Jan 222019
 
 January 22, 2019  Posted by at 10:55 am Finance Tagged with: , , , , , , , , , , , , , ,  


Pablo Picasso Female bust 1922

 

Pre-Davos Survey Shows Sixfold Rise In Global CEOs’ Gloom (G.)
In Versailles, Macron Vows To Reform To Avoid King’s Fate (R.)
The Garden Of Eden Is No More -David Attenborough (G.)
With Kamala Harris In The Race, Trump Stands No Chance Of Winning (Ind.)
Alexandria Ocasio-Cortez, Crusher of Sacred Cows (Matt Taibbi)
Theresa May: Second Referendum Would Threaten ‘Social Cohesion’ (G.)
Labour Calls For Vote On Holding Second Brexit Referendum (G.)
Xi Warns China Against ‘Black Swans’ Of Economic Volatility (G.)
US To Formally Seek Extradition Of Huawei Executive Meng Wanzhou (R.)
Greek Households Have Lost 28% Of Their Assets (K.)
Facebook And Twitter Can Work Out Who You Are Even If You Don’t Use Them (Ind.)
Greenland’s Ice Melting Four Times Faster Than In 2003 (Ind.)

 

 

And what are they gloomy about? Inequality? Species extinction? Warfare? Nope! They are gloomy about growth.

Pre-Davos Survey Shows Sixfold Rise In Global CEOs’ Gloom (G.)

Pessimism among chief executives has risen sharply in the past 12 months as the leaders of the world’s biggest companies have taken fright at rising protectionism and the deteriorating relationship between the US and China. The survey of chief executives conducted by the consultancy firm PwC to mark the start of the World Economic Forum in Davos showed a sixfold increase to 30% in the number of CEOs expecting global growth to slow during 2019. PwC said the rise in pessimism was unsurpassed in the 22 years it had been conducting the survey, with the downbeat mood a contrast to the bullishness of early 2018, when global growth was strong and stock markets were soaring.

The survey showed that the most pronounced shift was among CEOs in North America, where optimism about global growth dropped from 63% in 2018 to 37%. PwC said this was probably due to the fading impact of Donald Trump’s tax cuts and emerging trade tensions. “CEOs’ views of the global economy mirror the major economic outlooks, which are adjusting their forecasts downward in 2019,” PwC’s global chairman, Bob Moritz, said. “With the rise of trade tension and protectionism it stands to reason that confidence is waning.”

The unease about global economic growth had influenced CEOs’ confidence about their companies’ short-term prospects. Thirty-five percent of CEOs said they were very confident in their own organisation’s growth prospects over the next 12 months, down from 42% last year. While the US retained its position as the top international market for growth over the next year, many CEOs have been turning to other markets, PwC said.

Read more …

Macron does his own little Davos. And elects to huddle and hobnob with billionaires instead of talking to his people. Just like the King did 226 years ago.

Macron’s idea of reform is weakening labor laws, and more Europe. Precisely what the Yellow Vests don’t want.

In Versailles, Macron Vows To Reform To Avoid King’s Fate (R.)

President Emmanuel Macron told dozens of the world’s most powerful executives on Monday that he would not follow the path of guillotined French royals and would continue to reform the French economy despite a sometimes violent popular revolt. For the second year running, Macron hosted corporate A-listers like Microsoft Chief Executive Satya Nadella, Snapchat’s Evan Spiegel and JPMorgan CEO Jamie Dimon at a pre-Davos dinner at Versailles. Exactly 226 years after the decapitation of Louis XVI, who failed to plug the crown’s dismal finances and quell popular discontent over a sclerotic feudal society, Macron started his speech by invoking the king and his wife Marie-Antoinette. “If they met such an end, it is because they had given up on reforming,” Macron told the guests, according to his office.

His office said earlier that foreign companies including medical products company Microport, Mars, Procter & Gamble, Cisco and others would announce investments in France totaling more than 600 million euros. The dinner was an opportunity to reassure investors of Macron’s resolve to reform the economy after images of protesters angry at his policies attacking public monuments, boutiques, banks and riot police were beamed around the world. “There are questions about the protests’ magnitude, about the violence, because these images are shocking for foreigners,” a source at Macron’s office said before the summit. “Last year, the summit was in a totally different dynamic, it was all about ‘France is back’. Here we’re in a tougher part of the mandate domestically and that requires more explanations,” the source added.

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Really, David, you couldn’t have picked a place with more deaf ears for your message than Davos. All those politicians and wealthy folk owe their positions to the very process that eradicated the Garden of Eden.

The Garden Of Eden Is No More -David Attenborough (G.)

Sir David Attenborough has warned that “the Garden of Eden is no more”, as he urged political and business leaders from around the world to make a renewed push to tackle climate change before the damage is irreparable. Speaking at the start of the World Economic Forum (WEF) in Davos, Switzerland, the 92-year-old naturalist and broadcaster warned that human activity has taken the world into a new era, threatening to undermine civilisation. “I am quite literally from another age,” Attenborough told an audience of business leaders, politicians and other delegates. “I was born during the Holocene – the 12,000 [year] period of climatic stability that allowed humans to settle, farm, and create civilisations.” That led to trade in ideas and goods, and made us the “globally connected species we are today”.

That stability allowed businesses to grow, nations to co-operate and people to share ideas, Attenborough explained, before warning sombrely: “In the space of my lifetime, all that has changed. “The Holocene has ended. The Garden of Eden is no more. We have changed the world so much that scientists say we are in a new geological age: the Anthropocene, the age of humans,” he declared. In a stark warning to the world leaders and business chiefs flocking to the WEF this week, Attenborough warned that the only conditions that humans have known are changing fast. “We need to move beyond guilt or blame, and get on with the practical tasks at hand.”

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This old-guard wishful thinking seems the point to the opposite of what the headline says. Or maybe it was meant as humor?!

With Kamala Harris In The Race, Trump Stands No Chance Of Winning (Ind.)

Kamala Harris just ruined Donald Trump’s day. With her much anticipated declaration today, she immediately installed herself as a front-runner in the race to be the Democrat intent on taking down the president in 2020. “Let’s do this together: For ourselves, for our children, for our country,” she said. And with those carefully chosen words, Trump’s chances of reelection entered a death spiral. She is everything he is not. In US elections the White House often swings to the opposite of what has gone before. And whether it is gender, race, age, or ideals, Harris represents the diametric opposite of the present incumbent. She is, in many ways, the “female Obama”.

The political symbolism of a woman of colour declaring her candidacy on Martin Luther King Jr Day was lost on precisely no one. Certainly not on Trump, who will be feverishly trying to dream up a dismissive nickname for Harris. Such schoolyard tactics are unlikely to work. This daughter of a Jamaican-born father and Indian-born mother is a candidate of substance. She will spend the next year hammering Trump on his race relations record, specifically his comments after the neo-Nazi riots in Charlottesville. And voters will soon come to know the story of how, as a toddler, Harris was taken to civil right marches by her parents and shouted “Fweedom!” from her stroller. Within her own party too Harris is breaking the mould. Joe Biden and Bernie Sanders are widely expected to enter the race in the coming weeks. But both are septuagenarian white men.

Beto O’Rourke, for all his progressive credentials, is a millionaire internet entrepreneur. None of that is representative of the Democratic Party today. It was notable in a recent analysis of social media interactions that Harris was an easy second to Alexandria Ocasio-Cortez, the young congresswoman, for the most engagement among Democrat politicians. She is connecting with the youth of the party. At 54 she is two decades younger than Biden and Sanders. Videos of her questioning of Brett Kavanaugh, Trump’s controversial pick for the US Supreme Court, went viral, as have other episodes from her time on the Senate Judiciary Committee. And although she was only elected to the Senate in 2016, inexperience does not seem an argument that will fly for her opponents.

[..] When it came to announcing, Harris got one of the biggest platforms, a spot on Good Morning America, a sign the US TV networks know she is the real deal. It was a typically direct announcement, and Harris sought to address some of the concerns more national security-focused Democrat voters might have. She stressed her 20 years as a prosecutor in California, and her commitment to “keeping America safe”. Spelling out areas where she would take on Trump, she vowed to restore “America’s moral authority in the world”, working with allies he has snubbed. Most of all, she vowed to “stand up and fight”. And that is what the Democratic base most wants to hear.

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Forget Kamala. Chris Cillizza of all people gets it right: “..the social media profiles of both [AOC and Trump] allow them to “end-run the so-called ‘media filter’ and deliver their preferred message… directly to supporters.” Both expose the hollow sound of the system, each from their own side, but in the end it’s the same thing, because it’s the same system.

AOC is too young to be elected, but not to become very powerful inside the party. Incumbent heads will roll because of her, and whoever becomes the candidate can’t risk losing her support.

For me it’s nothing more to do with supporting AOC than it does with supporting Trump. It’s about exposing the rot in the system. Davos and all that.

Alexandria Ocasio-Cortez, Crusher of Sacred Cows (Matt Taibbi)

The Beltway press mostly can’t stand her. A common theme is that, as a self-proclaimed socialist, she should be roaming the halls of Rayburn and Cannon in rags or a barrel. Washington Examiner reporter Eddie Scarry tweeted a photo of her in a suit, saying she didn’t look like “a girl who struggles.” High priest of conventional wisdom Chris Cillizza, with breathtaking predictability, penned a column comparing her to Donald Trump. He noted the social media profiles of both allow them to “end-run the so-called ‘media filter’ and deliver their preferred message… directly to supporters.” The latter issue, of course, is the real problem most of Washington has with “AOC”: her self-generated popularity and large social media presence means she doesn’t need to ask anyone’s permission to say anything.

[..] I have no idea if Ocasio-Cortez will or will not end up being a great politician. But it’s abundantly clear that her mere presence is unmasking many, if not most, of the worst and most tired Shibboleths of the capital. Moreover, she’s laying bare the long-concealed fact that many of their core policies are wildly unpopular, and would be overturned in a heartbeat if we could somehow put them all to direct national referendum. Take the tax proposal offered by Ocasio-Cortez, which would ding the top bracket for 70 percent taxes on all income above $10 million. The idea inspired howls of outrage, with wrongest-human-in-history Alan Greenspan peeking out of his crypt to call it a “terrible idea,” Wisconsin’s ex-somebody Walker saying a 5th grader would know it was “unfair,” and human anti-weathervane Harry Reid saying “you have to be careful” because voters don’t want “radical change quickly.”

Except polls show the exact opposite. Almost everyone wants to soak the rich. A joint survey by The Hill and Harris X showed 71 percent of Democrats, 60 percent of Independents, and even 45 percent of Republicans endorse the Ocasio-Cortez plan. Is it feasible? It turns out it might very well be, as even Paul Krugman, who admits AOC’s rise makes him “uneasy,” said in a recent column. He noted the head of Barack Obama’s Council of Economic Advisers estimated the top rate should be even higher, perhaps even 80 percent. We’ve been living for decades in a universe where the basic tenets of supply-side economics — that there’s a massive and obvious benefit for all in dumping piles of money in the hands of very rich people — have gone more or less unquestioned.

Now we see: once a popular, media-savvy politician who doesn’t owe rich donors starts asking such questions, the Potemkin justifications for these policies can tumble quickly. There is a whole range of popular policy ideas the Washington political consensus has been beating back for decades with smoke and mirrors, from universal health care to legalized weed to free tuition to expanded Social Security to those higher taxes on the rich. As we’ve seen over and over with these swipes on Ocasio-Cortez, the people defending those ideas don’t realize how powerful a stimulant for change is their own negative attention. If they were smart, they’d ignore her. Then again, if politicians were smart, they’d also already be representing people, not donors. And they wouldn’t have this problem.

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First one to jump party lines wins.

Theresa May: Second Referendum Would Threaten ‘Social Cohesion’ (G.)

Theresa May reiterated her opposition to a second Brexit referendum on Monday night, claiming it would threaten Britain’s “social cohesion” and insisting the centrepiece of her strategy remained negotiating changes to the Irish backstop. With just 67 days to go until Britain is due by law to leave the European Union, May exasperated MPs and business groups by offering scant evidence that she was willing to change course. Giving a statement in the House of Commons, the prime minister outlined three changes she claimed had emerged from discussions with colleagues in the six days since her Brexit deal was rejected by MPs with a crushing margin of 230:

• A more consultative approach to the next phase of negotiations, with MPs, business groups and unions more involved. • Stronger reassurances on workers’ rights and environmental standards, “with a guarantee that not only will we not erode protections for workers’ rights and the environment but we will ensure this country leads the way”. • Another attempt to address the concerns of Tory and Democratic Unionist party MPs about the Irish backstop – which she could then discuss with Brussels. May dismissed the idea of extending article 50 and stepped up warnings about the potential consequences of asking the public to vote again on Brexit. “There has not yet been enough recognition of the way that a second referendum could damage social cohesion by undermining faith in our democracy,” she said.

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Corbyn doesn’t want a referendum. He dreams of elections, and even of winning those.

Labour Calls For Vote On Holding Second Brexit Referendum (G.)

Labour has said the Commons should be able to vote on whether to hold a second referendum in an amendment the party submitted on Monday night to Theresa May’s Brexit update. It is the first time the party has asked MPs to formally consider a second poll, although the carefully worded compromise amendment did not commit the party’s leadership to backing a referendum if such a vote were to take place. The wording called for May’s government to hold a vote on two options – its alternative Brexit plan and whether to legislate “to hold a public vote on a deal or a proposition” that is supported by a majority in the Commons.

The intervention came as the party’s leadership seeks to deal with divisions between Jeremy Corbyn and some of the leader’s closest allies who are sceptical about a second referendum and those who are more enthusiastic such as Brexit spokesman Sir Keir Starmer. The party’s alternative Brexit plan, which would be the subject of a separate vote if the amendment were carried, proposes that the UK remain in a post-Brexit customs union with the European Union and have a strong relationship with the single market. Citizens’ rights and consumer standards would be harmonised with the EU’s. Corbyn said: “Our amendment will allow MPs to vote on options to end this Brexit deadlock and prevent the chaos of a no-deal. It is time for Labour’s alternative plan to take centre stage, while keeping all options on the table, including the option of a public vote.”

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Xi gets nervous.

Xi Warns China Against ‘Black Swans’ Of Economic Volatility (G.)

Chinese president Xi Jinping has warned officials to be vigilant against any threats to the party’s “political security”, underlining uncertainty in Beijing as the economy falters. Xi spoke at a study session for top provincial leaders, ministers, and other party leaders on Monday, the same day official economic data showed the Chinese economy last year grew at its weakest pace in almost 30 years, pulled down by weakening spending, investment, and trade. Yet Xi’s remarks focused more on the “political” and “ideological security” as the country’s main priorities going forward. He stressed the campaign would be focused on training the next generation to uphold “socialism with Chinese characteristics”, the Chinese Communist party’s adaptation of Marxism-Leninism.

“Now the main front of the ideological struggle is on the internet, and the main audience of the internet is young people. Many domestic and foreign forces are trying to develop supporters of their values and even to cultivate opponents of the government,” Xi said. A slowing Chinese economy risks rising rates of unemployment and financially squeezed households and businesses, threatening social stability. “There is no political security. There is only regime security,” said Li Datong, a former journalist and outspoken commentator. “They see the risks of rebellion. As the economy becomes worse, people from all walks of the society can become opponents.”

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Canada’s ambassador to the United States complains that Canadians pay the price for Justin bending over backwards for the US.

US To Formally Seek Extradition Of Huawei Executive Meng Wanzhou (R.)

The United States will proceed with the formal extradition from Canada of Huawei executive Meng Wanzhou, Canada’s ambassador to the United States told the Globe and Mail, in a move certain to ratchet up tensions with China. David MacNaughton, in an interview with the Canadian newspaper published on Monday, said the U.S. has told Canada it will request Meng’s extradition, but he did not say when the request will be made. The deadline for filing is Jan. 30, or 60 days after Meng was arrested on Dec. 1 in Vancouver. Meng, the daughter of Huawei Technologies Co Ltd founder Ren Zhengfei, was arrested at the request of the United States over alleged violations of U.S. sanctions on Iran.

She was released on bail last month and is due in court in Vancouver on Feb. 6. Relations between China and Canada turned frosty after the arrest, with China detaining two Canadian citizens and sentencing to death a Canadian man previously found guilty of drug smuggling. [..] In an article published on Monday, a former Canadian spy chief said Canada should ban Huawei from supplying equipment for next-generation telecoms networks, while Canada’s government is studying any security implications. Some of Canada’s allies such as the United States and Australia have already imposed restrictions on using Huawei equipment, citing the risk of it being used for espionage. Huawei has repeatedly said such concerns are unfounded, while China’s ambassador to Canada last week said there would be repercussions if Ottawa blocked Huawei.

[..] In Monday’s interview, MacNaughton said he had complained to the United States that Canada was suffering from Chinese revenge for an arrest made at the U.S.’s request. “We don’t like that it is our citizens who are being punished,” the Globe and Mail cited MacNaughton as saying. “(The Americans) are the ones seeking to have the full force of American law brought against (Ms. Meng) and yet we are the ones who are paying the price. Our citizens are.”

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Strange headline. What they mean is value. And yeah, property prices are ‘recovering’, because foreigners are buying up the country. If you don’t think that’s a problem, imagine the same happening where you live.

Greek Households Have Lost 28% Of Their Assets (K.)

Greek households lost 27.9 percent of their assets in the decade from 2008 to 2018, Alpha Bank notes in its weekly financial bulletin. The lender’s analysts say that this drop was the biggest in the eurozone, followed by those recorded in Spain, Italy and Cyprus, while Germany recorded significant gains during the same period. Portugal also saw a rise, even though the country also went through an economic streamlining program, as it has benefited from the increase in property prices in recent years.

Households in Greece have recorded the biggest decline in the eurozone’s non-financial wealth after their counterparts in Spain, a development that mainly results from the slide in the Greek property market in previous years. Nevertheless, realty is currently showing signs of recovery in terms of both residential and commercial properties, with the house price index climbing 1.3 percent in January-September 2018 on an annual basis, while the price indexes for offices and retail spaces have climbed 7.4 percent and 3.1 percent respectively. The Alpha bulletin notes that household expectations regarding their spending capacity, employment conditions and the general economic situation are on the rise.

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For Facebook and Twitter, read CIA and MI6.

Facebook And Twitter Can Work Out Who You Are Even If You Don’t Use Them (Ind.)

Facebook and Twitter can be used to work out huge details of your personal life – even if you never actually use them, according to a new study. It is still possible to predict the kind of things you might say simply by looking at the sort of people you hang around with, a new study has found. The research undermines the idea that personal choice is the central part of privacy and that it is possible to opt out of tracking and data collection by social networks on your own, the researchers say. In the research, a team of scientists from the University of Vermont and the University of Adelaide took more than more than thirty million public posts on Twitter from 13,905 users.

They found it was possible to use the messages from eight or nine of a person’s contacts to predict what a person might post next – as accurately as if they were looking at a person’s own Twitter feed. Even if a person left the social network or never actually joined, researchers can guess a person’s future posting or activities with 95 per cent accuracy, the scientists write. It also means that signing up to a social network like Facebook really means you are handing over possible data on your friends, too, the researchers warn. “There’s no place to hide in a social network,” says Lewis Mitchell, a co-author on the new study.

The researchers actually showed that there is a mathematical upper limit on how much predictive information about a person can be held on a social network. But it doesn’t matter whether that information is being provided by the person being profiled or someone else entirely, they found. “You alone don’t control your privacy on social media platforms,” said UVM professor Jim Bagrow. “Your friends have a say too.”

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Oh well, talk to Davos and they’ll solve it all.

Greenland’s Ice Melting Four Times Faster Than In 2003 (Ind.)

Greenland‘s ice is melting far faster than initially thought and may have reached a “tipping point”, with the rate of ice loss now four times quicker than it was in 2003, a new study suggests. Scientists researching rises in global sea levels examined the country’s southeast and northwest regions and found that the largest amount of ice loss was sustained away from Greenland’s glaciers. “Whatever this was, it couldn’t be explained by glaciers, because there aren’t many there,” said Michael Bevis, the study’s lead author. “It had to be the surface mass – the ice was melting inland from the coastline. It’s because the atmosphere is, at its baseline, warmer,” Mr Bevis added. “What’s happening is sea surface temperature in the tropics is going up; shallow water gets warmer and the air gets warmer.”

The team’s study suggests that an increasing amount of water will flow from Greenland into the ocean during the summer months, further contributing to the rising sea levels. “We knew we had one big problem with increasing rates of ice discharge by some large outlet glaciers,” said Mr Bevis. “But now we recognise a second serious problem: increasingly, large amounts of ice mass are going to leave as meltwater, as rivers that flow into the sea.”

Read more …

Jan 092019
 
 January 9, 2019  Posted by at 7:27 pm Finance, Primers Tagged with: , , , , , , , , , , , , ,  


Pablo Picasso Massacre in Korea 1951

 

In the New Year, after a close to the old one that was sort of terrible for our zombie markets, do prepare for a whole lot of stories about China (on top of Brexit and Yellow Vests and many more windmills fighting the Donald). And don’t count on too many positive ones that don’t originate in the country itself. Beijing will especially be full of feel-good tales about a month from now, around Chinese New Year 2019, which is February 5.

And we won’t get an easy and coherent true story, it’ll be bits and pieces stitched together. What will remain is that China did the same we did, just on steroids. It took us 100 years to build our manufacturing capacity, they did it in under 20 (and made ours obsolete). It took us 100 years to borrow enough to get a debt-to-GDP ratio of 300%, they did it in 10.

In the process they also accumulated 10 times more non-productive assets than us, idle factories, bridges to nowhere and empty cities, but they thought that would be alright, that demand would catch up with supply. And if you look at how much unproductive stuff we ourselves have gathered around us, who can blame them for thinking that? Perhaps their biggest mistake has been misreading our actual wealth situation; they didn’t see how poorly off we really are.

 

Xiang Songzuo, “a relatively obscure economics professor at Renmin University in Beijing”, expressed some dire warnings about the Chinese economy in a December 15 speech. He didn’t get much attention, not even in the West. Not overly surprising, since both Beijing and Wall Street have a vested interest in the continuing China growth story.

But with the arrival of 2019, that attention started slowly seeping through. Former associate professor of business and economics at the Peking University HSBC Business School in Shenzhen, Christopher Balding, left China 6 months ago after losing his job. At the time, he wrote: “China has reached a point where I do not feel safe being a professor and discussing even the economy, business and financial markets..”. And, noting a change that very much seems related to what is coming down the road:

”One of my biggest fears living in China has always been that I would be detained. Though I happily pointed out the absurdity of the rapidly encroaching authoritarianism, a fact which continues to elude so many experts not living in China, I tried to make sure I knew where the line was and did not cross it. There is a profound sense of relief to be leaving safely knowing others, Chinese or foreigners, who have had significantly greater difficulties than myself. There are many cases which resulted in significantly more problems for them. I know I am blessed to make it out.”

A few days ago, Balding wrote this on Twitter:

“Most experts dismissed the speech by Xiang Songzuo (claiming Chinese GDP growth could be as low as 1.67%) as implausible…”. No, we didn’t. The GS PE guy and the PKU dean have every reason to deny it. Car and mobile phone shipment down 2% and 16% are not a 6.5% growth economy.”

That certainly sets the tone of the discussion. GDP growth of 1.67% vs the official 6.5%; smartphone shipments down 16%, car sales slumping. Not the kind of numbers you’ll hear from Beijing. And Balding does know China, whether they like it or not. On Monday, Bloomberg, where he was/is a regular contributor, published this from his hand:

 

China Has a Dangerous Dollar Debt Addiction

Officially, China lists its outstanding external debt at $1.9 trillion . For a $13 trillion economy, that’s not a major amount. But focusing on the headline number significantly understates the underlying risks. Short-term debt accounted for 62% of the total as of September, according to official data, meaning that $1.2 trillion will have to be rolled over this year .

Just as worrying is the speed of increase: Total external debt has increased 14% in the past year and 35% since the beginning of 2017 . External debt is no longer a trivial slice of China’s foreign-exchange reserves, which stood at just over $3 trillion at the end of November, little changed from two years earlier. Short-term foreign debt increased to 39% of reserves in September, from 26% in March 2016.

 

The true picture may be more precarious. China’s external debt was estimated at between $3 trillion and $3.5 trillion by Daiwa Capital Markets in an August report. In other words, total foreign liabilities could be understated by as much as $1.5 trillion after accounting for borrowing in financial centers such as Hong Kong, New York and the Caribbean islands that isn’t included in the official tally. Circumstances aren’t moving in China’s favor.

The nation’s companies rushed to borrow in dollars when there was a 3% to 5% spread between Chinese and U.S. interest rates and the yuan was expected to strengthen. Borrowing offshore was cheaper and offered the additional bonus of likely currency gains. Now, the spread in official short-term yields has shrunk to near zero and the yuan has been depreciating for most of the past year. Refinancing debt in dollars has become harder, and more risky.

 

Beijing’s policies have exacerbated the buildup of foreign debt. To promote Xi Jinping’s Belt and Road Initiative, the president’s landmark foreign policy endeavor, China has been borrowing dollars on international markets and lending around the world for everything from Kenyan railways to Pakistani business parks. With this year and 2020 being the peak years for repayments, China faces dollar funding pressure.

To repay their dollar debts, Chinese firms will either have to draw from the central bank’s foreign-exchange reserves (a prospect Beijing is unlikely to allow) or buy dollars on international markets. This creates a new set of problems. There are only 617 billion yuan ($90 billion) of offshore renminbi deposits in Hong Kong available to buy dollars . If China was to push firms to bring debt back onshore, this would necessitate significant outflows that would push down the yuan’s value against the dollar.

 

The Xiang Songzuo speech was also noted by the Financial Times this week. Their conclusions are not much rosier. Recent US imports from China look good only because both buyers and sellers try to stay ahead of tariffs. And whole some truce or another there may smoothen things a little, China must launch a massive stimulus against the background of twice as much investment being needed for a unit of GDP growth.

 

Nervous Markets: How Vulnerable Is China’s Economy?

A relatively obscure economics professor at Renmin University in Beijing sparked a minor furore last month when he claimed a secret government research group had estimated China’s growth in GDP could be as low as 1.67% in 2018 — far below the officially published rate of 6.7% for the year up to September. 

Most experts dismissed the speech by Xiang Songzuo as implausible, despite longstanding doubts about the reliability of China’s official GDP data. Yet although discussion of his claims was quickly scrubbed from the Chinese internet, the presentation has been viewed more than 1.2m times on YouTube — an indication of the raw nerve Mr Xiang touched with his doom-laden warnings.

[..] the question that is hanging over global markets is just how vulnerable is China to a much sharper slowdown? Ominously, the recent downturn has occurred even though the expected hit to Chinese exports from the trade war has not yet materialised. In fact, analysts say exports probably received a one-off boost in recent months as traders front-loaded shipments to beat the expected tariff rise from 10% to 25% that US president Donald Trump threatened would take effect in January. That rise is now on hold due to the 90-day truce that Mr Trump agreed with Chinese president Xi Jinping at the G20 meeting in Argentina last month.

[..] The amount of new capital investment required to generate a given unit of GDP growth has more than doubled since 2007 , according to Moody’s Analytics. In other words, investment stimulus produces little bang for Beijing’s buck, even as it adds to the debt levels.

[..] “They [Beijing] will soon have no choice but to launch massive stimulus,” says Alicia Garcia Herrero, chief Asia Pacific economist at Natixis in Hong Kong. “They do not want to give away their credibility because they said they wouldn’t do it, but there is no time to be cautious any more. Not having growth is ultimately the worst outcome of all.”

 

Christopher Whalen picks up on Xiang Songzuo’s speech as well, and quotes him saying that “Chinese stock market conditions resemble those during the 1929 Wall Street Crash”. Whereas the China Beige Book states that sales volumes, output, domestic and export orders, investment, and hiring fell on a year-over-year and quarter-over-quarter basis. Which leads to the conclusion that deflation is, or should be, Beijing’s main worry.

Oh, and Chinese consumer demand has weakened, something we’ve seen more off recently. Reuters headlines “China To Introduce Policies To Strengthen Domestic Consumption” today, but that headline could have come from any of the past 5 years or so. Domestic consumption is precisely China’s problem, and they can’t achieve nearly enough growth there.

 

China’s Stability Is at Risk

Foreign investors have convinced themselves that the Chinese Communist Party (CCP) is superior in terms of economic management, this despite ample evidence to the contrary, thus accepting the official view is easy but also increasingly risky. In a December 15 speech , Renmin University’s Xiang Songzuo warned that Chinese stock market conditions resemble those during the 1929 Wall Street Crash. He also suggested that the Chinese economy is actually shrinking.

China growth, Tesla profitability, or the mystical blockchain all require more credulity than ever before. For example, in the first half of 2016 global capital markets stopped due to fear of a Chinese recession. Credit spreads soared and deal flows disappeared. But was this really a surprise? In fact, the Chinese government had accelerated official stimulus in 2015 and 2016 to counter a possible slowdown and, particularly, ensure a quiet domestic scene as paramount leader Xi Jinping was enshrined into the Chinese constitution.

Today western audiences are again said to be concerned about China’s economy and this concern is justified, but perhaps not for the reasons touted in the financial media. The China Beige Book (CBB) fourth-quarter preview, released December 27, reports that sales volumes, output, domestic and export orders, investment, and hiring fell on a year-over-year and quarter-over-quarter basis. CBB is a research service that surveys thousands of companies and bankers on the ground in China every quarter.

Contrary to the positive foreign narrative about “growth” in China, CBB contends that deflation is the bigger threat compared to inflation. “Because of China’s structural problems, deflation has very clearly emerged as the bigger threat in a slowing economy than inflation. Consumer demand has weakened, and you see that reflected in retail and services prices,” CBB Managing Director Shehzad Qazi said in an interview.

 

So, China phone shipments are down 16%, as per Balding. But Tim Cook says Apple’s never done better. Still, if that 16% number is correct, either Apple or its Chinese suppliers are doing worse, not better. And 16% is a lot.

 

Despite Recent Battering, Tim Cook Says Apple’s ‘Ecosystem Has Never Been Stronger’

Apple Inc. stock has taken a beating in recent months, but Chief Executive Tim Cook defended his company Tuesday, and expressed optimism that trade tensions with China would soon ease. Apple shares have fallen by more than one-third since their peak on Oct. 3, and tumbled further last week after the tech giant warned of disappointing iPhone sales in its holiday quarter. But in an interview Tuesday with CNBC’s Jim Cramer, Cook said the company was still going strong, and its naysayers were full of “bologna.” “Here’s the truth, what the facts are,” Cook said about reports of slow iPhone XR sales, according to a CNBC transcript.

“Since we began shipping the iPhone XR, it has been the most popular iPhone every day, every single day, from when we started shipping, until now. . . . I mean, do I want to sell more? Of course I do. Of course I’d like to sell more. And we’re working on that.” Slower sales in China also contributed to Apple’s lowered forecast, and Cook said Tuesday he believes that situation to be “temporary.”

“We believe, based on what we saw and the timing of it, that the tension, the trade-war tension with the U.S. created this more-sharp downturn,” he said. Cook said he’s “very optimistic” a trade deal between the U.S. and China will be reached . “I think a deal is very possible. And I’ve heard some very encouraging words,” he said.

 

16% fewer phones, that gets you the second production cut at Apple and its ‘magnificent ecosystem’ in short order. Now sure, Cook can try and blame the tariffs. but Samsung’s Q4 2018 sales fell 11%, and its operating profit fell by 29%. It’s a bigger and wider issue, and China is at the heart of it.

 

Apple Cuts Q1 Production Plan For New iPhones By 10%

Apple, which slashed its quarterly sales forecast last week, has reduced planned production for its three new iPhone models by about 10% for the January-March quarter, the Nikkei Asian Review reported on Wednesday. That rare forecast cut exposed weakening iPhone demand in China, the world’s biggest smartphone market, where a slowing economy has also been buffeted by a trade war with the United States.

Many analysts and consumers have said the new iPhones are overpriced. Apple asked its suppliers late last month to produce fewer-than-planned units of its XS, XS Max and XR models, the Nikkei reported, citing sources with knowledge of the request. The request was made before Apple announced its forecast cut, the Nikkei said.

 

And very much not least there was this graph of Chinese investments in Africa. What are the conditions? At what point will they call back the loans? And when countries can’t pay back, what’s the penalty? How much of this has been provided by Beijing in US dollars it doesn’t have nearly enough of?

 

 

It’s like the much heralded Belt and Road project, or Silk Road 2.0, isn’t it, where the first batch of participating nations have started sounding the alarm over loan conditions. Yes, it sounds great, I admit, but I have long said that in reality Belt&Road is China’s ingenious scheme to export its industrial overcapacity and force other countries to pay for it. It’s like the model Rome had, and the US still do, just all in one single project. And this one has a name, and it can be expanded to Africa.

But no, I don’t see it. I think China’s debt, combined with the vast distance it still has from owning a global reserve currency, will call the shots, not Xi Jinping.

China won’t be taking over. At least, not anytime soon.

 

 

Jan 022019
 
 January 2, 2019  Posted by at 10:48 am Finance Tagged with: , , , , , , , , , ,  


Pablo Picasso Portrait of Dora Maar pensive 1937

 

China Warns Cities To Cut Reliance On Property, Developers’ Shares Fall (R.)
Chinese Manufacturing Had An Even Worse December Than Expected (CNBC)
Markets Dive As China Manufacturing Weakens In Bleak Start To 2019 (G.)
The Future Might Not Belong to China (Martin Wolf)
Australian Home Prices Mark Worst Year Since 2008 (R.)
The Anti-Trump Party (Turley)
Red Paul: The Senator from Kentucky is Now Working for Vladimir Putin (M.)
MH17 Turnabout: Ukraine’s Guilt Now Proven (Zuesse)
Reasons To Be Hopeful About The Environment In 2019 (G.)

 

 

Beijing has both actively and passively encouraged real estate sales. Now they move into “we warned you”, and shift the blame onto local government. Ominous, Xi tries to wash his hands from what he sees coming.

China Warns Cities To Cut Reliance On Property, Developers’ Shares Fall (R.)

China’s regional economies need to reduce their reliance on the property market for growth and instead focus on sustainable longer-term development, the Communist Party’s People’s Daily wrote on Wednesday. Hundreds of cities across China have seen upswings in their local property markets in recent years under a long-term plan by Beijing to further urbanize the country. In the last few years, the process of building new homes and revamping old ones has accelerated, backed by local governments keen to boost land sales and meet red-hot property demand. The total sales of China’s top 100 real estate developers soared 35 percent last year, according to private research firm CIRC.

But Beijing is concerned that some cities, looking for rapid expansion, have grown their property markets too quickly and at the expense of new industry development, adding potential froth to real estate prices. “All areas should focus on their own urbanization processes, develop their own pillar industries according to population mobility and resources, and form new points of growth to avoid the old road of relying on real estate to drive the economy,” the commentary quoted a professor at the Capital University of Economics and Business as saying. [..] The article also comes as a number of Chinese city authorities seek to ease existing curbs on their property markets, despite broader directives from Beijing to keep prices in check. Last week, the city of Hengyang rescinded an order to lift restrictions on property prices, having just introduced the easing measure a day earlier.

Read more …

So housing slumps, and so does industry. One month left till Chinese new year.

Chinese Manufacturing Had An Even Worse December Than Expected (CNBC)

Results of a private survey on China’s manufacturing for the month of December showed factory activity contracted for the first time in 19 months amid a trade dispute with the U.S. The Caixin/Markit Manufacturing Purchasing Managers’ index (PMI), a private survey, fell to 49.7 in December from 50.2 in November. Analysts’ in a Reuters poll predicted the PMI to come in at 50.1 in December. A reading above 50 indicates expansion, while a reading below that level signals contraction. In December, two separate measures for new orders and new export orders showed contraction, the Caixin survey showed.

“That showed external demand remained subdued due to the trade frictions between China and the U.S., while domestic demand weakened more notably,” wrote Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin. “It is looking increasingly likely that the Chinese economy may come under greater downward pressure,” Zhong added in the press release. [..] The slide in China’s PMI is “worrying” as there will be broader fallout on Asian exporters, said Vishnu Varathan, head of economics and strategy at Mizuho Bank.

Even though China’s manufacturing PMI typically slows ahead of Chinese New Year holidays — starting on February 5 in 2019 — this particular downturn in the sector “could be even sharper than headlines suggest,” Varathan wrote in a note on Wednesday. He added that the sustained downturn in manufacturing PMI in the second half of 2018 “with emphatic year-end slide” is “potentially symptomatic of far sharper underlying demand pullback. Especially as front-running US tariffs on China fade to reveal much softer demand conditions.”

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Whoever it is who holds Chinese stocks, some incurred some big losses.

Markets Dive As China Manufacturing Weakens In Bleak Start To 2019 (G.)

China’s huge manufacturing sector has shrunk for the first time in 19 months, sending stock markets into a tailspin in an ominous start to 2019. The weak data released on Wednesday follows a slew of other disappointing figures from the world’s second largest economy and underline concerns that is heading for a tough 12 months. Stock markets in the region suffered. Hong Kong was down 2.7%, Shanghai off 1.2% and the ASX 200 benchmark closed down 1.6% in Sydney. In South Korea, figures showed that its crucial export industries finished the year on a poor note, sending the Kospi stock index down 1.7% at the end of trading.

Asia biggest market, Japan, was closed for a holiday. But the selling looks set to spread to Europe and the US with FTSE futures pointing to a 0.25% fall at the open and the E-Mini futures for Wall Street’s S&P 500 down 0.8%. The Australian dollar, which is seen as a proxy for the Chinese economy, lost 0.6% as it plunged as low as US70.05 cents. It was the currency’s lowest level since January 2016 and perilously close to dipping below the key trading benchmark of US70c that, once breached, could spur further falls. The Australian outlook was not helped by figures showing that house prices are now falling at their fastest rate for 10 years.

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Snippets posted by Brad De Long. I could just as easily says: the future MIGHT not belong to India, either.

The Future Might Not Belong to China (Martin Wolf)

…The view widely held in the 1980s that Japan would be “number one” turned out to be badly mistaken. In 1956, Nikita Khrushchev, then first secretary of the Communist party of the Soviet Union, told the west that “We will bury you!” He proved utterly wrong…. Mistakes: extrapolating… assuming… rapid economic growth will be indefinitely sustained; and exaggerating the benefits of centralised direction… [which] in the long run… is likely to become rigid and so brittle….

China’s investment rate, at 44 per cent of GDP in 2017, is unsustainably high…. Not surprisingly, returns on investment have collapsed…. China has also hit the buffers on export-driven growth, at a lower level of income per head than other high-growth east Asian economies…. Future demand will depend on the emergence of a mass-consumer market, while growth of supply will require an upsurge in growth of “total factor productivity”…

For one and a half decades, China has benefited from the reforms introduced by Zhu Rongji, premier from 1998 to 2003. No comparable reforms have happened since his time. Today, credit is still being preferentially allocated to state businesses, while state influence over large private businesses is growing. All this is likely to distort the allocation of resources and slow the rate of innovation and economic progress…. China may well fail to replicate the success of other east Asian high-growth economies… because the distortions in its economy are so large and the global environment is going to be so much more hostile….

The most interesting other economy is not Europe, which seems destined for a slow relative decline, but India… far poorer than China … has great potential for fast catch-up growth…. The triumph of despotism is still far from inevitable. Autocracies can fail, just as democracies can thrive. China confronts huge economic challenges. Meanwhile, democracies must learn from their mistakes and focus on renewing their politics and policies…

Read more …

Everything is worst in a decade, it seems.

Australian Home Prices Mark Worst Year Since 2008 (R.)

Australian home prices skidded nearly 5% in 2018, marking their worst year since 2008, led by tighter credit conditions and waning investor interest, and analysts expect the weakness to persist this year. Property values across the country fell for the 15th consecutive month in December, with the rate of decline in Sydney and Melbourne – the two largest markets – worsening over the year, according to property consultant CoreLogic. Its index of home prices nationally dropped 1.8% in December from November, and tumbled 2.3% for the quarter – the worst quarterly decline in eight years. Values in the combined capital cities fell 1.3% in the month and 6.1% for the year.

Sydney was the worst performing capital city with prices down 1.8% in December. Regional centers fared better with prices outside the cities staying almost flat. “Access to credit has been the most significant factor weighing down housing market conditions over the year,” said Tim Lawless, head of research at CoreLogic. Since 2015, regulators have clamped down on risky lending by banks, particularly for interest-only loans, while a raft of scandals amid a high-level government-mandated inquiry has added to an air of caution. Earlier this year, Australia’s prudential regulator did ease some of its lending restrictions, but Lawless said access to finance was likely to remain “the most significant barrier” to an improvement in housing market conditions in 2019.

“Lenders are understandably risk-averse against a backdrop of falling dwelling values, high household debt, rising supply and heightened regulatory focus following the banking royal commission inquiry,” he said. The slowdown has been greatest in Sydney where home prices stumbled nearly 9% on the year, though Melbourne was catching up with an annual drop of 7%. Sydney and Melbourne comprise about 60% of Australia’s housing market by value and 40% by number.

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2019 promises to be even uglier than 2018. US politics becomes an oxymoron, the entire system, and all the blame is shifted to just one man.

Me, I’m getting tired of trying to provide some balance in the face of these things. The Democrats refuse to understand that not being Trump is not an identity, because it’s the only claim they have left at an identity.

The Anti-Trump Party (Turley)

Democrats are now defined by Trump the way that antimatter is defined by matter, with each particle of matter corresponding to an antiparticle. Take the secrecy. Democrats once were the party that fought against the misuse of secret classification laws by the FBI and other agencies. They demanded greater transparency from the executive branch, which is a position that I have readily supported. Yet, when oversight committees sought documents related to the secret Foreign Intelligence Surveillance Act investigation of Trump associates, Democrats denounced the very thought that Republicans would question the judgment of the FBI that any such disclosures would be tantamount to jeopardizing national security.

Democratic Party leaders including Pelosi declared that the oversight committees had moved beyond “dangerous irresponsibility and disregard for our national security” and “disregarded the warnings of the Justice Department and the FBI.” Likewise, House Intelligence Committee ranking minority member Adam Schiff expressed shock that the FBI was not given deference in withholding the information in the surveillance investigation.

Yet, when the information was finally forced out of the FBI, including the disclosure of previously redacted material, it was clear that the FBI had engaged in overclassification to shield not national security but to shield the bureau itself from criticism. It included discussion of the roles of high ranking FBI officials and their reliance on such sources as the Christopher Steele dossier, which were already publicly known. Democratic House members like Schiff presumably knew what was in the redactions and, nevertheless, wanted deference to the classification decisions of the FBI.

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The writer is Greg Olear. Whoever that is. But it’s published at Medium, who until now I thought had some standards. I no longer think so.

Red Paul: The Senator from Kentucky is Now Working for Vladimir Putin (M.)

[..] John McCain accused him on the Senate floor of “working for Vladimir Putin.” This quote got a lot of play in the political press, who love that sort of thing, but the consensus seemed to be that McCain was using hyperbolic language to make his point. But what if this was a bad take? Few members of Congress were more antagonistic toward Putin than John McCain. Perhaps when he called Rand Paul a Russian asset, on the floor of the US Senate, he actually meant it. Since the day John McCain called him out, Rand Paul has been a veritable lobbyist for the Kremlin.

On matters large and small, Paul has supported Moscow’s positions. He’s pushed for open and active dialogue with the nation that engaged in cyberwarfare against us. He’s argued for the lifting of sanctions on Russian individuals close to Putin. He was one of few politicians who defended Trump after his disastrous showing in Helsinki, when Trump more or less kissed the ring of the Russian dictator. He joined Trump in seeking the revocation of a security clearance on John O. Brennan, after the former CIA director denounced the Helsinki summit as “nothing short of treasonous.” In recent weeks, Paul has held with the Kremlin’s position on Syria.

Read more …

A long piece by Eric Zuesse, I haven’t read the whole thing yet.

MH17 Turnabout: Ukraine’s Guilt Now Proven (Zuesse)

Russia’s response documented beyond any question, at all, that this airliner was shot down by the Ukrainian Government, and that Western (i.e., US-allied) ‘news’media have been and are covering-up this crucial historical fact and The West’s still-ongoing lies about the downing of MH17. Those lies are the basis of US and EU anti-Russia sanctions, which remain in effect despite the basis for those sanctions having been exposed unequivocally, on September 17th, to be based on lies. Thus, continuing to hide those lies is crucial to the liars. This is the reason why Russia’s blazingly detailed presentation on September 17th has been virtually ignored — to protect the actually guilty.

The evidence here proves that those sanctions, themselves, are nothing but frauds against the public, and crimes against Russia — ongoing additional crimes, which have been, and remain, effectively hidden till now. The reader can see and consider here all of the conclusive evidence in the MH17 case — it can be reached via the present article’s links. Unlike the ‘news’-reports in The West’s ‘news’-media, the presentation here is not presuming readers’ trust, but is instead providing to all readers access to the actual evidence — evidence that is accepted by both sides. That’s what the links here are for: examination by any skeptics.

Read more …

if you need to look at Macron and the UN for such reasons, forget it.

Reasons To Be Hopeful About The Environment In 2019 (G.)

[..] 2019 may indeed be a breakthrough year. Public opinion is mobilising around the world and politicians and businesses are paying attention. There will be a series of high-profile events that will engage the public and governments and may provide a better way forward than was managed last year. Chief among them is the promise of António Guterres, the UN secretary general, to hold a summit for world leaders that will require them to face up to the dangers of climate change head on. Guterres is uncompromising, warning in Poland that it would be “immoral and suicidal” not to take firm and urgent action commensurate with the scale of the problem.

Leaders will be put on the spot, and will come under very public pressure as coalitions of civil society groups seek to put their case around the summit and in the lead-up to it. The role of women, who are among the most vulnerable to climate change, will be highlighted, and the role of young people, who will have to live with the consequences of their elders’ mistakes in a warming world. The French president, Emmanuel Macron, is also holding a One World Summit, planned for the summer, at which the focus will be on persuading businesses to take a leading role, investing in projects to reduce greenhouse gas emissions and changing the way they use energy.

There are clear signs of hope on climate change also in the rapidly falling cost of renewable energy technology, which is now competitive with fossil fuels. And the keep it in the ground campaign has succeeded in encouraging many investors to move their money out of fossil fuel stocks.

Read more …

Dec 022018
 
 December 2, 2018  Posted by at 10:53 am Finance Tagged with: , , , , , , , , , , , , , ,  


Claude Monet Camille Sitting on the Beach at Trouville 1870-71

 

US Markets To Close On Wednesday In Honor Of George H.W. Bush
US, China Agree To Trade War Ceasefire, More Talks (AFP)
Putin Refuses To Release Ukrainian Sailors And Ships (G.)
Putin Briefs Trump Over Ukraine As EU Leaders Up Pressure (AFP)
Mattis Says Russia Tried To ‘Muck Around’ US Vote, Again (AFP)
Mueller’s RussiaGate Probe: Conflicts and Special Interests (Adam Carter)
Trump To Notify Congress In ‘Near Future’ He Will Terminate NAFTA (R.)
Property Investors Can’t Expand As Lending Rules Toughen Up (NewsCorp)
France Is Deeply Fractured. Gilets Jaunes Are Just A Symptom (Guilluy)
Theresa May Faces Fresh Battle Over Publishing Brexit Legal Advice (BBC)
How Greece’s Financial Crisis Led To A Baby Bust (WaPo)

 

 

No, no, no, what a missed opportunity! They should have shut down the military instead for a day, or the CIA. And preferably longer than one day. But Bush had nothing to do with the markets.

US Markets To Close On Wednesday In Honor Of George H.W. Bush

Major U.S. markets will be closed on Wednesday in honor of former U.S. President George H.W. Bush. The New York Stock Exchange and Nasdaq will both close on Wednesday in observance of the National Day of Mourning after Bush’s death Saturday at the age of 94. Both the NYSE and Nasdaq will also observe a moment of silence at 9:20 a.m. ET on Monday. U.S. President Donald Trump on Saturday ordered the federal government to close on Wednesday out of respect for Bush. Federal Reserve Chairman Jerome Powell is scheduled to testify on Wednesday on the economic outlook before the congressional Joint Economic Committee. A spokesman for the committee did not immediately respond to questions on Saturday about whether the hearing would be rescheduled.

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How predictable would you like it?

US, China Agree To Trade War Ceasefire, More Talks (AFP)

US President Donald Trump and China’s Xi Jinping agreed Saturday to suspend any new tariffs in the escalating trade war between the world’s two largest economies, even if huge existing duties will remain in place. Following more than two hours of dinner talks between the two leaders, the White House said an increase of tariffs from 10 to 25 percent due to kick in on January 1 would now be put on hold, providing room for intense negotiations. The agreement, hashed out over steak in the Argentine capital Buenos Aires, lowers the temperature in a conflict that has spooked world markets. The two leaders, who were in Buenos Aires for a summit of the G20 countries, called it “a highly successful meeting,” the White House said.

“The principal agreement has effectively prevented further expansion of economic friction between the two countries and has opened up new space for win-win cooperation,” said Chinese Foreign Minister Wang Yi. Under the agreement, Trump is shelving a plan to raise existing tariffs of 10 percent to 25 percent from the start of next year. However, the truce is only partial. Some $50 billion worth of Chinese imports already face 25 percent tariffs while the 10 percent tariffs, which target a massive $200 billion in goods, will also remain in effect. Meanwhile, China has targeted $110 billion worth of US imports for tariffs. If there is any further retaliation, Trump has warned, he will slap punitive duties on the remaining $267 billion in Chinese goods coming to the United States.

And Saturday’s truce also contained an ultimatum. The White House made clear that the 10 percent tariffs would still leap up to 25 percent if China doesn’t meet US demands in 90 days. These include China stopping a host of trade barriers, intellectual property theft and other actions that Washington say make fair trade impossible. Tough negotiations lie ahead, but Trump was upbeat. “This was an amazing and productive meeting with unlimited possibilities for both the United States and China. It is my great honor to be working with President Xi,” he said in a statement.

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From Twitter: “Martial Law prohibits the diffusion of military movements in #Ukraine therefore won’t post the Armed Forces movements but I can safely say that #Odessa is being heavily prepared for war.”

Look, “sailors and ships?” They were armed navy vessels with soldiers, not fishing boats with civilians.

Putin Refuses To Release Ukrainian Sailors And Ships (G.)

Vladimir Putin has said it is “too early” to return Ukrainian sailors and naval vessels seized by Russia in the Sea of Azov, accusing the Ukrainian government of provoking an incident as a distraction from domestic problems. Putin was speaking to reporters after the G20 summit in Buenos Aires, where Donald Trump cancelled a meeting with the Russian leader because of Moscow’s refusal to release the 24 Ukrainians. The Russian president said it was necessary to detain the captives while a legal case was put together to demonstrate that the three Ukrainian naval vessels violated Russia’s territorial waters. He said the ships’ logs would show that their attempt to cross the Kerch strait from the Black Sea into the Sea of Azov – enclosed by Russia, the Crimean peninsula and mainland Ukraine – was a deliberate provocation.

Asked if he might consider exchanging the captive sailors for Russians in Ukrainian detention, Putin said: “We are not considering a swap and Ukraine did not raise this issue, and it’s too early to talk about that. They are still being investigated. “We need to establish the fact that this was a provocation by the Ukrainian government and we need to put all these things on paper,” he added, arguing that the incident was part of a wider pattern of Ukrainian provocation. “The current Ukrainian leadership is not interested in resolving this at all,” Putin said. “As long as they stay in power, war will continue. Why? Because when you have provocations, such hostilities like what just happened in the Black Sea … you can always use war to justify your economic failures.”

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Putin has finally put his foot down. Has he taken too long? if he’d done it earlier, would Ukraine try such stunts?

Putin Briefs Trump Over Ukraine As EU Leaders Up Pressure (AFP)

Russian President Vladimir Putin said Saturday he briefed his US counterpart Donald Trump on the Ukraine crisis as he came under pressure over Moscow’s robust foreign policy at the G20 summit in Argentina. Putin said he explained Moscow’s position to Trump when the leaders met briefly at a summit dinner Friday. “We spoke standing up. I replied to his questions about the incident in the Black Sea,” Putin told reporters at the end of the summit. Putin strode into the summit under a cloud, having drawn outrage from Europe over last week’s incident in which his navy detained three Ukrainian ships and 24 sailors – causing Trump to abruptly cancel their scheduled meeting. Ukraine President Petro Poroshenko kept up the pressure from Kiev, saying Putin had refused to take his calls since the crisis started.

[..] Away from the summit, US Defense Secretary Jim Mattis said Moscow had shown “brazen contempt” for a deal “that allowed both Russian and Ukrainian ships free passage.” Putin – who has praised his navy for defending Russian territory – “provided exhaustive explanations on this incident in the Black Sea, explaining everything in detail, in exactly the same manner as yesterday during his meeting with the French president,” Kremlin spokesman Dmitry Peskov told Interfax. Far from offering comforting words, Putin said at a post-summit press conference he saw no end in sight to the four-year conflict in eastern Ukraine “as long as the current Ukrainian authorities remain in power.” “The current Ukrainian authorities have no interest in resolving the conflict, especially by peaceful means,” he said.

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Oh, let’s see the evidence or shut up. And stop mucking around in Russia and Ukraine while you’re at it.

Mattis Says Russia Tried To ‘Muck Around’ US Vote, Again (AFP)

US Defense Secretary Jim Mattis said Saturday that Russia tried to meddle in the US midterm elections last month – just as it did in the 2016 vote that brought President Donald Trump to power. The already strained ties between Washington and Moscow have “no doubt” worsened over Russian’s continued attempts to interfere in the US voting process, Mattis said at the Reagan National Defense Forum in California. Russian President Vladimir Putin “tried again to muck around in our elections this last month, and we are seeing a continued effort along those lines,” the Pentagon chief said. Putin has “continued efforts to try to subvert democratic processes that must be defended,” Mattis said, stressing he was unsure whether there were growing threats from Russia.

“We’ll do whatever is necessary to defend them.” Mattis spoke as President Donald Trump suddenly scrapped a planned meeting with Putin at the G20 summit of world leaders in Buenos Aires, Argentina, citing a Russian military intervention in Ukraine. Ahead of last month’s vote, Twitter and Facebook shut down thousands of Russian-controlled accounts, while 14 people from Russia’s notorious troll farm, the Internet Research Agency, were indicted. And US law enforcement agencies warned that “Americans should be aware that foreign actors – and Russia in particular – continue to try to influence public sentiment and voter perceptions through actions intended to sow discord.”

Read more …

Robert Mueller comes with a long history. That’s why he was picked.

Mueller’s RussiaGate Probe: Conflicts and Special Interests (Adam Carter)

Robert Mueller was the director of the FBI between 2001 and 2013, spanning both Bush and Obama administrations. He was appointed as special counsel to investigate Russian interference in the 2016 United States general election on May 17, 2017. Since his appointment, Mueller has been promoted as a champion of justice and a pursuer of truth by the mainstream press. He has been hailed as incorruptible by some and “America’s straightest arrow” by others. However, history shows us that Mueller investigating anything may, inherently, come with disadvantages when it comes to the pursuit of truth. According to whistleblowers, under Mueller’s leadership, crimes and scandals involving both government officials and the private-sector were ignored or covered-up by the FBI, and there are questions about further cover-ups before he became the agency director.

In July 2017, FBI whistleblower Coleen Rowley wrote an article titled “No, Robert Mueller And James Comey Aren’t Heroes” in which the author details the not-so-perfect history of both Mueller and Comey, suggesting that those lionizing the pair may be suffering from amnesia. Rowley explains that Mueller and Comey presided over post-9/11 cover-ups, secret abuses against the Constitution, enabled Bush/Cheney fabrications used as the pretext for waging war and demonstrated incompetence. The article also references Mueller’s attempts to mislead everyone following 9/11 and Rowley’s efforts to challenge Mueller on his silence about what he knew.

Going further, Rowley covers Mueller’s bungled Amerithrax investigation that targeted an innocent man, violations of privacy, infiltration of non-violent anti-war groups and also references Mueller’s history before being director of the FBI: “Long before he became FBI Director, serious questions existed about Mueller’s role as Acting U.S. Attorney in Boston in effectively enabling decades of corruption and covering up of the FBI’s illicit deals with mobster Whitey Bulger and other “top echelon” informants who committed numerous murders and crimes. When the truth was finally uncovered through intrepid investigative reporting and persistent, honest judges, U.S. taxpayers footed a $100 million court award to the four men framed for murders committed by (the FBI operated) Bulger gang.”

Earlier this year, Republican congressman Louie Gohmert also highlighted various issues in a report titled “Robert Mueller Unmasked” that opened with a bold assertion: “Robert Mueller has a long and sordid history of illicitly targeting innocent people that is a stain upon the legacy of American jurisprudence. He lacks the judgment and credibility to lead the prosecution of anyone.”

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This will easily lead into January and the Democratic Congress. Let the courts decide.

Trump To Notify Congress In ‘Near Future’ He Will Terminate NAFTA (R.)

U.S. President Donald Trump said on Saturday he will give formal notice to the U.S. Congress in the near future to terminate the North American Free Trade Agreement (NAFTA), giving six months for lawmakers to approve a new trade deal signed on Friday. “I will be formally terminating NAFTA shortly,” Trump told reporters aboard Air Force One on his way home from Argentina. “Just so you understand, when I do that – if for any reason we’re unable to make a deal because of Congress then Congress will have a choice” of the new deal or returning to trade rules from before 1994 when NAFTA took effect, he said. Trump told reporters the trade rules before NAFTA “work very well.” NAFTA allows any country to formally withdraw with six months notice.

Trump, Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto signed a new trade agreement on Friday known as the United States-Mexico-Canada Agreement (USMCA). Trump’s decision to set in motion a possible end to largely free trade in North America comes amid some skepticism from Democrats about the new trade deal. The U.S. landscape will shift significantly in January when Democrats take control of the House of Representatives, after winning mid-term elections in November. Presumptive incoming Speaker of the House Nancy Pelosi described the deal as a “work in progress” that lacks worker and environment protections.

“This is not something where we have a piece of paper we can say yes or no to,” she said at a news conference on Friday, noting that Mexico had yet to pass a law on wages and working conditions. Other Democrats, backed by unions that oppose the pact, have called for stronger enforcement provisions for new labor and environmental standards, arguing that USMCA’s state-to-state dispute settlement mechanism is too weak. A 2016 congressional research report said there is a debate over whether a president can withdraw from a trade deal without the consent of Congress, and there is no historical precedent for the unilateral withdrawal from an free trade deal by a president that had been approved by Congress. The issue could ultimately be decided by the U.S. courts.

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From Australia, for the entire western world.

Property Investors Can’t Expand As Lending Rules Toughen Up (NewsCorp)

Property investors wanting to expand their holdings are finding doors slamming in their faces as new lending restrictions bite hard. Harsher income tests, tighter rules for interest-only loans, tax changes and tougher assessments of rents and repayments have put the brakes on, and lending specialists believe more squeezing is likely. Almost one-third of the nation’s 2.1 million residential real estate investors own more than one property, according to Australian Taxation Office data, and many see it as their ticket to retirement wealth instead of the struggling share market. However, expanding beyond one investment property has become much tougher this year amid factors including:

• Investors’ ability to repay is now being based on interest rates between 7.25 and 8 per cent, rather than the 4 per cent many are currently charged. • Lenders only count 70 per cent of a property’s rental income. • Interest-only loans, popular among investors, are harder to come by and harder to continue, resulting is higher repayments when they switch to principal-and-interest. The result is that potential investment loans are assessed as unaffordable even if the investor has no problems paying it back.

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Yet another analysis of how the left abandoned its voters. Meanwhile, gilets jaunes are now active in Belgium and Holland. If they can organize well enough, they’re here to stay for a while.

France Is Deeply Fractured. Gilets Jaunes Are Just A Symptom (Guilluy)

From the 1980s onwards, it was clear there was a price to be paid for western societies adapting to a new economic model and that price was sacrificing the European and American working class. No one thought the fallout would hit the bedrock of the lower-middle class, too. It’s obvious now, however, that the new model not only weakened the fringes of the proletariat but society as a whole. The paradox is this is not a result of the failure of the globalised economic model but of its success. In recent decades, the French economy, like the European and US economies, has continued to create wealth. We are thus, on average, richer. The problem is at the same time unemployment, insecurity and poverty have also increased.

The central question, therefore, is not whether a globalised economy is efficient, but what to do with this model when it fails to create and nurture a coherent society? In France, as in all western countries, we have gone in a few decades from a system that economically, politically and culturally integrates the majority into an unequal society that, by creating ever more wealth, benefits only the already wealthy. The change is not down to a conspiracy, a wish to cast aside the poor, but to a model where employment is increasingly polarised. This comes with a new social geography: employment and wealth have become more and more concentrated in the big cities. The deindustrialised regions, rural areas, small and medium-size towns are less and less dynamic.

But it is in these places – in “peripheral France” (one could also talk of peripheral America or peripheral Britain) – that many working-class people live. Thus, for the first time, “workers” no longer live in areas where employment is created, giving rise to a social and cultural shock. It is in this France périphérique that the gilets jaunes movement was born. It is also in these peripheral regions that the western populist wave has its source. Peripheral America brought Trump to the White House. Peripheral Italy – mezzogiorno, rural areas and small northern industrial towns – is the source of its populist wave. This protest is carried out by the classes who, in days gone by, were once the key reference point for a political and intellectual world that has forgotten them.

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May digging her hole ever deeper. As if people have no right to know what’s coming.

Theresa May Faces Fresh Battle Over Publishing Brexit Legal Advice (BBC)

Opposition parties plan to join forces in a bid to force the government to publish the full legal advice it received ahead of the Brexit agreement. “All parties” would press for contempt of Parliament proceedings if MPs are not shown the advice, Labour’s Brexit spokesman Sir Keir Starmer has said. Theresa May has promised MPs only a summary of the legal position. Some MPs believe the advice given suggests the Northern Ireland “backstop” would continue indefinitely. [..] on Monday Attorney General Geoffrey Cox, who wrote the advice, will offer only a limited summary of the legal advice given to government, during a statement to Parliament.

Ministers insist it is a long-standing convention that legal advice to the cabinet is kept confidential, and that government would otherwise be unable to function. The prime minister’s refusal to release the full advice prompted Northern Ireland’s Democratic Unionist Party – which has propped up Mrs May’s government since the general election in 2017 – to accuse her of having “something to hide”. Shadow Brexit secretary Sir Keir wrote in the Sunday Telegraph: “If the full legal advice is not forthcoming, we will have no alternative but to start proceedings for contempt of Parliament – and we will work with all parties to take this forward. “The full legal implications of this deal clearly need to be known and debated in full by our Parliament.”

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Austerity truly is death by a thousand cuts.

How Greece’s Financial Crisis Led To A Baby Bust (WaPo)

During the country’s deep and prolonged crash, which began in late 2009 and worsened in 2011 and beyond, an already-low birthrate ticked down further, as happened throughout the troubled economies of Southern Europe. Greece was also hit by a second factor, with half a million people fleeing the country, many of them young potential parents. Although Greece has been on the front lines of the migrant wave from the Middle East and North Africa, the majority of new arrivals have moved on to other parts of Europe, and the newcomers don’t make up for the losses. As a result, the country’s recession has helped produce postwar Greece’s smallest generation — a group of young children who are now reaching elementary age, some arriving at schools wearing secondhand shoes and backpacks, and who are only at the earliest stages of grasping the daunting era they’ve been born into.

“The kids don’t know we used to be better off,” said Sotiria Papigioti, the mother of a first- and a second-grader at Kalpaki. “But when they ask for things, I tell them, ‘We’re not in the position to afford this.’ ” Greece’s fertility rate, of about 1.35 births per woman, is among the lowest in Europe, and well below the rate of 2.1 needed for a stable population, not accounting for immigration. The fertility rate in Greece had been on the upswing before the crisis, hitting 1.5 births per woman in 2008. That progress has since been erased, and the birthrate has plummeted back toward the depths seen in the late 1990s and early 2000s.

Some countries, in the aftermath of economic crises, have seen a quick recovery in their fertility rates. But that is unlikely to happen in Greece, said Byron Kotzamanis, a demographer at the University of Thessaly, because even before the crisis the average woman in Greece wasn’t having children until age 31. Some women who postponed pregnancy during the recession have lost out on their chance entirely. As a result, Kotzamanis said, the recession has permanently reduced the size of the newest Greek generation — and has reduced the pool of parents in years to come. “We’ll have fewer and fewer births in Greece over the next decades,” Kotzamanis said.

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Nov 022018
 
 November 2, 2018  Posted by at 9:19 am Finance Tagged with: , , , , , , , , , , ,  


Pablo Picasso Bathers 1918

 

Trump Plans ‘Meeting Plus Dinner’ With Xi Jinping After G20 Summit (SCMP)
Shares Soar As Trump Hints At Possible US-China Trade Deal (G.)
The Fed’s QE Unwind Hits $321 Billion (WS)
Debt Is Back But This Time It’s Corporate (GolemXIV)
The ‘True State’ Of Americans’ Financial Lives (MW)
The American Dream Feels Further Off Than Ever For Millennials (G.)
The Lesson of 2018 (Strassel)
1 in 5 Germans Is ‘At Risk Of Poverty’ Despite Record Employment (RT)
Brexit Campaigner Arron Banks Faces Criminal Inquiry (G.)
EU Fisheries Row Threatens May’s Customs Union Plan (G.)
Groundskeeper In Monsanto US Weed-Killer Case Accepts Reduced Award (R.)
Thousands Of Europe-Bound Migrants Have Simply Vanished (ZH)

 

 

This would only happen if there’s progress in talks….

Trump Plans ‘Meeting Plus Dinner’ With Xi Jinping After G20 Summit (SCMP)

US President Donald Trump has offered to host a dinner for Chinese President Xi Jinping on December 1 in Buenos Aires after the G20 leaders summit, an invitation Beijing has tentatively accepted, people familiar with the arrangement have told the South China Morning Post. The Post reported two weeks ago that Trump and Xi had agreed to meet on November 29, the day before the official opening of the summit, but the meeting was rescheduled and upgraded into a “meeting plus dinner” at Trump’s request, the people said, who declined to be identified as the information is still classified.

A “Western-style” sit-down dinner after the G20 summit could offer the two leaders more time to talk than a chat on the sidelines of the summit and could offer a more conducive atmosphere for negotiations. “Trump originally planned to leave Buenos Aires as soon as the G20 agenda finished, but he has decided to postpone his departure to make this dinner happen,” a source said. It is not yet known what specific issues will be on the agenda. The two leaders had a call on Thursday, officially agreeing to meet in Argentina and laying the ground for further discussions on trade and North Korea.

Trump said in a tweet that he had a “long and good [phone] conversation” with Xi, adding: “We talked about many subjects, with a heavy emphasis on Trade. Those discussions are moving along nicely with meetings being scheduled at the G20 in Argentina. Also had good discussion on North Korea!” The Chinese side issued a much longer statement about the phone call. According to the official Xinhua news agency, Xi told Trump that “both of us have good intentions for the healthy and steady development of Sino-US relations and for growth in Sino-US trade cooperation, and we shall make efforts to turn these intentions into reality.”

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….but this may still be wishful thinking.

Shares Soar As Trump Hints At Possible US-China Trade Deal (G.)

Asian shares have surged on reports that Donald Trump wants to reach an agreement with Chinese president Xi Jinping about the trade dispute that has dogged markets for months. The US president spoke to Xi on Thursday and later tweeted that trade talks with China were “moving along nicely” ahead of face-to-face talks between the pair at the G20 summit in Argentina later this month. But Bloomberg later reported that the phone call – in which Trump and Xi both expressed optimism about resolving their bitter trade disputes – prompted Trump to ask officials to begin drafting potential terms. The report lit a fire under stock markets that have beset by fears of a full-blown trade war between the world’s two biggest economies.

The Nikkei was up 2.3% in Tokyo, the Hang Seng climbed 3.35% in Hong Kong and the Shanghai Composite was up 3%. There was a also a strong gain of 3% for the export-oriented Kospi index in South Korea. US stock futures rose 0.7% and the FTSE100 is set for a jump of almost 1% when it opens in London on Friday morning. The US and China’s tit-for-tat tariffs on each other’s goods have rumbled on for months as Trump pledges to help create more US manufacturing jobs. The tariffs have been blamed for a weakening of China’s mighty manufacturing sector which this week showed a marked slowdown in activity.

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Shedding $50 billion a month. Mayhem in dollar markets.

The Fed’s QE Unwind Hits $321 Billion (WS)

Over the four-week period from October 3 through October 31, the Federal Reserve shed $35 billion in assets, according to the Fed’s weekly balance sheet released Thursday afternoon. This brought the balance sheet to $4,140 billion, the lowest since February 12, 2014. Since October 2017, when the Fed began its QE unwind, or “balance sheet normalization,” it has now shed $321 billion. The Fed acquired Treasury securities and mortgage-backed securities (MBS) as part of QE, which ended in 2014. Between the end of QE and the beginning of the QE Unwind in October 2017, the Fed replaced maturing securities with new securities to keep their levels roughly the same.

In October last year, the Fed kicked off the QE unwind and began shedding those securities. But the balance sheet also reflects the Fed’s other activities, and the amount of its total assets is always higher than the sum of Treasury securities and MBS it holds. October was a new milestone: the QE unwind left the ramp-up phase and entered the cruising-speed phase, according to the Fed’s plan. In the cruising-speed phase, the Fed is scheduled to shed “up to” $30 billion in Treasuries and “up to” $20 billion in MBS a month, for a total of “up to” $50 billion a month. From October 3 through October 31, the Fed’s holdings of Treasury Securities fell by $23.8 billion to $2,270 billion, the lowest since February 19, 2014. Since the beginning of the QE-Unwind, the Fed has shed $195 billion in Treasuries:

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The amount of high risk debt owned by pension funds is something else. As I always say, remember the days of AAA?

Debt Is Back But This Time It’s Corporate (GolemXIV)

On Wednesday Feb 7th 2007 HSBC issued a profit warning. It was the first in its 142 year history. The bank told its share holders it would have to take an unprecedented charge of $10.5 billion because one of its units, its sub prime lender, was in deep trouble. And so began the sub prime crisis. Today GE issued a profit warning and cut its dividend to share holders from 12 cents to 1 cent. It is only the third time since the Great Depression that GE has reduced its dividend in this way. It told its share holders it would be taking a $22 Billion charge because one of its units, its power unit, is in deep trouble. GE has about $116 billion in debt. In 2007 the banks had flooded the global market with sub-prime loans.

The banks were also holding many of those same loans themselves or had transferred them to Special Purpose Vehicles (SPVs) they had set up, staffed and lent money to. Today it is not the banking world which stands at the centre of the storm but the corporate world. In the last years they have flooded the market with junk rated bonds. At the same time they are also burdened with high yielding, leveraged and covenant- lite loans. Taken together they are about $2.4 Trillion of debt. 2007 sub prime loans. 2018 corporate junk bonds and leveraged loans. 2007 banks and SPVs funded by the banks. 2018? Where is this sub-prime corporate debt sitting today? Nearly half sits in Insurance Companies and Pension funds. Given the close ties between insurance and pensions this is not a happy picture.

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“Some 44% of people said their expenses exceeded their income in the past year and they used credit to make ends meet.”

The ‘True State’ Of Americans’ Financial Lives (MW)

The finances of Americans may not be as good as they look from the outside. Despite optimistic metrics like a nine-year-long bullish, if volatile, stock market, low unemployment levels, and consumer confidence levels nearing record highs, millions of Americans continue to struggle, a study released Thursday from financial consultancy nonprofit the Center for Financial Services Innovation (CFSI) found. Only 28% of Americans are considered “financially healthy,” according to a CFSI survey of more than 5,000 Americans. “Financial health enables family stability, education, and upward mobility, not just for individuals today but across future generations,” the CFSI says.

“Many are dealing with an unhealthy amount of debt, irregular income, and sporadic savings habits.” Some 44% of people said their expenses exceeded their income in the past year and they used credit to make ends meet. Another 42% said they have no retirement savings at all. Meanwhile, 17% of Americans are “financially vulnerable,” meaning they struggle with nearly all financial aspects of their lives, and 55% are “financially coping,” meaning they struggle with some but not all aspects of their financial lives. The recent volatility in the Dow Jones Industrial and S&P 500 has not helped Americans feel secure, experts say.

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Can’t afford to start a family.

The American Dream Feels Further Off Than Ever For Millennials (G.)

From adolescence to our mid-30s, my wife and I have followed every common precept of responsible young adulthood – what conservatives venerate as “the success sequence”. We finished high school (then college, then grad school). We charged into the labor market and have stayed there. We had kids in a stable marriage. Neither of us quit our jobs or took a year off to “find ourselves”. We cut coupons and buy food in bulk. We did this, in part, because we trusted what we believed was America’s basic bargain: work hard, play by the proverbial rules, and you’ll enjoy a healthy middle-class life. You’ll have a decent job, stable housing, affordable education and healthcare, and a clear route to retirement.

But that old, potholed path doesn’t deliver like it used to, even for responsible rule-followers like us. Here in our mid-30s, my wife and I are still chasing homeownership, that final, elusive piece of middle-class life. Today’s young families started to hit the labor market during the great recession. We’re buried in educational debt, and college costs for our kids are predicted to be even higher than ours. Housing near good-paying jobs is wildly expensive. Healthcare costs are uncertain. We’re less likely to have a guaranteed retirement pension through work, and current signals suggest that government-funded retirement supports will be significantly smaller, if they’re there at all. These are bread-and-butter issues.

While national political leaders are gridlocked on how to address the crises of widening inequality and limited upward mobility, we’re struggling to simply provide our children with the same opportunities that came relatively easily to earlier generations. Most young families aren’t cynical because the rich have private helicopter fleets and offshore bank accounts, per se. We’re frustrated because the American bargain we believed in is broken.

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I don’t often disagree with Kimberley Strassel, but I do disagree with “the ascendant progressive movement blew an easy victory for Democrats.” It’s the old guard that blew it, Clinton, Pelosi, Waters, Feinstein.

The Lesson of 2018 (Strassel)

In a few days the U.S. will have its midterm results, and the Beltway press corps will lecture us on the lessons. Don’t expect to hear much about the one takeaway that is already obvious: that today’s preferred progressive politics—of character assassination, mob rule, intimidation and wacky policies—is an electoral bust. It is not what is winning Democrats anything. It is what is losing the party the bigger prize. Six weeks ago, Democrats were expecting a blue wave to rival the Republican victory of 2010, when the GOP picked up 63 House seats. Everything was in their favor. History—the party in power almost always loses seats. Money—Democrats continue to outraise Republicans by staggering amounts.

The opposition—some 41 GOP House members retired, most from vulnerable districts where Donald Trump’s favorability is low. Democrats were even positioned to take over the Senate, despite defending 10 Trump-state seats. Democrats obliterated their own breaker in the space of two weeks with the ambush of Supreme Court nominee Brett Kavanaugh. The left, its protesters and its media allies demonstrated some of the vilest political tactics ever seen in Washington, with no regard for who or what they damaged or destroyed along the way—Christine Blasey Ford, committee rules, civility, Justice Kavanaugh himself, the Constitution. An uncharacteristically disgusted Sen. Lindsey Graham railed: “Boy, y’all want power. God, I hope you never get it!”

A lot of voters suddenly agreed with that sentiment. The enormous enthusiasm gap closed almost overnight as conservative voters rallied to #JobsNotMobs. Even liberal prognosticators today forecast that Republicans will keep the Senate and Democrats will manage only a narrow majority in the House, if that. It’s always possible the polls are off, or that there is a last-minute bombshell. But it remains the case that the ascendant progressive movement blew an easy victory for Democrats.

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Thanks, Mutti. Or in other words: now you know why Merkel lost so much support.

1 in 5 Germans Is ‘At Risk Of Poverty’ Despite Record Employment (RT)

Germany may be Europe’s biggest and strongest economy and is enjoying record employment, but one fifth of its citizens are struggling to make ends meet, a new study reveals. Some 15.5 million people or 19 percent of the population in Germany were “at risk of poverty” or “social exclusion” in 2017, the Federal Statistics Office said. Even though the unemployment rate in Germany has fallen to record lows, many people still do not earn enough to pay their bills and keep themselves above the poverty line. Some 13.1 million Germans, roughly 16.1 percent of the population, are threatened by poverty precisely because of their low monthly income, the federal statistics bureau says.

According to the criteria introduced in the EU, people are considered to be at risk of poverty if their total income amounts to less than 60 percent of an average income in their country. In the case of Germany, it amounts to €1,096 ($1,243) for a single person per month and €2,302 ($2,611) for a family of two adults and two children under 14. 3.4 percent of the population were considered as threatened by poverty as they struggled to pay their rent on time, heat their homes adequately, travel on vacation or even to regularly get a substantial meal due to a lack of financial resources.

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This has been known for a long time, why investigate only now? And the Guardian blows its coverage of the topic by bringing Russia into the discussion. But then that’s Britain’s new favorite pastime. Another piece today on this, also in the Guardian, is by Luke Harding, career Assange and Putin basher.

Brexit Campaigner Arron Banks Faces Criminal Inquiry (G.)

The National Crime Agency is to investigate allegations of multiple criminal offences by Arron Banks and his unofficial leave campaign in the Brexit referendum, prompting calls from some MPs for the process of departing the European Union to be suspended. The NCA would look into suspicions that a “number of criminal offences may have been committed”, the Electoral Commission said in a statement, saying there were reasonable grounds to suspect Banks was “not the true source” of £8m in funding to the Leave.EU campaign. The commission said the cases involve Banks, the insurance millionaire who heavily backed leave; Elizabeth Bilney, one of his key associates; Leave.EU itself; the company used to finance it; and “other associated companies and individuals”.

News of the investigation prompted anti-Brexit campaigners to call for a delay to the process of leaving the EU. The Labour MP David Lammy said Brexit “must be put on hold until we know the extent of these crimes against our democracy”. A series of other Labour MPs echoed the call, while the Lib Dems said Brexit could not go ahead based on “a leave campaign littered with lies, deceit and allegations of much worse”. Downing Street said it could not comment on a live investigation, but dismissed the idea of a pause: “The referendum was the largest democratic exercise in this country’s history and the PM is getting on with delivering its result.” Banks and Bilney, who chaired the Leave.EU campaign, said they rejected any allegations of wrongdoing, and argued the investigation was motivated by political considerations.

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Spending time talking fisheries is entirely useless as long as the Irish border issue is still out there.

EU Fisheries Row Threatens May’s Customs Union Plan (G.)

Theresa May is facing fresh opposition from EU countries that have large fishing communities to her demands for an agreement before Brexit day on a temporary customs union to solve the Irish border problem. [..] The prime minister has said she wants the “backstop” solution in the withdrawal agreement, under which Northern Ireland would in effect stay in the single market and customs union alone, to be scrapped in favour of the whole of the UK staying in a customs arrangement temporarily. In the latest development, the European commission has floated a plan in which the full terms of a “bare bones” customs union for Great Britain would be laid out in the withdrawal agreement, so there would be no need for negotiations on it after Brexit. Northern Ireland would stay under the full EU customs code.

The backstop would come into force at the end of the transition period should a comprehensive trade deal to ensure there is no need for a hard border on the island of Ireland not be agreed in time. A senior EU official conceded that the proposal would not remove the need for a Northern Ireland-specific backstop that would keep the province in the single market as the UK gave up its membership. The issue of what to do about fisheries would also remain with member states likely to reject to any deal that undermines the “trade-off” envisioned in the bloc’s negotiating position papers in which British exporters were only given access to the single market in exchange for European fishing boats keeping access to the seas around the UK.

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Monsanto saved itself $200 million. But they’ll apeal again.

Groundskeeper In Monsanto US Weed-Killer Case Accepts Reduced Award (R.)

The school groundskeeper who won a jury trial against Bayer’s Monsanto unit over allegations that the company’s glyphosate-containing weed-killers caused his cancer, accepted a court-mandated reduced punitive damages award on Wednesday. The decision by Dewayne Johnson, who sued Monsanto in 2016, brings the total award to $78 million, down from the jury’s verdict on Aug. 10 of $289 million – $39 million in compensatory and $250 million in punitive damages. Johnson’s law firm said in a statement that he accepted the reduction “to hopefully achieve a final resolution within his lifetime.”

Judge Suzanne Bolanos of San Francisco’s Superior Court of California, who oversaw the trial, earlier this month affirmed the liability portion of the verdict, but ordered punitive damages to be slashed to concur with California and federal law. Bayer denies allegations that glyphosate can cause cancer and said it will appeal the decision as the verdict was not supported by the evidence presented at trial. The verdict, which marked the first such decision against Monsanto, wiped 10 percent off the value of the company and shares have since dropped nearly 30 percent from their pre-verdict value.

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Thanks Mutti. And Europeans will just focus on the US-Mexico border of course. Is that double morals or no morals at all?

Thousands Of Europe-Bound Migrants Have Simply Vanished (ZH)

Tens of thousands of migrants undertaking dangerous journeys in search of greener pastures throughout the world are dead or missing, according to an AP tally – nearly doubling estimates from the N’s International Organization for Migration (IOM). At least 56,800 migrants worldwide have simply vanished since 2014 by AP’s count – eclipsing the IOM’s October 1 estimate of around 28,500. This year alone, the IOM has documented over 1,900 deaths in and around the Mediterranean. “A growing number of migrants have drowned, died in deserts or fallen prey to traffickers, leaving their families to wonder what on earth happened to them,” reports Fox News. “At the same time, anonymous bodies are filling cemeteries around the world.”

Focusing on Europe alone, AP found almost 4,900 migrants whose families can’t account for their lived ones – nearly half of which are children who have been reported missing to the Red Cross. “… many of those who go missing are uncounted, including boatfuls [sic] of young Tunisians or Algerians and children whose parents lost track of them in the chaos of land border crossings. In all, The Associated Press found nearly 4,900 people whose families say they simply disappeared without a trace in Europe or en route, including more than 2,700 children whose families reported them missing to the Red Cross.” -Fox News

Meanwhile, efforts to identify those who have died in shipwrecks trying to make it to Europe have fallen flat. Of the 400 or so remains interred in a Tunisian cemetery for unidentified migrants, for example, only one has ever been identified since its opening in 2005. “Their families may think that the person is still alive, or that he’ll return one day to visit,” said one unemployed sailor, Chamseddin Marzouk. “They don’t know that those they await are buried here, in Zarzis, Tunisia.”

Read more …

Oct 192018
 
 October 19, 2018  Posted by at 1:04 pm Primers Tagged with: , , , , , , , , , , , ,  


M. C. Escher Meeting (Encounter) 1940

 

It’s no surprise that China has its own plunge protection team -but why were they so late?-, nor that Beijing blames its problems on Trump’s tariffs. GDP growth was disappointing at 6.5%, but who’s ever believed those almost always dead on numbers? It would be way more interesting to know what part of that growth has been based on debt and leverage. But that we don’t get to see.

So we turn elsewhere. How about the Shanghai Composite Index? It may not be a perfect reflection of the Chinese economy, no more than the S&P 500 is for the US, but it does raise some valid and curious questions.

Borrowing from Wolf Richter, here are some stats and a graph::
• Lowest since November 27, 2014, nearly four years ago
• Down 30% from its recent peak on January 24, 2018, (3,559.47)
• Down 52% from its last bubble peak on June 12, 2015 (5,166)
• Down 59% from its all-time bubble peak on October 16, 2007 (6,092)
• And back where it had first been on December 27, 2006, nearly 12 years ago.

 

 

The first thing I thought when I saw that was: how on earth is it possible that in an economy that’s supposedly been growing 6%+ for a decade, stocks have gone nowhere at all? And obviously the role of the Shanghai index is different from that of the S&P, the DAX or the FTSE, but at the alleged Chinese growth rate, the economy would have almost doubled in size in 10 years. And none of that is reflected in stocks?

 

 

And if you think Shenzhen is a better barometer of ‘real’ China, Tyler Durden had this graph yesterday. Not the same as Shanghai, but similar for sure.

 

 

But other aspects of the Chinese economy are perhaps more interesting, I think. China’s mom and pop are not typically in stocks. In the Zero Hedge article I took that graph from, there is also this:

“There’s a liquidity crisis in the stock market, and pledged shares are again starting to sound the alarm,” said Yang Hai, analyst at Kaiyuan Securities. [..] The fear is that if Beijing does nothing, the self-reinforcing liquidation is only set to get worse: with $603 billion of shares pledged as collateral for loans – or 11% of China’s market capitalization, – traders are increasingly concerned that forced sellers will tip the market into a downward spiral.

[..] China in June told brokerages to seek approval before selling large chunks of stock that have been pledged as collateral for loans, while the top financial regulator in August warned the industry that it’s closely watching corporate stock pledges. Neither of those warnings appears to have generated the desired outcome, and the result is that two-thirds of Shenzhen Composite stocks are now at 52-week lows or worse.

[..] what are investors to do in this time of panicked selling? Why demand more bailouts of course, like begging the National Team to step in and rescue them (just like in the housing market): “If there are no real policies to cure the array of problems and ailments in our market, no one will be willing to take the risk,” said Hai. “Authorities keep saying that there is room for more polices, but where are they?”

“It’s high time the state stepped in,” said Dong Baozhen, a fund manager at Beijing Tonglingshengtai Asset Management. “The national funds cannot just sit on the sidelines and watch this atmosphere of extreme pessimism.”

It’s this clamoring for the state to come to the rescue of people who are losing money that would appear to define China today, where there is a stock market and housing market, and many ‘investors’ making lots of money, but where the mentality still seems to lurk back to days of old whenever things don’t only go up in a straight line.

There was another report recently of people demonstrating outside a property developer’s office because the firm had lowered purchase prices by 30%. Those that had paid full price now stood to lose that 30%. This happens frequently, and it can get violent. Mom and pop are not in stocks, they are in real estate:

Property accounts for roughly 70 per cent of urban Chinese families’ total assets – a home is both wealth and status. People don’t want prices to increase too fast, but they don’t want them to fall too quickly either,” said Shao Yu, chief economist at Oriental Securities.

The Chinese are thinking about leaders from Deng Xiao Ping to Xi Jinping that it’s great if they steer the country in a direction where everyone can get rich, but when things go awry, it’s still Beijing’s task to solve the problems if and when they occur. I would expect the same kind of thing in many western countries where people have borrowed heavily into housing bubbles, I don’t see mass foreclosures in Sweden, Denmark, Holland, but bailouts of people who grossly overpaid.

But the Chinese go a step further in their demands from central government. And that is an enormous problem for Xi going forward. One crucial facet of all this is psychological: when people count on being bailed out by their government, they will take much more risk, borrow more, with higher leverage etc. If you allow people things like pledging shares to buy more shares, or homes, and shares fall, you have an issue.

China’s well-known for companies buying each other’s shares to appear viable. It’s also known for local governments borrowing heavily from shadow banks in order for party officials to look as if they’re performing real well.

Now of course, if Beijing keeps on presenting all those growth numbers that look so solid, it’s asking for it. Moreover, the Party has lost control over the shadow banks, and it couldn’t act to regain that control if it wanted. It could initiate a program to forgive debt owed to national banks, but what’s owed to the shadows will have to be paid. We’re talking many trillions.

The Party has let the shadows in, because it made its own debt numbers look so much better. But when this whole debt balloon, on which so much of the GDP growth has rested, and the roads to nowhere and empty apartment blocks and cities, starts to pop, who are the Chinese going to turn to? For that matter, who is Xi going to turn to?

Yes, much of the western wealth has turned into a mirage, but in that respect, too, China has done what we did in a fraction of the time. Trump’s tariffs may play a role in a slowdown, but wait until the western economies deflate their debt bubbles and stop buying much of China’s products.

Bubbles vs balloons, that seems a proper way to phrase this. And for better or for worse, Jerome Powell is hiking interest rates. There’s your Needles and Pins.

 

 

Sep 032018
 
 September 3, 2018  Posted by at 8:16 am Finance Tagged with: , , , , , , , , , , , ,  


Vincent van Gogh Courtyard of the hospital in Arles 1889

 

China’s ‘Silk Road’ Project Runs Into Debt Jam (AFP)
Should Africa Be Wary Of Chinese Debt? (BBC)
China’s Xi Says No Strings Attached To Funds For Africa (R.)
Anatomy Of A Fusion Smear (WSJ)
No-Deal Brexit: Study Warns Of Severe Short-Term Impact On UK (G.)
Boris Johnson Launches Fresh Attack On May’s Brexit Plans (G.)
Half The Staff Leaves UK’s Brexit Department (Ind.)
Britain Loses Medicines Contracts As EU Body Anticipates Brexit (G.)
Emerging Markets Haunt Spanish Banks (DQ)
Capitalism Is Beyond Saving, and America Is Living Proof (TD)

 

 

I’ve been saying for a long time that the BRI (Belt and Road) is China’s attempt at exporting its overcapacity. They make poor countries borrow billions, which these can’t pay back. And then… Only now do other parties wake up to that. And Xi is trying to do some damage control.

China’s ‘Silk Road’ Project Runs Into Debt Jam (AFP)

China’s massive and expanding “Belt and Road” trade infrastructure project is running into speed bumps as some countries begin to grumble about being buried under Chinese debt. First announced in 2013 by President Xi Jinping, the initiative also known as the “new Silk Road” envisions the construction of railways, roads and ports across the globe, with Beijing providing billions of dollars in loans to many countries. Five years on, Xi has found himself defending his treasured idea as concerns grow that China is setting up debt traps in countries which may lack the means to pay back the Asian giant. “It is not a China club,” Xi said in a speech on Monday to mark the project’s anniversary, describing Belt and Road as an “open and inclusive” project.

Xi said China’s trade with Belt and Road countries had exceeded $5 trillion, with outward direct investment surpassing $60 billion. But some are starting to wonder if it is worth the cost. During a visit to Beijing in August, Malaysia’s Prime Minister Mahathir Mohamad said his country would shelve three China-backed projects, including a $20 billion railway. The party of Pakistan’s new prime minister, Imran Khan, has vowed more transparency amid fears about the country’s ability to repay Chinese loans related to the multi-billion-dollar China-Pakistan Economic Corridor. Meanwhile the exiled leader of the opposition in the Maldives, Mohamed Nasheed, has said China’s actions in the Indian Ocean archipelago amounted to a “land grab” and “colonialism”, with 80 percent of its debt held by Beijing.

Sri Lanka has already paid a heavy price for being highly indebted to China. Last year, the island nation had to grant a 99-year lease on a strategic port to Beijing over its inability to repay loans for the $1.4-billion project.

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“This debt acquired from China comes with huge business for Chinese companies, particularly construction companies that have turned the whole of Africa into a construction site..”

Should Africa Be Wary Of Chinese Debt? (BBC)

African countries have shown a healthy appetite for Chinese loans but some experts now worry that the continent is gorging on debt, and could soon choke. The Entebbe-Kampala Expressway is still something of a tourist attraction for Ugandans, nearly three months after it opened. The 51km (31 mile), four-lane highway that connects the country’s capital to the Entebbe International Airport was built by a Chinese company using a $476m (£366m) loan from the China Exim Bank. It has cut what was a torturous two-hour journey through some of Africa’s worst traffic into a scenic 45-minute drive into the East Africa nation’s capital. Uganda has taken $3bn of Chinese loans as part of a wider trend that Kampala-based economist Ramathan Ggoobi calls its “unrivalled willingness to avail unconditional capital to Africa”.

“This debt acquired from China comes with huge business for Chinese companies, particularly construction companies that have turned the whole of Africa into a construction site for rails, roads, electricity dams, stadia, commercial buildings and so on,” the Makerere University Business School lecturer told the BBC. The Chinese loans come as many African countries are once again in danger of defaulting on their debts more than a decade after many had their outstanding borrowing written off. At least 40% of low-income countries in the region are either in debt distress or at high risk, the International Monetary Fund warned in April.

Chad, Eritrea, Mozambique, Congo Republic, South Sudan and Zimbabwe were considered to be in debt distress at the end of 2017 while Zambia and Ethiopia were downgraded to “high risk of debt distress”. “In 2017 alone, the newly signed value of Chinese contracted projects in Africa registered $76.5bn,” Standard Bank’s China Economist Jeremy Stevens wrote in a note. “However, despite a sizeable remaining infrastructure deficit on the continent, there is a concern that African countries’ debt-service ability will soon dissolve,” he says.

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Until you can’t pay up. China knows many countries won’t be.

China’s Xi Says No Strings Attached To Funds For Africa (R.)

Xi said at a business forum before the start of a triennial China Africa summit their friendship was time-honoured and that China’s investment in Africa came with no political strings attached. “China does not interfere in Africa’s internal affairs and does not impose its own will on Africa. What we value is the sharing of development experience and the support we can offer to Africa’s national rejuvenation and prosperity,” Xi said. “China’s cooperation with Africa is clearly targeted at the major bottlenecks to development. Resources for our cooperation are not to be spent on any vanity projects but in places where they count the most,” he said.

China has denied engaging in “debt trap” diplomacy but Xi is likely to use the gathering of African leaders to offer a new round of financing, following a pledge of $60 billion at the previous summit in South Africa three years ago. Chinese officials have vowed to be more cautious to ensure projects are sustainable. China defends continued lending to Africa on the grounds that the continent still needs debt-funded infrastructure development. Beijing has also fended off criticism it is only interested in resource extraction to feed its own booming economy, that the projects it funds have poor environmental safeguards, and that too many of the workers for them are flown in from China rather than using African labour.

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The Wall Street Journal is the only remaining paper of record. This is an editorial.

Anatomy Of A Fusion Smear (WSJ)

A partner at Foley & Lardner, Ms. Mitchell was astonished to find herself dragged into the Russia investigation on March 13 when Democrats on the House Intelligence Committee issued an interim report. They wrote that they still wanted to interview “key witnesses,” including Ms. Mitchell, who they claimed was “involved in or may have knowledge of third-party political outreach from the Kremlin to the Trump campaign, including persons linked to the National Rifle Association (NRA).” Two days later the McClatchy news service published a story with the headline “NRA lawyer expressed concerns about group’s Russia ties, investigators told.” The story cited two anonymous sources claiming Congress was investigating Ms. Mitchell’s worries that the NRA had been “channeling Russia funds into the 2016 elections to help Donald Trump.”

Ms. Mitchell says none of this is true. She hadn’t done legal work for the NRA in at least a decade, had zero contact with it in 2016, and had spoken to no one about its actions. She says she told this to McClatchy, which published the story anyway. Now we’re learning how this misinformation got around, and the evidence points to Glenn Simpson of Fusion GPS, the outfit that financed the infamous Steele dossier. New documents provided to Congress show that Mr. Simpson, a Fusion co-founder, was feeding information to Justice Department official Bruce Ohr. In an interview with House investigators this week, Mr. Ohr confirmed he had known Mr. Simpson for some time, and passed at least some of his information along to the FBI.

In handwritten notes dated Dec. 10, 2016 that the Department of Justice provided to Congress and were transcribed for us by a source, Mr. Ohr discusses allegations that Mr. Simpson made to him in a conversation. The notes read: “A Russian senator (& mobster) . . . [our ellipsis] may have been involved in funneling Russian money to the NRA to use in the campaign. An NRA lawyer named Cleta Mitchell found out about the money pipeline and was very upset, but the election was over.”

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But they still claim damage won’t be long-lasting..

No-Deal Brexit: Study Warns Of Severe Short-Term Impact On UK (G.)

The short-term impact of a no-deal Brexit on Britain’s economy would be “chaotic and severe”, jeopardising jobs and disrupting trade links, warn experts from the thinktank UK in a Changing Europe. The Brexit secretary, Dominic Raab, has said he believes 80% of the work on completing an exit deal with the EU27 is already done, as negotiations enter their final phase. But his cabinet colleague Liam Fox recently suggested a no-deal scenario – which would occur if negotiations broke down, or both sides agreed to disagree – was the most likely outcome. In a 30-page updated assessment of the impact of no deal, the thinktank said on Monday it would mean “the disappearance without replacement of many of the rules underpinning the UK’s economic and regulatory structure”.

Its analysis claimed that in the short term: • Food supplies could be temporarily disrupted – the beef trade could collapse, for example, as Britain is heavily reliant on EU imports, and would be forced to apply tariffs, in accordance with World Trade Organisation (WTO) rules. • European health insurance cards, which allow British tourists free healthcare in the EU, would be invalid from Brexit day. • There would almost certainly have to be a “hardening of the border” between Northern Ireland and the Irish Republic, including some “physical manifestation”. • The status of legal contracts and commercial arrangements with EU companies would be unclear, as the UK would become a “third country” overnight. • Increased and uncertain processing times for goods at the border would be “nearly certain”, risking queues at Dover and forcing firms to rethink their supply chains.

In the longer term, UK in a Changing Europe’s experts say, the UK would have time to normalise its trading status, and agreements could be struck with the EU27 to tackle many other practical challenges. “It should not be assumed that the damage, while real, will necessarily be long-lasting,” the report says.

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6 months to go. It’ll be a spectacle.

Boris Johnson Launches Fresh Attack On May’s Brexit Plans (G.)

Boris Johnson has used his first newspaper column of the new parliamentary term to attack Theresa May’s Chequers plan, saying it means the UK enters Brexit negotiations with a “white flag fluttering”. The declaration amounts to a significant escalation the former foreign secretary’s guerrilla campaign against the prime minister and her Chequers plan a day before the Commons returns and at a time when party disquiet over the direction of the divorce talks is mounting. Johnson wrote that “the reality is that in this negotiation the EU has so far taken every important trick. The UK has agreed to hand over £40 billion of taxpayers’ money for two thirds of diddly squat”.

Johnson added that by adopting the Chequers plan, which will see the UK adopt a common rule book for food and goods, “we have gone into battle with the white flag fluttering over our leading tank”. It will be “impossible for the UK to be more competitive, to innovate, to deviate, to initiate, and we are ruling out major free trade deals,” he added. The intervention comes after a summer in which the former minister, who resigned over the Chequers deal, had avoided touching on Brexit in his Daily Telegraph column – although he did unleash a storm of complaint by describing fully veiled Muslim women as looking like letter boxes and bank robbers. It will be seen as preparing the ground for a leadership challenge to May just as the Brexit negotiations reach their critical phase in the autumn, which is to culminate in any final deal agreed by the UK government being put to parliament for a vote.

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“..the average age of workers left in the department is 32..”

Half The Staff Leaves UK’s Brexit Department (Ind.)

The number of officials who have left the Whitehall department trying to deliver Brexit is equivalent to more than half of its total staff, shock new figures reveal. Data seen by The Independent shows hundreds of civil servants went elsewhere as the department tried to get on its feet and cobble together a negotiating stance for the UK over the last two years. The exodus means the average age of workers left in the department is 32, though they are tasked with winning a complex deal that could change Britain for a generation.

The information obtained by the Liberal Democrats appears to corroborate previous reports about an extraordinarily high turnover at the Department for Exiting the European Union (Dexeu), with critics now claiming it points to “deep instability” at the heart of the government’s Brexit operation. According to the turnover data obtained under freedom of information, a staggering 357 staff have left the Dexeu in just two years. Yet the total number of those employed at the Whitehall department amounts to only 665, indicating a turnover rate of more than 50 per cent in that period.

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Expect many more similar examples.

Britain Loses Medicines Contracts As EU Body Anticipates Brexit (G.)

Britain’s leading role in evaluating new medicines for sale to patients across the EU has collapsed with no more work coming from Europe because of Brexit, it has emerged. The decision by the European Medicines Agency to cut Britain out of its contracts seven months ahead of Brexit is a devastating blow to British pharmaceutical companies already reeling from the loss of the EMA’s HQ in London and with it 900 jobs. All drugs sold in Europe have to go through a lengthy EMA authorisation process before use by health services, and the Medicines & Healthcare products Regulatory Agency (MHRA) in Britain has built up a leading role in this work, with 20-30% of all assessments in the EU.

The MHRA won just two contracts this year and the EMA said that that work was now off limits. “We couldn’t even allocate the work now for new drugs because the expert has to be available throughout the evaluation period and sometimes that can take a year,” said a spokeswoman. In a devastating second blow, existing contracts with the MHRA are also being reallocated to bloc members. Martin McKee, the professor of European health at the London School of Hygiene and Tropical Medicine, who has given evidence to select committees about Brexit, said it was a disaster for the MHRA, which had about £14m a year from the EMA. The head of the Association of British Pharmaceutical Industry said it was akin to watching a “British success story” being broken up.

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Draghi!!

Emerging Markets Haunt Spanish Banks (DQ)

Almost exactly six years ago, the Spanish government requested a €100 billion bailout from the Troika (ECB, European Commission and IMF) to rescue its bankrupt savings banks, which were then merged with much larger commercial banks. Over €40 billion of the credit line was used; much of it is still unpaid. Yet Spain’s banking system could soon face a brand new crisis, this time not involving small or mid-sized savings banks but instead its alpha lenders, which are heavily exposed to emerging economies, from Argentina to Turkey and beyond. In the case of Turkey’s financial system, Spanish banks had total exposure of $82.3 billion in the first quarter of 2018, according to the Bank for International Settlements.

That’s more than the combined exposure of lenders from the next three most exposed economies, France, the USA, and the UK, which reached $75 billion in the same period. According to BIS statistics, Spanish banks’ exposure to Turkey’s economy almost quadrupled between 2015 and 2018, largely on the back of Spain’s second largest bank BBVA’s madcap purchase of roughly half of Turkey’s third largest lender, Turkiye Garanti Bankasi. Since buying its first chunk of the bank from the Turkish group Dogus and General Electric in 2010, BBVA has lost over 75% of its investment under the combined influence of Garanti’s plummeting shares and Turkey’s plunging currency.

But the biggest fear, as expressed by the ECB on August 10, is that Turkish borrowers might not be hedged against the lira’s weakness and begin to default en masse on foreign currency loans, which account for a staggering 40% of the Turkish banking sector’s assets. If that happens, the banks most exposed to Turkish debt will be hit pretty hard. And no bank is as exposed as BBVA, though the lender insists its investments are well-hedged and its Turkish business is siloed from the rest of the company. In Argentina, whose currency continues to collapse and whose economy is now spiraling down despite an IMF bailout, Spanish banks’ total combined investments amounted to $28 billion in the first quarter of 2018. That represented almost exactly half of the $58.9 billion that foreign banks are on the hook for in the country. The next most at-risk banking sector, the US, has some $10 billion invested.

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Maybe you should define capitalism first.

Capitalism Is Beyond Saving, and America Is Living Proof (TD)

Real wage growth has been nonexistent in the United States for more than 30 years. But as America enters the 10th year of the recovery—and the longest bull market in modern history—there are nervous murmurs, even among capitalism’s most reliable defenders, that some of its most basic mechanisms might be broken. The gains of the recovery have accrued absurdly, extravagantly to a tiny sliver of the world’s superrich. A small portion of that has trickled down to the professional classes—the lawyers and money managers, art buyers and decorators, consultants and “starchitects”—who work for them. For the declining middle and the growing bottom: nothing.

This is not how the economists told us it was supposed to work. Productivity is at record highs; profits are good; the unemployment rate is nearing a meager 4 percent. There are widely reported labor shortages in key industries. Recent tax cuts infused even more cash into corporate coffers. Individually and collectively, these factors are supposed to exert upward pressure on wages. It should be a workers’ market. But wages remain flat, and companies have used their latest bounty for stock buybacks, a transparent form of market manipulation that was illegal until the Reagan-era SEC began to chip away at the edifice of New Deal market reforms.

The power of labor continues to wane; the Supreme Court’s Janus v. AFSCME decision, while ostensibly limited to public sector unions, signaled in certain terms the willingness of the court’s conservative majority—five guys who have never held a real job—to effectively overturn the entire National Labor Relations Act if given the opportunity. The justices, who imagine working at Wendy’s is like getting hired as an associate at Hogan & Hartson after a couple of federal clerkships, reason that every employee can simply negotiate for the best possible deal with every employer.

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Aug 072018
 
 August 7, 2018  Posted by at 9:00 am Finance Tagged with: , , , , , , , , , , ,  


Eugène-Louis Boudin Beach at Étretat 1890

 

Petition To Trump: Pardon Julian Assange (Infowars)
Corporate Censorship Is State Censorship (CJ)
The Myths Of Stocks For The Long Run – Part X (Roberts)
Germany’s Huge Trade Surpluses Are A Burden On Its EU Partners (CNBC)
EU Acts To Protect Firms From Donald Trump’s Sanctions Against Iran (G.)
Mattress Firm Considers Bankruptcy to Get Out of its Real Estate Scams
UK To Run Out Of Food A Year From Now With No-Deal Brexit – Farmers (G.)
Record Number Of UK Police Officers Forced To Take Second Job (Ind.)
Chinese Newspaper: Trump’s Claim Of Winning Trade War ‘Wishful Thinking’ (R.)
China Bans Winnie The Pooh Film After Comparisons To President Xi (G.)
US Coalition Cooperates With Al-Qaeda In Yemen, AP Confirms (ZH)
Brazil Closes, Then Reopens Border To Venezuelan Migrants (AFP)
Humans Are About to Unleash an Irreversible “Hothouse Earth” (Science Alert)

 

 

Yes, Infowars, and I know. But this is about Julian Assange, and about Alex Jones getting thrown out of social media the moment he launched this petition. Please go to Infowars for once and sign!

Petition To Trump: Pardon Julian Assange (Infowars)

Whereas Journalist Julian Assange and his media organization, Wikileaks has, in the respected tradition of American journalism obtained and published information that is classified and newsworthy, a practice shared with the Washington Post, New York Times, Wall Street Journal and others and

Whereas in the eleven years of its existence the authenticity and accuracy of materials published by Wikileaks has ever been questioned or in dispute and

Whereas the material regarding Hillary Clinton and the Democratic National Committee published by Wikileaks served the national interest by exposing the corruption of the Clintons, the Clinton Foundation, the Clinton campaign and the Obama Justice Department and

Whereas assertion by the American Intelligence Services that Julian Assange is the agent of a ‘Hostile Foreign State” or the Russian government are politically suspect and completely unproven and denied by Assange and

Whereas Julian Assange has consistently denied that material obtained from the Democratic National Committee and published by Wikileaks came from the Russian State and has repeatedly offered to prove this for US authorities and

Whereas Assange, now in failing health, has been a veritable prisoner in the Ecuadorian Embassy in London for six years, with the media now reporting Equador is preparing to hand Assange over to British authorities who will presumably extradite Assange to the United States for trial and

Whereas Julian Assange is an impeccably-honest, incredibly-brave, humanitarian journalist, who provides an invaluable platform for whistleblowers exposing corruption and criminality infesting governments, nullifying democracy and obliterating human rights, around the world and

Whereas there are absolutely no legitimate legal grounds to prosecute Assange and, as the U.S. DOJ admitted in 2013, that doing so would expose ALL U.S. journalistic and news outlets to similar criminal jeopardy.

Therefore- we the undersigned urge President Donald J. Trump to issue a full and unconditional pardon to the journalist Julian Assange in the interests of both justice and mercy.

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“Assange’s mother also reports that this mass removal of Infowars’ audience occurred less than 48 hours after she was approached to do an interview by an Infowars producer.”

Corporate Censorship Is State Censorship (CJ)

Last year, representatives of Facebook, Twitter, and Google were instructed on the US Senate floor that it is their responsibility to “quell information rebellions” and adopt a “mission statement” expressing their commitment to “prevent the fomenting of discord.” “Civil wars don’t start with gunshots, they start with words,” the representatives were told. “America’s war with itself has already begun. We all must act now on the social media battlefield to quell information rebellions that can quickly lead to violent confrontations and easily transform us into the Divided States of America.” Yes, this really happened.

Today Twitter has silenced three important anti-war voices on its platform: it has suspended Daniel McAdams, the executive director of the Ron Paul Institute, suspended Scott Horton of the Scott Horton Show, and completely removed the account of prominent Antiwar.com writer Peter Van Buren. I’m about to talk about the censorship of Alex Jones and Infowars now, so let me get the “blah blah I don’t like Alex Jones” thing out of the way so that my social media notifications aren’t inundated with people saying “Caitlin didn’t say the ‘blah blah I don’t like Alex Jones’ thing!” I shouldn’t have to, because this isn’t actually about Alex Jones, but here it is:

I don’t like Alex Jones. He’s made millions saying the things disgruntled right-wingers want to hear instead of telling the truth; he throws in disinfo with his info, which is the same as lying all the time. He’s made countless false predictions and his sudden sycophantic support for a US president has helped lull the populist right into complacency when they should be holding Trump to his non-interventionist campaign pledges, making him even more worthless than he was prior to 2016. But this isn’t about defending Alex Jones. He just happens to be the thinnest edge of the wedge.

As of this writing, Infowars has been censored from Facebook, Youtube (which is part of Google), Apple, Spotify, and now even Pinterest, all within hours of each other. This happens to have occurred at the same time Infowars was circulating a petition with tens of thousands of signatures calling on President Trump to pardon WikiLeaks editor-in-chief Julian Assange, who poses a much greater threat to establishment narratives than Alex Jones ever has. Assange’s mother also reports that this mass removal of Infowars’ audience occurred less than 48 hours after she was approached to do an interview by an Infowars producer.

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At some point we’ll have to acknowledge that there is no market.

The Myths Of Stocks For The Long Run – Part X (Roberts)

In early 2017, Byron Wien was asked the question of where we are in terms of the economy and the market to a group of high-end investors. To wit: “The one issue that dominated the discussion at all four of the lunches was whether or not we were in the late stages of the business cycle as well as the bull market. This recovery began in June 2009 and the bull market began in March of that year. So we are more than 100 months into the period of equity appreciation and close to that in terms of economic expansion.“ His point is that markets rotate between bullish and bearish phases. When he made that statement he was simply saying the current economic recovery and the bull market are very long in the tooth. As shown below why shouldn’t we expect a market decline to follow, it has every other time?

[..] There are two problems facing investor outcomes. First, you don’t have 100+ years to invest in the market to get the “average” long-term returns. Second, your “long-term” investment horizon is simply the time you have between today and when you retire. As I stated above, for most people that is about 15 years. So, for argument sake, let’s be generous and assume you have 20-years from today until retirement. As we discussed previously, we know that based on current valuations in the market, forward real total returns in the market will likely be, on average, fairly low to negative.

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Germany and Holland live off the labor of their neighbors. There is no bigger threat to the EU.

Germany’s Huge Trade Surpluses Are A Burden On Its EU Partners (CNBC)

While few European states can pretend to share Germany’s distinction of being a “country of poets and thinkers,” none can rival German abilities to extract so much wealth from the rest of the European Union. Last year, Germany posted a 159.3 billion euro surplus on its goods trade with other countries in the EU — one of the world’s largest free-trade areas and a region with privileged access to German goods and services. That’s the way it’s been since 1958, when Europe’s common market opened up. Germany’s enormous EU bounty consistently accounts for two-thirds of its net foreign trade income in a market structure where Berlin remains an undisputed leader and a principal regulator.

This year looks set to mark another record-high EU trade income for Germany. The surplus during the January-April period was running at an annual rate of 175 billion euro — a 10 percent increase on the country’s EU trades in 2017 — according to statistics from Germany’s Bundesbank. A country representing 28 percent of the monetary union’s economy and living so grandly off the rest of its partners is a structurally destabilizing factor. To this day, economists pointing out that fundamental problem have been ridiculed as hopelessly naive because, as the mantra goes, the European project has always been, and always will be, a political construct to keep the Europeans off each other’s throats.

That charge is not only false, but it also bears the seeds of its own destruction. Taking hundreds of billions of euros of purchasing power out of the monetary union, Germany makes it virtually impossible for other euro area economies to grow and create jobs as they struggle to bring down their public debts and deficits. Instead of accumulating enormous wealth on the back of its euro partners, Germany should stimulate its domestic spending to buy more goods and services from them. [..] Recycling some of last year’s roughly $300 billion trade surplus — through direct investments in the rest of the EU — Germany would boost economic growth and employment in other countries in the bloc, solve the problem of its shrinking manpower and adjust its overflowing external accounts.

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The only choice firms have is who they want to be sanctioned by.

EU Acts To Protect Firms From Donald Trump’s Sanctions Against Iran (G.)

The EU has launched an attempt to protect European businesses from Donald Trump’s sanctions against Iran as the US administration voiced its intent to apply maximum pressure on Tehran by vigorously applying its punitive measures. The sanctions are to enter into force at midnight (US east coast time). At the same time, a blocking statute – last used to protect EU firms from US sanctions against Cuba – will be brought into force in an attempt to insulate firms and keep alive a deal designed to limit the Iranian government’s nuclear aspirations. European firms have been instructed that they should not comply with demands from the White House for them to drop all business with Iran.

Those who decide to pull out because of US sanctions will need to be granted authorisation from the European commission, without which they face the risk of being sued by EU member states. A mechanism has also been opened to allow EU businesses affected by the sanctions to sue the US administration in the national courts of member states. Trump announced his intention to hit firms doing business with Iran when he reneged on a deal struck in 2015 designed to help curtail Tehran’s nuclear ambitions in return for limited sanctions relief.

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Sharing a laugh with Wolf Richter.

Mattress Firm Considers Bankruptcy to Get Out of its Real Estate Scams

This is so thick it’s hard to believe. It’s far beyond just a Brick & Mortar Meltdown. “I recently sold a small strip center with my last Mattress Firm,” a relieved real estate developer told me earlier this year. “It traded at a 7.1% cap rate, which is just astonishing to me. During due diligence, the buyer’s lawyers focused on every minute risk and mentioned nothing about their parent company once. So crazy.” Mattress Firm’s parent company is Steinhoff, now a familiar name in the Enron lexicon. “Mattress Firm’s strategy is to have multiple stores on the same intersection in every town,” this developer had told me last fall.

“This was accomplished by design and not just mergers. As a developer, I was literally asked to find sites across the street from existing stores in almost every town. Mattress Firm was able to get these sites because they would overpay market rent by up to $10 per square foot in every market that I was focused in, but it is the same all over,” he said. To get out of these leases, and for other reasons, Mattress Firm, the largest mattress retailer in the US, is now considering a bankruptcy filing, people familiar with the matter told Reuters. Restructuring in bankruptcy court would allow Mattress Firm to shut down unprofitable and excess stores and get out from under their over-priced leases. Mattress Firm, which was founded in 1986, is a classic example of a private-equity pump-and-dump that has turned into an alleged real estate scam by insiders. Here is the turn of events:

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Better plant some more tomatoes in your gardens.

UK To Run Out Of Food A Year From Now With No-Deal Brexit – Farmers (G.)

Britain would run out of food on this date next year if it cannot continue to easily import from the EU and elsewhere after Brexit, the National Farmers’ Union has warned. Minette Batters, the NFU president, urged the government to put food security at the top of the political agenda after the prospect of a no-deal Brexit was talked up this week. “The UK farming sector has the potential to be one of the most impacted sectors from a bad Brexit – a frictionless free trade deal with the EU and access to a reliable and competent workforce for farm businesses is critical to the future of the sector,” she said. Batters’ warning comes a fortnight after the Brexit secretary, Dominic Raab, said Britain would have “adequate food supplies” after Brexit.

While Downing Street has insisted it is confident an agreement can be made in time, the international trade secretary, Liam Fox, warned over the weekend that the prospect of a no-deal Brexit was now at “60-40”, fuelling fears at the NFU and among food importers. Food security in Britain is in long-term decline, with the country producing 60% of what it needs to feed itself, compared with 74% 30 years ago, according to figures from the Department for Environment, Food and Rural Affairs (Defra). In a statement issued by the NFU, Batters expressed concern that Britain would not be able to meet its food needs if Brexit was mismanaged. Research showed 7 August 2019 would be the nominal day that Britain would run out of food if it were asked to be wholly self-sufficient based on seasonal growth, the NFU said.

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The blessings of austerity.

Record Number Of UK Police Officers Forced To Take Second Job (Ind.)

A record number of police officers are being forced to take on second jobs because they cannot afford essentials on their wages, a survey has found amid warnings the service is “in crisis”. The Police Federation said some officers were resorting to food vouchers and welfare schemes, while dealing with “unprecedented” demand, rising violent crime and terrorism. Almost 8 per cent of the 27,000 members who responded to the association’s annual pay and morale survey said they had taken up a second job, compared with 6 per cent the previous year. The roles included becoming driving instructors, personal trainers or leasing properties.

A further 45 per cent of officers said they worry about finances on a daily basis, 12 per cent said they do not have enough money to cover essentials and 88 per cent do not feel fairly paid. John Apter, the new chair of the Police Federation of England and Wales, warned that some officers were in “dire straits”. “Our members are under immense pressure to deliver, with dwindling resources and rising crime, particularly violent crime, leading to a demand for our services that has never been higher,” he said. “All they want is to be adequately paid for the job that they do. “We know officers are struggling and some have had to resort to food vouchers and other welfare schemes. This clearly cannot be right or acceptable that those employed to keep the public safe cannot make ends meet or put food on tables for their families.

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These kinds of things show that China is nervous.

Chinese Newspaper: Trump’s Claim Of Winning Trade War ‘Wishful Thinking’ (R.)

Chinese state media kept up their criticism of U.S. President Donald Trump’s trade policies, with a newspaper on Tuesday describing as “wishful thinking” Trump’s belief that a fall in Chinese stocks was a sign of his winning the trade war. As the world’s two biggest economies remained locked in a heated tariff dispute, Beijing and Washington have kept up a blistering rhetoric with threats and counter-threats of more punitive trade measures. The editorial in the official China Daily underscored an increasingly aggressive stance adopted by Chinese state media against Trump, a shift from their previous approach of tempering any direct criticism against the U.S. president.

On Monday, the overseas edition of the Communist Party’s People’s Daily newspaper singled out Trump, saying he was starring in his own “street fighter-style deceitful drama of extortion and intimidation”. [..] The China Daily referred to a Saturday Tweet by Trump which said “Tariffs are working far better than anyone anticipated. China market has dropped 27 percent in last four months.” China’s stock market was performing poorly before the U.S. administration imposed tariffs, said the English-language newspaper, asserting that the downturn was partly due to Beijing’s attempts to cut corporate debt. The paper said Trump’s claim that “tariffs are working big time” was undermined by data showing the U.S. trade deficit climbed $3 billion to $46.3 billion in June, the first increase in four months.

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Catchy, but not too likely. So you get the whole build-up and then towards the end: “China only allows 34 foreign films to be released in cinemas each year..”

China Bans Winnie The Pooh Film After Comparisons To President Xi (G.)

Who’s afraid of Winnie the Pooh? The Chinese government, apparently. Chinese censors have banned the release of Christopher Robin, a new film adaptation of AA Milne’s beloved story about Winnie the Pooh, according to the Hollywood Reporter. The Winnie the Pooh character has become a lighthearted way for people across China to mock their president, Xi Jinping, but it seems the government doesn’t find the joke very funny. It started when Xi visited the US in 2013, and an image of Xi and then president Barack Obama walking together spurred comparisons to Winnie – a portly Xi – walking with Tigger, a lanky Obama. Xi was again compared to the fictional bear in 2014 during a meeting with Japan’s prime minister, Shinzo Abe, who took on the part of the pessimistic, gloomy donkey, Eeyore.

As comparisons grew and the meme spread online, censors began erasing the images which mocked Xi. The website of US television station HBO was blocked last month after comedian John Oliver repeatedly made fun of the Chinese president’s apparent sensitivity over comparisons of his figure with that of Winnie. The segment also focused on China’s dismal human rights record. Another comparison between Xi and Winnie during a military parade in 2015 became that year’s most censored image, according to Global Risk Insights. The firm said the Chinese government viewed the meme as “a serious effort to undermine the dignity of the presidential office and Xi himself”.

[..] Another reason for the film’s rejection by the authorities may be that China only allows 34 foreign films to be released in cinemas each year. That leaves Hollywood summer blockbusters, family films and contenders from across the world jockeying for a tiny number of spots.

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Like we didn’t know already.

US Coalition Cooperates With Al-Qaeda In Yemen, AP Confirms (ZH)

Perhaps we could simply shrug our shoulders and say it’s better late than never for the mainstream media. A new Associated Press report confirms what was long ago detailed by a number of independent investigative journalists, and even in some instances buried deep within sporadic mainstream reports of past years: the US-coalition in Yemen is actually cooperating with al-Qaeda terrorists in the campaign to dislodge Shia Houthi militants. The AP report begins dramatically as follows:

“Again and again over the past two years, a military coalition led by Saudi Arabia and backed by the United States has claimed it won decisive victories that drove al-Qaida militants from their strongholds across Yemen and shattered their ability to attack the West. Here’s what the victors did not disclose: many of their conquests came without firing a shot. That’s because the coalition cut secret deals with al-Qaida fighters, paying some to leave key cities and towns and letting others retreat with weapons, equipment and wads of looted cash, an investigation by The Associated Press has found. Hundreds more were recruited to join the coalition itself.”

And contrary to the normative response of US officials to such allegations, which as in the case of US support to jihadists in Syria typically runs something like “we didn’t know” while hiding behind a system of ‘plausible deniability’ — in the case of Yemen officials involved have now admitted to the AP that coalition allies knowingly allowed al-Qaeda in the Arabian Peninsula (AQAP) to survive and flourish. Somewhat surprising for the AP, its report underscores this with zero ambiguity, even illustrating for the reader the terrorists’ linkage to 9/11:

“These compromises and alliances have allowed al-Qaida militants to survive to fight another day — and risk strengthening the most dangerous branch of the terror network that carried out the 9/11 attacks. Key participants in the pacts said the U.S. was aware of the arrangements and held off on any drone strikes.” Similar to the US role in Syria, American officials are now apparently quite comfortable admitting they are willing to utilize designated terrorist groups ultimately as a weapon against pro-Iran interests.

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“It is not justified to take the easy path to ‘close the doors’ because of difficulties in hosting refugees,” Supreme Court justice Rosa Weber said..”

Brazil Closes, Then Reopens Border To Venezuelan Migrants (AFP)

Brazil briefly closed then reopened its northern border to Venezuelans on Monday as it struggled to contain mass migration from the South American country saddled with a crippling political and economic crisis, police said. A Supreme Court justice overturned a lower court judge’s decision that had suspended for a few hours the entry of more Venezuelans until other immigrants from the country were transferred elsewhere in Brazil. “It is not justified to take the easy path to ‘close the doors’ because of difficulties in hosting refugees,” Supreme Court justice Rosa Weber said in her ruling issued shortly before midnight.

The border had remained open to Brazilians and other nationalities, as well as to Venezuelans seeking to return to their home country. It’s a main crossing point for tens of thousands of Venezuelan migrants, an influx that has increased dramatically over the past two years. President Michel Temer was opposed in a “non-negotiable” way to the border closure, Human Rights Minister Gustavo Rocha was quoted as saying by state-run Agencia Brasil. Roraima state’s capital Boa Vista has hosted the largest number of Venezuelan immigrants in the country — around 25,000 out of a total of 330,000 city dwellers. An estimated 500 Venezuelans cross the land border into Brazil each day.

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Feedback loops. Methane is becoming a bigger factor all the time.

Humans Are About to Unleash an Irreversible “Hothouse Earth” (Science Alert)

The coasts are gone. The waves crash high into what were once mountains. Many have perished, for food is scarce, and the deadly heat is inescapable. This bleak future scenario – called a “Hothouse Earth” – could be realised sooner than we think, scientists warn, if the planet breaches a pivotal climate threshold from which there may ultimately be no coming back. The worst part? Scientists say we could exceed this threshold even if we meet the carbon emission reductions called for in the Paris Agreement – and manage to keep global temperatures to 2°C above pre-Industrial levels. Achieving that goal would be a global success story. But it might not be the end of the story.

“Human emissions of greenhouse gas are not the sole determinant of temperature on Earth,” says Earth system scientist Will Steffen from the Australian National University. “Our study suggests that human-induced global warming of 2°C may trigger other Earth system processes, often called ‘feedbacks’, that can drive further warming – even if we stop emitting greenhouse gases.” In a new perspective study, Steffen and an international team of researchers outline a number of these ‘positive feedback’ systems that exist on Earth and can “amplify a perturbation and drive a transition to a different state”. One example is permafrost thaw. As the world gets hotter due to heat-trapping carbon emissions, there’s worrying evidence that melting permafrost soils are releasing even more carbon into the atmosphere – making a bad situation potentially catastrophic.

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Jul 162018
 
 July 16, 2018  Posted by at 7:30 am Finance Tagged with: , , , , , , , , , ,  


René Magritte The human condition 1935

 

Trump Cautious Ahead Of Putin Summit (BBC)
Kremlin Takes Trump To Task Over His Gas Pipeline Comments (R.)
Trump Calls European Union A ‘Foe’ – Ahead Of Russia And China (G.)
Xi’s Overly-Ambitious Goals Triggered US-China Trade War (Nikkei)
The Global Reset Will Come Like A Thief In The Night (von Greyerz)
Theresa May’s Grand Plan Has Left Her Stranded In No Woman’s Land (G.)
Theresa May Faces Rebellion From Brexit Hardliners In Customs Bill Vote (G.)
Glut Of Property Hits UK Housing Market In July (R.)
EU Urges Big Powers To Prevent Trade ‘Conflict And Chaos’ (AFP)
At Last, A Law That Could Have Stopped Blair And Bush Invading Iraq (G.)

 

 

Despite all the attempts to frustrate the meeting, it looks like it will take place. Good.

Trump Cautious Ahead Of Putin Summit (BBC)

US President Donald Trump will meet Russia’s Vladimir Putin later on Monday, ending a tumultuous European tour in which he criticised his allies. Mr Trump said he had “low expectations” ahead of the talks in the Finnish capital, Helsinki, but added that “maybe some good” would come of them. The summit comes after 12 Russians were charged with hacking in the 2016 US elections. Mr Trump says he will raise the issue, but there is no formal agenda. The two leaders will meet one-on-one, and will be joined only by their interpreters. It is the first-ever summit between Mr Putin and Mr Trump – although they have previously met on the sidelines of multilateral talks.

There have been calls in the US for Mr Trump to cancel the meeting altogether over the indictments of Russian military intelligence agents, announced on Friday. Russia denies the allegations, and says it is looking forward to the talks as a vehicle for improving relations. US National Security Adviser John Bolton has said both sides have agreed the meeting will have no set agenda. But he said he found it “hard to believe” Mr Putin did not know about the alleged election hacking and the subject would be mentioned. “That’s what one of the purposes of this meeting is, so the president can see eye to eye with President Putin and ask him about it,” he told ABC News.

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Nordstream 2 will be built.

Kremlin Takes Trump To Task Over His Gas Pipeline Comments (R.)

U.S. President Donald Trump’s criticism of Russia’s Nord Stream-2 gas pipeline to Europe is an egregious example of unscrupulous competition and it worries Moscow, Kremlin spokesman Dmitry Peskov was quoted as saying on Monday. Speaking shortly before Trump and Russian President Vladimir Putin sit down together for a summit in the Finnish capital, Peskov also said discussions between the two on Syria would be difficult because of the U.S. stance on Iran, Russia’s ally and a major player in the Syrian conflict. Russia’s RIA news agency quoted Peskov as saying he hoped the Helsinki talks would represent some kind of step away from the current crisis in U.S.-Russian relations.

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On trade.

Trump Calls European Union A ‘Foe’ – Ahead Of Russia And China (G.)

Donald Trump described the European Union one of his greatest “foes” in another extraordinary diplomatic intervention on Sunday, just hours before sitting down to a high-stakes summit with Russian president Vladimir Putin. Asked in a TV interview to name his “biggest foe globally right now”, the US president started by naming the European Union, calling the body “very difficult” before ticking off other traditional rivals like Russia and China. Hours earlier, British prime minister Theresa May revealed that Trump suggested she “sue the EU” rather than go into negotiations over Brexit. “Well I think we have a lot of foes,” Trump told CBS News at his Turnberry golf resort in Scotland. “I think the European Union is a foe, what they do to us in trade. Now you wouldn’t think of the European Union but they’re a foe.”

Apparently taken aback, anchor Jeff Glor replied: “A lot of people might be surprised to hear you list the EU as a foe before China and Russia.” But Trump insisted: “EU is very difficult. I respect the leaders of those countries. But – in a trade sense, they’ve really taken advantage of us.” Trump’s controversial tour through Europe has turned postwar western relations inside out, the president sparring with Nato leaders in Brussels and blasting May’s Brexit strategy in the Sun newspaper. His remarks have reflected one of this president’s core beliefs: that America is exploited by its allies. Donald Tusk, president of the European council, tweeted: “America and the EU are best friends. Whoever says we are foes is spreading fake news.”

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A different point of view.

Xi’s Overly-Ambitious Goals Triggered US-China Trade War (Nikkei)

China ranges over the global economy like a bull elephant roams the savanna. Other grassland wildlife is sensitive to this mammoth’s slightest moves. The ferocious lion, the U.S., is no exception. China has yet to become fully aware that it is the elephant in the global economy’s boardroom. But in Washington, Trump was cognizant that he could not stand idly by after China vowed to knock the U.S. off its economic pedestal in just 17 years from now. He campaigned for the presidency by promising voters he would put “America first.” News of China’s decision to bring forward its modernization target date emerged at a bad time. It came shortly after Xi had promised Trump business deals worth $250 billion.

That pledge came in November, when Trump was visiting Beijing, and was portrayed as a salve that would help to heal the U.S.’s massive trade deficit with China. As expected, it was little more than talk. The trade gap continues to quickly widen. Alarmed by China’s ambitions and frustrated by the lack of progress in narrowing the U.S. trade deficit, Trump went on the offensive in the spring. There are good reasons for China coming under U.S. trade fire. It has been the biggest beneficiary of the global trade system since it became a member of the World Trade Organization at the end of 2001. All the while, it has imposed strict foreign ownership limits in each industrial sector, forced foreign companies that enter China to transfer technologies and has set up various other barriers to its markets.

Backed by huge amounts of government funds, Chinese companies have made splashy acquisitions of U.S. and European companies that own key technologies, especially in the auto and information technology sectors. Chinese companies can quickly obtain technologies by acquiring or taking equity investments in U.S. and European companies. In the U.S. and Europe, any company can acquire any other company as long as it can obtain the necessary funds. But it is difficult for U.S. and European companies to acquire Chinese companies. Chinese authorities have numerous regulations at their disposal to block any such attempt.

When Xi bared China’s sharp claws, declaring China would overtake the U.S. economically by 2035, he did so for the benefit of a domestic audience and to aid his fierce power struggle with the political factions that had run China for decades. China is now beginning to realize the high price it is having to pay for Xi’s declaration.

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“When the monster, ‘everything’ bubble pops, so will the paper markets in gold, silver, and other precious metals. The size of this market is at least 100-times bigger than the physical market.”

The Global Reset Will Come Like A Thief In The Night (von Greyerz)

“It is absolutely unreal how the world pays so much respect to mediocrity or even incompetence when it comes to running the financial system. Central banks and their heads have created this monster balloon which is now waiting to be popped. They have given the world the impression that they have been instrumental in saving the world economy. The central bank chiefs that managed to retire before the balloon burst can count themselves lucky. In my view, the luck is now in the process of running out for the present ones. These chiefs believe so much in their own ability as saviors of the world that they don’t understand that all they are doing is creating a much bigger monster by printing and printing and printing.

[..] When the monster, ‘everything’ bubble pops, so will the paper markets in gold, silver, and other precious metals. The size of this market is at least 100-times bigger than the physical market. The rise of this market is very much linked to manipulation of the precious metals by central banks, the Bank for International Settlements (BIS), and bullion banks. When the paper metals markets pop, there will be no gold (or silver) offered at any price. This is the time when overnight or over a weekend the price will go from $1,250 to $10,000 or even $100,000. This might sound totally unreal to some, but this will be the most likely consequence of the monster bubble popping and everyone in markets running for the exit.

Most people believe that the status quo can go on forever and that central banks will continue their ridiculous game of pretending that air is real money that can create wealth. The few people who believe that there is a serious risk that the system will not survive in its present form, and that their assets — be it cash, bonds, or stocks — could decline substantially in value, must seriously consider insurance.

The next decline in financial markets is likely to start in late 2018 or early 2019. And this will not be an ordinary decline or normal correction. Instead, it will be the beginning of the biggest global bear market in history. And this time central banks and governments will fail in their attempts to save the system. They will, however, certainly print a lot of money and try to reduce interest rates. But as global bond markets collapse, rates will go up rapidly. This means that bonds and stocks will both crash along with most assets.

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The numbers are simply not there.

Theresa May’s Grand Plan Has Left Her Stranded In No Woman’s Land (G.)

Lyndon Johnson, who was majority leader in the US Senate before he became his country’s president, once declared that the most important talent in politics is “the ability to count”. There aren’t enough people who can count around Mrs May. The fatal flaw in her plan is that there is no majority for it in the House of Commons. The Brexit ultras are crying treachery and promising havoc. They both express and feed the furies of Tory activists. The Brextremists don’t have an alternative plan, other than to crash out of the EU without any deal at all, a catastrophic outcome that some of them actually wish for, but that hasn’t stopped them before and won’t curb them now.

Jacob Rees-Mogg and his cabal can muster the 48 signatures of Tory MPs that they need to trigger a confidence vote in Mrs May. They do not sound confident that they have the numbers – they require 159 – to oust her from the premiership. What the ultras can do is make the government’s life even more hellish by prosecuting a “guerrilla war” in parliament. Even if Mrs May could get the EU to accept her plan, 60-plus Conservative MPs are opponents of her version of a Brexit deal. That number will climb if, as is inevitable, she has to make further concessions in Brussels to secure an agreement. There are more than enough Brextremist rebels to block the prime minister in the Commons unless she can get some assistance from the opposition.

She needs the help of Labour MPs and she is not going to get it. Jeremy Corbyn won’t give her any succour. He is more interested in bringing down the Tories than helping them to solve a mad riddle of their own making. The Labour leadership calculates that defeating Mrs May in Brexit votes is their best chance of collapsing the government and precipitating an early general election. But Number 10 clearly harboured hopes that centrist Labour MPs might embrace her plan as the least worst version of Brexit that they are likely to get in the circumstances.

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They’ll keep at it till she’s gone. And it will get even messier.

Theresa May Faces Rebellion From Brexit Hardliners In Customs Bill Vote (G.)

Theresa May faces a concerted rebellion from the hard Brexit wing of the Conservative party on Monday, as MPs unhappy with her Chequers compromise prepare to mount a show of strength by voting for their amendments on the customs bill. The party’s European Research Group says it will reject any last attempts at compromise by Number 10 as they hope to force May to change course over Brexit or risk a no-confidence vote before the summer break by demonstrating the depth of their support. A special ERG whipping operation, using the WhatsApp messaging service, has been created by Steve Baker, the former Brexit minister who resigned from the government last week, although ERG insiders would not put a number on how many they expected to rebel in the Commons.

Jacob Rees-Mogg, the chairman of the ERG, told the BBC “we’ll have an idea of the numbers at 10pm on Monday evening” while one ERG insider added that they were “intensely relaxed” about the number of rebels they had signed up. Last week, members of the hard Brexit group put down four amendments to the taxation (cross-border trade) bill due to be debated on Monday evening, aimed at halting the customs plan announced by May at Chequers nine days ago. The level of support they attract will draw intense focus, particularly if the number significantly exceeds the 48 required to call for a vote of no confidence in May’s leadership of the Conservative party.

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No buyers left.

Glut Of Property Hits UK Housing Market In July (R.)

Britain’s housing market saw a glut of new property offered for sale this month, keeping a lid on prices at a time when sales typically suffer from a seasonal lull, property website Rightmove said on Monday. Real estate agents now have the highest amount of stock since September 2015, Rightmove said. “While an increase in seller numbers is a welcome sign of more liquidity in a generally stock-starved market, it has unfortunately come at a quieter time of year,” Rightmove director Miles Shipside said. The number of homes advertised by Rightmove, Britain’s largest property website, is 8.6 percent higher than the same month a year ago, but the number of sales is virtually unchanged from a year earlier, down 0.2 percent.

Average asking prices for new sellers are down 0.1 percent since June, typical for the time of year, Rightmove added. But in a sign that previous sellers had priced their property too high, a third of stock being advertised had seen at least one price reduction, the highest proportion for the time of year since 2011. Other industry data has shown British house price growth has slowed sharply since the June 2016 Brexit vote, though with marked regional variation. The slowdown is most marked in London and neighbouring areas, where demand has been hit by higher tax on expensive property and reduced demand from foreign investors. In other parts of Britain, prices are still rising moderately.

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EU Council President Donald Tusk says it is the duty of Europe, the US, China and Russia not to destroy global trade, but to improve it.

EU Urges Big Powers To Prevent Trade ‘Conflict And Chaos’ (AFP)

The European Union on Monday called on the United States, China and Russia to work together to avoid trade “conflict and chaos” to prevent it spiralling into violent confrontation. “It is the common duty of Europe and China, but also America and Russia, not to destroy (the global trade order) but to improve it, not to start trade wars which turned into hot conflicts so often in our history,” EU Council President Donald Tusk said in Beijing. “There is still time to prevent conflict and chaos.” Tusk spoke after meeting with Chinese Premier Li Keqiang as part of an annual EU-China summit that opened against the backdrop of the growing China-US economic confrontation and wider global trade discord.

The EU — the world’s biggest single market with 28 countries and 500 million people — is trying to buttress alliances in the face of the protectionism unleashed by US President Donald Trump’s “America First” administration. The meeting between Chinese and European officials in Beijing, which also included European Commission head Jean-Claude Juncker, comes as Trump prepared to hold talks in Helsinki with Russian leader Vladimir Putin. The world needed trade reform, rather than confrontation, Tusk said. “This is why I am calling on our Chinese hosts, but also on Presidents Trump and Putin, to jointly start this process from a thorough reform of the WTO.”

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Dream on. As Smedley Butler said, the only way to stop wars is to take the profit out of them.

At Last, A Law That Could Have Stopped Blair And Bush Invading Iraq (G.)

Tuesday is a red-letter day for international law: from then on, political and military leaders who order the invasion of foreign countries will be guilty of the crime of aggression, and may be punishable at the international criminal court in The Hague. Had this been an offence back in 2003, Tony Blair would have been bang to rights, together with senior numbers of his cabinet and some British military commanders. But if that were the case, of course, they would not have gone ahead; George W Bush would have been without his willing UK accomplices. The judgment at Nuremberg declared that “to initiate a war of aggression … is the supreme international crime”.

But this concept never entered UK law (as the misguided crowdfunded effort to prosecute Blair discovered last year). International acceptance of it stalled until states could agree on an up-to-date definition. The crime was included in the ICC jurisdiction back in 1998, but was suspended until its elements could be decided (in 2010) then ratified by at least 30 states (in 2016). At last it is finally being “activated”. In the meantime, Iraq and Ukraine have been invaded and other countries threatened, while Donald Trump attacked Syria last year. Now, the very existence of the crime of aggression offers some prospect of deterrence, and some degree of certainty in identifying the criminals.

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Jun 102018
 
 June 10, 2018  Posted by at 8:58 am Finance Tagged with: , , , , , , , , , , , , ,  


Paul Gauguin The Day of the God 1894

 

Is The Existing Banking System Coming To An End? (Ren.)
The Credit Cycle Will Be The EU’s Undoing (Macleod)
China is in Trouble (Mises)
How To Plan For Next Round Of Fed Interest Rate Hikes (Freep)
Trump Open To US Embassy In Pyongyang, North Korea (Axios)
Trump Backs Out Of Joint G7 Communique With Attack On Trudeau (Ind.)
One ‘Rant,’ Rough Talks Sour G7 Mood In Confrontations With Trump (R.)
China’s Xi Calls Out ‘Selfish, Short-Sighted’ Trade Policies (R.)
G7 Leaders Urge Russia To Stop Undermining Democracies (R.)
Iran’s Rouhani Criticizes US For Imposing Its Policies On Others (R.)
The Relationship Between Population And Consumption Is Not Straightforward (G.)
There Are No War Heroes. There Are Only War Victims. (CJ)
Our Plastic Pollution Crisis Is Too Big For Recycling To Fix (Leonard)

 

 

Well, not today. Support is low.

Is The Existing Banking System Coming To An End? (Ren.)

Today Switzerland is set to hold a referendum to decide whether to ban commercial banks from creating money. The aim of campaigners is to limit financial speculation by forcing banks to hold 100 per cent reserves against their deposits. If the referendum result goes the way of the campaign group, the Vollgeld Initiative and the concept known as the sovereign money initiative comes to fruition, Swiss banks will no longer be able to create money for themselves, rather they will only be allowed to lend money that they have accumulated from savers or other banks. The current fractional reserve banking system works like this: Banks lend money that they don’t actually have and then command interest on the non-existent money.

This is akin to x offering to loan y a sum of say, £100,000 that the former hasn’t got. The way around this conundrum is for x to then lodge the sum with another financial institution who happens to be in on the scam. Y then pays x interest on the money that x has never been in the position to lend in the first place. Consistent with the proposed Swiss model, the idea of limiting all money creation to central banks was first touted in the 1930s and supported by renowned US economist Irving Fisher as a way of preventing asset bubbles and curbing reckless spending. If the Vollgeld Initiative succeeds with its campaign on Sunday, the fractional reserve system will be replaced by a bill which will give the Swiss National Bank (SNB) a monopoly on physical and electronic money creation.

Since the establishment of the SNB in 1891, the bank has had exclusive powers to mint coins and issue Swiss bank notes. But over 90% of money in circulation in Switzerland (and arguably the world) currently exists in the form of electronic cash which is created out of nothing by private banks. In modern market economies central banks control the creation of bank notes and coins but not the creation of all money. The latter occurs when a commercial bank offers a line of credit. Iceland, whose bloated banking system collapsed in 2008, has also touted the abolition of private money creation and an end to a practice in which central banks accept deposits, make loans and investments and hold reserves that are a fraction of their deposit liabilities. Fractional banking means that money is effectively produced from thin air.

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The weakness of the euro. Largely self-induced.

The Credit Cycle Will Be The EU’s Undoing (Macleod)

It is a common misconception that the world has a business cycle: that merely puts the blame on the private sector for periodic booms and busts. The truth is every boom and bust has its origins in central bank monetary policy and fractional reserve banking. A central bank first attempts to stimulate the economy with low interest rates, having injected base money into the economy to rescue the banks from the previous crisis. The central bank continues to suppress interest rates, inflating assets and facilitating the financing of government deficits. This is followed by the expansion of bank credit as banks recognise that trading conditions in the non-financial economy have improved. Price inflation unexpectedly but inevitably increases, and interest rates have to rise.

They rise to the point where earlier malinvestments begin to be liquidated and a loan repayment crisis develops in financial markets. It is fundamentally a credit cycle, not a business one. Central bankers do not, with very few exceptions, understand they are the cause. And the few central bankers who do understand are unable to influence monetary policy by enough to change it. By not understanding that they create the crisis themselves, central bankers believe they can control all financial risks through regulation and intervention, which is why they are always taken by surprise when a credit crisis hits them. For these reasons we know it is only a matter of time before the world faces another credit crisis.

The next one is likely to be unprecedented in its violence, even exceeding that of the last one in 2008/09, because of the scale of additional monetary reflation that has taken place over the last ten years. The further accumulation of debt in the intervening period also means that a smaller increase in price inflation, and therefore a lower height for interest rates will trigger it. My current expectation is that a global debt liquidation and credit crisis is not far away and will occur by the end of Q1 in 2019, perhaps even by the end of this year. The problem is a global one and we know not where it will break. But once it does, the ECB and the euro will possibly face the most violent deflation in modern history, even exceeding the global slump of the 1930s.

We know in advance what the supposed solution will be: monetary hyperinflation to bail out the banks, governments and the indebted. The effects on prices in the Eurozone are unlikely to be as delayed as they have been in the current cycle, partly because of the sheer scale of the issuance of new money and credit required to stabilise the financial system, partly because the euro is subordinate to the dollar as a safe-haven currency, and partly because of its limited history as a medium of exchange.

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An exercise in large numbers.

China is in Trouble (Mises)

While the rulers of China have been able all along to hedge their plans over longer periods than their Western counterparts have, the new legal situation has extended this planning horizon even further.1 In comparison with those of Western economies, China’s countermeasures against the crisis in 2008 were significantly more drastic. While in the US the balance sheet total of the banking system increased by USD 4,000bn in the years after the global financial crisis, the balance sheet of the Chinese banking system expanded by USD 20,000bn in the same period. For reference: This is four times the Japanese GDP.

The following chart shows the expansion of the bank balance sheet total as compared to economic output. Did the Chinese authorities assume excessive risks in fighting the crisis? Neither the fact that China’s bank balance sheets amount to more than 600% of GDP nor the fact that they have doubled in terms of percentage of GDP in the past several years suggests a healthy development.

Our friends from Condor Capital expect NPL ratios to rise in China, which could translate into credit losses of USD 2,700 to 3,500bn for China’s banks, and this is under the assumption of no contagion (!). By comparison, the losses of the global banking system since the financial crisis have been almost moderate at USD 1,500bn The most recent crisis does teach us, however, that the Chinese are prepared to take drastic measures if necessary. China fought the financial crisis by flooding the credit markets: 35% credit growth in one year on the basis of a classic Keynesian spending program is no small matter.

Chinese money not only inflates a property bubble domestically but also around the globe (e.g. in Sydney and Vancouver). Further support for the global property markets is in question, given the measures China has recently launched. Due to financial problems, Chinese groups such as Anbang and HNA will have to swap the role of buyer for that of seller. The IMF has forecast a further doubling of total Chinese debt outstanding from USD 27,000bn in 2016 to USD 54,000bn in 2022. By comparison, in 2016 China’s GDP amounted to USD 11,200bn. This spells debt-induced growth at declining rates of marginal utility. From our point of view, this development – which we can also see in the West – is unsustainable.

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” Say good-bye to super-cheap cash.”

How To Plan For Next Round Of Fed Interest Rate Hikes (Freep)

The easy money officially ends Wednesday, as interest rates, much like summer temps, heat up once again. It’s a “slam-dunk” that the Federal Reserve will increase rates by a quarter point after its meeting this week, according to Mark Zandi, chief economist for Moody’s Analytics. And it’s likely we’re in for two more quarter-point hikes in September and December, he said. “If you are thinking about buying a car or home, sooner is better than later, but I wouldn’t rush into anything, as rates, while rising, are still very low,” Zandi said. The U.S. economy — with a national jobless rate at 3.8% in May, the lowest level in 18 years — has put the Great Recession in 2008-09 in the rear view mirror.

Consumers — as well as business leaders — are formulating strategies to cope with higher rates ahead. The Fed began gradually tightening money with the first quarter-point rate hike in December 2015 — then the first rate hike in nearly a decade. Since then, there have been another five rate hikes. The latest rate hike in March took the Fed’s benchmark rate to a target range of 1.5% to 1.75%. If the Fed raises rates as expected Wednesday, the overnight borrowing cost will be in line with the Fed’s inflation target of 2%. For the first time in almost a decade, the cost of borrowing will no longer be essentially free. Say good-bye to super-cheap cash.

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Carrot for Kim.

Trump Open To US Embassy In Pyongyang, North Korea (Axios)

President Trump is willing to consider establishing official relations with North Korea and even eventually putting an embassy in Pyongyang, according to two sources familiar with preparations for the Singapore summit. “It would all depend what he gets in return,” said a source close to the White House. “Denuclearization would have to be happening.” The sources stressed that this is one of many topics that could be discussed at the summit, and that certainly nothing like that has been decided or is necessarily expected to emerge from Trump’s historic mano a mano with North Korean leader Kim Jong-un.

But the U.S. and North Korean working groups — with engagements in New York, the DMZ and Singapore — have discussed establishing official relations between the two countries that would involve putting a U.S. embassy in Pyongyang. One of the sources, who is familiar with the president’s thinking, said Trump had made it a point not to reject any ideas headed into the summit: “It’s definitely been discussed,” the source said. “His view is: ‘We can discuss that: It’s on the table. Let’s see.’ Of course we would consider it. There’s almost nothing he’ll take off the table going in.” The source said North Korean officials have been wildly inconsistent in the pre-meetings, making it difficult to get any read on how the discussions might go.

The source close to the White House added: “POTUS will consider any idea anyone brings him if it delivers on denuclearization that is irreversible and verifiable. He won’t be played by Kim. But it is not his style to — on the front end — rule out possibilities of what could happen or may happen depending on how negotiations go.”

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Well, it wasn’t dull.

Trump Backs Out Of Joint G7 Communique With Attack On Trudeau (Ind.)

Donald Trump has rejected an agreement signed off by the leaders of countries at the G7 summit in Canada despite earlier having appeared to endorse the joint statement vowing to fight back against protectionism and pledging to follow established trade rules. The joint statement between the leaders of US, France, Germany, the UK, Japan, Italy, and Canada comes after US President Donald Trump refused to back down from his decision to impose international tariffs on goods including steel and aluminium imports as a part of his so-called “America First” strategy.

The communique had been confirmed by Canadian Prime Minster Justin Trudeau, who conceded that Mr Trump’s tough talk on trade showed there was a lot of work to be done between the countries, but nevertheless portrayed the joint statement as a positive step towards international cooperation. However, Mr Trump later tweeted that he had would not now endorse the communique due to “false statements” from the Canadian prime minister. He wrote: “Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive tariffs to our US farmers, workers and companies, I have instructed our US reps not to endorse the communique as we look at tariffs on automobiles flooding the US market!”

He added: “PM Justin Trudeau of Canada acted so meek and mild during our G7 meetings only to give a news conference after I left saying that, ‘US tariffs were kind of insulting’ and he ‘will not be pushed around.’ Very dishonest & weak. Our tariffs are in response to his of 270% on dairy!”

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These people see themselves as no.1, because that’s what they are where they come from. Being contradicted is then hard to take.

One ‘Rant,’ Rough Talks Sour G7 Mood In Confrontations With Trump (R.)

Trump gave “a long, frank rant”, the official said, repeating a position he carried through the 2016 U.S. election campaign into the White House that the United States had suffered at the hands of its trading partners, with French President Emmanuel Macron pushing back on the assertion and Japanese Prime Minister Shinzo Abe chiming in. It was a “a long litany of recriminations, somewhat bitter reports that the United States was treated unfairly,” said the French official, who spoke on condition of anonymity. “It was a difficult time, rough, very frank.” The U.S. president did not appear to be listening during some of the trade presentations, another G7 official familiar with the meeting said.

Trump himself told reporters on Saturday that the summit was not contentious and called his relationship with G7 allies a “10”. Despite smiles and jokes for the cameras, the tension among the leaders was clear. At one point, German Chancellor Angela Merkel was seen having a brief, intense one-sided conversation with a stony-faced Trump on Friday. On Saturday, Canadian Prime Minister Justin Trudeau sniped about “stragglers” after Trump was late to a breakfast session on gender equality. Trump left the summit early for Singapore, where he will meet North Korean leader Kim Jong Un next week.

One scene at the very beginning of the gathering of presidents and prime ministers of the biggest industrialized nations set the mood for facing the brash Trump. He arrived at La Malbaie, the scenic luxury resort on the banks of the St. Lawrence River in Quebec, as the four European leaders and the two EU heads were huddled together in a room to coordinate their strategy. The noise of Trump’s helicopter landing was so loud they had to stop talking for a while, in a scene one official compared to the opening from the U.S. television series M.A.S.H. “The EU understands that the only way with Trump is strength,” said one European official. “If you give in now, he will come back tomorrow for more.”

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All policies must benefit China.

China’s Xi Calls Out ‘Selfish, Short-Sighted’ Trade Policies (R.)

Chinese President Xi Jinping, whose country is locked in a high-stakes trade dispute with the United States, on Sunday said China rejects “selfish, shortsighted” trade policies, and called for building an open global economy. Xi did not mention the United States during a speech at a summit meeting of the Shanghai Cooperation Organisation (SCO), a regional security bloc led by China and Russia. “We reject selfish, shortsighted, closed, narrow policies, (we) uphold World Trade Organisation rules, support a multi-lateral trade system, and building an open world economy,” Xi said in a speech in the port city of Qingdao.

The United States and China have threatened tit-for-tat tariffs on goods worth up to $150 billion each, as President Donald Trump has pushed Beijing to open its economy further and address the United States’ large trade deficit with China. Xi spoke hours after Trump said he was backing out of the Group of Seven communique, thwarting what appeared to be a fragile consensus on a trade dispute between Washington and its top allies. “We must … discard Cold War thinking, group confrontation; we object to acts of getting one’s own absolute security at the cost of other countries’ security,” Xi said.

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Skripal and Crimea. It’s all they got.

G7 Leaders Urge Russia To Stop Undermining Democracies (R.)

Leaders of the Group of Seven countries urged Russia on Saturday to stop undermining democracies and said they were ready to step up sanctions against Moscow if necessary. The leaders of the United States, Canada, Japan, France, Germany, Italy and Britain made the strongly worded statement just hours after U.S. President Donald Trump, who is part of the G7, said he wanted Moscow re-invited to the group. “We urge Russia to cease its destabilizing behavior, to undermine democratic systems and its support of the Syrian regime,” the leaders said in a statement at the end of their two-day meeting in La Malbaie, Quebec.

The G7 leaders condemned an attack in Salisbury in Britain on a former Russian spy using a Russian-made military grade nerve agent, saying it was highly likely Moscow was responsible because there was no other plausible explanation. Russia denies having anything to do with the attack. The G7 leaders made a commitment on Friday, without naming Russia, to share information between themselves and work with internet service providers and social media companies to thwart foreign meddling in elections. The Kremlin has denied allegations by the United States and some European countries that Russia interfered in their elections. Earlier on Saturday, Trump told a news conference the issue of Russia’s return to the group was discussed. Russia was a member of the then G8 until it was expelled for annexing Crimea in 2014.

“I think it would be an asset to have Russia back in. I think it would be good for the world. I think it would be good for Russia. I think it would be good for the United States. I think it would be good for all of the countries of the current G7,” Trump said. Italy’s new Prime Minister Giuseppe Conti expressed similar sentiment. But the final communique struck a different note, saying western sanctions against Russia would continue as long as Moscow failed to meet its obligations in Ukraine under the Minsk accord it signed, and could even be stepped up. “We reiterate our condemnation of the illegal annexation of Crimea and reaffirm our enduring support for Ukrainian sovereignty, independence and territorial integrity within its internationally recognized borders,” the G7 statement said.

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World order.

Iran’s Rouhani Criticizes US For Imposing Its Policies On Others (R.)

Iranian President Hassan Rouhani on Sunday said that U.S. efforts to impose its policies on others are a threat to all, after Washington last month said it was withdrawing from the Iran nuclear deal and would reimpose economic sanctions. Rouhani, speaking at a summit of the Chinese and Russian-led security bloc the Shanghai Cooperation Organisation (SCO) in the port city of Qingdao, said he appreciated efforts by Beijing and Moscow to maintain the nuclear deal.

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“One believed in scientific ingenuity as the answer to our problems, the other was convinced that it only deepened the crisis.”

The Relationship Between Population And Consumption Is Not Straightforward (G.)

Charles C Mann is a science journalist, author and historian. His books 1491 and 1493, looking at the Americas before and after Columbus, were widely acclaimed. His new book, The Wizard and the Prophet, examines the highly influential and starkly contrasting environmental visions of Norman Borlaug (the Wizard) and William Vogt (the Prophet). Borlaug (1914-2009) was instrumental in the green revolution that vastly expanded the amount of food humanity has been able to cultivate. Vogt (1902-1968) was a pioneering ecologist who argued that humans had exceeded the Earth’s “carrying capacity” and were heading for cataclysm unless consumption was drastically reduced. One believed in scientific ingenuity as the answer to our problems, the other was convinced that it only deepened the crisis.

What made you frame this story of humanity’s future in terms of these two individuals?

It really started the night my daughter was born 19 years ago. I was standing in the parking lot at three in the morning and it suddenly popped into my head that when Amelia, my daughter, became my age there would be almost 10 billion people in the world. And I believe that centuries from now, when historians look back at the time when you and I have been alive, the big thing that they’ll say happened is that hundreds of millions of people in Asia and Latin America and Africa lifted themselves from destitution to something like the middle class. So not only will there be 10 billion people but all those people will want the same things you and I want – nice homes, nice car, nice clothes, the odd chunk of Toblerone, right?

And so I stood there in the parking lot and thought to myself: how are we meant to do this? I’m a science journalist, so when I was talking to researchers, I’d say: “How are we going to feed everybody, how are we going to get water for everybody, house everybody? What are we going to do about climate change?” After a while I realised that the answers I was getting fell into two broad categories, each of which had a name that kept being associated with it: one was Borlaug, the other Vogt.

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Caitlin Johnstone is a gem. I was thinking next Memorial Day make every American listen to With God On Our Side.

There Are No War Heroes. There Are Only War Victims. (CJ)

The US special operations soldier who was killed in Somalia (one of the “seven countries in five years” famously named in General Wesley Clark’s revelation of the US war machine’s plans for world domination) and the four others who were injured are not heroes. The US servicemen and women who have fought and died in America’s nonstop acts of military expansionism and wars of aggression are not heroes. They are victims. They are victims of a sociopathic power establishment which does not care about them, and never has. If what I just wrote bothered you, it is because you have been conditioned to oppose such ideas by generations of war propaganda.

If you believe that US soldiers are heroes, it means that you believe that they are fighting and dying for a noble cause; for your freedom, for democracy, for the good and the just. It turns the deaths of the fallen into a tragic but noble sacrifice in your eyes, which keeps you from realizing that they have actually been dying for the profit margins of war plutocrats, land and resource assets, and the neoconservative agenda to secure control of the planet. There is nothing heroic about being thrown into the gears of the war machine and having one’s body and mind ripped apart for the advancement of plutocratic interests. But if your rulers can trick you into thinking that dead US soldiers died for something worth dying for, you won’t turn around and lay the blame on the war profiteers and ambitious sociopaths who are truly responsible for their deaths.

So they lie to you. Constantly. People often counter this notion by pointing at World War 2, about which a case for the possibility of heroism in war can indeed be made. But the fact that this argument needs to reach back 73 years to the very brink of living memory in order to find a justifiable US war tells you everything you need to know about the weakness of that argument. Since 1945, when human civilization looked completely different and America itself was still an apartheid state, we have seen the US military spread around the globe, collapse nations, and butcher millions upon millions of people, all at the expense of the lives of US military personnel, and all without just cause. The people whose lives have been used like Kleenex and discarded by the US war machine did not die for a good cause.

They did not die fighting for freedom or democracy. They are not heroes. They are victims. We need to talk about this. The way we can be shamed into silence for saying such things is truly toxic, because it prevents us from addressing the very real problem that the United States starts unjust wars constantly and spends soldiers’ lives like pennies. It probably is nice for the families of war victims to tell themselves comforting stories about how their loved one died fighting to make the world a better place, and normally I’d be happy to let them harbor that personal fantasy without saying anything to disrupt it, but people are dying here.

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Annie Leonard is the boss at Greenpeace USA. And she has it upside down. You don’t ask multinationals if they would pretty please use less plastic. You ban them from using it.

Our Plastic Pollution Crisis Is Too Big For Recycling To Fix (Leonard)

Every minute, every single day, the equivalent of a truckload of plastic enters our oceans. In the name of profit and convenience, corporations are literally choking our planet with a substance that does not just “go away” when we toss it into a bin. Since the 1950s, some 8.3bn tons of plastic have been produced worldwide, and to date, only 9% of that has been recycled. Our oceans bear the brunt of our plastics epidemic – up to 12.7m tons of plastic end up in them every year. Just over a decade ago, I launched the Story of Stuff to help shine a light on the ways we produce, use and dispose of the stuff in our lives. The Story of Stuff is inextricably linked to the story of plastics – the packaging that goes along with those endless purchases.

We buy a soda, sip it for a few minutes, and toss its permanent packaging “away”. We eat potato chips, finish them, then throw their permanent packaging “away”. We buy produce, take it out of the unnecessary plastic wrap, then throw its permanent packaging “away”. The cycle is endless, and it happens countless times every single day. But here’s the catch – there is no “away”. As far as we try to toss a piece of plastic – whether it’s into a recycling bin or not – it does not disappear. Chances are, it ends up polluting our communities, oceans or waterways in some form. For years, we’ve been conned into thinking the problem of plastic packaging can be solved through better individual action. We’re told that if we simply recycle we’re doing our part.

We’re told that if we bring reusable bags to the grocery store, we’re saving the world. We think that if we drink from a reusable bottle, we’re making enough of a difference. But the truth is that we cannot recycle our way out of this mess. [..] We need corporations – those like Coca-Cola, Unilever, Starbucks and Nestlé that continue to churn out throwaway plastic bottles, cups, and straws – to step up and show real accountability for the mess they’ve created. Drink companies produce over 500bn single-use plastic bottles annually; there is no way that we can recycle our way out of a problem of that scale.

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