The Automatic Earth

Arthur Rothstein Migratory fruit pickers’ camp in Yakima, Washington 1936

Playing God.

• It Is Already Too Late To Scrap China’s One-Child Policy (AEP)

China’s Communist Party has scrapped its hated one-child policy in a bid to shore up political support, but the move comes far too late to avert a collapse of the workforce and a demographic crisis by the late 2020s. All couples will be allowed to have a second child under new rules agreed at the party’s closely-watched 5th Plenum in Beijing. The ban on larger families in cities will remain despite pleas from Chinese academics for total freedom. The policy shift will make no difference to the workforce for almost 20 years and by then China will already be in the full grip of a demographic crunch. “They have merely moved to a two-child policy. The family planning authorities are still there, and there is still an apparatus of state power intruding into people’s intimate lives,” said Jonathan Fenby, a China veteran at Trusted Sources.

The coercive anti-natalist policies begun by Mao Zedong in the early 1970s – and pushed further by ideologues in thrall to the Club of Rome’s Malthusian doomsday theories, the “Limits of Growth” – have had powerful and perverse effects. They freed workers from family duties and created a “demographic dividend” of sorts that until recently flattered China’s growth rate. Now the process is kicking violently into reverse. The workforce began to decline in absolute terms in 2012 and has since been shrinking by 3m people a year. The IMF says the reserve army of labour peaked five years ago and is going into “precipitous decline”, threatening a labour shortage of 140m by the early 2030s. This is happening just as life expectancy soars to 75.2 – with a target of 77 in 2020 – causing a drastic deterioration in the ratio of workers to pensioners, and unlike the demographic decline in Japan it will start to bite before the country is rich.

The ratio was 6.6 in 2000. It is expected to be 2.37 in 2030 and 1.25 in 2060. The Chinese Academy of Social Sciences says the fertility rate has collapsed to 1.4 and is nearing the danger line of 1.3, the so-called “low fertility trap” where it becomes culturally self-perpetuating. This has already happened in Japan, Korea and Taiwan, and in some of China’s richest cities. The rate in Shanghai has fallen to 0.8 for complex social reasons that no longer have anything to do with one-child policy. A relaxation of the rules in 2013 has not led to a pick-up in the city. “Having children is simply too expensive. Working couples can’t afford private hospital costs, childcare and kindergartens,” said Mr Fenby. China may already have left it too late to ditch the one-child policy.

Critics say the damage has been evident for years, leaving aside the traumatic suffering of poor women seized by police after tip-offs and forced into late-term abortions, the indignity of “menstrual monitors” and the status of “illegal” children denied ration coupons and schooling. Chinese demographers say the distorted family structure undermines support for the elderly and has led to a 20pc surplus of boys over girls, leaving a volatile army of frustrated single males. The Politburo refused to listen. Harvard professor Martin King Whyte said the policy had become “sacrosanct”, frozen by bureaucratic inertia. The long-awaited reform eclipsed the launch of the Communist Party’s latest five-year plan, intended to close the chapter on a series of errors and policy pirouettes over the past 12 months that have shattered global confidence in Chinese economic management.

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Could you be a bit more precise, please?: “The nation needs annual growth of at least 6.53% in the next five years”.

• Li Floats New China Five-Year Growth Minimum of Around 6.5% (Bloomberg)

Premier Li Keqiang highlighted a minimum growth estimate for China in the coming five years that could indicate the leadership’s readiness to accept the weakest period of expansion since the economy was opened up more than three decades ago. The nation needs annual growth of at least 6.53% in the next five years to meet the government’s goal of establishing a “moderately prosperous society,” Li said in an Oct. 23 speech to Communist Party members, according to people familiar with the matter who asked not to be identified as the remarks weren’t public. Communist Party leaders Thursday conclude a four-day gathering to discuss their 2016-20 five-year plan for the nation, the first since President Xi Jinping and Premier Li took office. Policy makers are managing the priorities of both reforming the economy and keeping short-term growth fast enough so that structural changes don’t cause a hard landing.

“This lower number is more realistic and feasible if substantive reforms can be implemented,” said Xiao Geng, a professor of finance and public policy at the University of Hong Kong. “It is good as Li is focusing on delivering the party’s key promise on raising the living standards of Chinese people. After all, growth is the best available verifiable indicator for progress.” Private economists have predicted a reduction in the five-year growth target to 6.5%, down from 7% in the current plan – a reflection of the Communist leadership’s continuing attempts to move away from debt-fueled expansion. “It seems that Premier Li is sending a signal through his speech that China’s government is likely to lower their growth target to 6.5% in the 13th five-year plan,” said Le Xia at Banco Bilbao Vizcaya. “The 6.5% target is still a little challenging. A target of 5-6% seems a more feasible one.”

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Shadow banks.

• China Steel Industry Outlook ‘Worst Ever Amid Unprecedented Losses’ (Zero Hedge)

It’s almost difficult to believe, but just 8 years ago, in 2007 and right before the world was swept in the worst financial crisis in history, China had only $7.4 trillion in debt, or 158% in consolidated debt/GDP. Since then this debt has risen to over $30 trillion (specifically $28.2 trillion as of Q2, 2014) representing a staggering 300% debt/GDP. This means that China was responsible for more than a third of all the $57 trillion debt created since 2007, making a mockery of the QE unleashed by all the DM central banks – something we first noted about two years before the famous McKinsey report went to print. However, it was precisely this credit expansion that not only allowed China to completely ignore the global depression of 2008/2009 but to build lots and lots of ghost cities such as these.

To be sure, many noticed but everyone kept quiet: after all, to build these cities China not only had to create trillions in debt, it had to import a hundreds of billions worth of commodities from places such as Brazil and Australia. Then, in the late summer and fall of 2014 something happened: for whatever reason, as we noticed one year ago, the most unregulated aspect of China’s financial system, its shadow banks, not only stopped lending money but actually went into reverse, thus putting a lid on China’s Total Social Financing expansion, which had been the world’s “under the radar” growth dynamo for so many years. At that moment not only did China’s ghost cities officially die, but it meant an imminent collapse for China’s feeder commodity economies such as the abovementioned China and Brazil.

In the US this phenomenon was given a very simpler name by the brilliant economists: “snow.” And since China’s domestic demand, not only from “ghost cities” but all other fixed investment was a function of pervasive credit, suddenly China’s commodity industry in general, and steel industry in particular, entered a state of shocked stasis. To get a sense of how bad it is, look no further than China’s steel industry. It is here that, as Bloomberg reports, “demand is collapsing along with prices,” and “banks are tightening lending and losses are stacking up, the deputy head of the China Iron & Steel Association said on Wednesday.” “Production cuts are slower than the contraction in demand, therefore oversupply is worsening,” said Zhu at a quarterly briefing in Beijing by the main producers’ group. “Although China has cut interest rates many times recently, steel mills said their funding costs have actually gone up.”

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“..police detained 2,800 people who planned to participate in the Oct. 26 demonstration [..] the future could be bleak for the 28 who remain in custody.”

• 28 Chinese Investors In Fanya Metal Exchange Go Missing After Protest (Quartz)

Over two dozen Chinese investors in Fanya Metal Exchange haven’t made any contact with friends or family members since they were arrested on Oct. 25, ahead of a planned protest in Beijing. They were detained as part of a massive police crackdown on Fanya investors, who have been agitating for the government to help them recover an estimated $6 billion they invested in the trading platform that now many suspect is a fraud. Investors have been unable to access any of their money since April, and about 10,000 signed up to participate in a protest in Beijing on Oct. 26. A total of 28 protest organizers, who represented investors from different provinces and cities, were arrested by police during an evening meeting in Beijing on Oct. 25, several investors told Quartz.

None of them had been in touch with their families or other investors by Thursday morning, these investors said. Family members of seven have received police notices that their relative is being held on suspicion of “gathering crowds to disturb public order,” which could carry a five-year jail term. There has been no news about the 21 others. Quartz talked directly to four investors who had been jailed as part of the larger crackdown, and three who witnessed or heard about the arrests of others in the past 48 hours. These would-be protesters, and others Quartz has spoken to in the past, are mostly middle class people in their thirties and forties who have never had any run-ins with the government before.

But they say they see no other way to get the government to notice their plight after complaints and previous protests got no reaction. “We were just exercising rights given by the constitution,” one told Quartz. Article 35 of China’s constitution guarantees citizens freedom of speech, assembly, and demonstration, among other rights, but it is rarely upheld. Investors estimate police detained 2,800 people who planned to participate in the Oct. 26 demonstration, rounding them up in the capital city and as they traveled to Beijing from Shanghai, the northern Shanxi province and other areas. Most have been released without incident, but the future could be bleak for the 28 who remain in custody.

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“The oil price rout has wiped almost $500 billion since the end of last year ..”

• Shell Has Biggest Loss in More Than a Decade on Price Slump (Bloomberg)

Royal Dutch Shellreported its biggest net loss in at least 16 years after Europe’s largest energy group abandoned some projects and lowered its oil-price expectations, resulting in a charge of almost $8 billion. The loss highlights the pain oil and gas companies are enduring as prices plunge, forcing them into the biggest belt-tightening in a generation. Eni, the Italian oil group, also fell into a loss in the third quarter, while profit slumped at BP and Total. The oil price rout has wiped almost $500 billion since the end of last year from Bloomberg World Oil & Gas Index, which tracks energy stocks globally including Shell, ExxonMobil and Chevron.

Shell, which is buying BG Group in the energy industry’s largest deal this year, reported a third-quarter net loss of $7.42 billion, compared with a profit of $4.46 billion a year earlier. Adjusted for one-time items and inventory changes, profit dropped 70% to $1.77 billion, The Hague-based Shell said Thursday in a statement. That missed the $2.92 billion average estimate of 17 analysts surveyed by Bloomberg. Shell took a $4.61 billion charge resulting from the withdrawal from offshore drilling in Alaska and an oil-sands project in Canada, and $3.69 billion triggered by cuts to its outlook for oil and natural gas prices.

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Each single one of these cities will deny it’s in a bubble.

• London House Prices Most Overvalued In The World, Says UBS (Guardian)

House prices in London are the most over-valued of any major city in the world and are in “bubble-risk territory”, a report by economists at UBS has found. Foreign investment, the help-to-buy scheme, “alluring” yields for buy-to-let landlords, and ongoing population growth have all led property prices in the city to decouple from local incomes, and there could be a “substantial price correction” if the conditions for investment deteriorated, the report said. The UBS Global Real Estate Bubble Index looked at 15 cities around the world, including Hong Kong, Sydney, New York, San Francisco and Geneva, examining prices against the economic backdrop in each country.

It found London was less affordable for locals who wanted to buy than any city except Hong Kong, and that it was at most risk of prices falling. The city rated 1.88 on UBS’s bubble index, and the report said that between 1985 and 2009, whenever the index exceeded 1.0 “a real price correction of on average 30% began within three years 95% of the time”. It added: “Investors in overvalued markets should not expect real price appreciation in the medium to long run.” Price increases of 40% since the start of 2013 have more than offset losses during the financial crisis and mean that homes in London now cost more than ever before. On Wednesday, the Land Registry said the average price had almost hit the £500,000 mark, with the annual rate of inflation running at 9.6%.

Meanwhile, wage growth has been sluggish, and the price increases have made London one of the most expensive cities in the world based on price-to-income and price-to-rent ratios, the UBS report said. “It takes a skilled service-sector worker approximately 14 years of average earnings to be able to buy a 60 sq m dwelling; the expense of buying a flat is comparable to renting it for 30 years,” it said. In Hong Kong, the same property costs 21 times income to buy, and the average yearly income of a highly skilled worker can buy only around 3 sq m of living space. The report said the Chinese territory was also at risk of a downward cycle, and that housing prices were expected to fall by more than 10% by the end of 2016.

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Let me guess…

• Why Investors Are Shorting Canada’s Housing Market (CNBC)

A growing number of investors are betting Canada’s frothy property market will nosedive, according to research firm Markit, as low energy prices drag down the country’s economic outlook. Investors are taking out an increasing number of “short” positions on banks and insurers with high exposure to the property market, Markit explained, with these investors expecting share prices to slide. This comes amid record low interest rates in the country— which have been cut twice this year, down to 0.5%. Financial groups now account for three of the top 10 shorted stocks in the country, it said. Home Capital Group — one of Canada’s largest financial institutions— currently ranks as the most shorted stock in Canada. Markit measures the short interest in a stock by calculating the amount of shares that are out on loan.

Home Capital Group recently saw an 18% share sell-off and the cost to borrow its shares jump 10% after second-quarter results showed fewer mortgage starts than expected. Shares on loan now total 31.9%, according to Markit. That’s followed closely behind by Canadian Western Bank, which has 54% of its $19 billion portfolio in real estate, personal loans and mortgages. About 27.7% of its shares are on loan, making it the fourth most shorted stock in the country. Genworth Mi Canada, which underwrites private residential mortgages, has not only seen its stock slide approximately 22% in the last 12 months, but the number of short holdings increased to 19.3%, Markit said. “Short sellers have been trying to call the top of the Canadian property market for some years now, which has proven to be a tricky trade as the continued cheapness of credit has continued to propel local demand and prices,” the report, led by Markit analyst Relte Stephen Schutte, said.

But it seems investors are taking a hint from declining market conditions. Data from the RBC Purchasing Managers Index (PMI) clocked the sharpest decline in Canadian business conditions in the survey’s history in September. Weak demand and stagnating exports helped send the PMI reading to a 5-year low of 48.6 — with any reading below 50 indicating a contraction. Furthermore, with oil prices widely forecast to stay lower for longer, it’s likely there could be further pain heaped on an economy which Markit estimates has a 20% structural exposure to energy markets. Canada’s economy technically entered recession after clocking two quarters of economic contraction in the first half of 2015. Meanwhile, property prices have continued to soar across the country, particularly in cities like Toronto and Vancouver. The latter was earlier this year dubbed one of the most expensive markets in the world in a housing survey by The Economist. It claimed Vancouver property was overvalued by 89%.

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Ireland’s back at it too.

• Great Expectations: The Driving Force Behind Latest Property Crisis (McWilliams)

Is it possible that we have got ourselves into the position where we have a housing crisis again, where those at the bottom and middle can’t find a place to live and those moving from the middle upwards are locked into, yet again, bidding wars for homes where the speculator and the owner are pitted against each other? Could we be in the situation where investors and large foreign funds are sitting on land waiting for the prices to go up in order to make a killing, thus exacerbating the supply shortage? It’s hard to believe – after everything we have been through – but it’s true. Above all, the Irish property market needs stability. It needs to be liberated from constantly changing expectations about where prices are going to go. Expectations about future prices are what destroy a property market and lead to the unhealthy intrusion of speculators in the market for accommodation.

Accommodation should be a fixed cost in an economy, a cost faced by all of us, like the cost of electricity. Can you imagine what would happen to the use of electricity in Ireland if people thought the price was going to change on a daily basis and everyone had their own generator trying to sell at the best price to a national grid? Imagine the surges and scarcities in both use and supply as users and suppliers tried to get the best price. Now think about the housing market. When there is an expectation that prices are going to go up, it is understandable in a capitalist system that the people who own the land will wait for prices to go ever higher, thus squeezing potential buyers. It is also understandable that potential buyers will panic when they see prices rising and bring forward their demand so they won’t be left behind.

This is precisely the opposite of what is suggested by classical economics. In classical economics, we are told that when the price of something rises then the demand will fall, but this is not the case in property. When the price rises, the demand rises too. What do you think happens to supply? Traditional economics suggests that when the price rises the supply will rise, but is this what actually happens in real life? If owners of land and houses believe that prices are going to rise, wouldn’t they be mad to sell now when they can make more money by delaying? So supply doesn’t rise when price expectations rise, it actually falls – exacerbating the panic. So you can see that the issue for the property market is not so much supply and demand at today’s prices as the traditional economics model suggests, but rather the reaction of supply and demand to the expectations about future prices.

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If only the Japanese would believe in Abenomics…

• Bank of Japan Keeps QE On Hold As It Hopes For Recovery (Reuters)

The Bank of Japan has held off expanding its massive monetary stimulus programme, preferring to keep its powder dry in the hope that the economy can overcome the drag from China’s slowdown without extra support. But the central bank is likely to remain under pressure to expand its asset-buying or quantitative easing programme as slumping energy costs, weak exports and a fragile recovery in household spending kept inflation well short of its 2% target. Consumer prices fell 0.1% in the year to September, a second monthly decline, while household spending slid 1.3% from a year earlier, official figures released on Friday said. The BOJ maintained its pledge to increase base money, or cash and deposits at the central bank, at an annual pace of 80 trillion yen ($662bn) through aggressive asset purchases.

The US dollar fell 0.5% against the yen and the Nikkei share average lost 0.6% before recovering into positive territory despite disappointment that the BOJ had backed away from another increase in liquidity for equity markets. Markets will now focus on the BOJ’s twice-yearly outlook report due to be released later on Friday. They will also scrutinise comments by BOJ governor Haruhiko Kuroda’s for clues on the timing of any future monetary easing when he gives a news conference on Friday afternoon. With the economy skirting recession, the BOJ is likely to cut its economic growth and inflation forecasts for the fiscal year that began in April. But it will only slightly alter its forecast that inflation will hit 1.9% next fiscal year, sources have told Reuters, giving it grounds to argue that Japan can hit its inflation target without expanding stimulus.

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They already are.

• Britain’s Youth At Risk Of Being ‘Lost Generation’ (Guardian)

Young people face the the worst economic prospects for several generations and their lives have got worse over the past five years, a comprehensive report has concluded. The Equality and Human Rights Commission (EHRC) said that young people – defined as those under 34 – suffered the biggest slide in income and employment and now faced higher barriers to achieving economic independence and success than five years ago. The period during which their fate has worsened coincides with the election of the Conservative-led coalition government in 2010. The commission, which has a mandate from parliament to tackle discrimination, said that although life had become fairer for many, progress had stalled or even worsened for some groups in society.

The report, Is Britain Fairer?, showed that during the recession and up to 2013, people aged under 34 were hit by the steepest drops in pay and employment, had less access to decent housing and better paid jobs, and were experiencing deepening levels of poverty. The unemployment rate for 16- to 24-year-olds stood at 14.8% for the three months to August, according to official figures, with some 683,000 classed as unemployed. That rate was higher than the 13.8% recorded for the three months to February 2008 – before the financial downturn struck. EHRC commissioner Laura Carstensen said that while barriers were being lowered in some sections of society, young people in particular were having to cope with far more difficult circumstances.

“Theirs are the shoulders on which the country will rely to provide for a rapidly ageing population, yet they have the worst economic prospects for several generations,” she said. TUC general secretary Frances O’Grady said the government could no longer afford to ignore the plight of young people, who were struggling to cope with low levels of pay, worsening employment prospects and rising housing costs. “This report should be wake-up call to ministers. Hiking up university and college fees and excluding young people from the new higher minimum wage rate is not the way to build a fair and prosperous Britain. It is the blueprint for a lost generation,” she said.

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And not just a few.

• US Special Ops Have Been Fighting ISIS On The Ground For Months (Bloomberg)

When Defense Secretary Ashton Carter announced Tuesday that the U.S. would begin “direct action” against Islamic State targets in Syria and Iraq, it sounded like a new mission for U.S. forces in a country where the president has repeatedly insisted Americans would not be engaged in combat operations. But America’s special operations forces have been engaging in these kinds of missions for several months, particularly in the Kurdish-controlled provinces in northern Iraq. And the special operations forces have already built up an extensive infrastructure to support these activities. This casts doubt on the official Pentagon statements that last week’s raid was “a unique circumstance.”

Since President Barack Obama authorized the first special operations teams to deploy to Iraq in the summer of 2014, the White House has provided few details on the mission and composition of the forces. The Pentagon today refers to the mission for the 3,500 U.S. service members as primarily “advise and assist,” with an emphasis on training local forces. But the small and highly classified military footprint in northern Iraq shows the U.S. is more involved in the fight against the Islamic State. According to U.S. and Kurdish officials, the U.S. now runs an operations center in Irbil staffed by a special operations task force whose work is so classified its name is a state secret.

The task force has worked in recent months to identify and locate senior leaders of the Islamic State and participated in the mission last Thursday, in which a member of the Army’s Delta Force was killed freeing prisoners from an Islamic State prison in Hawija. (He was the first U.S. soldier killed by enemy fire in the fight against ISIS) The secret U.S. military presence in northern Iraq doesn’t end there. Highly trained American special operations forces known as Joint Terminal Attack Controllers, who help paint targets for airstrikes of Islamic State vehicles, camps and buildings, also operate in northern Iraq. U.S. officials tell us these controllers also work closely with other Western countries and the Iraqis to avoid collisions and direct air traffic for drones and other aircraft to support the mission against the Islamic State. Finally, according to these officials, there is a contingent from the Marine Special Operations Command in charge of training Kurdish counter-terrorism forces fighting against the Islamic State.

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We’ll sell out the Philippines. Want to bet?

• In Defeat For Beijing, Hague Court To Hear South China Sea Dispute (Reuters)

In a legal setback for Beijing, an arbitration court in the Netherlands ruled on Thursday that it has jurisdiction to hear some territorial claims the Philippines has filed against China over disputed areas in the South China Sea. Manila filed the case in 2013 to seek a ruling on its right to exploit the South China Sea waters in its 200-nautical mile exclusive economic zone (EEZ) as allowed under the United Nations Convention on the Law of the Sea (UNCLOS). The Hague-based Permanent Court of Arbitration rejected Beijing’s claim that the disputes were about territorial sovereignty and said additional hearings would be held to decide the merits of the Philippines’ arguments. China has boycotted the proceedings and rejects the court’s authority in the case.

Beijing claims sovereignty over almost the entire South China Sea, dismissing claims to parts of it from Vietnam, the Philippines, Taiwan, Malaysia and Brunei. The tribunal found it had authority to hear seven of Manila’s submissions under UNCLOS and China’s decision not to participate did “not deprive the tribunal of jurisdiction”. The Chinese government, facing international legal scrutiny for the first time over its assertiveness in the South China Sea, would neither participate in nor accept the case, Vice Foreign Minister Liu Zhenmin told reporters. “The result of this arbitration will not impact China’s sovereignty, rights or jurisdiction over the South China Sea under historical facts and international law,” Liu said. “From this ruling you can see the Philippines’ aim in presenting the case is not to resolve the dispute. Its aim is to deny China’s rights in the South China Sea and confirm its own rights in the South China Sea.”

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Will France dare invite and protect Snowden?

• European Parliament Votes To Urge Protection for Edward Snowden (NY Times)

The European Parliament narrowly adopted a nonbinding but nonetheless forceful resolution on Thursday urging the 28 nations of the European Union to recognize Edward J. Snowden as a “whistle-blower and international human rights defender” and shield him from prosecution. On Twitter, Mr. Snowden, the former National Security Agency contractor who leaked millions of documents about electronic surveillance by the United States government, called the vote a “game-changer.” But the resolution has no legal force and limited practical effect for Mr. Snowden, who is living in Russia on a three-year residency permit. Whether to grant Mr. Snowden asylum remains a decision for the individual European governments, and none have done so thus far.

Still, the resolution was the strongest statement of support seen for Mr. Snowden from the European Parliament. At the same time, the close vote — 285 to 281 — suggested the extent to which some European lawmakers are wary of alienating the United States. Many European citizens have expressed sympathy for Mr. Snowden and criticism of eavesdropping and wiretapping by the United States and its closest intelligence-sharing allies, which include Britain and Canada. The resolution calls on European Union members to “drop any criminal charges against Edward Snowden, grant him protection and consequently prevent extradition or rendition by third parties.” In June 2013, shortly after Mr. Snowden’s leaks became public, the United States charged him with theft of government property and violations of the Espionage Act of 1917.

By then, he had flown to Moscow, where he spent weeks in legal limbo before he was granted temporary asylum and, later, a residency permit. Four Latin American nations have offered him permanent asylum, but he does not believe he could travel from Russia to those countries without running the risk of arrest and extradition to the United States along the way. The White House, which has used diplomatic efforts to discourage even symbolic resolutions of support for Mr. Snowden, immediately criticized the resolution. “Our position has not changed,” said Ned Price, a spokesman for the National Security Council in Washington. “Mr. Snowden is accused of leaking classified information and faces felony charges here in the United States. As such, he should be returned to the U.S. as soon as possible, where he will be accorded full due process.”

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Story after story after story….

• Two Boats Carrying Refugees Sink Off Greece, Leaving 21 Dead (AP) /span>

Authorities have said 21 people when two boats carrying people trying to reach Greece from Turkey sank over Thursday night in the latest deadly incidents in the eastern Aegean Sea. The Greek merchant marine ninistry said 18 people were killed and 138 people rescued near the island of Kalymnos, while another three died and six were rescued in a separate incident early on Friday off the island of Rhodes. The deaths occurred amid a surge of crossings to Greek islands involving people fleeing Syria, Afghanistan and other countries ahead of winter and as European governments weight taking tougher measures to try and limit the number of arrivals in Europe. Eight people were killed early on Thursday after a boat capsized off the island of Lesbos.

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…after story after story after story after tragic story….

• Greek Coast Guard Seeks Dozens Of Migrants Off Lesvos After Wreck (Kath.)

Hellenic Coast Guard vessels scoured the coastline of Lesvos on Thursday night in a bid to find more than 30 migrants feared to be missing after a large boat capsized near the eastern Aegean island on Wednesday, killing at least nine people. Following a huge operation on Wednesday evening that resulted in the rescue of 242 migrants, Greek coast guard vessels continued the search with Frontex boats on Thursday night. A senior coast guard official on Lesvos told Kathimerini that it was unclear exactly how many people were missing as many of the migrants are said to have been traveling alone and were not being sought by relatives. According to the Shipping Ministry, at least 17 migrants died in several incidents between Wednesday morning and late Thursday night, including 11 children.

Another 15 children were being treated at the pediatric clinic of Lesvos’s general hospital while another three were flown by C-130 military transport plane to the intensive-care unit of an Athens hospital. Coast guard officers on Lesvos and other islands struggling with the migrant influx, such as Samos and Agathonisi, have appealed for backup, Kathimerini understands. Space constraints for the temporary accommodation of the migrants pose another problem. On Thursday a small church near the port of Molyvos on Lesvos was used to shelter migrants, including children, some with symptoms of hypothermia or fever.

As the influx of migrants into Greece continues unabated, despite the worsening weather, some have called for a fence on the Greek-Turkish land border to be brought down to ease the wave of migrants arriving by sea, a proposal that has been rejected by the government. According to official figures of the Citizens’ Protection Ministry, more than 545,000 migrants have entered Greece this year. Of these, 23% are children. A total of 70 deaths have been recorded and another 100 people are believed to be missing. This month alone, more than 72,000 migrants have arrived in Greece, according to the UN refugee agency. The figure is only slightly smaller than the 77,163 migrants who arrived in Greece in the whole of 2014.

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Any chance of spending some of that to save lives now?

• Germany To Spend Up To €16 Billion On Refugees Next Year (Reuters)

Germany’s federal states and municipalities could face costs of up to €16 billion next year to deal with the refugee crisis, the Association of German Cities said on Thursday. Europe’s richest country has become a favoured destination for people fleeing war, violence and poverty in Asia, Africa and the Middle East. It expects 800,000 to a million migrants to enter the country this year, twice as many as in any prior year. Germany’s states have long complained that they are struggling to cope with the record influx and have urged the federal government in Berlin to provide more help.

Helmut Dedy, deputy managing director of the Association of German Cities, said the federal states and municipalities could end up spending €7 billion to €16 billion on costs related to refugees next year, depending on the number of new arrivals. Taking into account funds the government has already agreed to provide, that means the states and municipalities will still need €3 billion to €5.5 billion in financing, Dedy said. The association’s estimates are based on two scenarios with between 500,000 and 1.2 million refugees arriving next year. “The challenge is noticeable everywhere – from providing accommodation and on the housing market to schools, in daycare centres and in healthcare,” said Stephan Articus, managing director of the Association of German Cities.

He said the federal states therefore needed to pass the approved federal funds for accommodating and providing for refugees on to municipalities in full because until now the states’ involvement in financing the communities had been “extremely varied”. The federal government has already agreed to set aside €5 billion in windfall income from this year’s budget to help finance the states and municipalities in 2016. The government in Berlin pays the 16 federal states €670 each month for every asylum seeker they take in.

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“It’s only a question of time before the first baby freezes to death here..”

• Refugees Risk Freezing To Death In Germany, Too (Local.de)

Police near Passau, on the Bavarian border with Austria, have warned that there are no places left in emergency accommodation centres as crowds wait to cross into Germany in plummeting temperatures. “It’s only a question of time before the first baby freezes to death here,” Passau district police spokesman Lothar Venus said. Around 2,500 people were waiting in the open on the Austrian side of the border on Wednesday night, huddling together under the harsh glare of searchlights. Police have complained that Austrian authorities often bring large groups to the border in the late afternoon or evening. “It’s no problem up until midday. But in the late afternoon, it’s blow after blow. Our Austrian colleagues are just as overloaded as we are,” Freyung district police spokesman Thomas Schweikl said.

At 700 metres above sea level, temperatures fell to around 2 C, and a stream flowing nearby added damp to the harsh conditions. On the German side, there are simply not enough buses to bring refugees to accommodation elsewhere in Bavaria, leaving them stuck until transport arrives. “What do ten buses mean faced with this many people? We would need 40 to bring these people here quickly into the warm,” Venus said. He added that the risk was increasing that the refugee groups would begin moving into Germany of their own accord, walking the three kilometres along an unlit main road Two nights ago, 1,000 people did exactly that.

On Wednesday night, officers were able to avoid that scenario repeating itself, in part by housing people in a workshop cleared out specially by a local business owner – at least offering 300 people a roof over their head. At the border itself, the Red Cross handed out tea, vegetable soup and fruit. But few of the refugees accepted the proffered blankets, preferring to hang on to their place in the queue. All eyes will be on a meeting Angela Merkel has called with state leaders this weekend to deal with the problem. The Chancellor’s gathering is a response to Bavarian state premier Horst Seehofer’s ultimatum demanding that she work with Austria to stop the flow of people by Sunday – or else he would act on his own initiative.

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Emptiness rules Europe.

• EU Nations Have Relocated Only 86 Refugees From 160,000 Pledged (Bloomberg)

A European Union plan to resettle 160,000 refugees who have arrived in Greece and Italy has relocated just 86 so far. The pledge, made last month by EU governments, was meant to share the burden of the influx of migrants from Middle Eastern wars and civil strife between the bloc’s different countries in an effort to decrease the number of people making the journey northward through Europe. The 86 refugees who have been relocated so far had all been staying in Italy, EU Commission spokeswoman Natasha Bertaud told reporters in Brussels on Thursday. The EU is planning further transfers this week from Italy to Finland and France, and later to Spain, she said.

With more than 700,000 refugees arriving by sea so far this year and tens of thousands more on their way, EU governments are grappling with an influx on a scale not seen since the 1940s. Some have responded by closing borders and building fences, others by shuttling migrants across frontiers for other countries to deal with. The 160,000 redistribution plan laid bare the disunity within the EU over the crisis with bigger countries forcing the process through over the opposition of Hungary, the Czech Republic, Slovakia and Romania. All of the bloc’s 28 nations are now participating in the program apart from the U.K., which is not bound by EU rules on migration.

The failure to relocate more refugees is largely because countries have not told the EU Commission, which is coordinating the program, how many spaces they have for migrants to take up, Bertaud said. The EU needs “all member states to tell us how many places they have available right now out of their share of 160,000,” she said. “We have some of this information but we do not have it from all member states.” Countries also need to install officials in Greece to process the applications, she said. “We now have 30 people who are ready to be relocated from Greece and expect the flight to go to Luxembourg soon,” she said.

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“Two of our volunteers tried to resuscitate a child that died in the harbour and they kept doing CPR because the dad was distraught and they just wanted to show the dad that they had done their absolute best.”

• Lesbos Volunteer Says Huge Amount Of Trauma As Refugee Boats Capsize (Guardian)

A British volunteer on Lesbos has described horrendous scenes after worsening weather caused boats to capsize in the Aegean Sea, killing at least 11 people, including several children. Authorities on the Greek island said 38 people were believed to be missing at sea on Thursday after high winds battered the ageing wooden fishing boats that are increasingly used to make the perilous crossing from Turkey to Greece. Tracey Myers, a volunteer based in the port town of Molyvos, said: “I’ve never seen a day like yesterday. I never ever want to see another day like yesterday in my life. These people are escaping war and can’t get a route to safety. There is the need for the shelter, but the real need is for them to have a safe way to apply for asylum.”

Eleven people drowned on Wednesday after a boat carrying hundreds of refugees capsized and several smaller boats were also swamped, triggering one of the biggest rescue missions in the Aegean Sea this year. The Greek coastguard said it had rescued 242 people. Speaking to the Guardian by telephone from a rescue centre, Myers said volunteers had been warned of a “hideous medical need” when the high winds caused a “constant stream of boats sinking in the sea” on Wednesday afternoon. “We had one boat come and we had 10 half-drowned babies, and we had to lay them out on stretchers and try [to] resuscitate them. Then we had to move all those people on and the same thing happened again. “The harbour was just a scene of half-dead kids, with us trying to get the water out of them and trying to resuscitate them.”

Myers said about a third of the people rescued on Wednesday were children younger than five, mainly from Syria, with at least 25 suffering serious shock, hypothermia and other injuries. She said: “Two of our volunteers tried to resuscitate a child that died in the harbour and they kept doing CPR because the dad was distraught and they just wanted to show the dad that they had done their absolute best. One of the volunteers did CPR on this kid for 25 minutes, but the kid was gone. “Another of our volunteers came across a three or four-year-old boy and they tried to electroshock him and bring him back to life and resuscitate him, but he passed in his arms. The volunteers here are seeing a huge amount of trauma.”

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“They brought us this body the other day and begged us to bury it even though there was no space. But I don’t know what we’ll do from now on…”

• Lesbos Braces For Winter As Refugees Keep Coming (Gill)

Agios Panteleimonas is a saint known for his miracles and his steadfast faith.These days, at the sprawling cemetery in Mytilene named after him, there are no miracles to be found. The cemetery has three levels of gravesites, ranging from the best to the cheapest at the back. Now there is a new category beyond the pauper’s grave – the refugee grave. In a corner at the back of the site are mounds of earth that lie at a different angle compared to the rest of the graves with pieces of broken marble serving as headstones. “Our dead are buried facing east,” explains Christos Mavraheilis, “but the Muslims ask to be buried on their side, facing Mecca.” This is the final resting place for those who were unsuccessful in completing the perilous journey from Turkey to Lesbos.

The graves are marked with a serial number, burial date and the words “unknown minor” or “unknown Afghan.” “We’re not running out of space, we’re already completely out of space.” Mavraheilis explained. A local church’s philanthropic organization undertakes the process of the burials. DNA samples are taken at the hospital in the hopes of one day finding relatives. Several identified bodies are awaiting repatriation. There is already a backlog of bodies waiting to take their place. “There isn’t an inch of space left,” said Mavraheilis. He pointed to a fresh grave. “They brought us this body the other day and begged us to bury it even though there was no space. But I don’t know what we’ll do from now on. Especially when we bury a child, the local mothers from around here cry too. We’re all human,” he said. “They left for a better tomorrow which they never saw.”

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