Esther Bubley Greyhound garage, Pittsburgh, PA Sep 1943
There’s not a single day that we’re not treated to more smart treats about stimulus measures. Are they necessary, are they good, are they bad, who profits from them. It gets really long in the tooth. Today, former ECB head Trichet says unlimited stimulus ‘risks’ blowing bubbles. “Supplying unlimited amounts of liquidity at interest rates close to zero has “unintended counterproductive consequences.”
No shit, assclown. Does Jean-Claude really mean to claim he just figured that one out now? Why else did he never say it before? There are 1001 other wise guys like Trichet who’ve only recently seen a sliver of light, and see fit to make the great unwashed party to their new found wisdom. And they’re the vanguard, all the rest still sit on their asses.
The simple truth about ultra low interest rates is so simple it’s embarrassing, at least for those who claim they benefit society. That is, ultra low rates make borrowing accessible to the wrong people, and to the right people for the wrong reasons. The former are people who shouldn’t be able to borrow a dime, because they have no credit credibility, the latter borrow only for unproductive or counter-productive reasons.
Like companies setting up mergers and acquisitions not because a merger or stock buy-back is a good idea in itself, but because at 0% it’s too easy a risk not to take when you know it’ll lift your share price, and you can fire thousands of people to boot and label that ‘efficiency’.
In that same vein, but on an individual scale, mortgages will once again be made tempting for people who shouldn’t ever have a mortgage, at least not until they have their finances in order, through plans like the Access to Affordable Mortgages Act the US Congress is planning to launch upon the country. That is to say, if a 4% rate is too high for the poor, let’s make it less.
But if you can’t afford 4%, you shouldn’t have a mortgage, period, and your government certainly shouldn’t entice you into getting one. No matter how left or how right you lean politically, that is simply not something a pot a government should be stirring in or tampering with. That Congress prepares to do so anyway is a solid sign of how desperate Washington is about the US economy. That’s not even open to discussion.
Ultra low rates in a situation of already existing excessive debt levels is like feeding terminal patients strychnine, and telling them they’re sure to feel much better in the morning. Or maybe just something along the lines of: how much worse could it get?
US banks complain that they can’t lend out more because the potential penalties, in case the loan turns bad, are too severe. So Washington will lower those penalties (want to bet?). If not, home prices will fall, and we can’t have that, can we?
We live in a virtual economy, whereas we desperately need a real one. We need it because if we don’t get one soon, the virtual one will eat huge parts of every hard-working American’s (and European’s) fast shrinking wealth.
There are no western stock markets anymore, other than a bunch of idle numbers we see in the media. Trade volume is at levels as ultra low as interest rates, AND central banks are buying shares, AND a huge chunk of the market is high-frequency trade. What all that means is the Dow and S&P no longer reflect anything even remotely related to the American economy. That link is broken, gone. Not a minor detail.
Handing trillions to essentially broke banks, and on top of that enabling them to borrow – virtually – unlimited amounts of funds, is in essence the worst thing that could happen to the US economy. It is, though, the only way to save those same banks. And that’s why we have QE. It kills the real economy to save Wall Street. The latter has more political say than the former, i.e. it purchases more votes. It is simple indeed.
There are plenty historical average charts and stats for business loans and mortgage loans, and there’s no reason we should be at that average today.
Other than that, we are at a historically unique, never before seen, point at which we can only keep appearances if we give money away for free to those who already have the highest levels of debt. And that will only work short term. After that, all that remains is ‘Le deluge’, i.e. the wash-out flood, i.e. the debt tsunami.
That’s the only simple truth there is as far as QE is concerned. It’s nothing but yet another way to transfer money from you to the bankrupt yet privileged world of finance. Designed to allow the banks to postpone their inevitable moment of reckoning, and let everyone else pay for that delay.
How simple would you like it? The financial hole you’re in gets deeper every single day courtesy of your own government and central bank. That’s what QE means to you. Told you it was simple.
War.
• Ukraine To Get Arms From Five NATO Allies: Poroshenko Aide (Reuters)
A senior aide to Ukraine’s President Petro Poroshenko said on Sunday Kiev had reached agreement during the NATO summit in Wales on the provision of weapons and military advisers from five member states of the alliance. “At the NATO summit agreements were reached on the provision of military advisers and supplies of modern armaments from the United States, France, Italy, Poland and Norway,” the aide, Yuri Lytsenko, said on his Facebook page.
He gave no further details and it was not immediately possible to confirm his statement. Poroshenko, whose armed forces are battling pro-Russian separatists in eastern Ukraine, attended the two-day summit in Wales that ended on Friday. NATO officials have said the alliance will not send weapons to Ukraine, which is not a member state, but they have also said individual allies may choose to do so. Russia is fiercely opposed to closer ties between Ukraine and the NATO alliance.
• Unlimited Liquidity Risks Asset Bubbles: Ex-ECB Head Trichet (CNBC)
Supplying unlimited amounts of liquidity at interest rates close to zero has “unintended counterproductive consequences,” former European Central Bank President Jean-Claude Trichet warned on Saturday. “It’s true that new bubbles are necessarily created when you deliver unlimited supply of liquidity at zero rates,” Trichet told CNBC in an interview at the Ambrosetti Forum in Italy. The European Central Bank (ECB) surprised investors and markets on Thursday by cutting interest rates to record lows and announcing a bond-buying program. The rate on the main refinancing operations was cut to a new low of 0.05%. The rate on the marginal lending facility was lowered to 0.30% and the rate on the deposit facility was cut still further into negative territory, to -0.20%. ECB President Mario Draghi also announced the ECB would purchase asset-backed securities (ABS) and covered bonds to boost the economy and boost inflation.
Trichet said he trusted the move to purchase ABS and said it was “very very important”. Under such a program, euro zone banks sell the ECB their loans and other types of credit that have been packaged together. Draghi said the ECB would only purchase less risky senior tranches of securitized debt and loans, as well as mezzanine tranches with guarantees. “So I trust really,that as far as purchases of credible securities are concerned, the ECB is right to concentrate on where you have a problem, namely, the private tradable securities,” Trichet said. “On top of that, of course you have the monetary policy decision, and historically very very low rates, which confirms that the is ECB taking very seriously this very low inflation which characterizes the euro area. Concerns about growth-sapping low inflation had already seen the ECB unveil a host of measures designed to give the euro zone’s recovery a boost in June.
Former European Central Bank executive board member Jörg Asmussen, now a minister in the German government, said the ECB was right to do whatever it could within its mandate. He said the bank should not “change the rules”, echoing comments by other German policymakers who have challenged the legality of the ECB’s as yet untested sovereign bond buying program. Newswires, citing sources, reported that Bundesbank President Jens Weidmann had opposed the ECB’s latest policy measures. Asmussen warned that the euro zone debt crisis was not over but “dormant”. “And the risk for catastrophic events have clearly diminished. But this is why I try to say on the fiscal policy side, it’s extremely important – especially for countries with high public debt levels – to stick with the agreed framework.”
• Fed’s Plosser Warns Again On Risks Of Waiting To Hike Rates (Reuters)
Charles Plosser, president of the Philadelphia Federal Reserve Bank and the loan dissenter at the Fed’s July policy meeting, on Saturday continued his push for the U.S. central bank to change its language on interest rate policy to reflect an improving economy and pave the way for a faster-than expected-interest rate hike. Plosser, who is known for his longstanding warnings about potential inflation, said the Fed’s steady, accommodative language had fallen out of step with a strengthening economy. “We must acknowledge and thus prepare the markets for the fact that interest rates may begin to increase sooner than previously anticipated,” Plosser said in remarks prepared for delivery to a group of Pennsylvania community bankers gathered for their annual convention at this seaside resort.
“I am not suggesting that rates should necessarily be increased now,” said Plosser, who currently is a voter on the Fed’s main policy-setting committee. But “our first task is to change the language in a way that allows for liftoff sooner than many now anticipate and sooner than suggested by our current guidance.” The Fed’s policy committee meets later this month in a session that may see Plosser get his wish. In a recent speech at the Fed’s annual economic conference in Wyoming, Fed Chair Janet Yellen acknowledged the arguments of those, like Plosser, who feel the economy – and labor markets in particular – may be stronger than they appear by some indicators.
Th Fed is the only party left.
• How Central Bank Liquidity Levitates The Financial Markets (Lee Adler)
Dow Jones’s Marketwatch, inexplicably, does a better job of being “fair and balanced” in reporting financial news than its sister in crime, the Wall Street Journal, or their evil stepmom, Fox Business. The great humanitarian seeker of truth and paragon of journalistic virtue, Rupert Murdoch, controls all of them. So it’s surprising to find occasional points of light in that evil empire. Marketwatch’s Washington Bureau Chief Steve Goldstein is one of them, and one of a few financial journos who at least makes an effort to seek and report the facts, rather than hewing strictly to Wall Street’s company line. I had a conversation with Goldstein on Twitter on Tuesday. Goldstein had tweeted, “How much good data is needed for Treasury bulls to capitulate? (Lots, probably, but 10-yr up 7 bps today).”
I inferred that he was referring to the idea that good economic data should push Treasury yields higher. It’s a broadly accepted misconception that there’s a cause/effect relationship between economic data and bond yields. I sent him a Tweet alluding to the real drivers of Treasury prices, supply and demand. “Maybe, but there’s a temporary shortage of cash now as Treasury issues $87B in new paper 8/28-9/4, including $32B today.” He responded, “That’s surely not issue (no pun intended) at the long end.” Me in a series of tweets: “Sure it is. Absolutely positively. The cash must be raised to pay the bill. This is enormous supply in one week”. But it’s a short term effect. Couple days at most. Then the market snaps back to whatever trend it’s on. Treasury supply is one of THE most important, and widely ignored, short term market drivers for both bonds and stocks. It directly impacts the Primary Dealers in their market making functions, and other buyers, across the spectrum of markets.
Goldstein was open enough and curious enough to ask me if I had data. So I sent him my latest Treasury and Fed reports, along with the emailed comments reproduced below, which briefly illustrate a couple of key points in how I view markets. The Fed and US Treasury are the major players in driving price trends in the markets along with two other mammoth central banks. Goldstein then asked “What’s the correlation between S&P 500 and Treasury issuance, and how does that compare to QE?” This question really gets to the heart of what drives the markets, and what’s wrong with them. Below is my quickly penned, somewhat disjointed response.
• Even In The Richest 3%, There’s A Growing Wealth Gap (CNBC)
America’s millionaire population hasn’t grown significantly in 10 years, according to new government data, suggesting that not everyone at the top is benefiting from the recovery. The latest Surveys of Consumer Finance from the Federal Reserve paints the familiar picture of widening income inequality in America. The wealthiest 3% of households control 54.4% of the nation’s wealth, up from 51.8% in 2009. But the gains are highly concentrated at the top of the top 3%. And as a whole, American millionaire households—those with a total net worth of $1 million or more—have not fared as well, either in the recession or the recovery.
According to the new Federal Reserve data, there were 11.53 million millionaire households in the U.S. in 2013, down from 11.98 million in 2010 and below the 11.65 million millionaire households in 2004. (The numbers are inflation adjusted). In other words, it’s been a lost decade for America’s millionaire population. Even in percentage terms, the millionaire population is the lowest in a decade. Only 9.4% of American households had $1 million or more in assets in 2013, down from a peak of 10.4% in 2004 and even below the levels in 2001. Compared with the rest of the country, of course, millionaires are doing fine. But the declining population of millionaires through the recession shows just how devastating the downturn was even among the affluent. It is only the truly wealthy—the top 1% and, more importantly, the top 0.01%—that have benefited most from rising stocks and asset prices.
• ‘Affordable Mortgages Act’: How Congress Will Create The Next Crisis (Black)
Say hello to the next financial crisis, brought to you courtesy of the dumbest new bill of the week: H.R. 5148: Access to Affordable Mortgages Act. Ordinarily whenever an individual wants to borrow money for a mortgage, the bank conducts due diligence… both on the borrower as well as the property. It’s in the banks’ interest (as well as the banks’ depositors) to ensure that the property is at least worth as much as the amount being borrowed. Duh. Congress doesn’t agree. Apparently when banks conduct property appraisals, that seems to unfairly discriminate against some segment of the population trying to buy crap properties. And we certainly can’t have that going on in the Land of the Free.
So with HR 5148, Congress aims to exempt certain ‘higher-risk mortgages’ from property appraisal requirements. Curiously, this legislation reverses several provisions in the 1968 ‘Truth in Lending Act’. It’s as if Congress is now anti- ‘Truth in Lending’ and pro- ‘whatever the hell gets the money on the street’. And of course, all of this comes at a time when mortgage rates are still near their all-time lows. You can borrow money to buy a home today at just 4%. That’s less than half the long-term average of 8.5%, and a fraction of the 16%+ people were stuck paying 30 years ago. Isn’t paying 4% affordable enough? Nope. Not according to Congress.
So now they’re trying to engineer yet another financial crisis by encouraging banks and other lenders to exercise minimal due diligence on their mortgage portfolio. This comes at a pivotal time. US banks are only now just barely starting to recapitalize after the early days of the financial crisis. They’ve unloaded their toxic assets to the US government and Federal Reserve. They’ve borrowed money at essentially 0% from the Fed and loaned it to the Treasury Department at interest (the mother of all scams). After six years of these freebies and taxpayer-funded bailouts, bank balance sheets are only now starting to clear up. So what does Congress do? They propose a new law to screw up bank balance sheets all over again. It’s idiocy on an epic scale… and it makes one wonder what team of monkeys is coming up with these ideas.
• ‘Mortgage Crisis’ Is Coming This Winter: Dick Bove
A toxic brew is bubbling in the housing market that will lead to a mortgage crisis by winter, banking analyst Dick Bove said. Now that the Federal Reserve is nearly done with its monthly bond-buying program, which includes mortgage-backed securities, and Washington continues on its quest to unwind Fannie Mae and Freddie Mac, conditions could get dicey in the home loan market. Bove envisions a scenario in which long-term financing, like the ubiquitous 30-year mortgage, that has come with fixed interest rates is endangered as mortgage buyers dry up. “This means there will be less money available to fund housing, and the terms of the available funds will be considerably more onerous than what was available under 30-year, fixed-rate loans,” Bove said in a report he sent to clients Tuesday. “This means higher monthly payments and lower housing prices. It means a crisis in the mortgage markets—and the economy.”
As part of its quantitative easing program, the Fed had been buying as much as $40 billion a month of mortgage-backed securities—known as MBS and essentially mortgages bundled into products for investors. However, that buying has been reduced to $10 billion a month as part of a process often referred to as “tapering.” At the same time, Congress is on a path to unwind Fannie Mae and Freddie Mac, the two government-sponsored enterprises that were bailed out during the financial crisis. Bove credited the MBS program—which was coupled with purchases in Treasurys—with rescuing the housing market from its moribund state prior to the start-up of the third QE phase in 2012. He similarly pointed out that Fannie and Freddie control about 61 percent of mortgages as a buyer of loans on the secondary market.
Under the current congressional plan, the Fannie and Freddie GSE system would be replaced by one in which a Federal Mortgage Insurance Corporation would replace the two entities. Part of the plan would see private capital take the first 10 percent of losses in case of default, a provision that has drawn critics who say the level is too high and will discourage investors. While banks have stepped up their mortgage buying this year, Bove noted anecdotally that those institutions are unwilling to take on the risk of 30-year, fixed-rate mortgages. “While these banks are not willing to make public statements similar to those of the industry’s leaders, they all agree that the risk in making loans to low-income households is too high,” he said. “The fines, lawsuits and put-backs associated with those loans make them unprofitable.” Unless someone fills that vacuum, the prospects for housing remain troublesome.
Yawn.
• Ukraine Ceasefire Breached In Donetsk And Mariupol (Observer)
Ukraine’s ceasefire was breached repeatedly on Sunday as shelling was audible in the port city of Mariupol, and loud booms were also heard in the regional centre Donetsk. The ceasefire, agreed on Friday, held for much of Saturday, but shelling started overnight. The official Twitter account of the Donetsk rebels said in the early hours of Sunday that its forces were “taking Mariupol”, but later accused Ukraine of breaking the ceasefire. Fighters from the Azov battalion, who are defending the town, said their positions had come under Grad rocket fire. Earlier on Saturday the truce had appeared to be holding, with only minor violations reported, as hopes mounted that the deal struck in Minsk on Friday could bring an end to the violence that has left more than 2,000 dead in recent months.
Both sides accused the other of violating the ceasefire, but there did not appear to be any serious exchanges of fire and no casualties were reported. Nevertheless, the rhetoric coming from Kiev and Donetsk, capital of the Russia-backed rebel movement, showed that a political solution was still some way away. The atmosphere between the two frontlines on Saturday was tense but calm, as both sides took stock of what appear to have been heavy losses in the final fighting that led up to the ceasefire. The fiercest fighting on Friday came in the villages between Novoazovsk and Mariupol, the strategic port city that Ukrainians feared would be attacked by separatists over the past week. Rebel forces seized the town of Novoazovsk, across the border with Russia, 10 days ago. Kiev says the rebels were aided by soldiers and armour of the regular Russian army, which helped turn the tide against Ukraine’s forces and push Kiev towards accepting a ceasefire.
No chance.
• Ceasefire Plan: Ukraine Decentralized, Special Status Lugansk, Donetsk (RT)
The OSCE has revealed the 12-point roadmap behind the September 5 truce signed in Minsk. It says that Ukraine must adopt a new law, allowing for a special status for Lugansk and Donetsk regions, and hold early elections there. The document, titled ‘Protocol on the results of consultations of the Trilateral Contact Group’ and signed in Minsk on September 5, outlines what needs to be done for the ceasefire to stay in place. “To decentralize power, including through the adoption by Ukraine of a law ‘on provisional procedure for local government in parts of Donetsk and Lugansk regions (law on special status),’” states one of the provisions in the document. Another point emphasizes that “early local elections” are to be held in light of the special status of both regions. The early elections must be held in accordance with the same proposed law, it says. Kiev must then continue an “inclusive nationwide dialogue,” the document stresses.
The roadmap also implies an amnesty for anti-government forces in Donbass: “To adopt a law, prohibiting prosecution or punishment of people in relation to the events that took place in individual areas of Donetsk and Lugansk regions of Ukraine.” At the same time, it notes that all “illegal military formations, military equipment, as well as militants and mercenaries” have to be withdrawn from Ukraine. The Organization for Security and Co-operation in Europe (OSCE) published a copy of the protocol early on Sunday, with only a PDF document in Russian available so far. During the meeting on September 5, Kiev officials and representatives of the two self-proclaimed republics in southeastern Ukraine have agreed to a ceasefire. Some of the other provisions of the truce include monitoring of the ceasefire inside Ukraine and on the Russia-Ukraine border by international OSCE observers, the freeing of all prisoners of war, and the opening of humanitarian corridors.
A “safety zone” is to be created with the participation of the OSCE on the Russia-Ukraine border, the document says. It also calls for measures to improve the dire humanitarian situation in eastern Ukraine, and urges in a separate point that a program for Donbass’ economic development is to be adopted. Since the conflict significantly deteriorated in mid-April, 2,593 people have died in fighting in the east of the country, according to the UN’s latest data. More than 6,033 others have been wounded in the turmoil. The number of internally displaced Ukrainians has reached 260,000, with another 814,000 finding refuge in Russia.
Don’t like an inch of her. But she’s right.
• Crisis In Ukraine Is ‘All EU’s Fault’ – France’s Marine Le Pen (RT)
Marine Le Pen, the leader of France’s far-right National Front party, says the EU is to blame for the crisis in Ukraine as it forced the situation where Kiev had to choose between East and West. Now that France is joining sanctions against Russia over the alleged direct interference in the political crisis in Ukraine and Paris is considering suspending the €1.2 billion deal of two Mistral helicopter carrier ships ordered by Russia, the leader of the biggest parliamentary faction of the French parliament has her own opinion on Ukraine’s turmoil. “The crisis in Ukraine is all the European Union’s fault. Its leaders negotiated a trade deal with Ukraine, which essentially blackmailed the country to choose between Europe and Russia,” Le Pen told Le Monde daily in an interview. Le Pen has been a long-standing critic of Europe’s foreign policy and does not see how Ukraine could join the bloc. “The European Union’s diplomacy is a catastrophe,” Le Pen told RT’s Sophie Shevardnadze in an exclusive interview in June.
“The EU speaks out on foreign affairs either to create problems, or to make them worse.”“Ukraine’s entry into the European Union; no need to tell fairy tales: Ukraine absolutely does not have the economic level to join the EU,” Le Pen told RT. In her fresh interview with Le Monde, the National Front leader had a positive attitude towards Russian President Vladimir Putin and the economic model he builds. “I have a certain admiration for the man [Putin]. He proposes a patriotic economic model, radically different than what the Americans are imposing on us,” said Marine Le Pen. As for France’s decision to suspend the delivery of the first of two Mistral helicopter carrier ships to Russia, it only shows Paris’ obedience of American diplomacy, Marine Le Pen said earlier. This decision (not to deliver Mistral ships) is very serious, firstly because it runs contrary to the interests of the country and shows our obedience of American diplomacy,” Le Pen told France’s RTL radio.
France’s National Front and its leader Marine Le Pen, a party renowned for its anti-immigrant and anti-EU rhetoric, achieved unprecedented results at the latest EU elections, claiming nearly 25 percent of the votes and winning the election. “Our people demand one type of politics: they want politics by the French, for the French, with the French. They don’t want to be led anymore from outside, to submit to laws.” These were the National Front’s slogans that garnered a quarter of French voters earlier this year. President Francois Hollande’s popularity in France has hit a record low – just over 13 percent, according to estimates from the TNS-Sofres pollster, reported Reuters on Thursday. Full of confidence, the National Front leader Marine Le Pen has no doubt she can head the national government today. “I’m ready to be prime minister and implement the policies that the French are waiting for,” she said.“Hollande would be the president for representation and inauguration ceremonies, but that’s it. The government decides the policies and the political path to follow. He would have to submit to it, or he would have to go,” Le Pen told Le Monde.
Dementia at work.
• West Must Arm Ukraine To Fight ‘Invasion’: McCain (CNBC)
U.S. Senator John McCain on Saturday decried the “shameful” refusal of the West to provide Ukraine with intelligence and defensive weapons in its fight against Russian separatists in the east of the country. A cease-fire struck between Ukrainian forces and pro-Russian separatists was largely holding on Saturday, but McCain doubted the calm would last. Russian President Vladimir Putin had already achieved “de facto control over eastern Ukraine,” McCain, an influential member of the U.S. Senate Foreign Relations Committee told CNBC in an interview at the Ambrosetti Forum in Italy. “He calculates from day to day,” McCain said of Putin’s moves, “what is the reaction to the things he does”. He added that he believed Putin’s ultimate goal was to “re-establish the old Russian empire”. “That includes Ukraine, that includes Moldova, that includes the Baltics. And that is his ambition to achieve that goal… And if we don’t show strength, as we did during the Cold War. Then he will take advantage of what he perceives as weakness. And it could lead to very serious crises,” he said.
The lawmaker has traveled to Ukraine repeatedly to voice his support for the country. In December, he addressed pro-EU protestors who wanted former Ukrainian President Yanukovych booted out of office. McCain suggested the only reason the fragile cease-fire would hold was because Ukraine’s military had “no real capability”. “That of course, makes it more difficult for them to force the removal of Russians from eastern Ukraine. And the Russians are there,” the Arizona Republican Senator said. “We need tougher sanctions, we need to give the Ukrainians military equipment, intelligence, we need to set up training program. We need a group of American military advisors over there.” He is also concerned that Europe’s dependence on Russian energy could restrict the bloc’s willingness to act. “I’m afraid that as long as Europeans are dependent on Russian energy, that we’re not going to see vigorous response. We’ve heard a whole lot of talk, and very little action.”
Word. See Ron Paul.
• NATO – An Idea Whose Time Has Gone (Antiwar.com)
In the past dozen years, the armed forces of NATO countries, whether operating under the NATO banner or in related ad-hoc coalitions, have killed many hundreds of thousands of people. Of those hundreds of thousands of people, only a few hundred at most ever had any connection to any attack on a NATO country. Whatever modern NATO has become, a defensive alliance it is not; that fact is beyond rational dispute. It is also the case that the situation in countries where NATO has been most active in killing people, including Iraq, Libya, Afghanistan and Pakistan, has deteriorated. It has deteriorated politically, economically, militarily and socially. The notion that NATO member states could bomb the world into good was only ever believed by crazed and fanatical people like Tony Blair and Jim Murphy of the Henry Jackson Society. It really should not have needed empirical investigation to prove it was wrong, but it has been tried, and has been proved wrong.
The NATO states as a group have also embarked on remarkably similar reductions in the civil liberties of their own populations during this period. NATO to me is symbolized by the fact that its Secretary General, Anders Fogh Rasmussen, as Danish Prime Minister blatantly lied to the Danish parliament about Iraqi Weapons of Mass Destruction. When Major Frank Grevil released material that proved Rasmussen was lying, it was Grevil who was jailed for three years. In the United States, no CIA operative has been prosecuted for their widespread campaign of torture, but John Kiriakou is in jail for revealing it. NATO’s attempt to be global arbiter and enforcer has been disastrous at all levels. Its plan to redeem itself by bombing the Caliphate in Iraq and Syria is a further sign of madness. Except of course that it will guarantee some blowback against Western targets, and that will “justify” further bombings, and yet more profit for the arms manufacturers. On that level, it is very clever and cynical. NATO provides power to the elite and money to the wealthy.
But what of Putin’s Russia, I hear you say? I am no fan of Putin – I think he is a nasty, dangerous little dictator. But little is the operative word. Russia is not a great power. Its GDP is 10% of the GDP of the EU. Its economy is the same size as Italy’s. The capabilities of Russia’s armed forces are massively exaggerated by the security industry, including the security services, and by arms manufacturers. The entire area of Eastern Ukraine which Russia is disputing has a GDP smaller than the city of Dundee. Russia is only any kind of “military threat” because of its nuclear arsenal. The way forward to peace is active international nuclear disarmament – and the existence of NATO is the greatest obstacle to that. The idea that almost the entire developed world needs to encircle and contain Russia with massive military threat, is as sensible as the idea that it needs to encircle the UK or France – both of which have substantially larger and more diversified economies than Russia and much larger and more technologically advanced arms industries.
NATO is by far the largest danger to world peace. It should be dissolved as a matter of urgency.
More corrupt than Washington or Kiev?
• Dozens Of Brazil Politicians Linked To Petrobras Kickback Scandal (BBC)
An ex-director of Brazil’s state-run oil company Petrobras has accused more than 40 politicians of involvement in a kickback scheme over the past decade. Paulo Roberto Costa – who is in jail and being investigated for involvement in the alleged scheme – named a minister, governors and congressmen. They were members of the governing Workers party and two other groups that back President Dilma Rousseff. She is seeking re-election in a poll due on 5 October. Many of the names were published in Veja, one of Brazil’s leading magazines. Several politicians mentioned have denied involvement. Mr Costa claimed that politicians received 3% commissions on the values of contracts signed with Petrobras when he was working there from 2004 to 2012. He alleged that the scheme was used to buy support for the government in congressional votes.
Mr Costa was arrested in 2013. He is now in jail and struck a plea-bargain deal with prosecutors before giving the names. Ahead of the election, Ms Rousseff’s approval ratings have been slipping in opinion polls in favour of her rival, former Environment Minister Marina Silva. The BBC’s Wyre Davies in Rio de Janeiro says the latest allegations could hurt the incumbent further, as during her presidency Petrobras has dramatically underperformed and its costs have risen sharply. It has become one of the world’s most indebted oil companies and lost half of its market value in three years.
Too early?
• Scottish Independence Poll Puts Separatists Ahead at 51% (Bloomberg)
Scotland’s nationalists overtook opponents of independence in an opinion poll for the first time this year, less than two weeks before the country votes on whether to break up the 307-year-old U.K. A YouGov Plc survey for the Sunday Times showed Yes voters increased to 51%, while the No side dropped to 49% when undecided respondents were excluded. The shift to an outright lead for supporters of independence may further roil financial markets after the pound weakened last week when the pro-U.K side’s support narrowed to six percentage points.
The Sept. 18 ballot on Scottish independence is dominating the U.K. after door-to-door campaigning on both sides intensified last week and as traders and investors no longer rule out a dramatic victory for nationalist leader Alex Salmond. “For a positive message to catch up so much in a month is totally unprecedented,” said Matt Qvortrup, a senior researcher at Cranfield University in England and author of “Referendums and Ethnic Conflict.” “This is pretty revolutionary stuff in referendum terms. We’re ringside to history.” The pound may trade lower as markets absorb the poll and start to price in a higher probability of a Yes win, said Sebastien Galy, a senior currency strategist at Societe Generale SA in New York. “The market has been very relaxed regarding this risk and may now take a sharper interest,” he said.
Too late?!
• UK Promises Scots More Powers If They Reject Independence (Reuters)
The British government is scrambling to respond to a lurch in the opinion polls towards a vote for Scottish independence this month by promising a range of new powers for Scotland if it chooses to stay within the United Kingdom. British finance minister George Osborne said on Sunday that plans would be set out in the coming days to give Scotland more autonomy on tax, spending and welfare if Scots vote against independence in a historic referendum on Sept. 18. Osborne’s comments came after a YouGov poll for the Sunday Times showed supporters of independence had taken their first opinion poll lead since the referendum campaign began. With less than two weeks to go before the vote, the poll put the “Yes” to independence campaign on 51 percent and the “No” camp on 49 percent, overturning a 22-point lead for the unionist position in just a month.
“You will see in the next few days a plan of action to give more powers to Scotland … Then Scotland will have the best of both worlds. They will both avoid the risks of separation but have more control over their own destiny, which is where I think many Scots want to be,” Osborne told the BBC. “More tax-raising powers, much greater fiscal autonomy … more control over public expenditure, more control over welfare rates and a host of other changes,” he said, adding that the measures were being agreed by all three major parties in the British parliament. Osborne said the changes would be put into effect the moment there was a ‘no’ vote in the referendum. Nicola Sturgeon, deputy leader of the pro-independence Scottish National Party, welcomed the poll as a “very significant moment” in the campaign and rejected the talk of more devolved powers for Scotland. “I don’t think people are going to take this seriously. If the other parties had been serious about more powers, then something concrete would have been put forward before now,” she told Sky news.
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• The West Without Water (Tavares)
Dr. B. Lynn Ingram is a professor in the Department of Earth and Planetary Science at UC Berkeley, California. The primary goal of her research is to assess how climates and environments have changed over the past several thousand years based on the geochemical and sedimentologic analysis of aquatic sediments and archaeological deposits, with a particular focus on the US West. She is the co-author of “The West without Water: What Past Floods, Droughts, and Other Climatic Clues Tell Us about Tomorrow” together with Dr. Frances Malamud-Roam, which received great reviews. In this interview, Dr. Ingram shares her thoughts on the current drought in the US Southwest within the larger climate record and potential implications for the future.
E. Tavares: Thank you for sharing your thoughts with us today. Your research focuses on long-range geoclimatic trends using a broad sample of historical records. In this sense, “The West without Water”, which we vividly recommend reading, provides a very grounded perspective on the weather outlook for the US Southwest going forward. So let’s start there. What prompted you to write this book?
L. Ingram: My co-author and I decided to write this book because our findings, and those of our colleagues, were all showing that over the past several thousand years, California and the West have experienced extremes in climate that we have not seen in modern history – the past 150 years or so. Floods and droughts far more catastrophic than we can even imagine. We felt it was important to bring these findings to the attention of the broader public, as these events tend to repeat themselves. So we need to prepare, just as we prepare for large earthquakes in California.
ET: When you say “West”, which regions are you referring to?
LI: In the book we focus on the climate history of California and the Southwest, but also bring in examples and comparisons with other western states as appropriate (such as Oregon and Washington, Nevada, Utah, etc.), as the entire region experiences similar storms and is controlled by similar climate that originates in the Pacific Ocean.
ET: What type of evidence have you used in reaching your conclusions? How accurate are these records?
LI: In the book we bring together many lines of evidence, ranging from tree-ring records to sediment cored from beneath lakes, estuaries, and the ocean. Paleoclimatologists – those that study past climate change using geologic evidence – study various aspects of these cores, including the fossils in them, the chemistry of the fossils and the sediments, and pollen and charcoal remains. The charcoal provides evidence about past wildfires. The archaeological record also contains important clues about past climate and environments and how they impacted human populations.
• Retirees Turn To Farming As Encore Career (Chris Farrell)
A critical confusion at the core of the “unretirement,” work longer, encore career movement — pick your favorite euphemism — is choice versus necessity. Is the encore trend little more than marketing talk masking the ugly reality that most aging boomers can’t afford to retire and need to eke out a living well past 60? Or is the rethinking of life’s last stage a welcome shift in expectations, built on embracing engagement, meaning, giving back and, yes, earning an income? Truth is, for most boomers, the exploration is a mix of the desire for meaningful work and the need to pocket a paycheck. One of the oldest occupations (not that one) nicely shows the dialectical tension and illustrates an optimistic cocktail of motives behind the Unretirement movement: Farming.
Not having enough of a cushion for retirement is a daunting fear but there are strategies to help eke out some more dollars when it counts. If you know any farmers, you know that, for them, retirement is an elusive concept. Nearly 29% of the nation’s farmers (principal operators) are 55 to 64; a third are 65 and older. But there’s another reason for the high average age of farmers: The retire-to-farm movement (or, as my editor quipped, digging in for retirement). It’s an eclectic group that includes part-time farmers; second-career farmers; semiretired farmers; hobby farmers with a few acres; encore-career farmers with several hundred acres; immigrants carving out a new life for themselves and their families and others. Many retire-to-farm migrants rely on savings and pensions earned in a different occupation, although not all.
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