free trade Archives - The Automatic Earth

President Donald Trump’s former personal lawyer, Michael Cohen, pleaded guilty on Tuesday to campaign finance violations and other charges, saying he made payments to influence the 2016 election at the direction of a candidate for federal office, potentially delivering a legal blow to the president. Cohen, 51, who agreed to a plea bargain with federal prosecutors earlier in the day, pleaded guilty to eight counts total, including five counts of tax evasion and one count of making a false statement to a financial institution. He also pleaded guilty to one count of making an excessive campaign contribution on Oct. 27, 2016, which is the same date Cohen finalized a payment to adult-film star Stormy Daniels as part of a nondisclosure agreement over an affair Daniels alleges she had with Trump.

The most damaging statement by Michael Cohen was made when, acknowledging the charges against him, Cohen said he was directed to violate campaign law at the direction of an unnamed candidate for federal office, whom he did not name. At the same candidate’s direction, Cohen said he paid $130,000 in violation of campaign finance laws to “somebody” to keep them quiet, which was later repaid by the candidate. He said he arranged to make payments “for (the) principal purpose of influencing (the) election” at the direction of a candidate for federal office; Cohen did not give the candidate’s name, but those facts match Cohen’s payment to Clifford and Trump’s repayment. Cohen’s exact words: “I have donated the money that was in the account in coordination with and at the direction of a federal candidate.”

Cohen also tells the federal court he evaded substantial taxes on his income, with Bloomberg noting that the sentencing guideline calls for 46 to 63 months in prison. The prosecutor told the judge the purpose of the payments was to ensure that the individuals did not disclose “alleged affairs with the candidate.” Besides the $130,000 payment, Cohen admitted to making an illegal contribution of $150,000, which was how much McDougal received from the National Enquirer’s publisher to quash her story. As Bloomberg explicitly adds, “at no time was the candidate’s name mentioned.” The prosecutor also said Cohen failed to report $4 million on taxes and lied about debts and banking details on loan applications.

His voice cracked as he answered questions from Judge William Pauley III. As Bloomberg notes, Cohen was shaking head and appeared to be holding back emotions as judge reviews possible sentence. Cohen faces a likely prison sentence of 46 to 63 months, the judge said.

A mover and a shaker. Can’t help thinking we’re reading a real bad novel. Can’t wait for the movie.

• Paul Manafort Found Guilty On 8 Counts, Mistrial Declared On Other Ten (ZH)

Jurors in the trial of former Paul Manafort have reached a verdict on eight of the 18 counts against the former Trump aide. After a day of passing notes to the Judge, they said they were unable to reach a decision on the other 10. Manafort was found guilty on all five tax fraud counts, while the other three are related to his failure to disclose foreign bank accounts and bank fraud. The verdict comes at the end of two and a half weeks of testimony, which included 27 witnesses and 88 documents submitted into evidence. Earlier, the jury asked Judge T.S. Ellis earlier in the day what would happen if they couldn’t reach a verdict on a count, and Ellis told them to keep working on it.

“If we cannot come to a consensus for a single count, how can we fill in the verdict sheet?” the jurors asked in the note. “It is your duty to agree upon a verdict if you can do so,” said Ellis, who encouraged each juror to make their own decisions on each count. If some were in the minority on a decision, however, they could think about the other jurors’ conclusions. Give “deference” to each other and “listen to each others’ arguments,” said Ellis, adding “You’re the exclusive judges … Take all the time which you feel is necessary.” Manafort stands accused of 18 counts of tax evasion, bank fraud and obfuscating foreign bank counts in the first trial brought against him by special counsel Robert Mueller as part of his investigation into Russian meddling in the 2016 election – despite the charges stemming from his work for the then-Ukrainian governing party.

“The declaration that the Greek crisis is over is merely a statement that there is nothing left to extract from the Greek people for the interest of the foreign banks.”

• Genocide of the Greek Nation (Paul Craig Roberts)

Traditionally, when a sovereign country, whether by corruption, mismanagement, bad luck, or unexpected events, found itself unable to repay its debts, the country’s creditors wrote down the debts to the level that the indebted country could service. With Greece there was a game change. The ECB, led by Jean-Claude Trichet, and the IMF ruled that Greece had to pay the full amount of interest and principal on its government bonds held by German, Dutch, French, and Italian banks. How was this to be achieved? In two ways, both of which greatly worsened the crisis, leaving Greece today in a far worst position that it was in at the beginning of the crisis almost a decade ago.

At the beginning of the “crisis,” which would have easily been resolved by writing down part of the debt, the Greek debt was 129% of Greek GDP. Today Greek debt is 180% of GDP. Why? Greece was lent more money to pay interest to Greece’s creditors, so that they would not have to lose one cent. The additonal lending, called a “bailout” by the presstitute financial media, was not a bailout of Greece. It was a bailout of Greece’s creditors. The Obama regime encouraged this bailout, because the American banks, expecting a bailout, had sold credit default swaps on Greek debt. Without a bailout the US banks would have lost their bet and paid default insurance on Greek Bonds.

Additionally, Greece was required to sell its public assets to foreigners and to decimate the Greek social safety net, reducing pensions, for example, to below subsistance incomes and so radically reducing medical care that people die before they can get treatment. If memory serves, China bought the Greek seaports. Germay bought the airport. Various German and European entities bought the Greek municipal water companies. Real estate speculators bought protected Greek Islands for real estate development. This plunder of Greek public property did not go toward reducing the debt that Greek owed. It went, along with the new loans, to paying the interest. The debt, larger than ever, still stands. The economy is smaller than ever as is the Greek population that bears the debt.

The declaration that the Greek crisis is over is merely a statement that there is nothing left to extract from the Greek people for the interest of the foreign banks. Greece is sinking fast. All of the income associated with sea ports, airport, municipal utilities, and the rest of public property that was forcibly privatized now belongs to foreigners who take the money out of the country, thus further driving down the Greek economy.

Shifting goal posts, rearranging deck chairs.

• Call For Two Years Further Freedom Of Movement After Brexit (G.)

Britain would face labour shortages in London and the south-east from a no-deal Brexit, according to a report calling for the government to extend freedom of movement for EU migrants to protect the wider economy. The Centre for Cities thinktank urged the government to extend freedom of movement for two years after the UK leaves the EU on 29 March 2019, in the event of no deal on the terms of exit and future relations with the union. Publishing a report on EU citizens working in British towns and cities across the country, the Centre for Cities warned cities such as Oxford, Cambridge and London, where the vote was in favour of remaining in the EU, are reliant on EU migrants, making them particularly vulnerable to tougher immigration rules should Britain crash out without a deal.

The report said about one in 10 employees in major southern cities were from the EU. It said they had brought with them “significant economic benefits” to the wider British economy, which could be put at risk from a no-deal Brexit. Andrew Carter, chief executive of Centre for Cities, said: “[The government] should continue to allow EU migrants to come and work in UK cities for at least the next two years, even if there is no Brexit deal in place. This will be crucial in helping cities avoid a cliff edge in terms of recruiting the workers they need.” The report comes ahead of the government’s publication of a series of technical notices detailing the impact of a no-deal Brexit.

How far removed the City is from the country.

• Britain Extends Lead As King Of Currencies Despite Brexit Vote (R.)

Britain has extended its lead in the global currency trading business in the two years since it voted to leave the European Union, in another sign London is likely to continue to be one of the world’s top two financial centres even after Brexit. Leaving the European Union was supposed to deal a crippling blow to London’s position in global finance, prompting a mass exodus of jobs and business. But with eight months to go, London has tightened rather than weakened its grip on foreign exchange trading, a Reuters analysis shows. Foreign exchange – the largest and most interconnected of global markets, used by everyone from global airlines to money managers in transactions worth trillions of dollars a day – is the crowning jewel of London’s financial services industry.

Reuters’ analysis, based on surveys released by central banks in the five biggest trading centres, shows forex trading volumes in Britain had grown by 23 percent to a record daily average of $2.7 trillion (£2.1 trillion) in April compared to April 2016. That was double the pace of its nearest rival, the United States, which was up 11 percent to $994 billion, mostly out of New York. That means about two-fifths of all trades are handled in Britain, nearly all of them in London – a daily volume almost equivalent to the annual economic output of the United Kingdom. The next three biggest markets are Singapore, which fell by 5 percent to $523 billion; Hong Kong, which grew 10 percent to $482 billion; and Japan, which increased by 2 percent to $415 billion.

Time for a new Karl Marx?!

• Bank of England Chief Economist Warns On AI Jobs Threat (BBC)

The chief economist of the Bank of England has warned that the UK will need a skills revolution to avoid “large swathes” of people becoming “technologically unemployed” as artificial intelligence makes many jobs obsolete. Andy Haldane said the possible disruption of what is known as the Fourth Industrial Revolution could be “on a much greater scale” than anything felt during the First Industrial Revolution of the Victorian era. He said that he had seen a widespread “hollowing out” of the jobs market, rising inequality, social tension and many people struggling to make a living. It was important to learn the “lessons of history”, he argued, and ensure that people were given the training to take advantage of the new jobs that would become available.

He added that in the past a safety net such as new welfare benefits had also been provided. Mr Haldane’s points were echoed by the new head of the government’s advisory council on artificial intelligence, who also warned there was a “huge risk” of people being left behind as computers and robots changed the world of work. Tabitha Goldstaub, chair of the newly formed Artificial Intelligence Council, said that the challenge was ensuring that people were ready for change and that the focus was on creating the new jobs of the future to replace those that would disappear. “Each of those [industrial revolutions] had a wrenching and lengthy impact on the jobs market, on the lives and livelihoods of large swathes of society,” Mr Haldane told me for the Today Programme.

“Jobs were effectively taken by machines of various types, there was a hollowing out of the jobs market, and that left a lot of people for a lengthy period out of work and struggling to make a living. “That heightened social tensions, it heightened financial tensions, it led to a rise in inequality. “This is the dark side of technological revolutions and that dark-side has always been there. “That hollowing out is going to be potentially on a much greater scale in the future, when we have machines both thinking and doing – replacing both the cognitive and the technical skills of humans.”

“The shocks to our current system that arrive early are better than the ones that come too late.”

• Our Economic System Was Designed To Burn Everything In Its Path (NO)

Boom and bust cycles in the extraction economy have always brought incredible destruction and pain, especially to those closest to the land. Not by accident but by design – billions of dollars of wealth has been stripped from the land for the benefit of mostly outside investors who never intended a long term sustainable plan for rural or Indigenous communities, much less the ecosystems they rely on. But with accelerating climate change, we now have boom, bust and burn (this burn has many forms, fire is just one). And it affects everyone. The truth is this economic system has always been on fire. The terrifying object at the end of the extraction economy is the devastating and total incineration of almost everything we know and love.

This is the only endgame in the extraction economy — it is what happens when a model dependent on infinite growth is played out on a planet with finite resources. The extraction economy is an extinction economy, or maybe more accurately an extinction machine. It has always burnt everything in its path. That is what it’s designed to do. The people and living things on the periphery have always felt it first. But now in a world of global climate disruption, the match has burned down to our fingers. There is no periphery and no centre. Just one interconnected and interdependent world – on fire, together. It is not a bad thing to see this laid bare. We need new models for a sustainable civilization, and this will be a big lift that will require change at every level of social organization. The shocks to our current system that arrive early are better than the ones that come too late.

Free trade requires permanent war.

• The Economy of Permanent War (Connelly)

Dr Kadri says that free trade is ‘a poisonous concept’ that requires a state of permanent war. “In way we are caught in a catch-22 situation,” he says. “War is awful, but it does wonders for the macroeconomy.” “One need only look at what has occurred in Yemen, Gaza, Libya, Syria, Afghanistan and Iraq to discover the new shape of war and what happens to countries that attempt to control their own resources in an age where war and war spending have become all the more necessary to take the market out of its slump.” Syria’s GDP was $73 billion in 2012, a 73% decrease in economic output from 2008, according to Statista. Cumulative GDP loss between 2011–2016 is estimated at $226 billion, according to the World Bank.

“Why would the US be interested in billion dollar trade, when it has made more than a trillion out of war in Syria?,” he says. “If you want cash in against the Syrian government, you spend a trillion dollars mobilising intelligence in the west, another couple of trillion sowing dissent, saying Syria is bad, we have a bad guy in power, we should kill him and free this country, maybe bring in ISIS, al-Qaeda or some other obscurantist group. They’re willing to pay even tens of trillions, because they will earn back every penny.” “If they spend ten trillion on this war, they’re going to earn $10–20 trillion back,” he says.

[..] The former UN economist says that free trade basically dislocates resources and never re-employs them back. “It either drives resources out of business, or it simply destroys them,” he says. “If you force governments in sub-Saharan Africa or the Middle East to subsidise their agriculture, while the EU, for instance, spends a trillion euros a year subsidising its agriculture, you already have an economic imbalance in the way policy occurs.” In many cases, war is actually more profitable than trade.

Make every single part of the travel industry pay for the destruction it causes.

• Tourists Are Destroying the Places They Love (Spiegel)

It’s not just Europeans exploring each others’ countries. The boom is also fueled by people from countries that have benefited handsomely from globalization. Much of the responsibility for the growth in global tourism lies with members of the newly emerging middle classes in Russia and with people from the Far East and Arab countries. They also bear a significant share of the responsibility for the growing problems. The boom, after all, is also producing losers, and many of them have begun revolting, as recently seen in the pilot strikes at European budget carrier Ryanair, whose poor working conditions and low wages are what make the airline’s low-cost strategy possible in the first place.

But residents of the cities and regions affected are perhaps the biggest losers. When, for example, it becomes more lucrative for property owners to rent their apartments out to tourists on a daily or weekly basis than to locals who need an affordable place to live. Or when commuters have to squeeze into overcrowded public transportation because local buses and trains have been filled to capacity by tourists. Or when people no longer feel comfortable in their neighborhood because they have become a minority in the cafés and restaurants they traditionally frequented. That is, assuming they can get in at all or afford the new prices.

The tourism industry suddenly finds itself confronted by a group that it hadn’t previously paid much attention to. Having always focused on the guests, it tended to overlook the hosts. “Tourism is a phenomenon that creates many private profits but also many socialized losses,” says Christian Laesser, a tourism professor at the University of St. Gallen in Switzerland. Often, the profits benefit very few – the landlords and hotel owners primarily, but also, to a much lesser extent, the often poorly paid employees working in the travel sector. The rest are stuck with the noise and the mess, the high rents and the feeling of being a stranger in their own country, like being an extra in some Disney World for tourists.

The last ice area. That sounds ominous.

• Arctic’s Strongest Sea Ice Breaks Up For First Time On Record (G.)

The oldest and thickest sea ice in the Arctic has started to break up, opening waters north of Greenland that are normally frozen, even in summer. This phenomenon – which has never been recorded before – has occurred twice this year due to warm winds and a climate-change driven heatwave in the northern hemisphere. One meteorologist described the loss of ice as “scary”. Others said it could force scientists to revise their theories about which part of the Arctic will withstand warming the longest. The sea off the north coast of Greenland is normally so frozen that it was referred to, until recently, as “the last ice area” because it was assumed that this would be the final northern holdout against the melting effects of a hotter planet.

But abnormal temperature spikes in February and earlier this month have left it vulnerable to winds, which have pushed the ice further away from the coast than at any time since satellite records began in the 1970s. “Almost all of the ice to the north of Greenland is quite shattered and broken up and therefore more mobile,” said Ruth Mottram of the Danish Meteorological Institute. “Open water off the north coast of Greenland is unusual. This area has often been called ‘the last ice area’ as it has been suggested that the last perennial sea ice in the Arctic will occur here. The events of the last week suggest that, actually, the last ice area may be further west.”

Trump Makes Xi Happy

Apr 042018

April 4, 2018 Posted by Raúl Ilargi Meijer at 12:49 pm Finance Tagged with: China, exports, free trade, imports, intellectual property, patents, production, soybeans, tariffs, trade, treaty, Trump, WTO, Xi 8 Responses »

Mayfair Building, Times Square NYC 1951

Dr. D is on a roll.

Dr. D: Since tariffs are in the news again, let’s run down the topic , first in micro, then in macro.

“Trump said this week he’ll slap 25% tariffs on $50 billion to $60 billion in Chinese exports to the U.S., including aerospace, information and communication technology, and machinery. The move is aimed at countering Chinese cyber and intellectual property theft of U.S. technology . It also tries to push back against China’s demands for technology transfers from U.S. companies in return for access to China’s market.

The Chinese government, in turn, said it would hit U.S. shipments to China with $3 billion in tariffs, affecting goods such as pork, aluminum pipes, steel and wine.

“A family of four will end up paying about $500 more to buy (clothing, shoes, fashion accessories and travel goods) every year” if those products are subject to 25% tariffs, the American Apparel and Footwear Association says…

Retaliatory tariffs from China, meanwhile, could especially hurt American farmers. China is the world’s top soybean importer, with the U.S. providing close to 60% of the commodity. And the country is the second-largest purchaser of U.S. pork. Growing talk about a trade war has worried Iowa farmers. The state is the nation’s largest corn and pork producer and second-largest soybean grower.”

Historical background, when Clinton added China to the WTO, it opened the borders and U.S. markets to Chinese goods, but likewise, China promised to treat the exports of the U.S. fairly, which are driven by movies, patents, and intellectual property rights. In theory, that’s how the deal would be equitable. However for 20 years they have not been paying billions in patents or media royalties back to the U.S.. Stealing everything, patents, intellectual rights, ignoring international law, building a mile high tariff wall, and polluting their whole nation to boot, just like we did back in the 19th century when we were a wee country.

Guess what that shows? Tariffs work. It worked for us then and it works for China now. Go to a store and look for any item that isn’t made in China. That has devastated industry, and is arguably dumping, i.e. selling at a loss to ruin your competition. How? China isn’t a “capitalist” country, really. It’s an amalgam of communism and protectionism meant to rapidly modernize China in the footsteps of Stalin or Mao’s “Great Leap Forward,” and it works. As such, factories are built of debt money printed by the Central State then protected from bankruptcy with more printing and bailing out hand-picked winners by the state — just like we do.

Just like Abe buying up the entire Nikkei or the Swiss Bank buying a trillion in foreign stocks. So in a roundabout way, China is creating all these products at a loss, but doesn’t care about profit because people are employed and their industry rockets into the 21st century. Since profit is not a motive and bankruptcy is not a possibility, the strategy to modernize and compete with the U.S. is enhanced not only by moving China forward, but also by moving the U.S. backward into the last century. So the very concept of WTO, “Free Trade”, “Fair Trade” does not and cannot exist with a centrally-planned, centrally-protected, non-free market economy – theirs and ours. Only national strategy remains.

When that’s the case, you see Trump merely advocating for consequences to China breaking the original treaty, the original parity of hard goods for intellectual property. And why shouldn’t breaking a treaty have consequences? The problem of course is what those consequences mean.

Since from the Chinese perspective, they have reduced U.S. wealth, production, capacity for production, and even the U.S. military to 3rd world levels, and the U.S. no longer has the bargaining power to reverse what was supposed to be a free-market trade, but was executed by China as a mercantile/protectionist trade. And good on them, well played!

Here in the States, we hear people say –still!—“well if they give us cheap goods at a loss, who are we not to take them?” Regardless of the jobs lost since that giant sucking sound started. Or worse, “Since rebuilding industry will cost money, any move to help ourselves should be avoided because it will raise prices.” Yes people, we already missed the 21st century, let’s move back from the 20th century into an 19th century African colony because fighting it would cost something and be inconvenient. Worked for Argentina, right?

Trump said in his Asian tour:

“I don’t blame China – after all, who can blame a country for taking advantage of another country for the benefit of its citizens… I give China great credit,” said Mr. Trump while addressing a room of business leaders. Instead, the US leader said previous US administrations were responsible for what he called “a very unfair and one-sided” trade relationship with China.”

China seemed to understand this and take it pretty well: in the last 30 years 500 million were lifted out of poverty, they got everything they wanted, and are arguably already the largest, most modern economy, but the ride is over. Asia loves gold-plated show-boaters like Trump and their equanimity was unreported by the press.

It’s no surprise; I’m sure they knew it would end someday. Probably never dreamed it would go on this long. However, the way the game is played, China will still negotiate all they can as the inevitable ends. And with retaliatory tariffs, they negotiate their best deal, and as quoted, Trump understands that too. Nothing personal.

Daily news covered, let’s go Macro.

In the bigger sense, a lot of this is window dressing. We hear a lot about how “the world can’t feed itself if such and such,” but it’s feeding itself now: clearly it’s perfectly possible: if anything we may have too much! Same with trade and tariffs. So China refuses to buy American soybeans, but buys Brazilian, great: stick it to those farmers (mega corps actually) in the voting states! Show ‘em!

But here’s the thing: there are X hectares of soybeans grown on planet earth, and Y people who eat them. If China buys “The Beans of Brazil”™, then whoever bought Brazil last year won’t get theirs and will buy American. Same with steel, same with oil. If China now buys Saudi oil or Russian oil, then that oil is simply removed from Europe, and Europe must buy Norwegian or Venezuelan oil. But it’s the same oil, from the same wells, going to the same people: that is, FROM planet earth, TO planet earth, BY the people of planet earth.

There are strategies and prices, advantages and minutia down there, but in the big picture, the effect becomes more subdued than may appear. So China places tariffs, even boycotts Iowa corn, then that corn is sold to Europe instead. What kind of political pressure are they really bringing, aside from making headlines?

The same is with Trump attempting to change the composition of U.S. industry. It’s a lot harder and takes a lot longer to rotate out of services and back into hard goods than it seems. What’s more, to start making your own chips or medical equipment requires a constellation of support industries: power lines, rails, screw machines, sheet metal stamping, servo motors, and behind them the dirty, heavy industries we erased: mining, steel and aluminum smelting, and so on. Yet this has to be done. We can’t run a country by asking China, “pretty please sell us some steel so we can make battleships to bomb you with.”

But like the soybeans, this shift of capacity doesn’t work in the macro view: if we’re not buying Chinese goods because we’re making our own, what is China going to do with all their factories? That capacity exists. It’s going somewhere or it will collapse, we BOTH have a lot to lose. A cutoff of most retail goods, their factories idled and people in the streets, Mutual Assured Destruction.

This goes back to 2005 and something Ben Bernanke said about the “Global Savings Glut.” That is, the problem wasn’t that the U.S. spent too much, but the real problem was the darn Chinese were too productive, too responsible, and spent too little. You might recognize this same argument from Germany and Greece. As much as this deserves raucous laughter, the larger macroeconomic imbalance is only this: the U.S. imports instead of producing, and China exports instead of consuming.

That’s how we come to a $700B yearly trade deficit, a deficit that is not ours alone, but China’s too. This goes back to righting the trade imbalance, the tariffs, in fact the overall inequality of the present (former) globalism: the U.S. prints fake digits and the Chinese send us real goods. If the imbalances are righted, there is only one path: China must spend more and the U.S. must spend less.

What will China do with their own factories if the U.S. reindustrializes and makes their own goods? They’ll buy those Chinese products themselves.

This is a long time coming, too. For decades, China has worked hard and developed their country, so why should they make cheap products and get nothing for their work? They deserve the products of their labor — arguably more than the Americans do. They need to spend more, and as we see with input costs rising back home, we need to spend less. So let them buy their “Make-happy ginsu mango-mango slicer.” No one deserves it more.

What do you think Chairman-for-life Xi thinks of this? Trump is going to make China stop saving and force their middle class to start spending, to start behaving like the modern nation they are. Xi and his predecessors have been unable to convince China to spend. But now Trump can blame his problems on China and Xi can blame his problems on Trump. So do you think Xi is angry? Or happy?

This had to happen. A nation cannot live at the expense of everyone else forever, amen. The only question is when and how it ends. So if China makes and buys Chinese products, and the U.S. makes and buys U.S. products, and we trade equally, where’s the harm?

It’s no fun to re-industrialize, to fall back to the level of real production your country is capable of minus extractive, extortive credit, but there are only two choices: the Neocon’s one world unipolar empire of murder and force, or nation states with borders and the independence and the internal capacity to produce for and defend themselves on all fronts, agricultural, manufacturing, intellectual, and military.

That’s what the “America First” plan was and in the Asian tour, China showed they understand this. So since nation states are going to persist for now, the best we can do is rebuild, re-normalize, and re-localize independently as best we can.

As the imbalances are reversed, it’s going to be a bumpy ride, but if we can do it, it will be worthwhile. At the very least, better than the alternative (They tried). We can – it is possible – recover our nation again, and with it, what it means to be “America”, and that may be worth the work.

Debt Rattle March 10 2018

Mar 102018

March 10, 2018 Posted by Raúl Ilargi Meijer at 11:26 am Finance Tagged with: Canada, doomsday vault, fascism, free trade, Kim, math, meddling, QE, QT, Trump, Ukraine, Xi 2 Responses »

Pablo Picasso The Roaster 1938

• Trump Tariffs Cause Massive Outflows From US Stocks – BofAML (R.)

• Trump-Kim Meeting Contingent On ‘Concrete Steps’ By North Korea (Ind.)

• What’s Coming Will Be Much Worse Than 2008 (Phoenix)

• 313k Jobs Added? Nice Try But It’s Fake News (IRD)

• QE Unwind Is Too Slow, Says Fed Governor, Thus Launching First Trial Balloon (WS)

• Forget About ‘Free Trade’ (CHS)

• Europe’s Most-Leveraged Stocks Surge (BBG)

• Cash May Disappear in China – PBOC (BBG)

• Canada, Ukraine and Fascism (Carley)

• Letter To America – An Opportunity And A Warning (RTB) /span>

• Xi Jinping Says China’s Political System Can Be A Model For The World (Qz)

• Countries Annoyed Russia Gets All The Credit For 2016 Election Meddling (Onion)

• A Warning Cry From the Doomsday Vault (BBG)

• West Way Behind Iran, Saudi Arabia When It Comes To Women In Science (Qz)

Really? Both the Dow and the S&P were up 1.75% yesterday.

• Trump Tariffs Cause Massive Outflows From US Stocks – BofAML (R.)

A marked shift toward protectionism by President Donald Trump caused sharp outflows from U.S. large-cap stocks this week, Bank of America Merrill-Lynch (BAML) strategists said on Friday. Investors rushed into government bonds and other safer assets amid rising fears of an international trade war after Trump’s plans for tariffs on imported steel and aluminum met barbed responses from allies and trade bodies. Overall, investors pulled money out of equities, though the damage was mostly in the United States where $10.3 billion flowed out of U.S. equity funds, while global equity funds suffered just $0.4 billion of outflows, according to EPFR data cited by BAML. “As QE ends, protectionism begins,” wrote BAML strategists.

The risk-off mood drove investors into money market funds, pushing assets up to $2.9 trillion – the highest level since 2010. Safe-haven gold also drew in $0.4 billion. U.S. small caps were sheltered from the storm, the only U.S. sector to draw inflows, albeit tiny at $0.03 billion. U.S. large-cap stocks lost $10.1 billion. Flows into Japanese equities continued apace, with the market drawing in $4.1 billion in its 14th straight week of inflows, the longest streak of inflows since 2013. European stock funds managed to draw in $0.1 billion. Trump’s exemption of Canada and Mexico from the final tariffs announced late on Thursday soothed investors somewhat, and news the U.S. president would meet with North Korean President Kim Jong Un caused crude prices to rise.

How can Kim say no?

• Trump-Kim Meeting Contingent On ‘Concrete Steps’ By North Korea (Ind.)

Vice President Mike Pence has said the US made “zero concessions” in order to get an invitation to meet North Korean leader Kim Jong-un and talk about a possible end to Pyongyang’s nuclear weapons programme. Mr Pence said that President Donald Trump has “consistently increased the pressure” on North Korea, which has continued the development of its weapons – including an increasing number of missile tests in the last 12 months – despite numerous resolutions by the United Nations. Later at the White House, the press secretary made it clear that talks would only take place if Washington saw “concrete action” by North Korea towards denuclearisation. Mr Trump and Mr Kim are expected to meet before the end of May, although a date and location has yet to be set.

After months of escalating rhetoric between the nations the prospect of a thaw has been welcomed by world leaders. Ms Sanders said at a briefing on Friday that President Trump was “in a great mood” in the wake of the announcement, saying that the US was having conversations “from a position of strength” – with denuclearisation having always been the goal of the administration. It has taken many by surprise, including US Secretary of State Rex Tillerson, who had said just hours before the announcement that the US was a “long ways from negotiations”. But, Mr Tillerson said the President made the decision to accept the invite “himself”, a move he said was a “dramatic” reversal in posture for North Korea.

“When a stock bubble bursts, investors lose money. When a sovereign bond bubble bursts, entire countries go bust..”

• What’s Coming Will Be Much Worse Than 2008 (Phoenix)

While everyone is “high fiving” over stocks holding up, the bond market is back to imploding. Already Treasury yields have bounced and are soaring higher in one of the nastiest breakouts in over 20 years.

In a world awash in too much debt (global Debt to GDP is over 300%) this is a MAJOR problem. Most investors believe that the 2008 Crisis was the worst crisis of their lifetimes. They’re mistaken… what’s coming down the pike when the Bond Bubble blows up will be many times worse than 2008. The reason is that bonds, not stocks, represent the bedrock of the financial system. When a stock bubble bursts, investors lose money. When a sovereign bond bubble bursts, entire countries go bust (a la Greece in 2010). On that note, I want to point out that bond yields are not just rising in the US… we’re seeing them spike in Germany, Japan, and others.

This is a truly global problem, and if Central Banks don’t move to get it control soon, we’re heading into a MAJOR crisis.

US jobs reports are meaningless. Maybe it’s time to recognize that before they blow up in your faces.

• 313k Jobs Added? Nice Try But It’s Fake News (IRD)

The census bureau does the data-gathering and the Bureau of Labor Statistics feeds the questionable data sample through its statistical sausage grinder and spits out some type of grotesque scatological substance. You know an economic report is pure absurdity when the report exceeds Wall Street’s rose-colored estimate by 53%. That has to be, by far, an all-time record-high “beat.” If you sift through some of the foul-smelling data, it turns out 365k of the alleged jobs were part-time, which means the labor market lost 52k full-time jobs. But alas, I loathe paying any credence to complete fiction by dissecting the “let’s pretend” report. The numbers make no sense. Why? Because the alleged data does not fit the reality of the real economy.

Retail sales, auto sales, home sales and restaurant sales have been declining for the past couple of months. So who would be doing the hiring? Someone pointed out that Coinbase has hired 500 people. But the retail industry has been laying off thousands this year. Given the latest industrial production and auto sales numbers, I highly doubt factories are doing anything with their workforce except reducing it. And if the job market is “so strong,” how comes wages are flat? In fact, adjusted for real inflation, real wages are declining. If the job market was robust, wages would be soaring. Speaking of which, IF the labor market was what the Government wants us to believe it is, the FOMC would tripping all over itself to hike the Fed Funds rate. And the rate-hikes would be in chunks of 50-75 basis points – not the occasional 0.25% rise.

Balloons in a bubble.

• QE Unwind Is Too Slow, Says Fed Governor, Thus Launching First Trial Balloon (WS)

So we have the first Fed Governor and member of the policy-setting FOMC who came out and said that the QE Unwind that began last October with baby steps isn’t fast enough. And because it’s so slow it may actually contribute to, rather than lower, the “financial imbalances.” In her speech, Kansas City Fed President Esther George pointed at the growth of the economy, the tightness in the labor market, the additional support the economy will get from consumers and companies as they spend or invest the tax cuts, etc., etc. And despite this growth, “the stance of monetary policy remains quite accommodative,” she said. She cited the federal funds rate – the overnight interest rate the Fed targets. The Fed’s current target range is 1.25% to 1.50%, which is “well below estimates of its longer-run value of around 3%,” she said.

The Fed would have to raise rates at least six more times of 25 basis points each, for a total of at least 1.5 percentage points, to bring the federal funds rate to around 3% and get back to neutral. If the Fed wanted to actually tighten after that, it would have to raise rates further. So far, so good. And then came her concerns about the Fed’s balance sheet. Under QE, the Fed acquired $1.7 trillion in Treasury securities and $1.78 trillion in mortgage-backed securities, for a total of about $3.5 trillion. After QE ended in October 2014, the Fed then maintained the levels by replacing maturing securities. But in October last year, it commenced the QE-Unwind and started to not replace some maturing securities. This has the effect of shrinking its balance sheet.

Just like the Fed “tapered” QE by phasing it out over the course of a year, it is also ramping up the QE-Unwind over the course of a year. But the pace of the QE-Unwind has been too slow, according to George – and this may be destabilizing the financial markets: “By the end of this year, however, only about a quarter of the increase to the Fed’s balance sheet resulting from the first round of large scale asset purchases will be unwound. These holdings of longer-term assets were intended to put downward pressure on longer term interest rates. Many investors responded, as would be expected, by purchasing riskier assets in a reach for higher yield. As a result, asset prices may have become distorted relative to the economic fundamentals.”

Free trade is a deception tool.

• Forget About ‘Free Trade’ (CHS)

The mobility of capital radically alters the simplistic 18th century view of free trade. In today’s world, trade can not be coherently measured as goods moving between nations, because capital from the importing nation owns the productive assets in the exporting nation. If Apple owns a factory (or joint venture) in China and collects virtually all the profits from the iGadgets produced there, this reality cannot be captured by the models of simple trade described by Ricardo. In today’s globalized version of “free trade,” mobile capital can arbitrage labor, currencies, interest rates, regulatory burdens and political favors by shifting between nations and assets. Trying to account for trade in the 18th century manner of goods shipped between nations is nonsensical when components come from a number of nations and profits flow not to the nation of origin but to the owners of capital.

[..] In a world dominated by mobile capital, mobile capital is the comparative advantage. Mobile capital can borrow billions of dollars (or equivalent) in one nation at low rates of interest and then use that money to outbid domestic capital for assets in another nation with few sources of credit. Mobile capital can overwhelm the local political system, buying favors and cutting deals, all with cash borrowed at near-zero interest rates. Mobile capital can buy up and exploit resources and cheap labor until the resource is depleted or competition cuts profit margins. At that point, mobile capital closes the factories, fires the employees and moves on. Where is the “free trade” in a world in which the comparative advantage is held by mobile capital?

And what gives mobile capital its essentially unlimited leverage? Central banks issuing trillions of dollars in nearly-free money to banks and other financial institutions that funnel the free cash to corporations and financiers, who can then roam the world snapping up assets and arbitraging global imbalances with nearly-free money. There’s nothing remotely “free” about trade based not on Ricardo’s simple concept of comparative advantage but on capital flows unleashed by central bank liquidity. The gains reaped by mobile capital flow to those who control mobile capital: global corporations, financiers and banks. No wonder labor’s share of the economy is stagnating across the globe while corporate profits reach unprecedented heights.

Until the last drop: “A lot of companies have been living off debt and their business model won’t apply to higher interest rates.”

• Europe’s Most-Leveraged Stocks Surge (BBG)

Investors shrugged off trade skirmishes and signals of fading monetary stimulus as they rewarded some of Europe’s most leveraged companies, putting the latter on track for their best weekly advance since December 2016. Stocks with the weakest balance sheets gained 4.5% this week, compared to 3.1% for their less-indebted counterparts, according to a Bloomberg analysis of Morgan Stanley data. Since these risky-debt companies were beaten up earlier in the year, they’re beginning to bounce back thanks to the risk-on rally, buoyed by largely positive earnings reports, said Hugh Cuthbert at SVM Asset Management. “Post the jitters that we saw at the start of February, they are more than likely to be beneficiaries”.

“The market appetite for risk will always benefit those guys when it’s high.” Still, it’s a small reprieve after they dropped more than 10% in the 25 trading days through last week. Even after the recent advance, shares of weak balance-sheet companies sit 7.7% below their January peak. The Morgan Stanley-compiled basket tracks 40 European companies with measures that include net debt to Ebitda and interest coverage ratios. The good times may be short-lived, however, as the ECB pares stimulus, said Cuthbert. “Look out, if we are in a tightening cycle,” he said. “A lot of companies have been living off debt and their business model won’t apply to higher interest rates.”

A control tool Beijing finds hard to resist. Predictably.

• Cash May Disappear in China – PBOC (BBG)

Just because China’s financial regulators are cracking down on cryptocurrencies doesn’t mean they’re souring on the idea of digital money. People’s Bank of China Governor Zhou Xiaochuan made that clear at a press conference in Beijing on Friday, saying physical cash may one day become obsolete. Zhou said the PBOC is looking into digital currencies as it pursues faster, cheaper and more convenient payment methods, even as he warned that cryptocurrencies like Bitcoin – more often used for speculation than payments – don’t serve the economy.

“We must prevent major mistakes that would lead to irreparable losses, so we are cautious,” Zhou said during what may be one of his last public appearances before his expected retirement. “We don’t like creating products for speculation and making people have the illusion that they can get rich overnight.” China, once home to the world’s most active Bitcoin exchanges, banned the venues last year amid a broad-ranging clampdown on virtual currencies. Yet the country is still the world leader in digital payments, thanks to the popularity of platforms developed by tech giants Alibaba and Tencent.

Ink black history.

• Canada, Ukraine and Fascism (Carley)

The most notorious of the Nazi collaborators who immigrated to Canada was Mykhailo Chomiak, a mid-level Nazi operative in Poland, who came under US protection at the end of the war and eventually made his way to Canada where he settled in Alberta. Had he been captured by the Red Army, he would quite likely have been hanged for collaboration with the enemy. In Canada however he prospered as a farmer. His grand-daughter is the “Ukrainian-Canadian” Chrystia Freeland, the present minister for external affairs. She is a well-known Russophobe, persona non grata in the Russian Federation, who long claimed her grandfather was a “victim” of World War II. Her claims to this effect have been demonstrated to be untrue by the Australian born journalist John Helmer, amongst many others.

In 1940 the Liberal government facilitated the creation of the Canadian Ukrainian Congress (UCC), one of many organisations used to fight or marginalise the left in Canada, in this case amongst Canadian Ukrainians. The UCC is still around and appears to dominate the Ukrainian-Canadian community. Approximately 1.4 million people living in Canada claim full or partial Ukrainian descent though generally the latter. Most “Ukrainian-Canadians” were born in Canada; well more than half live in the western provinces. The vast majority has certainly never set foot in the Ukraine. It is this constituency on which the UCC depends to pursue its political agenda in Ottawa.

After the coup d’état in Kiev in February 2014 the UCC lobbied the then Conservative government under Stephen Harper to support the Ukrainian “regime change” operation which had been conducted by the United States and European Union. The UCC president, Paul Grod, took the lead in obtaining various advantages from the Harper government, including arms for the putschist regime in Kiev. It survives only through massive EU and US direct or indirect financial/political support and through armed backing from fascist militias who repress dissent by force and intimidation. Mr. Grod claims that Russia is pursuing a policy of “aggression” against the Ukraine.

If that were true, the putschists in Kiev would have long ago disappeared. The Harper government allowed fund raising for Pravyi Sektor, a Ukrainian fascist paramilitary group, through two organisations in Canada including the UCC, and even accorded “charitable status” to one of them to facilitate their fund raising and arms buying. Harper also sent military “advisors” to train Ukrainian forces, the backbone of which are fascist militias. The Trudeau government has continued that policy. “Canada should prepare for Russian attempts to destabilize its democracy,” according to Minister Freeland: “Ukraine is a very important partner to Canada and we will continue to support its efforts for democracy and economic growth.”

“It is the US government and NATO, and the people who own and control them, who are the threats and the enemies to the future of Humanity.”

• Letter To America – An Opportunity And A Warning (RTB) /span>

There is no place that the US or NATO has gone into in the last 4 decades that is better off. Not one. In fact, there is no place that NATO or the US have intervened, (usually against international law) that hasn’t become a failed state, hell on Earth for the citizens, and a genuine danger to the surrounding regions and the world. It is the US government and NATO, and the people who own and control them, who are the threats and the enemies to the future of Humanity. But their days of disregarding international law and destroying weaker nations with impunity are now over, as of March 1st, 2018. The good people of America now have a huge opportunity, and a huge challenge. Russia spends less than one tenth what the USA spends on military and defense, but their military and weapons are superior in every measurable way.

The waste, corruption and abject venality of the US military industrial complex has wasted trillions on weapon systems that are now literally useless, and which have left the US military (and by extension the American people) defenseless before the power of Russia’s weapons, which are designed and produced to be effective rather than profitable. The opportunity is this – the USA can now reduce its military spending (the highest in the world) by 90% and still be safer than you are right now, spending almost a trillion dollars a year on useless weapons and a defenseless military. Safer, because as soon as the American People take control of their government enough to reduce your spending to ONLY as much as Russia spends, Russia will stop having reason to see the USA as an existential threat.

The less you spend, the safer you will be. The more you spend, the more likely World War Three, which will see you as the instigators and the losers. This gives the USA, starting as soon as you want, an extra $800 billion, per year, to spend on things that have actual worth, things you really need. Health care, free college education, fixing the rotting economy and infrastructure that are daily becoming more of a threat to the American people than Russia has ever been. Your challenge is that you must root out an entrenched and ruthless kleptocracy, built on deceit and oppression, and which is bent on war, and will stop at nothing to cling to its power. It is a huge task, an historic task, but in it lies your only hope. These parasites must be stopped, and if the American People are not up to the challenge, if they fail in their historic mission, they will leave it to the armies of the world, led by Russia, who will no longer tolerate those who want to rule the world.

So-called democracy is no better.

• Xi Jinping Says China’s Political System Can Be A Model For The World (Qz)

Chinese president Xi Jinping has repeatedly told the world that China is ready to lead on issues like free trade and climate change. Now, he’s ready to extend his leadership to political parties everywhere. At the big annual gathering of Chinese lawmakers and political advisors that kicked off March 3, Xi said that China is offering a “new type of political party system”—a Chinese solution that contributes to the development of political parties around the world, according to state media (link in Chinese). The Chinese Communist Party (CCP) has always said the country will never copy the political systems of other countries, in particular the Western notion of democracy.

But under Xi—the most powerful Chinese leader in four decades—China’s own one-party system is one that is ready to be exported to regimes everywhere. The term “new type of political party system” was first put forward by Xi when he delivered a speech to non-party political advisors on March 4. It’s not the first time that Xi has floated the idea that China’s political model can make a contribution to the world. This time, however, Chinese state media churned out a wave of articles to underscore the significance of this new phrase. In the past, “some people lacking self-confidence always use Western political theories to criticize China’s political party system,” wrote Wang Xiaohong at the party-backed Central Institute of Socialism, in a commentary widely circulated by Chinese news outlets.

But as Wang argues, Western political systems are associated, among other things, with fractured societies, inefficient government, and “endless power transitions and social chaos” as in the countries of the former Soviet Union, and in north Africa after the Arab Spring. “The new type of political party system has overcome all sorts of problems that the old [one] can’t overcome,” Wang argued. In China, there are eight so-called “democratic parties” that are allowed to participate in the political system, but they are almost completely subservient to the CCP. Every year in March, members of the minor parties meet with their communist counterparts in Beijing to provide advice on everything from healthcare to poverty reduction—largely for show.

The system—called “multi-party cooperation and political consultation under the CCP’s leadership”—has been used as evidence that China is also a democracy. The internationalization of China’s political system is in fact well underway. Since 2014, the Communist Party has hosted an annual summit in Beijing inviting political party leaders from around the world to hear about how it governs China. In recent years, the party has also brought young African politicians to China for training, in a bid to cultivate allies.

About as valuable as what ‘serious’ press has to report.

• Countries Annoyed Russia Gets All The Credit For 2016 Election Meddling (Onion)

Complaining that U.S. investigations into foreign interference in the election have gotten almost everything wrong, officials from dozens of countries around the world expressed irritation Friday that all of the credit for meddling in the 2016 presidential race was going to Russia. Resentful operatives from Serbia, Uruguay, Swaziland, and 45 other nations said they were incredibly annoyed that Kremlin-backed computer hackers and dark-money financiers were receiving all the media attention, while their own far superior efforts to undermine the U.S. electoral process had so far received no recognition at all.

“Do you have any idea how much more sophisticated our attacks on American democracy were than Russia’s?” Laotian president Bounnhang Vorachith said of his government’s efforts to spread misinformation about Democratic candidate Hillary Clinton on social media sites. “We spent millions building a sophisticated bot network that could craft false but believable stories portraying Trump in a good light. And it worked! It’s unbelievably frustrating to pull off something like that and then have all the glory go to someone else.” “Do you really think Russia could’ve hacked into [Clinton campaign chairman] John Podesta’s emails?” Vorachith continued. “Hell no. That was Laos.”

According to sources, every time the American media credits Russian oligarchs with funding election-tampering efforts, numerous foreign agents across the globe throw up their arms and storm out of the room, infuriated because Costa Rican and Nepalese money launderers reportedly did far more to finance such initiatives. These agents have also been known to toss aside newspapers in anger, shouting that Mongolia’s work busing thousands of people with dead voters’ names to cast ballots for Clinton in New Hampshire was more deserving of attention than anything Russia had accomplished.

A bit more attention might go a long way.

• A Warning Cry From the Doomsday Vault (BBG)

On this winter day, the world was upside down: it was raining in the Arctic Circle and snowing in Rome. The contradiction was not lost on those gathered at the Svalbard Global Seed Vault, located near the top of the world. The scientists, activists, executives and government officials were in Longyearbyen, to mark the 10-year anniversary of what has become known as the Doomsday Vault, which stores seeds of the world’s most important crops deep in a mountain against the apocalyptic consequences of climate change and war. The challenge they’re facing now is that the climate is changing far quicker than they’d imagined. The facility sprung a leak last year after construction had failed to take into account that the permafrost could melt.

Norway is now spending about $20 million to secure and improve the facility. But it’s not just the building. “Biodiversity is the building block to develop new plants and because of climate change we’re in a terrible need to quickly develop new varieties,” said Aaslaug Marie Haga, executive director of Crop Trust, a group established to support gene banks. “The climate is changing quicker than the plants can handle.” Svalbard is the farthest north one can travel commercially, about an 1 1/2 hour flight from northern Norway. The vault is about a 10 minute drive from town, past a coal-fired power plant and up a winding two-lane road. Unless armed with a high-caliber rifle, driving is essential, since leaving town also means venturing into polar bear country.

The site’s entrance, not far from the abandoned coal mine that served as the first Nordic seed vault, shines at night like a green beacon, lit up by an artwork of fiber optics, steel and glass called Perpetual Repercussion. The seeds are kept at minus 18 centigrade (-4 Fahrenheit) more than 100 meters into the mountain behind six steel doors. And in an ideal world, the vault would never have to be used. It’s meant to back up the plant gene banks around the world, organized under the International Treaty on Plant Genetic Resources for Food and Agriculture. But many of these facilities are vulnerable. One withdrawal from Svalbard has already been made by the group that ran the seed bank in Aleppo, Syria.

Math as a female field. Nice.

• West Way Behind Iran, Saudi Arabia When It Comes To Women In Science (Qz)

In Iran, nearly 70% of university graduates in science, technology, engineering and mathematics (STEM) are women—a higher percentage than in any other country. Nearby Oman, Saudi Arabia, and the United Arab Emirates (UAE) are close, each boasting over 60% female graduates in science, still more of the rest of the world. Young women in science are the rule, not the exception, in the Middle East. At least a third of STEM trained talent across the Muslim world is female, writes Saadia Zahidi in her new book Fifty Million Rising, which tracks the workplace progress achieved by Muslim women since the turn of the century. Only in Jordan, Qatar and the UAE are girls more comfortable with math than boys.

“The Muslim world has put high investment in education, and the payoff is coming now,” argues Zahidi, a World Economic Forum executive who leads education and gender equality initiatives. While observant Muslim societies are often associated with strict social codes for men and women, Western gender stereotypes about work don’t necessarily apply: Several Muslim countries have filled more than half of STEM jobs with female workers. Zahidi adds that in many cases, Muslim women are pioneering their role in the workforce, so they don’t have preconceived stereotypes about whether tech jobs, for example, constitute “feminine” career goals.

A study published in February found that the social and political gender equality typical of Scandinavian countries may be inversely related to women’s representation in STEM fields. This could be in part due to the fact that countries with greater parity between sexes tend to be wealthier, providing better government support to citizens and allowing women to accept less secure jobs.

Debt Rattle November 22 2016

Nov 222016

November 22, 2016 Posted by Raúl Ilargi Meijer at 9:08 am Finance Tagged with: Blair, Brexit, extinct, Farage, free trade, JFK, Le Pen, Merkel, Snowden, TPP, Trump 1 Response »

Library of Congress Crowds of people waving at President Kennedy’s motorcade, Dallas, Texas Nov. 22 1963

• Donald Trump To Withdraw From TPP On First Day In Office (G.)

• Fed Should Allow “Elephant Size Quantitative Eurodollar Easing” (BBG)

• China May Have To Float The Yuan If Tighter Capital Controls Fail (BBG)

• Eurozone Nations Turn To Hedge Funds To Meet Borrowing Needs (R.)

• Goldman: How Corporations Will Spend Their Huge Piles of Overseas Cash (BBG)

• Why Free Trade Doesn’t Work for the Workers – Steve Keen (ET)

• Boo-Hoo (Jim Kunstler)

• Top Network Executives, Anchors Meet With Donald Trump (CNN)

• Trump Is ‘Just The President’ – Snowden (AFP)

• Nigel Farage Would Be Great UK Ambassador To US – Trump (G.)

• Richard Branson To Bankroll Secret Blairite Campaign To Stop Brexit (Ind.)

• Brexit Vote Wiped $1.5 Trillion Off UK Household Wealth In 2016 (G.)

• Merkel’s ‘Days Are Numbered’, Warns France’s Le Pen (CNBC)

• Greek Doctors Continue To Emigrate In Large Numbers (Kath.)

• Why Don’t We Grieve For Extinct Species? (G.)

Still think it’s a lot of fuzz over a Pacific deal that excludes China.

• Donald Trump To Withdraw From TPP On First Day In Office (G.)

Donald Trump has issued a video outlining his policy plans for his first 100 days in office and vowing to issue a note of intent to withdraw from the Trans-Pacific Partnership “from day one”. In the brief clip posted to YouTube on Monday, the president-elect said that “our transition team is working very smoothly, efficiently, and effectively”, contradicting a wealth of media reports telling of chaos in Trump Tower as Trump struggles to build a team. He said that he was going to issue a note of intent to withdraw from the TPP trade deal, calling it “a potential disaster for our country”. Instead he said he would “negotiate fair bilateral trade deals that bring jobs and industry back”.

Hours before Trump’s announcement, Japan’s prime minister, Shinzo Abe, warned that the TPP would be “meaningless” without US participation. Speaking to reporters in Buenos Aires on Monday, Abe conceded that other TPP countries had not discussed how to rescue the agreement if Trump carried out his promise to withdraw. Abe, a vocal supporter of the 12-nation agreement, appears to have failed in his recent attempts to coax Trump out of his “America first”, protectionism. The TPP, which excludes China, is thought to have been high on Abe’s agenda when he became the first foreign leader to meet the president-elect in New York last week.

While details of their 90-minute meeting have not been released, Abe would have used the time to try to persuade Trump to go back on his campaign threat to pull the US out of TPP on day one of his presidency. “The TPP would be meaningless without the United States,” Abe said, after Japan and other TPP countries had discussed the agreement on the sidelines of the Apec summit in Lima at the weekend. He added that the pact could not be renegotiated. “This would disturb the fundamental balance of benefits,” he said.

Dollar liquidity is under severe strain. There’s only one reserve currency. And letting this push up the value of the USD without limit will hurt the US in the end.

• Fed Should Allow “Elephant Size Quantitative Eurodollar Easing” (BBG)

As Donald Trump threatens to turn away from the rest of the world, the Fed will find itself under increasing pressure to extend a helping hand outwards. That’s the prognosis from Credit Suisse Director of U.S. Economics Zoltan Pozsar, who contends that the U.S. central bank needs to take a much more activist approach to ensuring adequate availability of the world’s reserve currency in light of recent regulatory changes that have raised bank funding costs and constrained sources of dollar funding. The liquidity financial institutions can draw upon has been drained by new rules that require banks to hold vast buffers of easy-to-sell assets, on the one hand, and a larger-than-expected exodus from prime money-market funds linked to financial reforms implemented in October, on the other.

That’s induced a pick-up in bank funding costs that looks to be permanent, the analyst said. That means that when foreign banks need dollars, they’re increasingly forced to procure them through currency swaps from U.S. banks and asset managers — who are themselves balance-sheet constrained. The cost of converting local currency payments in euros and yen into dollars is now at its most expensive since 2012, as implied by persistently negative cross-currency basis swap rates. The net result is an “existential trilemma” for the Federal Reserve, as it is forced to choose between two of the following three objectives: shoring up banks’ balance sheets, stabilizing costs for onshore and offshore dollar borrowing, and an independent monetary policy.

The best possible solution, according to Pozsar, is for the U.S. central bank to let its own balance sheet go: serving as a “dealer of last resort” by way of “elephant size quantitative eurodollar easing,” in other words, that it should allow the unlimited use of its dollar swap lines to prevent foreign banks’ dollar borrowing costs from getting too high in an environment of constrained bank balance sheets. “The tool to use is the Fed’s dollar swap lines but the aim would no longer be to backstop funding markets, but to police the range within which various cross currency bases trade,” Pozsar writes, arguing for the “fixed-price, full-allotment broadcast of eurodollars globally” by the U.S. central bank.

The flipside of a strong dollar. And of Trump’s America first.

• China May Have To Float The Yuan If Tighter Capital Controls Fail (BBG)

Dollar strength and rising U.S. interest rates under President-elect Donald Trump would intensify pressure on capital outflows from China, forcing its policy makers to choose between tightening capital controls or a drastic floating of the currency in coming months. That’s according to Victor Shih, a University of California at San Diego professor who studies China’s government and finance and specializes in tracking politics at the most elite level. “Given the Chinese government’s consistent preference for control, we may see much more Draconian capital controls before a decision to float the currency can be made,” Shih said in an interview in Beijing. “The main objective is to avoid a panicky float.”

Federal Reserve Chair Janet Yellen has indicated a rate hike could be appropriate “relatively soon,” and investors anticipate Trump’s proposals to cut taxes and boost infrastructure will spur faster U.S. growth and inflation. At the same time, the record indebtedness of China’s companies limits the government’s ability to raise interest rates because doing so would increase the cost of repaying debt. China may face a stark choice between abandoning recent policy changes to tie the yuan more to a basket of currencies and letting it float more freely or stringent capital controls sometime in the next six to 18 months, said Shih. The Communist Party’s preference for control suggests economic reform is unlikely to accelerate, Shih said. He sees China following Russia toward slower growth and rising currency volatility.

More signs the euro is failing.

• Eurozone Nations Turn To Hedge Funds To Meet Borrowing Needs (R.)

Eurozone governments are increasingly relying on hedge funds to help them meet their borrowing needs, which risks leaving them vulnerable to a debt market sell-off driven by a class of investors dubbed “fast money” for their speculative approach. With banks playing a less active part in the sovereign debt market because of pressures on their balance sheets, several countries have turned to hedge funds to sell their targeted amount of bonds, according to data, officials and bankers. Hedge funds tend to look for quick returns on investments, which could increase the volatility of government bond markets as they face several tests of sentiment in coming months.

A populist revolt that propelled Donald Trump and the Brexit vote is sweeping the developed world and threatens to unseat established leaders in an Italian referendum next month, and Dutch, French and German elections in 2017. Any such political shocks, compounded by rising bond market volatility, could potentially trigger a sell-off – a risk that stirs painful memories of the region’s debt crisis in 2010-2012 when a bond rout led to several countries unable to pay their debts and raised fears the euro zone could unravel. Hedge funds have been particularly active in the market for long-dated bonds as they offer the higher risk and reward that they traditionally seek.

Spain, Italy, Belgium and France have sought to lock in record-low borrowing rates this year with 50-year bond issues for €3-5 billion. Each of them reported a historically high allocation of 13-17% to hedge funds. By contrast, just three years ago, Spain, Italy and Belgium were selling only 4-7% of their syndicated bond sales to that community of investors.

Trump should penalize buybacks, make sure the money is used productively.

• Goldman: How Corporations Will Spend Their Huge Piles of Overseas Cash (BBG)

Companies in the S&P 500 Index will spend most of their sizable cash hoard buying back stock next year, analysts at Goldman Sachs write in a new note. If so, it would be only the second time in the past 20 years that buybacks have accounted for the largest share of cash usage. Much of this, Goldman says, would be due to the enacting of plans President-elect Donald Trump proposed on the campaign trail, such as a tax holiday for overseas income and changes to the corporate tax code. “A significant portion of returning funds will be directed to buybacks based on the pattern of the tax holiday in 2004,” the team, led by Chief U.S. Equity Strategist David Kostin, write. They estimate that $150 billion (or 20% of total buybacks) will be driven by repatriated overseas cash.

They predict buybacks 30% higher than last year, compared to just 5% higher without the repatriation impact. Other areas that will see a boost include capital expenditures, research and development, as well and mergers and acquisitions. Here’s a broader look at how the analysts see firms allocating their cash in 2017. Other Wall Street banks have started looking at the potential impacts of repatriation as well. A new note from Morgan Stanley analysts Todd Castagno and Snehaja Mogre says that this is one of the top questions they are receiving from clients, and that most are overestimating how much cash will be brought back from overseas.

“The often cited $2.5 trillion statistic [of cash for repatriation] represents accumulated foreign earnings that companies have declared permanently reinvested abroad for GAAP accounting purposes,” they write. “We estimate that only 40% of this amount, or roughly $1 trillion, is available in the form of cash and marketable securities. Thus, the other $1.5 trillion has been reinvested to support foreign operations and exists in the form of other operating assets, such as inventory, property, equipment, intangibles and goodwill.” The note did not provide more detail on how much of that available cash the analysts expect to be used for buying back stock.

Can America still reverse this, or is it too late? “You haven’t just lost the industrial capacity, you have lost the skill-base as well, you don’t have the engineers and designers anymore.”

• Why Free Trade Doesn’t Work for the Workers – Steve Keen (ET)

Once you have transferred all your capacity offshore, it’s very hard to reverse the process. You haven’t just lost the industrial capacity, you have lost the skill-base as well, you don’t have the engineers and designers anymore. They used to build news versions every year; now they are gone. What [Trump] can do on the fiscal front is his plan to invest in infrastructure. If he goes into this massive program as he has talked about and insists on a made-in-America policy, which he will do, that will provide the financing for the reindustrialization to occur. I’m not worried about a potential deficit because he has the world reserve currency in his hands and the Fed can print as much of it as necessary.

Then, if you produce all the infrastructure components onshore, you don’t even need trade tariffs. In my opinion, this wouldn’t be a trade barrier under WTO rules, but this could be the first dispute he has with the WTO. Because there is demand by the government and the components have to be manufactured onshore, capital needs to be invested and workers trained for the job. On top, you have the increases in productivity through infrastructure, another positive.

Epoch Times: What about tariffs? Mr. Keen: It’s not going to be peaceful, and there will be repercussions for American companies. Trump is used to playing hardball, and now he will have to negotiate with bureaucrats and their corporate backers. There will be attempts to control what Trump does through the WTO and it will be interesting to see how successful those attempts will be.

World Merchandise Exports in trillions of dollars. (World Bank)

“Mommy is all about feelings and Daddy’s role is action and that is another reason that Hillary lost and Trump won.”

• Boo-Hoo (Jim Kunstler)

America didn’t get what it expected, but perhaps it got what it deserved, good and hard. Daddy’s in the house and he busted straight into the nursery and now the little ones are squalling in horror. Mommy was discovered to be a grifting old jade who ran the household into a slum and she’s been turned out to solemnly await the judgment of the courts, nowhere to run, nowhere to hide. The kids on campus have gone temporarily insane over this domestic situation and some wonder if they’ll ever get over it. Trump as The USA’s Daddy? Well, yeah. Might he turn out to be a good daddy? A lot of people worry that he can’t be. Look how he behaved on the campaign trail: no behavioral boundaries… uccchhh. He even lurches as he walks, like Frankenstein.

Not very reassuring — though it appears that somehow he raised up a litter of high-functioning kids of his own. Not a tattoo or an earplug among them. No apparent gender confusion. All holding rather responsible positions in the family business. Go figure…. Judging from the internal recriminations among Democratic Party partisans playing out in the newspapers, it’s as if they all woke up simultaneously from a hypnotic trance realizing what an absolute dud they put up for election in Hillary Clinton — and even beyond that obvious matter, how deeply absurd Democratic ideology had become with its annoying victimology narrative, the incessant yammer about “diversity” and “inclusion,” as if pixie dust were the sovereign remedy for a national nervous breakdown. But can they move on from there?

I’m not so sure. For all practical purposes, both traditional parties have blown themselves up. The Democratic Party morphed from the party of thinking people to the party of the thought police, and for that alone they deserve to be flushed down the soil pipe of history where the feckless Whigs went before them. The Republicans have floundered in their own Special Olympics of the Mind for decades, too, so it’s understandable that they have fallen hostage to such a rank outsider as Trump, so cavalier with the party’s dumb-ass shibboleths. It remains to be seen whether the party becomes a vengeful, hybrid monster with an orange head, or a bridge back to reality. I give the latter outcome a low percentage chance.

Mommy is all about feelings and Daddy’s role is action and that is another reason that Hillary lost and Trump won. We’ve heard enough about people’s feelings and it just doesn’t matter anymore. You’re offended? Suck an egg. Someone appropriated your culture? Go shit in your sombrero. What matters is how we’re going to contend with the winding down of Modernity — the techno-industrial orgy that is losing its resource and money mojo. The politics of sacred victimhood has got to yield to the politics of staying alive.

“Trump senior adviser Kellyanne Conway, who arranged the meeting, said afterward that it was “very cordial, candid and honest.”

• Top Network Executives, Anchors Meet With Donald Trump (CNN)

Executives and anchors from the country’s five biggest television networks met with President-elect Donald Trump at Trump Tower on Monday afternoon. And they got an earful. Trump vented about media coverage, according to sources who spoke on the condition of anonymity. He was highly critical of CNN and other news organizations. But while Trump showed disdain for the news media, he also answered questions; listened to the journalists’ arguments about the importance of access; and committed to making improvements. A source in the room told CNNMoney that there was “real progress” made with regards to media access to Trump and his administration. One specific topic was the importance of the “press pool,” a small group of journalists that traditionally travels with the president.

The hour-long meeting was off the record, meaning the participants agreed not to talk about the substance of the conversations. But Trump senior adviser Kellyanne Conway, who arranged the meeting, said afterward that it was “very cordial, candid and honest.” While there was “no need to mend fences,” she said, “from my own perspective, it is great to hit the reset button, it was a long, hard-fought campaign.” Some of the attendees were struck by Trump’s anti-media posture. During the meeting, Trump revived some of the specific arguments he made weeks before winning the presidency. According to Politico, among Trump’s complaints, even as he asked for a “cordial” relationship, was that NBC had used unflattering pictures of him. But one of the participants told CNNMoney that Trump also asked for a positive relationship between his White House and the media.

The participant said that a New York Post account – which had a source describing it as Trump giving the assembled members of the media a “dressing down” like a “firing squad” – was overstated. Conway herself has also criticized the Post report. [..] NBC’s Chuck Todd and Lester Holt; CNN’s Wolf Blitzer and Erin Burnett; CBS’s Norah O’Donnell, Charlie Rose, John Dickerson, and Gayle King; and ABC’s George Stephanopoulos, David Muir and Martha Raddatz were some of the anchors seen entering Trump Tower shortly before 1 p.m. Several executives from the network news divisions were also spotted on the way into Trump Tower, including ABC News president James Goldston; CNN president Jeff Zucker; Fox News co-presidents Bill Shine and Jack Abernethy; NBC News president Deborah Turness; MSNBC president Phil Griffin; and CBS News vice president Chris Isham.

“But if I get hit by a bus, or a drone, or dropped off an airplane tomorrow, you know what? It doesn’t actually matter that much to me, because I believe in the decisions that I’ve already made.”

• Trump Is ‘Just The President’ – Snowden (AFP)

Former US National Security Agency contractor Edward Snowden on Monday downplayed the importance of President-elect Donald Trump and again defended his decision to leak documents showing massive surveillance of US citizens’ communications. “Donald Trump is just the president. It’s an important position. But it’s one of many,” Snowden told an internet conference in Stockholm, speaking via a video link from Russia, where he has been living as a fugitive. The 33-year-old is wanted in the United States to face trial on charges brought under the tough Espionage Act after he leaked thousands of classified documents in 2013 revealing the vast US surveillance of private data put in place after the September 11, 2001 attacks.

He said he was not worried about the Trump administration stepping up efforts to arrest him and stood by his decision to leak the classified material. “I don’t care,” he said. “The reality here is that yes, Donald Trump has appointed a new director of the CIA who uses me as a specific example to say that, look, dissidents should be put to death. “But if I get hit by a bus, or a drone, or dropped off an airplane tomorrow, you know what? It doesn’t actually matter that much to me, because I believe in the decisions that I’ve already made.”

Just a president-to-be having some fun.

• Nigel Farage Would Be Great UK Ambassador To US – Trump (G.)

US president-elect Donald Trump has suggested that Nigel Farage, controversial leader of the United Kingdom Independence party, should be the UK’s ambassador to the US. “Many people would like to see @Nigel_Farage represent Great Britain as their Ambassador to the United States,” Trump tweeted on Monday evening. “He would do a great job!” In a brief call with BBC Breakfast, Farage said he had been awake since 2am UK time when the tweet was first posted. The Ukip leader said he was flattered by the tweet, calling it “a bolt from the blue” and said he did not see himself as a typical diplomatic figure “but this is not the normal course of events”. But a Downing Street spokesman said: “There is no vacancy. We already have an excellent ambassador to the US.”

Farage, a member of the European parliament and on-again-off-again leader of Ukip for a decade, recently suggested he could launch an eighth bid to become an MP. Seven previous attempts were unsuccessful. It is unprecedented for an incoming US president to ask a world leader to appoint an opposing party leader as ambassador, and the statement puts British prime minister Theresa May in a difficult position. The role of UK ambassador to the US is among the most prestigious in the diplomatic service. Sir Kim Darroch, formerly the UK’s national security adviser and permanent representative to the European Union (EU), took over the role in January this year. The Ukip leader has previously said it was “obvious” that Darroch should resign his post, calling him part of the “old regime”.

But he told Sky News at that time he did not see himself as Darroch’s replacement: “I don’t think I will be the ambassadorial type. Whatever talents or flaws I have got I don’t think diplomacy is at the top of my list of skills.”

Bringing Blair back would be the end of Labour.

• Richard Branson To Bankroll Secret Blairite Campaign To Stop Brexit (Ind.)

Richard Branson’s Virgin Group is to help bankroll a campaign set up in secret by Blairite former ministers and advisers to derail Brexit, The Independent can reveal. An email seen by The Independent highlights the scale of backing the group has already secured. It shows the campaign has been months in the planning and claims “substantial progress” has already been made, including the identification of “an excellent potential CEO”. The memo was written by Alan Milburn, who was one of Tony Blair’s closest cabinet allies. It reveals the group has heavy financial, political and corporate backing and is receiving advice and support from a host of high-level business and communications organisations. High-profile MPs including former Deputy Prime Minister Nick Clegg and Labour MP Chuka Umunna are believed to have had contact with the group, as have celebrities such as Bob Geldof.

Freuds, a leading public relations agency that was founded by Matthew Freud, a close friend of both Mr Blair and David Cameron, is understood to have been commissioned to manage the strategy and marketing of the campaign. The email says: “We have been beavering away over the last few months to get a Europe campaign up and running. I’m pleased to say that substantial progress has been made.” “I have met the Freuds team several times and we are making good progress. “I have been in discussions with an excellent potential CEO to lead the campaign. “Virgin … are keen to help … Since we last spoke [they] have offered a further £25k, plus bigger office space, help with legal advice and a possible secondment. “I have held discussions with Stronger In, Chuka Umunna, a new organisation called Common Ground, Bob Geldof and a number of senior politicians across the party spectrum.”

Catchy headline and all, but hardly what the report in question is about.

• Brexit Vote Wiped $1.5 Trillion Off UK Household Wealth In 2016 (G.)

The UK saw $1.5tn (£1.2tn) wiped off its wealth during 2016 after the Brexit vote sent the pound tumbling and the stock market into reverse, according to a survey by Credit Suisse. A fall in values at the top-end of the property market also contributed to about 400,000 Britons losing their status as dollar millionaires and one of the biggest drops in wealth among the major economies. But the UK remained third for the number of ultra-high-net-worth individuals, who own more than £50m in assets, behind the US and China. And the UK’s top 1% of richest people also continued to own 24% of the nation’s wealth, the report said.

Across the globe, the richest 1% own more wealth than the rest of the world put together, continuing the dominance seen in last year’s report. A recovering in the global stock markets in recent weeks is also likely to reverse some of the losses suffered by pension savers and wealthy individuals. Oxfam said the huge gap between rich and poor was “undermining economies, destabilising societies and holding back the fight against poverty”.

The findings from the Credit Suisse Research Institute’s seventh annual global wealth report that found the overall growth in global wealth remained flat in 2016, following a trend that emerged in 2013 and contrasting sharply with the double-digit growth rates witnessed before the global financial crisis of 2008. Michael O’Sullivan, chief investment officer in Credit Suisse’s wealth management arm: “The impact of the Brexit vote is widely thought of in terms of GDP but the impact on household wealth bears watching. “Since the Brexit vote, UK household wealth has fallen by $1.5tn. Wealth per adult has already dropped by $33,000 to $289,000 since the end of June. In fact, in US dollar terms, 406,000 people in the UK are no longer millionaires.”

“Merkel is isolated given she represents the status quo while the pace of change in Europe is accelerating”

• Merkel’s ‘Days Are Numbered’, Warns France’s Le Pen (CNBC)

German Chancellor Angela Merkel’s “days are numbered,” according to the leader of France’s right-wing National Front party, Marine Le Pen. Merkel confirmed on Sunday she would run for a fourth term in 2017, however, Le Pen says the German leader does not fit the mood of the times. Speaking to CNBC on Monday, the National Front’s presidential candidate claims Merkel is isolated given she represents the status quo while the pace of change in Europe is accelerating. Turning to another international relationship, Le Pen said it would be natural for France to retain relations with Russia given the close history of the two countries. Arguing she sees no reason why we cannot live in a multi-polar world, she lambasted the U.S. for taking the world into the Cold War, saying it put France and Europe at great risk, given they were caught in the middle.

The numbers look a bit shaky, but the trend is glaringly obvious. The Troika is dismantling what until just a few years ago was an absolute world class health system.

• Greek Doctors Continue To Emigrate In Large Numbers (Kath.)

For a sixth consecutive year, Greece has been unable to stem the flow of doctors leaving the country. The numbers emigrating during 2016 have been high again, with most opting for work in other European countries. The only difference this year is that there has been a slight dip in those leaving for the UK, which may be due to Brexit. Overall, the Athens Medical Association (ISA) issued a total of 1,018 certificates between January 1 and October 24 allowing Greek doctors to practice abroad. During the whole of 2015, ISA issued 1,521 such documents, which was slightly higher than the 1,380 it produced in 2014 and 1,488 in 2013. The year which saw the highest level of emigration among Greek doctors was in 2013, when ISA issued 1,808 certificates. In total, between 2010 and this year, ISA has readied paperwork for more than 9,300 medical professionals looking to leave Greece.

[..] While Greek doctors pursue their futures abroad, the Greek National Health System (ESY) is buckling due to the shortage of medical staff. According to the Federation of Greek Hospital Doctors’ Unions (OENGE), Greece lacks some 6,000 specialized doctors. The vast majority of doctors hired over the last few years were on fixed-term contracts, which is not a very attractive proposition for those in the medical field. According to the Health Ministry, ESY employs 1,464 auxiliary doctors at the moment. “The medical world has been seriously affected by the crisis over the last few years,” ISA president Giorgos Patoulis told Kathimerini. “The proliferation of mostly young doctors and the low rate at which they are absorbed into the public or private sector creates serious challenges for them in finding work and drives wages down.

“In combination with the government’s failure to set out a sustainable and effective health policy, this has caused an unprecedented migratory wave. This leaves us facing a paradox: Even though there is a plethora of young doctors who are unemployed, the health system is getting old and collapsing due to a lack of personnel.”

Seems a tad quirky, but there’s more than meets the initial eye.

• Why Don’t We Grieve For Extinct Species? (G.)

In early 2010, artist, activist and mother, Persephone Pearl, headed to the Bristol Museum. Like many concerned about the fate of the planet, she was in despair over the failed climate talks in Copenhagen that winter. She sat on a bench and looked at a stuffed animal behind glass: a thylacine. Before then, she’d never heard of the marsupial carnivore that went extinct in 1936. “Here was this beautiful mysterious lost creature locked in a glass case,” she said. “It struck me suddenly as unbearably undignified. And I had this sudden vision of smashing the glass, lifting the body out, carrying the thylacine out into the fields, stroking its body, speaking to it, washing it with my tears, and burying it by a river so that it could return to the earth.”

[..] .. grief doesn’t occur only when we lose loved ones. Ask anyone who has seen a local forest they once played in as a child demolished for another cookie-cutter development or has watched as fewer bees and butterflies show up in their garden each summer. Or ask any conservationist who has to witness year-after-year as the species they work with slowly vanish, ask any marine biologist about coral reefs or any Arctic biologist about sea ice. Grief can extend far beyond our human parochialism. “We realised that there was a hunger for a way of grieving ecological loss through ritual,” said Porter who in 2011 directed a Funeral for Lost Species through her group, Feral Theatre. This was an outdoor theatrical performance in a churchyard that included various traditional forms of mourning and tilted between somber and whimsical.

Porter believes many people are simply “stuck in a kind of denial” when it comes to extinction, biodiversity loss and environmental crises. “If we face it honestly and fully we have to face our own collective shadow, our out-of-control destructive urges and acts. These are terrible, terrifying things to face alone,” she said. Part of this denial is also due to our growing disconnect from nature. “Many humans now solely interact with domesticated animals and plants. Some have no experience whatsoever of intact forest, field, and aquatic community. The total loss of other community members, their families, and life affirming ways then is an utterly distant abstraction,” Hollingsworth said. “Yet in grief, as in love, humans are wired for intimacy. “

A thylacine, or Tasmanian tiger, in captivity sometime in the 1920s. The thylacine was killed off by European settlers in Australia who erroneously viewed it as a sheep killer. Photograph: Popperfoto

Debt Rattle June 16 2016

Jun 162016

June 16, 2016 Posted by Raúl Ilargi Meijer at 8:10 am Finance Tagged with: asylum, Brexit, EU, free trade, Greece, Kuroda, Osborne, Yellen 5 Responses »

Arthur Rothstein Bank that failed. Kansas 1936

• Brexit Is The Only Way The Working Class Can Change Anything (G.)

• It’s Time To Call Time On The EU Experiment (Steve Keen)

• Osborne’s ‘Punishment Budget’ Is Economic Vandalism (AEP)

• JPMorgan CIO: Brexit “Hardly The Stuff Of Economic Calamity” (ZH)

• Brexit: Which Banks Will Be Hit Hardest (WSJ)

• Yellen Says Forces Holding Down Rates May Be Long Lasting, New Normal (BBG)

• Yellen Says Brexit Vote Influenced Fed (BBG)

• Bank of Japan Stands Pat Ahead of Brexit Vote (WSJ)

• Is The World Turning Its Back On Free Trade? (BBC)

• Switzerland Withdraws Longstanding Application To Join EU (RT)

• Highrise Harry Whispers The Terrible Truth (MB)

• EU Pushes Greece To Set Up New Asylum Committees (EUO)

• Could We Set Aside Half The Earth For Nature? (G.)

The essence behind the Leave surge. People dislike Cameron so much they’ll vote for anything he doesn’t want.

• Brexit Is The Only Way The Working Class Can Change Anything (G.)

In working-class communities, the EU referendum has become a referendum on almost everything. In the cafes, pubs, and nail bars in east London where I live and where I have been researching London working-class life for three years the talk is seldom about anything else (although football has made a recent appearance). In east London it is about housing, schools and low wages. The women worry for their children and their elderly parents – what happens to them if the rent goes up again? The lack of affordable housing is terrifying. In the mining towns of Nottinghamshire where I am from, the debate again is about Brexit, and even former striking miners are voting leave.

The mining communities are also worried about the lack of secure and paid employment, the loss of the pubs and the grinding poverty that has returned to the north. The talk about immigration is not as prevalent or as high on the list of fears as sections of the media would have us believe. The issues around immigration are always part of the debate, but rarely exclusively. From my research I would argue that the referendum debate within working-class communities is not about immigration, despite the rhetoric. It is about precarity and fear. As a group of east London women told me: “I’m sick of being called a racist because I worry about my own mum and my own child,” and “I don’t begrudge anyone a roof who needs it but we can’t manage either.”

Over the past 30 years there has been a sustained attack on working-class people, their identities, their work and their culture by Westminster politics and the media bubble around it. Consequently they have stopped listening to politicians and to Westminster and they are doing what every politician fears: they are using their own experiences in judging what is working for and against them.

Think I made it very and abundantly clear in the past that I fully agree with this. Tad surpised to see it come from Steve, given his link to Varoufakis.

• It’s Time To Call Time On The EU Experiment (Steve Keen)

The arguments for and against Brexit have focused on the economic costs and benefits for the UK in leaving or remaining within the EU. Though I am an economist, I am taking a more political perspective to this vote by focusing on the utterly undemocratic nature of the key institutions of the EU. The European Parliament is a weak, diversionary figurehead, while the real power resides within the unelected bureaucracy of the EU and the key political appointees of the Europe’s governments—and particularly its Finance Ministers. These effective cabals run roughshod over political democracies when they elect leaders that oppose core EU economic policies, while at the same time these policies are leading to the ruin of southern Europe, and the stagnation of France and Italy.

The EU has been a failed enterprise ever since 1992, when the Maastricht Treaty was approved. As the prescient non-mainstream English economist Wynne Godley realised at the time, the fetish in this Treaty for government surpluses would lead to the collapse of Europe. Godley wrote that “If a country or region has no power to devalue, and if it is not the beneficiary of a system of fiscal equalisation, then there is nothing to stop it suffering a process of cumulative and terminal decline leading, in the end, to emigration as the only alternative to poverty or starvation” (Godley, Maastricht and all that, London Review of Books, 1992). Godley’s words, which surely seemed rash and insanely pessimistic at the time, have proven true with time. I therefore think that it’s time to call time on the EU experiment. I’ll be voting for Brexit for this reason.

A bit surprisingly, Ambrose has turned hard against Brussels and Remain.

• Osborne’s ‘Punishment Budget’ Is Economic Vandalism (AEP)

George Osborne is disqualified from serving as Chancellor of the Exchequer for a single week longer. Whatever his past contributions, his threat to push through draconian fiscal tightening in an emergency Brexit budget is economic madness, if not criminal incompetence. Such action would leverage and compound the financial shock of Brexit, and would risk pushing the country into a depression. It violates the known tenets of macro-economics, whether you are Keynesian or not. Alistair Darling, the former Labour Chancellor, has connived in this Gothic drama. He professes to be “much more worried now” than he was even during the white heat of the Lehman crisis and the collapse of the Western banking system in 2008. So he should be. The emergency Budget that he endorses might well bring about disaster.

The policy response is the mirror image of what he himself did – wisely – during his own brief tenure through the Great Recession. We all understand why George Osborne is toying with such pro-cyclical vandalism – or pretending to – for he is acting purely as as partisan for the Remain campaign. He has fatally mixed his roles. No head of the Treasury can behave in this fashion. The emergency Budget would aim to cover a £30bn ‘black hole’ with a mix of tax rises and spending cuts. These “illustration” measures include 2p on income tax and a 5 percentage point rise on inheritance tax, and petrol and alcohol duties. Transport, the police, and local government would be axed by 5pc. There would be cuts in pensions and defence. Spending on the NHS would be “slashed’.

This is a fiscal contraction of 1.7pc of GDP. It would hammer the economy just as it was reeling from the immediate trauma of a Brexit vote and the probable contagion effects across eurozone periphery, already visible in widening bond spreads. It would come amid political chaos, before it was clear what the UK negotiating strategy is, or what the EU might do. It would be the worst possible moment to tighten. The Treasury has already warned that the short-term shock of Brexit would slash output by 3.6pc, or 6pc with 820,000 job losses in its ‘severe’ scenario. The Chancellor now states he will reinforce this with austerity a l’outrance. It is a formula for a self-feeding downward spiral, all too like the scorched-earth policies imposed on southern Europe during the debt crisis.

“.. the history of the last two centuries can be summed up in two words: democracy matters.”

• JPMorgan CIO: Brexit “Hardly The Stuff Of Economic Calamity” (ZH)

First The Telegraph, then The Sun, and today The Spectator all came out on the “Leave” side of the Brexit debate. However, perhaps even more shocking to the establishment is the CIO of a major bank’s asset management arm dismissing the apparent carnage that Cameron, Obama, and Osborne have declared imminent, warning that, “many articles on the Brexit vote overstate its risks and consequences.” As JPM’s Michael Cembalest adds, the reality is “hardly the stuff that economic calamity is made of.” As The Spectator concludes, “the history of the last two centuries can be summed up in two words: democracy matters.” As JPMorgan Asset Management CIO Michael Cembalest explains…

“My sense is that many articles on the Brexit vote overstate its risks and consequences for the UK, and/or overstate the vote’s impact on political movements and economic malaise in the Eurozone that predate it by months and years. Here are some thoughts on issues I have seen raised over the last few weeks. “UK growth will suffer a huge hit”. Of all the analyses I’ve read about a possible Brexit scenario, I found Open Europe’s report to be the most clear-headed and balanced. Their realistic case estimates the cumulative impact of Brexit on UK GDP at just -0.8% to 0.6% by the year 2030; hardly the stuff that economic calamity is made of.

“UK-EU trade will collapse”. Not necessarily. Norway, Iceland and Switzerland have entered into agreements with the EU on trade and labor mobility (European Economic Area, European Free Trade Area). As shown below, these three non-EU countries export as much to the EU as its members do. Such agreements could serve as a template for post-Brexit trade between Britain and the EU, if both sides see it in their mutual self-interest.”

The City could take a big hit.

• Brexit: Which Banks Will Be Hit Hardest (WSJ)

Barclays and HSBC are the banks with the most business in Europe. Barclays got just under 9% of its profits from continental European businesses in 2015. At HSBC, roughly 5.5% of last year’s profits came from continental Europe, where it has a large French retail business. Local businesses could become much more difficult to run from the U.K. if a Brexit vote provokes a big change in the trade arrangements with the rest of Europe. Meanwhile, their large London-based investment banks—and those of other European and U.S. groups—would also face losing direct access to Europe without a new trade deal that preserved Britain’s “passport” for services. In this case, Deutsche Bank, BNP Paribas and Société Générale, for example, would suffer some of the same disruption and relocation costs as Barclays or HSBC.

The other vulnerable group would be U.K. mortgage lenders, such as Lloyds Banking Group, Virgin Money and OneSavings. If international investors react badly to Brexit, pulling capital out of the country, the pound will fall further and the Bank of England may feel compelled to lift interest rates to attract investors back into U.K. government bonds. Some believe benchmark interest rates might only have to go to, say, 2%, to make U.K. assets attractive, but that could upend the housing market, where prices have risen dramatically in the past couple of years, helped by substantial lending to small-time landlords. Ultra-low interest rates have kept debt-service costs minuscule, a situation that could be upended quickly.

Sounds like she’s giving up.

• Yellen Says Forces Holding Down Rates May Be Long Lasting, New Normal (BBG)

Federal Reserve Chair Janet Yellen seems to be coming around to what her one-time rival, Lawrence Summers, has been arguing for a while: Some of the forces holding down interest rates may be long-lasting and secular. That’s reflected in a marked downgrade in rate projections released by policy makers after their meeting on Wednesday. Six of 17 now only see one rise this year, after the central bank lifted rates effectively from zero in December. Officials also slowed the pace of expected moves in both 2017 and 2018: They now only foresee three increases in each of those years, down from the four they expected in March, according to their latest median forecast.

Yellen in the past has ascribed the low level of rates mainly to lingering headwinds from the financial crisis – tight mortgage credit, for instance – and suggested that they would dissipate over time. On Wednesday, though, she also pointed to more permanent forces that could depress rates for longer, namely, slow productivity growth and aging societies, in the U.S. and throughout much of the world. In a press conference after the Fed held policy steady, Yellen spoke of a sense that rates may be depressed by ”factors that are not going to be rapidly disappearing, but will be part of the new normal.”

She means the Leave vote did. When it looked like Remain would win easily, things were different.

• Yellen Says Brexit Vote Influenced Fed (BBG)

Federal Reserve chair Janet Yellen said next week’s referendum in the UK on whether to remain in the EU was a factor in the US central bank’s decision to hold interest rates steady at its meeting Wednesday in Washington. “It is a decision that could have consequences for economic and financial conditions in global financial markets,” Yellen said during a press conference following the meeting. A vote on June 23 by Britons to leave the EU “could have consequences in turn for the US economic outlook,” she said. Fewer Federal Reserve officials now expect the central bank to raise interest rates more than once this year, as policy makers gave a mixed picture of a US economy where growth is picking up and job gains are slowing.

While the median forecast of 17 policy makers remained at two quarter-point hikes this year, the number of officials who see just one move rose to six from one in the previous forecasting round in March, according to projections released by the Federal Open Market Committee on Wednesday following a two-day meeting in Washington. “The central bank reiterated that interest rates are likely to rise at a “gradual” pace, without referring in the statement to the next meeting in July or any other specific timing for another increase.

“The BOJ might also have found itself short of ammunition to respond to that turbulence.”

• Bank of Japan Stands Pat Ahead of Brexit Vote (WSJ)

The Bank of Japan stood pat Thursday despite a surging yen and faltering inflation, opting to wait until after the results of a British referendum next week that could roil global markets. The central bank’s decision comes amid growing skepticism about the effectiveness of Prime Minister Shinzo Abe’s economic program in ending Japan’s long cycle of lackluster growth and sporadic deflation. Abenomics, which has leaned most heavily on the central bank, hasn’t produced sustained, robust growth since it was launched more than three years ago. Japan’s economy has swung between modest expansions and contractions in recent quarters, while the BOJ’s hard-won gains in the battle against falling prices are starting to slip away.

Economists have expected the BOJ to take additional action in recent months, particularly given that BOJ Gov. Haruhiko Kuroda has repeatedly vowed to take action “without hesitation” if the central bank’s 2% inflation target is in danger. The central bank also stood pat in April, when expectations for action were high. Some BOJ policy board members, though, signaled ahead of this week’s meeting that they preferred to wait until after the U.K. votes next week on whether to leave the European Union, according to people familiar with the central bank’s thinking. They were concerned that even if the BOJ acted this week, the market impact of its move would fade if a “Brexit” vote rocked global financial markets, according to people close to the bank. The BOJ might also have found itself short of ammunition to respond to that turbulence.

Free trade, like all forms of centralization, depends on a growing economy. There is no such thing anymore.

• Is The World Turning Its Back On Free Trade? (BBC)

Which politician has captured the curve, summed up a growing mood, in a ferocious speech? “Your iron industry is dead, dead as mutton. Your coal industries, which depend greatly on the iron industries, are languishing. Your silk industry is dead, assassinated by the foreigner. Your woollen industry is in articulo mortis, gasping, struggling. Your cotton industry is seriously sick. Your shipbuilding industry, which held out longest, is come to a standstill.” The Latin, the silk and the mutton are a dead giveaway. Not Trump, but Lord Randolph Churchill in 1884 denouncing Free Trade. The system he preferred – “Fair Trade” – is coming back into fashion.

We have heard a lot about the revolt against the political elites, the backlash by those “left behind” by globalization; a lot about the movements and political personalities this has brought to the fore; a lot about the implications for immigration. But not so much about the economics of it all. It many signal a new rejection of one of the global elite’s most cherished policies – free trade. This is the notion that the fewer economic barriers around the world, and the less countries protect their own goods and trade with special policies, the richer we all end up. The opposite is protectionism – making foreign goods more expensive by putting taxes on their import , tariffs, in order to make home-grown products cheaper by comparison. While few embrace the word protectionism, growing numbers of politicians are openly embracing the principle behind it.

Donald Trump has said he would put a swingeing 45% tax on goods from China and 35% on many from Mexico. Many economists mock this as crazy stuff, but it is a sentiment that goes down well with many Americans. [..] Bernie Sanders has made it very clear he is opposed to NAFTA, the free trade bloc with Mexico and Canada, and the planned Asia Pacific agreement. He has been saying it for a while. This is him in 2011: “Let’s be clear: one of the major reasons that the middle class in America is disappearing, poverty is increasing and the gap between the rich and everyone else is growing wider and wider, is due to our disastrous unfettered free trade policy.”

“..only “a few lunatics” may want to join the EU now..”

• Switzerland Withdraws Longstanding Application To Join EU (RT)

The upper house of the Swiss parliament on Wednesday voted to invalidate its 1992 application to join the European Union, backing an earlier decision by the lower house. The vote comes just a week before Britain decides whether to leave the EU in a referendum Twenty-seven members of the upper house, the Council of States, voted to cancel Switzerland’s longstanding EU application, versus just 13 senators against. Two abstained. In the aftermath of the vote, Switzerland will give formal notice to the EU to consider its application withdrawn, the country’s foreign minister, Didier Burkhalter, was quoted as saying by Neue Zürcher Zeitung. The original motion was introduced by the conservative Swiss People’s Party MP, Lukas Reimann.

It had already received overwhelming support from legislators in the lower house of parliament in March, with 126 National Council deputies voting in favor, and 46 against. Thomas Minder, counsellor for the state of Schaffhausen and an active promoter of the concept of “Swissness,” said he was eager to “close the topic fast and painlessly” as only “a few lunatics” may want to join the EU now, he told the newspaper. Hannes Germann, also representing Schaffhausen, highlighted the symbolic importance of the vote, comparing it to Iceland’s decision to drop its membership bid in 2015. “Iceland had the courage and withdrew the application for membership, so no volcano erupted,” he said, jokingly.

Australia: “We have nothing else except real estate…”

• Highrise Harry Whispers The Terrible Truth (MB)

Highrise Harry’s media foghorns continue his campaign to abolish foreign buyer stamp duties today at the AFR: “Alluding to remarks by Meriton boss Harry Triguboff that he might have to reduce his apartment prices in the wake of the surcharges, Ms Berejiklian said that, given so many people were worried about housing affordability, the NSW government would be “happy to wear that consequence”. Mr Triguboff labelled the new taxes “very dangerous”, coming as they did on top of moves by the banks to tighten up lending to foreign buyers. He also urged caution in light of the decline of the mining sector. “We have nothing else except real estate. We have to be very careful,” Mr Triguboff told the AFR.” True indeed, Highrise. But that’s why policy must shift away from property and towards the repair of everything else.

Brussels trying to bend Greek sovereign law and legal system.

• EU Pushes Greece To Set Up New Asylum Committees (EUO)

The EU wants Greece to quickly set up new appeals committees to better cope with the large number of asylum requests. “New appeals committees under the new law will be set up in the next 10 days, I am confident that procedures will be accelerated soon,” EU migration commissioner Dimitris Avramopoulos [said]. The Greek commissioner said the government in Athens decided on Tuesday to “upgrade and enhance” the appeals committees. “We salute that the Greek government took that initiative,” he said. The aim was “to speed up judicial procedures to assess all the requests and give prompt answers”. The committees are an essential part of an agreement reached in March between Turkey and the EU for sending back migrants.

So far, dealing with appeals regarding asylum requests has been the job of the so-called backlog committees, created in 2010 to deal with the large number of pending asylum cases in Greece. But these committees were not designed to deal with massive influx, as more than 8,000 migrants are still stranded on the Greek islands. EU officials claim it was always the goal of Brussels and Athens to create new committees to take this burden off the backlog committees. A Greek source told EUobserver however that an amendment to the existing law on appeals committees is still being debated in the Greek parliament, and there is no guarantee that the new committees will be set up the next 10 days.

But the issue has become especially important for EU member states after it emerged that the committees had ruled in 55 cases involving Syrians that the claimant could not be returned back to Turkey. In effect ruling that Turkey is not a safe country. Only in two cases did they agree to send those Syrians back to Turkey. According to an EU source, the first decision by the backlog committees that said Turkey is not a safe country created a major upset in Brussels and in other EU capitals, prompting fears that the EU-Turkey deal could unravel. “They are seen as the enemy of the deal,” the source added.

E.O. Wilson makes a last desperate call.

• Could We Set Aside Half The Earth For Nature? (G.)

As of today, the only place in the universe where we are certain life exists is on our little home, the third planet from the sun. But also as of today, species on Earth are winking out at rates likely not seen since the demise of the dinosaurs. If we don’t change our ways, we will witness a mass extinction event that will not only leave our world a far more boring and lonely place, but will undercut the very survival of our species. So, what do we do? E.O. Wilson, one of the world’s most respected biologists, has proposed a radical, wild and challenging idea to our species: set aside half of the planet as nature preserves. “Even in the best scenarios of conventional conservation practice the losses [of biodiversity] should be considered unacceptable by civilised peoples,” Wilson writes in his new book, Half-Earth: Our Planet’s Fight for Life.

One of the world’s most respected biologists, Wilson is known as the father of sociobiology, a specialist in island biogeography, an expert on ant societies and a passionate conservationist. In the book, Wilson argues eloquently for setting aside half of the planet for nature, including both terrestrial and marine ecosystems. He writes that it’s time for the conservation community to set a big goal, instead of aiming for incremental progress. “People understand and prefer goals,” he writes. “They need a victory, not just news that progress is being made. It is human nature to yearn for finality, something achieved by which their anxieties and fears are put to rest…It is further our nature to choose large goals that while difficult are potentially game-changing and universal in benefit. To strive against odds on behalf of all life would be humanity at its most noble.”

The reason why half is the answer, according to Wilson, is located deep in the science of ecology. “The principal cause of extinction is habitat loss. With a decrease of habitat, the sustainable number of species in it drops by (roughly) the fourth root of the habitable area,” Wilson wrote via email, referencing the species-area curve equation that describes how many species are capable of surviving long-term in a particular area. By preserving half of the planet, we would theoretically protect 80% of the world’s species from extinction, according to the species-area curve. If protection efforts, however, focus on the most biodiverse areas (think tropical forests and coral reefs), we could potentially protect more than 80% of species without going beyond the half-Earth goal. In contrast, if we only protect 10% of the Earth, we are set to lose around half of the planet’s species over time. This is the track we are currently on.

Debt Rattle April 17 2016

Apr 172016

April 17, 2016 Posted by Raúl Ilargi Meijer at 9:35 am Finance Tagged with: 9/11, Brexit, China, Doha, free trade, freeze, Iran, oil, P2P, pope, refugees 4 Responses »

Underwood&Underwood Chicago framed by Gothic stonework high in the Tribune Tower 1952

• South Korea Exports To China Tumble 15.7% In Q1 (Yonhap)

• Chinese P2P Shadow Lender’s Woes Expose Its Global Tentacles (WSJ)

• Doha Oil Freeze Talks Face Last-Minute Trouble (Reuters)

• Iran Central Banker Dismisses Idea Of Oil Output Cut (CNBC)

• Greece’s Creditors Weigh Extra Austerity Measures to Break Deadlock (WSJ)

• Panama and a New Copernican Revolution (Tett)

• Wolfgang Schäuble Warns UK Of Tough Brexit Negotiations (FT)

• BlackRock Wields Its Big Stick Like a Wet Noodle (Morgenson)

• Foreign Investment Turns New Zealand Stock Market Into A Casino (BBG)

• Free Trade Has Won: Adapt Or Die Is The Only Option Left To Us (G.)

• Economists Ignore One of Capitalism’s Biggest Problems (Steve Keen)

• Saudi Arabia Warns of Economic Fallout if Congress Passes 9/11 Bill (NYT)

• Varoufakis Joins French ‘Nuit Debout’ Anti-Labor Reform Protests (AFP)

• Pope Flies 12 Syrian Refugees to Vatican in Potent Symbol for EU (BBG)

China’s strongarming all of eastern Asia into submission to its exports. This could get very ugly.

• South Korea Exports To China Tumble 15.7% In Q1 (Yonhap)

South Korea suffered a 15.7% fall in exports to China in the first quarter this year, data showed Sunday, deepening its overall trade woes. It marks the biggest drop in seven years in South Korea’s outbound shipments to China, its single biggest market. China accounts for about 25% of South Korea’s total exports. Exports to China stood at $28.5 billion in the year’s first three months, down 15.7% from a year earlier, according to the Korea International Trade Association (KITA). By item, exports of semiconductors, flat panel displays, petrochemical products, car parts and synthetic resins recorded notable declines. Experts cited a structural problem and suggested a shift in trade strategy. “Over 70% of South Korean goods exported to China are intermediate goods. China’s demand for those is diminishing,” said Park Jin-woo, head of KITA’s strategic market research office.

“In particular, China is making massive investments and expanding facilities in such sectors as semiconductors, while reducing imports.” He stressed the need for targeting the consumer goods market instead. South Korea’s exports to the United States also sank 3.3% on-year to $16.8 billion in the January-March period and imports were down 4.9% to $10.1 billion. Trade with Japan remains in trouble as well. Exports fell 13.1% to $5.5 billion, representing a double-digit drop for the sixth consecutive quarter, and imports dwindled 11.2% to $10.6 billion. In contrast, exports to Vietnam, which has emerged as South Korea’s third-largest exports market, maintained an upward trend. Exports grew 7.6% to $7 billion, although growth rates showed signs of slowing.

Mom and pop, shadow banking, P2P, Hollywood, Ponzi, it’s all there.

• Chinese P2P Shadow Lender’s Woes Expose Its Global Tentacles (WSJ)

A crisis rocking a loosely regulated lending network is underlining the risks of a financing boom that has channeled Chinese household money into Hollywood movies and Wall Street deals Droves of teary-eyed investors from around China have descended on Shanghai Kuailu Investment Group’s swanky offices over the past week to demand their money back after the firm halted redemptions on wealth-management products for the roughly 250,000 clients of the firm and three affiliates. The uncertainty around investments handled by Kuailu could force a re-evaluation of a financing trend that has become widespread, in the latest knock to a financial system damaged by months of stock-market turmoil and a slowing economy.

Kuailu is one of thousands of finance companies in a universe of Chinese “shadow banks” that funnel investors funds to businesses and individuals, often with an assurance of high returns. Moody’s estimated credit extended by nonbank financing companies in China stood at $370 billion in mid-2015. Many Chinese refer to the diverse industry using English: P2P, as in peer-to-peer lending, though that business of matching small lenders and borrowers is just one segment of operations at Kuailu. Kuailu isn’t the first such lender to leave investors hanging amid recent collapses in the sector. What is distinctive is how its problems are exposing an international dimension to the industry, which bankers said is common but little understood.

The Shanghai firm invested in at least 20 feature films, including the coming release of “The Bombing” starring Bruce Willis, according to the company. Client money holds a slice of a $9 billion deal to privatize NYSE-listed Chinese Internet-security company Qihoo 360 Technology, firm marketing documents show. A crisis-management specialist that Kuailu’s founding chairman this month put in charge of sorting through $1.5 billion in liabilities told the WSJ it wasn’t a Ponzi scheme, a fear some investors have raised with the company. “No cash flow. That’s the issue,” said Xu Qi, who estimated assets cover about 90% of what is owed to investors, but that most of it is tied up in investments or projects that can’t be quickly converted to cash.

Companies like Kuailu got their start in peer-to-peer lending, initially a modest effort to supply money to Chinese households and entrepreneurs that was endorsed by top government officials as a way to power new streams of consumer activity. But crowdsourced lending has quickly expanded and now powers financing across China, from wedding loans to land speculation. Like banks, but with less regulation, such lenders compete aggressively for deposits, often via online platforms. Many attract money faster than they can thoroughly research investments, according to analysts.

B Movie.

• Doha Oil Freeze Talks Face Last-Minute Trouble (Reuters)

A meeting between OPEC and non-OPEC oil producers on an agreement to freeze output ran into last-minute trouble in Qatar on Sunday due to a new request by OPEC’s de facto leader Saudi Arabia, sources told Reuters. Oil ministers were heading into a meeting with the Qatari emir, Sheikh Tamim bin Hamad al-Thani – who was instrumental in promoting output stability in recent months – in an attempt to rescue the deal designed to bolster the flagging price of crude. “There is an issue. Experts are discussing how to find an acceptable solution. I’m confident they will come up with a solution,” one of the sources said. According to another source, Saudi Arabia said it wanted all OPEC members to participate in the talks, despite insisting earlier on excluding Iran because Tehran does not want to freeze production.

Saudi Arabia has taken a tough stance on Iran, the only major OPEC producer to have refused to participate in the freeze. Tehran says it needs to regain market share after the lifting of international sanctions against it in January. Deputy Crown Prince Mohammed bin Salman told Bloomberg that the kingdom would restrain its output only if all other major producers, including Iran, agreed to freeze production. More than a dozen nations inside and outside OPEC have officially confirmed they would attend the meeting in Doha but the role of Iran has been the key issue overhanging the talks. “We have told some OPEC and non-OPEC members like Russia that they should accept the reality of Iran’s return to the oil market,” Iran’s oil minister, Bijan Zanganeh, was quoted as saying by his ministry’s news agency SHANA on Saturday.

Iran will go all out.

• Iran Central Banker Dismisses Idea Of Oil Output Cut (CNBC)

Iran’s top central banker is adding to growing doubts about an agreement to freeze output at a meeting of oil producers in Doha, Qatar on Sunday. Ahead of a pivotal meeting that may determine the near-term outlook for crude prices, Iran on Saturday announced that it would not participate in the conference. The country, still trying to recover from Western sanctions, is seen trying to preserve market share, and has steadfastly resisted any suggestions that Iran should freeze or curb output in order to prop up prices. On the sidelines of an IMF meeting in Washington, D.C., Valiollah Seif, head of Iran’s central bank told CNBC that asking Iran to freeze output right now is unfair.

“What Iran is doing right now is trying to get back and secure its share of the market,” Seif said, adding that “what Saudi Arabia is asking Iran to do is not a very fair [or] logical request.” On several occasions, the leadership of Saudi Arabia has repeatedly said they would agree to an output freeze as long as Iran did too. Currently, analysts believe the two rivals are unlikely to reach a near-term consensus. Seif told CNBC that Iran, as a member of OPEC, has a quota of 2.4 million barrels per day. Under sanctions for its nuclear program, that quota went unfilled.

At the same other members used their output to fill the gap. “And right now, Iran is trying to just take back the quota it is entitled to get, so we are going to do that and this is the main direction of our economy,” Seif added. He went as far as to say other OPEC members are to blame for the sharp fall in oil prices, which are down more than 37% year to date. “This request is coming from those countries which are responsible for this surplus production in the market, because they have exceeded output beyond their quota, and I think this is not fair,” Seif added. He cautioned that this was his personal viewpoint, and the ultimate decision lies with Iran’s oil minister, Bijan Zangeneh.

Predators experimenting on an entire nation.

• Greece’s Creditors Weigh Extra Austerity Measures to Break Deadlock (WSJ)

Greece’s creditors are considering seeking extra austerity measures that would be triggered if Athens misses its fiscal targets, in a bid to bridge differences between Europe and the IMF and break a deadlock threatening to unravel the Greek bailout. Under the proposal, say officials involved in the discussions, Greece would have to sign up to so-called contingency measures of up to about €3 billion, on top of the package of about €5 billion in tax increases and spending cuts Greece and its lenders are already negotiating. The country would only have to implement the extra measures if falls short of targeted budget surpluses for coming years that were set out in last year’s bailout agreement, the officials say.

The idea, which has support from the eurozone’s dominant power Germany, hasn’t yet been agreed upon, and officials on the creditors’ side say it would be politically hard for Greece’s embattled government to swallow. Creditors say the contingency-measures idea could finally overcome the monthslong disagreement between European institutions and the IMF about the outlook for Greece’s budget. That disunity has paralyzed talks about what Greece needs to do to secure a new IMF loan program and unlock rescue funding from Europe. Without billions of euros in fresh bailout funds, Greece faces bankruptcy in July, when large debts fall due. Months of talks without agreement have stoked concern in Europe about another Greek debt drama this summer, reviving fears the country could tumble out of the eurozone.

Athens has argued that imposing even-more austerity measures would go beyond what was agreed in the July 2015 bailout deal, according to people familiar with Athens’s thinking. The deadlock among creditors since last fall stems from Germany’s insistence that Greece get no more money from the eurozone’s bailout fund until the IMF agrees to lend more money too. Since Greece’s bailout odyssey began in 2010, German Chancellor Angela Merkel has insisted IMF involvement is essential. But the IMF is unconvinced by the math of the eurozone’s July 2015 bailout plan for Greece. The fund says it can’t resume lending to Greece unless there is a combination of a credible fiscal plan for Greece and debt relief from Europe.

The creditors and Greece agreeing on a fiscal plan would allow for the start of concrete talks on a second thorny issue: debt relief for Greece. Germany is deeply reluctant to offer much debt relief, but tends to agree with the IMF about the weaknesses of Greece’s budget, rather than with the more upbeat assessments of the European Union’s executive arm, the Commission. The Commission believes around €5 billion of austerity measures would be enough for Greece to hit a key target in the bailout plan: a primary budget surplus, meaning before interest payments, of 3.5% of gross domestic product. But the IMF is more pessimistic about Greek growth and finances. It insists about €8 billion of savings are needed to hit the target. The European side’s proposed measures, the IMF thinks, would only get Greece to a primary surplus of 1.5% of GDP.

Dream on.

• Panama and a New Copernican Revolution (Tett)

The name Nicolaus Copernicus is not usually mentioned in the same breath as corporate tax planning or Mossack Fonseca. This month, however, it probably should be. Six centuries ago, the Polish astronomer formulated a model of the universe that put the sun, rather than the earth, at the centre of the solar system. It was a paradigm shift that led to a transformation in the way that we view the universe. I suspect something similar might be happening with global finance. This month, the International Consortium of Investigative Journalists (ICIJ) published some 11.5 million documents leaked from the Panamanian law firm Mossack Fonseca. Among other things, these gave details about offshore companies the firm created for the elite.

The leak has already provoked a number of political scandals: last week, the Icelandic prime minister resigned after it emerged that he had an offshore company in Panama; and David Cameron, the British prime minister, has faced a steady stream of criticism about an offshore company created by his late father. Meanwhile, revelations about Chinese and Russian billionaires could spark further recriminations. To my mind, it is not just the revelations concerning the rich and famous that make the Panama Papers so fascinating; after all, it is not illegal to create such companies, unless they are used to evade taxes or launder money. Instead, the most interesting issue is whether this leak will create something akin to a Copernican moment.

Think about it. Most of us vaguely know that money flows through offshore centres but the details of this world are very shadowy and opaque. Thus, insofar as any of us have ever tried to visualise the 21st-century “map” of global finance, we assumed that the visible onshore activity was the “sun” that dominated this universe — and offshore finance just a fuzzy little planet, that hovered on the edge. But the Panama Papers have given contours to that fuzzy, offshore world. More specifically, anyone who wants to get a sense of what has been happening in Panama can now go on to the ICIJ website and search those 11.5 million documents with keywords. Try it out at home — it is as simple as a Wikipedia search.

As further details tumble out, it’s not just more names that will be generated but numbers too. Even before the data were readily available, activist groups such as the Tax Justice Network had claimed that some $21tn-$32tn was being stashed in offshore centres, but they had no real way of verifying the figure. With the Panama Papers online, more precise figures could emerge — and with that the ability to compare them with the overall picture of global banking. Could this spark a bigger policy change, such as a crackdown on tax avoidance or money laundering? A cynic might argue not. Remember, powerful vested interests are involved. But if you want to get a sense of what can happen when that mental map flips, think about how attitudes to shadow banking have changed in the past decade.

EU does not rhyme with democracy, and never will. We’re going to see a lot of crazy claims and numbers pre-referendum.

• Wolfgang Schäuble Warns UK Of Tough Brexit Negotiations (FT)

Wolfgang Schäuble, Germany’s finance minister, has warned British chancellor George Osborne that Berlin would be a tough negotiator if the UK votes to leave the EU. Speaking on the sidelines of the IMF spring meetings on Saturday, Mr Schäuble, one of the strongest forces in European politics, also jested that British football teams in a post-Brexit world should be excluded from the European champions league — something not actually linked to EU membership. His confirmation that Germany would not readily agree to an easy trading relationship with Britain after Brexit undermines the Leave campaign’s argument that the UK would be able to secure preferential EU trade deals without freedom of movement of people or the need for Britain to contribute to the EU budget.

The German finance minister, who is known for his unyielding negotiating positions, told German media that he wanted the UK to remain in the EU and did not want to inflame the British debate. But he added that if Britain were to leave, the process would not be easy. The Treasury confirmed that Mr Schäuble told Mr Osborne just how tough negotiations would be after Brexit during a bilateral meeting this weekend — and made the same joke about European football. In Washington this weekend, finance minsters from around the world have gradually been waking up to the possibility that Britain will seek to leave the EU within a matter of months. The IMF said it would wreak “severe damage” to the British and European economies.

Christine Lagarde, the IMF head, admitted this week that while she hoped Europe would avoid having to deal with Brexit, “the continued relationship with other countries in the EU would be at risk”. The difficulties of post-Brexit negotiations will be amplified by elections in Germany and France in 2017, European finance ministers said privately on the sidelines of the IMF meetings. With populist rightwing Eurosceptic parties threatening mainstream politics in both countries, the domestic incentives would prevent concessions to Britain as politicians would need to show their electorates that leaving the EU comes with a heavy price.

Many European officials and ministers have tried to avoid the subject of how they would negotiate with the UK after Brexit, saying instead that they hoped the British people would vote to remain. But some did speak out. Klaus Regling, head of the European Stability Mechanism, said that the leave campaign’s ambition to secure full access to the single market without accepting free movement of people and budget contributions “has never happened in Europe”. “I’m pretty certain [the negotiations ] would take quite a while — two years is not enough — so there would be several years of high uncertainty, which would have a negative impact on the UK economy,” Mr Regling said.

BlackRock and ‘corporate responsibility’.. Yeah, sure.

• BlackRock Wields Its Big Stick Like a Wet Noodle (Morgenson)

For several years, Laurence D. Fink, chairman and chief executive of BlackRock, the money management giant, has been on a crusade, exhorting corporations to change their short-term ways. Executives should forgo tricks that reward short-term stock traders, he argues, like share buybacks purchased at high valuations. Instead, corporate managers should focus on creating value for long-term shareholders. It’s an admirable argument that has won Mr. Fink wise-man status on Wall Street and accolades in the press. Hillary Clinton has echoed his ideas on the campaign trail. Certainly, as the head of BlackRock, Mr. Fink wields an outsize stick. With $4.6 trillion in assets and ownership of shares in roughly 15,000 companies, BlackRock is the world’s largest investment manager.

But if Mr. Fink really wants to get the attention of company executives on stock buybacks and other corporate governance issues, why doesn’t BlackRock vote more often against CEO pay packages of companies that play the short-term game? Executive compensation is inextricably linked to the shareholder-unfriendly actions Mr. Fink has identified; voting against pay packages infected by short-termism would help curb the problem. But BlackRock rarely takes such a stance. From July 1, 2014, to last June 30, according to Proxy Insight, a data analysis firm, BlackRock voted to support pay practices at companies 96.2% of the time. On pay issues, anyway, Mr. Fink’s big stick is more like a wet noodle. BlackRock’s “yes” percentage runs far higher than that of other money managers that express concern about corporate responsibility. Domini Funds supported pay practices only 6% of the time during the period, while Calvert Investments did so at 46% of companies.

As if Auckland real estate wasn’t bad enough yet.

• Foreign Investment Turns New Zealand Stock Market Into A Casino (BBG)

As fund manager Mark Williams deliberated from his London office where next to invest, the world’s most remote stock market was just too good to pass up. That’s worrying locals, 11,000 miles away in New Zealand. The S&P/NZX 50 Index is the world’s best-performing developed stock gauge this year, climbing more than 7% to a record after overseas buying of equities jumped 21% in 2015. That’s driven stock valuations in the South-Pacific nation close to a record high, leaving them more expensive than anywhere else in the region. Funds from Henderson Global Investors to Liontrust Asset Management are buying into New Zealand, lured by dividends almost double the global average, rising earnings and expectations the central bank will cut interest rates to maintain growth.

Yet with a market cap of about $75 billion, smaller than the publicly traded value of Nike, opportunities are becoming more limited, says Matthew Goodson, an Auckland-based investor. “We’ve seen significant offshore inflows into larger-cap stocks and that’s driven their valuations to unusually high levels,” Goodson, who helps oversee about $1 billion at Salt Funds Management, said by phone. “It’s swamped the market and it leaves them very vulnerable. We’re somewhat nervous.” Foreigners now own about one third of New Zealand’s market, about three times the overseas ownership of U.S. equities, according to estimates from brokerage JBWere. Mark Williams, a money manager at Liontrust, is optimistic, given he expects the nation’s central bank will cut its key interest rate from an already record-low 2.25%.

While New Zealand accounts for less than 0.1% of the MSCI All Country World Index, Williams said he has 4.5% of his fund invested in the country. He bought Spark New Zealand and Fletcher Building in March, attracted by dividend yields of more than 5%. Spark, a communications provider, is the largest member by weighting of the S&P/NZX 50 gauge. “We find plenty of opportunities in New Zealand,” Williams, who helps manage $6.7 billion running an Asian equity-income fund at Liontrust, said by phone from London. “Interest rates remain relatively high, so that could lead to further cuts.”

This author gets it spectacularly wrong.

• Free Trade Has Won: Adapt Or Die Is The Only Option Left To Us (G.)

The Tata Steel sale has revived the battle between protectionists and free traders, a debate that became particularly acute in the run-up to the creation of the World Trade Organisation in 1995, which marked the success of “free traders” all around the world. In the protectionist camp, there is now a wide range of political parties from the extreme left to the extreme right: from Syriza to Ukip, from the Front National to Podemos. The common element for all these parties is that they dream of returning to a time when “we were in control”; when we could easily open or close our borders; when the world was manageable and small and we did not have to compromise. That is why they want national rules rather than international ones; and that is also why ultimately most of them despise the EU, because it is based not on direct control but on compromise.

The problem with that notion is that such a cosy world does not exist any more. The new generations expect to talk, travel and trade with each other all over the world, no matter where they are. My children, for example, know more about startup products released for crowdfunding around the world than about what is sold in shops in our high street; they respond to fashions that are created thousands of miles away; and they expect products to reach them almost instantaneously, no matter where they are made. Fluidity, speed, seamlessness and complexity define the 21st century. Fighting those trends makes sense only if you are of such an age and means that you can afford the luxury of whingeing about the present and dreaming nostalgically about the past, but if you are still trying to make your way in life, you have to embrace change and adapt.

Companies are rightly responding as quickly as possible to those new demands and, as a result, we are witnessing a level of international outsourcing that we could never have imagined. “Made in” labels mean little nowadays: companies based in the west often have their production plants elsewhere and use components sourced from third countries; and are financed by investors in yet other countries. If that were not complex enough, when countries impose trade barriers and erect controls, companies simply move overnight. Regulators and governments often do not stand a chance. That does not mean regulators should let modern trade become the Wild West. But it means they need to have the flexibility and tools to react better and faster.

Banks create money out of nothing. They’re not intermediaries.

• Economists Ignore One of Capitalism’s Biggest Problems (Steve Keen)

I like Joe Stiglitz, both professionally and personally. His Globalization and its Discontents was virtually the only work by a Nobel Laureate economist that I cited favourably in my Debunking Economics, because he had the courage to challenge the professional orthodoxy on the “Washington Consensus”. Far more than most in the economics mainstream—like Ken Rogoff for example—Joe is capable of thinking outside its box. But Joe’s latest public contribution—“The Great Malaise Continues” on Project Syndicate—simply echoes the mainstream on a crucial point that explains why the US economy is at stall speed, which the mainstream simply doesn’t get. Joe correctly notes that “the world faces a deficiency of aggregate demand”, and attributes this to both “growing inequality and a mindless wave of fiscal austerity”, neither of which I dispute.

But then he adds that part of the problem is that “our banks … are not fit to fulfill their purpose” because “they have failed in their essential function of intermediation”: Between long-term savers (for example, sovereign wealth funds and those saving for retirement) and long-term investment in infrastructure stands our short-sighted and dysfunctional financial sector… Former US Federal Reserve Board Chairman Ben Bernanke once said that the world is suffering from a “savings glut.” That might have been the case had the best use of the world’s savings been investing in shoddy homes in the Nevada desert. But in the real world, there is a shortage of funds; even projects with high social returns often can’t get financing. I’m the last one to defend banks, but here Joe is quite wrong: the banks have very good reasons not to “fulfill their purpose” today, because that purpose is not what Joe thinks it is.

Banks don’t “intermediate loans”, they “originate loans”, and they have every reason not to originate right now. In effect, Joe is complaining that banks aren’t doing what economics textbooks say they should do. But those textbooks are profoundly wrong about the actual functioning of banks, and until the economics profession gets its head around this and why it matters, then the economy will be stuck in the Great Malaise that Joe is hoping to lift us out of. The argument that banks merely intermediate between savers and investors leads the mainstream to a manifestly false conclusion: that the level of private debt today is too low, because too little private debt is being created right now. In reality, the level of private debt is way too high, and that’s why so little lending is occurring.

I can make the case empirically for non-economists pretty easily, thanks to an aside that Joe makes in his article. He observes that when WWII ended, many economists feared that there would be a period of stagnation: Others, harking back to the profound pessimism after the end of World War II, fear that the global economy could slip into depression, or at least into prolonged stagnation. In fact, the period from 1945 till 1965 is now regarded as the “Golden Age of Capitalism”. There was a severe slump initially as the economy changed from a war footing to a private one, but within 3 years, that transition was over and the US economy prospered—growing by as much as 10% in real terms in some years. (see Figure 1). The average from 1945 till 1965 was growth at 2.8% a year. In contrast, the average rate of economic growth since 2008 to today is precisely zero.

Time for Trump?!

• Saudi Arabia Warns of Economic Fallout if Congress Passes 9/11 Bill (NYT)

Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars’ worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks. The Obama administration has lobbied Congress to block the bill’s passage, according to administration officials and congressional aides from both parties, and the Saudi threats have been the subject of intense discussions in recent weeks between lawmakers and officials from the State Department and the Pentagon. The officials have warned senators of diplomatic and economic fallout from the legislation.

Adel al-Jubeir, the Saudi foreign minister, delivered the kingdom’s message personally last month during a trip to Washington, telling lawmakers that Saudi Arabia would be forced to sell up to $750 billion in treasury securities and other assets in the United States before they could be in danger of being frozen by American courts. Several outside economists are skeptical that the Saudis will follow through, saying that such a sell-off would be difficult to execute and would end up crippling the kingdom’s economy. But the threat is another sign of the escalating tensions between Saudi Arabia and the United States. The administration, which argues that the legislation would put Americans at legal risk overseas, has been lobbying so intently against the bill that some lawmakers and families of Sept. 11 victims are infuriated.

In their view, the Obama administration has consistently sided with the kingdom and has thwarted their efforts to learn what they believe to be the truth about the role some Saudi officials played in the terrorist plot. “It’s stunning to think that our government would back the Saudis over its own citizens,” said Mindy Kleinberg, whose husband died in the World Trade Center on Sept. 11 and who is part of a group of victims’ family members pushing for the legislation. President Obama will arrive in Riyadh on Wednesday for meetings with King Salman and other Saudi officials. It is unclear whether the dispute over the Sept. 11 legislation will be on the agenda for the talks. Saudi officials have long denied that the kingdom had any role in the Sept. 11 plot, and the 9/11 Commission found “no evidence that the Saudi government as an institution or senior Saudi officials individually funded the organization.”

But critics have noted that the commission’s narrow wording left open the possibility that less senior officials or parts of the Saudi government could have played a role. Suspicions have lingered, partly because of the conclusions of a 2002 congressional inquiry into the attacks that cited some evidence that Saudi officials living in the United States at the time had a hand in the plot. Those conclusions, contained in 28 pages of the report, still have not been released publicly. The dispute comes as bipartisan criticism is growing in Congress about Washington’s alliance with Saudi Arabia, for decades a crucial American ally in the Middle East and half of a partnership that once received little scrutiny from lawmakers. Last week, two senators introduced a resolution that would put restrictions on American arms sales to Saudi Arabia, which have expanded during the Obama administration.

French protests have been going on for a while. Not sure Yanis should desire a role in this.

• Varoufakis Joins French ‘Nuit Debout’ Anti-Labor Reform Protests (AFP)

Former Greek finance minister Yanis Varoufakis on Saturday addressed opponents of the French government’s workplace reforms at a protest in Paris, telling them the planned changes would “devalue labor.” “He (French President Francois Hollande) wants to devalue French labor… it can’t work,” Varoufakis told protesters as he paid a visit to the latest “Nuit Debout” (Up All Night) gathering at the city’s vast Place de la Republique. “Devaluing French labor can only deepen the crisis… I’m bringing to you solidarity from Athens,” he told the crowd. The labor reforms of France’s Socialist government aim to make it easier for struggling companies to fire people.

The government says they will make France’s rigid labor market more flexible but opponents say the reforms are too pro-business and will fail to reduce the 25% jobless rate among the young. Hundreds, at times thousands, of people have been demonstrating every night for the past two weeks at the Place de la Republique in central Paris. The labor reforms are a unifying theme of the gatherings but the so-called “Nuit Debout” movement is broader, embracing a range of anti-establishment grievances. The nightly protests have been marred by sporadic violence. The latest clashes erupted late Friday when, according to police, some 100 protesters set rubbish on fire and threw bottles and stones at officers, who responded with tear gas. Twenty-two people were arrested. The “Nuit Debout” demonstrations have spread to cities across France, becoming a major headache for the government.

I still can’t muster much enthousiasm about this. He should have used much harsher words. There are still 3,000 people locked up there, including many children.

• Pope Flies 12 Syrian Refugees to Vatican in Potent Symbol for EU (BBG)

Pope Francis made an emotional visit to the Greek island of Lesbos Saturday, plucking 12 Syrian refugees to take back to Rome with him and draw attention to what he called Europe’s most serious humanitarian crisis since the end of World War II. Francis, who has made migration a defining issue of his papacy, visited a refugee center as he appealed to the international community to deal with the migrants crisis as a humanitarian catastrophe. The pope said there was “reason to weep” on his visit to the refugees, and he brushed aside any political reasons for his invitation to have three families from Syria, 12 people including six children, accompany him on the flight home. “It is a purely humanitarian thing,” he told reporters on his chartered plane.

The Vatican will take financial responsibility for the families and an organization of volunteers, Comunità di Sant’Egidio, will initially host the groups, according to a statement. During the five-hour visit to Lesbos, the pontiff visited a refugee center with Ecumenical Patriarch Bartholomeos, the spiritual leader of the Orthodox Church, and was welcomed by Greek Prime Minister Alexis Tsipras. He also criticized the use of walls to keep migrants out. “In reality, barriers create divisions instead of promoting the true progress of peoples, and divisions sooner or later lead to conflicts,” Francis said in a speech at the port of Lesbos.

The visit was made days after migrants to Greece started being sent back to Turkey under a European Union agreement that has been criticized by the Vatican and denounced by human rights groups as impractical and legally suspect. Lesbos has become a repository for migrants seeking a better life in the EU: there were 3,560 refugees on the island as of Wednesday morning with more arriving each day, according to a daily tally issued by the Greek authorities. As he began the journey to Greece, the pope told reporters on his flight that the trip is marked by sadness. “This is important. It is a sad trip,” he said. “Refugees are not numbers, they are people who have faces, names, stories and need to be treated as such,” the pontiff said through his Twitter account.

Debt Rattle April 4 2016

Apr 042016

April 4, 2016 Posted by Raúl Ilargi Meijer at 9:26 am Finance Tagged with: free trade, Greece, IMF, negative rates, Panama Papers, Poroshenko, push back, refugees, Turkey 4 Responses »

Harris&Ewing Kron Prinz Wilhelm, German ship, interned in US in tow 1916

• Panama Papers “100 Times Bigger Than Wikileaks” (Fusion)

• Corporate Media Gatekeepers Protect Western 1% From Panama Leak (Murray)

• ‘Panama Papers’ Leak Spells Danger For Tax Havens, World Leaders (CNBC)

• Iceland PM Faces No Confidence Vote After Panama Papers Disclosure (BBG)

• Panama Papers Reveal Ukraine President Poroshenko’s Voter Betrayal (OCCRP)

• In Brexit Warm Up, Dutch To Vote on EU Treaty With Ukraine (Reuters)

• Trump’s Prediction Of ‘Massive Recession’ Puzzles Economists (Reuters)

• BOJ Negative Rates Destroy Interbank Loan Market as Freeze Deepens (BBG)

• An Inconvenient Truth About Free Trade (BBG)

• Britain’s Free Market Economy Isn’t Working (G.)

• UK Housing Policy ‘Tantamount To Social Cleansing’ (Ind.)

• There Has To Be A Better Way (Steve Keen)

• Rescuing Europe’s Worst Government Bonds May Take More Than ECB (BBG)

• Greece’s Euro Future May Be Back in Play as Rescue Talks Drag On (BBG)

• Italy, Not UK is European Union’s Weakest Link (Reuters)

• IMF Chief Says Greece Plan ‘Good Distance Away’ (AFP)

• Sordid Wrangling Between IMF and EU Shows Greek Democracy Is Dead (E.)

• EU Begins Refugee Push-Back, Defying Human Rights Outcry (WaPo)

The Panama Papers are a huge issue, with many names being named and more suggested. We’re more or less promised revelations about US angles soon, which are absent. But what does the Guardian open with today? A photo of Vladimir Putin, who’s NOT in the papers, but is linked to a violinist he knows, who is. Poroshenko is named, the Iceland PM is, the Saudi king, Cameron’s dad, Xi Jinping, and many others. But the Guardian opens with Putin. There goes the last bit of credibility. Western media propaganda has gone beyond shameless.

• Panama Papers “100 Times Bigger Than Wikileaks” (Fusion)

One April morning in 2014, Jurgen Mossack, the tall, German-born co-founder of the prominent Panama City law firm Mossack Fonseca, shot off an agitated email with the subject line “Serious Matter URGENT” to three top members of his staff. There was trouble brewing in the British Virgin Islands, a “secrecy jurisdiction” whose white-sand beaches and blue Caribbean waters conceal a barely-regulated haven for people who wish to create shell corporations. Many of those people employ Mossack Fonseca to perform precisely this service. “Swindled investors call the office constantly. We need to resign from this company immediately,” Mossack wrote. “At any moment, the police arrive, and we end up in the newspapers.”

As a “registered agent,” Mossack Fonseca provides the paperwork, signatures, and mailing addresses that breathe life into shell companies established in tax havens around the world – holding companies that often create nothing and sell nothing, but shelter assets with maximum concealment and a minimum of fuss. Jurgen wanted to pull the plug on representing one such firm that was raising red flags. For weeks, investors in an entity called Swiss Group Corporation had been contacting Mossack Fonseca, wondering why their annuity payments had suddenly stopped, why they had received only vague emails, whether they had been a victim of a fraud. “Swiss Group Corp. has shown no transparency in their processes,” one woman wrote from Colombia on March 31, 2014, “and now, I am worried about the investment I made 5 years ago, which is my only means of living.”

Mossack instructed his underlings to “Please do what you have to do,” – and then, he added: “Use the telephone!” Weeks after Jurgen issued his stern orders, queries continued to pour in from investors – including one woman who identified herself as a U.S. citizen, and others from Colombia and Bolivia. They were still groping in the dark, searching for shreds of information in the same black hole of offshore finance that routinely stumps tax authorities, law enforcement officials, and asset-tracers across the globe. By one estimate – based on data from the World Bank, IMF, UN, and central banks of 139 countries – between $21 and $32 trillion is hiding in tax havens, more than the United States’ national debt. That study didn’t even attempt to count money from fraud, drug trafficking and other criminal transactions whose perpetrators gravitate toward the same secret hideouts.

Mossack and his business partner Ramon Fonseca, a powerful political leader and best-selling author in Panama, are captains in an offshore industry that has had a major impact on the world’s finances since the 1970s. As their business has grown to encompass more than 500 employees and collaborators, they’ve expanded into jurisdictions around the world – including parts of the United States. But a new trove of secret information is shining unprecedented light on this dark corner of the global economy. Fusion analyzed an archive containing 11.5 million internal documents from Mossack Fonseca’s files, including corporate records, financial filings, emails, and more, extending from the firm’s inception in 1977 to December 2015.

The documents were obtained by the German newspaper Süddeutsche Zeitung and shared with Fusion and over 100 other media outlets by the International Consortium of Investigative Journalists (ICIJ) as part of the Panama Papers investigation. The massive leak is estimated to be 100 times bigger than Wikileaks. It’s believed to be the largest global investigation in history.

The world’s biggest ‘offshore industry’ is in the US these days. Delaware. Nevada. South Dakota.

• Corporate Media Gatekeepers Protect Western 1% From Panama Leak (Murray)

Whoever leaked the Mossack Fonseca papers appears motivated by a genuine desire to expose the system that enables the ultra wealthy to hide their massive stashes, often corruptly obtained and all involved in tax avoidance. These Panamanian lawyers hide the wealth of a significant proportion of the 1%, and the massive leak of their documents ought to be a wonderful thing. Unfortunately the leaker has made the dreadful mistake of turning to the western corporate media to publicise the results. In consequence the first major story, published today by the Guardian, is all about Vladimir Putin and a cellist on the fiddle. As it happens I believe the story and have no doubt Putin is bent. But why focus on Russia? Russian wealth is only a tiny minority of the money hidden away with the aid of Mossack Fonseca.

In fact, it soon becomes obvious that the selective reporting is going to stink. The Suddeutsche Zeitung, which received the leak, gives a detailed explanation of the methodology the corporate media used to search the files. The main search they have done is for names associated with breaking UN sanctions regimes. The Guardian reports this too and helpfully lists those countries as Zimbabwe, North Korea, Russia and Syria. The filtering of this Mossack Fonseca information by the corporate media follows a direct western governmental agenda. There is no mention at all of use of Mossack Fonseca by massive western corporations or western billionaires – the main customers. And the Guardian is quick to reassure that “much of the leaked material will remain private.”

What do you expect? The leak is being managed by the grandly but laughably named “International Consortium of Investigative Journalists”, which is funded and organised entirely by the USA’s Center for Public Integrity. Their funders include Ford Foundation, Carnegie Endowment, Rockefeller Family Fund, W K Kellogg Foundation, Open Society Foundation (Soros) among many others. Do not expect a genuine expose of western capitalism. The dirty secrets of western corporations will remain unpublished. Expect hits at Russia, Iran and Syria and some tiny “balancing” western country like Iceland. A superannuated UK peer or two will be sacrificed – someone already with dementia. The corporate media – the Guardian and BBC in the UK – have exclusive access to the database which you and I cannot see.

They are protecting themselves from even seeing western corporations’ sensitive information by only looking at those documents which are brought up by specific searches such as UN sanctions busters. Never forget the Guardian smashed its copies of the Snowden files on the instruction of MI6. What if they did Mossack Fonseca database searches on the owners of all the corporate media and their companies, and all the editors and senior corporate media journalists? What if they did Mossack Fonseca searches on all the most senior people at the BBC?

What if they did Mossack Fonseca searches on every donor to the Center for Public Integrity and their companies? What if they did Mossack Fonseca searches on every listed company in the western stock exchanges, and on every western millionaire they could trace? That would be much more interesting. I know Russia and China are corrupt, you don’t have to tell me that. What if you look at things that we might, here in the west, be able to rise up and do something about? And what if you corporate lapdogs let the people see the actual data?

Hmmm.. We wonder how deep the impact will be..

• ‘Panama Papers’ Leak Spells Danger For Tax Havens, World Leaders (CNBC)

A huge leak of documents that implicate government heads in the setting up of “shell” companies to harbor billions of dollars is set to cause upheaval on offshore hubs and shake up global political governance. A team of journalists from around the world published what they called the “Panama Papers” on Sunday—more than 11.5 million encrypted internal documents from Mossack Fonseca, a Panamanian law firm. An anonymous source began supplying the documents— dated from the 1970s to 2016—to German newspaper Süddeutsche Zeitung (SZ) a year ago. SZ assembled a group of media organizations, including the International Consortium of Investigative Journalists (ICIJ), The Guardian, the BBC and Le Monde, to analyze the data, before simultaneously releasing their findings.

Calling the leak “the biggest that journalists had ever worked with,” SZ said the documents revealed numerous shadowy financial transactions via offshore companies created by Mossack Fonseca. The law firm, who has more than 40 offices worldwide, specialized in the sale of anonymous offshore companies, known as shell firms. According to SZ’s findings, 12 current and former heads of state, 200 other politicians, as well as members of various Mafia organizations, plus football stars, 350 major banks, and hundreds of thousands of regular citizens were among Mossack Fonseca’s clients. It is important to note that owning an offshore company is not illegal in itself, but SZ alleged that concealing the identities of the true company owners was the law firm’s primary aim in the bulk of cases.

While people often legitimately move funds to countries outside their national boundaries to access more relaxed financial regulations, offshore companies are also commonly associated with tax evasion as well as serious illicit activities such as money laundering. Argentine President Mauricio Macri, Iceland’s Prime Minister Sigmundur David Gunnlaugsson, Saudi Arabia’s King Salman, U.A.E President Sheikh Khalifa and Ukrainian President Petro Poroshenko are among those named in the documents as having set up shell companies, according to SZ. Relatives and associates of other leaders, including Russia’s Vladimir Putin, China’s Xi Jinping, Syria’s Bashar Assad and Britain’s David Cameron, were also identified by the team of reporters that examined the documents. Other prominent Asian officials named in the reports included Anuraj Kerjiwal, the former head of Indian political party Lok Sattam, as well as Cambodia’s Minister of Justice.

Okay, this doofus is gone. What a dork.

• Iceland PM Faces No Confidence Vote After Panama Papers Disclosure (BBG)

Icelandic Prime Minister Sigmundur D. Gunnlaugsson faces a no confidence vote in parliament amid revelations he and his wife had an investment account in the British Virgin Islands created with the aid of the Panama-based law firm at the center of a global tax evasion leak. The opposition has called for a vote against the government as parliament begins its session at 3 p.m. local time. Protests are scheduled in Reykjavik starting two hours later. Gunnlaugsson, who took office in 2013, finds himself in the middle of a political storm after it was revealed in a leak uncovered by the International Consortium of Investigative Journalists, or ICIJ, that he and his wife had an offshore account to manage an inheritance. His wife, Anna Sigurlaug Palsdottir, previously revealed the account in a Facebook posting in March after the premier was questioned about the money.

According to the ICIJ report, Pálsdóttir says she has always paid all her taxes owed on the Wintris account, which was confirmed by her tax firm, KPMG. ICIJ cited a leak covering documents spanning leaders and businesses across the globe from 1977 to 2015 from Panama-based law firm Mossack Fonseca, a top creator of shell companies that has branches in Hong Kong, Miami, Zurich and more than 35 other places around the world. “As has been explained publicly, in establishing this company, the Prime Minister and his wife have adhered to Icelandic law, including declaring all assets, securities and income in Icelandic tax returns since 2008,” a Gunnlaugsson spokesman said in a statement to the ICIJ. The premier was one of 12 current and former world leaders to have offshore holdings revealed in the leak that has come to be called the Panama Papers. Offshore holdings can be legal, though documents show some banks, law firms failed to follow requirements to check their clients are not involved in crimes.

“..the candy magnate was more concerned about his own welfare than his country’s – going so far as to arguably violate the law twice, misrepresent information and deprive his country of badly needed tax dollars during a time of war.”

• Panama Papers Reveal Ukraine President Poroshenko’s Voter Betrayal (OCCRP)

When Ukrainian President Petro Poroshenko ran for the top office in 2014, he promised voters he would sell Roshen, Ukraine’s largest candy business, so he could devote his full attention to running the country. “If I get elected, I will wipe the slate clean and sell the Roshen concern. As President of Ukraine I plan and commit to focus exclusively on welfare of the nation,” Poroshenko told the German newspaper Bild less than two months before the election. Instead, actions by his financial advisers and Poroshenko himself, who is worth an estimated $858 million, make it appear that the candy magnate was more concerned about his own welfare than his country’s – going so far as to arguably violate the law twice, misrepresent information and deprive his country of badly needed tax dollars during a time of war.

Poroshenko did this by setting up an offshore holding company to move his business to the British Virgin Islands (BVI), a notorious offshore jurisdiction often used to hide ownership and evade taxes. His financial advisers say it was done through BVI to make Roshen more attractive to potential international buyers, but it also means Poroshenko may save millions of dollars in Ukrainian taxes. In one of several ironic twists in this story, the news about the president’s offshore comes as the Ukrainian government is actively fighting the use of offshores, which one organization says are costing Ukraine $11.6 billion a year in lost revenues.

Details about the Roshen deal can be found in the Panama Papers, documents obtained from a Panama-based offshore services provider called Mossack Fonseca. The documents were received by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists (ICIJ) with the Organized Crime and Corruption Reporting Project (OCCRP). And in a more painful irony, the Panama Papers reveal that Poroshenko was apparently scrambling to protect his substantial financial assets in the BVI at a time when the conflict between Russia and Ukraine had reached its fiercest.

Dutch anti-Putin propaganda is as strong as any, but people still don’t like supporting Ukraine’s corrupt system. As now represented by Poroshenko.

• In Brexit Warm Up, Dutch To Vote on EU Treaty With Ukraine (Reuters)

Dutch voters will decide on Wednesday whether to support a European treaty deepening ties with Ukraine in a referendum that will test sentiment toward Brussels ahead of Britain’s June Brexit vote and could also bring a boost for Russia. The broad political, trade and defense treaty is already provisionally in place but has to be ratified by all 28 European Union member states for every part of it to have full legal force. The Netherlands is the only country that has not done so. While a “no” vote in the non-binding referendum would not force the Dutch government to veto the treaty on an EU level the fragile coalition, which holds the rotating EU presidency, might find it hard to ignore with less than a year to general elections.

[..] An EU decision to push on with the treaty despite a “no vote”, whether the government respects it or not, could be damaging for the EU and highlight EU problems ahead of the British vote. “If politicians ignore the Dutch no then it will be an even stronger signal than what the British have already received that there is no way to correct the European political class and that they should vote to leave,” said Thierry Baudet, a “no” campaigner and one of the architects of the referendum that was triggered when activists gathered thousands of signatures of support.

Many Dutch feel they are being asked to choose between two unattractive options: EU expansion plans dreamed up by unaccountable bureaucrats in Brussels or helping Russian Putin who they blame for the MH17 plane disaster which killed almost 200 Dutch citizens in July 2014. A poll by Maurice De Hond on Sunday forecast that 66% of people certain to vote, would back ‘No’ with only 25% in favor, with turnout likely to be decisive in shaping the final result. Pollsters TNS Nipo have forecast turnout of 32%, just above the 30% threshold that is needed for the referendum to be valid.

The hastily gathered ‘expert’ comments are so lame Trump doesn’t even need to comment.

• Trump’s Prediction Of ‘Massive Recession’ Puzzles Economists (Reuters)

Donald Trump’s prediction that the U.S. economy was on the verge of a “very massive recession” hit a wall of skepticism on Sunday from economists who questioned the Republican presidential front-runner’s calculations. In an interview with the Washington Post published on Saturday, the billionaire businessman said a combination of high unemployment and an overvalued stock market had set the stage for another economic slump. He put real unemployment above 20%. “We’re not heading for a recession, massive or minor, and the unemployment rate is not 20%,” said Harm Bandholz, chief U.S. economist at UniCredit Research in New York. The official unemployment rate has declined to 5% from a peak of 10% in October 2009, according to government statistics.

But a different, broader measure of unemployment that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment is at 9.8%. Coming off a difficult week of campaigning, in which he acknowledged he struggled to articulate his position on abortion among other missteps, Trump’s comments to the Post might be some of his most bearish on the economy and financial markets. “I think we’re sitting on an economic bubble. A financial bubble,” he said. Some economists agree the stock market is in a period of overvaluation but do not see that as foretelling a cataclysmic economic downturn originating in the United States.

“Nobody can predict what the stock market is going to do,” said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University. “I cannot predict a stock market crash, so I cannot predict a recession. I don’t see any of the reasons for a recession going forward unless there is a huge problem with the market or there is some catastrophic world event which is beyond the scope of economics.” Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo, put the probability of an imminent recession at less than 10%. “If it happens, it would be because of what is happening overseas, especially in China and Europe,” he said.

Negative rates are perverse.

• BOJ Negative Rates Destroy Interbank Loan Market as Freeze Deepens (BBG)

The freeze in Tokyo’s market for overnight loans looks set to extend into a third month as the Bank of Japan’s negative rate policy makes it harder for brokers to price and process transactions. Two months after the BOJ said it would start charging interest on some lenders’ reserves, the outstanding balance in the interbank call market tumbled to a record low 2.97 trillion yen ($27 billion) on March 31, according to Tanshi Kyokai data going back to 1988. While the brokers association and the Japan Securities Depository Center said two weeks ago they had upgraded systems to settle transactions at sub-zero yields, traders say more than technical issues are preventing a revival.

“Among central banks, the BOJ is the one that destroys functioning markets the most,” said Izuru Kato, the president of Totan Research in Tokyo. “Companies will slash staff and scale back operations where activity is grinding to a halt, exposing markets to spikes in rates when the time comes for normalization.” The disruption to Japan’s ground zero for bank funding coincides with a collapse in bond-market trading over the past year, even as the BOJ’s hoarding of notes has left it nowhere near achieving its 2% inflation target three years after Haruhiko Kuroda became governor. When questioned by a lawmaker in parliament last month, Kuroda agreed that it would be theoretically possible to lower rates to minus 0.5%, from the current minus 0.1%.

It’s high time to have this talk.

• An Inconvenient Truth About Free Trade (BBG)

It’s easy to scoff at the anti-free-trade rhetoric emanating from the U.S. presidential campaign trail. Donald Trump keeps yelling about China, Mexico, and Japan. Bernie Sanders won’t stop shouting about greedy multinational corporations. Hillary Clinton, Ted Cruz, and John Kasich are awkwardly leaning in the same direction. If you’re a typical pro-trade business executive, you’re tempted to ask: Were these people throwing Frisbees on the quad during Econ 101? A recent article in the National Review expressed disdain by blaming a swath of America for its own problems, attributing Trump’s success to a “white American underclass” that’s “in thrall to a vicious, selfish culture whose main products are misery and used heroin needles.” Wait. Trump and Sanders may be clumsy and overly dramatic, and their solutions may be misbegotten, but they’re on to something real.

New research confirms what a lot of ordinary people have been saying all along, which is that free trade, while good overall, harms workers who are exposed to low-wage competition from abroad. Ignoring this damage—or pretending that it’s being cured through “redistribution” of gains—undermines the credibility of free traders and makes it harder to win trade liberalization deals. “Economists, for whatever odd reason, tend to close ranks when they talk about trade in public” for fear of giving ammunition to protectionists, says Dani Rodrik, an economist at Harvard’s Kennedy School of Government. “There’s a sense that it will feed the barbarians.” The theory of comparative advantage that’s taught to college freshmen is impossibly clean: It’s all about specialization. England trades its cloth for Portugal’s wine.

Even if Portugal is slightly better at producing cloth than England is, it should focus on what it’s best at, winemaking. Portuguese who lose their jobs making cloth will readily find new ones making wine. Efficiency improves. Everyone wins. Life is more complicated. For example: In times of slack global demand, countries grab more than their fair share of the available work by boosting exports and limiting imports. Perpetual trade deficits leave one country deep in hock to another, threatening its sovereignty. Financial bubbles form when deficit countries are overwhelmed by hot money inflows. Countries restrict trade for strategic reasons, such as to nurture an infant industry, to punish a rival, or to guarantee a domestic source for sensitive military hardware and software.

Nation-states may not appear in intro econ, but they call the shots in the real world. Even setting aside geopolitics, trade creates losers as well as winners. Back in 1941, economists Wolfgang Stolper and Paul Samuelson pointed out that unskilled workers in a high-wage country would suffer losses if that country opened up to imports from a low-wage nation. (The prestigious American Economic Review rejected the paper, calling it a complete sell-out to protectionists.) American support for free trade was strong for most of the 20th century. The Stolper-Samuelson theorem was of mainly theoretical interest because most U.S. trade was with other developed nations. Besides, economic textbooks assured students that losers from trade could be compensated with a portion of society’s gains.

“At the end of the 1990s, imports accounted for 40% of UK demand for basic metals; import penetration is now at 90%.”

• Britain’s Free Market Economy Isn’t Working (G.)

Last week should have been a good one for George Osborne. The first day of April marked the day when the ”national living wage” came into force. The idea was championed by the chancellor in his 2015 summer budget when he said it was time to “give Britain a pay rise”. Unfortunately for the chancellor, the 50p an hour increase in the pay floor for workers over 25 was completely overshadowed by the existential threat to the steel industry posed by Tata’s decision to sell its UK plants. Instead of being acclaimed by a grateful nation, Osborne found his handling of the economy under fire. The fact that official figures showed that Britain has the highest current account deficit since modern records began in 1948 did not help. At one level, all seems well with the economy. Growth was revised up for the fourth quarter of 2015 to 0.6% and is running at an annual rate of just over 2% – close to its long-term average and higher than in Germany, France or Italy.

Two of three key sectors of the economy are struggling, though. Industrial production and construction have yet to recover the ground lost in the recession of 2008-09, leaving the economy dependent on services, which accounts for three-quarters of national output. Digging beneath the surface glitter shows just how unbalanced and unsustainable the economy has become. Growth is far too biased towards consumer spending. Borrowing is going up and imports are being sucked in. An enormous current account deficit and a collapse in the household saving ratio are usually consistent with the economy in the last stages of a wild boom rather than one trundling along at 2%. A little extra digging provides the explanation, with some alarming structural flaws quickly emerging.

Here are two pieces of evidence. The first, relevant to the debate about the future of the steel industry, comes from an investigation by the left of centre thinktank, the IPPR, into the state of Britain’s foundation industries. Foundation industries supply the basic goods – such as metal and chemicals – used by other industries. They have been having a tough time of it across the developed world, but the decline has been especially pronounced in the UK. Since 2000, the share of GDP accounted for by foundation industries has fallen by 21% across the rich nations that belong to the OECD but by 43% in Britain. At the end of the 1990s, imports accounted for 40% of UK demand for basic metals; import penetration is now at 90%. Clearly, this trend will become even more marked if the Tata steel plants close.

The second piece of evidence comes from a joint piece of research from the innovation foundation Nesta and the National Institute for Economic and Social Research being published on Monday. This found that productivity weaknesses are common across the sectors of the UK economy, but particularly marked among newly formed companies. Fledgling firms tend to be less efficient on average, but the report said that in the years since the recession performance had been unusually poor among startups. Since the economy emerged from recession, the growth of highly productive companies has been curbed and there has also been a slowdown in the number of under-performing businesses contracting in size. This helps explain why Britain has an 18% productivity gap with the other members of the G7 group of industrial nations.

Now we’re talking.

• UK Housing Policy ‘Tantamount To Social Cleansing’ (Ind.)

Charities and politicians are demanding urgent changes to housing policy across Britain and warning that thousands of homeless children’s lives may be at risk because they are disappearing from support services after being rehoused. The calls come after an investigation by The Independent uncovered cases of homeless children dying from neglect and abuse after families were moved out of their local authority boundaries. Other evidence in the report suggested that the transfer of homeless families to other parts of the country could have resulted in suicides and miscarriages.

Councils are shunting homeless families out of their local areas on an unprecedented scale to save money on accommodation, as the legacy of the housing crisis and the the Government’s cuts to welfare are felt, but they are frequently neglecting to share records with each other, meaning thousands of vulnerable women and children are completely off the radar of support services. Figures obtained exclusively by The Independent show that at least 64,704 homeless families were moved out by London boroughs between July 2011 and June 2015, with more recent data yet to be collated. The Independent’s research suggests at least one third of families are moved without information being shared with the receiving council, though it is not known how high that figure could potentially be.

Councils are legally obliged to send notification under Section 208 of the Housing Act 1996. Housing and children’s charities are now calling for an urgent review of the practice. Barnardo’s chief executive Javed Khan told The Independent: “Children’s lives can be put at risk if homeless families fall off the radar of authorities.” “[Councils must] share information more effectively to stop that happening”. Shelter’s chief executive Campbell Robb said that out-of-area moves are “far too common and can have a disastrous effect on health and wellbeing” but that one problem is the Government not giving councils “realistic budgets to find accommodation locally”.

“We should follow the other Marx — Groucho — and apply the rule that no-one who actually wants the top job should get it.” As I’ve said many times, our ‘democratic’ structures self-select for the very last people you should want to hold the jobs.

• There Has To Be A Better Way (Steve Keen)

One of the disadvantages of growing up is finding in your old age that people you never took seriously in your youth are now running your country. In my personal case, I’m speaking about Tony Abbott and Malcolm Turnbull – but if I’d gone to University at the same time and place as Kevin Rudd, I’m sure I’d be speaking about him too. I knew Abbott and Turnbull in their Sydney University days: they were both active student politicians, while I was one of the leaders of the student revolt against the economics curriculum there. Abbott and Turnbull both tried to play a role in this “political economy” dispute – and their approach then mirrors their styles today. One believed he knew the word of God, while the other believed he was God. Abbott tried to defeat what he described, in his peculiar nasal drawl, as “the Maarxists” behind the protests.

He went beyond speaking against us at meetings and voting against us on the Students Representative Council to, shall we say, robust attempts to stop us putting up posters in the dead of night. He failed. He lost the votes in public forums and on the SRC. The posters went up, and most of them stayed up – my favourite stayed for years, because we cleaned it into the tarnished copper cladding of the library stack. Turnbull tried to reach a negotiated settlement between the warring sides: a majority of the students and (a substantial segment of the staff) on one side, and the professors Hogan and Simkin and Vice-Chancellor Williams on the other. He failed too. At a meeting where I was one of two invited student speakers, the economics faculty voted, against the professors’ wishes, for an inquiry into the Department of Economics.

The inquiry recommended, against the Vice Chancellor’s wishes, that the department should be split in two. This occurred in 1975 with the formation of the Department of Political Economy, which still exists today. So Turnbull and Abbott were bit players in that drama, but of course their eyes were set on a bigger role: that of becoming prime minister of Australia, as they both have now done. We knew those ambitions back in the 1970s too, and we laughed. It turned out to be no laughing matter so far as their ambitions went, but for the country itself, their success — and that of Rudd before them, and frankly many others — was a crying shame. Their one qualification for the top job was the unshakable belief that they deserved it. That self-belief, and the drive that went with it, carried them all — Rudd included — to the top.

This time it’s Portugal. Worse than Greece. Political distortions engendered by Draghi.

• Rescuing Europe’s Worst Government Bonds May Take More Than ECB (BBG)

It’s gone from bad to the worst for investors in Portuguese bonds. While government debt in the euro region posted the biggest quarterly returns since the ECB started its quantitative easing program a year ago, holders of Portuguese securities were left nursing a loss. Political wrangling to form a government and then a shift in budget policy have been dragging down the market more than in Spain, which is still without an elected government, or even Greece, a byword for crisis. Portuguese bonds lost 1.3% in the three months through March 31, compared with an average gain of 3.3% in the euro area, according to Bloomberg World Bond Indexes. Greece managed to eek out a 0.4% return.

“The situation in Portuguese bonds has been compromised by the election result and the instability that came after,” said Gianluca Ziglio at Sunrise Brokers in London. “That creates uncertainty with potential impact on the rating.” While Portugal’s bonds have also benefited from the ECB’s expansion of its asset-purchase program by €20 billion a month starting April, they have had a torrid year as investors avoided what they consider the riskiest assets. The issue is that Portugal’s prospects just look gloomier compared with neighboring Spain, even without their respective political battles. Portugal’s economy is forecast to grow 1.5% this year compared with 2.7% in Spain and 4.7% in Ireland.

Another country that had to resort to a bailout at the height of the sovereign debt crisis, Ireland last week sold a bond that matures in a century at 2.35%. Portugal has to pay about 3% just to borrow for a decade. Portugal is rated below investment grade, or junk, by Fitch Ratings, Moody’s Investors Service and Standard & Poor’s. It’s only the grading by DBRS Ltd., which is scheduled to next review its position on April 29, that gives the country enough creditworthiness to qualify for purchases under the ECB’s QE program.

Yeah, why not?! Let’s do it all over again.

• Greece’s Euro Future May Be Back in Play as Rescue Talks Drag On (BBG)

Greece could again face the threat of being pushed into default and out of the euro area if its current bailout review drags on into June and July, according to European officials monitoring the slow progress of Prime Minister Alexis Tsipras’s negotiations with creditors. Greece still hasn’t cut a deal on pensions, tax administration or its fiscal gap, and other issues like non-performing loans and a proposed privatization fund continue to slow the talks, said European officials. The IMF presents another obstacle, they said. The IMF, for its part, disagrees with the euro area on how Greece needs to cut its budget. With Germany insisting that the fund will eventually have to get on board for the bailout to proceed, officials from the IMF are trying to find ways to pressure Chancellor Angela Merkel to give Greece debt relief, according to a transcript of a purported conversation published by WikiLeaks April 2.

The euro area’s most-indebted member was almost forced out of the currency union last July before national leaders agreed to a third bailout package after all-night talks in Brussels. Merkel helped break the logjam then, warning it would be reckless and sow chaos to let Greece slip away from the currency union. While European officials have talked up the prospects for the review in public recently, all sides have harbored doubts from the get-go about whether Greece could meet the strict budget goals at the heart of last year’s rescue. Those concerns have increased as Tsipras’s Syriza party has lost allies and the European Commission and the ECB have faced stepped up demands from IMF negotiators.

“My odds for another Greek crisis this summer are relatively high,” said Carsten Brzeski, chief economist at ING Diba in Frankfurt. “Given the extremely slow pace of the implementations, the review, Syriza’s loss of popularity in opinion polls and still little appetite for debt relief, the next crisis is already in the making. It’s only a matter of time before it happens.”

The entire south is the weakest link.

• Italy, Not UK is European Union’s Weakest Link (Reuters)

The drama of the European Union can’t yet be called a tragedy, but it’s shaping up that way. What started out as the salvation of a continent from the horrors of the first half of its 20th century is now — after decades of optimistic growth lofty proclamations — toiling miserably merely to exist. Dramatic tragedy is the collapse of high status and ambition: The EU grasped after greatness, achieved much – and is now perilously close to losing all. The most obvious challenges from within come, first, from the always semi-detached British, who may well leave after a referendum in June. Informed opinion, which had been comfortably sure that fear or inertia would ensure continued membership, is now alarmed that threats of mass immigration, terrorism and increased economic turbulence mean out is winning over in.

But smaller nations are pesky too. Hungary is in what seems a frozen posture of enmity to the liberal ideals and practices of the Union it clamoured to join. To only a slightly lesser degree, so is Poland, seen since its 2004 accession to the Union as the most successful of the post-communist entrants. Greece still trembles on the brink of a new collapse: the governing leftist Syriza party must pass several dozen laws which will deepen austerity as a prelude to what is promised to be growth next year. It may balk. Yet a still larger, and hidden, challenge comes from the state that was one of the founding six nations and has consistently been most enthusiastic for ever-closer union. That state is Italy, a world soft power for its art and culture, both historic and present, its flair in design, its cuisine, its beauty. Italy is perhaps the weakest point in the European construction — for obvious reasons, and a deeper one.

One of the obvious reasons is its public debt: at over $2 trillion, it is second only to Greece in these dismal stakes. Another is the weakness of the Italian banks, which are burdened with bad debt of some $350 billion. It can be managed, say the financial authorities, as long as growth continues to increase: at present, however, it’s slowing. Prime Minister Matteo Renzi, a man of constant public optimism, seems to have passed on his upbeat view to the people of his nation, but not to the statistics. A Reuters analysis in January noted that Renzi’s sunniness “appears to have got through to most Italians, but this does not solve the chronically weak productivity and economic bottlenecks that have crimped its growth for two decades.” To set the seal on gloom, the analysis quotes the Deutsche Bank economist Marco Stringa as saying that “Every year (Italy) grows below the euro zone average, and if you are always below the average you have a problem.”

Lagrade reacts to Tsipras’ inquiries about the Wikileaks reveal with venom.

• IMF Chief Says Greece Plan ‘Good Distance Away’ (AFP)

IMF chief Christine Lagarde on Sunday told Greek Prime Minister Alexis Tsipras that “we are still a good distance away” in negotiations for a new deal for hard-up Athens. Her strongly worded letter to the prime minister, made public by the IMF, comes amid tense ties between Athens and the IMF after WikiLeaks said the lender sought a crisis “event” to push the indebted nation into concluding talks over its reforms. “My view of the ongoing negotiations is that we are still a good distance away from having a coherent program that I can present to our Executive Board,” Lagarde wrote, in unusually forceful terms, after Tsipras wrote to her in the wake of the WikiLeaks allegations.

“I have on many occasions stressed that we can only support a program that is credible and based on realistic assumptions, and that delivers on its objective of setting Greece on a path of robust growth while gradually restoring debt sustainability.” The Greek government on Saturday reacted strongly to the WikiLeaks report, saying it wanted the IMF to clarify its position. Lagarde rebuffed any suggestions the IMF was pushing for crisis in Greece. “The IMF conducts its negotiations in good faith, not by way of threats, and we do not communicate through leaks,” IMF managing director Lagarde said in her letter, adding that she was releasing the details of the text “to further enhance the transparency of our dialogue.” “I also look forward to any personal conversation with you on how to take the discussions forward,” she added.

In July, Greece accepted a three-year, €86 billion EU bailout that saved it from crashing out of the eurozone. But the bailout came with strict conditions such as fresh tax cuts and pay cuts. The IMF worked with the EU on two previous bailouts for Greece since 2010 but the Washington-based lender said it would not participate in the third rescue plan without credible reforms and an EU agreement to ease Greece’s debt burden. Athens is under pressure to address the large number of non-performing loans burdening Greek banks and to push forward with a pension and tax overhaul resisted by farmers and white-collar staff. Tsipras has accused the IMF of employing “stalling tactics” and “arbitrary” estimates to delay a reforms review crucial to unlock further bailout cash.

Mission chiefs from Greece’s international lenders — the EU, IMF, European Central Bank and European rescue fund — are due to resume an audit of the reforms on Monday. “I agree with you that successful negotiations are built on mutual trust, and this weekend’s incident has made me concerned as to whether we can indeed achieve progress in a climate of extreme sensitivity to statements of either side,” Lagarde wrote. “On reflection, however, I have decided to allow our team to return to Athens to continue the discussions,” she added, stressing that “it is critical that your authorities ensure an environment that respects the privacy of their internal discussions and take all necessary steps to guarantee their personal safety.”

Just one of many things that show that.

• Sordid Wrangling Between IMF and EU Shows Greek Democracy Is Dead (E.)

Financiers from the IMF are prepared to force millions of Greeks into abject poverty to secure a petty political victory over Brussels, according to a leaked conversation between top officials. The sordid wrangling shows just how dead Greece’s supposed democracy is, with Prime Minister Alexis Tsipras now powerless to defend his people from its puppet paymasters in Berlin and Washington, where the IMF is based. The international lender even wanted to use Britain’s EU referendum as an excuse to drive the struggling country to the wall so that it could get its own way. Greek politicians have reacted with fury to the revelations, and have demanded immediate answers from IMF boss Christine Lagarde. In a response today she astonishingly asked Greece’s former finance minister to “respect the privacy” of her staff, but also denied that the organisation would use his country’s insolvency as a bargaining chip.

But in truth they have no power to change the situation, with their country now entirely reliant on international bailouts to stay afloat. The shocking plot has been revealed in a leaked transcript of a meeting between two top IMF officials released by the whistle blowing website Wikileaks. The conversation, on 19 March, purportedly involves Poul Thomsen, head of the IMF’s Europe department, and Delia Velculescu, leader of the IMF team in Greece, who are the senior officials in charge of Greece’s debt crisis. They are apparently discussing how to get the EU – and Angela Merkel in particular – to come around to their way of thinking over a restructuring of Greek debt. The IMF says it will only sign up to a deal which involves debt relief for the stricken nation, a position Germany emphatically rejects.

The two parties are due to meet next week to discuss the next financial instalment for Greece, which will need fresh funding in the summer to avert a costly default. During the conversation it is apparently suggested that the international lender should be prepared to bring about an “event” – in other words a financial crisis bringing Greece to the point of collapse – to force the issue to a head. In the leaked transcript Mr Thomsen is quoted as complaining about the pace of talks on reforms Greece has agreed to carry out in exchange for the bailout. He asks: “What is going to bring it all to a decision point? “In the past there has been only one time when the decision has been made and then that was when they were about to run out of money seriously and to default.” Ms Velculescu later agrees, saying: “We need an event, but I don’t know what that will be”.

European democracy is dead. So is its reputation, its decency, its humanity. It will take a hundred years or more to get it back.

• EU Begins Refugee Push-Back, Defying Human Rights Outcry (WaPo)

The European Union on Monday began sending back across the sea hundreds of people who, only days ago, had braved the crossing to Greece aboard flimsy rubber rafts in search of a new life. Just after dawn on Lesbos, several bus-loads of men were led aboard two ferries under heavy police and military guard. The ferries, flying Turkish flags, steamed out of the port and turned east toward the Turkish coast. More than 100 migrants were believed to have been aboard. The deportations are the first of thousands expected under the E.U.’s plan to end the continent’s refugee crisis by shifting the burden onto neighboring Turkey. Human rights groups have condemned the strategy as a violation of basic rights.

But European officials forged ahead with a plan to send several boatloads of people on Monday across the Aegean Sea from the Greek islands of Lesbos and Chios — two popular landing spots for refugee rafts — to Turkey. More deportations are expected to follow later in the week. A spokeswoman for Frontex, the E.U. border control agency that will carry out the deportations, said on Sunday it had organized ferries to transport the migrants and that 200 personnel would be on Lesbos to oversee the operation, including to serve as escorts. “It needs to be done right with respect to human dignity,” said Ewa Moncure, the spokeswoman. But human rights advocates insisted that the plan was fundamentally flawed and represented an abandonment of European responsibility to help those seeking escape from the conflicts flaring on Europe’s doorstep. Amnesty International has called it “a historic blow to human rights.”

Debt Rattle April 23 2015

Apr 232015

April 23, 2015 Posted by Raúl Ilargi Meijer at 9:43 am Finance Tagged with: China, debt, Dracula, drought, EU, fracking, free trade, Goldman, Greece, Maidan, migrants, Petrobras 12 Responses »

Harris&Ewing Camp Meade, Maryland 1917

• Half of US Fracking Companies Will Be Dead or Sold This Year (Bloomberg)

• The ‘Grexit’ Issue And The Problem Of Free Trade (Stratfor)

• If Greece Can Survive 2015, It’s Home Free (MarketWatch)

• Greek Banks Win More Emergency Cash as Talks Loom (Bloomberg)

• Greece: Of Parents And Children, Economists And Politicians (Wren-Lewis)

• Greek Contagion Risks May Be Higher Than You Think (CNBC)

• We’re Just Learning the True Cost of China’s Debt (Bloomberg)

• ‘Goldman Advising On The Economy Like Dracula On Running A Blood Bank’ (RT)

• Russell Brand Eyes Cryptocurrency As Integral Part Of Global Revolution (RT)

• More Than A Million Brits Have Used Food Banks In The Past Year (Guardian)

• Petrobras, World’s Most Indebted Company, Gets Audited (CNBC)

• Petrobras To Book Nearly $17 Billion In Charges (MarketWatch)

• Most Migrants Crossing Mediterranean Will Be Sent Back (Guardian)

• EU Borders Chief Says Saving Migrants’ Lives ‘No Priority’ (Guardian)

• ‘Maidan Snipers Trained In Poland’: Polish MP (RT)

• US Accuses Russia Of ‘Ramping Up’ Ukraine Presence (BBC)

• If A Clinton Were To Marry A Bush, The US Could Cancel Elections (RT)

• Fed Refuses to Comply With Lawmakers’ Request For Names in Probe (WSJ)

• Wolves Shot From Choppers Shows Oil Harm Beyond Pollution (Bloomberg)

• What California Can Learn About Drought From ‘Chinatown’ (MarketWatch)

“It’s not good for equipment to park anything, whether it’s an airplane, a frack pump or a car.”

• Half of US Fracking Companies Will Be Dead or Sold This Year (Bloomberg)

Half of the 41 fracking companies operating in the U.S. will be dead or sold by year-end because of slashed spending by oil companies, an executive with Weatherford said. There could be about 20 companies left that provide hydraulic fracturing services, Rob Fulks, pressure pumping marketing director at Weatherford, said in an interview Wednesday at the IHS CERAWeek conference in Houston. Demand for fracking, a production method that along with horizontal drilling spurred a boom in U.S. oil and natural gas output, has declined as customers leave wells uncompleted because of low prices.

There were 61 fracking service providers in the U.S., the world’s largest market, at the start of last year. Consolidation among bigger players began with Halliburton announcing plans to buy Baker Hughes in November for $34.6 billion and C&J Energy buying the pressure-pumping business of Nabors Industries Ltd. Weatherford, which operates the fifth-largest fracking operation in the U.S., has been forced to cut costs “dramatically” in response to customer demand, Fulks said. The company has been able to negotiate price cuts from the mines that supply sand, which is used to prop open cracks in the rocks that allow hydrocarbons to flow.

Oil companies are cutting more than $100 billion in spending globally after prices fell. Frack pricing is expected to fall as much as 35% this year, according to PacWest, a unit of IHS. While many large private-equity firms are looking at fracking companies to buy, the spread between buyer and seller pricing is still too wide for now, Alex Robart, a principal at PacWest, said in an interview at CERAWeek. Fulks declined to say whether Weatherford is seeking to acquire other fracking companies or their unused equipment. “We go by and we see yards are locked up and the doors are closed,” he said. “It’s not good for equipment to park anything, whether it’s an airplane, a frack pump or a car.”

Not a big Stratfor fan, but smart analysis by Friedman: “The main assumption behind European integration was that a free trade zone would benefit all economies. If that assumption is not true, then the entire foundation of the EU is cast into doubt..”

• The ‘Grexit’ Issue And The Problem Of Free Trade (Stratfor)

The Greek crisis is moving toward a climax. The issue is actually quite simple. The Greek government owes a great deal of money to European institutions and the International Monetary Fund. It has accumulated this debt over time, but it has become increasingly difficult for Greece to meet its payments. If Greece doesn’t meet these payments, the IMF and European institutions have said they will not extend any more loans to Greece. Greece must make a calculation. If it pays the loans on time and receives additional funding, will it be better off than not paying the loans and being cut off from more? Obviously, the question is more complex. It is not clear that if the Greeks refuse to pay, they will be cut off from further loans.

First, the other side might be bluffing, as it has in the past. Second, if they do pay the next round, and they do get the next tranche of funding, is this simply kicking the can down the road? Does it solve Greece’s underlying problem, which is that its debt structure is unsustainable? In a world that contains Argentina and American Airlines, we have learned that bankruptcy and lack of access to credit markets do not necessarily go hand in hand. To understand what might happen, we need to look at Hungary. Hungary did not join the euro, and its currency, the forint, had declined in value. Mortgages taken out by Hungarians denominated in euros, Swiss francs and yen spiraled in terms of forints, and large numbers of Hungarians faced foreclosure from European banks.

In a complex move, the Hungarian government declared that these debts would be repaid in forints. The banks by and large accepted Prime Minister Viktor Orban’s terms, and the European Union grumbled but went along. Hungary was not the only country to experience this problem, but its response was the most assertive. A strategy inspired by Budapest would have the Greeks print drachmas and announce (not offer) that the debt would be repaid in that currency. The euro could still circulate in Greece and be legal tender, but the government would pay its debts in drachmas. In considering this and other scenarios, the pervading question is whether Greece leaves or stays in the eurozone. But before that, there are still two fundamental questions.

First, in or out of the euro, how does Greece pay its debts currently without engendering social chaos? The second and far more important question is how does Greece revive its economy? Lurching from debt payment to debt payment, from German and IMF threats to German and IMF threats is amusing from a distance. It does not, however, address the real issue: Greece, and other countries, cannot exist as normal, coherent states under these circumstances, and in European history, long-term economic dysfunction tends to lead to political extremism and instability. The euro question may be interesting, but the deeper economic question is of profound importance to both the debtor and creditors.

Won’t the Troika even give it that one year?

• If Greece Can Survive 2015, It’s Home Free (MarketWatch)

For the third time in five years, Greece’s parlous financial state is shaking up global markets. In 2010 and 2012, the country was saved from default by two massive rescue packages organized by the EU, the ECB and the IMF. This time, the question is whether Greece, which owes about €320 billion to its creditors, really wants to save itself. Its government, run by radical left-wing group Syriza, says it doesn’t want to default, but it also won’t make the economic reforms creditors demand. In fact, Syriza has vowed to protect pensioners and public employees’ salaries even as debt payments come due. With nearly 20 billion euros owed to creditors over the next six months, the two sides are far apart, and the risks of a default or “Grexit” — Greece’s exit from the euro — are rising.

Still, all may not be lost. If Greece can get through 2015, it won’t have to pay creditors very much until the next decade. “People are saying this is the crunch year,” said Franklin Allen, an expert on financial crises who is executive director of the Brevan Howard Centre and professor at Imperial College London. In fact, we’re in the crunch months. Athens owes around €2.5 billion to the IMF by mid-June. It made a payment to the IMF in early April. Greece and its creditors meet again on Friday in Riga, Latvia, although few expect a deal. Both Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis have said Greece will meet its obligations, but on Monday Tsipras ordered local governments to transfer funds to the Greek central bank.

That amounts to confiscating €2 billion in reserves local governments hold in commercial banks. The money could be used to pay salaries and part of the debt to the IMF. The yield on Greece’s two-year bonds soared to near 30% on Tuesday. Yikes! The Greek government wants €7.2 billion in emergency bailout funds to get it over the hump. So far, creditors aren’t budging. IMF Managing Director Christine Lagarde last week warned against any payment delays and told Varoufakis to accelerate reforms, such as privatizations and labor-market changes. It’s a recipe for a stalemate. That’s why Allen, who also has taught finance at The Wharton School of the University of Pennsylvania, thinks “there’s about a 40% chance they’ll default on something.”

What’s a few billion among friends?

• Greek Banks Win More Emergency Cash as Talks Loom (Bloomberg)

The ECB almost doubled an increase in emergency funding to Greek banks from last week before political talks shift to Brussels and Latvia over the country’s bailout review. The European Central Bank’s Governing Council raised the cap on Emergency Liquidity Assistance by about €1.5 billion to €75.5 billion on Wednesday, people familiar with the decision said. ELA is funding provided by national central banks at their own risk and is extended against lower-quality collateral than the ECB accepts. “The ceiling increase shows that deposit outflows from Greek lenders continue,” said Andreas Koutras at In Touch Capital Markets Ltd. in London. “The question now is when will the collateral against ELA be exhausted — in other words how much time is left?”

Euro-area finance ministers will meet in Riga, Latvia, on Friday in their latest attempt to persuade Greece to commit to economic reforms so that aid payments can be released before the country runs out of money. Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel are due to meet on the sidelines of a European Union immigration summit in Brussels on Thursday, according to a Greek government official. Greek stocks and bonds rose Wednesday after Finance Minister Yanis Varoufakis saw a “convergence” of views and ECB Executive Board member Benoit Coeure said progress was being made.

“In recent days, there has been tangible progress in the quality of the discussions,” Coeure said in an interview with the Athens-based newspaper Kathimerini. “Significant differences on substance remain.” There are signs Greece’s creditors are curbing demands for far-reaching reforms as part of current talks, focusing on a number of key actions instead, Medley Global Advisors said in a client report on Wednesday. The softening stance comes on condition Greece stays co-operative on fiscal targets, according to Medley.

“..from the perspective of the Eurozone and IMF, this is all extremely small beer. You would think the key players on that side had more important things to do with their time.”

• Greece: Of Parents And Children, Economists And Politicians (Wren-Lewis)

Chris Giles has a recent FT article where he describes how non-Greek policymakers (lets still call them the Troika) see themselves like parents trying to deal with the “antics” of the problem child, Syriza in Greece. He splits these parents into different types: those that want to act as if the child is grown up (though they believe they are not), those who want to be disciplinarians etc. As a description of how the Troika view themselves, and present themselves to the public, the analogy rings true. It certainly accords with the constant stream of articles in the press predicting an impending crisis because the Greeks ‘refuse to be reasonable’.

[..] We know that if Greece was not part of the Euro, but just another of a long line of countries that have borrowed too much and had to partially default, its remaining creditors would be in a weak position now that Greece has achieved primary surpluses (taxes>government spending). The reason why the Troika is not so weak is that they have additional threats that come from being the issuer of the Greek currency.

It is important to understand what the current negotiations are about. Running a primary surplus means that Greece no longer needs additional borrowing – it just needs to be able to roll over its existing debts. Part of the argument is about how large a primary surplus Greece should run. Common sense would say that further austerity should be avoided so that the economy can fully recover, when it will have much greater resources to be able to pay back loans. Instead the creditors want more austerity to achieve large primary surpluses. Of course the former course of action is better for Greece: which would be better for the creditors is unclear! The negotiations are also about imposing additional structural reforms. Greece has already undertaken many, and is prepared to go further, but the Troika wants yet more.

As Andrew Watt points out, from the perspective of the Eurozone and IMF, this is all extremely small beer. You would think the key players on that side had more important things to do with their time. The material advantages to be gained by the Troika playing tough are minimal from their perspective, but the threats hanging over the Greek economy are damaging – not just to investment, but also to the very primary surpluses that the Troika needs. So why do the Troika insist on continuing with brinkmanship? Can it be that this is really about ensuring that an elected government that challenges the dominant Eurozone political and economic ideology must be forced to fail?

This has always been obvious no matter what Draghi or Schäuble say. They have no way of knowing, they can just wish.

• Greek Contagion Risks May Be Higher Than You Think (CNBC)

A perception in financial markets that Greece exiting the euro zone would have limited knock-on effects is misguided, some analysts say. Euro zone officials meet in Latvia this week to discuss a rescue deal between Greece and its creditors amid growing talk that time is running out for Athens to avoid defaulting on its debt and being ejected from the 19-member euro zone. “UBS does not believe, as its base case that Greece, will leave the euro,” Paul Donovan, UBS global economist, said in a video published by the bank’s research team. “However, there seems to be a belief in financial markets that if Greece were to be forced from the euro area it should be regarded as an isolated incident,” he said. “This belief, seems to us, to be dangerous.”

Donovan said that the view that Greek problems were distinct from the rest of the euro zone was reflected in recent online search patterns: Searches on Google for the term “Grexit” had soared, while those for “euro crisis” or “euro collapse” had not, even though they did during the 2012 euro zone debt crisis. In the latest crisis, government bond yields in peripheral euro zone countries—in the past viewed as most vulnerable to any Greek contagion—have not followed Greek bond yields higher. Greek bond yields have risen sharply this week, reflecting the greater risk attached to holding them. Greece’s benchmark 10-year bond yielded over 13% on Tuesday, well above Spain’s 10-year yield at 1.48% and Portuguese yields at 2.12%.

Although this can partly be explained by the ECB’s massive monetary stimulus program, which is putting downward pressure on yields, it also reflects diminished contagion fears. “I don’t get the sense that there is a widespread view that if a deal is not made and Greece exits the euro zone, you would have this massive contagion effect,” Ben White, Politico’s chief economic correspondent, told CNBC on Monday. UBS’ Donovan said any contagion from a Grexit would come from the banking system. He said that if Greece did leave the euro area, any money in Greek banks would be redenominated into a new currency, which would probably plunge in value, distressing depositors.

Depositors in other countries may think their holdings are safe, since their country is not going to leave the euro zone–or they may decide to avoid any risk and withdraw their savings, Donovan said. “Why take the risk that your country probably won’t leave the euro, if it’s a relatively simple operation to withdraw your savings and hold them in cash?” Donovan asked. “A euro held as cash today is a euro tomorrow,” he said. “A euro held in a bank account today may be an entirely different currency tomorrow, if the irrevocable monetary union has been revoked. Investors are thus likely to choose cash over deposits.”

We haven’t a clue yet.

• We’re Just Learning the True Cost of China’s Debt (Bloomberg)

The true cost of the debt that China’s real estate developers peddled to eager international investors during a five-year property boom is now becoming clear. Having found themselves shut out of local bond and loan markets seven years ago, a band of developers began looking elsewhere for funds. First an initial public offering, and then a dollar bond sale. It became a well-trodden path. By 2010, a core group of four – Kaisa, Fantasia, Renhe, Glorious Property – raised a total of $5.6 billion. On Monday, Kaisa buckled under $10.5 billion of debt and defaulted. China’s home builders became the single biggest source of dollar junk debt in Asia amid government measures to prevent a property bubble.

Developers already funneled $78.8 billion from international equity and bond markets into an industry that’s grown to account for one third of the world’s second-biggest economy. Most of the first rush of dollar offerings, in 2010, falls due in the next two years. “It was an unintended consequence of the Chinese government that property developers are selling equity and debt to offshore investors,” said Ben Sy, a Hong Kong-based managing director in JPMorgan’s private banking division. “There happened to be huge demand from international investors in the past few years driven by the intense search for yield.” Kaisa was the first to debut in the dollar note market in 2010, selling $650 million of five-year bonds that April.

The securities paid a 13.5% coupon, more than twice the 6.3% average yield for Bank of America Merrill Lynch’s U.S. Real Estate index at the time. The Shenzhen-based developer was among nine real estate companies that raised $4 billion selling offshore bonds that year, a record at the time and fourfold the previous high. Six of the nine had listed their shares on the Hong Kong stock exchange in the previous 24 months. Chinese developers’ move into the international capital markets started in earnest in 2007. From January to December, as the rest of the world slid deeper into recession, homebuilders raised $7.2 billion. Since 2008, another $11.5 billion has been raised via IPOs in Hong Kong.

The Dracula Squid.

• ‘Goldman Advising On The Economy Like Dracula On Running A Blood Bank’ (RT)

Goldman Sachs’ claim that a Labour victory in the general election would impact negatively on Britain’s economy has been dismissed by leading British economists, who say the Wall Street giant’s outlook is laughable and colored by self-interest. In a research document sent to clients earlier this week, Goldman claimed a Labour-led government could spark an exodus of investors from the City of London to more business-friendly pastures. The bank’s warning adds to a growing chorus of concern emanating from the City that Ed Miliband’s party would formulate fiscal and economic policy in the interest of people rather than profit. Speaking to RT on Wednesday, British economist James Meadway insisted Goldman Sachs is not a credible voice on economic policy.

“Listening to Goldman Sachs for advice on how to run the economy is like listening to Dracula on how to run a blood bank,” he said. UK economist and anti-austerity campaigner Michael Burke added Goldman Sachs’ general election analysis amounts to “laughably bad economics.” Burke told RT Goldman’s assessment of Labour’s prospective role in government appears to “confuse the economy with the well-being of its own bankers.” He added the Wall Street banking giant’s prognosis is “blatantly political” and born of self-interest. Goldman Sachs is a powerful player in the City of London and across the European Union.

However, the investment bank has been the focus of a firestorm of criticism in recent years over allegations of insider trading, corruption, aggressive investment vehicles with profound social impacts, and its role in compounding Europe’s sovereign debt crisis. Despite the bank’s less-than-gleaming reputation, its condemnation of Labour will likely be welcomed by City financiers and Conservatives. Speaking to its clients earlier this week, the investment bank said a victory for Labour would be understood as “more problematic by the business community” than victory for the Tories. Goldman billed a coalition between Labour and the Scottish National Party (SNP) as the most toxic combination of parties that could enter government next month.

I’m not sure I find the celebrity contest that seems to go along with this thing all that appealing. Nothing against Russell, or Max.

• Russell Brand Eyes Cryptocurrency As Integral Part Of Global Revolution (RT)

In his quest for a global revolution, political activist Russell Brand is eyeing crypto currency and crowd funding as a way of negating and avoiding the capitalist system. Such combination can set the stage for a new era, believes RT’s Max Keiser. Russel Brand has long been promoting organized civil disobedience to bring about a political revolution and fair distribution of wealth unfeasible under capitalism. With his calls sometimes bordering on anarchy, Brand has emerged as a leftist political figure seeking social justice and decentralization of state control over the individual.

“I think what is important is to organize and to disobey. To be really, really disobedient. Revolution is required. It is not a revolution of radical ideas, but simply the implementation of the ideas that they say we already have,” Brand was telling his supporters as he campaigned for resistance. Now Brand has taken one of these revolutionary ideas, the cryptocurrency, and teamed up with StartJoin crowdfunding platform to help people break away from conventional monetary and financial systems. “Essentially what we need is alternative systems and models, and alternative currency is an integral part of that,” Brand told Max Kaiser, the co-guru behind the financial side of the StartCOIN project and the host of RT’s Kaiser Report.

“I’m very interested in setting up social enterprises, such as our cafe that we’ve started, replicating that model more and more,” Brand explained. “Small businesses, practical, functional things where people can come together in an entrepreneurial spirit, creatively, and work together – hopefully ultimately using an alternative currency and completely negating and avoiding the system.” “The more I deal with bureaucracy, the more I deal with consumerism, the more I think that there is really very little it can offer us,” he added. Brand’s latest project is aimed at promoting digital literacy, to further boost online activism. By raising £150,000 for at least 1,000 laptops he is planning to give away for free, Brand wants to make the voices of even the most marginalized individuals in the community heard.

Land of shame.

• More Than A Million Brits Have Used Food Banks In The Past Year (Guardian)

More than 1 million people, including rising numbers of low-paid workers, were forced to use food banks in the last 12 months, challenging claims that the dividends of Britain’s economic recovery are being equally shared. The latest figures from the Trussell Trust, which coordinates a network of food banks in the UK, show a 19% year-on-year increase in food bank users, demonstrating that hunger, debt and poverty are continuing to affect large numbers of low-income families and individuals. Nearly 1.1 million people received at least three days of emergency food from the trust’s 445 food banks in 2014-15 – up from 913,000 the previous year. Back in 2009-10, before the Liberal Democrat-Conservative coalition took power, the then little-known charity fed 41,000 people from its 56 food banks.

Chris Mould, the Trussell Trust chairman, said the figures showed many people were experiencing “catastrophic” problems as a result of low incomes, despite signs of a wider economic recovery. He said: “These needs have not diminished in the last 12 months.” Experts warned that the figures were the “tip of the iceberg” of food poverty in the UK, while doctors said the inability of families to buy enough food had become a public health issue. The Trussell Trust figures show the biggest proportion, 44%, of food bank referrals last year – marginally lower than the previous year – were triggered by people pitched into crisis because their benefit payments had been delayed, or stopped altogether as a result of the strict jobcentre sanctions regime. More than a fifth, 22%, of food bank users were referred because of low income – meaning they were unable to afford food due to a relatively small financial crisis such as a boiler breaking down or having to buy a school uniform.

This should have been one of the richest entities in the world. And look at it! What came out, see below, is they say they lose $2 billion to ‘graft’. $2 billion? Try $200 billion. These guys spend $2 billion on champagne alone.

• Petrobras, World’s Most Indebted Company, Gets Audited (CNBC)

Petrobras, the Brazilian oil giant, is hoping to finally release audited financial results for the fourth quarter after U.S. markets close on Wednesday, including an estimate of how much has been stripped out of the company by years of alleged fraud. The state-controlled oil company is engulfed in what’s probably the largest financial scandal in Brazil’s history—a high bar, given the country’s record of corruption. And Wednesday’s earnings report has big implications for investors and maybe even the future course of the world’s seventh-biggest economy. Markets are closely examining the results for the level of write-offs and impairments on Petrobras assets, whose values may have been inflated by the fraud. Estimates on how big those numbers may be are staggering: anywhere from $6 billion to $30 billion.

Andre Gordon of AMEC, a Brazilian shareholders’ rights group, said he’s “waiting to see the balance sheet” and expects impairments and writeoffs of between $10 billion to $15 billion. AMEC is active in lobbying for better corporate governance at Petrobras and within Brazil in general. Gordon said he hopes for a turning point for the company that will lead to less government entanglement with Petrobras, “but I am skeptical.” “Not even the opposition party talks about privatization of Petrobras—only small insignificant parties with small market share,” he said. The scandal started with the arrest early last year of a company director, who subsequently struck a deal with prosecutors in September. Since then, details have emerged almost daily of a decade-long, alleged bribery scheme involving company officials.

The executive alleged to investigators that for nearly 10 years, Petrobras contracts were routinely padded by 3%, with the extra money used for bribes and kickbacks. Much of that money was supposedly funneled to the country’s ruling political parties. Other executives have since come forward, and nearly 50 people have been arrested or charged, ranging from more than a dozen CEOs to politicians to party officials, including the treasurer of Brazilian President Dilma Rousseff’s Workers Party.

Rousseff must step down and open the prosecutorial floodgates here, or there’ll be severe damage for decades.

• Petrobras To Book Nearly $17 Billion In Charges (MarketWatch)

Brazilian state-run oil company Petróleo Brasileiro SA on Wednesday finally put a price tag on the impact of a corruption scandal that has battered the company’s shares, writing off 6.2 billion reais ($2.1 billion) of alleged bribe payments
In addition, the company booked an impairment charge of 44.6 billion reais ($14.8 billion) for 2014 after determining that assets were overvalued on its balance sheet. As a result, the company reported a net loss of 26.6 billion reais for the fourth quarter on revenue of 85.04 billion reais. Earnings before interest, taxes, depreciation and amortization stood at 20.06 billion reais, up from 15.55 billion reais a year earlier.

The disclosures were part of the first audited financial statements released by Petrobras in more than eight months. Brazilian federal prosecutors since last year have been investigating allegations that the company’s suppliers conspired to overcharge Petrobras for major projects, funneling some of the illicit profit to former Petrobras executives and politicians in the form of bribes and illegal political donations. Petrobras has portrayed itself as a victim of the graft and says it has cooperated with authorities. Still, the company struggled to calculate the scheme’s impact on its balance sheet, leading auditor PricewaterhouseCoopers to refuse to sign off on its statements since the third quarter of 2014.

“With the publication of audited 2014 results, Petrobras has cleared a significant obstacle, after a collective effort, that shows our ability to overcome challenges in an adverse environment,” Chief Executive Aldemir Bendine said in a statement. The financials come just days before an April 30 deadline in Petrobras’s bond covenants that could have allowed the holders of billions of dollars of Petrobras debt to demand early repayment.

“Only 5,000 resettlement places across Europe are to be offered to refugees..”

• Most Migrants Crossing Mediterranean Will Be Sent Back (Guardian)

Only 5,000 resettlement places across Europe are to be offered to refugees who survive the dangerous Mediterranean sea crossing under the emergency summit crisis package to be agreed by EU leaders in Brussels on Thursday. A confidential draft summit statement seen by the Guardian indicates that the vast majority of those who survive the journey and make it to Italy – 150,000 did so last year – will be sent back as irregular migrants under a new rapid-return programme co-ordinated by the EU’s border agency, Frontex. More than 36,000 boat survivors have reached Italy, Malta and Greece so far this year. The draft summit conclusions also reveal that hopes of a major expansion of search-and-rescue operations across the Mediterranean in response to the humanitarian crisis are likely to be dashed, despite widespread and growing pressure.

The summit statement merely confirms the decision by EU foreign and interior ministers on Monday to double funding in 2015 and 2016 and “reinforce the assets” of the existing Operation Triton and Operation Poseidon border-surveillance operations, which only patrol within 30 miles of the Italian coast. The European council’s conclusions said this move “should increase the search-and-rescue possibilities within the mandate of Frontex”. The head of Frontex said on Wednesday that Triton could not be a search-and-rescue operation. Instead, the EU leaders are likely to agree that immediate preparations should begin to “undertake systematic efforts to identify, capture and destroy vessels before they are used by traffickers”. The joint EU military operation is to be undertaken within international law.

The statement describes the crisis as a tragedy and says the EU will mobilise all efforts at its disposal to prevent further loss of life at sea and to tackle the root causes of the human emergency, including co-operating with the countries of origin and transit. “Our immediate priority is to prevent more people dying at sea. We have therefore decided to strengthen our presence at sea, to fight the traffickers, to prevent illegal migration flows and to reinforce internal solidarity,” it says, before adding that the EU leaders intend to support all efforts to re-establish government authority in Libya and address key “push” factors such as the situation in Syria. But the detail of the communique makes it clear that the measures to be agreed fall far short of this ambition.

In particular in terms of sharing responsibility across the EU for those who survive the journey, the draft statement suggests only “setting up a first voluntary pilot project on resettlement, offering at least 5,000 places to persons qualifying for protection”, it says. The EU leaders also make a commitment to “increasing emergency aid to frontline member states” – taken to mean Italy, Malta and Greece – “and consider options for organising emergency relocation between member states”.

“Leggeri ruled out putting his ships anywhere near the Libyan coast, saying stepping up search-and-rescue operations would only encourage desperate migrants to risk the passage.”

• EU Borders Chief Says Saving Migrants’ Lives ‘No Priority’ (Guardian)

The head of the EU border agency has said that saving migrants’ lives in the Mediterranean should not be the priority for the maritime patrols he is in charge of, despite the clamour for a more humane response from Europe following the deaths of an estimated 800 people at sea at the weekend. On the eve of an emergency EU summit on the immigration crisis, Fabrice Leggeri, the head of Frontex, flatly dismissed turning the Triton border patrol mission off the coast of Italy into a search and rescue operation. He also voiced strong doubts about new EU pledges to tackle human traffickers and their vessels in Libya.

“Triton cannot be a search-and-rescue operation. I mean, in our operational plan, we cannot have provisions for proactive search-and-rescue action. This is not in Frontex’s mandate, and this is in my understanding not in the mandate of the European Union,” Leggeri told the Guardian. The capsizing of a trawler off Libya late on Saturday sparked a public outcry. EU foreign and interior ministers held an emergency meeting on Monday and a special summit on the issue has been called for Thursday in Brussels. The ministers and the European commission agreed to bolster the current Triton mission, to increase its funding and assets, and to expand its area of operation while also calling for new military measures to “systematically capture and destroy” traffickers’ vessels.

Thursday’s summit is to finalise the EU response. Donald Tusk, the president of the European council, who called and will chair the emergency summit, said the leaders had to agree on quick and effective action. “Our overriding priority is to prevent more people from dying at sea … to agree on very practical measures, in particular by strengthening search and rescue possibilities,” he said. But Leggeri ruled out putting his ships anywhere near the Libyan coast, saying stepping up search-and-rescue operations would only encourage desperate migrants to risk the passage. He signalled that Frontex was not asking for more boats, and voiced scepticism about the new talk of military action.

More great stuff from ‘our’ side.

• ‘Maidan Snipers Trained In Poland’: Polish MP (RT)

Snipers who are thought to have operated in Kiev’s Independence Square amidst events that led to a coup in February 2014 were trained in Poland and sent to Ukraine to “do a favor” for the US, a Polish Euro-MP claimed in an interview. On February 20, 2014, riot police trying to restrain anti-government demonstrators on Maidan Nezalezhnosti in Kiev suddenly retreated up the street from whence they had come. As the protesters rushed forward, gunfire suddenly broke out, with many witnesses saying it was a sniper attack. In some two hours, 46 people were killed.

A year after the tragedy that provoked a huge backlash from the Ukrainians, ultimately leading to the rapid toppling of then-President Viktor Yanukovich, the events on the square are still pending investigation. Several Berkut riot police officers have been detained, but not much progress has been made, while murky details and speculation have been emerging in the press. In a new development, Polish former presidential candidate Janusz Korwin-Mikke told Wiadomosci media outlet that the snipers had actually been trained in Poland. Korwin-Mikke, 72, a European lawmaker and leader of Poland’s conservative KORWiN party, claimed this was a CIA operation. This came as a “Yes” reply to the question whether he believed the CIA was involved.

“Yes – but it was also our operation. The snipers were trained in Poland,” Korwin-Mikke said adding this was done “to provoke riots.” Poland trained those “terrorists” to please the US, which invested heavily into Ukrainian coup, the politician alleged. “Let me say this again: we are doing a favor to Washington,” Korwin-Mikke said. Challenged about his sources, the politician said he overheard this in the European Parliament as Estonia’s Foreign Affairs Minister Urmas Paet “admitted” to the then-EU foreign affairs chief Catherine Ashton that it was “our people who opened fire on Maidan, not those of Yanukovich or Putin.” It is not clear when the conversation took place, but in March previous year a tape with a telephone conversation between the two politicians was leaked which went among the same lines.

And we don’t need to provide no steenking proof.

• US Accuses Russia Of ‘Ramping Up’ Ukraine Presence (BBC)

The US has accused Russia of deploying more air defence systems in eastern Ukraine in breach of a ceasefire deal. The state department also said Russia was involved in training separatist forces in the area and building up its forces along the border. The Kremlin has not yet responded to the claims. A truce between Ukrainian forces and pro-Russian rebels in east Ukraine was brokered by the West in Minsk in February. State department spokeswoman Marie Harf said in a statement that “combined Russian-separatist forces” were violating the terms of the Minsk deal, keeping artillery and multiple rocket launchers in prohibited areas.

“The Russian military has deployed additional air defence systems into eastern Ukraine and moved several of these nearer the front lines,” she said. ‘Complex training’ “This is the highest amount of Russian air defence equipment in eastern Ukraine since August.” Ms Harf said the “increasingly complex nature” of training of pro-Russian forces in east Ukraine “leaves no doubt that Russia is involved”. “Russia is also building up its forces along its border with Ukraine,” she said. “After maintaining a relatively steady presence along the border, Russia is sending additional units there. These forces will give Russia its largest presence on the border since October 2014.” Earlier this month, about 300 US paratroopers arrived in western Ukraine to train with Ukrainian national guard units. At the time, Kremlin spokesman Dmitry Peskov warned the move “could seriously destabilise” the situation in Ukraine.

It’s should be mandatory. Get us royal family of lying chimps.

• If A Clinton Were To Marry A Bush, The US Could Cancel Elections (RT)

With apologies to their respective spouses, if Jeb Bush’s son, George P. Bush, had married Chelsea Clinton, Americans could have spared themselves the spectacle of Election 2016 and saved billions of dollars. All that the USA needs now is for a young Clinton to pair up with a junior Bush. Should the union produce an heir, a single line of monarchy would be established. This is the reality of the USA’s broken politics in 2015. A country pretty much established in opposition to hereditary elites now has the most closed political system in the Western world. In the past, America’s strange obsession with the British Royal Family was usually explained by fact that the US has no monarchy of its own. The bad news for Queen Elizabeth’s bunch is that this is increasingly the case in name only.

Right now, Hillary Clinton is close to an even money favorite to become the next American President. The only other short-odds candidate appears to be Jeb Bush. After the former Florida governor there’s a clutch of outsiders like Rand Paul, Scott Walker and Marco Rubio filling out the field. It’s depressing on so many levels. Should Hillary, as expected, secure the White House and serve two terms it’ll mean that America will have been ruled by either a Bush or Clinton for 28 out of 36 years. The only break coming during the 8-year Obama Presidency. Of course, the former first lady served as Secretary of State for half of Obama’s reign. Despite a common misconception that the Roosevelts, Teddy and Franklin D, were close relatives, (they weren’t) keeping things in the family has not been the American way.

In fact, George Bush Senior was the first President since FDR to have been born into the politically-connected WASP elite. Instead, post-war American Presidents have tended to be outsiders, coming from left field. Think Reagan, Nixon and Carter, for instance. Even the ultimate ‘silver-spoon’ Commander-in-Chief, John F. Kennedy, was far from an insider by dint of his Catholic religion. Indeed, despite their great wealth and celebrity, the Kennedy clan never came close to establishing the kind of dynasty that the Bush family has managed. However, the Boston brood remains powerful in the world of baby kissers and it’s commonly accepted that the late Edward was pivotal in securing Obama’s nomination for the 2008 contest.

Audit it.

• Fed Refuses to Comply With Lawmakers’ Request For Names in Probe (WSJ)

The Federal Reserve has not replied to a lawmakers’ request that it identify the individuals who had contact with a private consulting firm that published a report on the central bank’s market-sensitive internal policy deliberations. In October 2012, the day before the Fed released its minutes of its September 2012 policy meeting, Medley Global Advisors, sent a report to its clients with several sensitive details that subsequently appeared in the minutes. A central bank probe found a “few” Fed staffers had contact with Medley before the report, but did not identify them. Rep. Jeb Hensarling (R., Texas), Chairman of the House Financial Services Committee, sent a letter to Fed Chairwoman Janet Yellen on April 15 asking the Fed to name them by 5 p.m. EDT April 22.

The deadline passed without any response by the Fed, a committee spokesman said Wednesday. The Fed declined to comment. Medley did not respond to a request for comment. The central bank’s policy-making Federal Open Market Committee makes decisions on interest rates that can cause huge swings in global financial markets. Confidential information about its internal deliberations or advance information about the minutes of its meetings or possible future actions can be worth huge sums of money to traders around the world.

We won’t rest till all wildlife is gone.

• Wolves Shot From Choppers Shows Oil Harm Beyond Pollution (Bloomberg)

Here’s one aspect of Canada’s energy boom that isn’t being thwarted by the oil market crash: the wolf cull. The expansion of oil-sands mines and drilling pads has brought the caribou pictured on Canada’s 25-cent coin to the brink of extinction in Alberta and British Columbia. To arrest the population decline, the two provinces are intensifying a hunt of the caribou’s main predator, the gray wolf. Conservation groups accuse the provinces of making wolves into scapegoats for man-made damage to caribou habitats. The cull carried out in winter when the dark fur of the wolves is easier to spot against the snow has claimed more than 1,000 animals since 2005. Hunters shoot them with high-powered rifles from nimble two-seat helicopters that can hover close to a pack or lone wolf.

In Alberta, some are poisoned with big chunks of bait laced with strychnine, leading to slow and painful deaths that may be preceded by seizures and hypothermia. “It’s an unhappy necessity,” Stan Boutin, a University of Alberta biologist, said of the government-sponsored hunt. “We’ve let the development proceed so far already that now, trying to get industry out of an area, is just not going to happen.” The energy industry has delivered a death blow to caribou by turning prime habitat into production sites and by introducing linear features on the landscape that give wolves easy paths to hunt caribou, such as roads, pipelines and lines of downed trees created by oil and gas exploration.

A drop in drilling after oil prices plunged can’t reverse the damage. More than C$350 billion ($285 billion) spent by Alberta’s oil-sands producers to build an industrial complex that’s visible from space have made the province’s boreal herds of woodland caribou the most endangered in the country. Their population is falling by about half every eight years, according to a 2013 study in the Canadian Journal of Zoology. Since 2005, Alberta has auctioned the rights to develop more than 25,000 square kilometers (9,652 square miles) of land in caribou ranges to energy companies, according to the Canadian Parks and Wilderness Society, an Ottawa-based charity. That’s equivalent to about three times New York’s metropolitan area.

“When the oil industry goes in there and cuts those lines and drills and puts in pipelines, it helps the wolves,” said Chad Lenz, a hunting guide with two decades of experience based in Red Deer, Alberta. Lenz has watched caribou herds shrink as the number of wolves soar. “There’s not a place in Alberta that hasn’t been affected by industry, especially the oil industry.” Home to the world’s third-largest proven crude reserves, Alberta depends on levies from the energy industry to build new roads, schools and hospitals.

It’s no use staying. Your kids deserve better. California is yesterday.

• What California Can Learn About Drought From ‘Chinatown’ (MarketWatch)

In the 1974 film “Chinatown,” a fictional Los Angeles politician issues a warning as he lays out his case for creating an aqueduct to bring water to the city from the inland valley more than 200 miles north: “Beneath every street there is a desert, and without water the dust will rise up and cover us as if this place never existed.” For California, these words still resonate as a severe drought drags into its fourth year, prompting the first-ever mandatory restrictions on water usage and stirring questions about how the drought will be handled as the climate becomes warmer and drier. With the mood of the present-day state becoming more unsettled, “Chinatown” is perhaps more timely than ever, offering a cautionary tale and a possible roadmap for our thinking about water.

“I can’t tell you how many times people have said, ‘Forget it, Jake. It’s Chinatown,’” said Jon Christensen at UCLA, speaking of the iconic movie’s staying power. Although the film itself is a fictional work, “like all great art,” Christensen said, “it captures a great truth about water in California and in the American West.” The film, starring Jack Nicholson, Faye Dunaway and John Huston, dramatizes the California water wars of the early 1900s, accenting corruption, deception and secret dealings within Los Angeles, a city whose character would be shaped by its growing thirst for water. The film is set in the 1930s but is loosely based on the events of 1913, when Los Angeles began siphoning off water from the Owens Valley, on the eastern side of the Sierra Nevada, through an aqueduct.

As the L.A. region flourished, businessmen involved in the deal to bring water to the city profited wildly, while farmers in the Owens Valley were left to watch their land go dry and their regional economy suffer. The tension between agricultural and residential interests has been a defining conflict in California’s history, according to many experts. In March, the Golden State’s cities and towns were ordered to reduce their water usage by 25%. Farmers were exempted from these restrictions, even though agriculture amounts to 80% of water use in the state. Gov. Jerry Brown defended agriculture’s water consumption but has said water rights may need to be re-examined.