about Greece because they know the tough talking has yet to start. Then they will say that if Greece wants to stay in the euro and wants ECB support for its shaky banks, it has to accept the terms set by its creditors, perhaps with some minor modifications. Tsipras’s best chance of avoiding a humiliating climbdown is to toughen his stance and threaten to leave the euro unless he gets Greece’s official debt reduced by, say, 50%. Indeed, unless he is prepared to do this, it’s hard to see why this leftwing prime minister chose a rightwing anti-German party as his coalition partner.

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“They make a desert and call it peace.”

As In 1942, Germany Must Show Restraint Over Greece (Cockburn)

Here are some quotes from the diaries of Count Ciano (Mussolini’s foreign minister and son-in-law), referring to Greece a year and a half after it was invaded and occupied by Germany. 6 October 1942: “Clodius [the Third Reich’s economics minister] is in Rome to discuss the Greek financial question, which is very bad. If it continues at this rate, sensational and unavoidable inflation will result, with all its consequences… “All this is absurd, but the German army does not intend to reduce its interest rate.” 8 October 1942 [Ciano tells Mussolini about the Greek situation and quotes his reply]: “If we lose this war it will be because of the political stupidity of the Germans who have not even tried to use common sense, and have made Europe as hot and treacherous as a volcano.” “He [Mussolini] is thinking of speaking to Himmler about this… but he will not get anywhere.”

In 2015, as in 1942, the Germans tend to overplay a strong hand. They insist that the Greeks abide by austerity agreements that have just been rejected by Greek voters in the general election on 25 January. The reason there was an election at all was that the previous Greek government, drawn from the conservative New Democracy and nominally socialist Pasok parties, could not get enough support in parliament to select a new president because eurozone leaders and the IMF would not relax their terms. The clear message from Greece is that no Greek government can satisfy the demands of the troika and expect to survive. The Greeks have every reason to reject the troika’s austerity programme. If ever an economic plan failed, it is this one. When the EU and IMF took control of Greek economic policy five years ago, they were meant to solve its debt crisis, modernise the economy and restore it to health.

They have demonstrably failed. A quarter of the economy has been destroyed, 26% of the workforce and 57.5% of youth is unemployed, and the economy is in crisis still. Listening to EU officials speak of “progress made”, one is reminded of Tacitus’s line, spoken by a British insurgent leader resisting the Roman occupation, which has echoed down the centuries: “They make a desert and call it peace.” Do the EU, ECB and IMF officials who visit Athens, often displaying an arrogance and contempt for the views of the Greeks that Tacitus would have found familiar, have much idea of what is happening there? Megan Greene, chief economist for the Portfolio Solutions Group, has studied economic relations between Greece and Germany since 2006. Reflecting on the past five years, she wonders if IMF officials “surrounded by security men in dark glasses” ever met any ordinary Greeks. She recalls an ECB official in Athens being astonished when she told him that many Greeks simply did not have the money to pay their taxes.

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“..a central bank which was not accountable to any national authority and which would push countries merely to become hostages to the whims of the financial markets.”

The Country That Refuses to Bow Down to Western Bankers (AlterNet)

Mario Seccareccia, a professor of economics at the University of Ottawa, has been outspoken in his warnings that austerity policies have the potential to smash economies and spread human misery. In his work supported by the Institute for New Economic Thinking and elsewhere, he has challenged deficit hawks and emphasized the need for strong government investment in things like jobs, education, healthcare, and infrastructure if economies are to prosper. In the following interview, he talks about why what happened to Greece was entirely predictable, why the Greeks were right to reject austerity in the recent election, and what challenges the country faces in forging a sustainable path forward with the left-wing Syriza party at the helm.

Lynn Parramore: You have long been warning of problems in the Eurozone. What do the Greek elections mean to the debate about austerity and how it impacts economies?
Mario Seccareccia: I actually began warning about problems in the Eurozone even before they launched the Euro in 1999! A couple of years after the adoption, in 1992, of the Maastricht Treaty, which was the initial step in the creation the European Economic and Monetary Union or the Eurozone, I happened to be in Paris for the launch of a book that I had co-edited in French titled Les Pièges de l’Austérité (The Austerity Traps) that had been published in November 1993. During the discussions, a number of us were already raising very serious questions about a treaty which prevented national governments from doing what they needed to do to stabilize their economies — namely engage in needed deficit spending, regardless of the magnitude, during times of recession for the purpose of stabilizing income and employment.

Some of us at the book launch warned of problems that could arise from a European supranational currency and a central bank which was not accountable to any national authority and which would push countries merely to become hostages to the whims of the financial markets. Along with many others, I’ve also raised concerns over what economists call “deflationary bias” in the structure of the Eurozone — that is, the tendency for policies to focus on lower inflation instead of more jobs and growth and to prevent greater public spending as a means to achieve growth. I could see that Greece would be the country that would be hit first by these problems because it is financially the weakest link in the euro chain, and because of the high public debt ratio when it joined the Eurozone in 2002. What is surprising is that it took until 2010 to reach such a crisis even though the warnings had been there for a long time.

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Big name. Interesting choice.

Greece Hires Lazard To Advise On Debt (FT)

The Greek government has hired investment bank Lazard to advise it on managing sovereign debt in a sign that Syriza is serious about honouring its election pledge to restructure its debt pile—despite EU officials warning against it. Tensions have been high since the country’s newly-elected far-left party came to power after winning elections a week ago, with German chancellor Angela Merkel on Saturday reiterating that Greece’s European creditors would not consider forgiving part of the debt-ridden country’s rescue loans. “I don’t see a further debt haircut,” she said. News of the move to hire Lazard came as Erkki Liikanen, an ECB governing council member, warned that Greek banks would be cut off from ECB lending if no deal was reached by the end of February when Greece’s support programme expires.

“We (the ECB) have our own legislation and we will act according to that. . . Now, Greece’s programme extension will expire at the end of February so some kind of solution must be found, otherwise we can’t continue lending,” Mr Liikanen said. Meanwhile, prime minister Alexis Tsipras on Friday called ECB president Mario Draghi to reassure him that his new government wanted to reach a “mutually beneficial” solution with international partners over the renegotiation of Greece’s bailout. A Greek official, who spoke to Bloomberg on condition of anonymity, said Mr Tsipras called Mr Draghi following a tense meeting between his new finance minister Yanis Varoufakis and Jeroen Dijsselbloem, the head of the eurozone group of finance ministers.

Mr Varoufakis had said that Greece would no longer co-operate with the troika of international lenders and would not accept an extension of its EU bailout. “This position enabled us to win the trust of the Greek people,” he said. Mr Dijsselbloem in return rejected the new Greek government’s call for an international conference that would consider writing off part of Greece’s debt, which last year amounted to 175% of national output. The exchange, along with tough words from Berlin, captured an adversarial mood as the new Greek government and its eurozone partners made their first formal contact and set the stage for tense negotiations that could decide Greece’s future in the European bloc.

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Weighing very word is crucial: “I am absolutely confident that we will soon manage to reach a mutually beneficial agreement..”

Greece Will Repay ECB, IMF, Reach Deal With EU, Tsipras Says (Bloomberg)

Greek Prime Minister Alexis Tsipras sought to repair relations with creditors after a week-long selloff in bonds and stocks, triggered by his pledge to end the country’s bailout agreement. Greece will repay its debts to the European Central Bank and the International Monetary Fund and reach a deal soon with the euro area nations that funded most of the country’s financial rescue, Tsipras said Saturday in an e-mailed statement. “My obligation to respect the clear mandate of the Greek people with respect to ending the policies of austerity and returning to a growth agenda, in no way entails that we will not fulfill our loan obligations to the ECB or the IMF,” Tsipras said.

Greece may soon be operating without a financial safety net for the first time in five years after Tsipras said he won’t respect the conditions of the country’s €240 billion rescue. He’s asking euro area officials to endorse an alternative program of economic revival that would allow increases in spending and wages to boost growth. “We need time to breathe and create our own medium-term recovery program, which amongst other things will incorporate the targets of primary balanced budgets and radical reforms to address the issues of tax evasion, corruption and clientelistic policies,” Tsipras said. “I am absolutely confident that we will soon manage to reach a mutually beneficial agreement, both for Greece and for Europe as a whole.”

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“As a last act of resistance the victims sang, breaking into the Greek national anthem, as they were lined up before the firing squad.”

Barricades Down, Ties Off: Welcome To Greece’s Style Revolution (Guardian)

Barely 20 minutes after being sworn in, Tsipras was standing before a large slab of marble in the rifle range of Kaisariani holding a clutch of red roses. The slab commemorates 200 resistance fighters killed by Nazi SS officers as the war neared its end on 1 May 1944. The youngest was 14. The red roses, gingerly placed on top of the memorial, represented the “rivers of blood” that some in Kaisariani, an Athens suburb, still recall flowing through the streets that day. The massacre, in reprisal for the fatal ambushing of a German general, would end up being among the worst committed by Nazi forces feeling the heat of resistance. The victims were almost all communists interned in Athens’ infamous SS-run Haidari concentration camp. If memory is the stomach of the mind, as St Augustine once noted, for Greek leftwingers Kaisariani is a visceral reminder of what so many endured during the “stone years” of the 20th century.

Civil war, military dictatorship, persecution under rightwing governments ensued. As a last act of resistance the victims sang, breaking into the Greek national anthem, as they were lined up before the firing squad. Tsipras did not speak. He did not have to. The monument spoke for him. And its message was twofold: the left had finally achieved power, and Germany should never forget how much the Greeks had suffered. Just as they had done under occupation, they would continue to resist Germany’s hegemony and its perceived attempts at subjugation through economically disastrous austerity.

Two days after overthrowing the old political order, the young revolutionaries insisted that barricades protecting the Greek parliament –ostensibly from furious protesters – be brought down. Under Syriza’s stewardship, Athens’s new civil protection minister felt fit to announce that the cradle of democracy no longer needed to be iron clad. The biting cuts and tax rises that had pushed Greeks on to the streets, in massive demonstrations when the crisis first hit, now belonged to the past. Under azure skies – for the sun had come out – I watched as workmen dismantled the barriers with an alacrity not known to most labourers in Greece.

A riot bus, parked alongside the building at the behest of the previous conservative-led coalition, was gone by the time the sun had come up. A band of American tourists, taking in the sight as they watched the slow-motion dance of the ceremonial guards outside the parliament, began to applaud. Inside, as the government held its first cabinet meeting, the cameras rolled. Looking straight up at them, Tsipras declared: “We do not have the right to disappoint our voters.” By day’s end, the anti-austerians had delivered on their promises, reinstating the minimum wage, rehiring public sector employees, and rolling back on all manner of reforms.

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“Tick tock, tick tock, Mariano – you won’t survive till summer..”

Podemos Looks to Capture Tsipras Momentum to Oust Rajoy (Bloomberg)

Thousands of supporters of Spanish anti-austerity party Podemos converged on Madrid today to kick off a year of campaigning they hope will end with the ouster of Prime Minister Mariano Rajoy. The group, which has led in most recent opinion polls, has been energized by the election victory of its ally Syriza in Greece, where Prime Minister Alexis Tsipras is challenging the European Union’s insistence on spending cuts after a seven-year recession that wiped out 25% of the economy. “Greece, brothers, here we come,” the crowd shouted. “Tick tock, tick tock, Mariano — you won’t survive till summer.” Podemos emerged over the past year, matching similar movements in Italy, Ireland and Greece, where many voters have grown tired after years of austerity.

While Spain’s economy is growing at the fastest pace in seven years, its 24% unemployment rate means many voters are still to feel the effects of the recovery. “Change has already started,” Juan Carlos Monedero, a member of Podemos’s executive committee, said in comments broadcast on the Internet. The anti-establishment party’s march started outside the central bank and the headquarters of the army in Cibeles square in the center of the capital and then headed down to the Puerta del Sol, the plaza colonized by the so-called indignados in 2011. Most demonstrators wore stickers with the party’s purple logo, a reference to Spain’s second republic brought to an end by the civil war in 1936.

Podemos grew out of the indignados movement – many of its leaders and party workers were involved in the 2011 demonstrations – and won five seats in the European elections in May just four months after it was created. Since then the party’s popularity has surged. A Jan. 10 survey published by El Pais showed the party on 28.2% with Prime Minister Rajoy’s People’s Party in third place on 19.2%. A Sigma Dos poll published by TV station Telecinco on Jan. 20 showed the PP leading Podemos by 29.4% to 26.2%. “Podemos has become a force in Spanish politics and need to be taken seriously,” said Tom Rogers, senior economist at Oxford Economics. “However, as radical parties get closer to government, they tend to get the most radical elements out and become more pragmatic.”

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“In Greece, more has been done in six days than in many years..”

Spain’s Anti-Austerity Podemos Stages Show Of Force Before Elections (Reuters)

Tens of thousands marched in Madrid on Saturday in the biggest show of support yet for Spanish anti-austerity party Podemos, whose policies and surging pre-election popularity have drawn comparisons with Greece’s new Syriza rulers. Crowds chanted “yes we can” or “tic tac tic tac” to suggest the clock was ticking for Spain’s scandal-ridden political elite. Many waved Greek and Republican flags and banners reading “the change is now” or “Pablo president”. Podemos (“We Can”) was formed just a year ago by university professor Pablo Iglesias, but produced a major shock by winning five seats in elections for the European Parliament in May.

Tapping into Spaniards’ austerity fatigue and widespread anger at “la casta”, as it calls the country’s business and political elites, it is currently topping opinion polls in the run-up to local, regional and national elections this year. “People are fed up with the political class,” said Antonia Fernandez, a 69-year-old pensioner from Madrid who had come to the demonstration with her family. Fernandez, who lives with her husband on a €700-a-month combined pension cheque, said she used to vote for the Socialist Party but had lost faith in it because of its handling of the economic crisis and its austerity policies. “If we want to have a future, we need jobs,” she said. Spain is emerging from a seven-year economic slump as one of the euro zone’s fastest growing countries.

But the exit from recession has yet to ease the hardship for millions of households, in a country where nearly one in four of the workforce remains out of a job. Addressing the crowd in the Puerta del Sol square in central Madrid, the 36-year-old, pony-tailed Iglesias said 2015 would be the “year of change” in Spain. “The wind of change is starting to blow in Europe,” he said in Greek, as he praised Greek leftist leader Alexis Tsipras’ first decisions as prime minister. Tsipras promised that five years of austerity, “humiliation and suffering” imposed by international creditors were over after his Syriza party romped to election victory on Jan. 25. “Who said it was impossible? Greece today has a government of change. In Greece, more has been done in six days than in many years,” Iglesias said.

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Der Spiegel defends Angela.

Merkel’s Unintended Creation: Tsipras Win To Upset EU Power Balance? (Spiegel)

Tsipras never tires of saying that he wants to “give the Greeks back their dignity.” And dignity is an important word for those who seek to understand what has happened in Greece. If so many Greeks didn’t feel humiliated by their own corrupt political class, by their dwindling prosperity – but also by the Germans and the other Europeans – Tsipras would have never been elected. Tsipras is a man whose career was spawned by the euro crisis. The currency that was designed to unite Europe has effectively divided its people. In an economic community in which some feel that they have been hoodwinked and others feel oppressed, Tsipras’ fans revere him as a rebel. Many Greeks see him as a man who has what it takes to free them from oppression.

At the same time, many Germans see him as a terrifying extremist. They view Tsipras as Europe’s nightmare. Tsipras is the anti-Merkel, and he never would have achieved this kind of political success were it not for the German chancellor. And now these individuals constitute the two antipodes in a Europe in which there is a growing lack of mutual understanding. How could it come to this point? Right from the start, the euro was more than just a currency. It was a pledge to heal the rifts created by war and blind nationalism in Europe. When then-German Chancellor Helmut Kohl signed the Maastricht Treaty on Feb. 7, 1992, he hoped that the common currency would irreversibly unite the Continent.

Now, the euro appears to be stirring up the very antagonistic sentiments that it was supposed to eliminate. In Greece the crisis has brought a government to power that features an entirely new mixture of left-wing radicals and right-wing populists, whose only common ground is the joint struggle against Merkel’s austerity dictate. But Tsipras is also Merkel’s unintended creation. His rise to power cannot be explained without a deep understanding of the frustration that Europe’s policy of austerity has sparked. This may seem irrational. After all, it was the Greeks who amassed such huge debts that their country could no longer bear the burden in April 2010. But by morphing Merkel into an austerity dominatrix, Tsipras has created an artificial figure upon whom he can project all of the Greeks’ negative feelings.

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“..and whispered…”you have just killed the Troika,” to which Varoufakis responded… “wow!”

Dijsselbloem To Varoufakis: “You Just Killed The Troika” (Zero Hedge)

Amid ‘turmoiling’ stock markets on Friday, CNBC’s Simon Hobbs summed up the status quo’s thinking on the new Greek leadership when he noted, somewhat angrily and shocked, “The Greeks are not even trying to reassure the markets,” seeming to have entirely forgotten (and who can blame him in this new normal the world has been force-fed for 6 years) that political leaders are elected for the good of the people (by the people) not for the markets. Yesterday saw the clearest example yet of Europe’s anger that the Greeks may choose their own path as opposed to following the EU’s non-sovereign leadership’s demands when the most uncomfortable moment ever caught on tape – the moment when Eurogroup chief Jeroen Dijsselbloem stood up at the end of the EU-Greece press conference, awkwardly shook hands with Greece’s new finance minister, and whispered…”you have just killed the Troika,” to which Varoufakis responded… “wow!”

As Keep Talking Greece reports: The joint press conference was concluding, when Greek Finance Minister Yanis Varoufakis droped a last bombshell. “…and with this if you want – and according to European Parliament – flimsily-constructed committee we have no aim to cooperate. Thank you.” Varoufakis was referring to the famous Troika, the country’s official creditors consisting of the European Union, the International Monetary Fund and the European Central Bank.. After concluding with a “Thank you” Varoufakis gives the word to Eurogroup Chief Jeroen Dijsselbloem, who wants to hear the translation first. Then he takes off the ear phones, he stands up and sets to leave. An enforced-looking shaking of hands delays the departure of the Dutch FinMin. Dijsselbloem quickly whispers something to Varoufakis’ ear, he briefly replies back and the Eurogroup chief leaves the press conference hall as soon as it was possible.

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“We’re in for at least half a decade of turbulence and uncertainty in Europe.”

Greece Shakes Europe’s Political Kaleidoscope – Expect The Unexpected (Reuters)

By catapulting to power an improbable alliance of the hard left and nationalist far right, Greece has shaken up Europe’s political kaleidoscope and may have signaled the end of an era of centrist consensus. With eight general elections due in the European Union this year, as well as regional votes, the earthquake in Athens may be a harbinger of other shocks to come. Expect the unexpected in 2015 from Britain to Finland and Denmark to Spain as voters who have endured five years of economic crisis, falling real incomes and welfare cuts vent their anger, anxiety or apathy at the ballot boxes. Mainstream center-right and center-left parties that have dominated European politics since the end of World War II are bleeding support to populists at both ends of the spectrum, and to mavericks like Italian comic-turned-politician Beppe Grillo.

This theme will be prominent during Reuters’ annual euro zone summit this week which will interview a host of policymakers from Brussels and key EU capitals. In many countries, voters feel the established parties offer no real alternative. Many are keen to punish a ruling “caste” perceived as out of touch with ordinary people’s concerns, and as helping themselves rather than their electors. What unites many of the new forces is hostility to the EU and to policies of austerity driven from Brussels and Berlin. “We’ve reached the end of a 30-year cycle of liberal individualism and wealth accumulation that began with Ronald Reagan and Margaret Thatcher,” former British Europe minister Denis MacShane said in an interview. “We’re in for at least half a decade of turbulence and uncertainty in Europe.”

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This is not just growth contraction, it’s actual contraction. Things get worse fast.

China Manufacturing Shrinks For The First Time In Two Years (Guardian)

China’s manufacturing activity contracted for the first time in more than two years in January, an official survey showed on Sunday, signalling further downward pressure on the world’s second-largest economy. The official purchasing managers’ index (PMI) released by the national bureau of statistics came in at 49.8 last month, down from the 50.1 recorded in December. The index, which tracks activity in factories and workshops, is considered a key indicator of the health of China’s economy. A figure above 50 signals expansion, while anything below indicates contraction. January’s figure was the first contraction for 27 months. The British bank HSBC said last month that a preliminary reading of its own PMI edged up to 49.8 in January from a final reading of 49.6 in December. It was at the break-even point of 50.0 in November.

The bank is scheduled to release its final PMI figure on Monday. ANZ Banking Group said in a research report that the NBS figures were unexpected, particularly given “favourable seasonal factors”. “The Chinese New Year falls into late February this year, while it was in late January last year,” ANZ said. “Past experience suggests that there could be significant front loading effect before the Chinese New Year, which would provide short-term impetus to the manufacturing industry.” China’s central bank surprised economists in November by cutting benchmark interest rates for the first time in more than two years, in a move interpreted as an attempt to shore up flagging growth. The People’s Bank of China lowered its one-year rate for deposits by 25 basis points to 2.75% and its one-year lending rate by 40 basis points to 5.6%.

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“The prior question is, ‘what are we trying to achieve with our lives?’”

Beyond GDP: UK Greens Spark Debate On A Better Measure Of Progress (Guardian)

Daffodils do it; babies do it; kittens do it: growing seems like the most natural thing in the world, and over the years we’ve come to understand growth as the normal state for economies, too. Recessions, when GDP temporarily declines, are an aberration, imperilling human progress and interrupting the natural order. And chancellors are keen to trumpet Britain’s success when, as in 2014, our growth rate races ahead of the competition. So when the Green party suggested last week that it might abandon the idea of targeting GDP growth as a public policy aim, it caused a storm of indignation with some commentators fearing that the environmentalist party – which has been registering support of more than 10% in some recent polls – would catapult Britain back to the dark ages.

Caroline Lucas, the Green MP for Brighton and the party’s spokeswoman on the economy, is keen to play this down, stressing that any shift to a new way of gauging economic success would have to be gradual. She argues, for example, that a more rounded view of progress might incorporate a measure of how much Britain is depleting or polluting its “natural capital” – resources such as rivers, forests and oceans. The independent Natural Capital Committee, chaired by academic Dieter Helm, already produces regular reports for the government on sustainable use of resources.

“I don’t think it’s unreasonable to say that – at the very least to begin with – alongside GDP, we might also begin to have a measure of the depletion of resources,” Lucas says. “Once people get more used to that, you could imagine bringing in two or three more indicators: health, community cohesion, equality and so on.” She argues that GDP – which measures all kinds of economic activity, but misses out “bad” factors such as pollution, is “a very, very flawed measure: all it’s measuring is the amount of money revolving around the economy, without ascertaining whether or not it’s being used to good or bad ends. The prior question is, ‘what are we trying to achieve with our lives?’

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Britain’s great recovery.

The Rise Of The Working Poor: When Having A Job Cannot Prevent Poverty (Ind.)

The “vast majority” of veterans who need financial aid to prevent them from slipping into homelessness are unable to make ends meet despite having jobs, the head of a leading military charity has revealed. Hugh Milroy, the CEO of Veterans Aid, a front-line charity fighting homelessness among the country’s ex-servicemen and women, said about 80 per cent of its active cases could be described as “working poor” – people who are in employment but still fall below the poverty line. Staff at the charity, one of two being supported by The Independent on Sunday’s charity appeal, have observed a marked change in the kind of person seeking help over the past two years. The proportion of working poor on the charity’s books has been rising rapidly, they said.

“They are people who simply cannot afford to live and work. We’ve had one or two really bad cases where whole families could have ended up on the streets if we hadn’t intervened,” Dr Milroy said. “This is a really serious issue, and it isn’t going away. Life in Britain is complex and expensive. Some people simply can’t afford their rent and end up sleeping in their car, even though they’ve got a job. You cannot sustain your life like that.” The charity recently helped a single father with three young children who had been given 24 hours to move out of his flat after accruing debts through a payday loans company. Veterans Aid gave him money for a deposit on a new property and guaranteed his rent for six months. “Had we not, they would have been on the streets,” Dr Milroy said.

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“..in the United States at present, the policies being pursued by too many wealthy people and decision makers are ones that, as in the case of the Mayan kings, preserve their interests in the short run but are disastrous in the long run.”

10 Reasons You Don’t Hear The Doomsday Clock Ticking (Paul B. Farrell)

The Doomsday Clock was just reset: It’s now “Three Minutes to Midnight,” warns the Bulletin of Atomic Scientists. It’s loud ticking is a grim reminder, as Joe Romm put it on ClimateProgress, that “Earth’s rate of global warming is 400,000 Hiroshima bombs a day.” Yes, a civilization-ender, and yet, Gallup polls dismiss the warning — the public doesn’t consider climate change a major national priority. The threat was also summarized in Scientific American: The Doomsday Clock is “a visual metaphor to warn the public about how close the world is to a potentially civilization-ending catastrophe. Experts on the board said they felt a sense of urgency this year because of the world’s ongoing addiction to fossil fuels, procrastination with enacting laws to cut greenhouse-gas emissions and slow efforts to get rid of nuclear weapons.” Yes, global warming is as powerful and lethal as 400,000 atomic bombs exploding daily, said James Hansen, former head of NASA Goddard Institute of Space Studies.

America is addicted to Big Oil. But paradoxically, that’s numbing us to the terminal ticking sound of the disasters ahead. Our brains are trapped in denial — not just Big Oil and their right-wing climate-science deniers — but more than 100 million average Americans. We’re deaf. Dumb. Blind. To the threats. This is a problem of psychology, behavioral economics and the neurosciences. As anthropologist Jared Diamond, author of “Collapse: How Societies Choose to Fail or Succeed,” put it: Our brains still haven’t learned the lessons of history. Remember, centuries ago two million people lived in the Mayan civilization. But like “so many societies the elite made decisions that were good for themselves in the short run and ruined themselves and societies in the long run.”

As a result, the Mayan civilization collapsed “because of a combination of climate change, drought, water-management problems, soil erosion, deforestation.” Diamond added the rulers “managed to insulate themselves from the consequences of their actions.” Forests being chopped down. But “the kings didn’t recognize that they were making a mess until it was too late.” Flash forward, “similarly, in the United States at present, the policies being pursued by too many wealthy people and decision makers are ones that, as in the case of the Mayan kings, preserve their interests in the short run but are disastrous in the long run.” Yes, today the old pattern is repeating. Listen to 10 excuses Americans make. All of us, not just Big Oil but all across America, Washington, Wall Street, and yes, all over Main Street. Here’s why we are already repeating the same fate as the Mayans in today’s world of endless hypocrisy and denials about global warming, failing to prepare, oblivious of the coming storms.

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