Jan van Eijk The Arnolfini portrait 1434
They’re all still talking about the markets that aren’t markets. Curious. Is it because it’s all they have? Either way, seems leargely useless to me.
• A $3 Trillion Debt Tsunami Is About To Flood The Stock Market (MW)
Will Nasgovitz, who oversees about $1.3 billion in assets as the chief executive of Heartland Advisors, isn’t calling for a “full blown financial crisis,” but, with trillions in corporate debt coming due in the coming years, the industry veteran’s not exactly predicting smooth sailing in the stock market, either. “With interest rates low, the economy strong, and relatively easy lending standards, the thinking went that borrowing to buyback shares or finance acquisitions was a low-risk strategy,” Nasgovitz explained in a recent post. “But the next five years could severely test that Pollyanna view.” Nasgovitz used this chart to illustrate his stance. As you can see, about $3.3 trillion — or 48% of all current outstanding commercial debt — comes due by 2023.
The timing could be problematic. “The sheer volume would be challenging for the market to digest in the best of scenarios, let alone this late in an economic expansion,” Nasgovitz wrote. “Adding to our sense of caution are early signs that lending standards have begun to tighten for commercial and industrial borrowers.” He says that, as banks become more stringent, borrowers could end up paying higher rates just to secure funds to retire outstanding obligations. “While we don’t currently see signs of a full-blown financial crisis on the horizon,” he concluded, “we do believe that excessive debt adds unnecessary challenges to companies in general and will likely be a headwind for heavy borrowers in the intermediate term going forward.”
Overall sentiment: it won’t amount to much. So the media’s next steps are being prepared in the vein of “Just because Mueller couldn’t find a thing, doesn’t mean it doesn’t exist”.
Russiagate has been the media’s golden goose; what can they turn to now?
• Attorney General Barr To Announce End Of Mueller Probe Next Week: CNN (ZH)
Barely a week after being sworn in as the head of the Justice Department, Attorney General William Barr is reportedly planning to announce as early as next week that Robert Mueller has completed his investigation and that a confidential report on Mueller’s findings will be submitted to Congress in the very near future. According to CNN, the preparations – which are in line with an NBC report from late last year that the Mueller report would be completed by the end of February – “are the clearest indication yet that Mueller is nearly done with his almost two-year investigation.” Barr has said that he wants to be as “transparent” as possible while being “consistent with the rules and the law.”
According to the law, Mueller must submit a “confidential” report to the AG after the investigation ends. But the rules don’t require it to be shared with Congress or the public (though, like everything involving the Mueller probe, it will almost certainly leak). One thing that remains unclear is to what extent Mueller’s findings will be shared with Congress (since the DOJ typically frowns on publicizing embarrassing or compromising information about people who haven’t been charged with a crime…though that principle has apparently gone out the window over the last two years). CNN also noted that it’s possible that Mueller has made referrals to other prosecutors besides the New York US attorney who brought charges against Michael Cohen.
The existence of other investigations might also soon come to light. CNN reported that attorneys from the US attorney’s office for Washington DC have been visiting Mueller “more than usual.” Signs that the Mueller probe is winding down have been multiplying in recent weeks. Four of his 17 prosecutors have been reassigned, and the grand jury he has used to secure his indictments hasn’t convened since late January. While Trump is probably hoping that the Russia collusion narrative will decidedly die after the report is released, former DNI James Clapper – whom Trump threatened to strip of his security clearance – warned that the report might leave open the question of whether there actually was collusion between Trump and Russia, giving the release a disappointingly anti-climactic feel, according to the Hill.
A ‘subtle’ shift: now that going after Trump himself is going nowhere, Clapper et al claim Putin uses Trump as an unwitting asset. Takeaway: they will simply continue their collusion accusations. And Putin is an even easier victim.
Give me one reason why this entire cabal should not be investigated.
As I said yesterday: “Isn’t it supremely ironic that Mueller’s main objective today is trying to come up with some narrative that justifies his own probe? It’s circular ‘logic’ at its very best.
But why is McCabe so cocky about his treasonous(-like) behavior? Imagine someone like him doing an interview like that 2 years (or 6) into Obama’s presidency, saying it was possible Barack was an asset of China. Just imagine.”
• Mueller Report May Be ‘Anti-Climactic’ – Clapper (Hill)
Former Director of National Intelligence James Clapper said Wednesday that he’s far from sure that special counsel Robert Mueller’s investigation will clear up questions about President Trump and Russia. He said he was hopeful the Mueller probe will provide some answers, but warned it might not even draw a conclusion on whether there was collusion between the Trump campaign and Moscow. “I think the hope is that the Mueller investigation will clear the air on this issue once and for all. I’m really not sure it will, and the investigation, when completed, could turn out to be quite anti-climactic and not draw a conclusion about that,” Clapper said Wednesday on CNN.
Clapper, a frequent critic of Trump’s, said people in the intelligence community see a strange deference on the president’s part toward Russian President Vladimir Putin. “The strange thing I think that has bothered a lot of people both in and out of the intelligence community is this strange personal deference to Putin by the president. I’ve speculated in the past that the way Putin behaves is to treat President Trump as an asset,” Clapper said Wednesday. He added that if Trump were indeed advancing Putin’s interests, he would more likely be doing so unwittingly.
The White House has lashed out at Clapper over his criticism in the past and announced in August it was reviewing existing security clearances for Clapper and several other former intelligence and law enforcement officials who have criticized the White House. Speculation has ramped up over Trump’s relationship with Russia after it was reported last month that the Justice Department had opened an investigation into whether the president was working on behalf of Moscow’s interests. Former acting FBI Director Andrew McCabe on Friday claimed that he believes “it’s possible” Trump is a Russian asset.
And there’s Comey again, out to save the country.
• FBI Top Lawyer Believed Hillary Clinton Should Face Charges (Solomon)
For most of the past three years, the FBI has tried to portray its top leadership as united behind ex-Director James Comey’s decision not to pursue criminal charges against Hillary Clinton for transmitting classified information over her insecure, private email server. Although in the end that may have been the case, we now are learning that Comey’s top lawyer, then-FBI General Counsel James Baker, initially believed Clinton deserved to face criminal charges, but was talked out of it “pretty late in the process.” The revelation is contained in testimony Baker gave to House investigators last year. His testimony has not been publicly released, but I was permitted to review a transcript.
During questioning by Rep. John Ratcliffe (R-Texas), Baker was unequivocal about his early view that Clinton should face criminal charges. “I have reason to believe that you originally believed it was appropriate to charge Hillary Clinton with regard to violations of law — various laws, with regard to mishandling of classified information. Is that accurate?” Ratcliffe, a former federal prosecutor, asked Baker. Baker paused to gain his lawyer’s permission to respond, and then answered, “Yes.” He later explained why he came to that conclusion, and how his mind was changed: “So, I had that belief initially after reviewing, you know, a large binder of her emails that had classified information in them,” he said.
“And I discussed it internally with a number of different folks, and eventually became persuaded that charging her was not appropriate because we could not establish beyond a reasonable doubt that — we, the government, could not establish beyond a reasonable doubt that — she had the intent necessary to violate (the law).” Asked when he was persuaded to change his mind, Baker said: “Pretty late in the process, because we were arguing about it, I think, up until the end.” Baker made clear that he did not like the activity Clinton had engaged in: “My original belief after — well, after having conducted the investigation and towards the end of it, then sitting down and reading a binder of her materials — I thought that it was alarming, appalling, whatever words I said, and argued with others about why they thought she shouldn’t be charged.”
His boss, Comey, announced on July 5, 2016, that he would not recommend criminal charges. He did so without consulting the Department of Justice (DOJ), a decision the department’s inspector general (IG) later concluded was misguided and likely usurped the power of the attorney general to make prosecutorial decisions. Comey has said, in retrospect, he accepts that finding but took the actions he did because he thought “they were in the country’s best interest.”
More will follow. 5 weeks left.
• Conservative Split As Tory Rebels Denounce Hardline Brexiters (G.)
Three Conservative MPs who resigned to join a new independent group on Wednesday said Theresa May had allowed their former party to fall prey to hardline Brexiters and declared that the Tory modernising project had been destroyed. In the latest evidence that Brexit is reshaping the political landscape, Heidi Allen, Anna Soubry and Sarah Wollaston, all outspoken critics of May’s stance on Europe, said the Conservative party as they had known it under David Cameron was dead. “I’m not leaving the Conservative party – it has left us,” said Soubry at a hastily convened press conference around the corner from the House of Commons. “The modernising reforms that had taken years to achieve were destroyed.”
Allen was asked if she could ever return to the Conservatives and answered: “If we do our jobs properly, there won’t be a Tory party to go back to.” She added: “We’re about creating something better that is bang smack in the centre ground of British politics that people out there, I am convinced, we are convinced, want.” The dramatic resignations – announced shortly before May confronted Jeremy Corbyn at prime minister’s questions – sent shockwaves through Westminster, where MPs had barely digested news of the Labour split. The move reduces May’s already tenuous working majority to eight, raising still more questions over her authority amid rumours that there could be further Tory defections.
On Wednesday night, Allen told ITV’s Peston that “a third of the party” – around 100 of her former colleagues – shared her frustrations at its direction. The Tory former attorney general Dominic Grieve told the BBC: “The government which I am supporting implementing a no-deal Brexit – what would I do? I would not be able to maintain my support of the government. I would have to leave the party.”
George Galloway is right: center liberal parties are exactly what the whole world is rejecting.
• How Not To Organise A Split In A Party (Galloway)
Just seven MPs announced their departure from Jeremy Corbyn’s Labour Party and though there may be others to come this was their first rank. And there lies the first problem. Other than Chuka Umunna virtually nobody has ever heard of the new Independent Group of MPs who were quickly dubbed the ‘Seven Dwarfs’. [..] From a crowded field I’d say the next biggest blunder was registering their parliamentary factions as a private company in a transparent effort to avoid…transparency! It’s true that Chuka and co are the corporate suit types and most of them are more familiar with the boardroom than the boiler room but no parliamentary group in history has turned themselves into a business!
The reasons – millions of them – are not hard to discern. A political party must declare who’s funding it and how much. A private company doesn’t. But again what seemed like a wheeze is in fact a blunder. I’m now free to speculate that they’ve already received millions from Hamas, Hezbollah, Iran and President Putin. It’s probably not true, but how can one tell? [..] I may be wrong and Manchester United may win the Champions League but I’m perfectly sure Centrist neo-liberal politics are currently out of fashion throughout the world. I base this on 14 weeks of mayhem on the streets of France, and not much more than that in President Macron’s opinion poll ratings. On Mrs Merkel slouching out of the German Chancery in ruins. On the Rushmore like ruin of Hillary Clinton. On the portrait of Dorian Gray that is the haunted face of the most hated man in Britain, Tony Blair.
And that’s only the tariffs.
• UK And Ireland Retailers Warn Of 40% Tariffs On Food In No-Deal Brexit (G.)
A no-deal Brexit could lead to tariffs of 40% or more being imposed on food such as beef and cheddar cheese, driving up prices in shops and squeezing household budgets across the UK and Ireland, retail organisations from both countries have warned. With mounting fears that the UK could leave the European Union without an agreement in 36 days’ time, the British Retail Consortium (BRC), Northern Ireland Retail Consortium (NIRC) and Retail Ireland, issued a joint warning that this outcome could lead to delays at borders and shortages of fresh meat, fish, fruit and vegetables. The scheduled withdrawal on 29 March comes at a time in the year when the UK imports a lot of fresh, out-of-season, produce – 90% of the lettuce consumed in Britain, 80% of tomatoes and 70% of soft fruits come from, or arrive via, Europe.
Increased tariffs, the devaluation of sterling and new regulatory checks would drive up the cost of fresh food and drink, which would be passed on to consumers, the retail bodies warned. If the UK leaves the EU without a deal, both fall back on the World Trade Organization’s most favoured nation tariffs, which means import duties on everyday food items from fruit to cheese. This would mean a 42% tariff on imported cheddar, 46% on mozzarella, 40% on beef, 21% on tomatoes and 15.5% on apples, the BRC said. Last year one of the UK’s largest dairy producers, based in Northern Ireland, warned that leaving the customs union under a hard Brexit could lead to the price of meat doubling in the UK and the price of dairy, half of which is imported, rising by up to 50%.
Imagine taking that into a severe recession.
• UK Economy £100 Billion Smaller Because Of Austerity (G.)
Austerity policies from the Treasury have resulted in slower growth in every year since 2010 and left each household £300 a month worse off as a result, a thinktank has said. The New Economics Foundation said its analysis of the impact of tax and spending changes since the Conservatives came to power, first as part of a coalition with the Liberal Democrats, had left the economy £100bn smaller than it would otherwise have been. Although the peak impact of the attempt to reduce a record peacetime budget deficit occurred during the first two years of the 2010-15 parliament, the thinktank said austerity was still acting as a drag on output. The NEF said the cumulative effect of tax, public spending and welfare adjustments on growth by the end of the 2018-19 financial year would be to leave the average household £3,629 a year worse off – the equivalent of £1,495 per person.
The latest public finances figures, due out on Thursday, will show whether the chancellor, Philip Hammond, is on course to hit his forecast for a budget deficit in 2018-19 of £25.5bn – one sixth of its level in the aftermath of the financial crisis and deep recession of 2008-09. Alfie Stirling, head of economics at the NEF, said work by the Office for Budget Responsibility and the Institute for Fiscal Studies made it possible to isolate the effects of austerity. “At this time of year there is often renewed speculation over whether the chancellor will meet his year-end deficit targets by March. But for nine years, the elephant in the room has largely been missed: the sheer scale of economic damage that these targets have contributed to in the first place.”
The Germans have a much smaller weapons industry.
• Germany Rebuffs UK Call To Back Off Saudi Arms Freeze (ZH)
Germany is feeling the pressure from western allies over its weapons exports freeze in the wake of the Saudi killing of Jamal Khashoggi, a freeze first announced in November, which included plans to reject any future export licences to Riyadh, but not previously approved deals. German allies like the UK have lately implored the German government to soften its stance, noting the potential broader economic impact on Europe. British foreign minister Jeremy Hunt, currently in Berlin to discuss the terms of Brexit, reportedly wrote to the German foreign minister, Heiko Maas, in a private letter first revealed by Der Spiegel that UK defense companies would be hindered in contractual obligations related to Eurofighter Typhoon and the Tornado fighter jet delivery, namely to supply parts affected by the German arms freeze.
Hunt told Maas in the letter published in German press: “I am very concerned about the impact of the German government’s decision on the British and European defence industry and the consequences for Europe’s ability to fulfil its Nato commitments.” This follows comments by German chancellor Angela Merkel at the past weekend’s Munich Security Conference acknowledging the need for “common export controls guidelines” across Europe. She said during a question-and-answer session after her speech at the conference: “We have because of our history very good reasons to have very strict arms export guidelines, but we have just as good reasons in our defense community to stand together in a joint defense policy. And if we want … to develop joint fighter planes, joint tanks, then there’s no other way but to move step-by-step towards common export controls guidelines.”
It’s like nothing changed in 4 years. Only this time Bernie may be the favorite.
• Bernie Sanders Raised $6 Million In One Day After Launching Campaign (ZH)
Just one day after officially launching his campaign for the 2020 Democratic nomination during an interview on Vermont Public Radio, Bernie Sanders has already raised more than $6 million through more than 220,000 individual contributions, according to CNN. Sanders, who consistently ranks near the top of most polls alongside former Vice President Joe Biden, saw the money pour in from donors in all 50 states. The average contribution was $27, which is roughly in line with the average contribution from Sanders 2016 upstart primary campaign against Hillary Clinton, in which he won a number of crucial primaries (all while actively working against the DNC). Confirming his outsize popularity in an increasingly crowded field, the self-described “Democratic Socialist”‘s haul dwarfs the $300,000 raised by Elizabeth Warren during the 24 hours after her official campaign launch.
Of the $6 million raised, some 10% (about $600,000) came in the form of recurring donations, providing “a huge, dependable grassroots donor base that will afford the campaign a consistent budgeting baseline.” During his last race, Sanders regularly touted the fact that his campaign was largely funded by small donations. And it appears this is already emerging as a central theme for the 2020 race. “The only way we will win this election and create a government and economy that work for all is with a grassroots movement – the likes of which has never been seen in American history,” Sanders said in his message announcing his campaign. “They may have the money and power. We have the people.”
On top of that $6 million haul, Sanders is entering the race with more than $9 million left in his US Senate campaign committee: funds that he can transfer to his presidential campaign. That puts him behind only Warren ($11 million) and Sen. Kirsten Gillibrand ($10.3 million).
She has no reason to support anyone at all.
• Ocasio-Cortez Refuses To Back Bernie Sanders For 2020 (Ind.)
Alexandria Ocasio-Cortez has refused to endorse Bernie Sanders for the 2020 Democratic nomination, despite working on the senator’s first presidential campaign. A spokesperson for Ms Ocasio-Cortez, like Mr Sanders a self-described democratic socialist, refused to comment directly on the 77-year-old’s Tuesday announcement he is running for a second time. “We’re excited to see so many progressives in the race,” spokesperson Corbin Trent said. “We’re not thinking at all about the next election.” Any endorsement by Ms Ocasio-Cortez is likely to be influential on the outcome of the race, thanks to her massive support among the grassroots of the party. But the 29-year-old, a congresswoman for New York, is unlikely to offer an endorsement before her state’s Democratic primary next year, and may even permanently withhold any explicit support for a single candidate.