Aug 072019
 
 August 7, 2019  Posted by at 9:15 am Finance Tagged with: , , , , , , , , , , , , , ,  11 Responses »


Pablo Picasso Portrait of Dora with bun 1937

 

The Future Of Britain Is In The Hands Of Unelected Svengali Cummings (Oborne)
No-Deal Brexiteers Are Winning Because They Want It More (Sky)
UK Too Desperate To Secure US Trade Deal – Larry Summers (G.)
Brexit: Michael Gove Accuses ‘Wrong And Sad’ EU Of Intransigence (G.)
Met Police Examine Vladimir Putin’s Role In Salisbury Attack (G.)
China State Banks Seen Supporting Yuan In Forwards Market (R.)
Forget China, The Fed Has A Much Bigger Problem On Its Hands (ZH)
Papua New Guinea Asks China To Refinance Its National Debt (G.)
Chinese Port Plans Put Pacific Back In Play (R.)
Pentagon Set to Prevent “Unacceptable” Turkish Invasion Of Northern Syria (ZH)
The Mainstream Media Wants the Mifsud Story to Just Go Away (ET)
Epstein’s Mysterious Manhattan Apartment Building On East 66th Street (BI)

 

 

Conservative journalist/editor Peter Oborne says the exact same thing I said a few days ago in A Tale of Two Cummings. Boris Johnson is just a figurehead.

Nigel Farage is complaining that the Tories want him and his Brexit party to step aside, but that’s Cummings and his polls that show Farage is too unpopular.

The Future Of Britain Is In The Hands Of Unelected Svengali Cummings (Oborne)

Cummings is no longer in the shadows, operating behind the scenes — this Svengali is out in the open. Indeed, he seems to relish being seen in public, striding ostentatiously into Downing Street every morning. Now, we are all familiar with his shaven head, scruffy T-shirts, crumpled appearance and contemptuous and appraising eyes, his newspapers and bundles of documents carried in a Vote Leave bag. According to some papers, and many ministers and civil servants I have spoken to recently, this is the man who is truly running Britain. It’s Cummings who oversees the No 10 grid which controls the timing of announcements and public events. It’s in this capacity that he dispatches the PM up and down Britain, photographed in hospitals, sharing selfies with nurses, and on construction sites wearing a hard hat.


It is also Cummings, not Johnson, who determines political strategy — hence the huge public spending announcements on health, extra police and other issues. Indeed, it looks very much as if Johnson has become the public face of Cummings. And this, I am afraid, is profoundly disturbing. No one ever voted for Cummings, he has little experience of life outside politicking yet he has been given unprecedented power at a moment of immense crisis in the national fortunes. Within hours of Johnson becoming Tory leader two weeks ago, newly anointed special adviser Cummings called ‘his’ staff together in the magnificent Downing Street first-floor state room. He told them that he plans to deliver Brexit ‘by any means necessary’.

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Quoting Michael Jordan: “Some people want it to happen. Some wish it to happen. Others make it happen.”

No-Deal Brexiteers Are Winning Because They Want It More (Sky)

Consider this: we now have a prime minister and a government, buttressed by a not inconsiderable rump of the Conservative party, who have made it clear that there is not a convention they are not willing to break, an institution they are not willing to smash, a precedent they are not willing to burn, in the pursuit of their goal. The PM and his coterie have said that they would prorogue parliament because it might stand in their way; that they are willing to schedule an election far in excess of the usual time limits because it would ensure our exit on the 31 October. In so doing they would therefore go against yet more precedent in pursuing a highly tendentious policy during an election period (where normally a caretaker administration would do little of controversy).


And now, we have news that the prime minister would squat in Number 10 after he loses a confidence vote in the House of Commons. He is even willing to do so, apparently, if the Commons coalesces around an alternative prime minister, despite the fact the Cabinet Manual (the closest we have to a constitution) makes it clear that this is quite unacceptable and that it would risk the neutrality of the Queen. All of this would be constitutional vandalism. Brexit then, “whatever the cost”, as Dominic Cummings has said. It is a nihilistic vision of politics and indeed, a most unusual one for self-described “Conservatives” but it is, relentless and clear-sighted. Indeed, its recklessness has imbued this administration with a strange purpose and energy.

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Larry craves attention.

UK Too Desperate To Secure US Trade Deal – Larry Summers (G.)

The former US treasury secretary Larry Summers has said he does not believe that a “desperate” UK would manage to secure a post-Brexit trade deal with Washington, as Dominic Raab, the new foreign secretary, heads to the US to scope out the potential for such an agreement. Summers, who was a senior official under Bill Clinton and Barack Obama, said the UK was in a weak position when it came to negotiating with trade partners. He told BBC Radio 4’s Today programme on Tuesday: “Britain has no leverage, Britain is desperate … it needs an agreement very soon. When you have a desperate partner, that’s when you strike the hardest bargain.”


Despite warm words from Donald Trump about a trade deal, Summers said: “We have economic conflict with China and, even on top of that, the deterioration of the pound is going to further complicate the negotiating picture. “We will see it as giving Britain an artificial comparative advantage and make us think about the need to retaliate against Britain, not to welcome Britain with new trade agreements.” Even if the two countries could come to an agreement, Summers said, the UK was in a weak negotiating position. “Britain has much less to give than Europe as a whole did, therefore less reason for the United States to make concessions,” he said. “You make more concessions dealing with a wealthy man than you do dealing with a poor man.”

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The UK says the EU doesn’t want to talk, and vice versa. The demand to take the backstop out is a perfect dealbreaker. It can only lead to a no-deal Brexit. Re: Cummings.

Brexit: Michael Gove Accuses ‘Wrong And Sad’ EU Of Intransigence (G.)

Michael Gove has accused the European Union of intransigence over Brexit talks, calling it “wrong and sad”, as divisions between the UK and Brussels became further entrenched with the government seemingly intent on a no-deal departure. Gove, who is in charge of no-deal preparations, reiterated Boris Johnson’s position that the only route to progress would be the EU starting again with withdrawal negotiations, something Brussels has repeatedly and consistently ruled out. Adding to the impression of Johnson’s hardening position, newly released government read-outs of the prime minister’s phone calls with a series of EU leaders over recent days showed he delivered the same uncompromising message to them.

While the Irish prime minister, Leo Varadkar, insisted on Tuesday that a no-deal departure was not inevitable, both he and the country’s finance minister, Paschal Donohoe, warned of a significant and long-term change to relations between the countries if it did happen. Downing Street has increasingly pushed the message that Brexit will happen on 31 October under any circumstances – even intimating that No 10 believes the mandate of the 2016 Brexit referendum would overrule even a blocking vote in parliament.

There is increasing worry among some MPs that Johnson could try to force through a no-deal Brexit against the will of the Commons, with his de facto chief of staff, Dominic Cummings, reportedly threatening No 10 staff with the sack if they dissent. The government’s official position is still that it is seeking a formalised departure, albeit only if Brussels ditches the Irish backstop border insurance policy and reopens the withdrawal agreement.

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And of course Britain is anxious to keep the Skripal narrative going. In reality, all it would take is to present the man.

Met Police Examine Vladimir Putin’s Role In Salisbury Attack (G.)

Scotland Yard has examined the role of the Russian president, Vladimir Putin, in the novichok nerve agent attack in Salisbury, it has been revealed. Putin is assessed by UK intelligence agencies as having been “likely” to have approved of the attack in March 2018 on Sergei Skripal, a former Russian military officer, and his daughter, both of whom were left seriously ill but survived. Dawn Sturgess later died after coming across a discarded perfume bottle used by two Russian intelligence agents to carry the military grade nerve agent. Two Russian agents have been charged over the attack, and Britain wants them extradited and has issued a European arrest warrant (EAW) and Interpol red notice for their detention.


The Metropolitan police assistant commissioner Neil Basu, the head of UK counter-terrorism policing, said the investigation into the attack was continuing. Basu said the issues involved in bringing charges over the attack were complex. “You’d have to prove he [Putin] was directly involved,” he said. “In order to get an EAW, you have to have a case capable of being charged in this country. We haven’t got a case capable of being charged. “We’re police officers, so we have to go for evidence. There has been a huge amount of speculation about who is responsible, who gave the orders, all based on people’s expert knowledge of Russia. I have to go with evidence.”

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“The movement in forward points may reflect a tightening in USD (dollar) liquidity..”

China State Banks Seen Supporting Yuan In Forwards Market (R.)

China’s state banks have been active in the onshore yuan forwards market this week, using swaps to tighten dollar supply and support the Chinese currency, four sources with knowledge of the matter told Reuters. The spot value of the yuan has fallen sharply this week against the dollar as tensions between China and the United States escalated and prompted fears that their trade war could shift into a currency war. The sources said banks had conducted significant amounts of buy-sell swaps in the onshore market on Tuesday. Buy-sell swaps help to reduce the supply of dollars that the market can access to short-sell the yuan. “Yesterday big banks were all selling one-year onshore forward swaps, then in the afternoon the spot dollar-yuan fell,” said a trader at a foreign bank in Shanghai.


One state bank also was seen active in offshore forward swaps, two traders at foreign banks with knowledge of the matter said. On Wednesday, one-year onshore dollar-yuan forwards were at 175 points, down from 321 points on Monday, according to Refinitiv data. One-year offshore dollar-yuan forwards were at 459 points, down from 640 points on Monday. “The movement in forward points may reflect a tightening in USD (dollar) liquidity when some market participants need to buy spot dollars and sell them back in forwards. Meanwhile, the spot and outright moves were also partly due to a stabilization in RMB (yuan) sentiment on Tuesday,” said Frances Cheung, head of macro strategy for Asia at Westpac in Singapore.

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Liquidity.

Forget China, The Fed Has A Much Bigger Problem On Its Hands (ZH)

The Fed may have launched its first easing cycle since 2007 and liquidity-sapping quantitative tightening may finally be over, but Powell may have a much bigger problem on his hands – one which has nothing to do with China, and everything to do with a dramatic drain of liquidity in the market over the next two months.

We first hinted at this last week when we noted that as part of the recently completed debt ceiling deal, instead of taking its time in replenishing the cash balance (green line in the chart below), the US Treasury will scramble to rebuild its cash balance up to $350 billion, from today’s level of $133 billion (gray line), a process which as we said last Wednesday will “significantly tighten up liquidity in the banking system and potentially result in turmoil in funding and money markets as the world is flooded with an issuance of T-Bills” as the Treasury seeks to fill the $217 billion cash hole, which will lead to a substantial liquidity withdrawal from the broader financial system as shown in the following Nordea chart.

The problem, in a nutshell, is that traditionally such a rapid liquidity withdrawal leads to weaker risk appetite, a far stronger USD and lower treasury yields, while widening the LIBOR/OIS spread and further depressing the already negative EURUSD cross-currency basis. While we cautioned about all this last week (even before the FOMC announcement), it appears that our appreciation of just how severe this problem may be for the Fed and capital markets was overly optimistic, because according to a new analysis by Bank of America’s Mark Cabana, the Fed may have no choice but to resume Quantitative Easing and start expanding its balance sheet again – potentially as early as 4Q – in order to ease funding pressures expected during the coming wave of Treasury supply.

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Debt denominated in dollars by any chance?

Papua New Guinea Asks China To Refinance Its National Debt (G.)

Papua New Guinea has asked China to refinance its entire government debt in a blow to Australia’s attempts to counter China’s influence in the region. The request marks a “significant shift” in regional politics and PNG’s allegiances, according to Pacific experts. Australia has traditionally been the largest aid donor and most important ally of PNG, but in recent years ties between China and PNG have strengthened. PNG’s prime minister, James Marape, visited Australia two weeks ago at the invitation of his counterpart, Scott Morrison, in his first international visit since becoming the Pacific nation’s leader at the end of May.

In a speech during his visit, Marape said he wanted PNG to move away from an “aid-donor” relationship with Australia within 10 years, and step up alongside its neighbour as a leader in the Pacific region. However, on Tuesday, after a meeting with Xue Bing, the Chinese ambassador in Port Moresby, Marape requested that China refinance its debts of A$11.8bn (27bn kina, or US$7.95bn). PNG’s debt sits at around 32.8% of its GDP. “[The prime minister] requested the ambassador to inform Beijing on a bid to assist the government of PNG refinance its existing country’s K27bn debt,” said Marape’s office in a statement seen by the Guardian.

“He suggested that both the Bank of PNG and [China’s] People’s Bank will take the lead with the department of treasury in ensuring that consultations are under way,” the statement continued. “It suggest a significant shift in the relationship between Australia and Papua New Guinea and Papua New Guinea and China,” says Matthew Clarke, professor of international development at Deakin University. “In the past Australia would have been the natural country to turn to for this sort of refinancing, but now we see China’s place in the region shift and it becomes potentially a much more dominant player in the donor relationship.”

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“The United States, and allies including Japan, Australia and New Zealand, are actively expanding their diplomatic postings in the Pacific to counter China’s influence..”

Chinese Port Plans Put Pacific Back In Play (R.)

Early in the morning, before sunrise, low tide on the Samoan island of Savai’i reveals the remnants of an old American airstrip, washed away by decades of erosion, cyclones and tsunamis. The World War II site in Asau, which also hosts a 1960s-era concrete wharf in its well-protected natural harbor, is being considered for a new port to be developed by China, according to the Samoan government and the area’s highest ranking chief, Masoe Serota Tufaga. The proposed construction of a facility that could be turned into a military asset in hostile times has worried the United States and its regional allies, which have dominated international influence in the vast waters of the South Pacific since 1945.

Sitting at his coconut and cocoa plantation on the hills above the port site, Tufaga told Reuters he would abide by any government deal for a Chinese-developed port even though he was concerned about Beijing’s growing influence. “The government and China came here to look at it – they offered it,” said 71-year-old Tufaga, who has the final say over land-use agreements affecting Asau. “If China wants to operate this, it’s too hard for us to say to the government, no, we can not allow China here. The people are looking for some jobs. “That’s right – it’s money. It’s money.”

The United States, and allies including Japan, Australia and New Zealand, are actively expanding their diplomatic postings in the Pacific to counter China’s influence, and warning island nations that Beijing-funded projects needed to make financial sense. China is using “predatory economics” to destabilize the Indo-Pacific and the United States is working with its partners to address the region’s pressing security needs, U.S. Defence Secretary Mark Esper said in Sydney on Sunday.

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Erdogan bluff. I hope.

Pentagon Set to Prevent “Unacceptable” Turkish Invasion Of Northern Syria (ZH)

Turkey has for days been poised to unilaterally invade northern Syria over US objections, which Ankara officials say is to establish a 32 kilometer (20 mile) zone inside the war torn country, giving Turkey complete control of a region where the Syrian Kurdish YPG operates (People’s Protection Units). Turkey has long considered the US-backed group, which forms the core of the Syrian Democratic Forces (SDF), to be a terrorist extension of the outlawed PKK. The Pentagon has condemned the impending Turkish unilateral move, with US Defense Secretary Mark Esper telling reporters early Tuesday that it would be unacceptable and thwarted by Washington, though it’s unclear how far the Pentagon would be willing to go.

“What we’re going to do is prevent unilateral incursions that would upset, again, these mutual interests that the United States, Turkey and the SDF share with regard to northern Syria,” Esper said. Crucially, according to ABC News, US officials “have made clear that an invasion is an extremely risky venture that could threaten the safety of U.S. forces working with the SDF…”. On Sunday Turkish President Recep Tayyip Erdogan said that his forces would launch an operation in Syria east of the Euphrates River at an unspecified start date, and noted that the US and Russia had been notified. In ongoing negotiations this summer the US and Turkey have clashed over just such a “safe zone,” given Turkey wants the area completely clear of Kurdish armed groups, which the Pentagon simultaneously backs.

Turkish defense officials have lately threatened their “patience is limited” as the army builds up its forces along the border. The Foreign Ministry on Friday warned, “We won’t let this process be dragged out. If our expectations aren’t met, we are fully capable of taking whatever measures [are needed] to ensure our national security.”

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If Mifsud is an FBI asset, there are zero Russians left in the story.

The Mainstream Media Wants the Mifsud Story to Just Go Away (ET)

John Solomon of The Hill is reporting that an audiotape containing professor Joseph Mifsud’s deposition has been given to both U.S. Attorney John Durham’s investigators and to the Senate Judiciary Committee. “I can report absolutely that the Durham investigators have now obtained an audiotape deposition of Joseph Mifsud, where he describes his work, why he targeted George Papadopoulos, who directed him to do that, what directions he was given, and why he set that entire process of introducing Papadopoulos to Russia in motion in March of 2016, which is really the flashpoint the starting point of this whole Russia collusion narrative,” Solomon told Fox News’ Sean Hannity.

“I can also confirm that the Senate Judiciary Committee has also obtained the same deposition,” he said. Mifsud, who I have written about extensively in previous columns, is the key that turns the lock to the lid of this Pandora’s box that we refer to as “Spygate.” So I’m wondering why Solomon appears to be the only mainstream reporter pursuing this Mifsud story. I suspect it’s because many DNC Media outlets, after having fallen deeply and passionately in love with the Trump-Russia collusion hoax, are reluctant to call attention to something that would be the final nail in its coffin. The last thing the mainstream media wants right now would be for Mifsud to go on the record with both Durham’s investigative team and with Congress to say he was working for the FBI and was only pretending to be a Russian agent.

If Mifsud was an FBI asset sent to entrap Papadopoulos, then there are no real Russian agents anywhere in this entire Trump-Russia collusion story. Ponder what that means for a minute. You can’t save the Russian collusion narrative, if you can’t find any real Russians anywhere in the story. The FBI under James Comey will then be seen as having engaged in an operation to entrap people, and “Russian agents” turn out to be fakes working for the FBI and who were making fake offers of Russian help to the Trump campaign.

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But nobody knew a thing.

Epstein’s Mysterious Manhattan Apartment Building On East 66th Street (BI)

Before his extended stay in New York’s Metropolitan Correctional Center began in July, disgraced sex offender Jeffrey Epstein dwelled in some of the city’s most exclusive real estate, laying his head in a palatial Upper East Side townhouse and conducting his mysterious business out of a landmarked mansion on Madison Avenue. But it hasn’t been all private islands and 7,000-acre ranches for the half-billionaire. For decades Epstein has run some of his operations quietly out of a squat Second Avenue residential building owned by his brother, Mark Epstein, and frequently visited by the former Israeli Prime Minister Ehud Barak. According to property records and court filings, Jeffrey Epstein has long housed girlfriends, associates, employees, and businesses in a handful of units at 301 East 66th St.

There are 200 units at the address, and the majority of them are owned on paper by his brother’s development firm, Ossa Properties. While Ossa nominally owns the units connected to Jeffrey Epstein, the aforementioned records and filings show that Epstein effectively controls them. The postwar white-brick high-rise sits atop a nail salon, a coffee shop, and an Italian restaurant along a traffic-choked stretch of Second Avenue. Topped by a green canopy, the front door opens to a doorman guarding a hallway that leads to a light-filled lobby decorated with two couches and an armchair. Though the building shares a ZIP code with Epstein’s townhouse, its share of the neighborhood east of Park Avenue is less upscale, catering more to families and young professionals than foreign heads of state.

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Aug 062019
 


Piet Mondriaan Avond (Evening): The Red Tree 1908-10

 

Yuan, Futures Surge After PBOC Fix Is Stronger Than Expected (ZH)
China’s Yuan Steadies But Stocks Plunge As Trade Tensions Grow (R.)
Kyle Bass: Yuan Would Collapse 30%-40% If China Stopped Supporting It (CNBC)
US Designates China As Currency Manipulator For First Time In 25 Years (R.)
China State Media Says US ‘Destroying International Order’ (R.)
China Confirms It Is Suspending US Farm Products Purchases (CNBC)
Trump Orders Freeze On All Venezuelan Government Assets In US (AFP)
Hold the Teddy Bears and Candles (Kunstler)
Fourth Turning Economics (Jim Quinn)
Things Fall Apart (Michael Krieger)
Sinn Féin Joins the Great Disruption (Fintan O’Toole)
Nicola Sturgeon: ‘Talking To Theresa May Was Soul Destroying’ (Sky)

 

 

Anything above/below 7.10 is deemed to risky in Beijing. For now.

Yuan, Futures Surge After PBOC Fix Is Stronger Than Expected (ZH)

In the aftermath of the US shockingly designating China a currency manipulator – for the first time in over 25 years – there was a tense period of several hours in which it appeared that all bets were off, and that with both the US and China seemingly going full tilt, China would fix the Yuan not only far weaker than its Monday rate, but also weaker than expected according to an imputation of the country’s currency basket, which was 6.9736, well below the previous fixing of 6.9225, the first fixing below 6.90 in 2019 and the catalyst for the overnight plunge in risk assets. Heck, some even speculated that Beijing may fix the Yuan below 7.00 vs the USD, if not launch a couple of nukes at the US for good measure.

It wasn’t meant to be though: shortly after 9pm EST, the PBOC lifted the kimono so to speak… and the market collectively exhaled when China revealed that while it had indeed fixed the onshore yuan weaker than Monday, it did so stronger relative to both the 7.00 proverbial line in the sand, and which would have been a retaliatory declaration of outright currency war, but also relative to the expected fixing, with the number coming at 6.9683. In kneejerk reaction, a wave of relief washed over the market, sending the offshore Yuan surging, and reversing all prior session losses which had dragged it as low as 7.14 just moments ahead of the fix, to above 7.10 last…

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Presented as a strength, this is instead perhaps China’s biggest weakness: “.. this is something that we control rather than markets or whatever other pressures.”

China’s Yuan Steadies But Stocks Plunge As Trade Tensions Grow (R.)

China’s tumbling yuan steadied on Tuesday as authorities took steps to contain its slide while stocks plunged after Washington labelled Beijing a currency manipulator, marking a sharp escalation in U.S. trade tensions. The currency has slumped 2.3% over the past three days and broken past the symbolic 7-per-dollar level, pounding stocks and pushing bonds higher as investors feared the yuan’s value has become a new front in the U.S.-China trade war. On Monday, U.S. Treasury Secretary Steven Mnuchin said Washington would designate China a currency manipulator, its first such move since 1994, sending both the onshore and offshore yuan to record lows..


The People’s Bank of China’s firmer-than-expected yuan fixing on Tuesday helped pull the currency away from these lows as did an announced bond sale in the offshore market, seen as signs authorities wanted to stem the rout. “(China is) seizing the narrative on the renminbi,” said Andy Wong, multi-asset senior investment manager at Pictet Asset Management in Hong Kong. “Rather than being pressured to signal that 7 is just a psychological level, they are … saying this is something that we control rather than markets or whatever other pressures.”

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“.. they are trying to hold this whole thing together.”

they have to have dollars to sell to buy their own currency to hold it up..”

Kyle Bass: Yuan Would Collapse 30%-40% If China Stopped Supporting It (CNBC)

Hedge fund manager and Hayman Capital Management founder Kyle Bass said on Monday that without state support, China’s currency would plunge. “What’s happening in China is they have to have dollars to sell to buy their own currency to hold it up. If they were to ever free float their currency, I think it would drop 30% or 40%,” Bass told CNBC’s “Closing Bell.” “And the reason is they claim to be 15% of global GDP in dollar terms, but less than 1% of global transactions settled in their own currency,” Bass added. “And so, they prop their currency up…everyone calling them a currency manipulator – they are trying to hold this whole thing together.” Bass’s comments came after the Chinese yuan crossed a closely watched barrier against the U.S. dollar.


The onshore Chinese yuan changed hands above 7 against the dollar, the currency’s weakest levels against the greenback since 2008. The new lows for the yuan came after U.S. President Donald Trump unexpectedly announced fresh tariffs on Beijing last week that are set to take effect from Sept. 1. China on Monday said it could slap tariffs on U.S. agricultural goods that it bought recently, state-run media Xinhua reported. Bass, known across Wall Street for his prescient bets against subprime mortgages during the financial crisis in 2008, is also a noted China bear. The hedge fund manager has previously admonished American corporations for pushing Trump to strike a deal with Beijing too quickly and told CNBC as recently as June that the U.S. has leverage over China and should pressure negotiators into a better settlement.

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Which allows for much higher tariffs.

US Designates China As Currency Manipulator For First Time In 25 Years (R.)

The U.S. government has determined that China is manipulating its currency and will engage with the International Monetary Fund to eliminate unfair competition from Beijing, U.S. Treasury Secretary Steven Mnuchin said in a statement on Monday. The move brings already tense U.S.-Chinese relations to a boil and fulfills U.S. President Donald Trump’s promise to label China a currency manipulator for the first time since 1994. The U.S. action follows China allowing its yuan to weaken past the key 7-per-dollar level on Monday for the first time in more than a decade. Beijing later said it would stop buying U.S. agricultural products, inflaming a yearlong trade war with the United States.

The sharp 1.4% drop in the yuan comes days after U.S. President Donald Trump stunned financial markets by vowing to impose 10% tariffs on the remaining $300 billion of Chinese imports from Sept. 1, abruptly breaking a brief ceasefire in a bruising trade war that has disrupted global supply chains and slowed growth. The news knocked the dollar sharply lower and bolstered the price of gold . The Treasury Department said a statement from the People’s Bank of China (PBOC) on Monday made clear that Chinese authorities had ample control over the yuan exchange rate.

The PBOC said Monday it would “continue to … take necessary and targeted measures against the positive feedback behavior that may occur in the foreign exchange market.” “This is an open acknowledgement by the PBOC that it has extensive experience manipulating its currency and remains prepared to do so on an ongoing basis,” the Treasury statement said. It said China’s actions violate its commitment to refrain from competitive devaluation as part of the Group of 20 industrialized countries. Treasury said it expected China to adhere to those commitments and not target China’s exchange rate for competitive purposes.

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“..Trump’s election campaign pledge was to lift import tariffs to 45% on China.”

China State Media Says US ‘Destroying International Order’ (R.)

China’s official Communist Party newspaper said on Tuesday that the United States was “deliberately destroying international order”, a day after Washington branded Beijing a currency manipulator in a rapidly escalating trade dispute. The accusation, which followed a sharp slide in the yuan on Monday, has driven an even bigger wedge between the world’s largest economies and crushed any lingering hopes for a quick resolution to their year-long trade war. The dispute has already spread beyond tariffs to other areas such as technology, and analysts caution tit-for-tat measures could widen in scope and severity, weighing further on global economic growth.

In a strongly-worded editorial, the People’s Daily said the United States was holding its own citizens to ransom, without mentioning the latest U.S. decision. The responsibility of big countries is to provide the world with stability and certainty while creating conditions and opportunities for the common development of all countries, according to the editorial. “But some people in the United States do just the opposite,” it said. [..] The yuan has tumbled 2.3% in three days since President Donald Trump’s sudden declaration last week that he will impose 10% tariffs on $300 billion of Chinese imports from Sept. 1.

But it appeared to steady on Tuesday amid signs that China’s central bank may be looking to stem the slide, which has sparked fears of a global currency war. “Naming China a currency manipulator could open the door for U.S. tariffs to eventually increase to more than 25% on Chinese goods,” according to a note from DBS Group Research. “Apart from naming China a currency manipulator, Trump’s election campaign pledge was to lift import tariffs to 45% on China.”

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Try to buy from Brazil instead?

China Confirms It Is Suspending US Farm Products Purchases (CNBC)

China confirmed reports that it was pulling out of U.S. agriculture as a weapon in the ongoing trade war. A spokesperson for the Chinese Ministry of Commerce said Chinese companies have stopped purchasing U.S. agricultural products in response to President Trump’s new 10% tariffs on $300 billion of Chinese goods. “This is a serious violation of the meeting between the heads of state of China and the United States,” the Minister of Commerce said in a statement Monday that was translated via Google. The department also said it would “not rule out” tariffs on newly purchased agricultural goods after August 3.


China is one of the largest buyers of U.S. agriculture. Bloomberg News reported that Beijing may stop importing them completely in response to new tariffs by the United States. According to reports by Chinese State media, it would also consider slapping tariffs on U.S. agricultural products that it already bought. Those stories helped exacerbate fears on Wall Street pushing stocks to their worst day of the year. Now that China has confirmed the reports, it could add to pressure on equities. Stock futures fell Monday, implying a 480 point drop Tuesday.

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This is ridiculous. Know when you’ve lost.

Trump Orders Freeze On All Venezuelan Government Assets In US (AFP)

President Donald Trump on Monday ordered a freeze on all Venezuelan government assets in the United States and barred transactions with its authorities, in Washington’s latest move against President Nicolas Maduro. Trump took the step “in light of the continued usurpation of power by Nicolas Maduro and persons affiliated with him, as well as human rights abuses,” according to the order. The Wall Street Journal said the move was the first against a Western Hemisphere government in over 30 years, and imposes restrictions on Caracas similar to those faced by North Korea, Iran, Syria and Cuba. Asked last week if he was considering a “blockade or quarantine” of Venezuela, Trump responded: “Yes, I am.”


The order affects “all property and interests in property of the Government of Venezuela that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person.” These assets “are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in,” the order said. The measure also bars transactions with Venezuelan authorities whose assets are blocked. It prohibits “the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to this order,” as well as “the receipt of any contribution or provision of funds, goods, or services from any such person.”

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“This abyss of missing social relations is made worse by the everyday physical settings for everyday lives based on nothing: the wilderness of parking lots that America has turned itself into.”

Hold the Teddy Bears and Candles (Kunstler)

In a nation afflicted by fads, crazes, manias, and rages, mass murder is the jackpot for nihilists — begging the question: why does this country produce so many of them? Answer: this is exactly what you get in a culture where anything goes and nothing matters. Extract all the meaning and purpose from being here on earth, and erase as many boundaries as you can from custom and behavior, and watch what happens, especially among young men trained on video slaughter games. For many, there is no armature left to hang a life on, no communities, no fathers, no mentors, no initiations into personal responsibility, no daily organizing principles, no instruction in useful trades, no productive activities, no opportunities for love and affection, and no way out.

This abyss of missing social relations is made worse by the everyday physical settings for everyday lives based on nothing: the wilderness of parking lots that America has turned itself into. Such is the compelling myth of the New World as a wilderness that we obliged ourselves to re-enact it, minus nature, including human nature, especially what may be noble and sacred about human nature. The old truism sticks: when nothing is sacred, everything is profane, and what could be more profane than slaughtering your fellow humans en masse, for no good reason? Just because you felt like it at the time? Another time, you might feel like scarfing some tacos, or checking in on the free porn sites, or tweaking some crushed-up oxycontin.

One message from the culture of anything-goes-and-nothing-matters comes through loud and clear: if it feels good, do it! And if you feel bad, do something to make yourself feel better. The wonder is that the way we live these days hasn’t turned more people into homicidal maniacs, considering how many are out there feeling bad in this grotesque landscape of incessant motoring, vivid purposelessness, and lost aspiration — unless these bloody skirmishes are the precursor to some more general outbreak of murderous havoc. It’s not hard these days to imagine the political animus ratcheting up to something like a new civil war. If it works out that way, it will be the most psychologically confused political event of modern history.

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Don’t make the ideas too big.

Fourth Turning Economics (Jim Quinn)

The specific details of each crisis change, but economic catalysts have initiated all previous Fourth Turnings and led ultimately to bloody conflict. There is nothing in the current dynamic of this Fourth Turning which argues against a similar outcome. The immense debt, stock and real estate bubbles, created by feckless central bankers, corrupt politicians, and spineless government apparatchiks, have set the stage for the greatest financial calamity in world history. Rather than taking the bitter medicine of purging the system of bad debt and allowing zombie banks and corporations to die, the ruling class has chosen to ramp up the debt orgy and reward themselves and their cronies with ill-gotten riches, while impoverishing the masses.

Their arrogance and hubris have grown to vast proportions and will eventually result in a bloody backlash from those they have screwed over. The election of Donald Trump over the hand-picked candidate of the oligarchy, was a reaction to the raping and pillaging of Main Street by the greedy soulless psychopaths in suits on Wall Street and in the halls of the Eccles building in Washington D.C. The average hard-working American has seen eight years of “government of the bankers, by the bankers, for the bankers”. Wall Street was bailed out and rewarded with the ability to borrow at 0% from their captured Federal Reserve. Zombie corporations were kept alive with low interest debt, with no adjustment for risk.

The cowardly politicians drove the national debt from $11.5 trillion to over $20 trillion, while accomplishing minimal GDP growth (negative growth using a real inflation rate), and enriching mega-corporations and the top .1%. Meanwhile, risk averse senior citizens, depending upon some interest income to survive, were thrown under the bus by Bernanke, Yellen and Powell. It was the deplorables in flyover country, the blue-collar workers in Pennsylvania, Michigan, Wisconsin and Ohio, and senior citizens in Florida who voted their wallets, which had been picked by establishment politicians for the previous eight years.

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Again, big ideas. You easily get lost in those.

Things Fall Apart (Michael Krieger)

The primary shift that’s occurring is the U.S. empire has lost its ability to dictate all terms to all countries at all times. This capacity to dictate has been enforced via a two-pronged approach for decades. The prongs are global military dominance and control of the financial system. The first is threatened by the fact we’ve already entered a world in which it’s easier to frustrate global empire than it is to maintain it. We’ve seen this manifest in numerous places over the course of the 21st century. The war in Afghanistan is an ongoing failure despite it being the longest conflict in U.S. history, and the Iraq war (based on fake news) resulted in the death of hundreds of thousands and merely strengthened Iran’s position in the region.

Meanwhile, U.S. regime change plans in Syria were thwarted despite the empire’s best efforts, and Trump’s deranged crew of neocons still can’t even get rid of Maduro in Venezuela. Deny it all you want, but the geopolitical map has fundamentally changed. Meanwhile, the financial system itself (a tremendous source of U.S. imperial power) is also fundamentally broken. The first major failure in this regard happened back on August 15, 1971 when Richard Nixon closed the gold window.

Whether you believe this was a primary contributor to many of the negative trends that emerged afterwards likely depends on your personal ideology, but it’s undeniable that shortly after this event we started to see a major ramp up in the financialization of everything as well as a stagnation in median wage growth. A global buildup of financialization and fraud-based financial products played a key role in bringing us to where we are today, and also culminated in the second major failure of the global financial system in 2008. That was the moment when serious reform and severe consequences for the criminal perpetrators of economic collapse could’ve reset the system and brought the world back to a sustainable path, but we all know that’s not what happened.

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“It does not deny that no-deal would be awful – it welcomes this awfulness as the Great Disruption that completes the Irish national revolution.”

Sinn Féin Joins the Great Disruption (Fintan O’Toole)

The first – and at the moment by far the most decisive – group of Great Disruptors consists of the disaster capitalists fronted by Johnson. Their Utopia is Singapore. They believe, as Priti Patel, Dominic Raab, Liz Truss and other Tory young Turks wrote in Britannia Unchained in 2012, that the British have grown lazy and useless, their buccaneering spirit sapped by a culture of dependency. They see no-deal as the Big Bang that will blow the welfare state, environmental standards and labour protections to smithereens. Out of this chaos will come a new Global Britain of very low taxes for the rich, unregulated hyper-capitalism and boundless “free” markets.

The second group is the high command of the Labour Party around Jeremy Corbyn. Their Utopia is Socialism in One Country. They believe that a no-deal Brexit will free Britain from the wishy-washy social market capitalism of the EU and thus ultimately from capitalism itself. They have their roots in the socialist distaste for the European project that was, it is easy to forget, once the mainstream of British Euroscepticism. In that mentality, the EU was seen as a last, desperate attempt to shore up a dying capitalist system. Thus, on the far side of a no-deal Brexit, lies the workers’ paradise that is the inevitable outcome of history.

The third group of Great Disruptors is Sinn Féin. Their Utopia is, of course, a United Ireland. They ostensibly oppose a no-deal Brexit, and indeed Brexit itself. But beneath this opposition lies the belief that the worse Brexit is, the quicker we will have a Border poll and the more likely it is that Protestants in Northern Ireland will swim for the green lifeboat to avoid going down with the British ship. Alongside the disaster capitalism of Johnson’s faction and the disaster socialism of Corbyn’s, there is this disaster nationalism. It does not deny that no-deal would be awful – it welcomes this awfulness as the Great Disruption that completes the Irish national revolution.

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If that isn’t scathing, what is?

“I started the meeting off by saying, ‘before we get onto Brexit, fantastic shoes’, and in that instant I could see in her eyes, that she didn’t have an answer in the script before her for this. “So it became, what should have been a light-hearted moment, really quite awkward.”

Nicola Sturgeon: ‘Talking To Theresa May Was Soul Destroying’ (Sky)

Nicola Sturgeon has delivered a brutal verdict on the current and former prime ministers, claiming Boris Johnson tried to put his arm around her back and that talking to Theresa May was “soul destroying”. In a candid and indiscreet interview, Scotland’s first minister said her conversation with Mr Johnson last week was “crazy”, while Mrs May would never depart from a script, which made conversation awkward. Ms Sturgeon’s withering disclosures came in an Edinburgh Fringe Festival event with broadcaster Iain Dale in which she claimed there was growing support for Scottish independence. Asked by Mr Dale about the difference between her meetings with Mrs May and her first encounter with Mr Johnson at her Bute House official residence, she replied: “It was a very different experience.

“I don’t want to be too derogatory or pejorative about Theresa May. She’s obviously no longer prime minister, but having conversations with Theresa May was pretty soul destroying. “She would never depart from a script, no matter where you tried to take the conversation. “I remember in one meeting, going in and trying to think about how can we get this meeting off on a sort of gentler start before we immediately got into the areas where we disagreed. “And she had, as she often did, a fantastic pair of shoes, a really stylish pair of shoes. And I quite like shoes, so I started the meeting off by saying, ‘before we get onto Brexit, fantastic shoes’, and in that instant I could see in her eyes, that she didn’t have an answer in the script before her for this. “So it became, what should have been a light-hearted moment, really quite awkward.

“So talking to Boris, at least it was like having a conversation, albeit a bit of a crazy one. [..] “Boris Johnson is a prime minister that the vast of majority of people in Scotland, had they been given any choice, would not have chosen to give the keys of Number 10 Downing Street to. “He’s a prime minister who is intent on taking us out of Europe against our will, looks intent on taking us out without a deal and the catastrophe that would bring about I think is well understood here. “So I wasn’t overly thrilled to be standing on the steps of Bute House welcoming Boris Johnson as prime minister.”

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Aug 052019
 


Odilon Redon Peyrelebade landscape 1880

 

It’s never easy to gauge what exactly is happening in China, or why the CCP Politburo takes the decisions it does. Today, or overnight, is no exception to that. However, one thing that appears certain, but which I don’t see reflected in all the analyses, is that Beijing pushing the value of the renminbi (yuan) down below 7 to the USD in one fell swoop, is a major setback for Xi Jinping and his government.

Yes, China may have given up hope of reaching positive conclusions in its trade talks with the US. And yes, some may think, even in China itself, that devaluing the currency is a tool that can be useful in a potential currency war. But there’s another side to this coin. It’s not even about the value itself, or the change in it, it’s the heavy-handed way it’s executed.

 

China wants, and desperately needs too, for the yuan to be a force in global financial markets. In very simple terms this is true because if it then wants to buy something, it can simply print the money for it. But only about 1% of global trade today is executed in yuan. That is not nearly enough. It means China needs dollars and euros, all the time. And devaluing the yuan means the country needs even more of those.

You’d almost think: why would you want to do that? What are the long-term prospects for a move like this? You’re telling forex markets that the value of the yuan is not trustworthy, because if Xi or the PBOC decides in the next five minutes that it should go up or down by 10% or 20%, they can do it. The Fed and ECB also have tools to manipulate their currencies (re: interest rates), but none of that magnitude.

 

The crux of the dilemma probably lies in the Belt and Road Initiative (BRI), which I’ve been saying for years is just China’s way to sell its overcapacity and overproduction abroad. Sure, there may be loftier goals, and surely in the glitzy brochures, but the fact remains that China has tried to be an economic miracle, doing in 10 years what took the US a century, and it never slowed down its growth, at least not voluntarily, even if that might have been a wise move.

Already lately, purchases by Chinese citizens and companies of real estate and businesses abroad have been curtailed, and not a little bit, by Beijing. There’s no better way to convince Chinese people of the miracle’s success than to let them travel the world and spend there, but that, too, may well soon be cut. It kills foreign reserves.

If Beijing could charge participating countries in the Belt and Road Initiative in yuan, and they could pay for the overcapacity’s steel and cement and what not in yuan, that could be a game-changing program for the entire planet. But these countries have no reason to hold yuan, other than the BRI itself. And they, too, were watching the overnight move above 7 and must have thought: let’s be careful now.

And to top it all off, China right now needs for these countries to pay in dollars instead of yuan, because its foreign reserves are shrinking so fast. It’s Catch-22 all the way down. China’s need for dollars goes against everything BRI stands for.

 

Could the move hurt the US as well? Absolutely. But the long-term view behind the tariffs, and the talks China appears to have lost faith in, is to move the US away from its near all-encompassing addiction to Chinese production, and to move at least some of that production back home. Problem of course is, that is precisely what China’s miracle growth has been built on.

If the US starts bringing production home, who is Beijing going to sell its (over-)production to? Yes, I hear you, to the BRI countries. But there it runs into the currency problems mentioned before. To Europe? The top of that trade route is also behind us. Europe will have to follow the US to an extent, and also bring factories back to the continent (and not just to Germany either).

China could perhaps sell more than it does today to Russia. But that country still does produce a lot of things, and has been forced to be much more self-sufficient due to US and EU sanctions. It’s also a mighty small market compared to 350 million North Americans and 500 million Europeans, who are on average much richer than your average Russian to boot.

 

There is a way for China to make the yuan more important in global trade (but devaluation is definitely not that way): Beijing could let go of its central and total control over the value of its currency, and let forex markets figure it out. That would give traders -and everyone else- faith in the value. Problem with that is, this is not how central control communist governments think.

Beijing wants both: central total control AND a prominent place in world trade. And it may take them a long time to figure out that is not going to happen, unless of course they first conquer the entire world militarily. That is not an option, at least not for the foreseeable future. Come see me next century.

 

It wouldn’t be the first time for me to say I can see China retreat into itself, into its own borders and culture and market (1.3 billion people!). If the Communist Party wants to remain in power, and there’s no doubt it does, this may be only possible choice going forward. If growth has indeed left the miracle -as many observers think-, it can implode in very rapid succession. And even if growth hasn’t yet evaporated, it may well very soon. Without the growth, there is no miracle anymore.

And if China can no longer grow its exports, its domestic growth will also become a thing of the past. Domestic consumption can only grow as long as exports do too. Seen from that angle, the problems with trade and the currency look downright ominous. If you need dollars that badly, and you notice that you’re already getting fewer of them, not more, you’re in trouble.

Devaluing your currency may afford you some temporary respite, but it can’t possibly solve your troubles. It can make them much worse though.

I think China has wanted too much too fast, got carried away and forgot to take care of a few potential barriers to its growth, in particular the standing its currency had and still has in the world, and the grinding need for dollars that stems from it. And the Communists have no answer to this problem.

 

 

 

 

Aug 052019
 


Piet Mondriaan Study for Blue Apple Tree Series 1908

 

Currency War Begins: China Crashes Yuan Past 7, Halts US Agri Imports (ZH)
China Lets Yuan Slump Past 7 Per Dollar For First Time In Over A Decade (R.)
Hong Kong Brought To A Standstill As City-Wide Strikes And Protests Hit (G.)
Job Growth In Trump Land Is Dead In The Water (MW)
10 Alarming Things About The Economy That Politicians Won’t Tell You (MW)
The Crashes That Cause Grown Men To Cry (Eric Peters)
Inside The Plunge Protection Team: Chaos (ZH)
Russiagate is the New 42 (Craig Murray)
Austerity Populism (G.)
Bellingcat Unloads 4,000-Word Hit Piece On Tulsi Gabbard (RT)
America’s Other Original Sin (Bacevich)

 

 

“..trade talks, even the fake kind, is now over, dead and buried..”

Currency War Begins: China Crashes Yuan Past 7, Halts US Agri Imports (ZH)

Update 2: – China’s central bank has confirmed that it is, indeed, on, saying that it is able to keep the yuan exchange rate at a reasonable and balanced level – whatever that means – while acknowledging that the Yuan plunging beyond 7 per dollar is due to market supply and demand, trade protectionism and expectations on additional tariffs on Chinese goods. Meanwhile, resorting to its old, tired and worn out tricks, Dow Jones reports that the PBOC will crack down on short-term Yuan speculation, and anchor market expectations. Which is great… if only the PBOC didn’t say exactly the same back in May, when it warned currenct traders that those “shorting the yuan will inevitably suffer from a huge loss.” Three months later, it’s currency traders 1 – Beijing 0.


Update 1 – China is firing all the big guns tonight, because just an hour after Beijing effectively devalued the yuan, when it launched the latest currency war with the US, Bloomberg reported that the Chinese government has asked its state-owned enterprises “to suspend imports of U.S. agricultural products after President Donald Trump ratcheted up trade tensions with the Asian nation last week.” China’s state-run agricultural firms have now stopped buying American farm goods, and are waiting to see how trade talks progress. Translation: trade talks, even the fake kind, is now over, dead and buried, and the only question is how Trump will react.

[..] in a dramatically unsettling move for global stability, China’s offshore yuan just collapsed below 7/USD — after the PBOC fixed the onshore yuan below 6.90 for the first time in 2019 — the currency plunging a stunning 12 handles to its weakest on record against the dollar as countless stop losses were triggered and thousands of traders were margined out.

“A break of 7 is quite shocking to the market, and close attention will be paid to how China would deal with this move,” says Tsutomu Soma, general manager of the investment trust and fixed-income securities at SBI Securities Co. in Tokyo in a phone interview. This is the weakest offshore yuan has ever been against the dollar…

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Beijing control over the yuan is worrisome. It also prohibits uptake of the currency in global trade.

China Lets Yuan Slump Past 7 Per Dollar For First Time In Over A Decade (R.)

China on Monday let the yuan tumble beyond the key 7-per-dollar level for the first time in more than a decade, in a sign Beijing might be willing to tolerate further currency weakness in the face of an escalating trade row with the United States. The sharp 1.4% drop in the yuan came after the People’s Bank of China set the daily mid-point of the currency’s trading band at 6.9225 per dollar, its weakest level since December 2018. “Today’s fixing was the last line in the sand,” said Ken Cheung, senior Asian FX strategist at Mizuho Bank in Hong Kong. “The PBOC has fully given the green light to yuan depreciation”. The shakeout in the yuan comes days after Trump stunned financial markets by vowing to impose 10% tariffs on the remaining $300 billion of Chinese imports from Sept. 1, abruptly breaking a brief month-long ceasefire in the bruising trade war.

After opening the onshore session at 6.9999 per dollar, the yuan had weakened to 7.0266 per dollar by 0351 GMT, down 1.2% on the day after earlier losing as much as 1.4% of its value. Monday marked the first time the yuan had breached the 7-per-dollar level since May 9, 2008. With the escalating trade war giving Beijing fewer reasons to maintain yuan stability, analysts said they expect the currency to continue to weaken. “In the short-term, the yuan’s strength would be largely determined by the domestic economy. If third-quarter economic growth stabilizes, the yuan could stabilize around 7.2 or 7.3 level,” Zhang Yi, chief economist at Zhonghai Shengrong Capital Management in Beijing.


Capital Economics senior China economist Julian Evans-Pritchard said the PBOC had probably been holding back against allowing a weaker yuan to avoid derailing trade negotiations with the United States. “The fact that they have now stopped defending 7.00 against the dollar suggests that they have all but abandoned hopes for a trade deal with the U.S.,” he said.

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Organizers swore peaceful protests. But a few agitators can take care of that.

Hong Kong Brought To A Standstill As City-Wide Strikes And Protests Hit (G.)

Hong Kong’s embattled leader, Carrie Lam, has warned that mass protests have pushed the region to the brink of a “very dangerous situation” as residents have gone on strike, paralysing the city. Lam, who has disappeared from public view for the past two weeks, gave a media briefing in which she condemned the protests for hurting Hong Kong’s economy and stability. “Such extensive disruptions in the name of certain demands or uncooperative movement have seriously undermined Hong Kong law and order and are pushing our city, the city we all love, and many of us helped to build, to the verge of a very dangerous situation,” she said.

On Monday, transport across Hong Kong was brought to a standstill and more than 150 flights out of the city were cancelled. Almost 100 outbound and 100 inbound flights were cancelled. Protesters also blocked key roads and stopped trains throughout the city. [..] Protesters have shifted tactics beyond only marches and protests in the streets. Civil servants from more than 30 government departments, as well as pilots, teachers, construction workers, engineers, and aviation staff all pledged to strike on Monday.


On Monday morning, several lines of the MTR, the rail network serving Hong Kong, were suspended as protesters, many wearing face masks and black clothing, blocked the doors of trains, preventing them departing the stations. There were also reports of discarded umbrellas being wedged in train doors to prevent them from closing, delaying services. Monday’s planned city-wide protest, which is aimed to disrupt peak-hour travel of commuters, is the fifth consecutive day of mass demonstrations in the city. Simultaneous rallies were planned for seven of Hong Kong’s 18 districts on Monday. Hong Kong has not held a general strike in more than 50 years.

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“Rural America is older, sicker, poorer and more dependent upon state aid than it was before.”

Job Growth In Trump Land Is Dead In The Water (MW)

Since the economy began adding jobs after the Great Recession nine years ago, about 21.5 million jobs have been created in the United States, the second-best stretch of hiring in the nation’s history, second only to the 1990s. But job growth isn’t being spread evenly across the land. Most of the new jobs have been located in a just a few dozen large and dynamic cities, leaving slower-growing cities, small towns and rural areas — where about half of Americans live — far behind. Along with climate change and racial justice, economic development is America’s biggest challenge over the next few decades. Inclusive growth is a must, or else our society will fall apart. The problem: No one — certainly not President Trump — has found the magic wand that will bring back jobs to rural and small-town America.

According to a study titled “The Future of Work in America” by the McKinsey Global Institute released in July, 25 cities that are home to about 30% of Americans will capture about 60% of the job growth between 2017 and 2030, just as they did between 2007 and 2017. Twelve are megacities (and their extended suburbs): Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, New York, Philadelphia, Phoenix, San Francisco and Washington. Another 13 are high-growth hubs in smaller cities: Austin, Charlotte, Denver, Las Vegas, Minneapolis, Nashville, Orlando, Portland (Ore.), Raleigh, San Antonio, San Jose, Seattle, and Tampa. A few other smaller, fast-growing cities will also add jobs, while vast swaths of the South, Midwest and Plains will lose jobs.


The New York metro area, home to 20 million people, added more jobs over the past year than all the small towns and rural areas — with 46 million people — did combined. Anyone who’s been paying attention to the political map will recognize that the growth is mostly occurring in places that vote for Democrats, while the stagnation is mostly in places that vote for Republicans. Donald Trump has appealed to those who are the most fearful, the most resentful and the most despairing, but the situation hasn’t gotten any better since his election. Rural America is older, sicker, poorer and more dependent upon state aid than it was before.

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Feel lucky?

10 Alarming Things About The Economy That Politicians Won’t Tell You (MW)

Here are 10 remarkable forecasts and assumptions that Washington is making and isn’t telling you. These are all contained in the Congressional Budget Office’s most recent Long-Term Budget Outlook, the cornerstone document of government financial and economic planning.

1. We’re going to have a lot more immigrants. A lot. They’re expecting a net 22.5 million more immigrants to come to the U.S. over the next 20 years. By 2049, they’re expecting immigration to account for a stunning 87% of annual population growth.

2. We’re going to have a lot more illegal immigrants. Despite the current bluster and the scandals at the border, the CBO expects we’ll have 2.4 million more illegal immigrants (or “undocumented residents,” or whatever) in 20 years’ time than we have today.

3. We’re going to be up to our eyeballs in debt. The national debt is expected to skyrocket to an “unprecedented” 144% of GDP by 2049, or twice the level today. That would put the debt just under $100 trillion. The figure today: Around $18 trillion. As recently as 2000: $4 trillion. Oh, and this isn’t even the worst-case scenario: The national debt could exceed 200% of GDP in 30 years’ time, the CBO acknowledges.

4. We’re going to owe so much money that by 2049 the annual interest on the debt will be about 5% of GDP — roughly the share that we spend today on Social Security. And that’s even if interest rates stay low. Despite rising debt and federal spending, the government is expecting — or hoping — the average rate on federal debt will rise only from today’s lowly 2.4% to 4.2%, still modest by historic standards, by 2049.

5. This debt, and these deficits, will damage the economy. They will crowd private investment out of the debt markets, reducing income and growth, says the CBO. And as we’ll have to borrow more and more from abroad to finance the government, they’ll lead to bigger and bigger interest payments leaving the country.

6. Social Security, Medicare, other health programs and net interest are going to soak up so much of the budget that we’re going to have to slash everything else to the smallest share of the economy in 70 years — just 7%. The average over the past 50 years: 11%.

7. Just to keep the federal deficit to these levels, your taxes will go up. The Obama tax hike on “Cadillac” health-insurance plans will kick in starting in 2022, and the 2017 Trump tax cuts will expire in 2025.

8. Most working stiffs can say goodbye to any other tax cuts. Uncle Sam is explicitly relying on your taxes to go up thanks to “bracket creep,” where income-tax brackets rise only in line with inflation while your income — you hope — rises faster.

9. While tax rates go up for most people, they won’t for those earning the most. That’s because more and more of their income will be above the Social Security “cap,” saving them an effective 12.4% a year. The cap this year is $132,900.

10. Meanwhile, working stiffs will be taxed at twice the marginal rate of those who live on dividends. By 2049, says the CBO, labor income will be taxed at a marginal rate of 32%, compared to just 16% for capital income. Good to know, isn’t it? It would be great to see some of this stuff come up in the presidential race, wouldn’t it?

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“The Fed hiked 25bps to 3.25% in Feb 1994. Grown men cried on the trading floor. Salesmen. They were soon laid off. Their clients suffered staggering losses. They too were fired.”

The Crashes That Cause Grown Men To Cry (Eric Peters)

He started his career in 1989, with Fed Funds at 9.75%. The Fed slashed rates to 8.25% in Dec 1989 as the S&L Crisis unfolded. They continued cutting until Aug 1992, when rates hit a mindboggling low of 3.00%. The Fed kept money that cheap for 1.5 yrs. Investors had recently earned 9.75% for taking no risk and found themselves starved for returns. So banks structured complex products that offered enhanced yields by selling volatility – they were great, provided the Fed neither hiked nor cut rates. They flew off the shelves. Salespeople gouged their clients. The Fed hiked 25bps to 3.25% in Feb 1994. Grown men cried on the trading floor. Salesmen. They were soon laid off. Their clients suffered staggering losses. They too were fired.


And as their bosses and boards discovered the scale of their unbounded risk, they instructed the banks to get them out at the best price. Whenever that happened, the cost was far bigger than expected. And this in turn was reflexive. Those clients who had earlier assured themselves that they could stomach the ride – because they were long-term investors – were forced to vomit. They call that period The Great Bond Massacre. But it seemed like every few years, another great massacre would unfold in one thing or another. So he assumed that this is how the world worked. Of course, he wasn’t alone. Global central bankers also recognized this to be the case. So they strived to avoid new massacres. But their tools only worked when the mechanic applied greater leverage with each use. Massacre after massacre, they cranked away. By 2019, they had produced the longest economic expansion and equity bull market in American history.

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Is this enough to end the Fed?

Inside The Plunge Protection Team: Chaos (ZH)

Now, thanks to Bloomberg, we have a much more detailed look into what transpired at the trading desk of the “Plunge Protection Team”, and what we learn is that the past year said institution which forms the bedrock of support for the US capital market has been gripped by what at times is sheer chaos. Why? Perhaps it will not come as a surprise to anyone, that the reason for said chaos is another career economist, in this case the “new” president of the New York Fed, John Williams (no relation to the Star Wars guy). As Bloomberg details in a “must read” report, “an unusual level of internal tension broke out in recent weeks at the fortress-like Federal Reserve Bank of New York in lower Manhattan.”

This was prompted by the sudden departure of the two longtime officials mentioned above, which “shook staff, sank morale and drew attention to the leadership of the New York Fed under John Williams as he enters his second year at the helm.” And yes, this is the same John Williams who two weeks ago prompted a mini market tantrum following one of the most epic communication fuck ups by a central banker. As Bloomberg writes “the story involves Simon Potter, who ran the all-important markets desk, and Richard Dzina, head of the financial services group. Both were abruptly relieved of their roles in late May by Williams.


Little explanation was given, but according to current and former New York Fed employees, as well as those close to the bank, the nature of the exits, by fault or design, seemed to be a warning: fall in line.” It is not clear exactly what the two titans of US capital markets had to “fall in line” for, but two things are certain – i) Potter did not “resign”, he was fired by Williams, and ii) now that an economist with zero capital markets experience is in charge, and following his termination of Potter and Dzina, the world is one step closer to collapse as a clueless PhD hack is in charge of the most important market in the world.

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“Judge Koeltl concluded that, quite simply, the claims made as the basis of Russiagate are insufficient to even warrant a hearing.”

Russiagate is the New 42 (Craig Murray)

Douglas Adams famously suggested that the answer to life, the universe and everything is 42. In the world of the political elite, the answer is Russiagate. What has caused the electorate to turn on the political elite, to defeat Hillary and to rush to Brexit? Why, the evil Russians, of course, are behind it all. It was the Russians who hacked the DNC and published Hillary’s emails, thus causing her to lose the election because… the Russians, dammit, who cares what was in the emails? It was the Russians. It is the Russians who are behind Wikileaks, and Julian Assange is a Putin agent (as is that evil Craig Murray). It was the Russians who swayed the 1,300,000,000 dollar Presidential election campaign result with 100,000 dollars worth of Facebook advertising.

It was the evil Russians who once did a dodgy trade deal with Aaron Banks then did something improbable with Cambridge Analytica that hypnotised people en masse via Facebook into supporting Brexit. All of this is known to be true by every Blairite, every Clintonite, by the BBC, by CNN, by the Guardian, the New York Times and the Washington Post. “The Russians did it” is the article of faith for the political elite who cannot understand why the electorate rejected the triangulated “consensus” the elite constructed and sold to us, where the filthy rich get ever richer and the rest of us have falling incomes, low employment rights and scanty welfare benefits. You don’t like that system? You have been hypnotised and misled by evil Russian trolls and hackers. [Whether Trump and/or Brexit were worthy beneficiaries of the popular desire to express discontent is an entirely different argument and not one I address here].


Except virtually none of this is true. Mueller’s inability to defend in person his deeply flawed report took a certain amount of steam out of the blame Russia campaign. But what should have killed off “Russiagate” forever is the judgement of Judge John G Koeltl of the Federal District Court of New York. In a lawsuit brought by the Democratic National Committee against Russia and against Wikileaks, and against inter alia Donald Trump Jr, Jared Kushner, Paul Manafort and Julian Assange, for the first time the claims of collusion between Trump and Russia were subjected to actual scrutiny in a court of law. And Judge Koeltl concluded that, quite simply, the claims made as the basis of Russiagate are insufficient to even warrant a hearing. The judgement is 81 pages long, but if you want to understand the truth about the entire “Russiagate” spin it is well worth reading it in full. Otherwise let me walk you through it.

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Poverty as a means of getting rid of the unwanted.

Austerity Populism (G.)

In a recent book ostensibly focused on Jeremy Corbyn’s Labour party, but partly about recent British political history, the academics Matt Bolton and Frederick Harry Pitts explain the last decade in terms of “austerity populism”. Cuts, welfare crackdowns and the case for leave, they explain, were all sold to the public via the exclusion of supposedly unproductive undesirables: “scroungers” in the austerity narrative; “migrants” in the stories that swirled around the 2016 referendum. Both traded on a nostalgic idea of national struggle, keeping calm and carrying on, and some strange, latent belief that the country was in need of a purgative spell of pain akin to an imaginary version of the second world war.

In this vision, David Cameron’s election victory in 2015 and the leave side’s win a year later were watershed moments on the same national journey. But if austerity populism has so far been politically successful, it also comes with obvious risks. Trumpeting the wonders of slashing services and kicking around the poor only works for as long as the majority of people are largely untouched by those things – which is why Johnson is now partly changing tack and pledging to spend money (although our nasty, broken benefits system and countless imperilled public services will surely remain untouched).


By the same token, the romance of leaving the EU will only endure while its losers – sheep farmers, car industry workers, people who have come to the UK from central and eastern Europe – form a minority, and enough voters can still be persuaded that they will be winners in a Tory Brexit. Yet, however shambolic the opposition offered by Labour, the lived reality of no deal would surely risk tipping too many people into doubt and fear and away from the Conservatives, which is one reason why Johnson and his allies are in such an obvious hurry. The emotional side of me would simply describe this all as a very English tragedy, centred on a mean-spiritedness that the woman I met in Dover would instantly recognise. And at least until the end of this long, overheated summer and the start of an autumn of nightmares, millions of us will carry on behaving much as we have done for the last decade: not just passing by on the other side, but dancing as we do it.

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A weird propaganda tool. That we pay attention to it is a flashing red sign of where our societies are at.

Bellingcat Unloads 4,000-Word Hit Piece On Tulsi Gabbard (RT)

Running as an anti-war candidate in the US comes with a target painted on your back that draws fire from those rooting for foreign interventions. In case of Tulsi Gabbard, it includes a lengthy piece on chemical attacks in Syria. Gabbard, a Democratic presidential hopeful, became the most-googled candidate during the second primary debate – but the surge of public interest came with renewed attacks against her anti-interventionist agenda. In case you’ve missed it all, Gabbard has been branded a ‘Russian’ spoiler for whichever candidate is eventually picked, and, once again, an apologist for Syrian President Bashar Assad.

Joining the chorus of bashers on Sunday was Elliot Higgins, the founder of the UK-based ‘citizen investigation’ outlet Bellingcat, who wrote a whopping 4,000-word piece attacking Gabbard’s negative attitude toward regime change wars. In particular, Higgins didn’t like her skepticism over chemical weapons attacks in Syria reflected on her campaign website. The attacks were used by Washington to justify missile attacks against the country’s government – and by extension continued illegal US military presence in the country.


The mammoth piece starts with screenshots featuring logos of RT and InfoWars (Russian propaganda, dear readers, conspiracy theories!) and goes on to criticize anyone doubting the US-favored narrative about what happened in Syria. MIT Professor Theodore Postol gets an honorable mention, with whom Higgins no longer debates in person since their encounter in 2018. Back then, Higgins failed to address Postol’s technical criticisms of his investigations and instead resorted to mocking applauses and calling his opponent a tool of Russian propaganda.

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Always a sucker for a good history lesson.

America’s Other Original Sin (Bacevich)

Can there be more than one Original Sin? I’m guessing that may be a theological nonstarter, but as a basis for historical interpretation there is real merit in considering the possibility of multiple exiles from the Garden of Eden. That the arrival of the first African slaves to Jamestown 400 years ago this month qualifies as America’s Original Sin is now widely recognized. While holdouts remain, most agree that slavery and racism together have left an indelible stain on our nation. Many would argue that this awareness has arrived belatedly. I might even cite myself as an example.

As a kid growing up in Northwest Indiana in the middle of the last century, I judged slavery to have been an unfortunate mistake long since corrected. In the de facto segregated Calumet region where my family lived, race obviously remained a sensitive subject, but to my mind one best kept at arm’s length. I had more important things to worry about than the relationship between white people like me and those who were not white—why the Cubs were permanently stuck in or near the National League cellar being but one example. In the decades since, I’ve learned to see matters differently. So have many others.

But let me suggest the possibility of a Second Original Sin, not rising to the level of the first, but at least deserving far more attention than it has received. And that’s the sin committed in December 1898, when the United States laid claim to the Philippines. The history of this transaction, centering on a transfer of sovereign authority from Madrid to Washington, is both well known and almost entirely forgotten. As had been the case with race in East Chicago, Indiana, back in the late 1950s, the incorporation of the Philippines into an increasingly far-flung American empire has been written off. This, I have come to believe, is unfortunate, especially today when the American empire appears increasingly precarious.

The essential facts are these. In April 1898, the United States went to war with Spain. The war’s nominal purpose was to liberate Cuba from oppressive colonial rule. The war’s subsequent conduct found the United States not only invading and occupying Cuba, but also seizing Puerto Rico, completing a deferred annexation of Hawaii, scarfing up various other small properties in the Pacific, and, not least of all, replacing Spain as colonial masters of the Philippine Archipelago, located across the Pacific.


1898 US Political Cartoon: U.S. President William McKinley is shown holding the Philippines, depicted as a savage child, as the world looks on. The implied options for McKinley are to keep the Philippines, or give it back to Spain, which the cartoon compares to throwing a child off a cliff.

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Jun 252019
 


Caravaggio Conversion on the way to Damascus 1600-01

 

Something’s been nagging me for the past few days, and I’m not sure I’ve figured out why yet. It started when Donald Trump first called off the alleged planned strikes on targets in Iran because they would have cost 150 lives, and then the next day said the US would do sanctions instead. As they did on Monday, even directly targeting Trump’s equal, the “Supreme Leader Khameini”.

When Trump announced the sanctions, I thought: wait a minute, by presenting this the way you did, you effectively turned economic sanctions into a military tool: we chose not to do bombs but sanctions. Sounds the same as not doing a naval invasion but going for air attacks instead. The kind of decisions that were made in Vietnam a thousand times.

However, Vietnam was all out war (well, invasion is a better term). Which shamed the US, killed and maimed the sweet Lord only knows how many promising young Americans as well as millions of Vietnamese, and ended in humiliating defeat. But the US is not in an all out war in Iran, at least not yet. And if they would ever try to be, the outcome would be Vietnam squared.

Still, that’s not really my point here. It’s simply about the use of having the world reserve currency as a military weapon instead of an economic one. And I think that is highly significant. As well as an enormous threat to the US. The issue at hand is overreach.

While you could still argue that economic sanctions on North Korea, Venezuela and Russia are just that, economic and/or political ones, the way Trump phrased it, comparing sanctions one on one with military strikes, no longer leaves that opening when it comes to Iran. The new Iran sanctions are a preliminary act of war. Simply because of how he presented them. He explicitly stated that he swapped one for the other.

 

There are quite a few people who have been harping on the demise of the USD as reserve currency for a long time, and I always think: look, nobody wants the yuan, let alone the ruble. There’s no trade being executed in these currencies. So taking over from the USD is a pipe dream.

But that may very well change, and perhaps very fast too, if the US uses the dollar not as an economic weapon (and there are plenty issues with that already), but as a military one. That would potentially hugely speed up any efforts to move away from the buck in international trade.

For the simple reason that it becomes unreliable. Traders hate that, they can’t have that. A reserve currency must be neutral -to a point-. The world of trade doesn’t want the yuan because Beijing controls it and can therefore change conditions and values overnight. But if and when the US uses the USD as a military tool, it essentially risks doing exactly the same: it deneutralizes the USD.

Using the USD as an economic weapon is ugly, but something global trade can deal with. A military weapon, though, is something else altogether. And I see no sign that Trump understands this. The thing is, using your currency, which also happens to be the world reserve currency, as a military tool, means you’ve become a threat to everyone, the entire globe, overnight.

And people don’t want to live that way. Not Iran, not Russia, not China, not Europe, no-one. It’s one thing to use the USD for sanctions. But it’s a real different thing to use it as just a military alternative to “bombing a country into obliteration”.

 

What Trump did comes awfully close to signing the death warrant for the USD as the global reserve currency. And it’s really only because he and his people weren’t paying attention. He could have phrased the entire thing differently, and it would have been business as usual, a business that Moscow and Beijing are actively trying to undermine, but they could have waited a bit longer reacting.

Now, however, their plans have to be sped up. They’re going to be buying a lot of gold, as they’ve already been doing, they’ll try to do their mutual business in their own currencies backed by this gold, and they’ll speed up alternatives-to-USD plans with other countries in their neighborhood. Because they have no choice anymore.

I see Tyler Durden reporting that the US threatens to throw a Chinese state-owned bank out of the SWIFT system, and I think: great idea. Why not force China to quit the reserve currency system, the petrodollar, outright?! Why not force it to hasten the Asian/Russian alternative trade model into existence? What a great and lovely idea.

The US should today make friends. It should preserve the reserve currency status of the USD for as long as it can, by convincing allies and foes alike that it will protect its neutrality in global trade. But Trump and his people are doing the exact opposite, they’re playing all-on-red.

The US no longer has the economic, political or military might to dictate to the entire world any terms it wants to. Those days are long gone. That ended in Vietnam. Trump’s living in the last century, while Bolton and Pompeo, they live in their own time and world.

 

But yeah, sure, perhaps this is what the dying days of an empire MUST look like. Maybe there’s a model to follow and there’s no escape, maybe it’s all written in the stars. Like Rome and Greece and Genghis Khan. Maybe things simply just have to play out. Still, looking at that Trump statement about the new Iran sanctions that started me off, it doesn’t feel all that smart.

 

 

 

 

Apr 272019
 


Vincent van Gogh Pietà (after Delacroix) 1889

 

The Big Mystery In The GDP Report – Where Did The Inventories Come From? (MW)
China Finds Dollar Hegemony Is A Tough Nut To Crack (WS)
Nearly 102 Million Americans Do Not Have A Job Right Now (Snyder)
Trump Makes Post-Mueller Vow To Release “Devastating” FISA Docs (ZH)
Blowback Is a Harsh Mistress (Kunstler)
Marina Butina Sentenced To 18 Months In Prison (ZH)
Labour Party In ‘Complete Meltdown’ Over Final Say (Ind.)
London Extinction Rebellion Mural is a Banksy (G.)
Greeks The Most Stressed People Worldwide – Gallup (K.)
Brazil Governed By ‘Lunatics’ And US ‘Lackeys’ – Lula (G.)
Ecuador Amazon Tribe Win First Victory Against Government, Oil Companies (AFP)

 

 

Industrial production and imports are both down. But inventories rise.

The Big Mystery In The GDP Report – Where Did The Inventories Come From? (MW)

It is a case that would make Sherlock Holmes proud. Growth in the first quarter smashed expectations, fueled in part by strong inventory building. According to the government, $32 billion of goods were added to inventories this quarter, or $128 billion annualized. This stockpiling of goods boosted first-quarter GDP growth by about 70 basis points and helped propel growth to a 3.2% annual rate, well above forecasts. The problem is that it is not at all obvious where these inventories came from. Goods have to come from somewhere, either produced by domestic firms or imported from abroad. The mystery is that both production and imports fell in the first three months of the year, according to government data.

“You can’t stockpile what you do not import or do not produce,” said Robert Brusca, chief economist at FAO Economics. The Fed reported last week that industrial output slipped at a 0.3% annual rate in the first quarter. And the government’s GDP report estimates that imports fell 3.7% in the first three months of the year. The one other explanation — that consumption fell sharply enough to leave businesses with unexpected unsold goods — also doesn’t fit the evidence, Brusca said. Consumption did not fall faster than industrial production or imports to generate any surplus, he said. To be sure, spending on consumer durable goods fell 5.3%, the biggest drop in 10 years. Business spending on equipment was also weak. “Any way you slice it, this GDP report…is an apparent mess,” he said.

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Nobody will want the yuan as long as Beijing decides what it’s worth.

China Finds Dollar Hegemony Is A Tough Nut To Crack (WS)

In terms of global reserve currency, the renminbi (RMB) has a share of only 1.9%, in fifth place, and barely ahead of the Canadian dollar, but miles behind the US dollar (61.7%) and the euro (20.7%). Over the past two years, the RMB has made only microscopic headway as a reserve currency. And as an international payments currency, the RMB has failed similarly to crack the co-hegemony of the dollar and the euro. “With more than 1,900 financial institutions now using the RMB for payments with China and Hong Kong, the internationalization of RMB carries great strategic significance” for banks and financial institutions, gushes SWIFT (Society for Worldwide Interbank Financial Telecommunication), which tracks the progress of the RMB as payment currency.


But in March 2019, the RMB had a minuscule share of merely 1.22% for international cross-border payments by value (cross-border payments from one Eurozone country to another Eurozone country are excluded). This minuscule share put the RMB in 8th position, just behind the Swiss franc:

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Civilian labor force participation rate lingers around 63%.

Nearly 102 Million Americans Do Not Have A Job Right Now (Snyder)

At this moment, we are told that only 6.2 million Americans are officially “unemployed”, and that sounds really, really good. But that is only half the story. What the mainstream media rarely mentions is the fact that the number of Americans categorized as “not in the labor force” has absolutely exploded since the last recession. Right now, that number is sitting at 95.577 million. When you add 6.2 million “officially unemployed” Americans to 95.577 million Americans that are categorized as “not in the labor force”, you get a grand total of almost 102 million Americans that do not have a job right now. If that sounds terrible to you, that is because it is terrible.

Yes, the U.S. population has been growing over the last decade, and that is part of the reason why the number of Americans “not in the labor force” has been growing. But overall, the truth is that the level of unemployment in this country is not that much different than it was during the last recession. John Williams of shadowstats.com tracks what the real employment figure would be if honest numbers were being used, and according to him the real rate of unemployment in the United States at the moment is 21.2 percent.

Just before the last recession, the civilian labor force participation rate was sitting at about 66 percent, and that was pretty good. But then the recession hit, and the civilian labor force participation rate fell below 63 percent, and it stayed between 62 percent and 63 percent for an extended period of time. So where are we today? At this moment, we are sitting at just 63.0 percent. Does that look like a recovery to you? Of course not.

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“I’m glad I waited because i thought that maybe they would obstruct if I did it early..”

Trump Makes Post-Mueller Vow To Release “Devastating” FISA Docs (ZH)

President Trump on Thursday renewed his vow to declassify a wide swath of “devastating” documents related to the Russia probe “and much more” – adding that he’s glad he waited until the Mueller investigation was complete. In a Thursday night phone interview on Fox News, host Sean Hannity asked “will you declassify the FISA applications, gang of 8 material, those 302s – what we call on this program ‘the bucket of five’?” To which Trump replied: “Yes, everything is going to be declassified – and more, much more than what you just mentioned. It will all be declassified, and I’m glad I waited because i thought that maybe they would obstruct if I did it early – and I think I was right. So I’m glad I waited, and now the Attorney General can take a look – a very strong look at whatever it is, but it will be declassified and more than what you just mentioned.”

Last September 17th, Trump vowed to release all text messages related to the Russia investigation with no redactions, as well as specific pages from the FBI’s FISA surveillance warrant application on former Trump campaign aide Carter Page, and interviews with the DOJ’s Bruce Ohr. nFour days later, however, Trump said over Twitter that the Justice Department – then headed by Attorney General Jeff Sessions (while the Russia investigation was headed up by Deputy AG Rod Rosenstein) – told him that it might have a negative impact on the Russia probe, and that key US allies had asked him not to release the documents.

“I met with the DOJ concerning the declassification of various UNREDACTED documents,” Trump tweeted. “They agreed to release them but stated that so doing may have a perceived negative impact on the Russia probe. Also, key Allies’ called to ask not to release. Therefore, the Inspector General has been asked to review these documents on an expedited basis. I believe he will move quickly on this (and hopefully other things which he is looking at). In the end I can always declassify if it proves necessary. Speed is very important to me – and everyone!”

That key ally turns out to have been the UK, according to the New York Times., which reported last September that their concern was over material which “includes direct references to conversations between American law enforcement officials and Christopher Steele,” the former MI6 agent who compiled the infamous “Steele Dossier.” We now know, of course, that Steele had extensive contact with Bruce and Nellie Ohr in 2016, while Bruce was the #4 official at the Obama DOJ, and Nellie was working for Fusion GPS – the opposition research firm hired by Hillary Clinton and the DNC to produce the infamous Steele Dossier.

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“Mr. Mueller himself may well be subject to prosecution for destroying evidence and, yes, obstruction of justice…”

Blowback Is a Harsh Mistress (Kunstler)

The Thinking Class behind the bad faith Resistance is about to be beaten within an inch of its place in history with an ugly-stick of reality as The Narrative finally comes to be fairly adjudicated. The Mueller Report was much more than just disappointing; it was a comically inept performance insofar as it managed to overlook the only incidence of collusion that actually took place: namely, the disinfo operation sponsored by the Hillary Clinton campaign in concert with the highest officials of the FBI, the Department of Justice, State Department personnel, the various Intel agencies, and the Obama White house for the purpose of interfering in the 2016 election.


It will turn out that the Mueller Investigation was just an extension of that felonious op, and Mr. Mueller himself may well be subject to prosecution for destroying evidence and, yes, obstruction of justice. John F. Kennedy once observed that “life is unfair.” It is unfair, perhaps, that a TV Reality Show huckster, clown, and rank outsider beat a highly credentialed veteran of the political establishment and that he flaunts his lack of decorum in the Oval Office. But it happens that he was on the side of the truth in the RussiaGate farrago and that happens to place him in a position of advantage going forward.

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The empire destroying lives to uphold a narrative. It no longer matters what these crazies say, and they know it. The public swallows anything thrown at them. Collusion, Assange, Butina, these are all fictional stories, but today they dictate the headlines and dominate the airwaves. Butina is accused of “Ambitious conspiracy”. When she was 22.

Marina Butina Sentenced To 18 Months In Prison (ZH)

Accused Russian spy Marina Butina has been sentenced to 18 months in prison on Friday after pleading guilty to acting as an unregistered agent of a foreign government, the Hill reports. Butina, who was arrested in 2018, pled guilty to the charges in late. 2018. She will only serve nine months, as the judge knocked nine months off her sentence for time served. Prosecutors had recommended that she serve an additional 18 months, while her lawyers had asked for no prison time and her immediate deportation. Butina wasn’t mentioned in the Mueller report. Before her sentencing hearing on Friday, Butina pleaded with the judge for leniency, RT reports.


“My parents discovered my arrest on the morning news they watch in their rural house in a Siberian village,” she told the court. “I love them dearly, but I harmed them morally and financially. They are suffering from all of that. I destroyed my own life as well. I came to the United States not under any orders, but with hope, and now nothing remains but penitence.” Butina arrived in the US on a student visa in 2016 and became active in pro-gun circles. During the investigation into Russian interference that followed Trump’s electoral triumph, she was accused of working with the Russian government to infiltrate the Republican Party and National Rifle Association. Moscow and President Putin have denied any connection with her.

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Corbyn still clings to his dreams of an independent left-wing Britain. But matters haven’t stood still for the past 3 years.

Labour Party In ‘Complete Meltdown’ Over Final Say (Ind.)

Jeremy Corbyn is under growing pressure over his party’s position on a second Brexit referendum after a leaked draft of a campaign leaflet included no mention of a Final Say vote. The Labour leader faced an angry backlash over the flyer, with MPs saying it had triggered “complete meltdown” in the party and left pro-EU MPs “utterly furious”. As the row deepened, 75 MPs and 14 MEPs wrote to Labour’s governing body to demand that “a clear commitment” to another referendum be included in the party’s manifesto for next month’s European parliament elections. Mr Corbyn’s top team is split on whether Labour should support a second referendum. Several senior shadow cabinet ministers want the party to support a public vote on any Brexit deal passed by parliament, but Mr Corbyn’s inner circle say he only supports a referendum on the government’s deal or to avoid a no-deal outcome.


Other shadow ministers oppose another public poll entirely. In their letter to the National Executive Committee (NEC), the MPs and MEPs said Labour had “a clear opportunity to win these elections” if it fully supports a Final Say vote. They wrote: “These elections are about the kind of Europe we want to live in, and we can’t make a convincing case in them without being clear about Brexit. Labour has already, rightly, backed a confirmatory public vote. The overwhelming majority of our members and voters support this, and it is the democratically established policy of the party. “Our members need to feel supported on doorsteps by a clear manifesto that marks us out as the only viable alternative to Nigel Farage’s Brexit Party.

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First, you just have a wall. The next day, you have a wall worth a million dollars.

London Extinction Rebellion Mural is a Banksy (G.)

A Banksy collector and expert believes a mural that appeared at Extinction Rebellion’s Marble Arch base overnight is an authentic piece by the Bristolian street artist. John Brandler, who owns a dozen pieces by Banksy is convinced the artwork – which features the slogan “From this moment despair ends and tactics begin” next to a young girl sitting on the ground holding an Extinction Rebellion logo – is an original because of its execution and theme. The art dealer and gallerist said: “I’m convinced about the one in London for two reasons: it’s a topic that he would support, and it’s a continuation of the Port Talbot piece that appeared in December 2018.

“The name in the corner is not important, the signature is the work. And this is a Banksy. It’s a wonderful statement and a beautiful piece.” The work appeared at the site which had been occupied by climate activists since protests began in the capital almost two weeks ago. A spokesperson for Westminster council confirmed the work was being investigated but had not been authenticated yet. “We’re aware of the possible Banksy which appeared in Marble Arch overnight. Our officers are looking into this,” he said. Banksy has not confirmed whether the painting is legitimate, and his press team did not respond to a request for comment.

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Gallup does really bad surveys.

Greeks The Most Stressed People Worldwide – Gallup (K.)

Greeks are the most stressed people in the world, according to the results of the Gallup 2019 Global Emotions report conducted on a sample of 150,000 people in 140 countries. According to the poll, which was conducted last year, 59 percent of Greeks said they “experienced a lot of stress yesterday,” putting Greece at the top of the chart for the third consecutive year. After Greece on the list are the Philippines, Tanzania and Albania. The same poll asked respondents about their negative experiences and participants from Chad, Nigeria, Sierra Leone, Iraq and Iran polled the highest. The survey also polled anger levels with Armenians topping the chart, followd by Iraqis, Iranians and Palestinians. The five countries recording the most positive experiences are Paraguay, Panama, Guatemala, Mexico and El Salvador.

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“Does anyone really think the US is going to favour Brazil?” Lula asked. “Americans think of themselves first, second, third, fourth, fifth – and if there’s any time left over they think about Americans.”

Brazil Governed By ‘Lunatics’ And US ‘Lackeys’ – Lula (G.)

Brazil is being governed by “a bunch of lunatics” and United States “lackeys” who have shattered its international reputation, former president Luiz Inácio Lula da Silva has claimed in his first interview since being jailed one year ago. Lula, Brazil’s president from 2003 and 2011, surrendered himself to police last April after being convicted on corruption charges he disputes. The 73-year-old leftist had been forbidden from giving face-to-face interviews until Friday, when two Brazilian journalists were allowed to visit him at his prison in southern Brazil following a lengthy legal battle.

Lula told them Brazil needed to undergo period of “self-reflection” after what he described as the “crazy” fake news and hate-filled election of far-right populist Jair Bolsonaro last year. “What we can’t have is this country being run governed by a bunch of lunatics. The country doesn’t deserve this and above all the people do not deserve this.” “Brazil is adrift – so far he doesn’t know what to do,” he added of Bolsonaro, who took office in January and has suffered a turbulent opening act in power. Lula said he profoundly regretted “the disaster that is taking place in this country” and criticised Brazil’s dramatic tack towards Washington under Bolsonaro.

“I’ve never seen a [Brazilian] president salute the American flag. I’ve never seen a president go around saying, ‘I love the United States, I love it!’” Lula said of Bolsonaro, who paints himself as a “tropical Trump” and last month travelled to the United States to tout his close relations with the US president. “You should love your mother, you should love your country. What’s all this about loving the United States? “Does anyone really think the US is going to favour Brazil?” Lula asked. “Americans think of themselves first, second, third, fourth, fifth – and if there’s any time left over they think about Americans. And these Brazilian lackeys go around thinking the Americans will do anything for us.”

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Funny that AFP headline said they won vs oil companies. But in reality they beat Lenin Moreno trying to sell them off to the US, like he did Assange. There is SOME decency left in Ecuador.

Ecuador Amazon Tribe Win First Victory Against Government, Oil Companies (AFP)

Ecuador’s Waorani indigenous tribe won their first victory Friday against big oil companies in a ruling that blocks the companies’ entry onto ancestral Amazonian lands for oil exploration activities. After two weeks of deliberations, a criminal court in Puyo, central Ecuador, accepted a Waorani bid for court protection in Pastaza province to stop an oil bidding process after the government moved to open up around 180,000 hectares for exploration. The lands are protected under Ecuador’s constitution that establishes the “inalienable, unseizable and indivisible” rights of indigenous people “to maintain possession of their ancestral lands and obtain their free adjudication.” Crucially, however, the wealth in the subsoil is owned by the state.


The constitution also enshrines the need for prior consultation on any plans to exploit the underground resources, given the probable environmental and cultural impacts on tribal communities. The state reached an agreement with the Waorani over oil exploration in 2012, but the tribe’s leaders say they were duped. The judges ordered the government to conduct a new consultation, applying standards set by the Inter-American Court of Human Rights, based in San Jose. The ruling “has created a significant precedent for the Amazon,” said Lina Maria Espinosa, attorney for the plaintiffs, outside court. “It has been demonstrated that there was no consultation and that the state violated the rights of this people, and therefore of other peoples.”

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Jan 282019
 


Pablo Picasso Bust of woman with arms raised 1922

 

US Sanctions On Venezuela Are Killing Citizens – Former UN Rapporteur (Ind.)
PBOC Fixes Yuan Dramatically Stronger Following Gold Spike (ZH)
China’s Real Estate Loan Growth Slows Further In 2018 (CNBC)
Britain’s Biggest Lender To Offer 100% Mortgages To First-Time Buyers (G.)
UK Cannot Simply Trade On WTO Terms After No-Deal Brexit (G.)
May To Seek Binding Changes To Irish Backstop – Boris Johnson (R.)
Ireland Stresses It Will Not Yield On Brexit Backstop (G.)
UK Military Bases Stockpiling To Prepare For No-Deal Brexit (Sky)
Brexit Exposes Growing Fractures In UK Society (G.)
In Germany’s Plan To Phase Out Coal, A Big Polluter Will Benefit (BBG)

 

 

Picked up these numbers last week on Twitter. Chavez announced cancer in late 2012, died early 2013. Oil prices only explain a smal part of it. Economic warfare does the rest.

@spectatorindex – Venezuela GDP growth.
2012: 5.6%
2013: 1.3%
2014: -3.9%
2015: -6.2%
2016: -17%
2017: -15%
2018: -16%

US Sanctions On Venezuela Are Killing Citizens – Former UN Rapporteur (Ind.)

The first UN rapporteur to visit Venezuela for 21 years has told The Independent the US sanctions on the country are illegal and could amount to “crimes against humanity” under international law. Former special rapporteur Alfred de Zayas, who finished his term at the UN in March, has criticized the US for engaging in “economic warfare” against Venezuela which he said is hurting the economy and killing Venezuelans. The comments come amid worsening tensions in the country after the US and UK have backed Juan Guaido, who appointed himself “interim president” of Venezuela as hundreds of thousands marched to support him. European leaders are calling for “free and fair” elections. Russia and Turkey remain Nicolas Maduro’s key supporters.

Mr De Zayas, a former secretary of the UN Human Rights Council (HRC) and an expert in international law, spoke to The Independent following the presentation of his Venezuela report to the HRC in September. He said that since its presentation the report has been ignored by the UN and has not sparked the public debate he believes it deserves. “Sanctions kill,” he told The Independent, adding that they fall most heavily on the poorest people in society, demonstrably cause death through food and medicine shortages, lead to violations of human rights and are aimed at coercing economic change in a “sister democracy”. On his fact-finding mission to the country in late 2017, he found internal overdependence on oil, poor governance and corruption had hit the Venezuelan economy hard, but said “economic warfare” practised by the US, EU and Canada are significant factors in the economic crisis.

In the report, Mr de Zayas recommended, among other actions, that the International Criminal Court investigate economic sanctions against Venezuela as possible crimes against humanity under Article 7 of the Rome Statute. The US sanctions are illegal under international law because they were not endorsed by the UN Security Council, Mr de Zayas, an expert on international law and a former senior lawyer with the UN High Commissioner for Human Rights, said. “Modern-day economic sanctions and blockades are comparable with medieval sieges of towns. “Twenty-first century sanctions attempt to bring not just a town, but sovereign countries to their knees,” Mr de Zayas said in his report.

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Xi remains nervous.

PBOC Fixes Yuan Dramatically Stronger Following Gold Spike (ZH)

PBOC fixed the yuan dramatically stronger against the dollar overnight, sending offshore yuan surging to its strongest against the dollar in six months. While the Chinese currency is reportedly strengthening on the heels of trade talks optimism (which is entirely the opposite of the rhetoric coming out of Washington), we note that this was the biggest positive shift in the yuan fix in 19 months…

Notably, the yuan is strengthening considerably more against the dollar than it is against the broad basket of trade partner currencies…Shanghai Accord 2.0? And coincidentally, the surge in yuan comes the day after gold prices broke out higher… Perhaps the PBOC’s aggressive action was prompted to manage the Yuan peg against gold back into balance?

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If you look closer, nothing seems very dramatic. But real estate has become such a huge part of the economy that Beijing must weigh curbing risks vs continued growth.

It’s also the speed with which this has happened. 10 years ago Chinese didn’t borrow for homes. It’s literally been used to mitigate the financial crisis.

China’s Real Estate Loan Growth Slows Further In 2018 (CNBC)

Loans to China’s property sector grew at a slower pace in 2018 as Beijing tightened home-purchase rules to curb bubble risk, but lending to property developers expanded slightly faster than the year before, central bank data showed on Friday. Outstanding yuan property loans grew 20% from a year earlier to 38.7 trillion yuan ($5.72 trillion) by end-December, compared with 20.9% growth in 2017, the PBOC said in a quarterly financial report. Outstanding mortgage lending climbed 17.8% year-on-year to 25.75 trillion yuan by the end of 2018, below a 22.2% rise in 2017, central bank data showed.

Policymakers have vowed to ensure “stable and healthy” development of the property market, repeatedly emphasizing that homes are for living in, not speculative investment. The government’s sustained drive to reduce debt risks in the economy has cooled the property market but a continued downturn in credit growth in the sector could add to growing pressures on the world’s second-largest economy. The real estate sector is a key driver of economic growth, so any further weakness could influence the pace and scope of fresh stimulus steps expected from Beijing this year.

Property investment is also looking wobbly, with analysts waiting to see if the government will risk loosening restrictions on home buyers that have kept speculation in check. Real estate investment in December rose 8.2% from a year earlier, down from 9.3% in November, according to Reuters calculations based on data released by the National Bureau of Statistics. That was just ahead of the slowest pace of growth last year at 7.7% recorded for October. Developers raised their borrowings last year though, with loans extended for property development up 22.6% in 2018 versus growth of 21.7% in 2017, the report showed. The central bank also said outstanding household loans jumped 18.2% to 47.9 trillion yuan by end-2018.

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How much can Brexit hurt the British? A lot, we must assume. Then again, if you fall for this stuff at this moment in time, maybe you deserve what’s coming. How about a crisis worse than the 1930s?

Britain’s Biggest Lender To Offer 100% Mortgages To First-Time Buyers (G.)

Britain’s biggest lender is to offer 100% mortgages to first-time buyers in a return to lending last seen before the financial crash – but only if the buyer has family that can stand behind the loan. Under the new Lloyds Bank “Lend A Hand” deal, a first-time buyer will be able to borrow up to £500,000 for a new home, without putting down a penny of deposit. The Lloyds move marks a major expansion into the first-time buyer market, as most other mainstream lenders demand a minimum deposit worth 5% of the property purchase price, although Barclays has offered a similar “family springboard” deal. Lloyds has priced the mortgages to undercut the Barclays offer.

The deal – part of what Lloyds said is a £30bn commitment to help first-time buyers – will reopen concern about a two-tier market where buyers with well-off families can elbow aside those without. Saving for a deposit is usually cited by first-time buyers as the biggest hurdle to home ownership. Lloyds said the average deposit put down by first-time buyers has climbed to £33,211, and a staggering £110,182 in London. The Lloyds deal requires that a member of the family – such as parent, grandparent or close relative – helps out. The bank will only grant the 100% mortgage if the family member puts a sum equal to 10% of the value of the property into a Lloyds savings account.

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“The anticipated recession will be worse than the 1930s, let alone 2008.”

UK Cannot Simply Trade On WTO Terms After No-Deal Brexit (G.)

The UK will be unable to have frictionless, tariff-free trade under World Trade Organization rules for up to seven years in the event of a no-deal Brexit, according to two leading European Union law specialists. The ensuing chaos could double food prices and plunge Britain into a recession that could last up to 30 years, claim the lawyers who acted for Gina Miller in the historic case that forced the government to seek parliament’s approval to leave the EU. It has been claimed that the UK could simply move to WTO terms if there is no deal with the EU. But Anneli Howard, a specialist in EU and competition law at Monckton Chambers and a member of the bar’s Brexit working group, believes this isn’t true. “No deal means leaving with nothing,” she said. “The anticipated recession will be worse than the 1930s, let alone 2008.

It is impossible to say how long it would go on for. Some economists say 10 years, others say the effects could be felt for 20 or even 30 years: even ardent Brexiters agree it could be decades.” The government’s own statistics have estimated that under the worst case no-deal scenario, GDP would be 10.7% lower than if the UK stays in the EU, in 15 years. There are two apparently insurmountable hurdles to the UK trading on current WTO tariffs in the event of Britain crashing out in March, said Howard. Firstly, the UK must produce its own schedule covering both services and each of the 5,000-plus product lines covered in the WTO agreement and get it agreed by all the 163 WTO states in the 32 remaining parliamentary sitting days until 29 March 2019. A number of states have already raised objections to the UK’s draft schedule: 20 over goods and three over services.

To make it more complicated, there are no “default terms” Britain can crash out on, Howard said, while at the same time, the UK has been blocked by WTO members from simply relying on the EU’s “schedule” – its existing tariffs and tariff-free trade quotas. The second hurdle is the sheer volume of domestic legislation that would need to be passed before being able to trade under WTO rules: there are nine statutes and 600 statutory instruments that would need to be adopted. The government cannot simply cut and paste the 120,000 EU statutes into UK law and then make changes to them gradually, Howard said. “The UK will need to set up new enforcement bodies and transfer new powers to regulators to create our own domestic regimes,” she said.

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Fast and loose with Good Friday.

May To Seek Binding Changes To Irish Backstop – Boris Johnson

Prime Minister Theresa May will seek legally binding changes to the Irish backstop from the European Union in an attempt to break the deadlock over Brexit, lawmaker Boris Johnson wrote in The Telegraph on Sunday, citing senior government sources. The PM is looking to change the text of the agreement to insert either a sunset clause or a mechanism for the UK to escape without reference to the EU, Boris Johnson said in The Telegraph. The contentious backstop arrangement is designed to prevent a hard border between Ireland and the UK province of Northern Ireland by requiring Britain to keep some EU rules if it was unable to agree a trade deal with the bloc. Ireland said earlier on Sunday it would not accept any changes to the backstop agreement.

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The backstop will be May’s major point of contention this week. Stop her! There’s already talk of reinserting issues in the deal that have already been thrown out.

Ireland Stresses It Will Not Yield On Brexit Backstop (G.)

Ireland has launched a last-minute effort to warn Theresa May off any attempt to unravel the backstop, two days before a crucial Commons debate that may decide the next move for the UK’s rudderless Brexit policy. Simon Coveney, the Irish foreign minister and deputy prime minister, insisted the backstop – the mechanism to ensure there will be no hard border between the Irish Republic and Northern Ireland if Britain and the EU fail to strike a free trade deal – was “part of a balanced package that isn’t going to change”. In a forceful interview, he insisted it was only part of the withdrawal agreement because of the UK’s red lines.

On Tuesday Tory Brexiters may get the chance to vote for amendments that would signal their willingness to back May’s Brexit deal subject to the backstop’s either being removed or time-limited. Ministers have not formally backed any of the anti-backstop amendments, which are incompatible with the deal that May agreed with UK leaders, but if one were to pass by a majority, she would be able to present the EU with a firm idea of what changes might get her deal through parliament – something that as yet remains unclear to Brussels. In an interview with BBC One’s The Andrew Marr Show, Coveney said he did not see the need for further compromise because “the backstop is already a compromise”.

Although originally Northern Ireland-specific, it was made UK-wide at the request of May, he said. “And the very need for the backstop in the first place was because of British red lines that they wanted to leave the customs union and single market,” he said.

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Many Brits are so poor they can’t even think of stockpiling.

UK Military Bases Stockpiling To Prepare For No-Deal Brexit (Sky)

Britain has begun stockpiling food, fuel, spare parts and ammunition at military bases in Gibraltar, Cyprus and the Falklands in case of a no-deal Brexit, Sky News has learnt. Extra supplies are also being built up at bases in the UK to reduce the risk of the armed forces running short and being unable to operate if it suddenly becomes much harder to import and export day-to-day goods after 29 March. Military chiefs have spent at least £23m on what is being described as “forward-purchased” goods, Sky News understands. The move is part of contingency planning by the government – codenamed Operation Yellowhammer – to reduce disruption if Britain departs from the European Union without an agreement, according to three defence sources.

“An army marches on its stomach. If supply lines breakdown they struggle,” one source said. Any blockage in the flow of food and other vital items to Britain’s military bases overseas could impact on operations and affect thousands of soldiers, sailors and airmen. There is a concern that supplies delivered to British troops in the rest of Europe – the UK has a permanent presence in Cyprus and a base on the British overseas territory of Gibraltar, which shares a border with Spain – could be impacted, according to the sources.

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We haven’t seen any of it yet.

Brexit Exposes Growing Fractures In UK Society (G.)

Britons have become angrier since the referendum to leave the EU, according to a survey which suggests there is widespread unhappiness about the direction in which the country is heading. 69 per cent of respondents said they felt their fellow citizens had become “angrier about politics and society” since the Brexit vote in 2016, according to the Edelman Trust Barometer, a long-established, annual survey of trust carried out across the globe. 40 per cent of people think others are now more likely to take part in violent protests, the UK results from the survey show, even though violent political protest in Britain is rare.

One person in six said they had fallen out with friends or relatives over the vote to leave the bloc, the survey found. Edelman, which said the findings exposed a “disUnited Kingdom”, found widespread concern about where the government was heading, particularly among those who voted remain, and those who backed Labour. Overall, about 65% of Britons think the country is “on the wrong track”, the survey suggests. Amongst remain voters the figure is 82%, but even among leave voters the figure is 43%. Some 60% of people who identify with the Conservatives think the country is heading in the right direction, but among Labour identifiers, the figure is just 20%.

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The coal phase-out is part of a 500 billion-euro switch away from fossil fuels and toward renewables..

Compensating coal-mining regions & consumers for higher electricity prices expected to cost German taxpayer up to €78bn.

But across the border lies Italy, and next to it Greece. How are they going to pay for such a switch? And if they don’t, what’s the use of Germany doing it?

In Germany’s Plan To Phase Out Coal, A Big Polluter Will Benefit (BBG)

A proposal to stop Germany from using coal for power generation within two decades may leave an unexpected beneficiary: The company that burns the most of the fuel. While RWE AG was quick to say it’s “too soon” to shed all fossil fuel plants by 2038, the recommendations outlined this weekend by a panel advising Chancellor Angela Merkel called for compensation for the utilities and 40 billion euros ($45.6 billion) for regions coping with the transition. Together, the measures would significantly soften the blow on industry from Merkel’s vow to scale back greenhouse gases. They show how far the government has moved away from a quick clampdown on the most polluting fossil fuel and give more certainty for the future of some of RWE’s most valuable assets.

And while the proposals could yet be watered down by politicians, they signal a longer life for many of the utility’s plants than environmentalists had hoped for. “We believe that clarity, compensation payments, and a relatively long phase-out period should trigger a re-rating for the company’s conventional power generation,” said Guido Hoymann, an analyst at the private bank B. Metzler Seel. Sohn & Co. KGaA who added RWE to a list of top 10 German stocks.

Germany’s 120 or so remaining coal and lignite plants have a combined capacity of about 45 gigawatts. That’s enough to feed 40 percent of the nation’s power demand or about 32 million homes. Germany is already falling short on its targets to slash greenhouse gas emissions and sees closing coal plants as one of the most important ways to make the reductions needed. The coal commission includes members from the main political parties, environmental groups and industry charged with developing a consensus that Germany can live with for years to come.

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Jan 072019
 


Berthe Morisot Julie and her boat 1884

 

China Has a Dangerous Dollar Debt Addiction (Balding)
China Drops Hints Of Trade Pain Ahead (BV)
US and China To Resume Trade Talks With Both Eager For Compromise (G.)
May To Hold Parliamentary Brexit Vote On January 15 (R.)
Theresa May Pleads For EU To Give Ground And Rescue Brexit Deal (G.)
Germany and Ireland Step Up Efforts To Find Brexit Border ‘Fix’ (G.)
Average UK Unsecured Household Debt Hits Record £15,400 (G.)
UK Car Sales Record Biggest Fall Since Financial Crisis (R.)
France’s Macron Reeling As Tough Stance Against ‘Yellow Vests’ Backfires (R.)
The Euro: A Mindless Idea – Ashoka Mody (Spiked)

 

 

$1.2 trillion will have to be rolled over this year. There are $90 billion of offshore renminbi deposits in Hong Kong available to buy dollars. Good luck.

China Has a Dangerous Dollar Debt Addiction (Balding)

China’s foreign debt has been rising rapidly, and that’s becoming an increasingly big problem — for the country and, potentially, the world. 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.

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More trickle down fails.

China Drops Hints Of Trade Pain Ahead (BV)

While a cut in the reserve requirement ratio, China’s fifth in a year, was not surprising, the 100-basis point shift that started off 2019 was larger than anticipated. Of course, demand for cash tends to spike around this time of year, due to both the Chinese New Year holiday and tax deadlines, but the economy is cooling uncomfortably fast. Official figures may show growth slowed to 6.3% in the fourth quarter, Standard Chartered reckons. Friday’s announcement adds to other easing measures: People’s Bank of China officials last month announced a new policy tool to encourage lenders to disburse their cash more widely. The “targeted medium-term lending facility” will make cheaper funding available to banks that the PBOC judges to be doing their part by lending more to small companies.

It’s certainly not full-blown monetary stimulus yet; the central bank has not fired its heavier artillery, such as a benchmark rate cut. The market has also been kept waiting for reductions to cost of borrowing from the PBOC’s more important channel, its regular medium-term lending facility. But the overall direction of travel is clear, and both recent moves point to structural issues that worry pessimists: the extra liquidity pumped into the system does not seem to be translating into more loans for smaller companies, which may signal deeper problems with capital allocation, not to mention the private sector’s nervousness about politics in 2019.

All of this is bad news for Beijing’s trade negotiators, when they hold talks with U.S. counterparts face-to-face this week. As the pain mounts, they may be pushed to yield more in order to gain relief. They could, for example, agree to formally drop the controversial “Made in China 2025” plan, or to announce concrete measures to beef up enforcement of intellectual property rights. Trump said on Sunday that weakness in China’s economy will push officials to negotiate. He may be right.

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Tariffs rose Jan 1. It’s getting urgent.

US and China To Resume Trade Talks With Both Eager For Compromise (G.)

US officials arrived in China for the first face-to-face negotiations since a 90-day truce was declared in a trade war between Washington and Beijing, in the hope of ending a bruising confrontation between the world’s two largest economies. Hopes that the sixth round of negotiations between the two sides could yield a breakthrough helped Asian shares rise on Monday, combined with optimism about the state of the global economy on the back of strong US jobs figures on Friday. In Tokyo, the Nikkei soared more than 3% and there were also strong positive moves in Shanghai, Hong Kong and Sydney. US and Chinese trade representatives were set to hold talks on Monday and Tuesday.

After failing to reach an agreement in December when Donald Trump and Xi Jinping met, both sides agreed to suspend tariff increases while holding discussions on technology transfers, as well as intellectual property theft and cybersecurity. If no agreement is reached, US tariffs on $200bn of Chinese goods will increase in March to 25% from the current 10%. Trump said on Sunday that China was under pressure to do a deal amid signs of a slowdown in its economy. “I think China wants to get it resolved. Their economy’s not doing well. I think that gives them a great incentive to negotiate,” he said. “China’s slowdown is occurring across the board, affecting almost every industry and region,” said Scott Kennedy, a trade expert focused on China at the Center for Strategic and International Studies. “Resolving the trade war or at least finding some common ground with Washington will be needed to fully restore confidence,” he said.

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Whatever the outcome, chaos guaranteed. You can jot down next Tuesday night in your agenda for that.

May To Hold Parliamentary Brexit Vote On January 15 (R.)

Prime Minister Theresa May will hold a delayed parliamentary vote on her Brexit deal on Tuesday, January 15, the BBC reported on Monday, citing government sources. May was forced to pull the vote on her deal in December after she said it would be defeated by a large majority. The government had previously said the vote would be held in the week of January 14. May said on Sunday that Britain would be in uncharted territory if her Brexit deal is rejected by parliament, despite little sign that she has won over sceptical lawmakers.

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In case you were still wondering who will be blamed.

Theresa May Pleads For EU To Give Ground And Rescue Brexit Deal (G.)

Theresa May is preparing to make another desperate plea to EU leaders to offer a concession on the Irish backstop as she attempts to win over Brexiters who have vowed to vote down the government’s deal. The prime minister on Sunday promised to hold the meaningful vote in parliament in the week beginning 14 January despite growing opposition from Conservative backbenchers and the Democratic Unionist party, whose votes are required to push the deal through parliament. As MPs prepare to return to Westminster with the crucial Commons vote looming on the withdrawal agreement, Downing Street insisted that new compromises could still be won from Europe that would ensure the safe passage of May’s plan.

The hope of new developments came as opposition to the prime minister’s deal hardened. The hurdles facing May include: • Brexiters say the government faces a disaster if it fails to ditch the current deal, with DUP deputy leader Nigel Dodds describing the Irish backstop as “toxic”. • EU sources say talks to be held in Dublin on Tuesday between Leo Varadkar and Germany’s foreign minister, Heiko Maas, will not seek to reopen negotiations over the 585-page withdrawal agreement. • Senior MPs including Yvette Cooper and Nicky Morgan are launching a parliamentary campaign to rewrite government legislation to block a no-deal Brexit. • Chris Patten, the former Conservative Party chairman, called for a second referendum on the UK’s decision to leave the EU. • More than 200 MPs have signed a letter calling for Theresa May to rule out a no-deal Brexit. Tory ex-minister Dame Caroline Spelman, who organised the letter with Labour’s Jack Dromey, said the group had been invited to see the prime minister on Tuesday.

In an interview on Sunday, May said the vote, which was due to be held last month and postponed, would go ahead next week, as she sought further clarification from the EU to address MPs’ concerns. She also said she would look at giving parliament a greater say in how the UK’s future relationship would be negotiated, but refused to say exactly what that might be. Asked if there had been any changes she could offer to backbenchers who were expected to vote down her deal, she told BBC1’s Andrew Marr Show: “What we will be setting out over the next few days are assurances in three areas: first are measures specific to Northern Ireland; the second is a greater role for parliament as we take these negotiations forward into the next stage for our future relationship; and third – and we are still working on this – is further assurances from the European Union to address the issues that have been raised.”

Whitehall sources insisted that a compromise could still be found with the EU and that further planned announcements will be made this week that would win over MPs opposed to the deal. “We will be working flat out. There will be further contacts with the EU leaders. The issue of the backstop is not yet over,” the source said.

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“The EU cannot now give another concession ahead of the vote because if the deal isn’t ratified, it means any new concessions will simply be banked again to no benefit at all. It would be pointless.”

Germany and Ireland Step Up Efforts To Find Brexit Border ‘Fix’ (G.)

Germany’s foreign affairs minister is to fly to Dublin on Tuesday for Brexit talks as relations with Ireland intensify in an attempt to find a “fix” that will help Theresa May get the EU withdrawal agreement ratified. Heiko Maas will address an annual gathering of Ireland’s global diplomatic corps and take part in an unofficial fourth round of talks between Ireland and German leaders since Thursday. He will make the address in English, with a large German media contingent accredited, a reflection of how significant his speech is deemed back in Berlin. Last week the taoiseach, Leo Varadkar, had a lengthy telephone call with Angela Merkel. He then flew to Munich to address a meeting of her coalition partners, the CSU, and on Friday met the Germany chancellor’s successor as CDU leader, Annegret Kramp-Karrenbauer, for discussions on Brexit and the future of Europe.

The emerging Irish-German nexus on the Irish border backstop “fix” is being seen as significant in Irish political circles, where people also point to the fact that Varadkar speaks German and has a good working relationship with Merkel. They point out it was Merkel, not the taoiseach, who requested the phone call with Varadkar last Thursday. The talks lasted 40 minutes and were, according to Varadkar, “an opportunity to kind of brainstorm a bit as to what we could do to assist prime minister Theresa May in securing ratification of the withdrawal agreement”. But informed EU sources say Brexiters should not raise their hopes of a reopening of negotiations. The “fix” will be further details in the political declaration on the future relationship and not the 585-page withdrawal agreement. “That is locked,” said one EU source.

There is deep frustration that the British cannot see how far the EU went to break the impasse on the Irish border talks, yielding to May’s demands for a UK-wide customs arrangement. One EU source said: “The EU was totally opposed to this in 2017 and again in March and June in 2018. It then emerged out of the tunnel in the autumn as the solution, but the Brexiters did not see it for what it was – a major concession. [..] “They are now looking for more concessions, but they just can’t be given. The Brits banked this major concession and just did nothing with it. People can’t understand why it wasn’t sold as a victory for May. “The EU cannot now give another concession ahead of the vote because if the deal isn’t ratified, it means any new concessions will simply be banked again to no benefit at all. It would be pointless.”

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That’s about $20,000. Not including mortgages and student loans.

Average UK Unsecured Household Debt Hits Record £15,400 (G.)

Britain’s household debt mountain has reached a new peak, with UK homes now owing an average of £15,385 to credit card firms, banks and other lenders, according to the TUC. The trade union body said household debt rose sharply in 2018 as years of austerity and wage stagnation forced households to increase their borrowing. The TUC said in its annual report on the nation’s finances that the amounts owed by British households rose to a combined £428bn in the third quarter of 2018. Each household owed £886 more than it did 12 months previously, it said. The figures do not include outstanding mortgage debts but do include student loans.

The level of unsecured debt as a share of household income is now 30.4%, the highest level it has ever been at. It is well above the £286bn peak in 2008 before the financial crisis, the TUC said. That figure also included student loans, but tuition fees then were £3,000 a year compared with up to £9,250 now. [..] The TUC general secretary, Frances O’Grady, said: “Household debt is at crisis level. Years of austerity and wage stagnation has pushed millions of families deep into the red. The government is skating on thin ice by relying on household debt to drive growth. A strong economy needs people spending wages, not credit cards and loans.”

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They’re going to stay home?!

UK Car Sales Record Biggest Fall Since Financial Crisis (R.)

British new car sales in 2018 fell at their fastest rate since the global financial crisis a decade ago, hit by a slump in demand for diesel, stricter emissions rules and waning consumer confidence due to Brexit, according to an industry body. Demand dropped by nearly 7% last year to 2.37 million vehicles, the largest fall since registrations nosedived 11.3% in 2008, preliminary data from the Society of Motor Manufacturers and Traders (SMMT) showed. A nearly 30% drop in demand for diesel was the most significant factor in the decline. Diesel has been pummelled since the Volkswagen emissions cheating scandal of 2015, prompting a crackdown and higher levies.

But the industry also warned that Britain’s departure from the European Union due at the end of March risks the future of a sector which employs over 850,000 people and has been one of Britain’s few manufacturing success stories since the 1980s. “It’s still hard to see any upside to Brexit,” said SMMT Chief Executive Mike Hawes. “Everyone recognises that Brexit is an existential threat to the UK automotive industry and we hope a practical solution will prevail,” he said, calling for lawmakers to back Prime Minister Theresa May’s deal to guarantee a transition period. [..] After record highs in 2015 and 2016, demand fell in 2017 and some analysts see car demand as a leading indicator which could be a harbinger for future economic performance. Britain’s economy slowed to a crawl at the end of 2018, the housing market is stalling and lending to consumers growing at its slowest pace in nearly four years, according to data released on Friday.

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Macron is not just a fool himself, he’s surrounded by them as well. His spokesman after fleeing his office out of a back door as protesters invaded the courtyard and smashed up several cars said: “It wasn’t me who was attacked.” “It was the Republic.”.

Because the government is the Republic. The population is not.

France’s Macron Reeling As Tough Stance Against ‘Yellow Vests’ Backfires (R.)

Emmanuel Macron intended to start the new year on the offensive against the ‘yellow vest’ protesters. Instead, the French president is reeling from more violent street demonstrations. What began as a grassroots rebellion against diesel taxes and the high cost of living has morphed into something more perilous for Macron – an assault on his presidency and French institutions. The anti-government protesters on Saturday used a forklift truck to force their way into a government ministry compound, torched cars near the Champs Elysees and in one violent skirmish on a bridge over the Seine punched and kicked riot police officers to the ground.

The French authorities’ struggle to maintain order during the weekend protests raises questions not just over policing tactics but also over how Macron responds, as he prepares to bring in stricter rules for unemployment benefits and cut thousands of public sector jobs. On Sunday evening, Macron wrote on Twitter: “Once again, the Republic was attacked with extreme violence – its guardians, its representatives, its symbols.” His administration had hardened its stance against the yellow vests after the protest movement appeared to have lost momentum over the Christmas holidays.

The government would not relent in its pursuit of reforms to reshape the economy, government spokesman Benjamin Griveaux said on Friday, branding the remaining protesters agitators seeking to overthrow the government. Twenty-four hours later, he was fleeing his office out of a back door as protesters invaded the courtyard and smashed up several cars. “It wasn’t me who was attacked,” he later said. “It was the Republic.”

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“There is a Euro, which is a single currency in an incomplete monetary union, with a set of fiscal rules that are evidently economically illiterate..”

The Euro: A Mindless Idea – Ashoka Mody (Spiked)

[..] most serious of all is the notion of common economic development as a basis for Europe. It was briefly true after the Treaty of Rome in 1957, which opened up the borders, but the momentum ran out within two decades. You open borders, but once they’re open, there’s not a lot more you can do. Even the gains from the so-called Single Market are very limited beyond a certain point. Every economist understands that. On the Euro, there was never any question that it was a bad idea. Nicholas Kaldor, an economist at Cambridge University, wrote in March 1971 that a single currency was a terrible idea, both as economics and as politics. And Kaldor has been proven right time and again.

But the entire European establishment just ignores every subsequent warning from well-regarded economists, and produces defensive counternarratives. For example, I often hear that Europe needs fixed exchange rates in order to have a Single Market. Why? Germany is trading a lot with Poland, Hungary and the Czech Republic, which are in the Single Market, but have different currencies. These fluctuate, but the trade continues apace. You don’t need a single currency for a Single Market.

spiked: When did your critique of the European project emerge? Was it during your involvement in the Irish bailout? Mody: When I finished at the IMF I planned to write a book on the Euro crisis. And I began writing it as an IMF economist would – what happened before the crash, the bubble, the bubble bursting, the panic, the fact it wasn’t well managed, and so on. But I soon realised that something wasn’t right here. And so I spent two years tracing the history of the Euro, and asking the question: what brought the Euro into existence in its current form? You see, it is not just that there is a Euro. There is a Euro, which is a single currency in an incomplete monetary union, with a set of fiscal rules that are evidently economically illiterate – and nobody questions the fact that they are economically illiterate, that they lack a necessary fiscal backstop and the necessary fiscal union. So why does it exist?

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Nov 142018
 
 November 14, 2018  Posted by at 10:15 am Finance Tagged with: , , , , , , , , , , , ,  4 Responses »


Pablo Picasso Still life 1917

 

Britiain, EU Agree on Brexit Plan (G.)
France and Facebook Announce Partnership Against Online Hate Speech (Pol.eu)
Oil’s Unprecedented Slide Accelerates, Capitulates To Darkening Outlook (BBG)
Major Markets Are All Flashing Warning Signs (Roberts)
Trump’s Tariff Battle With China Spurs Record Dollar-Yuan Trading (CNBC)
Goldman Sachs Is Implicated In History’s Largest Financial Con (Ind.)
IMF Says Governments Could Set Up Their Own Cryptocurrencies (G.)
Amazon’s ‘HQ2’ Headquarters Will Cost US Taxpayers $2 Billion (R.)
Decoding The Hypersonic Putin On A Day Of Remembrance (Escobar)
Angela Merkel Calls For Creation Of ‘Real, True’ EU Army (Ind.)
Saudi ‘Kill Team’s’ Luggage Contained Syringes, Defibrillators, Scissors (AFP)
Who Gets to Live in Victimville? (Monics Lewinsky)
Social Media Increases Depression And Loneliness (TI)
Heatwaves Can ‘Wipe Out’ Male Insect Fertility (G.)

 

 

At sort of the last moment, the long awaited deal is announced. Alas, all it really does is push forward any awkward decisions- and there are many. And even that can be voted down by the Cabinet, or parliament, or some other party involved, like the DUP. One thing seems certain: Theresa May will no longer be in charge when actual decisions are made. So why would she care? It’s about saving face by now.

Britiain, EU Agree on Brexit Plan (G.)

Theresa May summoned her cabinet to an emergency meeting on Wednesday afternoon to sign off her long awaited final Brexit deal, prompting hard-Brexit Tories to call for senior ministers to stand up and block it. The critical meeting is the culmination of months of negotiations and will see May’s senior ministers consider whether they can personally endorse the agreement that the prime minister has been able to reach. Ministers were summoned to No 10 in the early evening and some met individually with May or her chief of staff, Gavin Barwell. They were given the chance to read the key documents, although they were not trusted to take any papers home.

Further one-on-one meetings were expected to take place on Wednesday. “Cabinet will meet at 2pm tomorrow to consider the draft agreement the negotiating teams have reached in Brussels, and to decide on next steps,” a No 10 spokesman confirmed. “Cabinet ministers have been invited to read documentation ahead of that meeting.” Key elements of the deal began to leak in the early evening. The UK was understood to have agreed that an independent arbitration committee will judge when a UK-wide customs backstop could be terminated, comprising an equal number of British and EU representatives plus an independent element.

There will be a review in July 2020, Brussels sources added, six months before the end of the transition period, at which it will be determined if the UK is ready to move to a free trade deal; transfer to the backstop; or extend the transition period, possibly by a year to 2021.

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Scary. The leader of one political party seeks to decide with Silicon Valley, what constitutes hate speech. The main potential target of this is Marine le Pen, who’s already had her share of hate accusations. Thing is, Macron has fallen behind her in the -EU election- polls, his popularity has fallen to 23%. And now Zuckerberg gives him the tools to get rid of Le Pen.

France and Facebook Announce Partnership Against Online Hate Speech (Pol.eu)

Emmanuel Macron just “friended” Mark Zuckerberg. The French president announced on Monday a six-month partnership with Facebook aimed at figuring out how the European country should police hate speech on the social network. As part of the cooperation — the first time that Facebook has teamed up with national politicians to hammer out such a contentious issue — both sides plan to meet regularly between now and May, when the European election is due to be held. They will focus on how the French government and Facebook can work together to remove harmful content from across the digital platform, without specifying the outcome of their work or if it would result in binding regulation.

The partnership, which will involve meetings in Paris, Dublin and California, may be broadened out to cover other as yet unnamed areas after six months. A French official who asked not to be named called the partnership an “unprecedented experiment” that would grant authorities insight into Facebook’s processes to formulate recommendations that are “concrete and operational.” The social networking giant is now trying to lobby national lawmakers on the perceived dangers of regulating the internet. “We are giving blind faith to our daily digital tools,” Macron told an audience in Paris. “Today, when I see our democracy, internet is much better used by the extremes … or by terrorist groups.”

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Feeding on itself by now?!

Oil’s Unprecedented Slide Accelerates, Capitulates To Darkening Outlook (BBG)

Oil’s unprecedented decline deepened as investors fled a market hammered by swelling excess supplies, a darkening demand outlook and U.S. President Donald Trump’s Twitter critique of the world’s biggest crude exporter. Futures plunged 7.1 per cent in New York on Tuesday for the biggest one-day drop in three years. OPEC’s dire forecast for 2019 demand came at a time of steadily rising American production and stockpiles. Trump admonished Saudi Arabia for planning to curb output and lamented prices that settled below US$56 a barrel for the first time in a year. “This tweet certainly did not help prices,” said Warren Patterson, a senior commodities strategist at ING Bank.

“Given the growing global surplus over the first half of 2019, OPEC will likely try to ignore President Trump’s call as much as possible.” West Texas Intermediate futures have fallen for a record 12 sessions on fears that a supply glut similar to the price-killing surplus of 2014 is redeveloping. In London, Brent futures have declined in 11 of the past 12 sessions. Money managers’ combined bullish positions in WTI and Brent sank to the lowest in 14 months as of Nov. 6, Commodity Futures Trading Commission data show, as long positions shrank and shorts increased.

“Today’s move is just capitulation,” said Nick Gentile, managing partner of commodity trading advisor NickJen Capital Management & Consulting LLC in New York. “You’re getting a combination of the systematic CTAs, the trend following guys, adding to the shorts and global macro guys liquidating longs.” WTI for December delivery dropped US$4.24 to end the session at US$55.69 a barrel on the New York Mercantile Exchange. Total volume traded Tuesday was about 90 per cent above the 100-day average.

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Master graphmaker Lance Roberts has some more. I picked a few.

Major Markets Are All Flashing Warning Signs (Roberts)

[..] the failure of the market to hold the 200-dma also increases the downside risk of the market currently. There is an important point here to be made about “bull markets” and “bear markets. While there is no “official” definition of what constitutes a “bull” or “bear” market, the generally accepted definition is a decline of 20% in the market. However, since I really don’t want to subject my clients to a loss of 20% in their portfolios, I would suggest a different definition based on the “trend” of the market as a whole. As shown in the chart below: • If prices are generally “trending higher” then such is considered a “bull market.” • A “bear market” is when the “trend” changes from positive to negative.

[..] what is happening domestically should not be a surprise. The rest of the world markets have already confirmed bear market trends and continue to trade below their long-term moving averages. (The very definition of a bear market.) While it has been believed the U.S. can “decouple” from the rest of the world, such is not likely the case. The pressure on global markets is a reflection of a slowing global economy which will ultimately find its way back to the U.S.

(Note: we closed all international and emerging market positions in our portfolios at the beginning of this year.) Just as a side note, China has been in a massive bear market trend since 2015 and is down nearly 50% from its previous highs.

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China’s foreign reserves are under severe pressure.

Trump’s Tariff Battle With China Spurs Record Dollar-Yuan Trading (CNBC)

Market uncertainty tied to the ongoing U.S.-China trade war has spurred more transactions than ever before between the American dollar and the Chinese yuan in recent months. Much of that volume comes as businesses and investors with exposure to the Chinese market are looking to hedge their foreign exchange risk. Many of them are looking to buy into the strengthening dollar, and that’s stoked speculation that Chinese authorities are intervening in the market to defend their currency, boosting trading volumes to new highs in the process. On Tuesday, currency traders told Reuters major state-owned banks were selling dollars to defend the Chinese yuan, as the greenback climbed to a 16-month peak against a basket for currencies.

Most trading between the two currencies takes place on the spot market, where dollars and yuan change hands as soon as a deal is done. That sort of market has seen volumes surge this year for the currency pair. But futures trading — where the transaction is agreed to take place at a later date at a certain price — is also increasingly catching dollar-yuan traders’ interests, according to Benjamin Lu, an investment analyst with Singapore brokerage Phillip Futures. [..] ups-and-downs in the foreign exchange market have prompted a Singapore-based privately backed Chinese exchange to launch a new dollar-offshore yuan futures contract. “Nobody knows how the trade war will end. There’s a lot of fear and panic in the financial market and worries about trade,” said Eugene Zhu, CEO of the Chinese-backed Asia Pacific Exchange.

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Malaysia should call Blankfein to testify in court. He knew, he was there. But Goldman is far more likely to just pay some huge fine.

Goldman Sachs Is Implicated In History’s Largest Financial Con (Ind.)

Even by Wall Street standards of gouging customers this was one hell of a skim. In 2012 and 2013, the Malaysian government was raising $6.5bn (£5bn) from investors to establish a sovereign wealth fund and finance various domestic infrastructure investment projects. And the cut for Goldman Sachs – the most prestigious investment bank in the world – for arranging the fundraising from the global capital markets? Ten per cent, or $600m. Now we can have a guess as to why the Malaysian authorities were so insouciant about those extortionate fundraising costs: because they themselves were, apparently, going to loot the pot in one of the biggest frauds in history. Around half of the fund has gone missing.

According to the US Justice Department a fair amount has been pumped into luxury American real estate and shady art auction bids. Appropriately, some went into investing in Martin Scorsese’s The Wolf of Wall Street. At one stage $680m mysteriously appeared in the bank account of the former Malaysian prime minister, Najib Razak, who chaired the 1MDB advisory board, and who is now charged in his own country with corruption. Malaysian politicians, officials and financiers had effectively bought Goldman Sachs’ blue chip reputation to pull in naive investors to the “1MDB” state investment fund. Ten per cent probably seemed a reasonable cut in the circumstances. The question is: what did Goldman know about the theft?

The bank claims today that it was completely oblivious. But the senior Goldman banker on the ground in Malaysia, Tim Leissner, certainly knew. He pleaded guilty in New York to financial crimes related to 1MDB last week, including bribery of officials to ensure Goldman was the sole fundraiser. What’s even more problematic for the bank is that Leissner told the court there was a “culture” at Goldman Sachs of bypassing internal compliance. That’s backed up by US prosecutors, who say Goldman’s business culture in the region was “highly focused on consummating deals, at times prioritising this goal ahead of the proper operation of its compliance functions”.

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And then let the IMF control them all.

IMF Says Governments Could Set Up Their Own Cryptocurrencies (G.)

Governments should consider offering their own cryptocurrencies to prevent the systems becoming havens for fraudsters and money launderers, Christine Lagarde, head of the International Monetary Fund said referring to the fast-growing fintech industry. Lagarde said central banks had to work quickly to establish digital cash for burgeoning networks of private financial transactions or risk their mushrooming into trading networks that were inherently unstable. A system regulated by central banks could become the basis for a rapid expansion of financial services to developing world countries and the poorest people in western societies without the risks associated with privately managed digital currencies, she said.

[..] Speaking at a fintech conference in Singapore, Lagarde said central banks would take over the processing of transactions while private-sector providers offered innovative services to customers. “The advantage is clear. Your payment would be immediate, safe, cheap, and potentially semi-anonymous. And central banks would retain a sure footing in payments. In addition, they would offer a more level playing field for competition, and a platform for innovation. Meanwhile your bank or fellow entrepreneurs would have ensured a friendly user experience based on the latest technologies,. “Putting it another way. The central bank focuses on its comparative advantage – back-end settlement – and financial institutions and start-ups are free to focus on what they do best – client interface and innovation. This is public-private partnership at its best.”

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Because Bezos is barely scraping by. Everywhere you look, Amazon gets rewarded for destroying communities.

Amazon’s ‘HQ2’ Headquarters Will Cost US Taxpayers $2 Billion (R.)

Amazon.com picked America’s financial and political capitals for massive new offices on Tuesday, branching out from its home base in Seattle with plans to create more than 25,000 jobs in both New York City and an area just outside Washington, D.C. The world’s largest online retailer plans to spend $5 billion on the two new developments in Long Island City and Arlington, Virginia, and expects to get more than $2 billion in tax credits and incentives with plans to apply for more. The prize, which Amazon called HQ2, attracted hundreds of proposals from across North America in a year-long bidding war that garnered widespread publicity for the company. Amazon ended the frenzy by dividing the spoils between the two most powerful East Coast U.S. cities and offering a consolation prize of a 5,000-person center in Nashville, Tennessee, focused on technology and management for retail operations.

[..] At the outset of its search last year, Amazon said it was looking for a business-friendly environment. The company said it will receive performance-based incentives of $1.525 billion from the state of New York, including an average $48,000 for each job it creates. It can also apply for other tax incentives, such as New York City’s Relocation and Employment Assistance Program that offers tax breaks potentially worth $900 million over 12 years. What benefit the company would actually get was unclear. In Virginia, Amazon will receive performance-based incentives of $573 million, including an average $22,000 for each job it creates. These rewards come on top of $1.6 billion in subsidies Amazon has received across the United States since 2000, according to a database from watchdog Good Jobs First.

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“We don’t have any defense that could deny the employment of such a weapon against us.”

Decoding The Hypersonic Putin On A Day Of Remembrance (Escobar)

A battle of ideas now rages across Europe, epitomized by the clash between the globalist Macron and populism icon Matteo Salvini, the Italian interior minister. Salvini abhors the Brussels system. Macron is stepping up his defense of a “sovereign Europe.” And much to the horror of the US establishment, Macron proposes a real “European army” capable of autonomous self-defense side by side with a “real security dialogue with Russia.” Yet all these “strategic autonomy” ideals collapse when you must share the stage, live, with the undisputed stars of the global show: President Donald Trump and President Vladimir Putin.

So the optics in Paris were not exactly of a Yalta 2.0 conference. There were no holds barred to keep Trump and Putin apart. Seating arrangements featured, from left to right, Trump, Chancellor Angela Merkel, Macron, his wife Brigitte and Putin. Neither Trump nor Putin, for different reasons, took part in a “walking in the rain” stunt evoking peace. And yet they connected. Sir Peter Cosgrove, the governor general of Australia, confirmed that Trump and Putin, at a working lunch, had a “lively and friendly” conversation for at least half an hour. No one better than Putin himself to reveal, even indirectly, what they really talked about. Three themes are absolutely key.

[..] Vast sectors of the US Deep State are in denial, but Putin may have been able to impress on Trump the necessity of serious dialogue due to an absolutely key vector: the Avangard. The Avangard is a Russian hypersonic glide vehicle capable of flying over Mach 20 – 24,700km/h, or 4 miles per second – and one of the game-changing Russian weapons Putin announced at his ground-breaking March 1 speech. The Avangard has been in the production assembly line since the summer of 2018, and is due to become operational in the southern Urals by the end of next year or early 2019.

In the near future, the Avangard may be launched by the formidable Sarmat RS-28 intercontinental ballistic missile and reach Washington in a mere 15 minutes, flying in a cloud of plasma “like a meteorite” – even if the launch is from Russian territory. Serial production of Sarmat ICBMs starts in 2021. The Avangard simply cannot be intercepted by any existing system on the planet – and the US knows it. Here is General John Hyten, head of US Strategic Command: “We don’t have any defense that could deny the employment of such a weapon against us.”

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“This is one of the scariest speeches I have heard as an MEP in my nine years. Merkel is an out-and-out European federalist and we should not be pandering to her as if she is on our side. She is on the side of the superstate.”

Angela Merkel Calls For Creation Of ‘Real, True’ EU Army (Ind.)

Angela Merkel has called for the creation of a “real, true” European army, echoing a similar call by her French counterpart. The German chancellor’s backing for the force comes amid a spat with US president Donald Trump, who took offence to a suggestion by Emmanuel Macron that such an army could ensure Europe’s security in the shadow of the United States. Ms Merkel endorsed the creation of the army while addressing MEPs at the European parliament in Strasbourg. “We should work on a vision of one day establishing a real, true European army,” Ms Merkel said. The French president made his call during a radio interview last week: “We have to protect ourselves with respect to China, Russia and even the United States of America.

“We will not protect the Europeans unless we decide to have a true European army.” He added: “When I see President Trump announcing that he’s quitting a major disarmament treaty which was formed after the 1980s Euro-missile crisis that hit Europe, who is the main victim? Europe and its security.” [..] Ms Merkel’s intervention is significant because France has historically been the strongest and most vocal proponent of an EU army, with its neighbour tentatively endorsing proposals for a joint command structure for military interventions. Eurosceptics reacted angrily to the speech. Conservative MEP David Campbell Bannerman said: “This is one of the scariest speeches I have heard as an MEP in my nine years. Merkel is an out-and-out European federalist and we should not be pandering to her as if she is on our side. She is on the side of the superstate.”

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Bone saw was a local purchase. As was the acid.

Saudi ‘Kill Team’s’ Luggage Contained Syringes, Defibrillators, Scissors (AFP)

Luggage carried by a 15-member Saudi team dispatched to Istanbul included scissors, defibrillators and syringes that may have been used against journalist Jamal Khashoggi, who was murdered in the Saudi consulate, a pro-government Turkish daily said Tuesday. X-ray images of the luggage were published in the Sabah newspaper as the New York Times reported that a member of the team at the consulate had told a superior by phone to “tell your boss”, suspected to be Crown Prince Mohammed bin Salman, that the operation was accomplished. Turkish media has published gruesome details of the murder of 59-year-old Khashoggi who according to a Turkish prosecutor was strangled and dismembered soon after he entered the Istanbul consulate on October 2.

After repeated denials, Saudi Arabia finally admitted Khashoggi, a Washington Post columnist and Riyadh critic, had been murdered at the mission in a “rogue” operation. Turkish President Recep Tayyip Erdogan has said the 15-member Saudi team travelled from Riyadh to Istanbul to kill Khashoggi. The luggage carried by the team was loaded into two planes that left for Riyadh at 1520 GMT and 1946 GMT on October 2, Sabah newspaper said. The luggage contained 10 phones, five walkie-talkies, intercoms, two syringes, two defibrillators, a jamming device, staplers, and scissors, the paper reported. [..] Khashoggi’s body has never been found, but Sabah reported on Saturday that his killers poured his remains down the drain after dissolving them in acid.

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“..with the false narrative that my mouth was merely a receptacle for a powerful man’s desire”

Who Gets to Live in Victimville? (Monics Lewinsky)

The process of this docuseries led me to new rooms of shame that I still needed to explore, and delivered me to Grief’s doorstep. Grief for the pain I caused others. Grief for the broken young woman I had been before and during my time in D.C., and the shame I still felt around that. Grief for having been betrayed first by someone I thought was my friend, and then by a man I thought had cared for me. Grief for the years and years lost, being seen only as “That Woman”—saddled, as a young woman, with the false narrative that my mouth was merely a receptacle for a powerful man’s desire. (You can imagine how those constructs impacted my personal and professional life.)

Grief for a relationship that had no normal closure, and instead was slowly dismantled by two decades of Bill Clinton’s behavior that eventually (eventually!) helped me understand how, at 22, I took the small, narrow sliver of the man I knew and mistook it for the whole. The process became meta. As the project re-examined the narratives, both personal and political, surrounding the events of 1998, so did I. I revisited then-President Bill Clinton’s famous finger-wagging Oval Office interview from early 1998, in which I was anointed “That Woman,” and was transported to my apartment in the Watergate apartment complex.

Sitting on the edge of my grandma’s bed and watching it unfold on TV, 24-year-old me was scared and hurt, but also happy that he was denying our relationship, because I didn’t want him to have to resign. (“I didn’t want to be responsible for that,” I thought at the time, absolving anyone else of responsibility.) Forty-five-year-old me sees that footage very differently. I see a sports coach signposting the playbook for the big game. Instead of backing down amid the swirling scandal and telling the truth, Bill instead threw down the gauntlet that day in the Oval Office: “I did not have sexual relations with that woman, Miss Lewinsky.” With that, the demonization of Monica Lewinsky began. As it so often does, power throws a protective cape around the shoulders of the man, and he dictates the spin by denigrating the less powerful woman.

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Just like alcohol and cocaine do.

Social Media Increases Depression And Loneliness (TI)

Ever since sites like Facebook and Instagram became part of daily life, scientists have wondered whether they contribute to mental health problems. In fact, research has hinted at a connection between social media use and depression for several years. A new study, published in the Journal of Social and Clinical Psychology, has added more evidence to the theory. [..] “Here’s the bottom line,” said Melissa G. Hunt, a psychologist at the University of Pennsylvania and lead author of the study. “Using less social media than you normally would leads to significant decreases in both depression and loneliness. These effects are particularly pronounced for folks who were more depressed when they came into the study.”

She added 18-to-22-year-olds shouldn’t stop using social media altogether, but cutting down might be beneficial. “It is a little ironic that reducing your use of social media actually makes you feel less lonely,” she said. “Some of the existing literature on social media suggests there’s an enormous amount of social comparison that happens. When you look at other people’s lives, particularly on Instagram, it’s easy to conclude that everyone else’s life is cooler or better than yours.”

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Mammals too. Semen is temperature sensitive.

Heatwaves Can ‘Wipe Out’ Male Insect Fertility (G.)

Heatwaves severely damage the fertility of male beetles and consecutive hot spells leave them virtually sterilised, according to research. Global warming is making heatwaves more common and wildlife is being annihilated, and the study may reveal a way in which these two trends are linked. The scientists behind the findings said there could also be some relevance for humans: the sperm counts of western men have halved in the last 40 years. Researchers studied beetles because their 400,000 species represent about a quarter of all known species. Insect populations are plunging worldwide as temperatures rise, falling by about 80% in 30 years in Puerto Rico’s rainforest and by 75% in German nature reserves.

Insects are such an integral part of life, as pollinators and prey, that scientists say their decline could lead to “ecological Armageddon”. Little is known about the precise causes of the decline, though climate change, habitat destruction and global use of pesticides are considered probable factors. The research, published in the Nature Communications journal, found that exposing beetles to a five-day heatwave in the laboratory reduced sperm production by three-quarters; females were unaffected. “Beetles are thought to constitute a quarter of biodiversity, so these results are very important for understanding how species react to climate change,” said Kris Sales, at the University of East Anglia, who led the work.

Other research has shown that heat can damage male reproduction in humans as well as cows, sheep and other mammals. “There could be relevance for human fertility,” said Prof Matt Gage, co-leader of the UEA research group. “The paradox is that one of the reasons the climate is warming up and we are having more heatwaves is there are too many humans. So maybe this is a leveller.” Stuart Wigby, of the University of Oxford, who was not involved in the study, said: “Given what we already know about the generality of the sensitivity of sperm to heat, there is every reason to expect that similar effects would be seen in other insects and also in mammals including humans.”

Read more …

Nov 132018
 
 November 13, 2018  Posted by at 10:10 am Finance Tagged with: , , , , , , , , , , , , , ,  3 Responses »


Vincent van Gogh Peasant burning weeds 1883

 

Dow Plunges 600 Points As Apple Leads Tech Rout (CNBC)
The Economic Consequences Of Debt (Roberts)
The Fed Supports Capital In Its Eternal War With Labor (Hunt)
China State Banks Selling Dollars In FX Market To Arrest Yuan Losses (R.)
Goldman Sachs Down Most In 7 Years On 1MDB, ‘Fear Of The Unknown'(BBG)
Banking Consolidation In Europe Is ‘Inevitable’ – UBS Chief (CNBC)
China Scours Social Media, Erases Thousands Of Accounts (R.)
Working to Protect the World from Bananas (Epsilon)
Turkey, France Spar Over Khashoggi Killing (AFP)
US Federal, State Elections Still In Flux (R.)
Rock the Vote (Kunstler)
Crucifying Julian Assange (Chris Hedges)
Stan Lee Leaves a Legacy as Complex as His Superheroes (DB)

 

 

“..the FANG trade is dead and the market is struggling to find a replacement.”

Dow Plunges 600 Points As Apple Leads Tech Rout (CNBC)

The Dow Jones Industrial Average fell 602 points on Monday after a big decline in Apple shares, a rise in the U.S. dollar and lingering worries about global trade weighed on investor sentiment. Monday’s losses bring the Dow’s decline over the past two sessions to 804 points; it closed at 25,387.18. The tech-heavy Nasdaq Composite pulled back 2.8 percent to 7,200.87 and fell back into the correction territory it first entered during the October market rout. The S&P 500 dropped 2 percent to 2,726.22 as financials tanked, led by Goldman Sachs. In late-afternoon trading, the major indexes hit their lows of the day after Bloomberg News reported the White House was circulating a draft report on auto tariffs. Shares of General Motors turned negative following the report.

Apple shares tanked by 5 percent after Lumentum Holdings, which makes technology for the iPhone’s face-recognition function, cut its outlook for fiscal second quarter 2019. Lumentum CEO Alan Lowe said one of its largest customers asked the company to “materially reduce shipments” for its products. Shares of Lumentum plunged 33 percent. The decline in Apple pressured the broader technology sector. The Technology Select Sector SPDR dropped 3.5 percent. Alphabet and Amazon shares pulled back 2.7 percent and 4.3 percent, respectively. Amazon shares fell into bear-market territory, down about 20 percent from its 52-week high. [..] Peter Boockvar, chief investment officer at Bleakley Advisory Group, said “the FANG trade is dead and the market is struggling to find a replacement.”

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I’m partial to the last graph. It shows an undeniable long term trendline.

The Economic Consequences Of Debt (Roberts)

The relevance of debt growth versus economic growth is all too evident as shown below. Since 1980, the overall increase in debt has surged to levels that currently usurp the entirety of economic growth. With economic growth rates now at the lowest levels on record, the growth in debt continues to divert more tax dollars away from productive investments into the service of debt and social welfare. It now requires nearly $3.00 of debt to create $1 of economic growth.

Another way to view the impact of debt on the economy is to look at what “debt-free” economic growth would be. In other words, without debt, there has actually been no organic economic growth.

In fact, the economic deficit has never been greater. For the 30-year period from 1952 to 1982, the economic surplus fostered a rising economic growth rate which averaged roughly 8% during that period. Today, with the economy expected to grow at just 2% over the long-term, the economic deficit has never been greater.

But it isn’t just Federal debt that is the problem. It is all debt. When it comes to households, which are responsible for roughly 2/3rds of economic growth through personal consumption expenditures, debt was used to sustain a standard of living well beyond what income and wage growth could support. This worked out as long as the ability to leverage indebtedness was an option. The problem is that when rising interest rates hit a point where additional leverage becomes problematic, further economic cannot be achieved. Given the massive increase in deficit spending by households to support consumption, the “bang point” between rates and the economy is likely closer than most believe.

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The Fed must step back as wages rise.

The Fed Supports Capital In Its Eternal War With Labor (Hunt)

For 46 years, from 1951 to 1997, we were no more and no less rich than our economy grew. Which makes sense. That’s the neutral vision of monetary policy, where you’re not trying to pull forward future growth through leverage and easy money in order to create more wealth today. For the past 20 years, however, we have had a series of wealth bubbles – first the Dot-Com bubble, then the Housing Bubble, and today the Financial Asset Bubble – that have made us richer than our economy grows. Each of these bubbles was intentionally “blown” by the Fed through monetary policy. That’s the tried and true method of creating a wealth bubble in the modern age of fiat money – you artificially lower the cost of money to encourage borrowing and leverage, which in turn pulls future growth into the present. It’s a neat trick so long as you can keep it going.

But that’s the problem, of course. The Fed can’t keep it going, not if it wants to satisfy its raison d’etre, which is to keep inflation bottled up, particularly wage inflation. Once wage inflation starts to pick up, the Fed ALWAYS stops blowing bubbles. Why? Because the Fed, like every central bank, was created to support Capital in its eternal war with Labor. It’s in the name. They are bankers. I know that sounds all Marxist and conspiratorial and all that, but it’s really not. It’s very straightforward. It’s Alexander Hamilton, not Karl Marx. In case you haven’t noticed, wage inflation has started to pick up. The Fed has stopped blowing this Financial Asset Bubble. Then isn’t the inescapable conclusion that we are now inevitably heading back to that GDP growth line? And if that IS the conclusion, then how bad could it get for investors?

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A very ominous sign.

China State Banks Selling Dollars In FX Market To Arrest Yuan Losses (R.)

Major state-owned Chinese banks were seen selling dollars at around 6.97 per dollar in the onshore spot foreign exchange market in early trade on Tuesday, three traders said, in an apparent attempt to arrest sharp losses in the local currency. The onshore spot market opened at 6.9681 per dollar, weakening to a low of 6.9703 at one point in early deals. “Big banks were selling (dollars) to defend the yuan,” said one of the traders. The move by the state-run banks helped the yuan recover to 6.9550. The onshore spot yuan was trading at 6.9645 as of 0237 GMT.

Traders attributed the sharp morning losses in the yuan to broad strength in the U.S. dollar, which hit 16-month highs against a basket of six other major currencies. They also suspect the authorities are keen to prevent the yuan from weakening too sharply before U.S. President Donald Trump and his Chinese counterpart President Xi Jinping’s meeting later this month. The two countries’ leaders plan to meet on the sidelines of a G20 summit, in Argentina at the end of November for a high-stakes talk.

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The Squid got hungry.

Goldman Sachs Down Most In 7 Years On 1MDB, ‘Fear Of The Unknown'(BBG)

Goldman Sachs Group’s reputation is facing one of its biggest crises of the decade – and now its shares are, too. Since prosecutors implicated a trio of Goldman Sachs bankers in a multi-billion-dollar Malaysian fraud early this month, investors have endured an almost daily drip of news on the firm’s ties to the scandal. The barrage culminated on Monday (Nov 12) as Malaysia’s finance minister demanded a “full refund”, tipping Goldman’s shares into their biggest drop since 2011. Across Wall Street, analysts expressed surprise over the dive, noting the bank – which hasn’t been charged with wrongdoing – can probably stomach any payment that might be extracted in the case. Instead, some said, the decline appeared to be due to a combination of concern over the persistently harsh spotlight and uncertainty about what’s to come.

It was also a generally bad day in US markets. “It’s not so much the dollar amount,” said Mr Gerard Cassidy at RBC Capital Markets. “It’s more that we don’t know all of the facts yet; we don’t know all of the important points to the story at this time. It’s the fear of the unknown.” On Nov 1, at least three senior Goldman Sachs bankers were publicly implicated by the US Department of Justice in a multi-year criminal enterprise that included bribing officials in Malaysia and elsewhere and laundering hundreds of millions of dollars. The firm has said it’s cooperating with the investigations and may face “significant” fines. [..] The Malaysia probe focuses on the country’s scandal-plagued state investment company, 1Malaysia Development Bhd and the US$6.5 billion it raised in 2012 and 2013. Goldman Sachs handled the deals, reaping almost US$600 million in fees.

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“..technology will make the sector more “effective and more efficient.”

Banking Consolidation In Europe Is ‘Inevitable’ – UBS Chief (CNBC)

The European banking system needs consolidation and “as time goes by, it will become more and more inevitable,” the head of one of the largest banks in Europe told CNBC on Tuesday. Often investors, policy-makers and other industry experts refer to fragmentation as one of the biggest hurdles to European banks. UBS chief Sergio Ermotti told CNBC that the issue is “not sustainable.” “That’s something that as time goes by will become more and more inevitable, is part of the solutions. For sure consolidation needs to happen, in particular in Europe, where we see a lot of fragmentation that it is not sustainable,” Ermotti told CNBC’s Joumanna Bercetche. He further added that technology will make the sector more “effective and more efficient.”

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Self-media: social media not run by government.

China Scours Social Media, Erases Thousands Of Accounts (R.)

China’s top cyber authority has scrubbed 9,800 social media accounts of independent news providers deemed to have posted sensational, vulgar or politically harmful content on the Internet, it said late on Monday. China’s strict online censorship rules have tightened in recent years with new legislation to restrict media outlets, surveillance measures for media sites and rolling campaigns to remove content deemed unacceptable. The Cyberspace Administration of China (CAC) said in a statement that the campaign, launched on Oct. 20, had erased the accounts for violations that included “spreading politically harmful information, maliciously falsifying (Chinese Communist) party history, slandering heroes and defaming the nation’s image.”

CAC also summoned social media giants, including Tencent’s Wechat and Sina-owned Weibo, warning them against failing to prevent “uncivilized growth” and “all kinds of chaos” among independent media on their platforms. “The chaos among self-media accounts has seriously trampled on the dignity of the law and damaged the interests of the masses,” CAC said. The term “self-media” is mostly used on Chinese social media to describe independent news accounts that produce original content but are not officially registered with the authorities.

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Despair no more. Big Brother is here.

Working to Protect the World from Bananas (Epsilon)

The main story is the increased pace and arc of the Chinese system overall, not the ‘play-by-play’. With technology, even totalitarian surveillance technology, there typically is no ‘big bang’, just a bunch of independent systems coming on line, getting adopted over time, then getting networked together, resulting in a series of subtle shifts in personal behavior, and then a tipping point. Having watched this system come on line for nearly 20 years, the deployment of the Chinese technology-driven domestic surveillance system was pretty limited even up until 2010, but has been absolutely rip-roaring and accelerating over the last five years thanks to the same driving forces of most other tech advances since 2010:

• Ubiquitous handheld connected device • App adoption • Cheap sensors (inc. cameras) • Cheap massive data storage • Sophisticated statistical algorithms • Leaps forward in compute power and cost. All of these advances are so powerful for surveillance with its inherent big, unstructured data characteristics that I think we are now really close to an inflection point where the system is starting to really work in a functional day-to-day way, which will then lead to a behavioral tipping point. I don’t think the main story is that controversial at this point, i.e., I don’t think anyone, even the Chinese government, denies this system is being built, the intention of it, or that it is starting to work in a practical way.

Therefore, I think the more interesting story in many ways is the sub-story of the willful ignorance of the main story by the West. I was at an event last week where a new fancy think tank on AI ethics based here in San Francisco was presenting and expounding their tenet of “Working to protect the privacy and security of individuals”, whilst simultaneously welcoming Baidu into their organization. I’m sorry, but that’s like “Working to protect the world from bananas” while signing up Del Monte as a member. Bananas. With hypocritical sprinkles. And a big ignorant cherry on top.

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They’ve all heard the tapes, but not one of them talks about the content.

Turkey, France Spar Over Khashoggi Killing (AFP)

Turkey on Monday lashed out at “unacceptable” and “impertinent” comments by the French foreign minister who accused President Recep Tayyip Erdogan of playing a “political game” over the murder of Jamal Khashoggi. Erdogan said on Saturday that Turkey had shared recordings linked to the Saudi journalist’s murder last month with Riyadh, the United States, France, Britain and other allies, without giving details of the tapes’ specific content. In an interview with France 2 television on Monday, French Foreign Minister Jean-Yves Le Drian said he “for the moment was not aware” of any information transmitted by Ankara. Asked if the Turkish president was lying, he said: “It means that he has a political game to play in these circumstances.”

His comments provoked fury in Ankara. “We find it unacceptable that he accused President Erdogan of ‘playing political games’,” the communications director at the Turkish presidency, Fahrettin Altun, told AFP in a written statement. “Let us not forget that this case would have been already covered up had it not been for Turkey’s determined efforts.” Turkish Foreign Minister Mevlut Cavusoglu responded even more sharply, saying that his French counterpart’s accusations amounted to “impertinence”. “It does not fit the seriousness of a foreign minister,” he said, accusing Le Drian of “exceeding his authority”.

[..] Altun said Ankara had shared evidence linked to the murder with officials from a large number of countries and that France was “no exception”. “I confirm that evidence pertaining to the Khashoggi murder has also been shared with the relevant agencies of the French government,” he said. A representative of French intelligence listened to the audio recording and examined detailed information including a transcript on October 24, he added.

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The US is incapable of building a strong election system. How disgraceful is that?

US Federal, State Elections Still In Flux (R.)

Democrats took control of the U.S. House of Representatives in the Nov. 6 elections and Republicans held onto a majority in the U.S. Senate, but more than a dozen races remain undecided nearly a week later. The outcomes of two Senate races, 13 House seats and two governorships had yet to be settled on Monday. The results of Arizona’s U.S. Senate race became clear on Monday, when Democratic candidate Kyrsten Sinema declared victory and Republican candidate Martha McSally conceded after multiple media outlets called the race for Sinema. Florida ordered a recount in the race where Democratic Senator Bill Nelson trailed his Republican challenger, Florida Governor Rick Scott.

Florida also ordered a recount for its gubernatorial race, while the winner of the governor’s race in Georgia remained uncertain, with a December runoff still possible. In one of Mississippi’s U.S. Senate races, Republican Senator Cindy Hyde-Smith and her Democratic challenger, Mike Espy, will contest a runoff on Nov. 27 after neither won a majority. Vote tallies continue to trickle in for the 13 U.S. House races that appear too close to call, and there is no consensus among media outlets and data provider DDHQ that a victor has emerged. Democrats held narrow leads in eight of those races, according to unfinished tallies compiled by DDHQ.

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“.. C-Span will be livelier and more colorful than the WWE Wrestlemania round-robin, midget division.”

Rock the Vote (Kunstler)

It warmed my heart to read in The Wall Street Journal that Hillary Clinton is preparing to re-enter the Washington DC swamp from her deluxe exile in the woods of Chappaqua, New York, and make another run for the White House — though it’s hard to calculate how many porters in sandals and loincloths will be required to lug all her baggage around the campaign trail. Will hubbie hit the hustings with her? That would be rich. I can just imagine the pussy-hatted legions shrieking #MeToo at every stop. Surely there is no better way to put the Democratic Party out of its misery. The post-election melodramas in Georgia and Florida grind on, despite the various rules and laws about deadlines for certifying ballots and accounting for their origin.

What is a ballot after all but a mere scrap of paper, easily reproducible, and interchangeable. Sometimes, they make strange journeys out of election headquarters in trucks and SUVs, seeking fun and excitement, and they have been known to mysteriously turn up by the hundredweight in broom closets where they retreat to caucus. Only one thing is certain: the ballot fiasco is a billable hours bonanza for DC lawyers arriving on the scene to sort things out — which they may not manage anyway. If the vote count somehow remains in favor of the provisional winners — Republicans Rick Scott, Ron DeSantis (Fla), and Brian Kemp (Ga) — you can be sure we’ll be in a frenzy of sore loserdom that will make the Medieval ergot outbreaks of yore look like episodes of Peewee’s Playhouse.

If the provisional votes get overturned, the attorneys billable hours will quickly exceed the national debt, and we’ll find ourselves in a new era where the free citizens of this republic can‘t be trusted to the simple task of counting ballots, or even holding elections in the first place. [..] Meanwhile, the new Democratic majority congress prepares to ramp up its longed-for multi-committee inquisition against Trump and Trumpism, and the Republican Senate will counter-punch with binders of criminal referrals against the superstars of the Resistance. C-Span will be livelier and more colorful than the WWE Wrestlemania round-robin, midget division.

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The role of the MSM demands much more scrutiny.

Crucifying Julian Assange (Chris Hedges)

Assange was once feted and courted by some of the largest media organizations in the world, including The New York Times and The Guardian, for the information he possessed. But once his trove of material documenting U.S. war crimes, much of it provided by Chelsea Manning, was published by these media outlets he was pushed aside and demonized. A leaked Pentagon document prepared by the Cyber Counterintelligence Assessments Branch dated March 8, 2008, exposed a black propaganda campaign to discredit WikiLeaks and Assange.

The document said the smear campaign should seek to destroy the “feeling of trust” that is WikiLeaks’ “center of gravity” and blacken Assange’s reputation. It largely has worked. Assange is especially vilified for publishing 70,000 hacked emails belonging to the Democratic National Committee (DNC) and senior Democratic officials. The Democrats and former FBI Director James Comey say the emails were copied from the accounts of John Podesta, Democratic candidate Hillary Clinton’s campaign chairman, by Russian government hackers. Comey has said the messages were probably delivered to WikiLeaks by an intermediary. Assange has said the emails were not provided by “state actors.”

The Democratic Party—seeking to blame its election defeat on Russian “interference” rather than the grotesque income inequality, the betrayal of the working class, the loss of civil liberties, the deindustrialization and the corporate coup d’état that the party helped orchestrate—attacks Assange as a traitor, although he is not a U.S. citizen. Nor is he a spy. He is not bound by any law I am aware of to keep U.S. government secrets. He has not committed a crime.

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Enough controversy for ten.

Stan Lee Leaves a Legacy as Complex as His Superheroes (DB)

He was born Stanley Martin Lieber in the Bronx. For nearly 22 years, beginning almost immediately after graduating from DeWitt Clinton High School, he labored in obscurity as a writer, editor, and art director in a publishing industry just one cultural rung above pornography: comic books. And then, in 1961, he became one of the pivotal 20th century figures who elevated comics into the first draft of American pop culture. Stan Lee, who died Monday, November 12 at age 95, is synonymous with Marvel Comics. Nearly every movie released by Hollywood upstart-turned-juggernaut Marvel Studios can trace part of its creative origins to Lee. (The exceptions are the Captain America, Guardians of the Galaxy, and forthcoming Captain Marvel franchises.)

Among people who shaped the legacy of the Disney company, which purchased Marvel in 2009 for $4 billion, Lee is probably second only to Walt Disney himself. George Lucas is third because of the debts Star Wars owes to the comics creations of Lee’s greatest creative partner and bitterest foe, Jack Kirby. Lee’s legacy at Marvel is immortal. But so too is the debate and controversy over what that legacy specifically is. In some quarters in comics, and especially to devotees of Kirby, Stan Lee is a supervillain–a man who stole credit, and corresponding fortunes, from the people who truly shaped Marvel creatively in the ’60s, relegating them to also-ran obscurity.

Aspects of that critique, uncomfortably, have merit. Lee had a maestro’s instincts for what we now call branding, and it cast a shadow long enough to keep his Marvel collaborators in darkness. In press interviews, his endless public appearances, and his own writing, Lee portrayed himself as the driver of the Marvel Universe, rendering artists like Kirby and Spider-Man co-creator Steve Ditko as afterthoughts.

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