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Debt Rattle May 28 2023

May 282023
 
 May 28, 2023  Posted by at 8:37 am Finance Tagged with: , , , , , , , , ,  32 Responses »


Vincent van Gogh The garden of the asylum at Saint-Rémy 1889

 

• No Truce With the Heartland (Luongo)
• Eurasian Heartland Rises to Challenge the West (Pepe Escobar)
• After Bakhmut (Douglas Macgregor)
• Counteroffensive Can Start At Any Moment – Ukrainian Official (RT)
• Ukraine Demands German Missiles Capable Of Striking Moscow (RT)
• Africa Foresees End Of Unipolar World – Russian Envoy (RT)
• Credit Rating Agency Downgrades US (RT)
• Debt Ceiling Deal Between White House And GOP Reached In Principle (ZH)
• EU Sanctions Talks Hit Roadblock – Politico (RT)
• China Rebuffing All Contact With US Military: Pentagon (ZH)
• John Durham and the Burying of American History (Patrick Lawrence)
• Roger Waters Under Criminal Probe Over Anti-Nazi Satire (RT)
• Fisher-Price Introduces ‘My First Gender Transition’ Playset (BBee)

 

 


The winner from the Texas Sand Sculpture Festival.

 

 

Eli Crane

 

 

Anthony Bourdain

 

 

Rogan Smith

 

 

 

 

Veritas

 

 

Carrey

 

 

 

 

 

 

 

 

Perhaps it’s time to see Mackinder from a Chinese perspective. In 1904 that may not have seemed important, but today?!

• No Truce With the Heartland (Luongo)

Ukraine has always represented the apotheosis of the Neocon/Neoliberal world order. As Crooke points out, they are facing a very unpleasant choice: “The war is now, in this way, being projected as a binary choice: ‘End the war’ versus ‘Win the war’. Europe is tergiversating –standing at the cross-roads; hesitantly starting down one road, only to reverse, and indecisively take a few cautious steps down the other. The EU will both train Ukrainians to fly F-16s; and yet is coy about providing the planes. It smacks of tokenism; but tokenism is often the father to mission-creep.” Indeed it is. Because of the closed-mindedness of those in power in the West — their biases, racism, and arrogance — they will not stop in Ukraine until they are forced to by circumstances.


Those circumstances will likely be dictated by the revamped Russian military now configured to fight a longer and different kind of war than the one that began in February 2022. Every day we see signs that Russia’s military-industrial capacity is increasing rapidly while the EU languishes. The US is rapidly trying to bring back onshore manufacturing lost to the ZIRP and Greenspan Eras, but this is a slow and painful process especially since it has run out of room on the balance sheet to deficit spend to accelerate things. “Biden” and his merry band of vandals in D.C. are more than happy to burn the place to the ground more thoroughly than the British did in the War of 1812 if they can’t get their way on unlimited taxing and spending.

So, here we are. Bakhmut has fallen. The Ukrainian counter-offensive is non-existent. If anything it was already absorbed by Putin and Prigozhin. Zelenskyy will now get F-16s to attack Crimea and use that as some moral high ground for justifying NATO’s official involvement after Russia’s inevitable counter-attack. Then the air will be thick with the smell of thermobarics in the morning. But, regardless of any of that, there will be no truce in the Heartland. Russia will not back down. China will back them to the end, as will OPEC+ and the rest of Central Asia. But they will not escalate one inch further than they need to. Allowing the West to keep thinking they can win is the ultimate form of grinding out a superior opponent.


[..] While the West fights desperately to stave off defeat of the Heartland, it’s clear the rest of the World Island is making plans to leave them behind. At some point there are simply too many people and too much pressure to keep pushing the world towards a conclusion it doesn’t want to go. And that’s when everything changes, literally overnight. Until then, it will be another day, another escalation, another pointless political knife fight and thousands of people dying needlessly. When he published that paper in 1904 all Mackinder did was formalize British imperial thinking into an easily-digested thesis for morons. Today we are being gaslit by these morons into believing our lives depend on fighting for ‘freedom’ in central Ukraine. It was written as the British empire’s grip on power was beginning to wane. World War I would put the capper on that.

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More heartland. BRICS + Central Asia.

• Eurasian Heartland Rises to Challenge the West (Pepe Escobar)

President Xi Jinping telling President Putin at the end of their summit last March in Moscow that we’re now facing “great changes not seen in a century” directly applies to the new spirit reigning across the Heartland. Cue to the China-Central Asia summit last week in Xian, the former imperial capital, where Xi solidified the expansion of the Belt and Road Initiative (BRI) from Western China in Xinjiang to its western neighbors and then all the way to Iran, Turkey and Eastern Europe. Xi in Xian particularly stressed the complementing aspects between BRI and the Shanghai Cooperation Organization (SCO), once again showing that all five Central Asian “stans”, acting together, should counter-act the proverbial external interference via “terrorism, separatism and extremism”.

The message was stark: these hybrid war strategies are all integrated with the attempt by the Hegemon to continue fostering serial color revolutions. The purveyors of the “rules-based international order”, Xi implied, will go no holds barred to prevent ongoing Heartland integration. The usual suspects in fact are already spinning that Central Asia is falling into a potential trap, fully captured by Beijing. Yet this is something Kazakhstan’s “multi-vector diplomacy”, coined way back in the Nazarbayev years, would never allow. What Beijing is developing, instead, is an integrated approach via a C+C5 secretariat with no less than 19 separate channels of communication. The heart of the matter is to turbo-charge Heartland connectivity via the BRI’s Middle Corridor.

And that, crucially, includes technology transfer. As it stands, there are dozens of industrial transfer programs with Kazakhstan, a dozen in Uzbekistan, and several in discussion with Kyrgyzstan and Tajikistan. These are extolled by Beijing as part of “harmonious Silk Roads”. Xi himself, as a post-modern pilgrim, detailed the connectivity in his keynote speech in Xian: “The China-Kyrgystan-Uzbekistan highway that runs across the Tian shan Mountains, the China-Tajikistan expressway that defies the Pamir Plateau, and the China-Kazakhstan crude oil pipeline and the China-Central Asia Gas Pipeline that traverse the vast desert – they are the present-day Silk Road.”

[..] Moscow is very much aware of the high stakes. For instance, for a year and a half virtually every month a Russian delegation arrives in Tajikistan to implement, in practice, the “pivot to the East”, developing projects in agriculture, health care, education, science and tourism. Central Asia should have a leading role in BRICS+ expansion – something supported by both BRICS leaders Russia and China. The idea of a BRICS + Central Asia is being seriously floated from Tashkent to Almaty. That would imply establishing a strategic continuum from Russia and China to Central Asia, South Asia, West Asia, Africa and Latin America – spanning the logistics of connectivity trade, energy, manufacture production, investment, technological breakthroughs and cultural interaction.

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“Zelensky’s supporters no longer believe in the myth of Ukrainian victory..”

• After Bakhmut (Douglas Macgregor)

Until the fighting begins, national military strategy developed in peacetime shapes thinking about warfare and its objectives. Then the fighting creates a new logic of its own. Strategy is adjusted. Objectives change. The battle for Bakhmut illustrates this point very well. When General Sergey Vladimirovich Surovikin, commander of Russian aerospace forces, assumed command of the Russian military in the Ukrainian theater last year, President Vladimir Putin and his senior military advisors concluded that their original assumptions about the war were wrong. Washington had proved incurably hostile to Moscow’s offers to negotiate, and the ground force Moscow had committed to compel Kiev to negotiate had proved too small. Surovikin was given wide latitude to streamline command relationships and reorganize the theater.

Most importantly, Surovikin was also given the freedom of action to implement a defensive strategy that maximized the use of stand-off attack or strike systems while Russian ground forces expanded in size and striking power. The Bakhmut “Meatgrinder” was the result. When it became clear that Ukraine’s President Volodymyr Zelensky and his government regarded Bakhmut as a symbol of Ukrainian resistance to Russian military power, Surovikin turned Bakhmut into the graveyard of Ukrainian military power. From the fall of 2022 onward, Surovikin exploited Zalenskiy’s obsession with Bakhmut to engage in a bloody tug-of-war for control of the city. As a result, thousands of Ukrainian soldiers died in Bakhmut and many more were wounded. Surovkin’s performance is reminiscent of another Russian military officer: General Aleksei Antonov.

As the first deputy chief of the Soviet general staff, Surovikin was, in Western parlance, the director of strategic planning. When Stalin demanded a new summer offensive in a May 1943 meeting, Antonov, the son and grandson of imperial Russian army officers, argued for a defensive strategy. Antonov insisted that Hitler, if allowed, would inevitably attack the Soviet defenses in the Kursk salient and waste German resources doing so. Stalin, like Hitler, believed that wars were won with offensive action, not defensive operations. Stalin was unmoved by Soviet losses. Antonov presented his arguments for the defensive strategy in a climate of fear, knowing that contradicting Stalin could cost him his life. To the surprise of Marshals Aleksandr Vasilevsky and Georgy Zhukov, who were present at the meeting, Stalin relented and approved Antonov’s operational concept. The rest, as historians say, is history.

Macgregor

If President Putin and his senior military leaders wanted outside evidence for Surovikin’s strategic success in Bakhmut, a Western admission appears to provide it: Washington and her European allies seem to think that a frozen conflict—in which fighting pauses but neither side is victorious, nor does either side agree that the war is officially over—could be the most politically palatable long-term outcome for NATO. In other words, Zelensky’s supporters no longer believe in the myth of Ukrainian victory. The question on everyone’s mind is, what’s next? In Washington, conventional wisdom dictates that Ukrainian forces launch a counteroffensive to retake Southern Ukraine. Of course, conventional wisdom is frequently high on convention and low on wisdom.

On the assumption that Ukraine’s black earth will dry sufficiently to support ground maneuver forces before mid-June, Ukrainian forces will strike Russian defenses on multiple axes and win back control of Southern Ukraine in late May or June. Roughly 30,000 Ukrainian soldiers training in Great Britain, Germany, and other NATO member states are expected to return to Ukraine and provide the foundation for the Ukrainian counterattack force. General Valery Gerasimov, who now commands the Russian forces in the Ukrainian theater, knows what to expect, and he is undoubtedly preparing for the Ukrainian offensive. The partial mobilization of Russian forces means that Russian ground forces are now much larger than they have been since the mid-1980s.

Given the paucity of ammunition available to adequately supply one operational axis, it seems unlikely that a Ukrainian offensive involving two or more axes could succeed in penetrating Russian defenses. Persistent overhead surveillance makes it nearly impossible for Ukrainian forces to move through the twenty- to twenty-five-kilometer security zone and close with Russian forces before Ukrainian formations take significant losses. Once Ukraine’s offensive resources are exhausted Russia will likely take the offense. There is no incentive to delay Russian offensive operations. As Ukrainian forces repeatedly demonstrate, paralysis is always temporary. Infrastructure and equipment are repaired. Manpower is conscripted to rebuild destroyed formations. If Russia is to achieve its aim of demilitarizing Ukraine, Gerasimov surely knows he must still close with and complete the destruction of the Ukrainian ground forces that remain.

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Repeat every day.

• Counteroffensive Can Start At Any Moment – Ukrainian Official (RT)

Ukrainian forces are “ready” to launch their much-touted counteroffensive, the head of the National Security and Defense Council told the BBC in an interview on Saturday. Aleksey Danilov said the military top brass are now waiting for the right moment to launch the attack. “It could happen tomorrow, the day after tomorrow or in a week,” Danilov answered when pressed about a potential start of the counteroffensive, which Kiev has been talking about for months. A major assault was initially expected to start in spring or even late winter, but Kiev repeatedly postponed it, citing adverse weather conditions and the need to obtain all necessary weapons and equipment from western backers. Danilov said it would have been “weird” for him to reveal the exact date, as “that cannot be done.”

He described the planned attack as a “historic opportunity” that his nation “cannot lose” if it wants to become a “big European country.” “We understand that we have no right to make a mistake,” he added. In April, The New York Times reported that Ukraine’s Western supporters might start to pressure Kiev into launching talks with Moscow should the much-anticipated offensive fail to yield any major gains. Kiev has been sending mixed signals on the counteroffensive. Earlier this week, Ukrainian President Vladimir Zelensky’s aide, Mikhail Podoliak, told Italy’s Rai TV channel that it “has been going on for several days”. However, on Thursday, another presidential advisor, Igor Zhovkva, contradicted that statement, saying Ukrainian forces were still preparing for the operation.

Danilov denied the offensive had already begun, claiming that Ukrainian strikes against Russian “control centers” and “military equipment” were just routine operations. Danilov’s remarks came as Russia outlined its conditions for ending the conflict with Ukraine. Russian Deputy Foreign Minister Mikhail Galuzin told TASS on Saturday that Kiev should abandon the idea of joining NATO and the EU, guarantee the rights of minorities, and declare Russian a state language. Ukraine must also recognize the “new territorial realities,” the high-ranking diplomat said, referring to four former Ukrainian territories that joined Russia following referendums in autumn 2022, as well as Crimea, which reunited with Russia in 2014 following another referendum. However, Danilov stated earlier in May that there could be no peace talks “on Russia’s terms.”

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Does Germany wish to be a target?

• Ukraine Demands German Missiles Capable Of Striking Moscow (RT)

Ukraine has asked Berlin to provide it with long-range air-launched missiles that could potentially reach Moscow, a spokesperson for Germany’s Defense Ministry confirmed on Saturday. On Friday, the Frankfurter Allgemeine Zeitung newspaper reported, citing two unnamed “insiders” within the German military, that Ukraine “urgently wants” Swedish-German Taurus missiles. These munitions could be allegedly placed on US-made F-16 fighters, which are now being considered for delivery to Kiev by several Western countries. Ukrainian President Vladimir Zelensky is said to have asked for the missiles during his meeting with German Chancellor Olaf Scholz in Berlin earlier this month.

For now, it is unclear whether Berlin, which earlier said it did not have any F-16s to send to Kiev, will grant this request. The report said the demand presents Berlin with a dilemma, as some in the German government doubt whether Ukraine would sensibly use such a weapon – which can travel 500km (310 miles) and is armed with a 500kg warhead. As Kiev may use the Taurus to strike Moscow from the border, “some fear that in a situation of dire need, Kiev could allow the war to escalate uncontrollably,” the paper added. According to the outlet, another problem is that the Taurus needs extremely precise and up-to-date information to stage attacks, raising questions as to whether Berlin would be willing to share such data with Kiev.

Earlier this month, the UK decided to supply Ukraine with Storm Shadow missiles with a range of over 250km (155 miles), with Moscow’s Foreign Ministry condemning the move as another step towards a “serious escalation.” Later, the Russian Defense Ministry said that Kiev used the weapon to conduct a strike on civilians in the Donbass city of Lugansk, resulting in six children injured, according to local authorities. Even without long-range missiles, earlier this month Kiev unsuccessfully attempted to conduct a strike on the Kremlin using two drones, which according to Moscow was an attempt to assassinate Russian President Vladimir Putin. Kiev has denied any involvement, with Ukrainian President Vladimir Zelensky claiming that “we fight on our territory” and “we don’t have… enough weapons for this.”

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“..the aggressive imposition of Western ‘new values’ causes growing rejection there and only brings Russia and African countries closer together.”

• Africa Foresees End Of Unipolar World – Russian Envoy (RT)

The West’s attempts to pressure Africa to turn on Russia have failed as people on the continent realize the true nature of the conflict in Ukraine and see that the unipolar world order is coming to an end, according to the head of the Russia-Africa Partnership Forum. Oleg Ozerov, who is also Russia’s ambassador-at-large, told Newsweek on Friday that the attendance of 40 out of 54 nations of the continent at the Russia-Africa Interparliamentary Conference had “shattered the myth of Russia’s alleged isolation due to the events in Ukraine, persistently promoted in the West.” “People in Africa understand very well that the former Soviet republic has turned into an arena of confrontation between the new and the old world paradigms, between different visions of the future, not just a trivial feud between neighbors,” he said.

According to the diplomat, the well-balanced and neutral approach towards “Russia’s confrontation with the West” by Africa, China, India and Latin American nations “confirms once again that the transition to… multipolar architecture is irreversible.” Those countries clearly understand that the time for “unipolar world-order is running out,” he added. What Africa needs now is promotion of local solutions and national interests, as well as deliverance “from the rigid constraints of globalism promoted by neo-liberalist ideologists,” Ozerov said. “African countries count on Russia’s support” in achieving those goals, he stated. Moscow is backing efforts to complete the decolonization process in a number of African countries, while also working to put together a broad anti-terrorist front on the continent “free from any hidden agenda or double standards,” the diplomat continued.

“The US and EU want Africa to play the role of a mere supplier of raw materials to the ‘civilized world,’” Ozerov said. But Russia has a different approach as its “primary interest is to assist the development of Africa’s domestic energy and electricity markets, where we have considerable expertise, especially as regards nuclear energy,” he explained. Moscow has “no vested interests, such as to preserve its zone of influence or aggressively guard markets from any ‘outsiders,’” and Africans see that, the envoy said. And that’s the reason why “the unprecedented pressure by the West on Russia’s partners in Africa is not that effective in practice.” Ozerov said that, during his trips to the continent, it became obvious to him that “the aggressive imposition of Western ‘new values’ causes growing rejection there and only brings Russia and African countries closer together.” Russia is due to host a high-level Russia-Africa Summit in St. Petersburg in July, with the envoy saying that recent developments indicate that the event is going to be “a success.”

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What’s the influence on Treasury purchases?

• Credit Rating Agency Downgrades US (RT)

China Chengxin International Credit Rating (CCXI) slashed its sovereign credit score for the US by one notch earlier this week, becoming the first among top rating firms to make the move. The leading Chinese agency, a joint venture between Beijing Zhixiang Information Management Consulting and US ratings giant Moody’s, lowered the US to AAg+ from AAAg, having placed it on review for a further downgrade, according to a statement released on Thursday. “The intensification of political divisions between the two parties in the United States has increased the difficulty of resolving the debt-ceiling issue,” the statement reads.

“Even if a consensus is reached, the brinkmanship would pose uncertainty to the US government’s policy path and dampen economic confidence, which could trigger further volatility in the US politics and economy,” the agency added. According to CCXI, US debt sustainability is currently being seriously challenged, with the highest level of borrowing among the previously AAAg-rated nations, while the issue is being complicated by hawkish policies of the US Federal Reserve. The regulator has hiked the key interest rate several times over the past few months, raising the risk of asset depreciation on the balance sheets of many financial institutions. The credit rating agency Fitch previously put the US on watch for a potential downgrade, having warned that the nation could soon lose its AAA score due to an inability to pay its bills, within a matter of days.

Meanwhile, Moody’s said a mid-June interest payment on Treasuries will be critical for maintaining its top AAA grade. Republicans and Democrats have struggled to reach an agreement to increase the debt ceiling for weeks, prompting warnings from Treasury Secretary Janet Yellen that the US is “highly likely” to default if Congress does not act soon. The move would be a first in American history, as the government has never defaulted on its debt, which has swelled to more than $31 trillion. Late on Friday, Yellen extended the deadline for a potentially devastating default, saying the government has just a few more days to argue over the debt ceiling before it runs out of cash.

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“The debt ceiling deal “cuts” spending by 0.2% of GDP or about $50 billion. Is that good enough?”

“Of the $80 billion Democrats appropriated to the IRS over ten years, the “deal” rescinds $1.9 billion. You read that right. That’s the kind of “get” that’s so good McCarthy agreed to increase the debt ceiling $4 trillion.”

• Debt Ceiling Deal Between White House And GOP Reached In Principle (ZH)

The White House and GOP negotiators have reached an agreement in principle to raise the US debt ceiling, averting a default. The deal raises the debt limit and keeps non-defense spending ‘near flat’ for two years, while cutting and capping various federal programs, the NY Times reports. After 2025, however, there will be no budget caps. It was structured with the aim of enticing votes from both parties, though it would most likely draw the ire not only of conservative Republicans but also Democrats furious at being asked to vote for cuts they oppose with the threat of default looming. If the progressives or the Freedom Caucus don’t blow it up, the plan has a chance of Congressional passage before June 5, the date Treasury Secretary Janet Yellen has warned any deal must be finalized by in order to avoid hitting the “X-date”, when the Treasury can no longer meet its obligations.


“After weeks of negotiations, we have come to an agreement in principle,” said House Speaker Kevin McCarthy, adding that there are “historic reductions in spending” and “consequential reforms.” “There are no new taxes, no new government programs,” McCarthy continued, adding that they would be spending tonight writing the agreement. McCarthy expects a vote on Wednesday. In the House, Republicans hold a narrow majority – meaning unhappy right-wing lawmakers who have demanded significantly larger budget cuts in exchange for raising the ceiling may hold it hostage (lookin’ at you Gaetz). That said, McCarthy can at least say he tried – inking in principle a compromise that would effectively freeze federal spending that had been slated to expand.

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“European diplomats are hesitant to openly name and shame those who stall the negotiations, allegedly out of fear that more EU countries suspected of facilitating sanctions-evasion could also rebel.”

• EU Sanctions Talks Hit Roadblock – Politico (RT)

The negotiations over the European Union’s 11th package of sanctions against Russia have been stalled amid opposition from Athens and Budapest, who demand their companies be removed from the Kiev-compiled list of “war sponsors,” according to Politico. Two rounds of talks in Brussels this week ended with no deal in sight, as there was “no pressure” to discuss smaller issues until crucial objections by the member states are addressed, the publication reported on Saturday citing multiple anonymous diplomatic sources. The main roadblock is said to be Kiev’s notorious list of “sanctions-evaders” and “international sponsors of war,” which features multiple European companies because they maintained business ties with Russia.

Compiled by the National Agency on Corruption Prevention (NACP), the list includes such giants as German wholesaler Metro, French retailer Auchan, Italian cement company Buzzi Unicem and Austrian banking group Raiffeisen, among others. Hungary was the only EU state to voice objections during a foreign ministers’ meeting on Monday, insisting that Kiev’s baseless accusations against its leading financial institution OTP Bank could be formalized with the bloc’s next round of sanctions. On Wednesday, however, Greece stepped into the forefront of the discussion, saying that allegations of sanction circumvention could be “very damaging” to its economy as well.

“Greece reiterated that, should there be concrete evidence of violation of sanctions, these should be brought to the attention of the member states concerned, at the technical level, so that this be adequately investigated and then due action will be taken,” an unnamed EU diplomat told the publication. Politico claimed that the Ukrainian list and the next sanctions package are “not linked” and the duo was simply holding the talks hostage as “political leverage.” However, European diplomats are hesitant to openly name and shame those who stall the negotiations, allegedly out of fear that more EU countries suspected of facilitating sanctions-evasion could also rebel. In the meantime, two sources said that the EU’s top diplomat, Josep Borrell, acknowledged the problem and “it is now up to him to work with the Ukrainians on a solution.”

Budapest has taken a neutral stance in the ongoing conflict between Moscow and Kiev, as it refused to provide military aid to Ukraine or allow Western aid to pass through its territory. Although Hungary had largely taken part in the existing EU sanctions against Russia, it has repeatedly criticized the restrictions and opposed those that might affect its own economy, including its conventional and nuclear energy sectors. Athens also defied the bloc’s efforts to cut all economic ties with Moscow, with imports of Russian goods by Greece more than doubling to a record €9.33 billion ($10 billion) last year. The trade balance between the two countries in 2022 was negative, however, with the value of Greek exports to Russia last year decreasing to €156.4 million from €206.6 million in 2021.

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They’re arming Taiwan. So what is there to talk about?

• China Rebuffing All Contact With US Military: Pentagon (ZH)

Top Pentagon officials have once again said that China is ignoring and rebuffing the US military’s attempts to establish and open line of communication, which is crucial to avoiding inadvertent conflict in regions such as in the South China Sea where both naval powers operate. “Open communication channels between the US and China are important in maintaining peace and stability across the Taiwan Strait, US Assistant Secretary of Defense for Indo-Pacific Affairs Ely Ratner said on Thursday,” regional media reports. “The Pentagon’s attempts to reach out to China’s military in recent months have been ignored or rebuffed,” Ratner told an audience at the DC-based Center for Strategic and International Studies.

He sought to stress that the Pentagon “believes in the importance of open lines of communication with the PRC [People’s Republic of China] and we have sought to build out those open lines of communication. Unfortunately… we’ve had a lot of difficulty when we have proposed phone calls, meetings, dialogues.” “The US and Department of Defense have had an outstretched hand on this question of military to military engagement, but we have yet to have consistently willing partners,” Ratner emphasized further. Earlier this month there was hope that US-China dialogue would be back on track following the meeting between National Security Advisor Jake Sullivan and Chinese Communist Party Politburo Member and China’s Director of the Office of the Foreign Affairs Commission Wang Yi in Vienna on May 10-11.

That meeting was generally reported and regarded as positive, given that before that all such high level diplomatic contacts had been off ever since the ‘spy balloon’ shootdown incident over the American east coast in early February. But even if the rival militaries are struggling to keep open communications, Washington and Beijing are pushing forward with trade talks: “U.S. Secretary of Commerce Gina Raimondo sat down with her Chinese counterpart Wang Wentao in Washington D.C. on Thursday to discuss “concerns” surrounding bilateral trade. Marking the first cabinet-level exchange between the two countries in months, the U.S. talked about American companies operating in China. According to a readout by the Commerce Department, “The two had candid and substantive discussions on issues relating to the U.S.-China commercial relationship, including the overall environment in both countries for trade and investment and areas for potential cooperation.”

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“..part of the effort to bury the Russiagate hoax the way the Warren Commission buried the facts of the Kennedy assassination for many years.”

• John Durham and the Burying of American History (Patrick Lawrence)

I appreciate the Durham Report for the chronology of events it indicates. This is now easier to follow than it has been previously. In simple terms, Clinton authorized an operation to frame Trump within days of the leak of emails from Democratic Party servers in July 2016. The FBI’s leadership acted quickly to set this operation in motion. It first considered using the offhand remarks of George Papadopoulos, a minor Trump campaign volunteer, to obtain surveillance warrants against various of Trump’s advisers. When that proved too flimsy, the agency’s top officials turned to the Steele Dossier. The agency knew it was junk, but they punched it up sufficiently to get the warrants needed to proceed against Trump and his people. This was Crossfire Hurricane, the FBI’s anti–Trump op at the heart of the Russiagate hoax.

“The truth is, we had almost all of the information a long time ago. What we didn’t have was the certification of the information by a government authority, by a legal authority,” Walter Kirn remarks in America This Week. “I think Durham did a job of showing reach to the highest levels of the government. Apparently everyone was briefed on the reality of this thing early on, very early on. All the highest authorities knew it was bullshit.” Perfectly fair comment, an astute summation. Then Kirn continues in a very curious way: “In a way, I guess it became necessary that the system vindicates itself by finding that which could not be found and asserting that which could not be proved, to the point that the moment where it mattered passed away. President Trump’s no longer president. All of the harms that were done by this thing have been done. They changed our history, they changed our media. They changed our sense of information and why it’s important.”

Kirn is right to suggest that “the system” appears to figure that a report such as Durham’s can now be released because it is all water under the bridge—a little in the way the U.S. will acknowledge one or another of its coup operations long after the facts have ceased to matter. Similarly, it looks as if Garland found this an opportune moment to send the Durham Report to Capitol Hill, effectively to remove the entire Russiagate affair from the common American consciousness. With a presidential election 18 months away, Biden’s attorney-general must dispose of Russiagate and Durham’s probe as hastily and as best he can.

But I am not with Kirn when he asserts all the harm has been done. No, it has not. Russiagate changed history all right. And the destruction of this history is to my mind the greatest harm of all. This is the very oddest thing about the Durham Report: It purports to rip off the veil shielding the plot against Donald Trump from view, but it shapes up after a few days’ consideration as part of the effort to bury the Russiagate hoax the way the Warren Commission buried the facts of the Kennedy assassination for many years.

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He’s been doing it for 50 years.

• Roger Waters Under Criminal Probe Over Anti-Nazi Satire (RT)

German police have launched a criminal investigation into English rock legend and Pink Floyd co-founder Roger Waters on suspicion of glorifying Nazism during two concerts in Berlin. The musician has insisted the performance was in opposition to fascism. On Friday, in a statement quoted by several media outlets, the Berlin police said that Waters was suspected of inciting hatred, and that the probe was centered on his performances on May 17 and 18 in the German capital. In footage posted on social media, the musician can be seen wearing a leather trench coat resembling a Nazi uniform with two crossed hammers and a red armband. He then proceeds to take a mock gun and shoot into the crowd.

“The context of the clothing worn is deemed capable of approving, glorifying or justifying the violent and arbitrary rule of the Nazi regime in a manner that violates the dignity of the victims and thereby disrupts public peace,” the police said. Nazi-related symbols are outlawed in Germany, with an exception being made for educational or artistic purposes. Waters’ performance was apparently in reference to the film “the Wall,” an adaptation of the eponymous 1979 Pink Floyd album. The rock star appears as the album’s protagonist who hallucinates being a fascist dictator addressing a Nazi rally. Waters’ concerts also featured a pig-shaped balloon floating in the air, with a logo of the Israeli weapons company Elbit Systems and the Star of David.

The show also involved showing the names of people fading in on the screen, including Anne Frank, a Jewish diarist who died in a Nazi concentration camp, and Palestinian Al Jazeera journalist Shireen Abu Akleh, who was killed while covering an Israeli military operation in May 2022. The Israeli UN Ambassador Danny Danon suggested that Waters wanted to compare Israel to the Nazis, describing the musician as “one of the biggest Jew haters of our time.” On Friday, the musician addressed the controversy, writing on Twitter that he had become a target of “bad faith attacks” from those who disagreed with his political views. “The elements of my performance that have been questioned are quite clearly a statement in opposition to fascism, injustice and bigotry in all its forms”, he said, adding that he had spent his entire life speaking out “against authoritarianism and oppression.”

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“Therapist doll that, when squeezed, whispers, “Don’t tell your parents.”

• Fisher-Price Introduces ‘My First Gender Transition’ Playset (BBee)

In a show of solidarity with a vocal minority of gender activists who don’t purchase their products, Fisher-Price introduced the “My First Gender Transition” playset for kids ages 2 to 9. “The My First Gender Transition playset helps your child have a fun time playing pretend while in no way being inculcated with an emotionally destructive ideology,” said Product Manager Murthina Spillwig who may soon be updating her resumé. “Parents in our focus groups were excited to force their kids to pretend to enjoy the playset for Instagram.” The playset is bursting with a plethora of features to confuse your toddler, including:

-My First Gonadotropin-Releasing Hormone Analogue puberty-blocking toy syringe
-Top Surgery For Tykes toy surgical table
-Barnyard and jungle-themed breast binders and packing underwear
-Therapist doll that, when squeezed, whispers, “Don’t tell your parents.”
-A lifesize poster of inspiring role model Dr. Rachel Levine
In anticipation of the success of the gender-affirming playset, Fisher-Price has announced they will soon be releasing the “My First Detransition” playset.

Read more …

 

 

 

 

Perfect job

 

 

Bukele

 

 

Aweeeee

 

 

Iguana
https://twitter.com/i/status/1662395821977894916

 

 

 

 

Deactivate a cat

 

 

 

 

Sea slug
https://twitter.com/i/status/1662378744160440321

 

 

 

 

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Debt Rattle May 22 2023

May 222023
 
 May 22, 2023  Posted by at 8:45 am Finance Tagged with: , , , , , , ,  39 Responses »


Piet Mondriaan Mill 1905

 

• Ukraine Claims It’ll ‘Win War’ After Getting F-16s (RT)
• US Approval Of Crimea Strikes Proves Lack Of Interest In Peace – Envoy (TASS)
• Trump’s Victory Would Be ‘The End Of Ukraine’ – Hillary Clinton (RT)
• Zelensky Compares Artyomovsk To Hiroshima (RT)
• Destruction Of Both Hiroshima, Artyomovsk Led By White House – Zakharova (TASS)
• How Russia Forced Ukrainians To Retreat From Artyomovsk (RT)
• Lula Says Zelensky Didn’t Show Up To Scheduled Meeting (RT)
• Durham Report: Clinton, Not Trump, Colluded With Russians – Hanson (Fox)
• The Durham Report Indicts the Deep State—and the Media (RCI)
• EU ‘Offer’ To Global South Must Be Better Than China’s – Ursula (RT)
• Hunter Biden Faces Call for the Appearance of Key Business Associates (Turley)
• White House Blasts GOP Over Debt Ceiling Talks (RT)
• Biden Thinks He Has Authority To Use 14th Amendment On Debt Ceiling (Hill)
• DE-Dollarization Made Simple -Even For Millennials (Vilches)
• Greece’s Debt Is More Unsustainable Than Ever (Varoufakis)

 

 

 

 

Biden 100k
https://twitter.com/i/status/1660240874851168259

 

 

 

 

Conyers

 

 

 

 

Nobody is safe

 

 

 

 

CoronaThrax

 

 

 

 

The sudden rush into the 50-year old F-16s shows us just how badly Ukraine is losing.

• Ukraine Claims It’ll ‘Win War’ After Getting F-16s (RT)

F-16 fighter jets could become a game changer in the ongoing conflict between Moscow and Kiev, a spokesman for the Ukrainian Air Force Command, Yury Ignat, claimed in remarks to Ukraine’s Espreso TV broadcaster on Saturday. “When [we] have F-16, we will win this war,” Ignat said, adding that Kiev has repeatedly told its Western backers that the air defense systems it has already obtained from the West are insufficient to protect all of Ukraine’s territory against Russian air strikes. “The territory of the country and the length of the state border are big and the frontline … is over 2,500 kilometers [long],” the Air Force spokesman said, counting Ukraine’s border with Belarus, its Black Sea shores, and the border with Moldova’s breakaway region of Transnistria as parts of the “frontline.”

It would be impossible to cover such an expanse with air defense systems, Ignat maintained. He also said that the US-made F-16 fighter jets would become “a part of the air defenses” and would be used in areas not covered by the ground-based systems. The Air Force spokesman also admitted that the Soviet-made jets that Ukraine has been using until now cannot effectively counter Russian unmanned aerial vehicles (UAVs) and cruise missiles. He said that Kiev also plans to use the US-made jets in offensive operations and that the aircraft would significantly increase the effectiveness of anti-radar HARM missiles and JDAM precision-guided munitions, which Western nations have already handed over to Ukraine. Ukraine would also use the F-16s to strike the command centers and logistical networks of Russian forces, Ignat said, adding that such attacks would allow Kiev to “quickly” seize territories that it considers “occupied” by Russia.

His words came just days after Washington said it would support a joint program to train Ukrainian pilots on modern jets such as F-16s and would allow allies to transfer the US-made aircraft to Kiev. On Saturday, US national security adviser Jake Sullivan told journalists that President Joe Biden had “informed his G7 counterparts” that Washington would let its Western allies supply advanced jets to Ukraine. Moscow blasted the decision as a “movement up the escalation ladder” that is “fraught with colossal risks” for the West itself. Russian Foreign Ministry spokeswoman Maria Zakharova also accused the US of “waging a hybrid war against the entire region” and of using Ukrainian territory to achieve its own goals.

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“..when US planes will take off from NATO airfields, piloted by foreign ‘volunteers’..”

• US Approval Of Crimea Strikes Proves Lack Of Interest In Peace – Envoy (TASS)

Washington’s approval of Ukraine’s strike on Crimea with Western weapons indicates that the US has no interest in peace, Russian Ambassador to Washington Anatoly Antonov said Sunday. “Washington has totally bent G7 members to its will in regards to the conflict in Ukraine. Moreover, it has seriously tightened its approaches on two important issues. I am referring to the handover of F-16 planes to the Kiev regime, as well as unconditional approval of strikes on Crimea with American and other Western weapons. Such steps once again make it clear that the US has never been interested in peace,” he said. The envoy added that Russia will view strikes on Crimea “as an attack on any other region of the Russian Federation,” and called on the US to consider potential response measures from Russia.


Antonov also pointed out that Ukraine lack infrastructure to use F-16 planes, as well as the required number of pilots and maintenance crews. According to Antonov, all this raises concerns about NATO’s future involvement in the conflict “when US planes will take off from NATO airfields, piloted by foreign ‘volunteers’,” he said. Earlier, US President Joe Biden told his Ukrainian counterpart Vladimir Zelensky on the sidelines of the G7 summit in Hiroshima that the US and its allies will start training Ukrainian pilots in use of F-16 fighter. Previously, US National Security Advisor Jake Sullivan said that the US and its allies will discuss which states exactly will send F-16 planes to Ukraine. He also noted that F-16s are not on the list of priority shipments for preparation of Kiev’s counteroffensive.

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“..the end of democracy in the United States” and the “end of Ukraine..”

• Trump’s Victory Would Be ‘The End Of Ukraine’ – Hillary Clinton (RT)

If ex-US President Donald Trump is re-elected in 2024, it would be the downfall of both Ukraine and democracy in America, former Democratic presidential candidate Hillary Clinton warned on Saturday. Speaking to the Financial Times, Clinton, who served as secretary of state under Barack Obama and lost to Trump in the 2016 election, said she does not believe that her former rival will be successful this time. However, she claimed that if Trump does win in 2024, it will be “the end of democracy in the United States” and the “end of Ukraine,” as he will withdraw the country from NATO. Clinton went on to say that Russian President Vladimir Putin believed Trump would do so had he won the 2020 election. “Trump was the gift that kept giving to people like [Chinese leader Xi Jinping] and Putin,” she said, accusing him of being “enamored of authoritarians” and “inept in any kind of strategic approach to China.” She added that Trump was “clearly going to do whatever Putin wanted on NATO.”


Clinton also said she once believed that China was preparing to “make [a] move against Taiwan” within a few years, but the Ukraine conflict discouraged Beijing from attempting to reclaim the island, which it regards as part of its sovereign territory. She went on to address widespread concerns that the current president, Joe Biden, 80, who confirmed that he would run again in late April, is too old for the job. While acknowledging that age is “an issue,” she urged voters to compare him to the man he is running against. Trump, who announced last November that he would run again in 2024, has been critical of Biden’s approach to the Ukraine conflict. In January, he claimed that the president “is systematically, but perhaps unknowingly, pushing us into what could soon be World War III.” Trump has described himself as the “only candidate” capable of stopping the US from sliding into a global conflict, promising he would settle the conflict in Ukraine “very quickly” if elected.

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And why not? Anything goes.

• Zelensky Compares Artyomovsk To Hiroshima (RT)

The devastation left by the months-long battle for the Donbass city of Artyomovsk is reminiscent of the destruction resulting from the US nuclear bombing of Hiroshima, Ukrainian President Vladimir Zelensky told journalists on Sunday while attending the G7 summit hosted by the Japanese city. “The photos of Hiroshima remind me of Bakhmut,” said Zelensky, using the Ukrainian name of the city. He laid wreaths at the memorial to the victims of the atomic bombing in Hiroshima during his visit. “Absolute total destruction. There is nothing, there are no people,” he said, adding that “all the buildings are destroyed” in the city captured by Russia over the weekend. The Russian Defense Ministry confirmed seizing Artyomovsk late on Saturday.

On Sunday, Russian President Vladimir Putin congratulated Wagner fighters and the servicemen of the regular Russian Army for successfully taking the city. Kiev continues to deny losing control of it. Zelensky himself sent mixed signals about the situation on the ground. Early on Sunday, he said the city “is only in our hearts” when asked if Ukraine still controls Artyomovsk. Later, he denied the city was “occupied by Russia.” Russian businessman Evgeny Prigozhin, the founder of the Wagner Group private military company, told journalists on Sunday that “no Ukrainian fighters had been left” in Artyomovsk. The US nuclear bombing of Hiroshima killed between 70,000 and 80,000 civilians, or around 30% of the city’s population at that time, according to various estimates. Another 70,000 people were injured. The blast also killed an estimated 20,000 Japanese military personnel.

The ‘Little Boy’ bomb that exploded about 580 meters above the city right over the Shima Surgical Clinic destroyed everything within a some 1.6-kilometer radius from the center of the blast. It also caused a massive blaze that engulfed 11 square kilometers. According to Japanese officials, almost 70% of the city’s buildings were destroyed. The salt-mining city of Artyomovsk had been the scene of intense fighting for some eight months as Russian forces gradually pushed Ukrainian troops out. The city, which spreads over some 41.6 square kilometers, was largely destroyed in the process. In 2017, the total population of Artyomovsk amounted to just over 71,000 people. Most residents were evacuated before the battle began or earlier in the fighting. However, according to the International Committee of the Red Cross, some 10,000 people were still living in the city in late March. Kiev also stated that the battle for Artyomovsk claimed the lives of some 4,000 civilians. Russia did not comment on these estimates.

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Zakharova has the real link between the two..

• Destruction Of Both Hiroshima, Artyomovsk Led By White House – Zakharova (TASS)

Russian Foreign Ministry Spokeswoman Maria Zakharova pointed out that both Artyomovsk (Bakhmut) and Japan’s Hiroshima were destroyed by the official Washington, commenting on Ukrainian President Vladimir Zelensky’s comparison of the aftermath of the nuclear bombing of Hiroshima to hostilities in Artyomovsk. She pointed out that the Ukrainian president “compared Hiroshima, destroyed by an American nuclear bomb to Artyomovsk” on the sidelines of the G7 summit in Japan. “Well done, because the White House orchestrated both things,” Zakharova said on her Telegram channel Sunday.

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A very lenghty timeline of a very lenghty battle.

• How Russia Forced Ukrainians To Retreat From Artyomovsk (RT)

Nine months of battles for a symbolic site in Kiev’s attempt to regain control of the region have ended with another triumph for Moscow’s forces Screenshot from social media video= The battle for Artyomovsk (called Bakhmut by the Ukrainians) began in August 2022, and gradually turned into the epicenter of fighting between Russia and Ukraine. While other parts of the front remained relatively stable, both sides actively brought forces to this small city. For Kiev, which in May 2022 suffered a defeat at Azovstal that helped undermine its image, Artyomovsk became the new Mariupol. Ukrainian propaganda labeled it ‘the Bakhmut Fortress’, and attempted to give an air of heroism to those fighting there.

Despite the fact that the city has no strategic importance for advancing westward, Russian troops accepted the challenge posed by Ukrainian propaganda. So what did Moscow gain from the nine-month-long ‘Bakhmut meat grinder’? In the nineteenth century, Artyomovsk was a provincial town in the Russian Empire and the administrative center of the developing Donbass region. As other cities grew, however, its role became less prominent. By the beginning of the Russian offensive in February 2022, the city had a population of about 70,000. It was home to several industrial facilities including a sparkling wine factory where battles took place in early 2023. According to the Ukrainian authorities, by that time 60% of the city had already been destroyed.

The importance of the city grew tremendously after the start of Russia’s military operation in February 2022. Initially, when Russian troops broke the first line of fortifications in the area of Popasnaya, Zolotoye, and the Lisichansk-Severodonetsk agglomeration, Artyomovsk was an important transport hub. It kept the Ukrainian front line connected with the rest of the country. After the Russians managed to break this line of defense and completely removed Kiev’s forces from the territory of the Lugansk People’s Republic (LPR), Artyomovsk went from being a transport hub to becoming Ukraine’s second line of defense around the Bakhmutka River. This strip ran from Ukrainian positions opposite Gorlovka – since 2014 controlled by the Donetsk People’s Republic (DPR) – in the south up to Seversk in the north, running straight into the Seversky Donets, the main river in Donbass.

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Zelensky knows where Lula stands. Peace. Negotiations.

• Lula Says Zelensky Didn’t Show Up To Scheduled Meeting (RT)

Brazilian President Luiz Inacio Lula da Silva has said that his Ukrainian counterpart, Vladimir Zelensky, had failed to show up for a scheduled bilateral meeting during the G7 summit in Hiroshima, Japan. “I had an interview, a bilateral one with [Zelensky] here in this room at 3:15 pm. We waited and received the information that he was late,” the president, who is commonly referred to as just Lula, said on Monday, as cited by Reuters. He added that Zelensky “did not show up” because “clearly he had appointments and he couldn’t come.” AFP cited Lula as saying that he was “upset” that the meeting fell through. A face-to-face meeting with the Ukrainian leader was absent from the itinerary published by Lula’s office ahead of his trip to Japan.


However, Bloomberg cited unnamed Brazilian officials as saying on Saturday that the Brazilian delegation felt pressured to arrange a meeting between Lula and Zelensky, whose travel plans are not usually publicly announced in advance. Zelensky later told reporters that “everyone has their schedules, so we couldn’t meet with the Brazilian president.” The two leaders previously spoke over the phone in March. Lula has condemned Russia’s military operation in Ukraine, but refused to join Western sanctions imposed Moscow and declined to provide weapons to Kiev. He has stressed that the Russia-Ukraine conflict should be resolved through negotiations. “No solution will last if it is not based on dialogue. We need to work to create the space for negotiations,” Lula said on Sunday.

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How much longer till she’s indicted?

• Durham Report: Clinton, Not Trump, Colluded With Russians – Hanson (Fox)

The Durham report suggests there are more questions about Hillary Clinton’s overtures toward Russian entities than former President Donald Trump’s, Victor Davis Hanson claimed. Hanson, a historian and fellow at Stanford University’s Hoover Institution, told “Life, Liberty & Levin” that Durham’s findings showed that “far from being a Trump-Russian connection, there was a Hillary-Clinton–Russian connection.” Hanson analyzed the findings, saying they showed Clinton was using a Moscow-based “source,” Democrat-linked PR executive Charles Dolan Jr., to collect purported intelligence on Trump. Dolan, who served twice as former President Bill Clinton’s Virginia state campaign chairman, was “feeding” information to Igor Danchenko, a Russian national working at the Brookings Institution at a time the thinktank was being led by Nelson “Strobe” Talbott, Hanson said.

Talbott, who also served as Bill Clinton’s deputy secretary of State, had been made privy to “briefings and inquiries on the development of the dossier” by Steele, according to a Fox News analysis by law professor Jonathan Turley. “Strobe Talbott… was introduced to Christopher Steele through Fiona Hill of impeachment fame, and the basic story mark was that they were fabricating everything in this dossier, and Dolan was trying to pass on rumors to Danchenko, who was corroborating with Steele,” Hanson said. In a 2019 Politico op-ed, Talbott notably claimed in-part, “[W]e already know that the Kremlin helped put Trump into the White House and played him for a sucker.”

Hanson said the purported “pee tape” — which supposedly was to have shown prostitutes urinating on a Moscow hotel bed at the behest of Trump to spite the Obamas, who reportedly previously slept there — was “all made up.” “[A]nd worse yet, the FBI knew it was made up, and yet they continued to pay Danchenko in hopes that he might find some credibility because they were using this material to get a FISA warrant to spy on [then-Trump campaign aide] Carter Page, and yet they knew that it was false.” “Even in the case of Steele, they offered him $1 million, apparently, if he could just reify or substantiate just one point and he couldn’t. So the FBI was knee-deep in it, and Durham suggests that they didn’t want to investigate Hillary or monitor her communications,” he said.

The reason the feds didn’t probe Clinton as they had Trump, he surmised, was because they were certain she was soon to be elected president. “And they were terrified that anybody, I guess, who would concoct such a conspiracy might do the same to them if she was in the White House,” he said. “So it’s damning to the FBI. It’s damning to the Hillary Clinton campaign. It’s damning to the media, because it’s all out there and then nobody’s refuted it… it really shows that Hillary Clinton colluded with the Russian government through intermediaries, and the FBI knew about it and blamed Donald Trump, who was innocent of it.”

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“..Russiagate’s aim from the jump was to delegitimize, destabilize, and destroy Donald Trump’s presidency..”

• The Durham Report Indicts the Deep State—and the Media (RCI)

Russiagate’s aim from the jump was to delegitimize, destabilize, and destroy Donald Trump’s presidency. Hatched by the Hillary Clinton campaign, this would be her revenge for losing to Trump—an attempt to make his victory a Pyrrhic one. This would be the deep state’s way to sabotage and subvert a commander in chief who threatened to upend its agenda, and that of the entire political establishment. Neither fidelity to the law and truth, nor any sense of shame, nor any fear of consequences could temper the zealous would-be vanquishers of the “bad orange man.” We know this because, as Durham’s report spells out, and as even casual observers have long been aware, the story of Trump-Russia collusion was a farce from the very beginning and in virtually every respect.

It was born of hearsay, ludicrous innuendo, and laughable inferences. Its sources were biased, unscrupulous, and shady. The investigators acted corruptly, lawlessly, and violated basic practices and time-honored norms in pursuing a probe of the highest stakes. They could not corroborate the key pillars on which they “built” their “case” and covered their eyes and ears in the face of exculpatory evidence at every turn. The lack of due diligence and carelessness is staggering—if you were to assume the FBI and Justice Department were operating in good faith. Despite the glaring deficiencies in their case and the blatant violation of the rights of innocent Americans, including among them true patriots, nothing would slow them down.

It did not have to be this way. Were American journalists at our nation’s most storied publications adversaries of the ruling class rather than its stenographers—had they even a modicum of skepticism, curiosity, or intellectual honesty, they could have stepped in to defend our republic. They could have exposed one of the greatest scandals in American history: that our national security and law enforcement apparatus effectively sought to halt the transfer of power to a president they feared and loathed by pursuing him as a traitor, based on crackpot conspiracy theories borne of his political opponent’s research. Consider Gen. Michael Flynn’s purported Logan Act violations; George Papadopoulos’ comments to an Australian diplomat; Carter Page’s supposed Russian ties; the contents of the Steele dossier; Sergei Millian’s significance; the secret Alfa Bank back channel to Russia. The list of shoddy stories pertaining to purported Russian collusion is virtually endless, and as the Durham Report shows—as did reporting from independent, contrarian journalists at the time—such stories would fall apart under the slightest scrutiny.

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EU and G7 are 10 years late. Or is that 20? Africa, Latin America, Central Asia, they’ve lost it all. And they’re so full of hubris they never even noticed.

• EU ‘Offer’ To Global South Must Be Better Than China’s – Ursula (RT)

The EU needs to offer a real alternative to China’s economic projects for the countries of the Global South, European Commission President Ursula von der Leyen said on Saturday. The EU and likeminded nations must use the “window of opportunity” as “many countries of the Global South are looking for alternative funding options,” she said at the G7 summit in Japan’s Hiroshima. Von der Leyen claimed that China’s Belt and Road Initiative – a global infrastructure investment strategy unveiled ten years ago – has been losing its appeal because many countries had “bad experiences with China.” “They took Chinese loans and ended up in a debt crisis,” the EU official stated, adding that the European bloc and the G7 must fill the void.


“We want to put a better offer on the table. If we are in a race, we are in a race to the top,” von der Leyen said. She added that the EU is rolling out 90 “flagship projects” on different continents as part of its Global Gateway investment scheme. Von der Leyen’s words came as G7 countries adopted a joint statement that accused Beijing of “economic coercion” and technology theft. China, in turn, has repeatedly accused G7 members of abusing trade regulations in order to impose their will on others. Beijing has also denied claims that the Belt and Road project hurts other nations. “The so-called Chinese debt trap is a lie made up by the US and some other Western countries,” Chinese Foreign Ministry spokesman Wang Wenbin said last year.

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“On the list are business partners who are connected to millions of dollars acquired from foreign interests in China, Ukraine and other countries…”

• Hunter Biden Faces Call for the Appearance of Key Business Associates (Turley)

There is a new and interesting development in Arkansas where attorneys for Lunden Alexis Roberts have prepared a list of witnesses for the upcoming proceedings involving Hunter Biden’s daughter, Navy. As previously discussed, Hunter Biden is seeking to reduce child support payments and has balked at Navy being able to use the Biden name. If successful, this could get a lot worse for Hunter in his allegedly efforts to conceal his past incomes. On the list are business partners at the center of the influence peddling scandal. (Thank you to the reader who sent this possibly prophetic intersection picture). On the list are business partners who are connected to millions of dollars acquired from foreign interests in China, Ukraine and other countries. Also on the list is New York City art gallery owner Georges Bergès who continues to sell his art.

Bergès has reportedly pushed back on congressional efforts to reveal details on these proceeds and buyers even though former government ethicists have raised concerns over the sales. The costs of these proceedings and high-priced legal team would seem to undermine claims of financial distress by Biden. However, by putting his financial worth at issue, Hunter has opened up a new front in battling over the disclosure of his past dealings. Some of his part associates are reportedly cooperating with House investigators in tracking foreign payments. Even the Washington Post has belatedly published an editorial admitting that this is all a serious concern over influence peddling. In an editorial titled “Millions flowed to Biden family members. Don’t pretend it doesn’t matter.”

It was a bittersweet moment for many of us who have been writing about these dealings for years as newspapers like the Post downplayed the scandal or the authenticity of the laptop. Media outlets like National Public Radio (NPR) declared NPR declared that it “not want to waste our time on stories that are not really stories, and we don’t want to waste the listeners’ and readers’ time on stories that are just pure distractions.” These disclosures have been forced into the public despite the best efforts of the Post and other media. Indeed, recently the Post’s Philip Bump derided the House investigation as a “fishing expedition . . . it’s nearly all innuendo, a big corkboard with lots of pictures but little interconnecting string.” His “witchhunt” attack was then repeated by others at the Post.

Despite these efforts, Hunter Biden appears to going his level best to force the issue in Arkansas. It is not clear if the court will call any of these witnesses. However, since Hunter has put his finances at issue, some disclosures will need to be made. As for Navy, she is still uncertain if the court will allow her to use the Biden name despite her father’s efforts to the contrary. While it does not appear that Hunter (who lives in a California mansion) is financially broke, his actions (and those of the President and First Lady) toward this little girl show a moral deficit and delinquency that is abundantly obvious.

Read more …

MAGA?!

• White House Blasts GOP Over Debt Ceiling Talks (RT)

The White House has hit out at a Republican congressional leadership it says has become increasingly beholden to fringe ‘MAGA’ elements for obstructing talks designed to raise the US debt ceiling and avoid putting the country into default for the first time in its history. In a statement posted to the White House website on Saturday, a spokesperson for the administration of President Joe Biden described a deal offered by House Speaker Kevin McCarthy on Friday as a “big step back” and said that it contained a set of “extreme partisan demands.” “The President has over and over again put deficit reduction proposals on the table, from limits on spending to cuts to Big Pharma profits to closing loopholes for oil and gas,” the statement from White House Press Secretary Karine Jean-Pierre said.

“It is only a Republican leadership beholden to its MAGA wing – not the President or Democratic leadership – who are threatening to put our nation into default.” The proposal offered by McCarthy on Friday included significant cuts to domestic programs while increasing defense spending. It also imposed work requirements on some aid programs, while making it more difficult for states to waive work requirements for people in areas of high unemployment who rely on federal food assistance. The GOP deal also refuses Democratic requests to increase tax revenue to help pay for future budget deficits. “I’m not going to agree to a deal that protects wealthy tax cheats and crypto traders while putting food assistance at risk for nearly one million people,” Biden said on Sunday in comments delivered from Hiroshima, Japan, where he was attending the G7 summit.

Biden also accused Republicans of engaging in political theater in their handling of the negotiations to extend the debt ceiling. “I think there are some MAGA Republicans in the House who know the damage this would do to the economy, and because I am president, and the president’s responsible for everything, Biden would take the blame,” he said. Unless an accord is struck, the Treasury Department has indicated that the US could default on its $31.4 trillion debt as early as June 1. This would lead to a scenario where Washington is unable to borrow more money or pay all of its bills.

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“The idea hinges on a phrase in the 14th Amendment that says the public debt “shall not be questioned,” which proponents of the idea argue means the president could unilaterally continue to issue debt..”

• Biden Thinks He Has Authority To Use 14th Amendment On Debt Ceiling (Hill)

President Biden on Sunday said he believes he has the authority to use the 14th Amendment to unilaterally address the debt ceiling, but he acknowledged potential legal challenges could still lead the nation to default if he went that route. “I’m looking at the 14th Amendment as to whether or not we have the authority — I think we have the authority,” Biden told reporters at a press conference in Hiroshima, Japan. “The question is, could it be done and invoked in time that it would not be appealed, and as a consequence past the date in question and still default on the debt. That is a question that I think is unresolved.”

Biden added that all four congressional leaders said in a recent White House meeting that they agreed the nation would not default, signaling that he hoped talk of the 14th Amendment would ultimately not be necessary. “So I’m assuming that we mean what we say and we’ll figure out a way to not have to default,” Biden said. Sunday’s remarks were Biden’s strongest to date on the 14th Amendment, which has been a point of debate among legal experts and administration officials as the U.S. gets closer to the risk of default. The Treasury Department has warned the U.S. could default as early as June 1 if no action is taken to raise the debt ceiling.

The idea hinges on a phrase in the 14th Amendment that says the public debt “shall not be questioned,” which proponents of the idea argue means the president could unilaterally continue to issue debt if Congress does not act. Biden earlier this month said he had been “considering” the 14th Amendment as a way to unilaterally work around the debt ceiling, but he acknowledged that it would not be a viable short-term solution. Treasury Secretary Janet Yellen previously warned that using the 14th Amendment could trigger a “constitutional crisis,” calling it “one of the not good options” if Congress failed to act.

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“This is happening now because the USA today no longer manufactures and/or renders anywhere remotely near enough products or services..”

• DE-Dollarization Made Simple -Even For Millennials (Vilches)

Dollars are just failing I.O.U´s (more on that later) issued by the US which until today were still exchangeable for (1) goods and/or (2) services and/or (3) payment of debts the three of which could be either of US origin (that´s okay) or also from elsewhere (that´s NOT okay). In a nutshell, that´s what the current DE-dollarization process is all about, which translated means that US dollars will progressively be dumped onto the US economy´s front lawn as time goes by leading to an unstoppable hyperinflationary process. So, as we speak, many commercially and industrially, and technologically important economies (actually essential for the world and individual countries) have decided that transactions amongst themselves should be paid for in something different from US dollars as the USA is not involved in any part of such process.

Why would Argentina or Brazil export their grains to China payable in US dollars rather than Yuans while both need tons of Yuans to pay for Chinese imports? Accordingly, Saudis now allow China to pay for their oil in Yuans. So with growing impetus, many countries are now paying – and planning to pay in increasing quantities — for transactions amongst themselves with their own currencies and/or physical gold bullion which thru 6000 years of history has clearly proved that it has long-lasting intrinsic value in and of itself as accumulated labor duly acknowledged by third parties. So bullion´s role would be to compensate for the differences in the exchanging BRICS+ currencies used to settle import-export balances between non-US trading partners. BTW, the Central Bank of China does not waste any time reducing its exposure to US Treasuries now lowest since early 2010 and getting lower by the hour.

Since 2018 Russia holds practically 0 (zero) US Treasuries. This is happening now because the USA today no longer manufactures and/or renders anywhere remotely near enough products or services to cancel the humongous amount of IOU dollars already issued with total impunity. An “exorbitant privilege“ per former French President Valery Giscard d’Estaing´s brilliant definition many decades ago. The US deal is “you work hard as hell and we´ll just print” follow? You raise cattle till cows are fat and healthy enough to export us your beef – meaning years of investments and hard labor – and we´ll just copy-paste some more pretty Benjamins and hand them over to you in exchange, okay? Please be advised in case you didn´t notice that Walmart today does not carry “Made in USA” goods because everything now is most efficiently manufactured somewhere else.

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Ruling center-right won the Greek elections yesterday. They can now continue to sell off the country.

• Greece’s Debt Is More Unsustainable Than Ever (Varoufakis)

Greece is deeper in the hole of insolvency today than it was in 2010, when the whole world of finance — the International Monetary Fund, the European Central Bank, and the European Commission — said we were bankrupt. Back then, our debt was something like €295 billion and our income €220 billion, whereas today the debt is €400 billion and our national income, in real terms, €192 billion. Most of our debt is owed to the troika and to foreign investors. So, our dependence on the kindness of strangers is greater than ever. Greece’s population today has, on average, 20 percent lower living standards than in 2010; if you look at the working class, the reduction of GDP per capita is 45 percent. As for private sector debt, around two million out of ten million Greeks have negative equity and nonperforming loans.

It’s a world record: it didn’t even happen in the US in 2008–09, during the subprime mortgages crisis. But how come I acknowledge that from the perspective of foreign investors, Greece is doing better than any other country? Well, government bonds are trading at 3.6 to 3.7 percent yields — a very nice spread over German ones at 2.2 to 2.3 percent. Everyone knows that the Greek state is bankrupt and the bonds are junk. So, why do they buy them? The European Central Bank (ECB) has announced that it will back Greek bonds. It’s a political decision to declare Greece solvent, just as it was a political decision to declare it insolvent in 2010. Christine Lagarde and her minions are making a nod and a wink to investors.

Why is the ECB standing behind bonds, when it didn’t in 2012 or 2015? Recent years saw a world first, a mechanism for extracting wealth from the bankrupt. The powers that be have instituted the so-called Hercules plan, taking bonds off the books of banks and selling them to vulture funds based in the Cayman Islands. They belong partly to foreign investors, partly to people who run the Greek banks, partly to the extended families of the political class. They can, for instance, buy a nonperforming loan of €100,000 but for just €3,000. They don’t expect to get the money back; but if they can sell the collateral for €50,000 they have extracted €47,000 in rent to the Caymans without paying a cent in tax. This can extract around €70 billion from a sub-€200-billion-a-year economy.

So, it may sound like a paradox that the financial press is hailing an economy whose public and private sectors are more bankrupt than ever. But seeing the gains foreign investors can draw from this situation, it is no paradox. Greece is a goose laying golden eggs: such profit rates don’t exist anywhere else. To boot, this Hercules scheme, passed by the Greek parliament, guarantees a minimum of €23 billion. The Greek state — and thus the ECB itself — stands behind the vultures’ interests, if they don’t manage to extract enough in dispossessions.

Read more …

 

 

 

 

Anne Heche
https://twitter.com/i/status/1660121425846435840

 

 

Thai ducks

 

 


The revenge of the duck

 

 

How?

 

 

Ibex

 

 

Cheetah
https://twitter.com/i/status/1660009782349111296

 

 

Lunch

 

 

 

 

 

 

Support the Automatic Earth in virustime with Paypal, Bitcoin and Patreon.

 

 

 

 

 

Debt Rattle February 4 2018

Feb 042018
 
 February 4, 2018  Posted by at 11:17 am Finance Tagged with: , , , , , , , , , , ,  6 Responses »


John William Waterhouse Hylas and the Nymphs 1896

 

• A Tale Of Two Americas (Axios)
• Today’s Market Is Biding Its Time Until It Becomes Normal Again (Bonner)
• The Market System Is Tight In All Directions (Fas.)
• Bond Market’s Debt-Ceiling Alarm Bell Is Ringing Loud and Clear (BBG)
• Yellen: “I Don’t Want To Label What We’re Seeing As A Bubble” (ZH)
• The Fed’s Dilemma Isn’t Going Away Under Powell (Shilling)
• Theresa May Says Brexit Transition Deal Will Be Agreed In Seven Weeks (R.)
• Tory Former Attorney General Says “Time is Now” To Reverse Brexit (Ind.)
• Anger Over Glut Of ‘Posh Ghost Towers’ Planned For London (G.)
• ‘We Made The Finest Steel In The World – Now We Make Lattes’ (G.)
• Illicit Foreign Casino Cash Often Goes Straight Into Vancouver Housing (VSun)
• Greece On Edge For ‘Macedonia’ Protest In Athens (K.)

 

 

As I said yesterday: the divisions it causes are much bigger than the memo itself. It’s what happens in echo chambers.

• A Tale Of Two Americas (Axios)

On MSNBC, Rachel Maddow was literally laughing. Over on Fox News, Sean Hannity put up his dukes. At 9 last night, Axios points out that you could just flip between the two and see an encapsulation of our two Americas – total dismissal of the memo’s import, versus the assertion that it’s “only about 15 percent of what’s coming.”

So, Rachel, how was your day? “This thing?! This was two weeks of: This memo is going to end everything. This memo, have you heard about the memo? Hashtag: Release the memo! This memo will make Donald Trump innocent. This memo will put Robert Mueller in jail. It will abolish the FBI. The Justice Department will have to rename itself the Donald J. Trump & Family Private Security Task Force.” “I mean, I can’t believe this is it.” “I don’t really believe in the whole Cable News Wars idea. I know people who work across the street at the Fox News Channel. I’ve got friends that work there. I think we’re all doing our own thing in our own way best we can.”

“But, oh my God, right? … [T]his … hyping and huffing and puffing and working their audience up into a frenzy for two solid weeks.” “And apparently, despite all of that, … they either didn’t know or they didn’t notice that this thing they have been clamoring for and hyping for two solid weeks, … it actually disproves their whole point.” “They release this memo to prove that the dossier started everything. The memo says the dossier didn’t actually start anything.”

What’s up, Sean? “[W]hen you put all this information together, here’s what it all means. The FBI misled and purposely deceived a federal court while using an unverified, completely phony opposition research bought and paid for by Hillary Clinton.” “We have never, ever in history seen anything like this, and it was spearheaded not by rank-and-file members of the FBI intelligence community and Department of Justice. No. High-ranking officials: James Comey, Andrew McCabe, Rod Rosenstein, Peter Strzok, Lisa Page, likely Loretta Lynch.”

“But here’s the bottom line: Crimes have been committed. There is no way that they did not know that the FBI was lying to a FISA court in order to spy on an opposition campaign during an election year. They have aided and abetted what is a massive constitutional violation.” “Comey, McCabe, Rosenstein and others all need to be investigated and, in many cases, prosecuted to the fullest extent of the law.” “Now, of course, Comey is running scared. He’s out of his mind right now, now that he is exposed with this memo.” “[T]he special counsel must be disbanded immediately.” “And, by the way — nobody else will say this — all charges against Paul Manafort and General Michael Flynn need to be dropped. It’s that simple.” “This scandal is only in Phase 1. … Stay tuned! Tick tock! “

Read more …

“..when something is not normal… it is just biding its time until it becomes normal again.”

• Today’s Market Is Biding Its Time Until It Becomes Normal Again (Bonner)

On Planet Earth, we can find our direction by reference to the Magnetic North. For investing, we use the most reliable force in finance – the relentless return to “normal” – to get our bearings. And searching for normal, we may have stumbled upon what could be the Trade of the Century. More on that later… As economists describe it, reversion to the mean is merely a recognition of the tendency for things to stay in a range that we recognize as “normal.” Trees do not grow 1,000 feet high. People don’t run 100 mph. You don’t get something for nothing. Normal exists because things tend to follow certain familiar patterns, shapes, and routines. When people go out in the morning, they know, generally, whether to wear a winter coat or a pair of shorts.

The temperature is not 100 degrees one day and zero the next. Occasionally, of course, odd things happen. And sometimes, things change in a fundamental way. But usually, when people say “this time is different”… it’s time to bet on normal. This phenomenon – reversion to the mean – has been thoroughly tested and studied in the investment world. It seems to apply to just about everything – stocks, bonds, strategies, markets, sectors… you name it. But let’s push on. What is unusual in the chart below? What is so abnormal that the mean is likely to revert against it? You will note that global debt was only $30 trillion in 1994. Now it is $230 trillion. That $200 trillion in extra credit is probably the whirlwind that sent equities spinning up to the top right.

Those gusts blew stock and other asset prices up to heights never seen before. The Dow reached over 26,000. Houses went on the market for more than $100 million. Gold rose above $1,900. But while stocks and bonds may have the wind at their backs, it seems to blow in the economy’s face… making forward progress almost impossible. The real economy – as depicted by GDP at the bottom of the chart – has grown in a rather normal way, but at a slower and slower rate. Its steady, plodding increase gives no hint of the chaos going on above it. The real economy and the financial world are as different as the eye of a hurricane and the swirling clouds and storms around it. Another thing you notice is that until the mid-’90s… and again between 2008 and 2012… the average investor got essentially no benefit in exchange for the added risk of putting his money into equities (the chart above includes dividends). He might just as well have left his money in U.S. Treasury bonds.

[..] there is a time to be in stocks… and a time to be out of them. Without knowing the future, you can still know when something is not normal. And when something is not normal… it is just biding its time until it becomes normal again.

Read more …

Who or what can restore flexibility when everything’s maxed out to the point of bursting?

• The Market System Is Tight In All Directions (Fas.)

The Four Pillars Holding Markets Up Are Strained, All At The Same Time. Viewed as a combination of intertwined components, each component is showing growing signs of pressure and seem to be running out of road for further advancing. The synchronicity of them, more than any single component taken independently, is what should draw attention, as it compounds systemic risk. Here are the four components, characterizing the basin of chaotic attraction for markets nowadays:

What happens when the system is tight in its key possible directions of expansion? That it expands no more. Stochastically, on one of the components a tipping point is reached, which jumpstarts the autolytic effect, spreading back through the vectors of the complex system, and snapping the unstable equilibrium into an alternative stable state. That is our thesis. In [a] recent interview, we discuss the impending tipping points for markets due to a synchronicity of excess valuations, excess indebtedness, excessively low cash balances and a drawback in excessive public flows. Let’s give a cursory look across the four components. Again, the list is by no means exhaustive, but rather a work-in-progress (seemingly endless) collecting of data points, following on to our previous work of ‘a long list of anomalies’

Read more …

In a country so divided it doesn’t take much to let things get out of hand.

• Bond Market’s Debt-Ceiling Alarm Bell Is Ringing Loud and Clear (BBG)

In the $2 trillion Treasury-bill market, where the U.S. government turns for short-term funding, investors are showing they’re plenty nervous about the approaching deadline to raise the nation’s debt ceiling. With Treasury expected to exhaust its borrowing authority as early as the first half of March, a four-week bill sale on Tuesday will serve as the latest gauge of investor anxiety. There’s growing concern that the impasse over the debt limit will become entangled with efforts to keep the government open. Current federal funding expires Feb. 8, and the Republican-led Congress has been working on a stopgap measure to extend that into late March.

Treasury has deployed extraordinary measures to stay under the debt cap since it was reinstated in early December, but investors are wary. The new securities mature March 8, around when the Congressional Budget Office expects Treasury to run out of room. Traders are asking for higher yields to own previously issued bills maturing March 8. What’s more, an auction last week of bills due March 1 drew the weakest demand since May. “People are kind of getting skeptical of March 8 bills,” said Joseph Abate at Barclays Capital in New York. “You might argue that the March 1 bill isn’t necessarily vulnerable to payment delay because the Treasury probably has sufficient resources to meet outflows and thus might be able to last until” March 5.

Treasury has placed the drop-dead date around the end of February. But investors are leaning toward the projection from the nonpartisan CBO, which said last week that the U.S. may run the risk of default without a debt-ceiling increase in the first half of March. After the Jan. 30 auction of bills maturing March 1, the rate on those securities was higher than debt due a week later. Since then, the rate on debt expiring March 8 has climbed to 1.40%, exceeding that on bills due a week later.

Read more …

In a country where 70% of people live paycheck to paycheck, the best the central bank president can muster is “they should diversify their investments..” And people are praising her for doing such a good job.

• Yellen: “I Don’t Want To Label What We’re Seeing As A Bubble” (ZH)

While her term ended – for all practical purposes – with the conclusion of this week’s January FOMC meeting, former Fed Chairwoman Janet Yellen’s last official day at the helm of the world’s most important central bank was marked by an explosion of volatility in the Dow, with the blue chips recording their worst single-day selloff since the collapse of Lehman brothers. And even though it’s tempting to suspect Friday’s selloff might foreshadow what’s to come during the Powell era, Yellen admitted during an interview with PBS Newshour that she was disappointed to not be reappointed for a second term by President Trump – and that, if she had her druthers, she would’ve opted to stay. “I would have liked to serve an additional term and I did make that clear, so I will say I was disappointed not to be reappointed,” Yellen said Friday. “I think things are looking very strong.”

Despite the volatility of the past week and the first nascent signs of wage growth in years – which should worry a central bank whose primary responsibility is to put a floor under plunging markets – Yellen says she expects interest rate hikes to proceed as planned. “The Federal Reserve has been on a path of gradual rate increases and if conditions continue as they have been, that process is likely to continue,” she said. “And as it happens we would expect long rates to move up.” Unlike fellow former Fed chairman Alan Greenspan – who this week declared that both stocks and bond valuations are in bubble territory – Yellen was careful not to use such strident language. “I don’t want to label what we’re seeing as a bubble.”

“But I would say that asset valuations are generally elevated…for the stock market, the ratio of price to earnings…is near the high end of its historical range. If we look at for example commercial real estate and other assets, we’re seeing high valuations.” But should Americans be worried about the markets? “They should be careful and I would say diversified in their investments. What we look at is the likely resilience of the economy and the financial system… In that regard, we have a banking system that is much stronger and better capitalized and better able to withstand a shock than prior to the financial crisis.” Stlll, Yellen is refusing to rule out another selloff. “Asset valuations could change I’m not predicting that that would happen and I wouldn’t rule that out,” she said.

Read more …

Powelll will be cleaning up Bernanke and Yellen’s shit.

• The Fed’s Dilemma Isn’t Going Away Under Powell (Shilling)

[..] the Fed is confronted with a serious dilemma: Inflation and wage increases continue to undershoot its expectations at the same time the central bank confronts forces pressuring it toward credit tightening. The new chairman, Jerome Powell, who isn’t a trained economist, may change the central bank’s tone, but his soon-to-be predecessor Janet Yellen and the other academic economists who have dominated monetary policy, believe fervently in the theoretical Phillips Curve. It posits that a declining unemployment rate should spur inflation, despite evidence to the contrary. Rather than increase as the unemployment rate declined since the recession, the rate of inflation has largely stayed the same.

Nevertheless, the Fed wants to tighten credit slowly due to chronic low inflation and memories of the May 2013 “taper tantrum,” when a mere mention by then-Chairman Ben Bernanke of reducing the Fed’s rate of asset purchases sent financial markets into tailspins as interest rates leaped. Another reason for the Fed to tighten is to keep commercial banks from lending out the more than $2 trillion in excess reserves the Fed has given them through quantitative easing. These are simply an asset of the banks and a liability on the Fed balance sheet with little financial or economic consequences. But as economic growth picks up as a result of the tax cuts followed by likely massive fiscal stimulus, creditworthy borrowers will want to borrow, banks will be happy to lend, and these excess reserves could turn into tons of money that would threaten major inflation.

Read more …

Fat chance.

• Theresa May Says Brexit Transition Deal Will Be Agreed In Seven Weeks (R.)

British Prime Minister Theresa May said on Friday that a Brexit transition period will be agreed with the European Union in seven weeks as she tries to ease concerns that a deal may take longer to reach. The EU has offered Britain a status quo transition until the end of 2020 after Brexit. Both sides are aiming to reach a transition agreement by the end of March that will form part of the final withdrawal treaty to be agreed later this year. But there is disagreement inside May’s Conservative Party over some details such as the status of EU citizens during the transition and the scope of European Court of Justice jurisdiction. Many businesses and banks are concerned a battle over the terms of a transition could delay or even sink an agreement just months before Britain exits the EU on March 29, 2019.

“In seven weeks time, we will have an agreement with the European Union, that is the timetable they have said on an implementation period,” May told the BBC in an interview in China. “What the British people voted for is for us to take back control of our money, our borders and our laws and that’s exactly what we are going to do,” May said of Brexit. The EU and Britain hope to hammer out a deal on Britain’s exit and the outline of a trade package by October 2018. But some EU officials have begun to voice concern that a plan to have the leaders endorse negotiating guidelines for a new phase of talks to begin in April on a future trade agreement may be in danger of slipping if May does not spell out what Britain’s demands are for that trade pact.

Read more …

Britain is as divided as the US is.

• Tory Former Attorney General Says “Time is Now” To Reverse Brexit (Ind.)

Dominic Grieve has warned the public it is running out of time to change its mind on Brexit, saying the next few months are “decision time”.The former Attorney General told The Independent it would soon be too late to reverse the decision to leave the EU, and urged people to make their minds up in the next six months.“The six months we have between now and the autumn are so important,” he said. “It is going to be decision time. And decision time in the sense of what happens in the next six months being a final decision.“If people do want to change their mind, and they could if they wanted to, the time is now. It cannot be after 29 March 2019, and frankly it cannot be after the end of the autumn of this year.”

While he did not endorse calls for a second EU referendum, Mr Grieve said it was important to give people the chance to change their minds on Brexit. “I’m not calling for a second referendum,” he said. “But we should not exclude the possibility that people’s opinion may change. And to start from an opinion on an issue that was expressed 18 months ago, where people are bound to have had their opinion influenced since, we must be very careful to listen about what it is they want.”He continued: “It the most extraordinary conundrum. We have an instruction from the electorate, by a small but significant majority, to do something that many of us [in Parliament] think is going to be very hard to achieve without serious damage to the wellbeing of every citizen in this country. It is an ethical conundrum and it is a practical conundrum.”

Read more …

And here is why the country is so divided.

• Anger Over Glut Of ‘Posh Ghost Towers’ Planned For London (G.)

London councils have granted property developers planning permission to build more than 26,000 luxury flats priced at more than £1m each, despite fears that there are already too many half-empty “posh ghost towers” in the capital. Builders are currently constructing towers containing 7,749 homes priced between £1m and £10m, and have planning rights to build another 18,712 high-end apartments and townhouses, the Observer can reveal. Politicians and housing campaigners said the figures show councils are prioritising the needs of the super-rich over those of hardworking young Londoners. The boom in developments of luxury flats, which often include private cinemas, gyms, swimming pools and concierge facilities, comes as the capital faces a growing crisis in the availability of affordable housing, with nurses, police officers and other essential workers struggling to get on to the housing ladder.

Research shows that a fifth of aspiring first-time buyers have moved in with their parents to save money, and a quarter of them will need to stay there for at least five years to amass enough for a deposit. The proportion of English first-time buyers who rely on help from families and friends for their deposit has increased from 22% in 1996 to 29% in 2016, according to the government’s English Housing Survey. Anne Baxendale of Shelter said: “The UK is in the grip of a housing crisis and nowhere is this more apparent than in the capital – and these luxury developments are certainly not the types of homes most Londoners need. The government must close loopholes which make it easy for developers to build high-priced homes that are way out of reach of ordinary families, rather than the affordable ones most people actually need and can afford.”

David Lammy, the Labour MP for Tottenham, said the figures “reveal a travesty being played against the working class and young Londoners”. “The public keep being told we are building more affordable housing, and people can see cranes up all over London,” he said. “But this shows that councils are prioritising the fancies of overseas millionaires and billionaires before the needs of hardworking young Londoners.” Just 6,423 affordable homes were built in London during the 2016-2017 financial year (the latest figures available), a 5% decline on the previous year and a big drop from the 19,622 built in 2014-15.

Read more …

Plus, of course, Britain suffers from what brought Trump to power. Where globalization goes to die.

• ‘We Made The Finest Steel In The World – Now We Make Lattes’ (G.)

Wearing a T-shirt with the slogan “Fighting for the community” underneath an image of Redcar’s mothballed steelworks, Frankie Wales is preparing to take a training session at the town’s boxing club. Young men are sparring in the rings; others are hitting punchbags. “Nothing gets you fit like boxing,” says one, exhausted from the ring. Wales, who set up the club 20 years ago and funds it on a shoestring with various small grants, is proud to be doing his bit for Redcar’s young people. He is a livewire in a community struggling to get off the floor after a series of near knockout blows. The local steelworks ceased production in 2015 with the loss of 3,000 jobs. Someone, he insists, has to help them. “It is incredibly sad,” he says. “Not long ago they would go and work in the steelworks after school.

Men round here made the finest steel in the world. Now they are making lattes and sandwiches on zero-hours contracts. We have lots of entrepreneurial kids, but the only entrepreneurial activity going on around here is selling fags and drugs.” Few young people care what those who are supposed to run their country – politicians and civic and business leaders – say any more because they feel so let down. “We have lost the steel industry, lost the local shipbuilding, lost the coal. What’s the point? There is nothing left,” says Wales. “We just have to make the best of what we have got and get on with it ourselves.” Like many communities in England’s north-east, the people of this North Yorkshire town, which bears the scars of industrial decline, and has a youth unemployment rate more than double the national average, made their unhappiness known in June 2016.

They fought back. In Redcar, there was a hefty 66% vote for Brexit, similar to that in areas further north up the coast, from Teesside to Tyneside. “We have to get our country back to where it needs to be,” says Geoff Holding, a caretaker at a government office in the town who voted Leave and whose brother lost his job at the steelworks. He wants an end to cheap imports of foreign goods, like the Chinese steel that did for the local plant. There is a still a thriving chemicals sector in Redcar, but not enough manufacturing. “We need to bring things back in-house, get industry back on its own feet, make things ourselves.”

Read more …

“Staggering volumes of dirty cash, including hundreds of thousands of dollars worth of $20-dollar bills stuffed in hockey bags..”

• Illicit Foreign Casino Cash Often Goes Straight Into Vancouver Housing (VSun)

It’s almost hard to believe the dismaying stories that Postmedia investigative reporter Sam Cooper has been producing about the laundering of hundreds of millions of dollars of East Asian cash through Metro Vancouver casinos and the funnelling of much of it into the city’s pricey real estate. Yet Cooper continues to clearly map out, using impeccable high-level sources, the trans-national connections between Chinese drug traffickers, B.C. casinos and the city’s housing market. He has been so effective that NDP Attorney General David Eby ended years of B.C. Liberal inaction on casino fraud to launch an investigation by money-laundering specialist Peter German. Global intelligence agents have come to call the Asian-Pacific network of corruption, drugs, tax avoidance and real estate that Cooper is exposing “The Vancouver Model.”

Metro’s casinos have become infamous for the way B.C.’s former Liberal government allowed them to be exploited to help make possibly billions of dollars in “dirty” money appear “clean” – particularly by injecting it into residential housing and condo development. Cooper says his sources “took a lot of risks” to unveil how high-stakes Chinese gamblers, called “whales,” have been funnelling illicit cash into gambling chips, especially at Richmond’s River Rock Casino. Using freedom-of-information law, Cooper obtained reports in which an official with the B.C. Lottery Commission noted that 97 of its 100 top rollers were East Asian. Cooper also dug up reports suggesting one out of four of China’s major 100 alleged financial fugitives were living in Canada, with many of them believed to be in B.C.

One Metro Vancouver gambler was accused Lai Changxing, alleged mastermind of a billion-dollar drug-smuggling operation in China, who owned property in Richmond. An audit of 800 “VIP” gamblers at River Rock Casino found their most common profession was “real estate.” Almost half their $53 million worth of transactions in one year were flagged as “suspicious.” The second and third most common professions among the biggest gamblers were “business owner” and “construction.” Many high-stakes gamblers at River Rock also declared themselves as “housewife” or “student” – with one youth forking over $819,000 in cash to buy casino chips. Investigators believe housewives and offspring are often used as fake “nominees” to hide the true source of wealth in money-laundering and real-estate schemes. Staggering volumes of dirty cash, including hundreds of thousands of dollars worth of $20-dollar bills stuffed in hockey bags, have been flowing through Metro casinos and then been shifted into real-estate.

Read more …

A major and undoubtedly heated protest today. Topic: A former Yugoslav province wants to call itself Macedonia. But there already is a Greek province called macedonia. So Greece has refused to accept that name for a foreign country, and has for years halted access for that country to international organizations. The legacy of Alexander the Great plays a big role too. There are negotiations ongoing, but 70% of Greeks want no referral to Macedonia in the country’s eventual name. So no New Macedonia etc. Just call it the Republic of Skopje.

• Greece On Edge For ‘Macedonia’ Protest In Athens (K.)

With United Nations-mediated negotiations aimed at resolving a dispute between Greece and the Former Yugoslav Republic of Macedonia (FYROM) over the latter’s name at a sensitive juncture, the government is bracing for Sunday’s Athens rally protesting the use of the term “Macedonia” in a solution amid signs that the turnout will be significant. Around 1,500 buses have been chartered to bring demonstrators from the provinces to the capital where the rally is to begin at Syntagma Square at 2 p.m. Most conservative New Democracy MPs are expected to attend. ND leader Kyriakos Mitsotakis said the party respects both those who do choose to attend and those who do not.

“We respect all choices,” he said. Former conservative premier Antonis Samaras endorsed the demo, saying Sunday will be “a great day for the country.” The main speaker will be veteran Greek composer Mikis Theodorakis, who is to address the crowd in person rather than sending a video message as originally planned. Speeches will also be delivered by three clerics representing the Church of Greece, which has backed the rally following initial reservations by Archbishop Ieronymos. The Greek Police plans to erect barriers to keep demonstrators at Syntagma apart from anarchists who are to stage their own counter-rally, starting at noon outside Athens University.

Read more …

Debt Rattle August 31 2017

Aug 312017
 
 August 31, 2017  Posted by at 8:25 am Finance Tagged with: , , , , , , , , , ,  2 Responses »


Prohibition sale June 24 1920

 

• Hurricane Harvey the Costliest Natural Disaster in US History (H.)
• “No Way To Prevent Imminent Explosion” At Texas Chemical Plant (ZH)
• Texans To Be Hit With New Insurance Law (Ind.)
• A Decade of G7 Central Bank Collusion – And Counting… (Nomi Prins)
• It’s Time For Your Reminder That Most Commodities Are Priced In US Dollars (BI)
• A Universal Basic Income Would Grow The Economy (Vox)
• The Promise of Fiscal Money (Varoufakis)
• America and China’s Codependency Trap (Stephen Roach)
• Financial Firms Fear Turmoil Over Fraught US Debt Ceiling Talks (R.)
• Weird Things Are Happening With Gold (Rickards)
• ‘More Europe’ Won’t Solve Europe’s Fiscal Quandary (BBG)
• Victory For Assad Increasingly Likely As World Loses Interest In Syria (G.)
• ‘Our Society Is Broken’: Canada’s First Nations Suicide Epidemic (G.)

 

 

$160 billion and counting.

• Hurricane Harvey the Costliest Natural Disaster in US History (H.)

Hurricane Harvey is predicted to be the costliest natural disaster in the history of the U.S., with a damage cost exceeding Hurricanes Sandy and Katrina. AccuWeather predicts that the damage cost will hit $160 billion. AccuWeather, a private weather firm, notes that the storm’s cost represents 0.8% of the national GDP, which is now at $19 trillion. “Business leaders and the Federal Reserve, major banks, insurance companies, etc. should begin to factor in the negative impact this catastrophe will have on business, corporate earnings and employment. The disaster is just beginning in certain areas,” AccuWeather founder Dr. Joel N. Myers said in a statement.

“Parts of Houston, the United States’ fourth largest city will be uninhabitable for weeks and possibly months due to water damage, mold, disease-ridden water and all that will follow this 1,000-year flood.” Before Harvey, the costliest hurricane to hit the U.S. was Hurricane Katrina, which caused $108 billion in damage along the Gulf Coast in 2005. The second-costliest was Hurricane Sandy, which caused $75 billion in damage in 2012. Hurricane Ike, the last storm to make landfall in Texas before Harvey, caused $37.5 billion in damage in 2008. [..] The Associated Press reports that 80% of Harvey’s victims do not have flood insurance. Thousands of families will have to take on more debt or spend much more to fix their homes. Others will sell their property to move out.

Robert Hunter, director of insurance at the Consumer Federation of America, estimated that flood damage alone cost at least $35 billion. Hunter explained to the AP that if you don’t have flood insurance, you can apply for federal disaster benefits. However, these are low interest loans that will add more debt. Homeowners insurance covers water damage caused by wind damage, but not if the water comes through the floor or walls, the AP explains. “Homeowners with water damage can get paid through their homeowners insurance but only if wind blows out a window or sends a roof aloft first, allowing the water in,” the AP notes. “If the water rushes through the floorboard or walls, you’re not covered.”

Read more …

There have been scores of chemicals released into the air already in the area.

• “No Way To Prevent Imminent Explosion” At Texas Chemical Plant (ZH)

[..] in a potentially disastrous outcome from the Harvey flooding, a chemical plant in Crosby, Texas belonging to French industrial giant Arkema, has announced it is evacuating workers due to the risk of an explosion, after primary power was knocked out and flooding swamped its backup generators. The French company said the situation at the plant “has become serious” and said that it is working with the Department of Homeland Security and the State of Texas to set up a command post in a suitable location near our site. The plant, which produces explosive organic peroxides and ammonia, was hit by more than 40 inches of rain and has been heavily flooded, running without electricity since Sunday. The plant was closed since Friday but has had a skeleton staff of about a dozen in place.

Following the flood surge, the plant’s back-up generators also failed. The threat emerged once the company could no longer maintain refrigeration for chemicals located on site, which have to be stored at low temperatures. The plant lost cooling when backup generators were flooded and then workers transferred products from the warehouses into diesel-powered refrigerated containers. On Tuesday afternoon, the company released a statement which admitted that “refrigeration on some of our back-up product storage containers has been compromised due to extremely high water, which is unprecedented in the Crosby area. We are monitoring the temperature of each refrigeration container remotely.” It then warned that “while we do not believe there is any imminent danger, the potential for a chemical reaction leading to a fire and/or explosion within the site confines is real.”

One day later, and with the torrential rains finally over, has the situation at the giant peroxide chemical plant stabilized? Unfortunately, according to Reuters, the answer is no. Speaking to reporters on Wednesday afternoon, Richard Rowe, the chief executive of Arkema’s American operations said that “the company has no way of preventing chemicals from catching fire or exploding at its heavily flooded plant.” Rowe added that the company now expects chemicals on site to catch fire or explode within the next six days. Since the plant remains flooded by about six feet of water, “the company has no way to prevent” this worst-case outcome. Anticipating the worst, the company earlier evacuated all remaining workers, while Harris County ordered the evacuation of residents in a 1.5-mile radius of the plant that makes organic chemicals.

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Insult. Injury.

• Texans To Be Hit With New Insurance Law (Ind.)

The embattled populations of southeastern Texas, may soon encounter a new obstacle in their quests to rebuild their lives after Harvey when a new state insurance law that makes it harder for consumers to receive full claims goes into effect Friday. The new law decreases the chances that an insurance company will be forced to pay claim delay penalties and plaintiff attorneys’ fees related to weather-involved claims — a protection that may discourage struggling households from pursuing legal action even if they think the insurance companies are offering less of a payout than they should. Under the new regulations, insurance companies will enjoy greater freedoms to push back on insurance claims, and the first wave of such claimants are likely to be coming from areas impacted by Harvey.

Residents reeling from Harvey now have until just Friday to assess the damages to their homes that may still be under water, and to notify their insurance company of nay damages if they want to avoid navigating that new law. After Friday, new legal restrictions will be in place that make things more difficult for consumers, and interest rates imposed on insurance companies to deter late payments will be cut nearly in half. “Without this law, and as the law currently is until Friday, I think insurance companies would be more responsive to claims,” Kir Pittard, a Dallas attorney, wrote on Facebook of the new law. “After Friday, there won’t be the incentive because the penalty for delays have been reduced.” To put it bluntly, a lot of residents in the impact area of Harvey may face a long battle ahead to replace the roofs torn off their homes from high winds, activists say.

“Insurance companies already had a lot of power, and the bill gives them a lot more power. As we know, too often insurance companies wrongfully withhold payments, they delay payments, they deny claims,” Ware Wendell, the executive director of consumer watchdog group Texas Watch, told The Independent. “So, we’re very concerned that people are going to have blue tarps on their homes instead of roofs.”

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Nomi sees central banks the same way I do.

• A Decade of G7 Central Bank Collusion – And Counting… (Nomi Prins)

Since late 2007, the Federal Reserve has embarked on grand-scale collusion with other G-7 central banks to manufacture a massive amount of money. The scope and degree of this collusion are historically unprecedented and by admission of the perpetrators, unconventional in approach, and – depending on the speech – ineffective. Central bank efforts to provide liquidity to the private banking system have been delivered amidst a plethora of grandiose phrases like “unlimited” and “by all means necessary.” Central bankers have played a game with no defined goalposts, no clock rundown, no max scores, and no true end in sight. At the Fed’s instigation, central bankers built policy on the fly. Their science experiment morphed into something even Dr. Frankenstein couldn’t have imagined.

Confidence in the Fed and the U.S. dollar (as well as in other major central banks globally) has dropped considerably, even as this exercise remains in motion, and even though central bankers have tactiltly admitted that their money creation scheme was largely a bust, though not in any one official statement. On July 31, 2017, Stanley Fischer, vice chairman of the Fed, delivered a speech in Rio de Janeiro, Brazil. There, he addressed the phenomenon of low interest rates worldwide. Fischer admitted that “the effects of quantitative easing in the United States and abroad” are suppressing rates. He also said there was “a heightened demand for safe assets affecting yields on advanced-economy government securities.” (Actually, there’s been heighted demand for junky assets, as well, which has manifested in a bi-polarity of saver vs. speculator preference.)

What Fischer meant was that investors are realizing that low rates since 2008 haven’t fueled real growth, just asset bubbles. Remember, Fischer is the Fed’s No. 2 man. He was also a professor to former Fed Chair Ben Bernanke and current European Central Bank President Mario Draghi. Both have considered him to be a major influence in their economic outlook. The “Big Three” central banks – the Fed, the European Central Bank and the Bank of Japan – have collectively held rates at a zero% on average since the global financial crisis began. For nearly a decade, central banks have been batting about tens of trillions of dollars to do so. They have fueled bubbles. They have amassed assets on their books worth nearly $14 trillion. That’s money not serving any productive, real-economy purpose – because it happens to be in lock-down.

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When the reserve currency sinks, strange things can happen.

• It’s Time For Your Reminder That Most Commodities Are Priced In US Dollars (BI)

The commodity rally since June has been impressive, and it could be tied to weakness in the US dollar. Those sharp increases — ranging between 15-40% — have had Morgan Stanley strategists slightly puzzled. On one hand, bulk commodities such as iron ore and coal have benefited from steady increases in demand. “Similarly, restocking in zinc and nickel markets have helped lift prices of those trades,” the analysts said. However, they added that fundamentals alone can’t explain the rise in the prices of copper, aluminium and lead. That suggests some of the price action is being driven by an external factor: the recent weakness in the US dollar. The analysts noted that this is the second commodity rally within the last year that’s been directly connected to the US dollar.

But the first one was the other way round — commodities staged a 4-week rally in the wake of the US election last November, when the US dollar was also rising. So why the difference? According to Price and Bates, it’s because the outlook for inflation has now largely reversed. “Post-election, markets positioned for new inflation risk, on the promise of a US infra-build story,” they said. But infrastructure reform is yet to get off the ground amid political gridlock in Washington, and US inflation remains stuck below the Federal Reserve’s target rate of 2-3%. Currency markets have reacted by driving the US dollar lower throughout most of 2017. So it follows that commodities priced in US dollars have benefited from a fall in the greenback while overall commodity-demand remains unchanged.

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Try it in a smaller country first?!

• A Universal Basic Income Would Grow The Economy (Vox)

A universal basic income could make the US economy trillions of dollars larger, permanently, according to a new study by the left-leaning Roosevelt Institute. Basic income, a proposal in which every American would be given a basic stipend from the government no strings attached, is often brought up as a potential solution to widespread automation reducing demand for labor in the future. But in the meantime, its critics typically allege that it is far too expensive to be practical, or else that it would spur millions of Americans to drop out of the labor force, wrecking the economy and depriving the government of a tax base for funding the plan. The Roosevelt study, written by Roosevelt research director Marshall Steinbaum, Michalis Nikiforos at Bard College’s Levy Institute, and Gennaro Zezza at the University of Cassino and Southern Lazio in Italy, comes to a dramatically different conclusion.

And it does so using some notably rosy assumptions about the effects of large-scale increases to government spending, taxes, and deficits, assumptions that other analysts would dispute vociferously. Their paper analyzes three different models for a universal basic income: • A full universal basic income, in which every adult gets $1,000 a month ($12,000 a year) • A partial basic income, in which every adult gets $500 a month ($6,000 a year) • A child allowance, in which every child gets $250 a month ($3,000 a year) They find that enacting any of these policies by growing the federal debt — that is, without raising taxes to pay for it — would substantially grow the economy. The effect fades away within eight years, but GDP is left permanently higher. The big, $12,000 per year per adult policy, they find, would permanently grow the economy by 12.56 to 13.10% — or about $2.5 trillion come 2025.

It would also, they find, increase the%age of Americans with jobs by about 2%, and expand the labor force to the tune of 4.5 to 4.7 million people. They also model the impact of the plan if it’s paid for with taxes. That amounts to large-scale income redistribution, which, the authors argue, would stimulate the economy, because lower-income people are likelier to spend their money in the near-term than rich people are. Thus, they find that a full $12,000 a year per adult basic income, paid for with progressive income taxes, would grow the economy by about 2.62% ($515 billion) and expand the labor force by about 1.1 million people.

These are extremely contentious estimates, borne of controversial assumptions about the way the economy works and the effects that a basic income would have on it. Many, if not most, economic modelers would come to very different conclusions: that a basic income discourages work, that raising taxes to pay for it could have profound negative economic impacts, and that not paying for it and exploding the deficit is a recipe for fiscal and economic ruin. But the authors argue that the economic model they’re using, run by the Bard College Levy Economics Institute, uses more realistic assumptions than alternative models, and is particularly well-suited for predicting a UBI’s impact.

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Part of Yanis’ plans for Greece. A parallel system.

• The Promise of Fiscal Money (Varoufakis)

any attempt to bring treasuries and central banks back under one roof would expose politicians to accusations of trying to get their grubby hands on the levers of monetary policy. But another response to the new reality is available: Leave central banks alone, but give governments a greater say in domestic money creation – and, indeed, greater independence from the central bank – by establishing a parallel payments system based on fiscal money or, more precisely, money backed by future taxes. How would fiscal money work? For starters, it would “live” on the tax authority’s digital platform, using the existing tax file numbers of individuals and companies. Anyone with a tax file number (TFN) in some country receives a free account linked to their TFN.

Individuals and firms will then be able to add credit to their TFN-linked account by transferring money from their normal bank account, in the same way that they do today to pay their taxes. And they will do so well in advance of tax payments because the state guarantees to extinguish in, say, a year €1,080 of the tax owed for every €1,000 transferred today – an effective annual interest rate of 8% payable to those willing to pay their taxes a year early. In practice, once, say, €1,000 has been transferred to one’s TFN-linked account, a personal identification number (the familiar PIN) is issued, which can be used either to transfer the €1,000 credit to someone else’s TFN-linked account or to pay taxes in the future. These time-stamped future tax euros, or fiscal euros, can be held for a year until maturity or be used to make payments to other taxpayers.

Smartphone apps and even government-issued cards (doubling as, say, social security ID) will make the transactions easy, fast, and virtually indistinguishable from other transactions involving central bank money. In this closed payments system, as fiscal money approaches maturity, taxpayers not in possession of that vintage will fuel rising demand for it. To ensure the system’s viability, the Treasury would control the total supply of fiscal money, using the effective interest rate to guarantee that the nominal value of the total supply never exceeds a%age of national income, or of aggregate taxes, agreed by the legislature. To ensure full transparency, and thus trust, a blockchain algorithm, designed and supervised by an independent national authority, could settle transactions in fiscal money.

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Is it low savings or high debt levels?

• America and China’s Codependency Trap (Stephen Roach)

Caught up in the bluster of the US accusations being leveled at China, little attention is being paid to the potential consequences of Chinese retaliation. Three economic consequences stand out. First, imposing tariffs on imports of Chinese goods and services would be the functional equivalent of a tax hike on American consumers. Chinese producers’ unit labor costs are less than one fifth those of America’s other major foreign suppliers. By diverting US demand away from Chinese trade, the costs of imported goods would undoubtedly rise sharply. The possibility of higher import prices and potential spillover effects on underlying inflation would hit middle-class US workers, who have faced more than three decades of real wage stagnation, especially hard.

Second, trade actions against China could lead to higher US interest rates. Foreigners currently own about 30% of all US Treasury securities, with the latest official data putting Chinese ownership at $1.15 trillion in June 2017 – fully 19% of total foreign holdings and slightly higher than Japan’s $1.09 trillion. In the event of new US tariffs, it seems reasonable to expect China to respond by reducing such purchases, reinforcing a strategy of asset diversification away from US dollar-based assets that has been under way for the past three years. In an era of still-large US budget deficits – likely to go even higher in the aftermath of Trump administration tax cuts and spending initiatives – the lack of demand for Treasuries by the largest foreign owner could well put upward pressure on borrowing costs.

Third, with growth in US domestic demand still depressed, American companies need to rely more on external demand. Yet the Trump administration seems all but oblivious to this component of the growth calculus. It is threatening trade sanctions not only against China – America’s third-largest and fastest-growing major export market – but also against NAFTA partners Canada and Mexico (America’s largest and second-largest export markets, respectively). As the reactive pathology of codependency would suggest, none of these countries can be expected to acquiesce to such measures without curtailing US access to their markets – a counter-response that could severely undermine the manufacturing revival that seems so central to the Trump presidency’s promise to “Make America Great Again.”

In the end, China’s economic leverage over America is largely the result of low US domestic saving. In the first quarter of 2017, the so-called net national saving rate – the combined depreciation-adjusted saving of businesses, households, and the government sector – stood at just 1.9% of national income, well below the longer-term average of 6.3% that prevailed over the final three decades of the twentieth century. Lacking in saving and wanting to consume and grow, the US must import surplus saving from abroad to close the gap, forcing it to run massive current-account and trade deficits with countries like China to attract the foreign capital.

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“..the now-notorious 2011 standoff led S&P Global Ratings to downgrade U.S. sovereign debt for the first time. The episode wiped $2.4 trillion off U.S. stocks.”

• Financial Firms Fear Turmoil Over Fraught US Debt Ceiling Talks (R.)

Financial firms are sounding alarm bells and dusting off contingency plans over fears an increasingly dysfunctional U.S. Congress may fail to reach a deal to raise the country’s debt limit. Several lobbyists, representing dozens of bankers, investors and credit rating agencies, told Reuters they are worried that dynamics at play in Washington – a bitterly divided Republican party and unpredictable President Donald Trump – could rule out a deal before an October deadline. Policymakers have vowed to provide disaster relief to areas affected by Hurricane Harvey, boosting hopes the debt limit battle could be included in an agreement on a legislative package.

But the acrimonious atmosphere following Trump’s remarks about the Charlottesville protests this month, which cost him key backers in the business community and raised worries about his ability to broker a deal, still lingers. The debt ceiling is a legal cap on how much money the government can borrow to fund its budget deficits and meet debt obligations. Failure to raise it from the current $19.8 trillion could lead to default, sending shockwaves across global markets. “The stakes here are incredibly high. The economic impact associated with debt default is so immense,” said Rob Nichols, president and CEO of the American Bankers Association (ABA), one of the country’s key financial lobby groups. “We’re monitoring this extremely closely and we will mobilize as needed throughout September.”

While leading lawmakers and the administration have pledged it will get done, some corners of financial markets are already on edge. After all, Goldman Sachs estimated that failure to lift the cap would force a government spending cut equal to between 3 and 4% of U.S. gross domestic product, which would have crippling economic consequences. Moreover, previous debt limit negotiations went down to the wire, and the now-notorious 2011 standoff led S&P Global Ratings to downgrade U.S. sovereign debt for the first time. The episode wiped $2.4 trillion off U.S. stocks.

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“U.S. gold is currently officially valued at $42.22 per ounce on the Treasury’s books versus a market price of $1,285 per ounce”

• Weird Things Are Happening With Gold (Rickards)

The first strange gold story involves Germany… The Deutsche Bundesbank, the central bank of Germany, announced that it had completed the repatriation of gold to Frankfurt from foreign vaults. The German story is the completion of a process that began in 2013. That’s when the Deutsche Bundesbank first requested a return of some of the German gold from vaults in Paris, in London and at the Federal Reserve Bank of New York. Those gold transfers have now been completed. This is a topic I first raised in the introduction to Currency Wars in 2011. I suggested that in extremis, the U.S. might freeze or confiscate foreign gold stored on U.S. soil using powers under the International Emergency Economic Powers Act, the Trading With the Enemy Act or the USA Patriot Act.

This then became a political issue in Europe with agitation for repatriation in the Netherlands, Germany and Austria. Europeans wanted to get gold out of the U.S. and safely back to their own national vaults. The German transfer was completed ahead of schedule; the original completion date was 2020. But the German central bank does not actually want the gold back because there is no well-developed gold-leasing market in Frankfurt and no experience leasing gold under German law. German gold in New York or London was available for leasing under New York or U.K. law as part of global price-manipulation schemes. Moving gold to Frankfurt reduces the floating supply available for leasing, making it more difficult to keep the manipulation going.

Why did Germany do it? The driving force both in 2013 (date of announcement) and 2017 (date of completion) is that both years are election years in Germany. Angela Merkel’s position as chancellor of Germany is up for a vote on Sept. 24, 2017. She may need a coalition to stay in power, and there’s a small nationalist party in Germany that agitates for gold repatriation. Merkel stage-managed this gold repatriation with the Deutsche Bundesbank both in 2013 and this week to appease that small nationalist party and keep them in the coalition. That’s why the repatriation was completed three years early. She needs the votes now.

The truly weird gold story comes from the United States… Secretary of the Treasury Steve Mnuchin and Senate Majority Leader Mitch McConnell just paid a visit to Fort Knox to see the U.S. gold supply. Mnuchin is only the third Treasury secretary in history ever to visit Fort Knox and this was the first official visit from Washington since 1974. The U.S. government likes to ignore gold and not draw attention to it. Official visits to Fort Knox give gold some monetary credence that central banks would prefer it does not have. Why an impromptu visit by Mnuchin and McConnell? Why now? The answer may lie in the fact that the Treasury is running out of cash and could be broke by Sept. 29 if Congress does not increase the debt ceiling by then. But the Treasury could get $355 billion in cash from thin air without increasing the debt simply by revaluing U.S. gold to a market price. (U.S. gold is currently officially valued at $42.22 per ounce on the Treasury’s books versus a market price of $1,285 per ounce.)

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Naked power plays.

• ‘More Europe’ Won’t Solve Europe’s Fiscal Quandary (BBG)

To a certain cast of people, the solution to every problem in Europe is “more Europe” – even, or especially, those problems that have been caused by Europe. The economic crisis that began a decade ago has exposed many flaws in the European economic model. The solution? Some are calling for a euro-zone budget and a euro-zone finance minister. France’s new president, Emmanuel Macron, is dedicated to the idea. Berlin has signaled conditional support. And Brussels is always happy to accrue more power. The idea makes superficial sense: Monetary union, most people now accept, doesn’t really work without fiscal union. The European Central Bank is constantly under pressure to loosen monetary policy to help the weakest euro members, and to keep it tight to help the strongest. But currency is a blunt instrument.

The “more Europe” thinking is that if the EU had a large budget, it could redistribute wealth to more directly help struggling members. (This is what happens in the U.S.) A powerful finance minister would oversee member countries to keep deficits and debts down and prevent debt crises. Except that that doesn’t make much sense: As Martin Sandbu points out, the U.S. federal budget, hovering at around 20% of GDP, isn’t enough to act as much of a macro-economic stabilizer, and nobody contemplates an EU budget of even that scale in the foreseeable future. Regardless, the so-called debt crises in the euro zone were not ultimately caused by deficits and debts as such, but by monetary phenomena. The euro made Mediterranean countries uncompetitive, leading to slow growth and debt and deficits, and the interest on those debts spiked only when the implicit euro-zone-wide guarantee on those debts was called into question by Germany.

What of Germany, which is essential to any EU reform effort? Germany historically, and Angela Merkel especially, has always been keen on more European integration – but also doesn’t want to pay for it. German Finance Minister Wolfgang Schaeuble has favored the idea of an EU budget – with a little-noticed but all-important asterisk. EU countries’ access to a European macroeconomic stabilization fund would be conditioned on “the bailout fund having more say over national debt and budgets,” he told the German Bild newspaper. In other words, Germany would be happy to pay a little something toward a macro-economic stabilization fund in exchange for having practical control over the budgets of all the euro-zone countries.

The commitment to pay into the fund is probably not daunting, because the budgetary orthodoxy rules Germany would come up with would be unattainable, and the money would probably never be spent. In other words, Macron and the “more Europe” camp are willing to hand Germany control over the euro zone’s finances, in exchange for … well, perhaps nothing. It’s an offer that Merkel can’t refuse.

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No, it’s not ideal. But at least all-out chaos like in Libya has been prevented.

• Victory For Assad Increasingly Likely As World Loses Interest In Syria (G.)

In recent months, as supplies of aid, money and weapons to Syria’s opposition have dwindled, it had clung to the hope that ongoing international political support would prevent an outright victory for Bashar al-Assad and his backers. Not any more. An announcement earlier this week by Jordan – one of the opposition’s most robust supporters – that “bilateral ties with Damascus are going in the right direction” has, for many, marked a death knell for the opposition cause. Within the ranks of the political opposition, and regional allies, the statement was the opening act of something that all had dreaded: normalisation with a bitter foe. And without anything much to show for it.

Emphasising his words, Jordanian government spokesman Mohammad al-Momani said: “This is a very important message that everyone should hear.” And indeed, the about-face in Amman was quickly noted in Ankara, Doha, and Riyadh, where – after seven and a-half years of war – states that were committed to toppling the Syrian leader are now resigned to him staying. Returning from a summit in the Saudi capital last week, opposition leaders say they were told directly by the foreign minister, Adel al-Jubeir, that Riyadh was disengaging. “The Saudis don’t care about Syria anymore,” said a senior western diplomat. “It’s all Qatar for them. Syria is lost.”

In Britain too, rhetoric that had demanded Assad leave the Presidential Palace, as a first step towards peace, has been replaced by what Whitehall calls “pragmatic realism”. The foreign secretary, Boris Johnson, last week couched Assad’s departure as “not a precondition. But part of a transition.” Rex Tillerson, the US secretary of state, has openly delegated finding a solution to Syria to Russia. Donald Trump, meanwhile, has pledged to close a CIA-run programme, which had sent weapons from Jordan and Turkey to vetted Syrian rebel groups for much of the past four years. Washington has adopted a secondary role in twin, ailing, peace processes in Geneva and Astana and has focused its energies on fighting Isis, not Assad.

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How long ago is it that Justin vowed to fix this? “.. more than 100 reserves still lack housing, electricity or running water “

• ‘Our Society Is Broken’: Canada’s First Nations Suicide Epidemic (G.)

The suicide epidemic affecting First Nations communities across Canada has been a national crisis for decades, but it attracted international headlines after three indigenous communities were moved to declare a state of emergency in response to a series of deaths. In the spring of 2016, Attawapiskat First Nation reserve in Ontario declared a state of emergency after 11 young people tried to commit suicide in one night – adding to the estimated 100 attempts made over 10 months among this community of 2,000 people. Not long after, it was revealed that six people, including a 14-year-old girl, had killed themselves over a period of three months in the Pimicikamak Cree Nation community of northern Manitoba. In the aftermath, more than 150 youths in this remote community of 6,000 were put on suicide watch.

Then in June this year, another First Nations reserve in Ontario lost three 12-year-old girls who had reportedly agreed a suicide pact. This string of tragic events has seen media and government turn the spotlight on an issue too often ignored in Canada. Across the country, suicide and self-inflicted injury is the leading cause of death for First Nations people below the age of 44. Studies show young indigenous males are 10 times more likely to kill themselves than their non-indigenous male counterparts, while young indigenous females are 21 times more likely than young non-indigenous females. [..] The government has been criticised for its lack of support and funding for First Nations communities, which total 1.4 million people – just under 4.3% of Canada’s population. “We call that injustice,” says Roderick McCormick, an expert in indigenous health and suicide at Thompson Rivers University in Kamloops BC.

He suggests a complex web of severe poverty plus lack of education and basic necessities underpins the rise in suicides among indigenous youths. “In terms of educational opportunities, healthcare and child welfare, the government is doing an injustice by not adequately funding our communities,” McCormick says. “When these remote reserves compare themselves to other communities across Canada, there is a huge gap that has become really evident.” Recent research has found more than 100 reserves still lack housing, electricity or running water – with almost 90 of them being advised to boil their drinking water. Another study by the Canadian Centre for Policy Alternatives found that 60% of children on these reserves are living in poverty. “The communities I represent are living in abject poverty,” Wilson says. “My people are the poorest in this country, and that’s not right.”

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Debt Rattle August 22 2017

Aug 222017
 
 August 22, 2017  Posted by at 8:35 am Finance Tagged with: , , , , , , , , ,  6 Responses »


Pierre Bonnard Nude in an Interior c1935

 

• Periods Of Re-Pricing Are Usually Quick And Brutal (Roberts)
• US House Price Bubbles 2.0 (Hanson)
• QE Is Like Heroin, Says Former UK Treasury Official (G.)
• UK Credit Card Lending Booms As Real Wages Fall (Ind.)
• Cash is Not The Curse (Mark GB)
• US Gross National Debt to Spike by $800 Billion in October? (WS)
• Why Peter Costello Is Not Even Half Right On Housing (ND)
• Diminishing Returns (Jim Kunstler)
• What Would A US Civil War Look Like? (Copley)
• Hate is the New Sex (Greer)
• Greece Concerns Peak Amid Sudden Spike In Refugee Arrivals (K.)
• US Farmers Confused By Monsanto Weed Killer’s Complex Instructions (R.)
• UK Blasted Over ‘Shocking’ Export Of Deadly Weedkiller To Poorer Countries (G.)
• The Blue Dogs of Mumbai (G.)

 

 

And the longer re-pricing is postponed, through QE etc., the steeper the fall will be.

• Periods Of Re-Pricing Are Usually Quick And Brutal (Roberts)

1. Stock prices run in cycles. Periods of re-pricing are usually quick and powerful.

7. Your first loss will often be your best loss. No one is right all the time and you don’t have to be. There are market participants that are immensely profitable by being right only 30% of the time. It is good to have conviction in your investment thesis, but discipline should always trump conviction.

8. Optimism and pessimism in the stock market are contagious. Investor psychology often loses its logic and become emotional. The news media and the most recent price action play a particularly important role in developing moods of mass optimism or pessimism.

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Debt slaves.

• US House Price Bubbles 2.0 (Hanson)

A big problem with house prices experiencing even a “moderate” correction of 10% to 20% — already underway in many of the most over-priced regions — is with between 40% and 50% of all house purchases for years being of the “less than 10% down” variety — and because it takes 8% to 10% equity to sell plus the 3% to 10% down payment on the new house — it doesn’t take much downside to swamp the nation in “NEGATIVE EQUITY” once again. And we know for certain that many homeowners rather pay their credit cards and car payments before their mortgage when they are underwater.

ITEM 1) Household income INCREASE needed to Buy the Median Priced House in Key Cities. Bottom Line: On a “national” basis the divergence isn’t too bad…6%. But, in the key cities that drive the US economy, Bubble 2.0 has blown large. This represents significant downside, especially in the sand states, just like in Bubble 1.0.

ITEM 2) DIVERGENCE between Actual Household Income & Income Needed to Buy the Median Priced House. Bottom Line: Here too, on a “national” basis the divergence isn’t too bad…-6%. But, in the key cities that drive the US economy, Bubble 2.0 has blown large.

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It’s worse, actually. Heroin cold turkey is doable though hard. QE cold turkey is definitely not.

• QE Is Like Heroin, Says Former UK Treasury Official (G.)

A former senior Treasury mandarin has compared quantitative easing to heroin and called for an end to almost a decade of electronic money printing by central banks. Nick Macpherson was permanent secretary to the Treasury when Bank of England officials started buying UK government bonds to stimulate the economy following the financial crisis. On Monday, he said it was “time to move on” from QE, which is credited with helping Britain into recovery but remains in use nine years later amid concerns over Brexit. Threadneedle Street initially began pumping £200bn into the gilt market in 2009 to boost the economy, before expanding the programme to £435bn, including an extra £60bn following the EU referendum. The bond buying scheme is similar to massive stimulus packages used by other countries, such as the Fed’s $4.5tn of asset purchases (£3.5tn) and the ECB ’s €2.3tn (£2.1tn) plan.

Lord Macpherson’s call comes as pressure mounts on the world’s central bankers to give more clues about how they intend to exit QE in a process known as “normalisation” almost a decade on from the crash. Some indications could be given at a meeting of senior officials at Jackson Hole in the US later this week. Mario Draghi, the ECB governor, is expected to be the star turn at the event watched by global investors, although he is not thought to be preparing to announce the end of QE just yet. While QE is credited with lowering borrowing costs and helping banks to lend more to consumers and businesses, critics say such schemes inflate assets owned by the richest in society, while punishing savers without large amounts of wealth. Macpherson did not single out the specific bond-buying programme of a particular central bank. “QE like heroin: need ever increasing fixes to create a high. Meanwhile, negative side effects increase. Time to move on,” he wrote on Twitter.

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And after all the QE, people are poorer than before.

• UK Credit Card Lending Booms As Real Wages Fall (Ind.)

UK consumers are increasingly purchasing goods on plastic with the number of transactions on credit and debit cards jumping 12% in the last year. The increase was the fastest annual rise in the number of card transactions since 2008 and comes after warnings from the Bank of England about the growth of personal debt. Shoppers spent 7.2% more on all types of cards in the year to the end of June, despite real wages falling over the period, data from industry body UK Finance showed. The total value of credit and charge card purchases increased 6.9% over the 12 months with credit card lending accelerating in April, May and June to an annual growth rate of 9%. During those three months, the number of people defaulting on their credit card bills and personal loans “increased significantly”, the Bank of England said in a recent report.

The rise comes as official figures show real earnings have declined. Average pay rose at an annual rate of 2.1% in the three months to June – well below the inflation rate of 2.6% in the year to the end of June. Overall consumer spending was up 1.3% in the year to July, the Office for National Statistics said in a separate release this month. Peter Tutton, head of policy at StepChange debt charity, expressed concern at the findings. “With our research estimating 3.2 million people are using credit cards to pay for everyday household expenses, the growing stock of credit card debt should focus attention on households in financial difficulties,” he said. Mr Tutton said the growth in credit card cash advances was particularly worrying. This type of borrowing is expensive and can be a warning sign that borrowers are facing financial difficulty.

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More on Ken Rogoff and Larry Summers’ crazy ideas of power over people’s money.

• Cash is Not The Curse (Mark GB)

There’s a pub in the Welsh hills, not far from where I live, called ‘The Tylers Arms’ – pronounced ‘tillers’. The name originated, I believe, in the 18th century. The local villagers, who all worked on the land, would go there to pick up their wages in the form of ‘tyles’ – some of which would be immediately exchanged for beer, and thus returned to the landowner…who also owned the pub…and the local store. Thus, the ‘tyles’ circulated regularly, providing employment & cheap produce for the villagers, a steady and almost ‘captive’ profit for the landowner, and stability for the community. As the industrial revolution progressed some of the larger UK manufacturers adopted a similar system, but using fiat currency – e.g. there is a ‘village’ in Birmingham known as Bourneville, which was built by the Cadbury family.

Now before anyone thinks I’ve got unresolved baggage on feudalism, a ‘downer’ on capitalism, or a yearning for socialism…hold your horses please…this is about something far more serious than the ‘isms’. This is about who controls the money. The folks who do that…can, and do, call the tune for the rest of us. And that’s what I want to talk about here.

These days our monetary masters are much more sophisticated – our ‘tyles’ are pieces of paper backed by government fiat. You can work for pretty much whomever you like, and you can buy from whomever you like, but one way or another the government will take a cut of everything you earn and everything you spend. You can do the odd ‘swapsie’ with your pals but you can’t pay taxes with home grown tomatoes – the IRS don’t do vegetables – they can’t digitise them or create them with a keystroke so veggies would confuse the poor dears.

What happens next is technical and varies between territories, so let’s just deal with the ‘myth’: The taxman’s ‘cut’ is used to boost the economy on your behalf by spending it on useful things like building roads and bridges. It also includes an ever-growing list of things that you didn’t even realise you need, like cruise missiles & other stuff that goes ‘BANG’, along with other seemingly ‘essential’ services like bribing foreign governments and funding ‘moderate rebels’ to remove the foreign governments that can’t be bribed. Clearly we’ve come a long way from tyles, especially in the case of the dollar, which can used to bribe governments on seven continents. The chap who owned the Tillers never dreamt of such power – this is considered to be progress…

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Now that Goldman rules the White House, default risk is definitely down.

• US Gross National Debt to Spike by $800 Billion in October? (WS)

“There is zero chance, no chance we won’t raise the debt ceiling,” swore Senate Majority Leader Mitch McConnell (R., Ky.) at an event in Louisville, Kentucky, on Monday. He who couldn’t get his Republican ducks all lined up in a row to get any major legislation passed this year was confident that the Senate would pass a bill that would raise the debt ceiling so that the government could continue to pay for things that Congress told the Government to pay for, and so that the government could service its debts, rather than default on them. Treasury Secretary Steven Mnuchin was there with him, pleading once again for a “clean” debt-ceiling increase, according to the Wall Street Journal. His “magic super Treasury powers” that allow the government to conserve cash to avoid having to issue more debt will expire at the end of September, he said.

“This is not about spending money,” he said. “This is about paying for what we’ve spent, and we cannot put the credit of the United States on the line.” The debt ceiling is just under $20 trillion. While the government can issue bonds to redeem maturing bonds – and it does this all the time – it cannot allow the gross national debt to go beyond the debt ceiling. But because it has to continue to pay for things that Congress mandated in its various spending bills over the years, the Treasury scrounges up the money from other government accounts, robbing Peter to pay Paul, so to speak. For example it temporarily short-changes the Civil Service Retirement and Disability Fund. These “extraordinary measures,” as they’re called, or the “magic super Treasury powers,” as Mnuchin called it, run out after a while.

Mnuchin said in his last letter to Congress that the out-of-money-date is September 29. But as in the past, the real out-of-money date can probably be stretched into October. These shenanigans make the entire world shake its collective head and pray that Congress, after going through its charade, will for the umpteenth time raise the debt limit. The other option is a US default. Its global consequences are too ugly to even imagine. But this charade has some peculiar effects, beyond its entertainment value: for months on end, it covers up the true extent of US government debt, and the current surge of this debt. This chart shows the gross national debt going back to 2011, including the last two debt-ceiling fights. Note the long flat lines leading into October or November, followed each time by an enormous spike:

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A good example of exatly how stuck governments and central banks are after blowing housing bubbles. There was an Australian tycoon this week who said the Oz bubble won’t pop because people are too heavily invested in property…

• Why Peter Costello Is Not Even Half Right On Housing (ND)

When former treasurer Peter Costello called on Monday for interest rates to be ‘normalised’ upwards to stop Australia’s credit bubble getting any larger, he was very nearly half right. As long as the Reserve Bank keeps the official cash rate at the record low of 1.5%, the economy will become increasingly “unbalanced”, as he put it. And although struggling families will protest that they can’t afford higher mortgage repayments, the other side of that coin is that each successive wave of first home owners is taking on even higher debts. The longer that super-low rates persist, the more debt the banks will be able to balance on the shoulders of new home buyers. That has already created huge property-based inequality. But Mr Costello’s comments weren’t focused on that imbalance – he’s worried about the impact that unstable house prices or teetering banks could have on economic growth more generally.

He told The Australian that “once [the price of] money returns to more normal levels” Australia could face a “big problem” with asset prices and the housing market. Quite right, but what could prevent that? A gradual increase in rates will not, in itself, ‘fix’ the housing market. To do that, two other abnormalities need to be addressed. The one mentioned most by Mr Costello’s side of politics is the availability of suitable dwellings – the ‘supply problem’. That is a wildly misunderstood problem, so I will look at it separately in coming days. But bigger than either low rates or the supposed ‘supply problem’ is the abnormality that Mr Costello himself created – tax laws that reward investors for making annual losses in the housing market, so as to reap lightly-taxed capital gains years down the track.

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“..an impenetrable smokescreen of legal blather in the service of racketeering.”

• Diminishing Returns (Jim Kunstler)

These two words are the hinge that is swinging American life — and the advanced techno-industrial world, for that matter — toward darkness. They represent an infection in the critical operations of daily life, like a metabolic disease, driving us into disorder and failure. And they are so omnipresent that we’ve failed to even notice the growing failure all around us. Mostly, these diminishing returns are the results of our over-investments in making complex systems more complex, for instance the replacement of the 37-page Glass-Steagall Act that regulated American banking, with the 848 page Dodd-Frank Act, which was only an outline for over 22,000 pages of subsequent regulatory content — all of it cooked up by banking lobbyists, and none of which replaced the single most important rule in Glass-Steagall, which required the separation of commercial banking from trafficking in securities.

Dodd-Frank was a colossal act of misdirection of the public’s attention, an impenetrable smokescreen of legal blather in the service of racketeering. For Wall Street, Dodd-Frank aggravated the conditions that allow stock indexes to only move in one direction, up, for nine years. During the same period, the American economy of real people and real stuff only went steadily down, including the number of people out of the work force, the incomes of those who still had jobs, the number of people with full-time jobs, the number of people who were able to buy food without government help, or pay for a place to live, or send a kid to college. When that morbid tension finally snaps, as it must, it won’t only be the Hedge Funders of the Hamptons who get hurt. It will be the entire global financial system, especially currencies (dollars, Euros, Yen, Pounds, Renminbi) that undergo a swift and dire re-pricing, and all the other things of this world priced in them.

And when that happens, the world will awake to a new reality of steeply reduced possibilities for supporting 7-plus billion people. The same over-investments in complexity have produced the racketeering colossus of so-called health care (formerly “medicine”), in case you’re wondering why the waiting room of your doctor’s office now looks exactly like the motor vehicle bureau. Meanwhile, it’s safe to say that the citizens of this land have never been so uniformly unhealthy, even as they’re being swindled and blackmailed by their “providers.” The eventual result will be a chaotic process of simplification, as giant hospital corporations, insurance companies, and overgrown doctors’ practices collapse, and the braver practitioners coalesce into something resembling Third World clinics.

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“..such a conflict – physical or political – could, equally, lead to a victory for nationalism over globalism, and to the protection of currencies and values.”

• What Would A US Civil War Look Like? (Copley)

There is little doubt that the US, despite the evidence that economic recovery is at hand, could spiral into a self-destructive descent of dysfunction, dystopia, and anomie. The path toward a “second civil war” has significant parallels with the causes of the first US Civil War (1861-65). Both events — the 19th Century event and a possible 21st Century one — saw the polarization of a fundamentally urban, abstract society against a fundamentally regional, traditional society. In some respects, it is a conflict between people with long memories (even if those memories are flawed and selective) and people to whom memories and history are irrelevant. Equally, it is a conflict between identity and materialism, with the abstract social groups (the urban populations) the most preoccupied with short-term material gain.

I have covered the US for 50 years, and my earliest view of it was, a half century ago, that its populations would inevitably polarize into protective islands of self-interest, surrounded by seas of unthinking locusts. What is ironic is that the present islands of wealth and power — the cities — have come to represent short-term materialism, as cities have throughout history. But what is interesting is that, despite the global attention on the political/geographic polarizations occurring in the US and other parts of the Western world, there has been a reversion in other parts of the world to a sense of Westphalian or pre-Westphalian nationalism. The fact that “the West” may have ring-fenced Iran, Russia, and so on, with sanctions and other forms of isolation may well be what ensures their enduring status.

They have avoided the contagion of globalism. Russia, indeed, recovered from the Soviet form of globalism in 1991. An urban globalist “victory” over Trump and Brexit would trigger that meltdown toward a form of civil societal collapse – civil war in some form or other – as the regions disavow the diktats of the cities. That would, in turn, bring about the global economic uncertainty which could impact the PRC and then the en-tire world. But such a conflict – physical or political – could, equally, lead to a victory for nationalism over globalism, and to the protection of currencies and values. We have seen this cycle repeated for millennia. It is the eternal battle.

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The Archdruid from a few weeks ago.

• Hate is the New Sex (Greer)

It occurred to me the other day that there’s a curious disconnect between one of the most common assumptions most of us make about how to make the world better, on the one hand, and the results that this assumption has had when put into practice, on the other. It’s reminiscent of the realization that led James Hillman and Michael Ventura to title a once-notorious book of theirs We’ve Had A Hundred Years Of Psychotherapy And The World’s Getting Worse. In this case as in that one, something that’s supposed to make things better doesn’t seem to be doing the trick—in fact, quite the opposite—and it’s time that we talked about that. You know the assumption I have in mind, dear reader. It’s the conviction that certain common human emotions are evil and harmful and wrong, and the way to make a better world is to get rid of them in one way or another.

That belief is taken for granted throughout the industrial societies of the modern West, and it’s been welded in place for a very long time, though—as we’ll see in a moment—the particular emotions so labeled have varied from time to time. Just now, of course, the emotion at the center of this particular rogue’s gallery is hate. These days hate has roughly the same role in popular culture that original sin has in traditional Christian theology. If you want to slap the worst imaginable label on an organization, you call it a hate group. If you want to push a category of discourse straight into the realm of the utterly unacceptable, you call it hate speech. If you’re speaking in public and you want to be sure that everyone in the crowd will beam approval at you, all you have to do is denounce hate.

At the far end of this sort of rhetoric, you get the meretricious slogan used by Hillary Clinton’s unsuccessful presidential campaign last year: LOVE TRUMPS HATE. I hope that none of my readers are under the illusion that Clinton’s partisans were primarily motivated by love, except in the sense of Clinton’s love for power and the Democrats’ love for the privileges and payouts they could expect from four more years of control of the White House; and of course Trump and the Republicans were head over heels in love with the same things. The fact that Clinton’s marketing flacks and focus groups thought that the slogan just quoted would have an impact on the election, though, shows just how pervasive the assumption I’m discussing has become in our culture.

Now of course most people these days, when confronted with the sort of things I’ve just written, are likely to respond, “Wait, are you saying that hate is good?”—as though the only alternatives available are condemning something as absolutely bad or praising it as absolutely good. Let’s set that simplistic reaction to one side for the moment, and ask a different question: what happens when people decide that some common human emotion is evil and harmful and wrong, and decide that the way to make a better world is to get rid of it?

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Watch Erdogan. German elections coming up.

• Greece Concerns Peak Amid Sudden Spike In Refugee Arrivals (K.)

A sudden spike in the number of undocumented migrants arriving from neighboring Turkey has led to concern on the part of Greek authorities, who expect the next few days to reveal whether the rapid increase is a random occurence or the beginning of a new trend. A total of 643 migrants who had set out from the Turkish coast landed on the islands of the eastern Aegean between Friday and Monday morning, according to government figures. Another 114 people arrived in two separate smuggling boats later on Monday, putting authorities on alert.

Early on Monday, a vessel belonging to the European Union’s border monitoring agency Frontex spotted a smuggling boat off the coast of Chios and intercepted the 53 migrants who had been aboard. Later in the day another 61 migrants were found in a boat that had reached Samos and were also detained. Tensions are already high in reception centers on several Aegean islands. Most of the facilities are at around twice their capacity as hundreds of migrants and refugees await the outcome of asylum applications or deportation orders. Tolerance has been tested in several island communities as dozens of migrants continue to arrive daily from nearby Turkish shores. There are currently more than 14,400 migrants living on camps on Lesvos, Chios, Samos, Kos and Leros.

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Confused? The instructions are impossible to follow, not confusing.

• US Farmers Confused By Monsanto Weed Killer’s Complex Instructions (R.)

With Monsanto’s latest flagship weed killer, dicamba, banned in Arkansas and under review by U.S. regulators over concerns it can drift in the wind, farmers and weed scientists are also complaining that confusing directions on the label make the product hard to use safely. Dicamba, sold under different brand names by BASF and DuPont, can vaporize under certain conditions and the wind can blow it into nearby crops and other plants. The herbicide can damage or even kill crops that have not been genetically engineered to resist it. To prevent that from happening, Monsanto created a 4,550-word label with detailed instructions. Its complexity is now being cited by farmers and critics of the product. It was even singled out in a lawsuit as evidence that Monsanto’s product may be virtually impossible to use properly.

At stake for Monsanto is the fate of Xtend soybeans, it largest ever biotech seed launch. Monsanto’s label, which the U.S. Environmental Protection Agency (EPA) reviewed and approved, instructs farmers to apply the company’s XtendiMax with VaporGrip on its latest genetically engineered soybeans only when winds are blowing at least 3 miles per hour, but not more than 15 mph. Growers must also spray it from no higher than 24 inches above the crops. They must adjust spraying equipment to produce larger droplets of the herbicide when temperatures creep above 91 degrees Fahrenheit. After using the product, they must rinse out spraying equipment. Three times. “The restriction on these labels is unlike anything that’s ever been seen before,” said Bob Hartzler, an agronomy professor and weed specialist at Iowa State University. The label instructions are also of interest to lawyers for farmers suing Monsanto, BASF and DuPont over damage they attribute to the potent weed killer moving off-target to nearby plants.

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It’s not ‘shocking’, it’s criminal.

• UK Blasted Over ‘Shocking’ Export Of Deadly Weedkiller To Poorer Countries (G.)

Paraquat, a pesticide so lethal that a single sip can be fatal, has caused thousands of accidental deaths and suicides globally, and was outlawed by EU states in 2007. But Swiss pesticide manufacturer Syngenta is exporting thousands of tonnes of the substance to other parts of the world from an industrial plant in Huddersfield. Campaigners have condemned the practice as an “astonishing double standard”, while a UN expert said it was deeply disquieting that the human rights implications of producing a substance for export that is not authorised in the EU were being ignored. “The fact that the EU has decided to ban the pesticide for health and environmental reasons, but they still export it to countries with far weaker regulation and far weaker controls, is shocking to me,” said Baskut Tuncak, the UN special rapporteur on toxic wastes.

Syngenta is responsible for 95% of Europe’s exports of paraquat, which it sells under the brand name Gramoxone. The substance can be absorbed through the skin and has been linked with Parkinson’s disease. Syngenta has exported 122,831 tonnes of paraquat from the UK since 2015, an average of 41,000 tonnes a year, according to export licensing data analysed by the Swiss NGO Public Eye and shared with the Guardian. Since 2015, when a facility in Belgium stopped exporting paraquat, all EU exports of the pesticide have come from Syngenta’s UK base, according to Public Eye. Almost two-thirds of these exports by volume – 62% – go to poor countries, including Brazil, Mexico, Indonesia, Guatemala, Venezuela and India. A further 35% is exported to the US, where paraquat can only be applied by licensed users.

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We are a brilliant species.

• The Blue Dogs of Mumbai (G.)

Authorities in Mumbai have shut down a manufacturing company after it was accused of dumping untreated industrial waste and dyes into a local river that resulted in 11 dogs turning blue. The group of strangely coloured canines was first spotted on 11 August, according to the Hindustan Times, prompting locals to complain to the Maharashtra Pollution Control Board about dyes being dumped in the Kasadi river, where the animals often swim. Footage shows the animals roaming the streets with bright blue fur. “It was shocking to see how the dog’s white fur had turned completely blue,” said Arati Chauhan, head of the Navi Mumbai Animal Protection Cell, told the Times. “We have spotted almost five such dogs here and have asked the pollution control board to act against such industries.”

Chauhan had posted images of the blue dogs on the group’s Facebook page, saying the “pollutants from Taloja Industrial area not only ruining the water bodies affecting humans there but also affecting animals, birds, reptiles”. The board investigated, shutting down the company on Wednesday after confirming that canines were turning blue due to air and water pollution linked to the plant. An animal welfare agency managed to capture one of the dogs and wash some of the blue dye off. The group concluded that animal seemed unharmed in all other ways. The Kasadi River flows through an area with hundreds of factories.

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Debt Rattle March 16 2017

Mar 162017
 
 March 16, 2017  Posted by at 9:16 am Finance Tagged with: , , , , , , , , , ,  Comments Off on Debt Rattle March 16 2017


Arthur Rothstein “Quack doctor, Pittsburgh, Pennsylvania” 1938

 

• Hawaii Judge Halts Trump’s New Travel Ban Before It Can Go Into Effect (R.)
• Trump Proposes Historic Cuts Across Government to Fund Defense (BBG)
• Janet Yellen Explains Why She Hiked In A 0.9% GDP Quarter (ZH)
• Fed Rate Hikes + Low Growth = Recession (MW)
• How The Fed Rate Hike Will Impact Millions Of Americans (MW)
• How Global Central Banks Have Set Interest Rates Since 2008 (Tel.)
• Beware the Debt Ceiling (BBG)
• Amazon Is Going To Kill More American Jobs Than China Did (MW)
• PM Mark Rutte Sees Off Challenge Of Geert Wilders In Dutch Election (G.)
• Northern Ireland Vote Jolts Already Disunited Kingdom (R.)
• Erdogan, Europe Head for Political Blow-Up They Can’t Afford (BBG)
• Turkey Protests Dutch Government by Returning 40 Holstein Cows (BBG)
• Spike In Number Of Greeks Renouncing Inheritance To Avoid Taxes (K.)
• New Zealand River Granted Same Legal Rights As Human Being (G.)

 

 

Not much room left to move, it would seem. And the Supreme Court is still some distance away, if the case even gets there.

• Hawaii Judge Halts Trump’s New Travel Ban Before It Can Go Into Effect (R.)

Just hours before President Donald Trump’s revised travel ban was set to go into effect, a U.S. federal judge in Hawaii on Wednesday issued an emergency halt to the order’s implementation. The action was the latest legal blow to the administration’s efforts to temporarily ban refugees as well as travelers from six predominantly Muslim countries, which the President has said is needed for national security. Trump lashed out at the judge’s ruling, saying it “makes us look weak.” Trump signed the new ban on March 6 in a bid to overcome legal problems with a January executive order that caused chaos at airports and sparked mass protests before a Washington judge stopped its enforcement in February. U.S. District Judge Derrick Watson put an emergency stop to the new order in response to a lawsuit filed by the state of Hawaii, which argued that the order discriminated against Muslims in violation of the U.S. Constitution.

Judge Watson concluded in his ruling that while the order did not mention Islam by name, “a reasonable, objective observer … would conclude that the Executive Order was issued with a purpose to disfavor a particular religion.” Watson was appointed to the bench by former Democratic President Barack Obama. Speaking at a rally in Nashville, Trump called his revised executive order a “watered-down version” of his first. “I think we ought to go back to the first one and go all the way, which is what I wanted to do in the first place,” Trump said. Trump called the judge’s block “unprecedented judicial overreach” and said he will take the case “as far as it needs to go,” including to the U.S. Supreme Court. The Department of Justice called the ruling “flawed both in reasoning and in scope,” adding that the president has broad authority in national security matters. “The Department will continue to defend this Executive Order in the courts,” it said a statement.

[..] The government, in its court filings cautioned the court against looking for secret motives in the executive order and against performing “judicial psychoanalysis of a drafter’s heart of heart.” Watson said he did not need to do that, because evidence of motive could be found in the president’s public statements. He said he did not give credence to the government’s argument that the order was not anti-Muslim because it targeted only a small percentage of Muslim-majority countries. “The notion that one can demonstrate animus toward any group of people only by targeting all of them at once is fundamentally flawed,” the judge wrote.

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The military-industrial complex.

• Trump Proposes Historic Cuts Across Government to Fund Defense (BBG)

President Donald Trump is proposing historically deep budget cuts that would touch almost every federal agency and program and dramatically reorder government priorities to boost defense and security spending. The president’s fiscal 2018 budget request, which will be formally delivered Thursday to Congress, would slash or eliminate many of the Great Society programs that Republicans have for decades tried to peel back while showering the Pentagon and Department of Homeland Security with new resources. Some of the deepest cuts are reserved for the agencies and programs Trump has often derided. The State Department would be hit with a 28% reduction below fiscal 2016 levels that mainly targets international aid and development assistance; the EPA would face a 30% reduction.

Also in the crosshairs are agriculture programs, clean energy projects and federal research funding. “You see reductions in many agencies as he tries to shrink the role of government, drive efficiencies, go after waste, duplicative programs,” Office of Management and Budget Director Mick Mulvaney told reporters. “If he said it in the campaign, it’s in the budget.” Trump’s proposal for $1.15 trillion in federal discretionary funding for fiscal year 2018 is certain to face vigorous opposition from lawmakers in both parties who will resist chopping favored programs, whether foreign aid, rural water projects, or development grants for Appalachia and the Mississippi Delta. In addition to a solid wall of opposition from Democrats, senior Republicans including Senate Majority Leader Mitch McConnell have raised objections to specific agency cuts even before the budget request went to the Capitol.

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It’s all about credibility. “Fighting inflationary pressures”?!

• Janet Yellen Explains Why She Hiked In A 0.9% GDP Quarter (ZH)

It appears that, the worse the economy was doing, the higher the odds of a rate hike.

Putting the Federal Reserve's third rate hike in 11 years into context, if the Atlanta Fed's forecast is accurate, 0.9% GDP would mark the weakest quarter since 1980 in which rates were raised (according to Bloomberg data).

We look forward to Ms. Yellen explaining her reasoning – Inflation no longer "transitory"? Asset prices in a bubble? Because we want to crush Trump's economic policies? Because the banks told us to?

For now it appears what matters to The Fed is not 'hard' real economic data but 'soft' survey and confidence data…

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“..raising interest rates off ultralow levels during a period of tepid economic growth coincides with recessions in the following three to nine months..”

• Fed Rate Hikes + Low Growth = Recession (MW)

The Federal Reserve on Wednesday lifted benchmark interest rates for only the third time in about a decade, and that has caused trepidation among some market participants. Lance Roberts, chief investment strategist at Clarity Financial, makes the case in one chart that raising interest rates off ultralow levels during a period of tepid economic growth coincides with recessions in the following three to nine months (see chart below, which compares real, inflation-adjusted, GDP to Fed interest rate levels).

The Fed lifted key rates by a quarter-point Wednesday to a range of 0.75% to 1%. The rate increase comes as the U.S. economy has been growing at a lackluster pace. Government data show that gross domestic product—the official report card of economic performance—was growing at a seasonally adjusted pace of 1.9% in the fourth quarter compared with 1.6% in 2016 and 2.6% in 2015. “Outside of inflated asset prices, there is little evidence of real economic growth, as witnessed by an average annual GDP growth rate of just 1.3% since 2008, which by the way is the lowest in history since…well, ever,” Roberts wrote in a blog post March 9 (see chart below):

Woeful productivity, defined as the average output per hour of work, has been another bugaboo for economists and the Fed, for the past six years. Higher rates could exacerbate both problems, especially since corporations tend to benefit when borrowing costs are low. Roberts told MarketWatch in a recent interview that the “Fed lifts interest rates to slow economic growth and quell inflationary pressures.” He argues that outside of a stock market that has been mostly zooming higher, “economic growth is weak.”

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Debtors get screwed, savers get some air. Sounds cute and all, but there’s so much debt out there.

• How The Fed Rate Hike Will Impact Millions Of Americans (MW)

Bad news for those with credit card debt: The Federal Reserve hiked its key rate on Wednesday by a quarter%age point and, as a result, your own interest rates could rise almost immediately. The Fed raised the rate for federal funds by a quarter%age point, to 0.75% to 1% at the end of its two-day meeting on Wednesday, and signaled two further rates rises in 2017. In other words, the Fed announced an increase in how much banks will be charged to borrow money from Federal Reserve banks. (The Fed raises and lowers interest rates in an attempt to control inflation.) That increase will most likely eventually be passed on to consumers, said Sean McQuay, a credit card expert at the personal finance website NerdWallet. Many households with credit card debt — the average household carrying credit card debt has more than $16,000 — will likely take a hit. Here’s how the latest Fed rate increase could impact your credit cards and bank accounts.

Credit cards Because a rise in the federal funds rate means banks will likely pay more to borrow from the Federal Reserve, they may pass that cost on to consumers. Credit card interest rates are variable (banks and credit card companies should state that their rates are variable in the literature customers receive to learn about their cards), and they are tied to the prime rate, an index a few%age points above the federal funds rate. It is a benchmark that banks use to set home equity lines of credit and credit card rates; as federal funds rates rise, the prime rate does, too. As a result, credit card holders are likely to see their interest rates rise, and that will happen soon, said Greg McBride, the chief financial analyst at the personal finance company Bankrate, told MarketWatch.

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Written just before Yellen’s hike.

• How Global Central Banks Have Set Interest Rates Since 2008 (Tel.)

After the financial crisis in 2008 central banks across the world cut their base lending rates to varying degrees, with some introducing negative rates of interest. [..] The US economy has performed strongly in recent months, leading Fed chair Janet Yellen to say that policymakers are now ready to change their stance on interest rates. The expectation is that there will be a steady hike in rates in the coming years and that, in the longer term, interest rates should be hovering around 3pc. Market traders are predicting three interest rate rise in the US this year alone. Ms Yellen has said that waiting too long to raise interest rates risked more rapid increases later if the economy started to overheat. If the Fed does see fit to continue to increase interest rates, it could signal the start of a similar pattern in other countries that have, thus far, kept rates very low since the financial crisis.

The Bank of England’s base lending rate stood at 5.75pc in July 2007 but was slashed repeatedly in the following months and years. Since March 2009 the Bank’s lending rate has been languishing below 1pc. In contrast to the expected direction of interest rates in the US, last August BoE Governor Mark Carney cut the rate again from 0.5pc to 0.25pc. [..] The ECB’s deposit rate has been at -0.4pc since early 2016 while the Swiss National Bank’s lending rate has been even lower than this. Mark Carney has said that the next move on interest rates in the UK will be an upward one but that it will be “limited and gradual”. However with the economic uncertainty surrounding Brexit it may be some time before rate rises catch up with the US. And it is likely to be some time before the ECB feels it can gamble with a significant rate rise.

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June 1 drop-off.

• Beware the Debt Ceiling (BBG)

Euphoria has been pervasive in the stock market since the election. But investors seem to be overlooking the risk of a U.S. government default resulting from a failure by Congress to raise the debt ceiling. The possibility is greater than anyone seems to realize, even with a supposedly unified government. In particular, the markets seem to be ignoring two vital numbers, which together could have profound consequences for global markets: 218 and $189 billion. In order to raise or suspend the debt ceiling (which will technically be reinstated on March 16), 218 votes are needed in the House of Representatives. The Treasury’s cash balance will need to last until this happens, or the U.S. will default. The opening cash balance this month was $189 billion, and Treasury is burning an average of $2 billion per day – with the ability to issue new debt.

Net redemptions of existing debt not held by the government are running north of $100 billion a month. Treasury Secretary Steven Mnuchin has acknowledged the coming deadline, encouraging Congress last week to raise the limit immediately. Reaching 218 votes in favor of raising or suspending the debt ceiling might be harder than in any previous fiscal showdown. President Donald Trump almost certainly wants to raise the ceiling, but he may not have the votes. While Republicans control 237 seats in the House, the Tea Party wing of the party has in the past has steadfastly refused to go along with increases. The Republican Party is already facing a revolt on its right flank over its failure to offer a clean repeal of the Affordable Care Act. Many members of this resistance constitute the ultra-right “Freedom Caucus,” which was willing to stand its ground during previous debt ceiling showdowns.

The Freedom Caucus has 29 members, which means there might be only 208 votes to raise the ceiling. (It’s interesting to recall that, in 2013, President Trump himself tweeted that he was “embarrassed” that Republicans had voted to extend the ceiling.) It may be unrealistic to expect Democrats to save the day – at least initially. House Democrats may be more than happy to sit back and watch Republicans fight among themselves. If the Democrats eventually ride to the rescue, it probably won’t be until after a period of Republican-on-Republican violence. Nobody wants the Treasury to reach the point where it has to prioritize payment of interest over other obligations – a threshold where creditworthiness and market confidence will have begun to retreat. The bond market already seems to be reacting to this possibility, sending yields higher and prices lower, even as the S&P/Dow/Nasdaq have been on a tear and are showing scant concern over the potential turmoil.

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Change with an enormous impact. Do we really want this?

• Amazon Is Going To Kill More American Jobs Than China Did (MW)

Amazon.com has been crowing about its plans to create 100,000 American jobs in the next year, but as with other recent job-creation announcements, that figure is meaningless without context. What Amazon won’t tell us is that every job created at Amazon destroys one or two or three others. What Jeff Bezos doesn’t want you to know is that Amazon is going to destroy more American jobs than China ever did. Amazon has revolutionized the way Americans consume. Those who want to shop for everything from books to diapers increasingly go online instead of to the malls. And for about half of those online purchases, the transaction goes through Amazon.

For the consumer, Amazon has brought lower prices and unimaginable convenience. I can buy almost any consumer product I want just by clicking on my phone or computer — or even easier, by just saying: “Alexa: buy me one” — and it will be shipped to my door within days or even hours for free. I can buy books for my Kindle, or music for my phone instantly. I can watch movies or TV shows on demand. But for retail workers, Amazon is a grave threat. Just ask the 10,100 workers who are losing their jobs at Macy’s. Or the 4,000 at The Limited. Or the thousands of workers at Sears and Kmart, which just announced 150 stores will be closing. Or the 125,000 retail workers who’ve been laid off over the past two years.

Amazon and other online sellers have decimated some sectors of the retail industry in the past few years. For instance, employment at department stores has plunged by 250,000 (or 14%) since 2012. Employment at clothing and electronics stores is down sharply from the earlier peaks as more sales move online. “Consumers’ affinity for digital shopping felt like it hit a tipping point in Holiday 2014 and has rapidly accelerated this year,” Ken Perkins, the president of Retail Metrics, wrote in a research note in December. And when he says “digital shopping,” he really means Amazon, which has increased its share of online purchases from about 10% five years ago to nearly 40% in the 2016 holiday season.

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Rutte lost big and is the winner.

• PM Mark Rutte Sees Off Challenge Of Geert Wilders In Dutch Election (G.)

The Dutch prime minister, Mark Rutte, has seen off a challenge from the anti-Islam populist Geert Wilders to claim a resounding victory in parliamentary elections widely seen as a test for resurgent nationalism before key European polls. With nearly 95% of votes counted and no further significant changes expected, Rutte’s centre-right, liberal VVD was assured of 33 MPs, by far the largest party in the 150-seat Dutch parliament, national news agency ANP said. Wilders’ Freedom party (PVV) looked certain to finish second, but a long way behind on 20 seats, just ahead of the Christian Democrat CDA and liberal-progressive D66 which both ended up in third position on 19 seats. “Our message to the Netherlands – that we will hold our course, and keep this country safe, stable and prosperous – got through,” Rutte told a cheering crowd of supporters at the VVD’s election night party.

After Britain’s shock Brexit vote and Donald Trump’s presidential victory in the US, he added, the eyes of the world had been on the vote: “This was an evening when … the Netherlands said ‘Stop’ to the wrong sort of populism.” A first-place finish for the anti-immigration, anti-EU PVV would have rocked Europe. In France, the far-right leader Marine Le Pen is expected to make the second-round runoff in the presidential election in May, while the Eurosceptic Alternative für Deutschland (AfD) is on target to win its first federal parliament seats later in the year. Relieved European politicians were quick to applaud. A spokesman for European commission president Jean-Claude Juncker hailed “a vote against extremists” while French foreign minister Jean-Marc Ayrault tweeted: “Congratulations to the Netherlands for halting the advance of the far right.”

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What’s going to be left by the time Brexit is reality?

• Northern Ireland Vote Jolts Already Disunited Kingdom (R.)

A nationalist surge at elections in Northern Ireland and a Scottish demand for a second independence referendum have raised doubts over whether the United Kingdom can hold together after it leaves the European Union. Last year’s referendum on EU membership saw England and Wales vote to leave while Scotland and Northern Ireland voted to remain, straining the ties that bind the UK together. Scottish leader Nicola Sturgeon dealt a blow to British Prime Minister Theresa May on Monday by demanding a new vote on independence in late 2018 or early 2019, making her move much sooner than expected. But while the Scottish issue had been well flagged since the Brexit vote, a snap provincial assembly election in Northern Ireland produced a genuine shock: for the first time since the partition of Ireland in 1921, unionists lost their majority.

Nationalist party Sinn Fein, backed by many of Northern Ireland’s Catholics, narrowed the gap with the Democratic Unionist Party, whose support base is among pro-British Protestants, to just one seat. This has revived the slow-burning question of whether Northern Ireland will stay in the United Kingdom over the long term or become part of the Republic of Ireland. This could be achieved by a referendum, often referred to as a border poll. “A border poll might be 10 years away and it might still be lost, but clearly this election has shown a different dynamic in Northern Ireland politics,” said Peter Shirlow, Director of Irish Studies at the University of Liverpool. “This opens the door for a different scenario.”

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No visa-free travel either.

• Erdogan, Europe Head for Political Blow-Up They Can’t Afford (BBG)

Politicians in Turkey and the European Union stoking tensions for short-term electoral gain may have done lasting damage to vital economic and security ties. While relations between the EU and Turkey have been rocky for years, the furor of recent days – with Turkish President Recep Tayyip Erdogan freely hurling the Nazi epithet at his western antagonists – marks a rift that could prove irreparable. Turkey has been negotiating EU membership since 2005, but progress has come close to a halt. “Even without anyone saying it, Turkey’s EU membership talks will go into an irreversible coma now,” said Marc Pierini, who served as the EU’s ambassador to Turkey from 2006-2011 and is a visiting scholar at Carnegie Europe, a Brussels-based think tank. “That will suit everybody, except Turkey’s democrats.”

[..] Pierini sees a wider clash between two populisms – one anti-Muslim in Europe, and the other fighting for the Islamization of the secular Turkish Republic – that risks an uncontrolled downward spiral. Europe’s leaders, he said, “are losing sight of the fundamentals, that you have a counter-revolution going on in Turkey,” where Erdogan is trying to reverse the westward course on which Mustafa Kemal Ataturk set the country in 1923. Hanging in the balance is a deal struck a year ago, under which Turkey agreed to cooperate in stemming the flow of refugees from Syria. In exchange, the EU provided more than $3 billion in economic aid and pledges both to “re-energize” Turkey’s stalled membership talks and deliver visa-free travel for Turks entering the 26-nation Schengen area, both of which are increasingly politically toxic for EU leaders.

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Where it hurts.

• Turkey Protests Dutch Government by Returning 40 Holstein Cows (BBG)

Two months after a Turkish butcher broke the Internet, the country’s red meat producers are trying a novel way to break the Dutch government’s resolve. Members of the Ankara-based Beef and Lamb Producers Association have sent 40 Holstein cows back to the Netherlands to show their displeasure at a decision to prevent Turkish ministers from conducting political campaigning on their soil, the association’s chairman Bulent Tunc said in telephone interview. A fiery diplomatic spat has erupted between the two countries after the EU state, which is holding its own elections on Wednesday, refused access to Turkish ministers seeking to campaign on a referendum to expand President Recep Tayyip Erdogan’s powers.

While Tunc called the number of cows being shipped away “symbolic,” he spoke of widespread support for the Turkish president’s stance among association members, who number 160,000. Those involved in the cattle trade are also considering putting a stop to purchases of tractors, equipment, feed and bull semen — and extending the boycott to Austria, which Tunc accused of sharing the Dutch government’s stance. “There are many alternatives,” he said, citing Brazil and Romania as possibilities. “Turkey is a huge market for livestock imports and countries are dying to get in.”

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More Greek tragedies. Imagine having to give up age-old family homes and/or land because you can’t afford taxes.

• Spike In Number Of Greeks Renouncing Inheritance To Avoid Taxes (K.)

An increasing number of people are turning their backs on properties they have inherited to avoid paying the higher taxes that accompany them, according to new data from the country’s courts which show that applications for renunciation of property rose 86.4% last year compared to 2013. According to the latest statistics, which were made public on Wednesday, a total of 54,422 such applications were lodged with the country’s local courts last year, compared to 45,628 in 2015 and 29,199 in 2013. Experts attribute the rise to the tremendous increase in property taxes that successive governments have imposed over the years as part of bailout agreements with Greece’s creditors. According to official figures, property owners paid seven times more in taxes last year compared to 2009, the year before the crisis hit.

In 2009, property taxes did not exceed €500 million, while revenue collected from property reached €3.5 billion last year. Most of those who filed documents last year to renounce their inheritance did so in the country’s major cities, with 11,655 applications recorded in Athens, 5,563 in Thessaloniki, 1,938 in Piraeus and 1,473 in Patra. People are not only giving up family houses and apartments but also plots of lands. According to Nikos Stasinopoulos, formerly the head of the association representing Greek notaries, many people in the provinces give up inherited land even when the tax they would have to pay on it is relatively small. He offered the example of one beneficiary in the region of Gortynia who gave up a plot on which he faced a €150 levy, and a second who inherited a total of 98 plots of land in the region of Larissa from his father and aunt and was “relieved” to discover that he could hand them over to the state to avoid paying tax.

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We have lost all wisdom. Only native peoples have any left.

“..all Maori tribes regard themselves as part of the universe, at one with and equal to the mountains, the rivers and the seas.”

• New Zealand River Granted Same Legal Rights As Human Being (G.)

In a world-first a New Zealand river has been granted the same legal rights as a human being. The local Maori tribe of Whanganui in the north island has fought for the recognition of their river – the third-largest in New Zealand – as an ancestor for 140 years. On Wednesday, hundreds of tribal representatives wept with joy when their bid to have their kin awarded legal status as a living entity was passed into law. “The reason we have taken this approach is because we consider the river an ancestor and always have,” said Gerrard Albert, the lead negotiator for the Whanganui iwi [tribe]. “We have fought to find an approximation in law so that all others can understand that from our perspective treating the river as a living entity is the correct way to approach it, as in indivisible whole, instead of the traditional model for the last 100 years of treating it from a perspective of ownership and management.”

The new status of the river means if someone abused or harmed it the law now sees no differentiation between harming the tribe or harming the river because they are one and the same. Chris Finlayson, the minister for the treaty of Waitangi negotiations, said the decision brought the longest-running litigation in New Zealand’s history to an end. “Te Awa Tupua will have its own legal identity with all the corresponding rights, duties and liabilities of a legal person,” said Finlayson in a statement. “The approach of granting legal personality to a river is unique … it responds to the view of the iwi of the Whanganui river which has long recognised Te Awa Tupua through its traditions, customs and practise.” Two guardians will be appointed to act on behalf of the Whanganui river, one from the crown and one from the Whanganui iwi.

Albert said all Maori tribes regarded themselves as part of the universe, at one with and equal to the mountains, the rivers and the seas. [..] “We can trace our genealogy to the origins of the universe,” said Albert. “And therefore rather than us being masters of the natural world, we are part of it. We want to live like that as our starting point. And that is not an anti-development, or anti-economic use of the river but to begin with the view that it is a living being, and then consider its future from that central belief.”

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Debt Rattle February 25 2017

Feb 252017
 
 February 25, 2017  Posted by at 9:31 am Finance Tagged with: , , , , , , , , ,  4 Responses »


Dorothea Lange Saturday afternoon, Pittsboro, North Carolina 1939

 

• Trump An ‘Idiot’ On China, ‘No Clue What Currency Manipulation Means’ (CNBC)
• The Fiscal Horror Show Playing Soon in Washington (Stockman)
• Homeland Security Report Disputes Threat From 7 Banned Nations (AP)
• Multiple News Outlets Denied Access To White House Press Briefing (G.)
• Tsipras Says The Era Of Austerity In Greece Is Over (AP)
• Transcript Of IMF Press Briefing Thursday, February 23, 2017 (IMF)
• Toronto Housing Market May Need Vancouver-Style Cooling (BBG)
• Just As Neoliberalism Is Finally On Its Knees, So Too Is The Left (G.)
• Documents Indicate Germany Spied on Foreign Journalists (Spiegel)
• Surgeons Should Not Look Like Surgeons (NN Taleb)

 

 

From one of Reagan’s main economic advisers.

• Trump An ‘Idiot’ On China, ‘No Clue What Currency Manipulation Means’ (CNBC)

President Donald Trump may think the Chinese are the “grand champions” of currency manipulation, but he’s wrong, expert John Rutledge told CNBC on Friday. “Trump is an idiot on this. He has no clue what currency manipulation means,” the chief investment officer of global investment firm Safanad said in an interview with “Closing Bell.” During the campaign, Trump accused China of keeping its yuan currency artificially low against the U.S. dollar to make Chinese exports cheaper, “stealing” American manufacturing jobs. On Thursday, the president told Reuters he has not “held back” in his assessment, despite not acting on a pledge to declare the country a currency manipulator on his first day in office. “Well they, I think they’re grand champions at manipulation of currency. So I haven’t held back,” Trump said. “We’ll see what happens.”

However, earlier Thursday Treasury Secretary Steve Mnuchin told CNBC he wasn’t ready to pass judgment on China’s currency practices. “We have a process within Treasury where we go through and look at currency manipulation across the board. We’ll go through that process. We’ll do that as we have in the past. We’re not making any judgments until we continue that process,” he told “Squawk Box.” Rutledge, who was one of the principal architects of President Ronald Reagan’s economic plan, said China is actually trying to support its currency. “Chinese authorities have actually sold a trillion dollars’ worth of foreign reserves in the last year to support their currency that’s trying to fall because Chinese nationals are trying to get their money out of China,” he said. That is anti-manipulation.”

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It’s all about the debt ceiling.

• The Fiscal Horror Show Playing Soon in Washington (Stockman)

The Deep State’s coup against Donald Trump is palpable. So count it as another element of reality to which Wall Street and its raging robo-machines and day traders are blind as bats. After all, they are essentially “pricing-in” the most successful presidency in modern times on the economic front. The Trump Stimulus was even supposed to be “in like Flynn” in time to boost corporate earnings materially in 2017. But it has already transpired that the Flynn in question was named Mike, not Errol; and the conquest was not that of a swashbuckling outsider who quickly had his way with the Imperial City, but the doings of resident swamp creatures bent on turning back the Donald’s unwelcome challenge.

So in a matter of weeks or months at most, Trump will be struggling to survive, while the giant fiscal stimulus that has Wall Street all bulled-up will amount to a heap of ruins scattered about a debilitating political war zone on Capitol Hill. I never thought the vaunted Trump tax cut and infrastructure boom would see the light of day in their own right, of course, because the Donald is caught in an inherited debt trap that he does not yet even dimly appreciate. Yet with each passing day, the magnitude of the trap materially enlarges. As of the Daily Treasury Statement for February 17, for example, the public debt was $19.895 trillion compared to $18.99 trillion on the same date a year ago. When you factor in a slight gain in the Treasury’s cash balance to $262 billion, the math speaks for itself.

During the past year Uncle Sam’s “cash burn rate” was nearly $75 billion per month. That means Washington actually consumed $885 billion of cash during the last 365 days — or far more than implied by the official budget deficit of $587 billion for the fiscal year just ended (FY 2016). It also means that once the tax collection season ends in April, it will be Katie-bar-the-door time on the debt ceiling front. When the latter becomes frozen into place on March 15 after the insidious Boehner-Obama debt ceiling “holiday” expires, there will not be enough cash to last the summer — even if the Treasury resorts to the usual gimmicks, such as temporarily divesting the trust funds. So let this part be crystal clear. What is coming down the track is the mother of all debt ceiling showdowns and the virtual certainty of government shutdowns and deferred payments to states, contractors and even some transfer payment beneficiaries.

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Funny, but not new. They can always deflect criticism be saying it was an Obama list.

• Homeland Security Report Disputes Threat From 7 Banned Nations (AP)

Analysts at the Homeland Security Department’s intelligence arm found insufficient evidence that citizens of seven Muslim-majority countries included in President Donald Trump’s travel ban pose a terror threat to the United States. A draft document obtained by The Associated Press concludes that citizenship is an “unlikely indicator” of terrorism threats to the United States and that few people from the countries Trump listed in his travel ban have carried out attacks or been involved in terrorism-related activities in the U.S. since Syria’s civil war started in 2011. Trump cited terrorism concerns as the primary reason he signed the sweeping temporary travel ban in late January, which also halted the U.S. refugee program. A federal judge in Washington state blocked the government from carrying out the order earlier this month.

Trump said Friday a new edict would be announced soon. The administration has been working on a new version that could withstand legal challenges. Homeland Security spokeswoman Gillian Christensen on Friday did not dispute the report’s authenticity, but said it was not a final comprehensive review of the government’s intelligence. “While DHS was asked to draft a comprehensive report on this issue, the document you’re referencing was commentary from a single intelligence source versus an official, robust document with thorough interagency sourcing,” Christensen said. “The … report does not include data from other intelligence community sources. It is incomplete.”

The Homeland Security report is based on unclassified information from Justice Department press releases on terrorism-related convictions and attackers killed in the act, State Department visa statistics, the 2016 Worldwide Threat Assessment from the U.S. intelligence community and the State Department Country Reports on Terrorism 2015. The three-page report challenges Trump’s core claims. It said that of 82 people the government determined were inspired by a foreign terrorist group to carry out or try to carry out an attack in the United States, just over half were U.S. citizens born in the United States. The others were from 26 countries, led by Pakistan, Somalia, Bangladesh, Cuba, Ethiopia, Iraq and Uzbekistan. Of these, only Somalia and Iraq were among the seven nations included in the ban.

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It’s one way to change the conversation. C’mon, guys, you’ll be let back in soon.

• Multiple News Outlets Denied Access To White House Press Briefing (G.)

The White House barred several news organizations from an off-camera press briefing on Friday, handpicking a select group of reporters that included a number of conservative outlets friendly toward Donald Trump. The “gaggle” with Sean Spicer, the White House press secretary, took place in lieu of his daily briefing and was originally scheduled as an on-camera event. But the White House press office announced later in the day that the Q&A session would take place off camera before only an “expanded pool” of journalists, and in Spicer’s West Wing office as opposed to the James S Brady press briefing room where it is typically held. Outlets seeking to gain entry whose requests were denied included the Guardian, the New York Times, Politico, CNN, BuzzFeed, the BBC, the Daily Mail and others.

Conservative publications such as Breitbart News, the One America News Network and the Washington Times were allowed into the meeting, as well as TV networks CBS, NBC, Fox and ABC. The Associated Press and Time were invited but boycotted the briefing. The decision to limit access to Spicer, hours after Trump once again declared that much of the media was “the enemy of the American people” while speaking at the annual Conservative Political Action Conference, marked a dramatic shift. While prior administrations have occasionally held background briefings with smaller groups of reporters, it is highly unusual for the White House to cherry-pick which media outlets can participate in what would have otherwise been the press secretary’s televised daily briefing.

The briefing has become indispensable viewing for journalists trying to interpret the often contradictory statements coming out of the Trump administration, and Spicer’s aggressive handling of the press and delivery of false or misleading statements have already been memorably mocked on NBC’s Saturday Night Live. “Gaggles” – more informal briefings – with the press secretary are traditionally only limited to the pool when they conflict with the president’s travel, in which case they often take place aboard Air Force One. At times, impromptu gaggles form with reporters who spend their days in the White House, but denying outlets wishing to participate is extremely uncommon.

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Don’t believe it for a second.

• Tsipras Says The Era Of Austerity In Greece Is Over (AP)

Greek Prime Minister Alexis Tsipras says the era of austerity is over for his country, painting a positive picture Friday of reforms the country has agreed to take after its latest bailout program ends in 2018. Speaking in parliament, Tsipras described the deal reached Monday as an “exceptional success” and said it showed the country’s creditors accepted Greeces insistence that it could no longer bear any further budget austerity. “I am fully convinced we achieved an honorable compromise,” Tsipras said, adding that all sides at the eurozone finance ministers’ meeting in Brussels had agreed for the “first time after seven years … to leave the path of continued austerity behind us.”

On Monday, Greece agreed to legislate new reforms to come into effect in 2019, but said these will be fiscally neutral: for every euros worth of new burdens on the Greek taxpayer, an equal amount of relief will be granted. In return, Greeces creditors agreed to send their bailout inspectors back to Athens next week for further talks to complete a long overdue review of progress made in Greeces bailout. Tsipras said both creditor-requested new measures and government-proposed relief measures will be legislated at the same time, and that therefore there was no conditionality for the relief measures. The prime minister’s left-led coalition government, trailing in polls, has presented the deal as a decisive, positive step forward for austerity-weary Greeks hammered by seven years of a financial crisis that plunged the country into an economic depression.

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I found this very interesting. Looks like the IMF has never truly looked at whether being part of the euro is best for Greece. Why not? It’s not as if they only do what countries want. Whose interests is the IMF really defending here?

Part of transcript of a press briefing with Gerry Rice, IMF Director of Communications, and reporters.

• Transcript Of IMF Press Briefing Thursday, February 23, 2017 (IMF)

QUESTIONER: Gerry, help me to understand how the IMF weighs a member country’s interests, economic interests when it is in a monetary union, when the interests may be that it be out of a monetary union. I haven’t seen any analysis by the IMF about the pros and cons, economic pros and cons of Greece exiting the euro. And it seems to me that Madame Lagarde has expressed herself as a pro euro and a pro EU advocate. So help me to understand, one, why we haven’t seen any economic analysis to defend the IMF’s position to not counsel Greece for exiting the euro or – and two, how it weighs this decision when obviously other member countries who are not in a program want Greece to stay in the euro. Do you understand where I’m getting at? I just haven’t seen any analysis from the IMF to defend or argue either case.

MR. RICE: You know, the amount of economic analysis that we’ve undertaken on Greece over the last seven years, you probably know as well as anyone, is voluminous. So, you know, I think there’s plenty out there to analyze and digest. [..] So, you know, on the question of Greece being a member of the eurozone and the monetary union, you know, it’s been Greece’s explicit objective to retain its membership of the eurozone. It’s been one of its priority objectives since the very beginning. It’s been also a priority objective of the other eurozone members. So, you know, in terms of how we weigh our service and support to a member country, you know, these are obviously important factors that we take into account, and we have taken those into account and are trying to support and service the member as best we can in that context.

QUESTIONER: But, if I may follow up, Gerry. There are cases in which a member country is explicitly – to use your language – has an explicit objective to do for economic policies that the IMF believes to not be in that member country’s economic interests or in the global economic interest. And it speaks truth to power, and yet there has been no analysis to argue why Greece should remain part of the euro or why it shouldn’t. And to me that’s a fundamental economic argument, since you’re talking about internal devaluation versus a nominal exchange rate devaluation. I mean, that’s at the heart of the problem. So can you tell me why the IMF hasn’t at least published its analysis or any analysis on why Greece should remain in the euro or should exit as a part of its truth-telling economic advice to a member country?

MR. RICE: Well, you know, again I think there’s been plenty of analysis of Greece’s economic situation and how the IMF assesses what is in Greece’s best interests. And, you know, I just think there’s voluminous information on that. And –

QUESTIONER: If you can point me to the – and respectfully, I appreciate your patience and me interrupting you – but if you can point me to the voluminous analysis of Greece – which I admit is voluminous, it will probably fill several volumes in fact, several history books, but I have seen in none of it that I am aware of any analysis of the pros and cons of Greece staying or exiting the eurozone.

MR. RICE: [..] I’ll come back to you, but I do believe there is actually a lot of analysis where you can clearly distill what the IMF’s view is as being in Greece’s best economic interest. I would include in that the many staff reports and, in particular, these ex post evaluation studies that we have done that, again, I can point you to some of this material afterwards. But I do think there’s plenty of material.

QUESTIONER: I just want to follow up on Ian’s question and maybe have another question if you don’t mind. Maybe you can clarify do you think – does the IMF think that it’s in Greece’s best interest to retain its membership in the eurozone? And the second question has to do with the timeline entry, because you mentioned the fact that the discussion on the debt will take place following the discussion on reforms. So should we assume that this discussion on the debt relief won’t start before the second review is completed?

MR. RICE: Yes, I don’t have the timing on the completion of the second review. Again, I want to revert to my formulation. Before we would be able – we, the IMF – would be able to, you know, make a commitment on our participation in the program, we would need to have the discussion of both policies and debt relief, and beyond the discussion, credible commitments in which we have confidence. So that’s the way I would like to formulate that.

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Been saying that forever. But as we saw last week, Toronto’s entire budget is based on high and rising house prices.

• Toronto Housing Market May Need Vancouver-Style Cooling (BBG)

Toronto may require measures to cool its red-hot housing market similar to moves taken in Vancouver if interest rates don’t increase, said Royal Bank of Canada Chief Executive Officer David McKay. The head of Canada’s largest lender said Toronto housing is “running hot” and is fueled by a “concerning mix of drivers” that include lack of supply, continued low rates, rising foreign money and speculative activity. Similar circumstances in Vancouver prompted British Columbia’s government last year to impose a 15% tax on foreign buyers. “In the absence of being able to use higher rates to reduce that, I do think we’re going to at some point have to consider similar measures to slow down the housing price growth,” McKay said Friday in a telephone interview.

The comments from the bank CEO come as frustration grows over the unaffordability of properties in Canada’s biggest city. The average home price in Toronto jumped 22% in January from the previous year, the fifth straight month of gains topping 20%. Listings have dropped off, down by half from last year, squeezing prices further. The CEOs of Canada’s other big banks last year called on the government to increase housing regulation amid skyrocketing prices in Vancouver and Toronto. National Bank of Canada CEO Louis Vachon said that minimum downpayments should return to 10% from 5%, while Bank of Nova Scotia head Brian Porter suggested his company was pulling back on mortgage lending due to concern about high home prices in those two cities.

Vancouver, once Canada’s fastest-paced home market and now supplanted by Toronto, has seen slowing sales after several regulatory moves. In August, British Columbia added a 15% tax to home purchases by non-Canadians after they were found to have bought more than C$1 billion ($760 million) in property in a five-week period. The city of Vancouver in January began taxing empty homes and plans to further regulate short-term rentals. Since the tax was imposed in Vancouver, monthly transactions in the metro region fell on average by 36% compared to a year earlier, according to data from the Real Estate Board of Greater Vancouver. Prices for prized single-family detached homes had been rising in double digits last year. In the past six months, they’ve fallen 6.6% to an average C$1.47 million, according to board figures released earlier this month.

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The left largely has itself become part of neoliberalism. Ergo: there is no left, left, other than in name.

• Just As Neoliberalism Is Finally On Its Knees, So Too Is The Left (G.)

The 10th anniversary of the global financial crisis looms this year, which means it’s almost a decade since neoliberal economics began to fall apart. The crisis spawned a global recession, the near collapse of global finance and the subsequent eurozone crisis as governments incurred huge debts amid efforts to rescue the hapless banking industry. The then Australian prime minister, Kevin Rudd, observed in the immediate aftermath: The current crisis is the culmination of a 30-year domination of economic policy by a free-market ideology that has been variously called neoliberalism, economic liberalism, economic fundamentalism, Thatcherism or the Washington consensus. The central thrust of this ideology has been that government activity should be constrained, and ultimately replaced, by market forces.

The global recession that followed was the worst in 70 years and its effects continue to be felt in many developed countries. Australia was one of the fortunate few to avoid a recession, thanks to enormous government-funded stimulus packages and the continuation of an unprecedented mining boom. Nevertheless, economic activity has been sluggish ever since, job growth has stalled, wage growth has collapsed and inequality is on the rise. And yet in 2017, just as neoliberalism is on its knees, so too is the left. It matters not whether we are describing social democrats, socialists, the hard left or the moderate left. A swath of populist extreme rightwing forces is sweeping through many developed countries. Europe now resembles a graveyard for social democracy. How did it come to this?

First and foremost, there is incompetence. Neoliberal economics, a creation of the right and embraced to varying degrees by social democrats, has dominated western politics for nigh on four decades. Its mantras of deregulation, privatisation and cutting tax for the wealthy and corporations have been exhausted, if not discredited. There are only so many assets that can be privatised and, as the head of the Australian Competition and Consumer Commission, Rod Sims, has noted, replacing a public-sector monopoly with a private-sector monopoly has simply driven up prices. The fetish for deregulation and tax cutting has caused immense harm – for consumers, for workers and for governments seeking to provide services demanded of them but hampered by inadequate revenue.

It is not just Pope Francis who has called for major reform of the economic system. The World Economic Forum, which met in January, advocated “fundamental reforms to market capitalism to tackle inequality”. In doing so, it echoed statements of the IMF and World Bank, formerly strong advocates of the neoliberal agenda.

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Legal schmegal. If they can do it, they will. All of them. Question: is this worse than banning them?

• Documents Indicate Germany Spied on Foreign Journalists (Spiegel)

According to documents seen by SPIEGEL, the BND conducted surveillance on at least 50 additional telephone numbers, fax numbers and email addresses belonging to journalists or newsrooms around the world in the years following 1999. Included among them were more than a dozen connections belonging to the BBC, often to the offices of the international World Service. The documents indicate that the German intelligence agency didn’t just tap into the phones of BBC correspondents in Afghanistan, but also targeted telephone and fax numbers at BBC headquarters in London. A phone number belonging to the New York Times in Afghanistan was also on the BND list, as were several mobile and satellite numbers belonging to the news agency Reuters in Afghanistan, Pakistan and Nigeria.

The German spies also conducted surveillance on the independent Zimbabwean newspaper Daily News before dictator Robert Mugabe banned it for seven years in 2003. Other numbers on the list belonged to news agencies from Kuwait, Lebanon and India in addition to journalist associations in Nepal and Indonesia. Journalists in Germany enjoy far-reaching protection against state meddling. They enjoy similar legal protection to lawyers, doctors and priests: occupations that require secrecy. Journalists have the right to refuse to testify in court in order to protect their sources. German law forbids the country’s domestic intelligence agency from conducting surveillance on persons who have that right.

The German chapter of Reporters without Borders says that the BND’s systematic surveillance of journalists is an “egregious attack on press freedoms” and “a new dimension of constitutional violation.” Christian Mihr, head of the German chapter of Reporters without Borders, says that press freedom “is not a right granted by the graciousness of the German government, it is an inviolable human right that also applies to foreign journalists.” The allegations come as the German parliamentary investigative committee focusing on U.S. spying in Germany is completing its inquiry. Chancellor Angela Merkel, who appeared before the committee last Thursday, was the last witness called and now the committee members are working on their closing report. But even as the committee also addressed extensive BND spying, the surveillance of journalists was only a fringe issue.

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Things are not what they seem.

• Surgeons Should Not Look Like Surgeons (NN Taleb)

Say you had the choice between two surgeons of similar rank in the same department in some hospital. The first is highly refined in appearance; he wears silver-rimmed glasses, has a thin built, delicate hands, a measured speech, and elegant gestures. His hair is silver and well combed. He is the person you would put in a movie if you needed to impersonate a surgeon. His office prominently boasts an Ivy League diploma, both for his undergraduate and medical schools. The second one looks like a butcher; he is overweight, with large hands, uncouth speech and an unkempt appearance. His shirt is dangling from the back. No known tailor in the East Coast of the U.S. is capable of making his shirt button at the neck. He speaks unapologetically with a strong New Yawk accent, as if he wasn’t aware of it. He even has a gold tooth showing when he opens his mouth.

The absence of diploma on the wall hints at the lack of pride in his education: he perhaps went to some local college. In a movie, you would expect him to impersonate a retired bodyguard for a junior congressman, or a third-generation cook in a New Jersey cafeteria. Now if I had to pick, I would overcome my suckerproneness and take the butcher any minute. Even more: I would seek the butcher as a third option if my choice was between two doctors who looked like doctors. Why? Simply the one who doesn’t look the part, conditional of having made a (sort of) successful career in his profession, had to have much to overcome in terms of perception. And if we are lucky enough to have people who do not look the part, it is thanks to the presence of some skin in the game, the contact with reality that filters out incompetence, as reality is blind to looks.

When the results come from dealing directly with reality rather than through the agency of commentators, image matters less, even if it correlates to skills. But image matters quite a bit when there is hierarchy and standardized “job evaluation”. Consider the chief executive officers of corporations: they not just look the part, but they even look the same. And, worse, when you listen to them talk, they will sound the same, down to the same vocabulary and metaphors. But that’s their jobs: as I keep reminding the reader, counter to the common belief, executives are different from entrepreneurs and are supposed to look like actors.

Now there may be some correlation between looks and skills; but conditional on having had some success in spite of not looking the part is potent, even crucial, information. So it becomes no wonder that the job of chief executive of the country, that is, the president, was once filled by a former actor, Ronald Reagan. Actually, the best actor is the one nobody realizes is an actor: a closer look at the record and the activity shows that Barack Obama was even more of an actor: a fancy Ivy-League education combined with a liberal reputation is compelling as an image builder. (In fact much as President Trump has going for him is that he doesn’t act as a president).

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