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Debt Rattle August 10 2020

Aug 102020

August 10, 2020 Posted by Raúl Ilargi Meijer at 10:22 am Finance Tagged with: balanced budget, coronavirus, Covid19, eurozone, Halper, Hong Kong, Jimmy Lai, Lindsey Graham, mail-in ballots, Mnuchin, Nagasaki, Pelosi 19 Responses »

William-Adolphe Bouguereau La naissance de Vénus 1879

• The Spies Who Hijacked America (Schrage)

• Memo Shows FBI May Have Misled Senate About Russia Probe (JTN)

• Pelosi, Mnuchin Open Door To Narrower COVID19 Aid Through 2020 (R.)

• Fed’s Evans Says Another Coronavirus Aid Package ‘Incredibly Important’ (R.)

• The US Economy Is Stronger Than the Eurozone’s (Lacalle)

• Hong Kong Media Tycoon, Pro-Democracy Leader Arrested In New Crackdown (JTN)

• Should The Government Balance Its Budget? (DO)

• One-Fifth Of All Mail-in Ballots Disqualified In NYC Primary (JTN)

• The Very Un-Christian Nagasaki Bomb (Kohls)

We passed 20 million cases, another sad milestone. But both new cases and new deaths are quite low. With US new cases below 50,000, and deaths at “only” 534, overall not a bad weekend, in the grand scheme of things.

Pelosi
https://twitter.com/greg_price11/status/1292647384124661767

Aaron Maté Russiagate Monsters under the bed

If you’re wondering what a discussion of “Russian interference in the 2020 election” is, it’s like kids fearing a monster under the bed except also blaming that monster for them not winning the 2016 election. https://t.co/bpnyDFsGLY

— Aaron Maté (@aaronjmate) August 10, 2020

If you read just one thing today, try this. From Matt Taibbi’s substack.

“As a doctoral candidate at Cambridge working under “FBI Informant” Stefan Halper, I had a front-row seat for Russiagate..”

• The Spies Who Hijacked America (Schrage)

Global scandals now labeled Russiagate, Spygate, and what President Trump calls “Obamagate” shook the political world, but hit me closer to home. I’m the reason the so-called FBI “spy” at the center of Spygate, Stefan Halper, met Carter Page, the alleged “Russian Asset” in Russiagate’s Crossfire Hurricane investigation. On May 19, 2018, this realization blindsided me in London as I was about to fly out for my wedding. The New York Times, NBC News and other sources had outed my PhD supervisor, Stefan Halper, as a spy known to the UK’s MI6 intelligence service as “The Walrus.” It didn’t seem real. Could a former professor I once trusted as a mentor have betrayed his word, profession, and country to start these disasters?

I had moved to England to pursue an academic career and leave DC’s politics behind, only to have my PhD supervisor throw me back into the most outrageous political firestorms I could imagine. Just my luck. Then an even worse question began nagging at me. Did I unintentionally light the match that started it all? As I started to piece together what happened over the next few months, I realized something. The stories that The New York Times, Washington Post, and others were pushing didn’t add up. Many seemed planted to cover up or advance the agendas of several individuals whose tentacles secretly ran through these scandals, and who each had longstanding ties to intelligence services like the FBI, CIA, and MI6. I call these individuals the Cambridge Four.

Strangely, all four were linked through that sleepy British academic town thousands of miles from the alleged “ground zeroes” of Russiagate’s conspiracies, Moscow and DC. In addition to the central “Spygate” figure Halper, they include the central source of “Russiagate’s” fake conspiracy theories, Christopher Steele; former MI6 Director Sir Richard Dearlove; and Halper’s and Dearlove’s partner in a Cambridge Intelligence Seminar linked to titillating — but false — tales of a “Russian spy” seducing Trump’s top national security advisor. My years of work with Halper provided an inside view of how their four networks interconnected. The more I dug up new pieces of this puzzle, the more I saw how these individuals’ seemingly separate acts might fit together in an absurd picture of how these scandals really started.

Armed with first-hand knowledge and evidence, I quietly sought to help federal investigators uncover these scandals’ mysteries. It wasn’t my first rodeo. After witnessing the plane that hit the Pentagon on 9/11, I led G8 and State Department international crime and terrorism efforts with Department of Justice (DOJ), FBI, and intelligence officials and had worked for decades in White House, Congressional, and presidential campaign roles. This helped me keep a stiff upper lip when I was falsely accused in 2019 by the House Intelligence Committee’s Ranking Republican and others on television as being part of a secret anti-Trump cabal. As much as I wanted to defend myself, I knew our best shot of exposing the real forces behind these scandals was for me to remain publicly silent and not let those under investigation know what I knew or was willing to say.

MAY have?

• Memo Shows FBI May Have Misled Senate About Russia Probe (JTN)

The Senate Judiciary Committee on Sunday released a document it says shows the FBI misled senators on the Intelligence Committee during the Russia probe by falsely suggesting Christopher Steele’s dossier was backed up by one of his key sources. “Somebody needs to go to jail for this,” Sen. Lindsey Graham, R-S.C., the panel’s chairman, told the Fox News program Sunday Futures with Maria Bartiromo. “This is a second lie. This is a second crime. They lied to the FISA court. They got rebuked, the FBI did, in 2019 by the FISA court, putting in doubt all FISA applications. “A year before, they’re lying to the Senate Intel Committee. It’s just amazing the compounding of the lies,” Graham added.

The document in question contains the draft talking points the FBI used to brief the Senate Intelligence Committee in February 2018, including an assessment that the primary sub-source of the information contained in the Steele dossier had backed up the former MI-6 agent’s reporting. The primary sub-source “did not cite any significant concerns with the way his reporting was characterized in the dossier to the extent he could identify it,” the FBI memo claimed. “…At minimum, our discussions with [the Primary Sub-source] confirm that the dossier was not fabricated by Steele.” In fact, by the time the FBI provided senators the briefing, agents had already interviewed Steele’s primary sub-source who disavowed much of what was attributed to him in the dossier as in “jest” or containing uncorroborated allegations.

Agents also had been warned by the CIA that Steele’s memos contained disinformation fed to him by Russian intelligence services, and had created a spreadsheet showing most of the claims in the dossier were either debunked, unable to be corroborated or Internet rumor. Graham said the document is so misleading he is demanding FBI Director Chris Wray identify the names of those involved in the briefing. “They misled the hell out of them,” he said. There is widespread evidence released by the Judiciary Committee and the DOJ inspector general contradicting the February 2018 FBI briefing memo including that the primary sub-source:

• told the FBI that he “has no idea” where some of the language attributed to him came from or that his contacts and “never mentioned” some information attributed to him.
• told the FBI he “did not know the origins” or “did not recall” other information contained in the dossier that was supposedly from his contacts
• alleged that Steele used “incorrect source characterization” for one of his contacts. told the FBI that the corroboration for the dossier was “zero” and that he takes what the sources for the dossier told him with “a grain of salt.”
• claimed much of what he told Steele was second-hand or even in jest and never intended it to be treated as intelligence because if was “word of mouth and hearsay” and “conversation that [he] had with friends over beers.”

Pelosi tried to be a leader and failed. Now she’s a follower. Does that about sum it up?

• Pelosi, Mnuchin Open Door To Narrower COVID19 Aid Through 2020 (R.)

U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin on Sunday said they were open to restarting COVID-19 aid talks, after weeks of failed negotiations prompted President Donald Trump to take executive actions that Democrats argued would do little to ease Americans’ financial distress. Discussions over a fifth bill to address the impact of the coronavirus pandemic fell apart on Friday, a week after the expiration of a critical boost in unemployment assistance and eviction protections, exposing people to a wave of economic pain as infections continue to rise across the country.

Trump on Saturday sought to take matters into his own hands, signing executive orders and memorandums aimed at unemployment benefits, evictions, student loans and payroll taxes. Trump told reporters in New Jersey before returning to Washington on Sunday that his suspension of the collection of the payroll tax could be made permanent. He said doing so would have no impact on Social Security because reimbursement would be made through the general fund. Trump, noting that Democrats want to resume stimulus discussions, said the White House would be willing to talk to them again “if it’s not a waste of time.”

On Sunday, both Pelosi and Mnuchin appeared willing to consider a narrower deal that would extend some aid until the end of the year, and then revisit the need for more federal assistance in January. That would come after November’s election, which could rebalance power in Washington. “Let’s pass legislation on things that we agree on,” Mnuchin told Fox News in an interview. “We don’t have to get everything done at once. … What we should do is get things done for the American public now, come back for another bill afterwards.”

DDMB Out of work

Great chart by @biancoresearch w/data via @uscensusbureau Household Pulse Survey. About 35% of American households expect a loss of employment in the next four weeks. With the percentage of unemployed out of week >15 weeks at 48.8%, the conventional portion of recession has begun pic.twitter.com/OizuXW1yuC

— Danielle DiMartino Booth (@DiMartinoBooth) August 9, 2020

Protect small businesses? Half of them are gone forever. Protect the people instead.

• Fed’s Evans Says Another Coronavirus Aid Package ‘Incredibly Important’ (R.)

The United States should implement another support package to ensure workers can stay safely at home while the novel coronavirus continues to spread, Chicago Fed President Charles Evans said in an interview with CBS News released on Sunday. Evans said it was up to U.S. lawmakers to protect small businesses and vulnerable communities with measures that ensure they can continue to pay their rent and buy food as long as the virus was not under control. “I think that public confidence is really important and another support package is really incredibly important,” Evans said on CBS’s Face the Nation program.

He also said that the most pessimistic economic projections involved not supporting state and local governments, which in turn would have to implement drastic cuts to support some of the federal aid measures. Evans’ comments come after U.S. lawmakers failed to strike an agreement on a second aid package after weeks of negotiations, leaving tens of millions of unemployed Americans without direct federal support.

And you would expect to see that reflected in the USD’s exchange rate. But not yet.

• The US Economy Is Stronger Than the Eurozone’s (Lacalle)

The United States is showing resiliency and strength compared with other leading economies worldwide. The impact of the covid-19 forced shutdown crisis is lower in the United States than in Japan, Germany, France, the average of the European Union 27, and the euro area countries. The recovery is also stronger and more sustainable. This does not mean that the economic impact is small. Recession is severe and its impact on jobs and growth cannot be underestimated, but it is important to show how other economies with larger government spending plans and important entitlement programs are showing a much weaker performance. The second quarter GDP was much better than in the euro area (–9.5 percent quarterly compared to –12.1 percent in the eurozone), although it reflects a notable quarterly drop, and well below the one seen in 2008.

This comparison is important because most mainstream economists believe that higher government spending and public sector help offset the blow of a recession. They do not. The United States quarterly GDP fall, at –9.5 percent, is small compared to Germany’s –10.1 percent, France’s –13.8 percent, Italy’s –12.4 percent, Spain’s –18.5 percent and the European Union 27’s at –11.9 percent. You may have read about the quarterly annualized –32.9 percent figure for the United States, but it is misleading to compare it with the European published figures, which are not annualized. The annualized rate estimates how much the economy would grow or shrink if the rate of change seen in the quarter continued for four consecutive quarters.

If we compared apples to apples, the quarterly annualized GDP collapse would be from –40 percent in Germany to –55 percent in Spain compared to the US’s –32.9 percent. In any case, it seems relevant to insist on three points: 1) the United States GDP decline was smaller than consensus estimates; 2) it is notably lower than the eurozone figure, which was worse than consensus expected; and 3) the advanced US data points to one of the strongest recoveries in the world. The improvement in domestic demand that we already began to observe in the month of May has been confirmed in June. Retail sales registered an increase of 7.5 percent per month, the second-highest number in the historical series after the May data, and this time with a less relevant “base effect.” In year-on-year terms, retail sales have already grown 1.1 percent and, eliminating vehicle sales, this increase amounts to 7.3 percent year on year. Still a lot to improve, though.

Advanced and leading indicators in the United States point to a third quarter GDP rise of 18 to 20 percent in annualized terms, a recovery of more than half of the decline in first half of the year in three months. There is a lot to do and no one can be complacent. If consumption and investment progress within potential, the US economy could close the year at flat growth and 6 percent unemployment in the most optimistic scenario. However, it is more likely that the economy will end the year down 5 percent and with unemployment at 8.5 percent, all according to our estimates. This compares with a eurozone that may likely fall more than 9 percent in 2020, with official unemployment and furloughed jobs reaching an average of 12.5 percent according to Bloomberg.

Cullusion with foreign forces. It’s like the US. And now they can take him to China under the new law?!

• Hong Kong Media Tycoon, Pro-Democracy Leader Arrested In New Crackdown (JTN)

Jimmy Lai, a prominent publisher and pro-democracy leader in Hong Kong, was arrested Monday on charges of foreign collusion under a new national security law sharply criticized by the United States. The 71-year-old founder of the Apple Daily outlet and a longtime antagonist of communist China was taken in custody as police raided his newsroom seeking documents. Lai was already facing other charges related to his organization of protests last year, but the new counts sent shockwaves through Hong Kong. Lai’s arrest was part of a larger police operation. Hong Kong law enforcement officials said at least seven people aged 39 to 72 had been arrested on suspicion of collusion with foreign forces against national security, and conspiracy to commit fraud.

Twitter thread from Deficit Owl h/t Steve Keen. I’ve said it before: we must have these discussions.

• Should The Government Balance Its Budget? (DO)

One popular idea in “Keynesian economics” is that the government should balance its budget over the course of the business cycle, running deficits for stimulus during recessions, then surpluses in booms to bring down the debt. This is a bad strategy, because it neglects the interconnectedness of financial positions in the economy. One entity’s spending is another’s income; so for somebody to run a surplus, somebody else has to run a deficit. So if we say “gov should run a surplus,” what does that imply about private financial positions? In the US, because of structural factors that aren’t going away anytime soon, we nearly always run deficits against the rest of the world (the trade/current account deficit), meaning that we send income overseas that doesn’t come back as spending.

That means that for the US private sector balance to be positive (a surplus), the gov sector balance has to be negative (a deficit) and it has to be at least as large as the losses to the foreign sector (the gov deficit ≥ the current account deficit). The private sector doesn’t need to be in surplus at all times. But we also wouldn’t expect it to be continually in deficit – that would imply, on net, ever-worsening financial positions in the private sector, running down saved assets and/or issuing new IOUs. So what happens to the private sector if the gov “balances its budget over the cycle”? In recessions, depending on the size of the gov deficit, the private sector will be balanced or running small surpluses (because the foreign deficit cancels out some/all of the gov deficit). But in booms, the private sector would be deeply in the red (deficit), because the gov surpluses would be subtracting income out of the private sector, while the foreign sector is doing it too. /7

This discussion is far from over.

• One-Fifth Of All Mail-in Ballots Disqualified In NYC Primary (JTN)

Tens of thousands of mail-in voting ballots in the recent New York Democratic presidential primary election were disqualified without being counted — a sign that the country’s looming presidential election, one which may be conducted significantly by mail, could be facing procedural chaos over countless disputed and uncounted votes. A total of more than 84,000 ballots were disqualified in the city primary — roughly 21%, or one out of every five votes — many of them due to late submissions, lack of postmarks and missing signatures. Kings County — the borough of Brooklyn — alone saw 30,000 ballots invalidated. The disorganized voting and tallying process could signal a coming crisis in November, when much of the American vote is expected to be submitted via mail due to fears of the coronavirus.

A Pew Research Center Poll from June found that just one out of every five Americans voted by mail in the 2016 election; many officials across the country have been pushing in recent months for every American voter to receive a mail-in ballot. President Trump has of late warned repeatedly that the mail-in voting process is ripe for fraud and abuse, yet the disarray of New York’s primary suggests procedural issues may form a much larger concern for election integrity in November. A localized ruling by a federal judge last week has thrown the New York primary into even greater disorder. Judge Analisa Torres ruled Aug. 3 that, due to faulty mailing and processing issues, all mail-in votes in the state received up to two days after the election must be counted so long as they were postmarked by the day of the election.

Torres extended that order to cover all elections across the state, claiming that not doing so “would risk running afoul of the Constitution’s guarantee of equal treatment.” State Board of Elections spokesman John Conklin told Just the News that Torres’ ruling has not yet been enforced. “The State Board of Elections is appealing the decision,” he said via email. “If we lose the appeal then all affected boards will have to conduct additional canvassing for absentee ballots received on June 24th and 25th without a postmark. The local boards would then submit amended certifications of their primary results.”

“It is not expected that the outcome in any contest will be changed,” Conklin added. “Absentee ballots can be disqualified for any number of statutory reasons,” he added, including “late postmark, no postmark, the Oath envelope not signed and dated by the voter, the signature on the Oath envelope does not match the signature in the voter’s registration record, the Oath envelope not sealed by the voter, the voter is deceased, the voter showed up in person to vote on Election Day,” and numerous other factors.

There was zero need to drop it, or the Hiroshima bomb. Japan had been looking for a way to surrender for months. But Russia also declared war on Japan, and that changed things.

• The Very Un-Christian Nagasaki Bomb (Kohls)

Seventy-five years ago today, an all-Christian bomber crew dropped “Fat Man,” a plutonium bomb, on Nagasaki, Japan, instantly annihilating tens of thousands of innocent civilians, a disproportionate number of them Japanese Christians, and wounding uncountable numbers of others. For targeting purposes, the bombing crew used St. Mary’s Urakami Cathedral, the largest Christian church in East Asia. At 11:02 a.m., on Aug. 9, 1945, when the bomb was dropped over the cathedral, Nagasaki was the most Christian city in Japan. At the time, the United States was arguably the most Christian nation in the world (that is, if you can label as Christian a nation whose churches overwhelmingly have failed to sincerely teach or adhere to the peaceful ethics of Jesus as taught in the Sermon on the Mount).

The baptized and confirmed Christian airmen, following their wartime orders to the letter, did their job efficiently, and they accomplished the mission with military pride, albeit with a number of near-fatal glitches. Most Americans in 1945 would have done exactly the same if they had been in the shoes of the Bock’s Car crew, and there would have been very little mental anguish later if they had also been treated as heroes. Nevertheless, the use of that monstrous weapon of mass destruction to destroy a mainly civilian city like Nagasaki was an international war crime and a crime against humanity as defined later by the Nuremberg Tribunal. Of course, there was no way that the crew members could have known that at the time. Some of the crew did admit that they had had some doubts about what they had participated in when the bomb actually detonated.

Of course, none of them actually saw the horrific suffering of the victims up close and personal. “Orders are orders” and, in wartime, disobedience can be, and has been, legally punishable by summary execution of the soldier who might have had a conscience strong enough to convince him that killing another human, especially an unarmed one, was morally wrong. When Nagasaki was destroyed, it had been only three days since another U.S. atomic bomb, nicknamed “Little Boy,” had decimated Hiroshima. The Nagasaki bombing on Aug. 9 occurred amid chaos and confusion in Tokyo, where the fascist military government, which had known for months that it had lost the war, was searching for a way to honorably surrender.

The only obstacle to surrender had been the Allied insistence on unconditional surrender, which meant that the Emperor Hirohito, whom the Japanese regarded as a deity, would be removed from his figurehead position in Japan and possible subjected to war crimes trials. That was a deal-breaker, an intolerable demand for the Japanese that prolonged the war and prevented Japan from giving up months earlier.

St. Mary’s Urakami Cathedral after the bomb exploded above it as shown in a photograph dated Jan. 7, 1946.

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1944 CIA memo on how to infiltrate an organisation

This statue doesn’t like dogs. Think we should topple it?

That statue hates dogs and should be torn down. pic.twitter.com/3gRvJs4Pj8

— Life on Earth (@planetpng) July 30, 2020

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Debt Rattle March 18 2020

Mar 182020

March 18, 2020 Posted by Raúl Ilargi Meijer at 11:00 am Finance Tagged with: Bailouts, Boeing, casinos, central banks, coronavirus, Covid19, Cyprus, EU, hotels, Mnuchin, money tree, unemployment 47 Responses »

Matson Aircraft refueling at Semakh, British Mandate Palestine 1931

• Global Powers Unleash Trillions Of Dollars To Stem Coronavirus Crisis (R.)

• We’re at a Real Risk of Financial Markets Being Closed – Bianco (NZZ)

• The Lesson (Henrich)

• Boeing Seeks ‘Tens Of Billions’ In Bailouts (ZH)

• Hotel Industry To Ask Trump For $150 Billion In Aid (LAT)

• American Indian Casinos Close For Coronavirus, Seek $18 Billion Aid (R.)

• Mnuchin Warns Senators Of 20% US Unemployment Without Coronavirus Rescue (R.)

• 18% Of US Workers Have Lost Jobs Or Hours Since Coronavirus Hit (LAT)

• COVID-19 Pandemic Could Continue For 2 YEARS – German Health Expert (RT)

• New Coronavirus Can Persist In Air For Hours And On Surfaces For Days (R.)

• Australian Scientists Map How Immune System Fights Virus (BBC)

• A Coronavirus Outbreak In Jails Or Prisons Could Turn Into A Nightmare (Vox)

• Cyprus Bans Flights From 28 Countries From March 21 (R.)

• Beijing Tells NYT, WSJ, WaPo Journalists To Hand In Credentials (RT)

It is truly great to see that over the past 10 days or so, millions of coronavirus experts worldwide have come out of hiding whose existence we knew nothing about beforehand. We at the Automatic Earth have been following the virus for well over 2 months, and not only do we still not understand as much as all these experts, we even contradict ourselves and each other from time to time. With all the new expert knowledge and -especially- opinions, no doubt the crisis will be solved real soon now.

When I started working very early this working, one of the first things I saw was this from Reuters. Which shows, while for instance Worldometer still had total deaths at 7,915, a 8,410+ number. Somehow it feels too specific for just a random mistake. Worldometer now says 8,010, so there is an increase, but not nearly as much.

Do note, however, that both cases and deaths are up by much larger numbers in the past 24 hours than ever before…

• Cases 202,270 (+ 18,137 from yesterday’s 184,133)

• Deaths 8,012 (+ 830 from yesterday’s 7,182)

These numbers, too, are rising relentlessly.

From Worldometer yesterday evening (before their day’s close)

From Worldometer -NOTE: mortality rate is now at 9%!- (Note: some call this rate “misleading”, but that can by definition only be true if you don’t know the parameters. Worldometer is very clear: the death rate is part of Closed Cases, not All Cases. You may argue that Active Cases should be part of the equation, but that would only insert uncertainty into the number. Neither Worldometer nor I imply that 9% will be the ultimate fatality rate, just that at present it’s the rate among Closed Cases.)

From SCMP: (Note: the SCMP graph was useful when China was the focal point; they are falling behind now)

From COVID2019.app: (New format lacks new cases and deaths)

Somebody found a money tree. Or, rather, one in every country.

• Global Powers Unleash Trillions Of Dollars To Stem Coronavirus Crisis (R.)

The world’s richest nations prepared more costly measures on Tuesday to combat the global fallout of the coronavirus that has infected tens of thousands of people, triggered social restrictions unseen since World War Two and sent economies spinning toward recession. With the highly contagious respiratory disease that originated in China racing across the world to infect more than 196,000 people so far, governments on every continent have implemented draconian containment measures from halting travel to stopping sporting events and religious gatherings. While the main aim is to avoid deaths – currently at over 7,800 – global powers were also focusing on how to limit the inevitably devastating economic impact.

In the world’s biggest economy, U.S. President Donald Trump’s administration has proposed pumping $1 trillion into the market. Trump wants to send cash to Americans within two weeks as the country’s death toll approached 100 and more testing sent the number of coronavirus cases to over 5,700. Airlines are among the worst-hit sector, with U.S. carriers seeking at least $50 billion in grants and loans to stay afloat as passenger numbers evaporate. Britain, which has told people to avoid pubs, clubs, restaurants, cinemas and theaters, unveiled a 330 billion pounds ($400 billion) rescue package for businesses threatened with collapse. Budget forecasters said the scale of borrowing needed might resemble the vast amount of debt taken on during the 1939-1945 war against Nazi Germany.

“Now is not a time to be squeamish about public sector debt,” Robert Chote, head of the Office for Budget Responsibility, which provides independent analysis of the UK’s public finances, told lawmakers. France is to pump 45 billion euros ($50 billion) of crisis measures into its economy to help companies and workers, with output expected to contract 1% this year. “I have always defended financial rigor in peacetime so that France does not have to skimp on its budget in times of war,” Budget Minister Gerald Darmanin was quoted as saying by financial daily Les Echos. The European Union eased its rules to allow companies to receive state grants up to 500,000 euros ($551,000) or guarantees on bank loans to ensure liquidity.

But even with the promised cash splurges, world stock markets and oil prices were unable to shake off their coronavirus nightmare after Wall Street on Monday saw its worst rout since the Black Monday crash of 1987. The Philippines was the first country to close markets, while Europe – now the epicenter of the pandemic – saw airline and travel stocks plunge another 7%.

Central banks have run out of tools. Philippines the first to close markets altogether.

• We’re at a Real Risk of Financial Markets Being Closed – Bianco (NZZ)

Mr. Bianco, the Federal Reserve takes massive emergency actions. What does this mean for financial markets? The Central Banks went all in. They fired all of their ammunition and they’ve got only one goal in mind: They have to stop the decline in financial markets. This started late last week with the Fed’s giant repo operation. You can also throw in the announcements of the ECB and the Bank of Japan. Plus, we have the extraordinary actions taken by European governments to stem the effects of the pandemic. The government of Germany for instance is basically guaranteeing everybody’s job.

However, investors don’t seem convinced. What’s going to happen if markets drop further? Central Banks need to stop the stock market from falling through last week’s low. I believe if markets fall through those levels and keep going down, the so-called Fed Put is dead. It doesn’t work anymore, so quit trying to find new ways to exercise it. Just understand Einstein’s definition of insanity: Doing the same thing over and over again, and expecting different results.

What are the ramifications if the Fed Put doesn’t work anymore? Central Banks will need to move on. So if stocks make new lows we’re at a real risk of financial markets being closed. The Fed and other Central Banks have fired all their ammunition and if markets crash through last week’s lows, there’s nothing left. The Fed can’t buy equities outright without a change of the Federal Reserve Act. It would take weeks for Congress to do that. Even if Congress moves with lightning speed it will take them at least a week, and it will be over before that.

What would be the benefit of closing markets? It took the stock market sixteen trading days to drop by 27% from the all-time highs to Thursday’s lows. We have never seen anything close to that in history. The closest we’ve ever been in history was 1929, when it took 42 days to get from the all-time highs to a 20% correction. The speed in this decline is unprecedented.

Why is it so important to stop this crash? If it continues, you will get margin calls, involuntary liquidation. Markets will lose their ability to price securities, especially things like high yield bonds and emerging markets securities. Funds in those areas will be unavailable for people to redeem because they won’t have any prices. There will be trapped money. Also, you will get broken covenants in the corporate debt area, and that will force changes of control or restructurings. But the biggest damage will be that pensions will become underfunded. Companies will be forced to pony up billions of Dollars to get their pensions back into funding.

[..] You’re been in the investment business for a long time and have seen quite a few crashes. How do you experience this crisis personally? This is unlike anything we’ve seen in our lifetime. What’s going on in financial markets today exceeds the financial crisis of 2008, it exceeds 9/11, it exceeds the tech peak, and it exceeds the 1987 crash. Maybe 1929 is still bigger, but few of us were alive then. We’re writing a new chapter for American and world history textbooks. We’re only a few pages into it, and we’re not sure how it will end, but our grandchildren will one day learn school about the great pandemic of 2020 and what it meant for world history.

“What I’m opposed to is the hype, hypocrisy and excess that has preceded it. People got greedy, they piled into stocks at ungodly valuations. Companies that didn’t save or prepare for a crisis, instead were focused on short term market gains to juice up their stock prices. Companies such as Boeing that cut corners and blew money on buybacks for financial engineering purposes to enrich upper management and shareholders. I say screw them..”

• The Lesson (Henrich)

The lesson of it all? The lesson is that lessons are not being learned. Of course the human species has an ingrained problem: We are all born with a blank sheet and have to learn everything from scratch. It would be helpful though if the elders could pass lessons from past mistakes on to the new generation. But no. So we keep making the same stupid mistakes. And here we are. Just four weeks after all time highs in markets America is again turning into bailout nation. Yes coronavirus is an unforeseen shock. So what? We’re supposed to handle a shock. We’re supposed to be prepared. We’re supposed to have savings and great balance sheets.

After an 11 year recovery and market bull run based on cheap and easy money shouldn’t things be great and shouldn’t we be well prepared for the next downturn? Is that really too much to ask? Apparently. We can’t even go 4 weeks without the Fed going apeshit on cutting rates to zero, launching $700B in QE, making discount windows available and launching $500B, even trillion dollar repos. We can’t even go 4 weeks without the government launching a proposed $850B stimulus package, tax cuts, free money checks of $1,000 to Americans and suggesting bailouts for $BA and $GE. That’s how fragile things are. They must be, otherwise the system would be able to handle a temporary shock. But it can’t. Why? Well for one our supposed great economy ever has the vast majority of Americans live paycheck to paycheck:

The consumer is doing great:

“78 percent of full-time workers said they live paycheck to paycheck, up from 75 percent last year.
Overall, 71 percent of all U.S. workers said they're now in debt, up from 68 percent a year ago.” https://t.co/iLgLYRrPYN

— Sven Henrich (@NorthmanTrader) December 15, 2019

That’s a systemic problem. Sure you can blame people for living beyond their means, but in general most people just don’t have the income power to keep abreast with rising medial costs, home prices and all the other fun inflationary items that the Fed simply doesn’t count as inflation. How ignorant they are. PCE deflator. Please. And then of course the same lesson again not learned that keeps repeating ahead of every bust: Greed and more greed. When has it ever been a good idea to chase stocks to 150% market cap to GDP or even higher? The answer is never. Yet they convinced themselves and others that it’s different this time. New flash: It wasn’t. A lesson not learned and yet they did it. The chart was screaming unsutainability. And here we are 4 weeks later, yesterday closing at 109.5% market cap to GDP:

Reversion to the mean. And it could eventually get much worse. I showed this chart in Bull Cliff in February and I stated: “Investors keep piling money into this historically priced market….Central banks can deny all they want that they are not responsible for asset price inflation, but everybody knows better. The denials are not only hollow they are straight out lies. And having created the Pavlovian effect we now see in the investment community they are leading investors to abandon all sense of risk when risks are mounting ever more around us as valuations and earnings multiples keep expanding as a result of monetary policy. And hence it may be said that central bankers may be leading investors off the cliff.”

[..] I’m not opposed to the government stepping in to help in an emergency. That’s why we have government. What I’m opposed to is the hype, hypocrisy and excess that has preceded it. People got greedy, they piled into stocks at ungodly valuations. Companies that didn’t save or prepare for a crisis, instead were focused on short term market gains to juice up their stock prices. Companies such as Boeing that cut corners and blew money on buybacks for financial engineering purposes to enrich upper management and shareholders. I say screw them. If you don’t learn the lessons of the past then live with the consequences. And who pays ultimately for the consequences? We’ve seen this movie before

Still the greatest financial crisis explanation rant ever.
See if you note anything different 10 years later.#wankingbankers pic.twitter.com/FHutYeSJqD

— Sven Henrich (@NorthmanTrader) January 24, 2019

Even Tyler Durden vehemently disagrees. But this is major military supplier Boeing.

• Boeing Seeks ‘Tens Of Billions’ In Bailouts (ZH)

In its latest 8K, the plunging planemaker has completely drawn down its $13.8 billion credit line that it entered in October 2018 as it “navigates current business challenges” exposing just how fast this company is burning through cash. [..] This comes just hours after sources told Reuters that Boeing is seeking a bailout of ‘tens of billions’ in US government loan guarantees amid the Covid-19 crisis.[..] As we raged previously, this bailout demand comes after the company blew nearly $100 billion on stock buybacks since 2013 helping push its stock to all-time highs not that long ago, and instead of selling stock to get liquidity, they’re asking the Trump administration for a massive bailout.

So, no, nobody in their right minds should give Boeing even one penny in “short term aid”. Instead, management and the board should be ordered to sell as much stock as they need – you know, the opposite of buying it back – to maintain the business, even it means sending the stock price crashing far lower. Because it’s called capitalism, and because there is no reason why taxpayers should foot the bill for a company which instead of saving cash when times were good, was handing it out to shareholders and a handful of executives, and which should now for some insane reason be eligible for a bailout when times suddenly go bad. No: force Boeing – and others like it that spent billions repurchasing its stock while incurring massive amounts of debt – to sell its stock.

After all that’s what a public company’s stock is – a currency – and just as Boeing could repurchase it when it had cash, and lifted its stock price to all time highs, it should now sell its stock and use the proceeds to fund itself, like any other corporation does when it needs funding. Last time we checked, Boeing’s market cap was $73 billion, and it certainly afford to drop much more as the company now does the buyback in reverse. This is also a warning to Congress and the White House: if chronic stock repurchasers such as Boeing, are bailed out instead of ordered to find their own sources of liquidity, there will be a mutiny in America and rightfully so, because it was Boeing’s shareholders that got rich on the way up, and now it is somehow up to taxpayers to make sure the company, loaded up with record amounts of debt used to fund buybacks, survives one more quarter. That, in a word, is bullshit.

We have this opportunity to get the rotten apples out, but are we going to use it?

• Hotel Industry To Ask Trump For $150 Billion In Aid (LAT)

Staggered by the coronavirus outbreak, the lodging industry requested $150 billion in aid from the Trump administration Tuesday as Marriott International announced plans to furlough tens of thousands of workers. After a White House meeting with President Trump and Vice President Mike Pence, hotel industry leaders said the virus outbreak is on pace to cause a bigger economic hit than the 2001 terrorist strikes and the 2008-09 recession combined. In addition to the $150 billion requested by the hotel industry, other sectors of the travel industry — such as convention centers, theme parks and tour companies — have requested $100 billion in funding to overcome the crisis, said Roger Dow, president of the U.S. Travel Assn., the trade group for the country’s travel industry.

That is on top of the $58 billion in aid requested Monday by the airline industry to overcome a surge in flight cancellations amid new travel restrictions. Without federal aid to the travel and lodging industries, the U.S. could lose as many as 4 million jobs in 2020, pushing the unemployment rate from 3.3% to 6.3% across the country, Dow said. Hotel occupancy rates were around 80% a few weeks ago but are now 10% to 20% in the busiest cities of the country, Chip Rogers, president of the American Hotel & Lodging Assn., said in a conference call with reporters. The federal aid, he said, has been requested in the form of grants to keep workers employed until the crisis subsides. Details about how the money would be disbursed had yet to be decided, Rogers said.

Should casinos be bailed out? Or only those owed by Native Americans?

• American Indian Casinos Close For Coronavirus, Seek $18 Billion Aid (R.)

The Native American gaming industry on Tuesday requested $18 billion in U.S. federal aid as it shut casinos that are the sole source of commercial revenue for dozens of tribes in a bid to slow the coronavirus epidemic. Tribal governments will be unable to provide health and education services and will default on loans unless they get federal support to make up for lost casino money, the National Indian Gaming Association said in a letter to members of the U.S. House of Representatives. “Providing the means for tribal governments to continue paying all employees’ salaries and benefits will immensely help this country recover,” according to the letter addressed to Representatives Deb Haaland and Tom Cole of the House Native American Caucus.

The United States’ roughly 460 Indian casinos are in the process of closing given the threat of coronavirus to tribal members and many non-Native American employees. Tribes are sovereign nations but are following advice from U.S. states and the federal government to slow the virus’ spread. That means shutting American Indian casinos which employ a combined 700,000-plus people directly and indirectly and generated over $37 billion in 2017, making them the largest segment of the U.S. gaming industry, according to the association.

Frances Coppola: “Demand is falling because of virus control measures. Giving people money to spend (above their normal income) while simultaneously making it impossible for them to spend it is absurd.”

• Mnuchin Warns Senators Of 20% US Unemployment Without Coronavirus Rescue (R.)

U.S. Treasury Secretary Steven Mnuchin warned Republican senators on Tuesday that the country’s unemployment rate could hit 20% if they failed to act on a proposed coronavirus rescue package and there was lasting economic damage, a person familiar with the closed-door meeting said. Mnuchin met with senators to persuade them to pass a $1 trillion stimulus package that would send cash to Americans within two weeks and backstop airlines and other companies. The Senate is majority-controlled by President Donald Trump’s fellow Republicans. A Treasury official said Mnuchin was not providing a forecast but trying to illustrate the potential risks of inaction.

“During the meeting with Senate Republicans today, Secretary Mnuchin used several mathematical examples for illustrative purposes, but he never implied this would be the case,” Treasury spokeswoman Monica Crowley said in an emailed statement. The warning was similar to one issued to U.S. lawmakers at the depths of the 2008 financial crisis, when Treasury Secretary Henry Paulson and Federal Reserve Chair Ben Bernanke went to Capitol Hill to urge passage of a $700 billion plan to buy toxic mortgage assets.

Amazingly nice comment from @DanaBashCNN.

President @realDonaldTrump “is being the kind of leader that people need.”

It is incredible that unity is the byproduct of this aweful virus. It is beautiful to see and this is a great start. Thanks Dana…

pic.twitter.com/9ZNyOJkipx

— Eric Trump (@EricTrump) March 18, 2020

“56% of Americans considered the coronavirus outbreak a “real threat,” while 38% said it was “blown out of proportion.”

• 18% Of US Workers Have Lost Jobs Or Hours Since Coronavirus Hit (LAT)

As fallout from the coronavirus pandemic hits the economy, it’s slamming the American workforce: Some 18% of adults reported that they had been laid off or that their work hours had been cut, a new poll found. The proportion affected grew for lower-income households, with 25% of those making less than $50,000 a year reporting that they had been let go or had their hours reduced, according to a survey released Tuesday by NPR, PBS NewsHour and Marist of 835 working adults in the contiguous United States. The poll was conducted Friday and Saturday, just after stocks began their steep plunge and normal life started grinding to a halt, with schools and places of worship closing, concerts and conferences being canceled and sports leagues suspending their seasons. The same poll found that about 56% of Americans considered the coronavirus outbreak a “real threat,” while 38% said it was “blown out of proportion.”

Couldn’t we all make this prediction? It depends on 1001 variables. Who needs an expert for this?

• COVID-19 Pandemic Could Continue For 2 YEARS – German Health Expert (RT)

A senior German disease control expert has warned that the coronavirus pandemic could continue for two years, depending on how long it takes for an effective vaccine to be developed and if people develop immunity after illness. Speaking on Tuesday, the Robert Kock Institut’s (RKI) president, Prof. Lothar Wieler, said pandemics tend to run their course in waves, and factors influencing how it unfolds from this point include how many people become immune to it after contracting the virus – and how quickly a vaccine is made. The RKI, a German federal agency responsible for disease control and prevention, on Tuesday raised the country’s threat level from the ongoing coronavirus pandemic from ‘moderate’ to ‘high’.

It said the revision comes in light of the continuing increase in new infections of the rapidly-spreading virus, which originated in China late last year and whose symptoms range from fever to serious respiratory illness. Germany has recorded over 7,900 cases of Covid-19 to date, with 20 deaths. New research from RKI scientists and the Helios clinic group also says that the novel coronavirus can more seriously afflict adults aged under 60 who have no underlying health conditions than similar patients suffering severe pneumonia in the regular flu season.

Although countries around the globe have largely stepped up measures to counter the spread of the virus, including border closures, shutting schools and limiting mass gatherings, Covid-19 cases outside of China recently surpassed the total figure recorded inside the country that had, until now, suffered the worst of the outbreak. Italy, in particular, is struggling with the pandemic and recorded a larger single-day number of deaths last weekend than China did at the worst of the peak there.

I thought we already knew that, but the article is dated the 17th.

• New Coronavirus Can Persist In Air For Hours And On Surfaces For Days (R.)

The highly contagious novel coronavirus that has exploded into a global pandemic can remain viable and infectious in droplets in the air for hours and on surfaces up to days, according to a new study that should offer guidance to help people avoid contracting the respiratory illness called COVID-19. Scientists from the National Institute of Allergy and Infectious Diseases (NIAID), part of the U.S. National Institutes of Health, attempted to mimic the virus deposited from an infected person onto everyday surfaces in a household or hospital setting, such as through coughing or touching objects. They used a device to dispense an aerosol that duplicated the microscopic droplets created in a cough or a sneeze.

The scientists then investigated how long SARS-CoV-2 remained infectious on these surfaces, according to the study that appeared online in the New England Journal of Medicine on Tuesday – a day in which U.S. COVID-19 cases surged past 5,200 and deaths approached 100. The tests show that when the virus is carried by the droplets released when someone coughs or sneezes, it remains viable, or able to still infect people, in aerosols for at least three hours. On plastic and stainless steel, viable virus could be detected after three days. On cardboard, the virus was not viable after 24 hours. On copper, it took 4 hours for the virus to become inactivated.= In terms of half-life, the research team found that it takes about 66 minutes for half the virus particles to lose function if they are in an aerosol droplet.

That means that after another hour and six minutes, three quarters of the virus particles will be essentially inactivated but 25% will still be viable. The amount of viable virus at the end of the third hour will be down to 12.5%, according to the research led by Neeltje van Doremalen of the NIAID’s Montana facility at Rocky Mountain Laboratories. On stainless steel, it takes 5 hours 38 minutes for half of the virus particles to become inactive. On plastic, the half-life is 6 hours 49 minutes, researchers found. On cardboard, the half-life was about three and a half hours, but the researchers said there was a lot of variability in those results “so we advise caution” interpreting that number.

Encouraging, but looks like a long time option.

• Australian Scientists Map How Immune System Fights Virus (BBC)

Scientists in Australia say they have identified how the body’s immune system fights the Covid-19 virus. Their research, published in Nature Medicine journal on Tuesday, shows people are recovering from the new virus like they would from the flu. Determining which immune cells are appearing should also help with vaccine development, experts say. “This [discovery] is important because it is the first time where we are really understanding how our immune system fights novel coronavirus,” said study co-author Prof Katherine Kedzierska. The research by Melbourne’s Peter Doherty Institute for Infection and Immunity has been praised by other experts, with one calling it “a breakthrough”.

Many people have recovered from Covid-19, meaning it was already known that the immune system can successfully fight the virus. But for the first time, the research identified four types of immune cells which presented to fight Covid-19. They were observed by tracking a patient who had a mild-to-moderate case of the virus and no previous health issues. The 47-year-old woman from Wuhan, China, had presented to hospital in Australia. She recovered within 14 days. Prof Kedzierska told the BBC her team had examined the “whole breadth of the immune response” in this patient. Three days before the woman began to improve, specific cells were spotted in her bloodstream. In influenza patients, these same cells also appear around this time before recovery, Prof Kedzierska said.

Chest scans showed the patient’s lungs clearing after immune cells appeared

Iran has released 54,000 + 85,000 prisoners “temporarily”.

• A Coronavirus Outbreak In Jails Or Prisons Could Turn Into A Nightmare (Vox)

The next site of a deadly coronavirus outbreak may not be a cruise ship, conference, or school. It could be one of America’s thousands of jails or prisons. Just about all the concerns about coronavirus’s spread in packed social settings apply as much, if not more, to correctional settings. In a prison, multiple people can be placed in one cell. Hallways and gathering places are often small and tight (often deliberately so, to make it easier to control inmates). There is literally no escape, with little to no space for social distancing or similar recommendations experts make to combat coronavirus. Hand sanitizer can be contraband.

Such an outbreak could not only infect and kill hundreds or thousands of people in prison, but potentially spread to nearby communities as well. Visitors and correctional staff could spread the disease when they go back home, and inmates could spread it when they’re released. Even an outbreak contained within a jail or prison could strain nearby health care systems, as hundreds or thousands of people suddenly need medical care that jails and prisons themselves can’t provide. So if you want to “flatten the curve” to spread out the illness and avoid overwhelming health care systems, experts say, you should worry about coronavirus in prisons and jails.

In the US, the concern is particularly acute because America puts so many people in jail or prison. The US locks up about 2.3 million people on any given day — the highest prison and jail population of any country in the world. With an incarceration rate of 655 per 100,000 people, the US locks up people at nearly twice the rate of Russia, more than five times that of China, more than six times Canada and France, nearly nine times Germany, and almost 17 times Japan. “We can learn what works in terms of mitigation from other countries who have seen spikes in coronavirus already, but none of those countries have the level of incarceration that we have in the United States,” Tyler Winkelman, a doctor and researcher at the University of Minnesota focused on health care and criminal justice, told me.

While France and Germany go out of their way to keep EU (Schengen) borders open, EU member Cyprus says no.

• Cyprus Bans Flights From 28 Countries From March 21 (R.)

Cyprus on Tuesday announced a two-week ban on flights from 28 countries, including Britain and Greece, to curb the coronavirus outbreak. The measure will come into effect from 0100 GMT on March 21 for a 14-day period, an official statement said. It does not affect cargo flights. The island has already enacted stringent entry requirements, effective from March 16, barring anyone into the island, including Cypriots, without a medical certificate that they are clear of coronavirus. Those who do arrive are placed in compulsory quarantine in a government-supervised facility for two weeks. The east Mediterranean island has reported 49 cases of coronavirus.

Australia’s DFAT travel advisory map has been updated. Every country in the world is labelled “Do Not Travel”, for the first time ever.

Best friends.

• Beijing Tells NYT, WSJ, WaPo Journalists To Hand In Credentials (RT)

China is pulling the press credentials of US journalists from outlets including the New York Times and the Washington Post whose passes expire in 2020, in the latest move of an ongoing tit-for-tat with America over media access. In a statement about China’s “countermeasures against US suppression of Chinese media organizations in the United States,” Beijing announced that American reporters working for the NYT, Wall Street Journal, Voice of America, Time and the Washington Post whose credentials are due to expire by the end of this year must hand them over within 10 days. These reporters will also not be allowed to work in China – including Hong Kong and Macau – in the future, and other US journalists will face new visa restrictions similar to those Washington recently introduced for Chinese reporters.

“In view of the US’ discriminatory restrictions on visas, administrative review, and interviews of Chinese journalists, China will take reciprocal measures against US journalists,” it added. The back-and-forth expulsions of journalists started in February, when Chinese authorities gave three Wall Street Journalists five days to leave the country after Beijing objected to an opinion piece in the outlet calling China the “real sick man of Asia.” The paper refused to apologize for the piece. Shortly afterwards, the US dramatically reduced the number of journalists it would permit to work for four Chinese state-owned media companies inside the US, cutting the number allowed from 160 to 100. They also reduced the length of time those permitted entry could remain in the US. Beijing condemned the move as reflecting a “Cold War mindset” and warned of retaliation.

Clean water in Venice for the first time in forever. The flipside of this: Free parking in Athens to limit use of public transportation.

https://twitter.com/ikaveri/status/1239660248207589383

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Debt Rattle September 13 2019

Sep 132019

September 13, 2019 Posted by Raúl Ilargi Meijer at 9:44 am Finance Tagged with: Bercow, Boeing, Boris, Brexit, BRI, ECB, Huawei, Israel, McCabe, Mnuchin, Queen, Taliban 7 Responses »

Marc Chagall The watering trough 1925

• The Dogs in the Street Know (Craig Murray)

• Speaker Bercow Warns Boris Johnson Against Disobeying Brexit Law (BBC)

• Former FBI Deputy Director Andrew McCabe Must Face Criminal Charges (CNBC)

• US House Panel Wants Boeing To Allow Employee Interviews On 737 MAX (R.)

• US Pressures Israel To Drop China ‘Belt And Road’ Investments (ZH)

• Huawei CEO Offers To License 5G Technology To American Companies (F.)

• Mnuchin Says 100-Year Treasury Bond Possible (R.)

• US Justice Department To Release Name Of Shadowy Figure In 9/11 Case (R.)

• Trump’s Taliban Talks Led by Neocon Operation Cyclone Agent (MPN)

• Palace Revolt at the ECB, Legitimacy of Policy out the Window (WS)

• The New ECB QE Is A Mistake. Here Is What It Should Have Done (Lacalle)

A Scotsman taking down the Queen.

• The Dogs in the Street Know (Craig Murray)

There are some very obvious facts in British politics which nobody seems to be saying. Joanna Cherry stated in her successful court case that “the dogs in the street know” that the real reason that Boris Johnson had prorogued parliament was to prevent parliament from having an effective say on the outcome of Brexit. The documents that the government was forced to produce to the Scottish Courts proved beyond any shadow of a doubt that was indeed Johnson’s motive. So why are we expected to believe that what you knew and I knew, what Joanna Cherry knew, what the very dogs in the street knew, was not known to the Queen?

Do we really believe that the Queen was “misled” and that she and her courtiers were the only people in the entire country who actually believed that Johnson just wanted the longest prorogation for 89 years to prepare a really good Queen’s speech? Are we really expected to believe that the Queen had not noticed that Brexit was at a crucial stage and the effect that prorogation would have on parliament’s say in the process? This is obviously complete and utter nonsense. The Queen has better sources of information than any of us and knew exactly what was happening. She was not “misled” by Boris Johnson, she was his ally in a common purpose. She absolutely understood both the context and the effect of the prorogation. All this utter nonsense about the Queen being “lied to” and “misled” is part of this strange myth of the ultimate goodness of authority which is a recurring theme in human societies.

Peasants died under the knout while building the Trans-Siberian railway thinking “if only the good Tsar knew.” The Queen is not a naive figure of Christ like innocence taken in by Boris Johnson, she is an ultra wealthy woman of very conservative views embedded in a social circle dominated by very rich and reactionary people. To repeat what I have repeatedly explained, it was unconstitutional for the Queen to appoint Boris Johnson in the first place when it was plain as a pikestaff that he could not command a parliamentary majority. That initial crime (and I use the word advisedly) was compounded by the decision to prorogue parliament to enable her no majority Prime Minister to govern. In a sane world we should be getting out the pitchforks. Instead people are tut-tutting about the poor Queen being misled.

Prior to his election to Speaker, Bercow was a longtime member of the Conservative Party.

• Speaker Bercow Warns Boris Johnson Against Disobeying Brexit Law (BBC)

John Bercow has vowed “creativity” in Parliament if Boris Johnson ignores the law designed to stop a no-deal Brexit. The Commons Speaker also said in a speech that the only possible Brexit was one backed by MPs. A new law, passed before the suspension of Parliament, forces the PM to seek a delay until 31 January 2020, unless a deal or no-deal exit is approved by MPs by 19 October. The PM has said he would rather be “dead in a ditch” than ask for a delay. Delivering a lecture in London, Mr Bercow said: “Not obeying the law must surely be a non-starter. Period.” He said it would be a “terrible example to set to the rest of society”.

“The only form of Brexit which we will have, whenever that might be, will be a Brexit that the House of Commons has explicitly endorsed,” he said. “Surely, in 2019, in modern Britain, in a parliamentary democracy, we – parliamentarians, legislators – cannot in all conscience be conducting a debate as to whether adherence to the law is or isn’t required.” He called it “astonishing” that “anyone has even entertained the notion”. If the government comes close to disobeying the Act, the MP said that Parliament “would want to cut off such a possibility and do so forcefully”. “If that demands additional procedural creativity in order to come to pass, it is a racing certainty that this will happen, and that neither the limitations of the existing rule book nor the ticking of the clock will stop it doing so,” he added.

Hmm. Should McCabe run free?

• Former FBI Deputy Director Andrew McCabe Must Face Criminal Charges (CNBC)

Former FBI deputy director Andrew McCabe has failed in his efforts to convince the Justice Department not to file potential criminal charges against him for allegedly lying to federal agents, NBC News reported Thursday. Lawyers for McCabe, who has not been charged in the case, reportedly met last month with a top Justice official the U.S. Attorney for the District of Columbia and in what were believed to be talks seeking to dissuade then from filing criminal charges. The Washington Post reported last week that federal prosecutors for months have been using a grand jury to investigate McCabe, a critic of President Donald Trump.

They have to ASK?

• US House Panel Wants Boeing To Allow Employee Interviews On 737 MAX (R.)

Congress on Thursday asked Boeing Co’s chief executive to make several employees available for interviews as part of a congressional probe into the design, development and certification of 737 MAX aircraft involved in two crashes that killed 346 people. House of Representatives Transportation Committee Chairman Peter DeFazio and Representative Rick Larsen, who chairs the aviation subcommittee, said in a statement that while Boeing has provided substantial documents and shared senior management’s perspective, “it’s important to the committee’s investigation to hear from relevant Boeing employees.”

The committee plans another Boeing hearing in the coming weeks and previously asked whistleblowers to come forward with any information about the plane’s development. Boeing has provided more than 300,000 pages of documents, a person briefed on the matter said, speaking on condition of anonymity. Boeing said in a statement it was “deeply disappointed the committee chose to release private correspondence given our extensive cooperation to date. We will continue to be transparent and responsive to the committee.”

[..] CEO Dennis Muilenburg said at an investor conference on Wednesday that the company is still targeting “early fourth quarter for getting the airplane back up in the air” but added that “ultimately return-to-service timing will be determined by the regulator.” The FAA has repeatedly said it will not certify the plane to fly again until it is safe to do so. The European Aviation and Space Agency said on Tuesday it “intends to conduct its own test flights separate from, but in full coordination with, the FAA. The test flights are not scheduled yet, the date will depend on the development schedule of Boeing.”

If they’re pressuring Israel, they much be pressuring others too.

• US Pressures Israel To Drop China ‘Belt And Road’ Investments (ZH)

As China executes on its “Belt and Road” global trade scheme, more than 130 countries who have either committed to or expressed interest in the $600 billion initiative have been hard at work expanding their infrastructure to accommodate Beijing’s ambitious plan. And while President Trump has been pounding the table in an ongoing US-China trade war, progress made on Belt and Road threatens to reduce US leverage over Beijing – putting US allies such as Israel, which extended a 25-year offer for the operation of the Haifa terminal to state-controlled Shanghai International Port Group – in a tricky position, according to Bloomberg’s Ivan Levingston.

“With national elections approaching on Sept. 17, Prime Minister Benjamin Netanyahu can ill afford to alienate the Trump administration on its signature international issue. Trump has endeared himself to Netanyahu by transferring the U.S. Embassy from Tel Aviv to Jerusalem and recognizing Israeli sovereignty in the disputed Golan Heights. Netanyahu reciprocated by naming a new Golan settlement after Trump and praising the American leader for, among other things, quitting the Iranian nuclear accord. “Over the years, Israel has been blessed to have many friends who sat in the Oval Office, but Israel has never had a better friend than you,” Netanyahu told the president during a March trip to the White House. An October Pew study found that 69% of Israelis had confidence in Trump’s performance as president, and many of Netanyahu’s campaign ads prominently feature the U.S. leader.” -Bloomberg

Of note, China is currently Israel’s second-largest trading partner with around $11.5 billion in annual transactions in 2018, according to the report. Meanwhile, the United States has pressed Israel to create a buffer with China in the interest of national security – which would look something like the Committee on Foreign Investment in the US (the same one that rubber-stamped Russia’s purchase of 20% of America’s Uranium). “Israel and Israeli companies are quickly coming to the realization that it’s going to be difficult to sustain business as usual in work with China while keeping the United States as the primary partner,” said Daniel Shapiro, Barack Obama’s US ambassador to Israel.

How is Huawei linked to Belt & Road?

• Huawei CEO Offers To License 5G Technology To American Companies (F.)

Zhengfei Ren, the CEO and founder of Huawei offered an olive branch to the Trump administration: License the Chinese telecommunications giant’s 5G technology to American companies, with the caveat that the U.S. government ““the U.S. side has to accept us at some level for that to happen.” Currently, the use of Huawei equipment is banned from U.S. networks over concerns that it could be used by the Chinese government as a method to spy or disrupt telecom systems. The offer [..] would essentially allow the U.S. to finally get in the race for 5G supremacy which is now dominated by Chinese firms Huawei and ZTE, Ericsson of Sweden and Nokia from Finland.

“Huawei is open to sharing our 5G technologies and techniques with U.S. companies, so that they can build up their own 5G industry. That would create a balanced situation between China, the U.S. and Europe,” told Ren to the newspaper. [..] Ren added that the U.S. companies would be allowed to modify as they see fit the software code used to run any of Huawei’s 5G equipment or even change it and use their own. [..] Ren added that the American licensees will be able to sell their 5G equipment based on Huawei’s intellectual property anywhere in the world, except in China.

“We are going to start with 50 years, and if the answer is, 50-years is successful, we’ll consider 100-year bonds..”

• Mnuchin Says 100-Year Treasury Bond Possible (R.)

U.S. Treasury Secretary Steven Mnuchin on Thursday said the United States will issue 50-year bonds if there is “proper demand,” a moved aimed at “derisking” the government’s $22 trillion of debt and locking in low interest rates. “We are going to start with 50 years, and if the answer is, 50-years is successful, we’ll consider 100-year bonds,” Mnuchin said in an interview with New York Times’ DealBook and streamed online live, adding that he began looking into the possibility of ultra-long U.S. bonds two years ago. The longest-dated U.S. Treasury currently is 30 years.

U.S. President Donald Trump has proposed a different fix for the rising cost of the record U.S. debt, calling on Wednesday on the “boneheads” at the Federal Reserve to reduce interest rates to below zero so as to reduce interest-rate payments. The Fed is widely expected to cut interest rates by a modest quarter of a percentage point next week when U.S. rate-setters meet. Fed Chair Jerome Powell and other policymakers see U.S. economic conditions as still generally favorable despite a global slowdown and a still-unresolved U.S.-China trade war, and they have consistently pushed back against the notion of negative rates or of setting rates to cater to political pressure.

Is something moving?

• US Justice Department To Release Name Of Shadowy Figure In 9/11 Case (R.)

The U.S. Justice Department on Thursday said it would release the name of an individual sought by people who are suing the government of Saudi Arabia for alleged involvement in the Sept. 11, 2001, hijacking attacks. U.S. prosecutors in New York said in a court filing that Attorney General William Barr had decided not to invoke state secrets and will share the person’s name with attorneys involved in the case. The decision could help victims of the Sept. 11 attacks and their family members, who charge in a long-running lawsuit that the Saudi government supported the hijackers who crashed jet liners into the World Trade Center, the Pentagon and a Pennsylvania field, killing nearly 3,000 people.

The Saudi government has repeatedly denied involvement in the attacks. The Saudi embassy in Washington did not immediately respond to requests for comment on Thursday. The case, filed in 2003, received a boost in 2016 when Congress passed a law making it easier to sue foreign governments for alleged involvement in terrorism. The plaintiffs have been trying to obtain redacted material from a 2012 FBI report which indicated the agency was investigating two Saudi officials, Omar al-Bayoumi and Fahad al-Thumairy, and said there was evidence that a third, unnamed party had ordered them to help the hijackers. Attorneys will now get to learn the name of that person, though their identity will remain under seal.

Scary people.

• Trump’s Taliban Talks Led by Neocon Operation Cyclone Agent (MPN)

John Bolton wasn’t the only veteran of the conflict in Afghanistan now charged with resolving it. Nor was he the only PNAC veteran in the Trump administration. U.S. Special Representative for Afghanistan Reconciliation Zalmay Khalilzad, the top American official in the negotiations, was a PNAC charter member and has been quietly overseeing the destruction of Afghanistan for most of his political career — longer than the Taliban has existed as an organization. Khalilzad worked closely with late National Security Advisor Zbigniew Brzezinski, who took a leading role in Operation Cyclone under President Carter. The secret CIA program pumped the Afghan Mujahideen up with cash, weapons, training, and jihadist school books.

The Brooklyn-based Al-Kifah Afghan Refugee Center — a front for Maktab al-Khidamat, an organization co-founded by Osama bin Laden — would become key to this endeavor. Brzezinski’s aim, as he stated, was to give the Soviets their own Vietnam quagmire. Back then, his message to the Mujahideen fighters that would become al-Qaeda and the Taliban was: “Your cause is right and God is on your side.” Even after the devastating attacks of September 11, Brzezinski defended the decision to support the Mujahideen in the name of defeating the Soviet Union.

The United States’ support for the Mujahideen in Afghanistan, and later Bosnia, was intended to bleed the Soviet Union. It is no surprise that the same leeches — the Taliban and al-Qaeda — that were trained by the United States, would turn on their masters. In the case of the Taliban, clinging on to the U.S. for nearly two decades, slowly sucking away all the while. In the case of al-Qaeda, the attacks on the World Trade Center dealt massive blows. The end-game tactics mirror the CIA’s philosophy in training the Mujahideen against the USSR. U.S officials like Khalilzad would spend decades in luxurious buildings in and around Washington while the people of Afghanistan would continue to suffer nearly another two decades of conflict because of their policies.

Wolf Richter sees the ECB falling to bits. Wonder what Lagarde is doing these days.

• Palace Revolt at the ECB, Legitimacy of Policy out the Window (WS)

ECB President Mario Draghi, who is on his way out, will, as we’re learning more and more, do anything to push his agenda and make it stick at the ECB long after he leaves, but whatever his agenda may be, it’s clearly unrelated to the European economy which has been buckling under the consequences of his agenda: the destructive weight of negative interest rates and QE. And in the process, he is destroying the legitimacy of the ECB’s policy. The latest incident was on Thursday. During the press conference following the ECB’s policy meeting, he lied to reporters, claiming that the “consensus was so broad there was no need to take a vote,” when in fact he had a revolt on his hand during the meeting by the presidents of the national central banks that represented half of the economy of the Eurozone, and by members of the Executive Board.

Among the key policy changes the ECB announced on Thursday was the restart of QE to the tune of €20 billion a month and a tiny 10-basis point cut in its deposit rate, from the old negative -0.4% to the new negative -0.5%. The announcement also included a provision to help banks – which have been getting re-crushed by these idiotic negative interest rates – to survive those negative interest rates: the ECB would exempt part of the banks’ deposits at the ECB from negative rates in a two-tier system. It was the QE portion of the decision that had triggered the unprecedented revolt during the meeting. “Officials with knowledge of the matter” told Bloomberg that during the contentious meeting, the members of the Governing Council and of the Executive Board who vigorously opposed the restart of QE included but was not limited to:

• Jens Weidmann, President of the Bundesbank • Francois Villeroy de Galhau, Governor of the Bank of France • Klaas Knot, President of the Dutch central bank • Ewald Nowotny, Governor of the Austrian central bank • Ardo Hansson, Governor of the Bank of Estonia • Sabine Lautenschlaeger, Member of the Executive Board • Benoit Coeure, Member of the Executive Board. The countries of the five heads of the national central banks, from Weidmann to Hansson, account for about half of the economy of the Eurozone. They opposed the restart of QE, but there was no vote – which is common in ECB proceedings when there is a consensus. But there was no consensus. And Draghi simply imposed his agenda.

Mistake perhaps. But hardly an honest one, if you read Wolf Richter’s piece above. The ECB IS the mistake.

• The New ECB QE Is A Mistake. Here Is What It Should Have Done (Lacalle)

The ECB is creating a dangerous bubble and should not have cut rates by 10bps nor added a new purchase program of €20 billion per month. 1) Eurozone states are already financing themselves at negative rates. There is no need for lower rates and this disguises real risk. This has saved governments more than 1 trillion euro in interest expenses. 2) The ECB has not abandoned its stimulus. It repurchases all maturities, launched a liquidity injection (TLTRO) in March 2019 and balance sheet stands at almost 40% of eurozone GDP. 3) Excess liquidity is 1.7 trillion euro. More liquidity does not lead agents to spend/invest more. There is no higher solvent credit demand because monetary policy perpetuates overcapacity and zombifies the economy. Share of zombie companies has soared c30% since 2013 (BIS).

4) Interest rates are already negative. This has caused a 23 billion euro loss for banks (according to Scope Ratings) and a worrying rise in junk debt demand. 5) There is no evidence of a need for more credit growth. Rather the opposite. The ECB believes the eurozone problem is one of excess saving and lack of demand when it is of excess debt and oversupply. 6) Negative rates zombify the economy and are a massive transfer of wealth from savers and productive sectors to the indebted and inefficient. 7) The ECB already accumulates a disproportionate amount of sovereign debt as well as corporate bonds of issuers that never had a problem financing themselves at low rates. This disguises risk and creates an enormous bubble.

8) The problem of the eurozone is not one of lack of stimuli, but an excess of them. Governments burden the productive private sector with higher taxes and unnecessary regulations, so economic surprise falls despite massive stimulus. 9) When this fails or -even worse- explodes, central planners will likely blame “markets” or “lack of stimulus” to repeat. 10) Saying that negative rates are “demanded” by investors is a sad excuse. Financial repression leads economic agents to take more risk for lower yields and central banks go from lenders of last resort to enablers of financial bubbles.

Debt Rattle August 26 2019

Aug 262019

August 26, 2019 Posted by Raúl Ilargi Meijer at 9:10 am Finance Tagged with: Boris, Brexit, China, ECB, homeless, Hong Kong, Mnuchin, trade war, Trump 11 Responses »

Marc Chagall The Smolensk newspaper 1914

• Yield Curve Screams “Recession” as Trade War Picks Up Steam (Mish)

• China’s Yuan Slumps To 11-Year Low, Stocks Fall As Trade War Escalates (R.)

• Trump Says China Called Twice To Restart Trade Talks (MW)

• China Willing To Resolve Trade Dispute With US Via Dialogue (R.)

• Mnuchin: If China Agreed To Fair Relationship, We’d Sign ‘In A Second’ (CNBC)

• Hong Kong Police Arrest 36 After Running Battles With Protesters (R.)

• Australia’s Big Banks Gear Up For Capital Raising Rush (R.)

• Why The Next ECB Stimulus Plan May Fail (Lacalle)

• Britain Can ‘Easily Cope’ With No-Deal Brexit, Claims Boris Johnson (G.)

• Has Anyone Loved Being Prime Minister As Much As Boris Johnson? (Peston)

• England’s Homeless Children Problem (ZH)

• English Police Could Patrol Northern Ireland Border After No-Deal Brexit (RT)

To think that until recently this was not considered possible at all.

• Yield Curve Screams “Recession” as Trade War Picks Up Steam (Mish)

Futures pick up where they left off Friday with equity prices and bond yields lower. Sunday Evening Futures: • Equities Down • Gold Up • Treasury Yields Down As of 1:36 AM Central on Monday morning, the 30-year long bond is a record low 1.942%. It’s now inverted 17.8 basis points with the Fed Funds rate. The 5-year note is a whopping 78.4 basis points inverted. Few seem to believe it, but the yield curve is now screaming recession.

“The impact of the new tariffs on China’s economic growth will be sizeable..”

• China’s Yuan Slumps To 11-Year Low, Stocks Fall As Trade War Escalates (R.)

China’s yuan slumped to a fresh 11-year low against the dollar on Monday and stocks fell as the Sino-U.S. trade war sharply escalated, threatening to inflict more damage on the world’s largest economies and weigh further on global growth. In Hong Kong, a weekend flare-up in violence during anti-government protests added to pressure on share prices. The onshore yuan fell 0.6% in early trade to 7.15 per dollar, its weakest since February 2008 and its second biggest one-day drop of the month. The offshore yuan fell to a record low of 7.1850, before regaining some ground to around 7.1595.

The Chinese authorities have allowed the tightly-managed yuan to fall some 3.6% so far this month as trade tensions between Beijing and Washington worsened, sparking fears of a global currency war. It was trading around 7.1419 by 0330 GMT. On Friday, U.S. President Donald Trump announced an additional duty on some $550 billion of targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75 billion worth of U.S. goods. “This tit-for-tat escalation shows how unlikely a trade deal and de-escalation have become,” Louis Kuijs, of Oxford Economics, wrote in a note late on Sunday. “The impact of the new tariffs on China’s economic growth will be sizeable,” he said.

China denies.

• Trump Says China Called Twice To Restart Trade Talks (MW)

In a comment that moved financial markets, President Donald Trump on Monday said serious negotiations with China will begin after the U.S. received two “very good calls” from Beijing. “China called last night our top trade people and said let’s get back to the table,” the president said after meeting Egyptian President Abdel-Fattah el-Sissi. “I have great respect for it.” Trump said “we are going to start talking very seriously.” He says the Chinese want to make a deal and he thinks one will finally be reached. Trump says he’ll say more about China later Monday.

China’s foreign ministry meanwhile said it wasn’t aware of any such calls and that a U.S.-China decoupling will lead to market chaos, according to wire reports. After the Dow Jones Industrial Average DJIA, -2.37% dropped 623 points on Friday, U.S. stock futures were higher in the early hours of Monday morning. The dollar rose against the Japanese yen. Europe stocks were a bit weaker, with trading light with the U.K. market closed for a holiday.

All has to be said in a way that avoids losing face.

• China Willing To Resolve Trade Dispute With US Via Dialogue (R.)

Chinese Vice Premier Liu He said on Monday that China is willing to resolve its trade dispute with the United States through calm negotiations and resolutely opposes the escalation of the conflict, a state-backed newspaper reported. Liu, China’s top trade negotiator, was speaking at a tech conference in Chongqing in southwest China, the Chongqing Morning Post reported. The comments come after U.S. President Donald Trump last week announced an extra 5% duty on some $550 billion of Chinese goods, the latest tit-for-tat move announced hours after China unveiled its retaliatory tariffs on $75 billion worth of U.S. products.

“They have free entrance into our markets, our investments, our companies and we do not have the same thing there. That’s the only reason why we are in this situation..”

• Mnuchin: If China Agreed To Fair Relationship, We’d Sign ‘In A Second’ (CNBC)

American Treasury Secretary Steven Mnuchin doubled down on the White House’s latest punch in the U.S.-China trade war by calling out Beijing for unfair trade practices. “We do not have free trade with them,” Mnuchin said Sunday on the sidelines of the G-7 meeting in France. “It’s a one way street: They have free entrance into our markets, our investments, our companies and we do not have the same thing there. That’s the only reason why we are in this situation with China. If China would agree to a fair and balanced relationship, we would sign that deal in a second,” he added.

“Sometimes you’ve got to take stern measures,” White House economic advisor Larry Kudlow said alongside Mnuchin, adding that American companies should heed the president’s call to leave China. “Come home to America, we’ve got the best tax system, we’ve got the best regulatory system, it’s an easy place to make money, the best technology in the world. Come home. That’s what the president is saying,” Kudlow said. Before leaving for the G-7, U.S. President Donald Trump said he would raise existing duties on $250 billion in Chinese products to 30% from 25% on Oct. 1. Additionally, he said, tariffs on another $300 billion of Chinese goods, which start to take effect on Sept. 1, will now be 15% instead of 10%.

Protesters are escalating because their demands are ignored.

• Hong Kong Police Arrest 36 After Running Battles With Protesters (R.)

Hong Kong police said on Monday they arrested 36 people, the youngest aged 12, after violence during anti-government demonstrations escalated as protesters hurled Molotov cocktails at security forces who responded with water cannon and tear gas. Sunday’s protests saw some of the fiercest clashes yet between police and demonstrators since protests escalated in mid-June over a now-suspended extradition bill that would have allowed Hong Kong people to be sent to mainland China for trial. Police fired water cannon and volleys of tear gas in running battles with brick-throwing protesters on Sunday, the second day of violent clashes in the Chinese-ruled city.

Six officers drew their pistols and one officer fired a warning shot into the air, police said in a statement. “The escalating illegal and violent acts of radical protesters are not only outrageous, they also push Hong Kong to the verge of a very dangerous situation,” the government said in a statement.

More demonstrations are planned in the days and weeks ahead, including a rally at Hong Kong’s Cathay Pacific Airways headquarters on Wednesday to protest against perceived “white terror”, a common expression to describe anonymous acts that create a climate of fear. Cathay has emerged as the biggest corporate casualty of the protests after China demanded it suspend staff involved in, or who support, the anti-government demonstrations that have plunged the former British colony into a political crisis. The protests also pose the gravest popular challenge to Chinese President Xi Jinping since he took power in 2012, with Beijing eager to quell the unrest ahead of the 70th anniversary of the founding of the People’s Republic of China on Oct 1.

Bubbling below the surface.

• Australia’s Big Banks Gear Up For Capital Raising Rush (R.)

Australia’s biggest banks are expected to cut dividend payments and tap bond markets for more funding to cope with tougher capital requirements as regulators look to safeguard the sector from future market volatility, according to analysts and bankers. This week, Commonwealth Bank of Australia Chief Executive Matt Comyn and Chief Financial Officer Alan Docherty will finalise a roadshow with Australian equity investors before holding similar meetings in New York next month as well as London and Hong Kong. The bank traditionally meets with investors following its full-year results and the presentations have often preceded CBA tapping the bond markets. However, the meetings this year come as Australia’s banks are under increasing pressure to boost their capital.

Last week, the Australian Prudential Regulation Authority (APRA) said local banks would only be allowed to have 25% of their tier one capital – core funds held to help absorb losses – exposed to international operations or related parties from January 2021, down from the current 50%. That means banks such as Australia and New Zealand Banking Group face higher costs because they will have to fund each unit separately. The news came on top of another decision by APRA last month ruling that Australian banks would need to raise an extra A$50 billion ($33.8 billion) of so-called “tier two” bonds – riskier instruments that suffer losses before tier one capital is touched – by 2024 as part of its new total loss absorbing capital rules.

“..all this happens amidst an unprecedented chained stimulus.”

• Why The Next ECB Stimulus Plan May Fail (Lacalle)

When many analysts tell us that Europe “is not so bad” or that “it is only a slowdown,” they ignore that all this happens amidst an unprecedented chained stimulus. The results are not only extremely poor, but they are also deeply worrying. According to Morgan Stanley, the European Central Bank could be preparing a new repurchase program of between 2.2 and 3.3 billion euros. Not only buying back bonds from governments, but also from banks and companies. What for? Even Italy – in the midst of a political crisis – has negative real sovereign bond yields. The sovereign debt of all the eurozone countries shows negative yields in two-year maturity and negative as well going up to seven years. Germany has just launched a 30-year bond at -0.11%.

Is it really necessary to artificially depress yields even more? In the eurozone there are already fourteen junk bonds listed with negative yields and high-risk bonds of banks and companies are listed with ridiculous returns of 3-4%. The problem of the eurozone is not lack of liquidity, when excessive liquidity reaches 1.8 trillion euros, or low rates when they are already negative,. The eurozone problem is precisely the constant practice of using monetary policy as a perverse incentive to maintain structural imbalances. Monetary policy works as a huge transfer of wealth from savers and productive sectors of the eurozone to inefficient governments and unproductive sectors that are constantly refinanced, zombifying the economy, putting obstacles to productivity and technological change.

The stimulus chain described above can be summed up in the phrase: a huge subsidy to low productivity. Here is the debate. Why has it worked in the US and not in Europe? First, because it is not true that the United States owes its improvement to quantitative easing. In a report by Stephen Williamson for the Federal Reserve, he already warned that “there is no relationship between greater economic activity and quantitative easing.” The US economy is the most dynamic, open and least dependent on bank financing of the world’s leading countries. The Federal Reserve never accounted for 100% of the demand for government bonds, it always kept an eye on the secondary market. The ECB became seven times the bond supply, according to Deutsche Bank.

Blaming the EU will not work.

• Britain Can ‘Easily Cope’ With No-Deal Brexit, Claims Boris Johnson (G.)

Britain could “easily cope” with a no-deal Brexit, which would be the fault of EU leaders’ “obduracy”, Boris Johnson claimed at the summit of G7 countries in France, as he continued to resist mounting pressure to spell out his own plans for breaking the deadlock. “I think we can get through this, this is a great, great country, the UK, we can easily cope with a no-deal scenario,” Johnson insisted in Biarritz, as he made his debut on the international stage as prime minister with a series of bilateral meetings with world leaders including Donald Trump, the EU council president Donald Tusk and Indian prime minister Narendra Modi. Johnson said preparations for no deal were being ramped up to help secure an agreement, but also “so that if and when we are forced by the obduracy by our European friends to come out on 31 October without a deal that things are as smooth as they can possibly be”.

Johnson claimed food shortages – one of the risks outlined in the leaked Operation Yellowhammer documents on no-deal planning – were “highly unlikely”, and offered a “guarantee” that patients would be able to access medicines unhindered. The prime minister said that in the event of no deal the UK would withhold much of the £39bn financial settlement agreed by Theresa May – and insisted it was up to the EU27 to avert that eventuality. “If we come out without an agreement it is certainly true that the £39bn is no longer, strictly speaking, owed,” he said “There will be very substantial sums available to our country to spend on our priorities. It’s not a threat. It’s a simple fact of reality.”

Robert Peston was once a serious journalist. What is this, the elites are closing ranks?

• Has Anyone Loved Being Prime Minister As Much As Boris Johnson? (Peston)

I’ve learned only one thing at the G7 summit of big rich countries here in Biarritz: Boris Johnson absolutely loves being Prime Minister. There’s little of the conspicuous sense of duty that weighed on the shoulders of Theresa May, Gordon Brown and Sir John Major. Nor is there that unnerving claim to embody the spirit of a nation that Tony Blair and Margaret Thatcher perhaps made too often and believed too much. There’s a touch of David Cameron’s Old Etonian entitlement, the idea that it would be odd if he weren’t PM. But mostly Johnson simply seems to be having fun – whether by pointing a joshing finger at the imperious president of France or telling an incredulous President of the EU that they agree on absolutely everything.

Johnson’s bonhomie is all the more odd because the UK – as his advisers remind him continuously – is in the grips of the most acute peacetime crisis for generations, over how and even whether to leave the EU, and Johnson’s grip on power is almost non-existent, with no majority in Parliament and fratricide in his own Tory party as unremarkable as shaking hands. But in Johnson we have the clown prince of prime ministers, who – for the first time in years, or perhaps ever – plainly thinks he is home. His interlocutors – Emmanuel Macron, Donald Tusk, Justin Trudeau – all laugh. With him or at him? I am not sure that matters, in that he seems to cheer them up.

Feel-good Boris.

• England’s Homeless Children Problem (ZH)

New estimates from the Children’s Commissioner’s Office for England have revealed that, in addition to the official figure for child homelessness of 124 thousand, there are thought to be around 92 thousand children ‘sofa surfing’ in the country. Statista’s Martin Armstrong notes that the report, ‘Bleak Houses’ also found that the temporary accommodation of families and children is often not fit for human habitation with shipping containers, office blocks and B&Bs being re-purposed to house them.

Commenting on the findings, Children’s Commissioner Anne Longfield said: “It is a scandal that a country as prosperous as ours is leaving tens of thousands of families in temporary accommodation for long periods of time, or to sofa surf.” On the reasons for the current situation, Polly Neate, chief executive of charity Shelter blamed “a cocktail of punitive welfare policies, a woeful lack of social homes and wildly expensive private rents mean this is frighteningly commonplace.”

Oh no.

• English Police Could Patrol Northern Ireland Border After No-Deal Brexit (RT)

Despite a wealth of history suggesting that it’s a very bad idea, UK politicians have reportedly devised detailed plans to deploy English police officers in Northern Ireland in the event of a no-deal Brexit. According to a report in The Sunday Times, the plans would first see approximately 300 Scottish police drafted in to support the Police Service of Northern Ireland (PSNI) as a preliminary step. However, if tensions between the unionist and nationalist communities boil over or civil unrest erupts, officers from English forces will be deployed in the province.

A source at London’s City Hall told the newspaper: “All the police forces have agreed to give support to Northern Ireland. It is a concern. Thankfully it wouldn’t affect too many London officers, but we would be there. Imagine it: officers from the mainland in Northern Ireland. Bloody hell.” Unsurprisingly the report has triggered alarm bells in Northern Ireland and Ireland with many people worrying that it could incite anger among Irish nationalists and endanger the fragile peace in the region. “English police on the Irish border. What could go wrong? Don’t remember this on the referendum ballot paper or being debated in 2016? In the week we have remembered Mo Mowlam I despair at such a reckless attitude to hard-won peace,” Labour MP Anna Turley said.

Debt Rattle July 25 2019

Jul 252019

July 25, 2019 Posted by Raúl Ilargi Meijer at 9:32 am Finance Tagged with: Amazon, Boeing, condor, Deutsche, ECB, Epstein, Mnuchin, Mueller, Puerto Rico, Trump 7 Responses »

Piet Mondriaan Trafalgar Square 1939-43

• Trump Cheers As Michael Moore Blasts ‘Frail’ Mueller (AFP)

• Donald Trump Vetoes Bills Prohibiting Arms Sales To Saudi Arabia (AP)

• Nothing Matters: It’s Like the Whole Market Has Gone Nuts (WS)

• Mnuchin Says Amazon ‘Destroyed’ US Retail Sector (R.)

• Boeing Says It Could Halt Production Of 737 Max After Grounding (G.)

• Jeffrey Epstein Found Injured In Jail Cell (R.)

• Embattled Governor Of Puerto Rico Resigns After Protests (AFP)

• With Finger On Trigger, ECB Aims At More Stimulus (R.)

• Deutsche Bank Faces A -Much- Smaller, Poorer Future (Coppola)

• California Condor Comes Back From The Dead (NPR)

There are still people calling for impeachment after Mueller’s horror show yesterday. Saw both AOC and Rob Reiner do just that. The somewhat more awake amongst us merely feel sorry for the old man, but that goes too far. He put himself in that position. He’s never delivered any proof of Russian meddling, but that doesn’t appear to bother many. He refused to talk to Assange just so that meddling narrative could be kept alive.

But the biggest takeaway from the hearing must be that Mueller didn’t write his own report, something that became glaringly obvious when he didn’t know what Fusion GPS was. Mueller has just been the face of an investigation that was conducted by others. He is the supposed hero who’s ideal as the front for such a thing. But the thing is hollow and empty.

There were far too many things Mueller said were not in his purview (he said that 16 times) of which at least some certainly were. Moreover, as several members of Congress pointed out, Mueller got far too close to ignoring the presumption of innocence. Trump does not have to prove he’s innocent, Mueller had to prove he’s guilty – and failed.

• Trump Cheers As Michael Moore Blasts ‘Frail’ Mueller (AFP)

In a rare meeting of minds Wednesday between two opposing American political voices, Michael Moore earned plaudits from President Donald Trump when the liberal filmmaker blasted former special counsel Robert Mueller’s “stumbling” congressional testimony. Moore, a frequent Trump critic who has also warned of the Democratic Party’s failure to resonate with working-class America, let loose on Mueller as he testified in often halting fashion before Congress about Russian election interference and possible connections to Trump and his 2016 campaign. “A frail old man, unable to remember things, stumbling, refusing to answer basic questions,” Moore said in a scathing tweet after Mueller appeared uncertain and asked for several questions to be repeated during some of the most closely watched congressional hearings of the year.

“I said it in 2017 and Mueller confirmed it today — All you pundits and moderates and lame Dems who told the public to put their faith in the esteemed Robert Mueller — just STFU from now on,” he added, using a crass acronym that includes an expletive. Trump seized on the famed documentarian and Academy Award winner’s fury, retweeting the post and adding his observation that “Even Michael Moore agrees that the Dems and Mueller blew it!” Mueller, 74, appeared reluctant to take the gloves off as he sat for hours in hearings before two House panels, often sounding dispassionate and unsteady.

At times lawyerly and assured, he was also dull and sluggish, declining to stray beyond the confines of his report or to push back aggressively on his Republican questioners and light the fireworks that several Democrats no doubt had been looking for. “Trump must be gloating in ecstasy,” tweeted Moore, director of films like “Bowling for Columbine” and “Roger & Me.” “Not because of the failure that is Robert Mueller — his Report is still a damning document of crimes by Trump — but because Trump understands the power of the visual, and he understands that the Dems aren’t street fighters and that’s why he’ll win.”

.@RepRatcliffe tears into Mueller: 'You managed to violate every principle and the most sacred of traditions about prosecutors'#Mueller #Muellerhearings pic.twitter.com/byXFsOuwCR

— BlazeTV (@BlazeTV) July 25, 2019

If the Dems wouldn’t waste so much time and credility with Russiagate, they could protest this. And sure, Pelosi tries, but they are not a believable anti-war party.

• Donald Trump Vetoes Bills Prohibiting Arms Sales To Saudi Arabia (AP)

Donald Trump has vetoed a trio of congressional resolutions aimed at blocking his administration from selling billions of dollars of weapons to Saudi Arabia and the United Arab Emirates. The secretary of state, Mike Pompeo, last month cited threats from Iran as a reason to approve the $8.1bn arms sale to the two US allies in the Gulf. Saudi Arabia is an enemy of Iran and tension has mounted between the UAE and Tehran over several issues, including the UAE’s coordination with US efforts to curb what it calls Iran’s malign activities in the region. But Trump’s decision in May to sell the weapons in a way that would have bypassed congressional review infuriated lawmakers. In a pushback to Trump’s foreign policy, Democrats and Republicans banded together to pass resolutions to block the weapons sale.

The White House had argued that stopping the sale would send a signal that the US did not stand by its partners and allies, particularly at a time when threats against them were increasing. The arms package included thousands of precision-guided munitions, other bombs and ammunition and aircraft maintenance support. Anger has been mounting in Congress over the Trump administration’s close ties to the Saudis, fuelled by the high civilian casualties in the Saudi-led war in Yemen – a military campaign the US is assisting – and the killing of the US-based columnist Jamal Khashoggi by Saudi agents. Trump’s decision in May to sell the weapons further inflamed the tensions. “The president’s shameful veto tramples over the will of the bipartisan, bicameral Congress and perpetuates his administration’s involvement in the horrific conflict in Yemen, which is a stain on the conscience of the world,” the House speaker, Nancy Pelosi, said in a statement.

Let’s start a casino and call it a market.

• Nothing Matters: It’s Like the Whole Market Has Gone Nuts (WS)

You see, Tesla is different. It just reported another doozie, a loss of $408 million in the second quarter, after its $702 million loss in the first quarter, for a total loss in the first half of $1.1 billion. In its 14-year history, it has never generated an annual profit. It has real and popular products and surging sales, but it subsidizes each of those sales with investor money. And here’s where it’s different this time: investors don’t care. They dig how the company has been consistently overpromising and underdelivering. They dig the chaos at the top. They dig everything that should scare them off.

Yeah, its shares plunged 11% afterhours today, but that takes those shares only down to where they’d been on May 1. Big deal. Shares are down 32% from the peak. But their peak should have been a small fraction of that. Even today, the company is still valued at over $40 billion. Tesla lacks a viable business model in the classic sense. Its business model is a new business model of just burning investor cash that it raises via debt and equity offerings on a near-annual basis because investors encourage it to do that, and love it for it, and eagerly hand it more money to burn, and they’re rewarding each other by keeping the share price high. It’s just a game, you see. And nothing else matters.

Then there is Boeing. It just reported the largest quarterly loss in its history of $2.9 billion due to a nearly $5-billion charge related to its newest bestselling all-important 737 Max, two of which crashed, killing 346 people, due to the way the plane is designed. The flight-control software that is supposed to mitigate this design issue is not working properly. And a software fix that is acceptable to regulators remains elusive. The plane has been grounded globally since March. No one, especially not the regulators, can afford a third crash. So today, Boeing announced that it may further cut production of the plane or suspend it altogether if the delays continue to drag out. This is big enough to start impacting US GDP.

[..] But here we go: From 2013 through Q1 2019, Boeing has blown a mind-boggling $43 billion on share buybacks (buyback data via YCharts): Blowing these $43 billion on share buybacks has caused Boeing to have a “total equity” of a negative $5 billion. In other words, it has $5 billion more in liabilities than in assets. This company is out of wriggle room. If it can’t borrow enough money to make payroll, it’s over.

Shouldn’t he wait for the DOJ investigation?

• Mnuchin Says Amazon ‘Destroyed’ US Retail Sector (R.)

U.S. Treasury Secretary Steven Mnuchin said on Wednesday that online giant Amazon.com Inc “destroyed the retail industry across the United States.” Mnuchin said he looked forward to hearing the results of a Justice Department probe, announced on Tuesday, into whether big U.S. technology firms engage in anticompetitive practices, the strongest sign yet that the Trump administration is stepping up its scrutiny of Big Tech. “If you look at Amazon, although they’re certain benefits to it, they’ve destroyed the retail industry across the United States,” Mnuchin told CNBC. “I don’t have an opinion other than I think it’s absolutely right the attorney general is looking into these issues and I look forward to listening to his recommendations to the president.”

Amazon defended itself, saying that 90% of all sales occur in brick-and-mortar stores. “Today, independent sellers make up more than 58% of physical gross merchandise sales on Amazon, and their sales have grown twice as fast as our own, totaling $160 billion in 2018,” a spokesman for Amazon said. A Justice Department spokesman declined to say on Tuesday which companies it would scrutinize under the antitrust probe, but said the review would consider concerns raised about “search, social media, and some retail services online” – an apparent reference to Google, Amazon, Facebook, and potentially Apple.

No more parking spaces left.

• Boeing Says It Could Halt Production Of 737 Max After Grounding (G.)

Boeing said it could halt production of the 737 Max jet on Wednesday as it reported the company’s largest ever quarterly loss following two fatal accidents involving the plane. The company lost $2.9bn in the three months to the end of June, compared to a profit of $2.2bn for the same period last year. Sales fell 35% to $15.8bn. Chief executive Dennis Muilenburg said production of the plane could be slowed or halted if regulators do not move to lift the ban on the plane. The 737 Max was Boeing’s best selling aircraft until the fleet was grounded worldwide in March following crashes in Indonesia and Ethiopia. In January Boeing’s executives said the Max was the fastest selling plane in its history and the company expected to deliver between 895 and 905 airplanes this year.

Now it has become the most costly plane in Boeing’s history. Boeing has predicted that the Max will be flying again by the end of the year, but this month the Wall Street Journal reported that government and industry officials believe a return date of January 2020 is more likely. On a call with analysts Muilenburg said the company may have to consider slowing or halting production if there are further delays in getting the plane back into the skies. Boeing is still producing 42 of its 737 jets a month and plans to boost that rate to 57 next year. But if there are further setbacks, Muilenberg said: “We might need to consider possible further rate reductions or other options including a temporary shutdown of the Max production.”

It got him out of jail…

• Jeffrey Epstein Found Injured In Jail Cell (R.)

Jeffrey Epstein, the financier facing charges of sex trafficking involving dozens of underage girls, was found unconscious in a Manhattan jail cell with injuries to his neck, media reported late on Wednesday, citing unidentified sources. Epstein was found by guards sprawled on the floor of cell at the Metropolitan Correctional Center on Wednesday, media reported. Some media reported that his face appeared blue. The billionaire financier was taken to hospital, the New York Post reported, but it was unclear where he was taken or what his condition was. It was not clear how he suffered his injuries. Epstein was recently denied bail, a move his lawyers plan to appeal according to a court notice made public on Tuesday.

Epstein was expected to ask the 2nd U.S. Circuit Court of Appeals to overturn the judge’s July 18 rejection of his request to remain under house arrest in his $77 million mansion on Manhattan’s Upper East Side. Epstein has pleaded not guilty to the charges and the appeal for bail was expected. His lawyer Reid Weingarten did not immediately respond to requests for comment. A spokesman for U.S. Attorney Geoffrey Berman in Manhattan declined to comment. The charges, concerning alleged misconduct from at least 2002 to 2005, were announced more than a decade after Epstein pleaded guilty to state prostitution charges in Florida. In denying him bail, U.S. District Judge Richard Berman in Manhattan said the government had shown by clear and convincing evidence that Epstein would pose a danger to the community if released pending trial.

Impressive.

• Embattled Governor Of Puerto Rico Resigns After Protests (AFP)

Puerto Rico’s embattled governor Ricardo Rossello announced his resignation late Wednesday following two weeks of massive protests triggered by the release of a chat exchange in which he and others mocked gays, women and hurricane victims. “I announce that I will be resigning from the governor’s post effective Friday, August 2 at 5 pm,” Rossello said, in a video statement posted on the government’s Facebook page. As soon as the video ended, a joyous commotion and cries of “ole ole ole” were heard from protesters who had rallied since the afternoon at the gates of the governor’s mansion.

“I trust that Puerto Rico will continue united and move forward as it always has,” Rossello said. “And I hope that this decision will serve as a call for citizen reconciliation.” Rossello said that Justice Secretary Wanda Vazquez would temporarily succeed him. Puerto Ricans had waited expectantly for the announcement throughout the day, as rumors of the governor’s forthcoming resignation swirled.

Christine Lagarde is stuck even before she takes the job. There is no way out of ultra-low rates.

• With Finger On Trigger, ECB Aims At More Stimulus (R.)

The European Central Bank is all but certain to ease policy further on Thursday, with the biggest question whether it staggers its moves over several months or opts for a big bang. With inflation stuck well below its target and the U.S. Federal Reserve already in easing mode, the ECB has flagged more stimulus, hoping to prop up confidence amid a steady flow of bad news that threatens to unravel years of unprecedented support. It could cut interest rates, perhaps while also helping banks offset the costs to them, restart a recently shuttered bond-buying program or raise the bar for any future tightening of monetary policy.

But with economic data relatively stable there is little urgency to deliver a comprehensive package this week, suggesting the ECB could take its time to prepare the measures and wait for the Fed to set its own course. This will be crucial for determining the euro’s exchange rate against the dollar, presently the single most-watched variable for ECB policymakers. Having stoked easing expectations already, ECB President Mario Draghi will have to deliver at least something on Thursday. If nothing else, he is likely to unveil revamped interest rate guidance that makes it clear a rate cut is coming and that rates will stay at record lows for much longer than the ECB had previously expected.

As I said: all they can do is to prolong the agony.

• Deutsche Bank Faces A -Much- Smaller, Poorer Future (Coppola)

Deutsche Bank has issued its results for the second quarter of 2019. They make grim reading. The bank reported a headline loss of €3.1bn ($3.44bn), which it said was due to “charges relating to strategic transformation” of €3.4bn ($3.78bn). But both net income of £231m ($256.67m) and underlying profits of €441m ($490m) were significantly down on the same quarter in 2018. The restructuring announced earlier this month has yet to impact fully. The “capital release unit” into which the bank plans to put €74bn ($82.22bn) of poorly-performing and non-strategic assets and business lines, including its entire equities trading division, is not yet up and running, and although headcount is about 4,500 lower than it was a year ago, the latest round of sackings doesn’t yet show up in the redundancy costs.

Restructuring costs themselves therefore only contribute €50m ($55.56m) to the headline loss. A further €350m ($388.89m) comes from junking software and service contracts that will no longer be needed because of the restructuring. But by far the largest part of the headline loss arises from impairment of goodwill to the tune of €1bn ($1.11bn) and a €2bn ($2.22bn) reduction in the value of the bank’s deferred tax asset. This may sound like accounting gobbledegook, but it sends a very important message. Deutsche Bank’s management has admitted the bank will never return to the profitability of the past. When the restructuring is complete, it will be a much smaller, poorer bank.

Let’s end with something positive.

• California Condor Comes Back From The Dead (NPR)

The California condor, North America’s largest bird, once ruled the American Southwest and California’s coastal mountains. The vulture-like bird was revered by Native Americans and was believed to contain spiritual powers. Hundreds of years later, its future seemed all but certain. Defying odds, conservation efforts brought the species back and prevented it from joining the dodo in extinction. Now, condor reintroduction celebrates a milestone: Chick No. 1,000 has hatched. In the 1980s, fewer than two dozen condors were left in the world. Conservationists rounded up the remaining condors and began breeding them in captivity.

According to the International Union for Conservation of Nature, the condor became critically endangered in the 20th century — one classification behind extinct in the wild. The decline came from poaching, habitat destruction and lead poisoning as condors scavenged for carrion containing lead shots. Today, more than 300 California condors exist in the wild. Including captivity breeding programs, there are more than 500 in the world, says Tim Hauck, the condor program manager at the Peregrine Fund.

The 1,000th successful birth signifies an optimistic future for the condor recovery mission. “We’re seeing more chicks born in the wild than we ever have before,” Hauck told NPR’s Scott Simon. “And that’s just a step towards success for the condor and achieving a sustainable population.” The hatchling is currently in Zion National Park — it emerged from its shell in May, but its survival was just confirmed in July. The chick, whose sex cannot be identified without a blood test, will be ready to fledge — or take flight — for the first time in November. If the chick successfully leaves the nest, it can expect to grow up to have a 10-foot wingspan. The bird’s average lifespan is 60 years, one of the world’s longest-living bird species.

Photo by National Park Service – AP

Debt Rattle May 7 2019

May 072019

May 7, 2019 Posted by Raúl Ilargi Meijer at 9:54 am Finance Tagged with: Chelsea Manning, extinction, humanity, incompetence, insects, Mnuchin, Mueller, renewables, Ron Paul, tax returns, Trump, Venezuela 3 Responses »

Robert Rauschenberg Collection 1954-55

• Chelsea Manning Declares She will Never Cooperate with Grand Jury (SM)

• Major Mueller Report Omissions Suggest Incompetence Or A Coverup (ZH)

• Mnuchin Refuses To Release Trump’s Tax Returns To Congress (R.)

• A Nuclear War? Over Venezuela? (Ron Paul)

• Going South (Jim Kunstler)

• Fed Flags High US Business Debt, Asset Prices In Financial Report (R.)

• Vancouver Housing Bust Steepens, Bank of Canada Likes “Froth” Coming Off (WS)

• Why Renewables Can’t Power Modern Civilization: They Were Never Meant To (F.)

• Silent Spring’s Encore (CP)

• Human Society Under Urgent Threat From Loss Of Earth’s Natural Life (G.)

• Humanity Must Save Insects To Save Ourselves (G.)

• Humans ‘Threaten 1 Million Species With Extinction’ (BBC)

Our best, bravest and brightest. Our conscience. Look what we do to them.

• Chelsea Manning Declares She will Never Cooperate with Grand Jury (SM)

Today, attorney Moira Meltzer-Cohen filed a Motion for Chelsea Manning to be released on the basis that, as she will never be convinced to cooperate with the grand jury, further confinement serves no lawful purpose and must be terminated. According to Moira Meltzer-Cohen, attorney to Chelsea Manning: “A witness who refuses to cooperate with a grand jury subpoena may be held in contempt of court, and fined or incarcerated. The only permissible purpose for confinement under the civil contempt statute is to attempt to coerce a witness to comply with the subpoena, or “purge” their contempt. If it is no longer possible to purge the contempt, either because the grand jury is no longer in existence, or because the witness is un-coercible, then confinement has been transformed from coercive into punitive, in violation of the law.

“The key issue before Judge Hilton is whether continued incarceration could persuade Chelsea to testify. Many judges have complained of the “perversity” of this law: that a witness may win their freedom by persisting in their contempt of court. However, should he agree that Chelsea will never agree to testify, he will be compelled by the law to order her release. “Since Ms. Manning is not going to agree to give testimony before the grand jury, she argues, her confinement has exceeded its permissible scope, and she must be released.

“Letters of support were submitted to the Court by Ms. Manning’s friends, family, and colleagues, including from representatives of civil liberties organizations including the ACLU, the Freedom of the Press Foundation, the Electronic Frontier Foundation, and Fight for the Future. These letters reiterate that Chelsea is a person of great moral courage, who will not be swayed into betraying her principles, even in the face of great hardship. “That her confinement has already been so arduous gives credence to her claim that she will endure great hardship rather than agree to cooperate.”

There are more oversights than this article mentions.

• Major Mueller Report Omissions Suggest Incompetence Or A Coverup (ZH)

First, according to The Federalist’s Margot Cleveland (a former law clerk of nearly 25 years and instructor at the college of business at the University of Notre Dame) – the Mueller report fails to consider whether the dossier authored by former MI6 spy Christopher Steele was Russian disinformation, and Steele was not charged with lying to the FBI. The Steele dossier, which consisted of a series of memorandum authored by the former MI6 spy, detailed intel purportedly provided by a variety of Vladimir Putin-connected sources. For instance, Steele identified Source A as “a senior Russian Foreign Ministry figure” who “confided that the Kremlin had been feeding Trump and his team valuable intelligence on his opponents, including Democratic presidential candidate Hillary Clinton.”

Other supposed sources identified in the dossier included: Source B, identified as “a former top-level Russian intelligence officer still active inside the Kremlin”; Source C, a “Senior Russian Financial Officer”; and Source G, “a Senior Kremlin Official.” -The Federalist As Cleveland posits: “Given Mueller’s conclusion that no one connected to the Trump campaign colluded with Russia to interfere with the election, one of those two scenarios must be true—either Russia fed Steele disinformation or Steele lied to the FBI about his Russian sources.”

Mueller’s second major oversight is the special counsel’s portrayal of Maltese professor Joseph Mifsud was a Russian agent – when available evidence suggests he may have been a Western agent. Weeks after returning from Moscow, Mifsud – a self-described Clinton Foundation member – ‘seeded’ the rumor that Russia had ‘dirt’ on Hillary Clinton with Trump campaign adviser George Papadopoulos on April 26, 2016, according to the Mueller report. As Rep. Devin Nunes (R-CA) noted on Fox News on Sunday, “how is it that we spend 30-plus-million dollars on this, as taxpayers and they can’t even tell us who Joseph Mifsud is?” “…this is important, because, in the Mueller dossier, they use a fake news story to describe Mifsud. In one of those stories, they cherry- pick it,” Nunes added.

“.. it lacks “a legitimate legislative purpose.” I do wonder what the purpose is. If it has to do with Russia collusion, the ground is very slippery post-Mueller.

• Mnuchin Refuses To Release Trump’s Tax Returns To Congress (R.)

U.S. Treasury Secretary Steven Mnuchin on Monday denied a leading House Democrat’s request for President Donald Trump’s tax returns, setting the stage for a lengthy court battle between lawmakers and the Trump administration. In a May 6 letter, Mnuchin told House Ways and Means Committee Chairman Richard Neal that he would not comply with the Democrat’s April 3 request, saying it lacks “a legitimate legislative purpose.”

Ron Paul has endorsed Tulsi Gabbard. Good.

• A Nuclear War? Over Venezuela? (Ron Paul)

Is President Trump about to invade Venezuela? His advisors keep telling us in ever-stronger terms that “all options are on the table” and that US military intervention to restore Venezuela’s constitution “may be necessary.” Secretary of State Mike Pompeo was on the Sunday news programs to claim that President Trump could launch a military attack against Venezuela without Congress’s approval. Pompeo said that, “[t]he president has his full range of Article II authorities and I’m very confident that any action we took in Venezuela would be lawful.” The man who bragged recently about his lying, cheating, and stealing, is giving plenty of evidence to back his claim.

The president has no Constitutional authority to start a war with Venezuela or any other country that has not attacked or credibly threatened the United States without Congressional approval. It is that simple. How ironic that Pompeo and the rest of the neocons in the Trump Administration are ready to attack Venezuela to “restore their constitution” but they could not care less about our own Constitution! While Washington has been paralyzed for two years over disproven claims that the Russians meddled in our elections to elect Trump, how hypocritical that Washington does not even hesitate to endorse the actual overturning of elections overseas!

Without Congressional authority, US military action of any kind against Venezuela would be an illegal and likely an impeachable offense. Of course those Democrats who talk endlessly of impeaching Trump would never dream of impeaching of him over starting an illegal war. Democrats and Republicans both love illegal US wars.

” The outcome of that was two Americas: the hipsterocracy of the coastal elites and the suicidal deplorables of Flyoverland. ”

• Going South (Jim Kunstler)

Buying all those cheap toaster-ovens, patio loungers, sneakers, sheet-rock screws, alarm clocks, croquet mallets… well, you name it, naturally made it uneconomical for America to make the same stuff, with all our silly-ass sentimental attachment to union wages, eight-hour workdays, and pollution regs, so we just steadily let the lights go out and the roofs fall in, and ramped up the “financialized” economy, with Wall Street parlaying Federal Reserve largess into an alternative universe of Three-Card-Monte scams using multilayered derivatives of promises to repay loans (that have poor prospects of ever being paid back). The outcome of that was two Americas: the hipsterocracy of the coastal elites and the suicidal deplorables of Flyoverland.

The hipsterocracy sustains itself on the manufactured hallucinations of the holographic economy — that is, on the production of images, TV psychodramas, news media narratives, status competitions, public relations campaigns, law firm machinations, awards ceremonies, and other signaling systems to maintain the illusion that the financialized economy has everything under control as we transform into a nirvana of ultra high tech pleasure-seeking and endless leisure. Meanwhile, out in Flyoverland, the holograms aren’t selling so well anymore. Nobody has the scratch to pay for them, not even those indentured to the neo-feudal empires of WalMart and Amazon. The children keep coming, though it’s nearly impossible for a man to support them, and increasingly the fathers just take themselves out of the picture.

The women ferment in single-parent hopelessness. The children turn more feral by each generation. All remaining economic opportunity is diverted back into the leveraged buy-out mills of the Coastal Elsewhere. Even growing food out of the land was long ago converted into an Agri-Biz hustle based on practices with no future. And now the spring weather is drowning out that hustle and driving the corporatized farms into bankruptcy. The two Americas have turned a formerly workable political system into a divorce court and for the past three years nothing of value has come out of that negotiation except more mutual grievance and animus.

First create them, than issue a warning. End the Fed.

• Fed Flags High US Business Debt, Asset Prices In Financial Report (R.)

U.S. stock prices are “elevated” and business debt is at historic levels, but the financial system overall “appears resilient” with low levels of leverage and less of a destabilizing run in key markets, the Federal Reserve said in its latest report on financial stability. “Investor appetite for risk appears elevated by several measures, and the debt loads of businesses are historically high,” the Fed said on Monday in a report that noted the 20 percent growth in leveraged loans between the start of last year and this year, and other aspects of corporate debt.

The ratio of debt to assets among publicly traded, nonfinancial firms is near a 20-year high, the Fed noted, and the share of new loans going to the most indebted companies is near peaks reached in 2014 and just before the 2007 to 2009 financial crisis. While the Fed sees the system overall as healthy, the levels of corporate debt stand out, said Fed Governor Lael Brainard. “With financial volatility easing since the end of last year, the Federal Reserve Board’s Financial Stability Report suggests stretched asset valuations and risky corporate debt merit continued vigilance against a backdrop of low-to- moderate vulnerabilities in the household and banking sectors,” Brainard said in an emailed statement.

[..] As in the last edition of its now twice-yearly report on the financial sector, the Fed cited the rapid growth of business debt and leveraged lending to corporations as a source of possible concern, noting that it could leave weaker companies stressed if the economy softens. Business debt has grown faster than the overall economy for a decade, the Fed noted, and “the elevated level of debt could leave the business sector vulnerable to a downturn in economic activity or a tightening in financial conditions.”

Wait till that “froth” turns out to be 30-40-50%.

• Vancouver Housing Bust Steepens, Bank of Canada Likes “Froth” Coming Off (WS)

Across Greater Vancouver, British Columbia, sales of all types of homes so far this year through April plunged to 6,212 homes, the lowest count since 1986, as the market is freezing up. In the city of Vancouver, condo sales – the largest segment of the market – plunged 30% in April from April last year, to merely 348 condos, the lowest since 2001, even as inventory for sale jumped by 75% to 2,191 condos. At the current rate of sales, supply soared by 168% year-over-year to 6.4 months. And prices are descending at speeding-ticket velocities: • Average price: -19% year-over-year to C$786,981 • Median price: -17% year-over-year to C$651,000 • Average price per square foot: -14% yoy to $940.

“Buyers have become increasingly hesitant, particularly for unbuilt product such as pre-sale condo assignments and new unfinished development in general, says Steve Saretsky, a Vancouver Realtor and author behind Vancity Condo Guide, in his April report. “This is prompting condo developers to increase bonuses and incentives as unsold inventory begins to pile up at presale centers across the lower mainland.” The average price per square foot – historically “a very consistent and reliable price metric with much less volatility,” Saretsky says – has now dropped 16% from the peak in January 2018:

Sales of detached houses in the city of Vancouver dropped to 130 houses, the worst April in decades, down 69% from 2015. The chart below shows the number of sales for each April going back to the 1990s – a sign the market has frozen up, that buyers are unwilling to get anywhere near sellers’ aspirational asking prices, and deals are not happening:

See my article yesterday.

• Why Renewables Can’t Power Modern Civilization: They Were Never Meant To (F.)

Now comes a major article in the country’s largest newsweekly magazine, Der Spiegel, titled, “A Botched Job in Germany” (“Murks in Germany”). The magazine’s cover shows broken wind turbines and incomplete electrical transmission towers against a dark silhouette of Berlin. “The Energiewende — the biggest political project since reunification — threatens to fail,” write Der Spiegel’s Frank Dohmen, Alexander Jung, Stefan Schultz, Gerald Traufetter in their a 5,700-word investigative story (the article can be read in English here). Over the past five years alone, the Energiewende has cost Germany €32 billion ($36 billion) annually, and opposition to renewables is growing in the German countryside.

“The politicians fear citizen resistance” Der Spiegel reports. “There is hardly a wind energy project that is not fought.” In response, politicians sometimes order “electrical lines be buried underground but that is many times more expensive and takes years longer.” As a result, the deployment of renewables and related transmission lines is slowing rapidly. Less than half as many wind turbines (743) were installed in 2018 as were installed in 2017, and just 30 kilometers of new transmission were added in 2017. Solar and wind advocates say cheaper solar panels and wind turbines will make the future growth in renewables cheaper than past growth but there are reasons to believe the opposite will be the case.

Der Spiegel cites a recent estimate that it would cost Germany “€3.4 trillion ($3.8 trillion),” or seven times more than it spent from 2000 to 2025, to increase solar and wind three to five-hold by 2050. Between 2000 and 2018, Germany grew renewables from 7% to 39% of its electricity. And as much of Germany’s renewable electricity comes from biomass, which scientists view as polluting and environmentally degrading, as from solar. Of the 7,700 new kilometers of transmission lines needed, only 8% has been built, while large-scale electricity storage remains inefficient and expensive. “A large part of the energy used is lost,” the reporters note of a much-hyped hydrogen gas project, “and the efficiency is below 40%… No viable business model can be developed from this.”

Almost 60 years ago. We’re blind deaf and dumb.

• Silent Spring’s Encore (CP)

Rachel Carson’s famous and brilliant book Silent Spring (1962), which single-handedly ignited the environmental movement, has never been more relevant than it is today. A mimeo of Silent Spring is scheduled for publication by the UN, as the most comprehensive study of life on the planet ever undertaken, an 1,800-page study by the world’s leading scientists that spells out in detail the results of a massive study of the world’s ecosystems. The conclusion: Nature is in “steep decline.” According to Mike Barrett, WWF’s executive director of conservation and science: “All of our ecosystems are in trouble. This is the most comprehensive report on the state of the environment. It irrefutably confirms that nature is in steep decline.”

Interestingly enough, in days of yore, Silent Spring’s opening chapter, “A Fable for Tomorrow,” described a fictional flourishing town in the heartland of America with its splendid natural beauty; however, within only a few pages, that alluring picturesque community degenerates: “A grim specter has crept upon us almost unnoticed….” Thereafter, Silent Spring turns non-fictional as it informs its reading public, i.e., the radicalized Sixties, that 500 new chemicals “… annually find their way into actual use in the U.S. alone to which the bodies of men and animals are required somehow to adapt each year, chemicals totally outside the limits of biologic experience.”

A few pieces on the UN report.

“The biomass of wild mammals has fallen by 82%, natural ecosystems have lost about half their area and a million species are at risk of extinction..”

• Human Society Under Urgent Threat From Loss Of Earth’s Natural Life (G.)

Human society is in jeopardy from the accelerating decline of the Earth’s natural life-support systems, the world’s leading scientists have warned, as they announced the results of the most thorough planetary health check ever undertaken. From coral reefs flickering out beneath the oceans to rainforests desiccating into savannahs, nature is being destroyed at a rate tens to hundreds of times higher than the average over the past 10m years, according to the UN global assessment report. The biomass of wild mammals has fallen by 82%, natural ecosystems have lost about half their area and a million species are at risk of extinction – all largely as a result of human actions, said the study, compiled over three years by more than 450 scientists and diplomats.

Two in five amphibian species are at risk of extinction, as are one-third of reef-forming corals, and close to one-third of other marine species. The picture for insects – which are crucial to plant pollination – is less clear, but conservative estimates suggest at least one in 10 are threatened with extinction and, in some regions, populations have crashed. In economic terms, the losses are jaw-dropping. Pollinator loss has put up to $577bn (£440bn) of crop output at risk, while land degradation has reduced the productivity of 23% of global land. The knock-on impacts on humankind, including freshwater shortages and climate instability, are already “ominous” and will worsen without drastic remedial action, the authors said.

“The health of the ecosystems on which we and other species depend is deteriorating more rapidly than ever. We are eroding the very foundations of economies, livelihoods, food security, health and quality of life worldwide,” said Robert Watson, the chair of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (Ibpes). “We have lost time. We must act now.”

Save insects? You want to have Monsanto lose its business?

“While we humans have doubled our population in the past 40 years, the number of insects has been reduced by almost half..”

“The rate of insect extinction is eight times faster than that of mammals, birds and reptiles. ”

• Humanity Must Save Insects To Save Ourselves (G.)

Humanity must save insects, if not for their sake, then for ourselves, a leading entomologist has warned. “Insects are the glue in nature and there is no doubt that both the [numbers] and diversity of insects are declining,” said Prof Anne Sverdrup-Thygeson, at the Norwegian University of Life Sciences. “At some stage the whole fabric unravels and then we will really see the consequences.” On Monday, the largest ever assessment of the health of nature was published and warned starkly that the annihilation of wildlife is eroding the foundations of human civilisation. The IPBES report said: “Insect abundance has declined very rapidly in some places … but the global extent of such declines is not known.”

A Notch-horned Cleg, a type of horsefly. Photograph: Rebecca Cole/Alamy

It said the available evidence supports a “tentative” estimate that 10% of the 5.5m species of insect thought to exist are threatened with extinction. The food and water humanity relies upon are underpinned by insects but Sverdrup-Thygeson’s new book, Extraordinary Insects, spends many of its pages on how wonderful and weird insects are. “The first stage is to get people to appreciate these little creatures,” said Sverdrup-Thygeson. Many appear to defy the normal rules of life. Some fruit flies can be beheaded and live normally for several days more, thanks to mini-brains in each joint. Then there are the carpet beetles that can effectively reverse time, by reverting to younger stages of development when food is scarce.

Others are bizarrely constructed. Some butterflies have ears in their mouths, one has an eye on its penis, while houseflies taste with their feet. Insect reproduction is also exotic. The southern green shield bug can maintain sex for 10 days, while another type of fruit fly produces sperm that are 20 times longer than its own body.

Lip service will be paid.

• Humans ‘Threaten 1 Million Species With Extinction’ (BBC)

Three years in the making, this global assessment of nature draws on 15,000 reference materials, and has been compiled by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES). It runs to 1,800 pages. The brief, 40-page “summary for policymakers”, published today at a meeting in Paris, is perhaps the most powerful indictment of how humans have treated their only home. It says that while the Earth has always suffered from the actions of humans through history, over the past 50 years, these scratches have become deep scars. The world’s population has doubled since 1970, the global economy has grown four-fold, while international trade has increased 10 times over.

Getty Images

To feed, clothe and give energy to this burgeoning world, forests have been cleared at astonishing rates, especially in tropical areas. Between 1980 and 2000, 100 million hectares of tropical forest were lost, mainly from cattle ranching in South America and palm oil plantations in South East Asia. Faring worse than forests are wetlands, with only 13% of those present in 1700 still in existence in the year 2000. Our cities have expanded rapidly, with urban areas doubling since 1992. All this human activity is killing species in greater numbers than ever before. According to the global assessment, an average of around 25% of animals and plants are now threatened. Global trends in insect populations are not known but rapid declines in some locations have also been well documented.

All this suggests around a million species now face extinction within decades, a rate of destruction tens to hundreds of times higher than the average over the past 10 million years. “When we laid it all out together I was just shocked to see how extreme the declines are in terms of species and in terms of the contributions that nature is providing to people.” The assessment also finds that soils are being degraded as never before. This has reduced the productivity of 23% of the land surface of the Earth. Our insatiable appetites are producing a mountain of waste. Plastic pollution has increased ten-fold since 1980. Every year we dump 300-400 million tonnes of heavy metals, solvents, toxic sludge and other wastes into the waters of the world.

Money doesn’t talk, it swears
– Bob Dylan

Debt Rattle December 26 2018

Dec 262018

December 26, 2018 Posted by Raúl Ilargi Meijer at 10:56 am Finance Tagged with: Abenomics, Agora, Brexit, CNN, Guardian, Kuroda, Mnuchin, Powell, sortition, Syria, Trump, whale hunt 2 Responses »

Caravaggio Burial of St. Lucy 1608

• US Prepares To Hit The Wall As Reckless Trump Undoes Years Of Hard Work (G.)

• Trump Urges Americans To Buy The Dip; Voices Confidence In Mnuchin, Powell (ZH)

• Trump’s Frustration With Mnuchin Rising – Source (CNN)

• BOJ’s Kuroda Further Waters Down Pledge To Hit Inflation Target Quickly (R.)

• Japan To Resume Commercial Whaling (AFP)

• Asian Stocks Slip On US Shutdown Worries, Trump’s Fresh Criticism Of Fed (MW)

• Asian Stocks Retreat As US Political Tumult Adds To Growth Worry (R.)

• ‘We’re Not Far From Zuckerberg Getting Subpoenaed’ (Ind.)

• How Can We Break The Brexit Deadlock? Ask Ancient Athens (Bridle)

• Brexit Made The UK A Global Joke. Can We Rebuild Our Reputation? (Kampfner)

• Arab League Set To Readmit Syria Eight Years After Expulsion (G.)

• More Than 50 Australian Plant Species Face Extinction Within Decade (G.)

Can’t make it up (fast enough): I used 6 anti-Trump Guardian articles from December 23 in my article yesterday, Dumping on the Donald. But guess what: I still missed one from that day. The contents are completely empty, but they really wanted to get the headline in.

• US Prepares To Hit The Wall As Reckless Trump Undoes Years Of Hard Work (G.)

The accomplishments of a US president’s first year in office can be credited to his predecessor, at least where the economy is concerned. And Donald Trump was handed the best performing economy on the planet. All the tough decisions – to refinance the banks, rescue the car companies and deflate the real-estate bubble – had been made. The stock market was tearing along, setting records almost every week. Trump gave this rising balloon extra air with $1tn of tax cuts. It was borrowed money, but no matter. The economy sailed along for another year and the stock market carried on rising. His plan was to win the midterm congressional elections and then persuade the Republican party to give him another $1tn, or as near to it as possible.

In other words, he would use another pile of borrowed cash to pump up the economy again, hoping against hope that it would not blow up before his re-election. Without control of the House of Representatives, his plans are in ruins. And that was obvious to stock and bond traders, who followed the vote in November by putting a sell sign over their maps of America. December has proved to be the worst month for shares in many decades. Oil prices have slumped and the market is expecting worse to come in the new year. The reasons for pessimism are piling up. From the Atlantic to the Pacific, US home sales are struggling, with agents reporting that there are not enough buyers and asking prices are not being met.

[..] And in recent days Trump has given markets something else to worry about – building the wall. His threat to shut down the government if Congress refuses to provide him with the money for a pan-American border fence with Mexico has spooked traders. This reckless threat was preceded by the surprise decision to pull US troops out of Syria. If Trump could make such a move without consulting important allies, then perhaps he was capable of the “long shutdown” he has promised in his tweets. With ever fewer calming voices in the White House to rein in the president’s wilder excesses, it’s understandable that the finance industry is jittery about the prospects for 2019.

Trump likes Mnuchin. Who’s been around from the get-go. And of course both know there are hard times ahead.

• Trump Urges Americans To Buy The Dip; Voices Confidence In Mnuchin, Powell (ZH)

“We have companies, the greatest in the world, and they’re doing really well,” Trump told reporters at the White House on Christmas Day. “They have record kinds of numbers. So I think it’s a tremendous opportunity to buy. Really a great opportunity to buy.” Trump’s invocation to BTFD came one day after the most violent Christmas Eve selloff on record, and the day when the S&P fell not only to its lowest level in 20 months, but also slumped into a bear market. For Trump, the stock market has served as a barometer on his administration, and while he was pointing out virtually every major uptick for the past two years, the recent plunge has infuriated him, leaving him mute on any market-related topic.

But a more important catalyst for a potential Wednesday rally came when Trump appeared to back off on his demands that the Fed stop hiking, which culminated with Trump reportedly seeking to fire Fed Chair Powell and speculation that if the market does not stop falling, Treasury Secretary Mnuchin may also be on the chopping block. Alongside urging Americans to BTFD, Trump expressed confidence in the Treasury secretary and the Federal Reserve, in an attempt to calm financial markets further roiled after a recent Bloomberg report that the president had discussed firing the central bank’s chairman over raising interest rates.

Asked about Fed Chairman Jerome Powell, Trump said the central bank is “raising interest rates too fast” but he has “confidence” that the Fed will “get it pretty soon.” Trump was also asked if he has confidence in Treasury Secretary Steven Mnuchin who sparked a market panic on Monday with his late Sunday statement in which he said he had called the CEOs of the top 6 banks to make sure bank liquidity levels are fine (prompting a frenzy of question what he knows that the rest of the market does not) and followed it up with a call with the Plunge Protection Team on Monday, which however failed to prevent one of the worst one-day routs in history . Trump’s response: “yes I do, very talented guy, very smart person.”

While answering questions from reporters at the White House after addressing U.S. armed forces members on a Christmas Day video conference call, Trump also said the Fed is hiking borrowing costs because the “economy is doing so well” – which is accurate, however it is the market that is spooked by the aggressive tightening – adding that U.S. companies are having “record kinds of numbers” and it’s a “tremendous opportunity to buy.” The remarks represented Trump’s first expression of public support for Mnuchin and Powell since Bloomberg reported last week that the president has discussed dismissing Powell who was recommended by Mnuchin. Overnight, Bloomberg also reported that the president also weighed dismissing Mnuchin, while another said that Mnuchin’s tenure may depend in part on how much markets continue to drop.

But CNN has found an anonymous source who claims Mnuchin is on his way out. Bloomberg claimed something similar.

Is it getting through to people that nothing CNN has to say about Trump has any news value?

• Trump’s Frustration With Mnuchin Rising – Source (CNN)

President Donald Trump’s frustration with Treasury Secretary Steven Mnuchin is ratcheting up further after markets suffered their worst Christmas Eve drop ever despite Mnuchin’s attempts to calm Wall Street, according to a source close to the White House. The source told CNN that Mnuchin could be in “serious jeopardy” with Trump, who regularly rages at Cabinet members he feels have made mistakes, before he cools off. Trump nevertheless vouched for Mnuchin publicly, shifting blame for the market volatility to the Federal Reserve instead. “Yes, I do,” Trump said Tuesday when asked whether he had confidence in Mnuchin. “Very talented, very smart person.”

But the source painted a different picture of Mnuchin’s standing behind the scenes. “Mnuchin is under the gun,” the source said. The Treasury secretary left Washington for a Christmas holiday in Mexico’s Cabo San Lucas as the federal government shut down over the weekend, while Trump canceled his own planned trip to his Mar-a-Lago resort in Florida and remained cooped up in the White House over the holiday, absorbing a flood of negative news about the markets. Mnuchin aides have been scrambling to find economic data to help their boss calm Trump down, but Trump was said to be unhappy with what Mnuchin was telling him, this source said. An administration source dismissed the latest round of rumors that the secretary’s continued tenure was on the line. “This is nonsense,” they said.

Abenomics bleeds to death very slowly and even more expensively.

• BOJ’s Kuroda Further Waters Down Pledge To Hit Inflation Target Quickly (R.)

Conceding it was taking longer than expected to achieve 2 percent inflation, Kuroda said global risks have “come to warrant further attention” as China’s growth slows and trade frictions hurt business sentiment. He also said the BOJ must be mindful of the rising costs of prolonged monetary easing, such as the chance years of near-zero rates could hurt financial institutions’ profits and discourage them from boosting lending. “The BOJ will proceed step by step toward achieving its price target, while taking into account in a balance manner not only the benefits of monetary easing but also its costs,” Kuroda told an annual meeting of business lobby Keidanren on Wednesday. Up till now, Kuroda has repeatedly said the BOJ will seek to achieve 2 percent inflation “at the earliest date possible.”

[..] The BOJ is caught in a bind. With inflation distant from its target, it is forced to maintain a massive stimulus despite the negative spillovers. Its dwindling policy ammunition limits the ability to ramp up stimulus to prevent another recession. The dilemma has created a rift within the BOJ with its board members disagreeing on ways to address the dangers of prolonged easing, minutes of the October rate review showed. Kuroda said the situation has changed from when the BOJ deployed a massive asset-buying program in 2013, when such a drastic action was critical to pull Japan out of stagnation. Now, the economy is in good shape but inflation remains weak and closer attention is needed to overseas risks, he said. “In complex times like now, what’s required is to persistently continue with the current powerful easing while weighing the benefits and costs of our policy in a balanced manner,” Kuroda said.

Nobody wants whale hunts. They’re arcane and stupid. So stop buying Japanese cars and electronics. Get organized. Either boycott them completely or hold your tongue.

• Japan To Resume Commercial Whaling (AFP)

Japan said Wednesday it is withdrawing from the International Whaling Commission and will resume commercial whaling next year, sparking criticism from activists and anti-whaling countries including Australia. The announcement comes after Japan failed earlier this year to convince the IWC to allow it to resume commercial whaling. Top government spokesman Yoshihide Suga said the commercial hunts would be limited to Japan’s territorial waters. “We will not hunt in the Antarctic waters or in the southern hemisphere,” he added. Tokyo has repeatedly threatened to pull out of the IWC, and has been regularly criticised for catching hundreds of whales a year for “scientific research” despite being a signatory to a moratorium on hunting the animals.

Suga said Japan would officially inform the IWC of its decision by the end of the year, which will mean the withdrawal comes into effect by June 30. Leaving the IWC means Japanese whalers will be able to resume hunting in Japanese coastal waters of minke and other whales currently protected by the IWC. But Japan will not be able to continue the so-called scientific research hunts in the Antarctic and elsewhere that it has been exceptionally allowed as an IWC member. Japan joins Iceland and Norway in openly defying the IWC’s ban on commercial whale hunting, and its decision sparked international criticism.

I think they slip because their economies are in trouble.

• Asian Stocks Slip On US Shutdown Worries, Trump’s Fresh Criticism Of Fed (MW)

Asian markets were mostly lower on Wednesday after President Donald Trump said that there was “nothing new” in efforts to end the partial government shutdown over a U.S.-Mexico border wall. Traders had no fresh leads from Wall Street, which was closed on Christmas. U.S. stocks are headed for their worst December since the Great Depression in 1931. South Korea’s Kospi, 1.3% to 2,028.01 and the Shanghai Composite Index shed 0.3% to 2,498.29. Japan’s Nikkei, which plunged 5% on Tuesday, picked up 0.9 percent to 19,327.06. Shares fell Taiwan and throughout Southeast Asia. Markets in Hong Kong and Australia were closed.

The partial shutdown of the U.S. government that started Saturday shows no signs of abating. “Nothing new. Nothing new on the shutdown. Nothing new. Except we need border security,” Trump told reporters. The White House said Trump will reject any deal that does not include any funding for a wall or a fence. The Democrats have opposed this and are offering $1.3 billion for security. The routines of 800,000 federal employees are expected to be disrupted by the shutdown, but essential services will keep running. Trump’s criticism of the U.S. central bank triggered a drop in Asian equities on Tuesday. “The only problem our economy has is the Fed,” the president said on Twitter.

“They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders.” Trump has since said since that interest rate hikes were a “form of safety” for an economy that was doing well, while stressing that the Fed was raising rates too quickly. “The outsized moves are not reflective of the current U.S. economic landscape, but that seems to matter little so far as fear mongering continues to permeate every pocket of global capital markets,” Stephen Innes of OANDA said in a market commentary.

Trump brings down Asian stocks. Didn’t win your Christmas lottery? You know who to blame.

• Asian Stocks Retreat As US Political Tumult Adds To Growth Worry (R.)

Asian stock markets retreated again on Wednesday, extending a rout that began last week as U.S. political uncertainty exacerbated worries over slowing global economic growth. Investors were unnerved by the U.S. federal government partial shutdown and President Donald Trump’s hostile stance toward the Federal Reserve chairman. U.S. Treasury Secretary Steven Mnuchin had also raised market concerns by convening a crisis group amid the pullback in stocks. S&P 500 emini futures were last down 0.6 percent, pointing toward a lower start for Wall Street when the U.S. market reopens after Christmas Day, when many of the world’s financial markets were shut.

Markets in Britain, Germany and France will remain closed on Wednesday. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.5 percent, brushing a two-month low. The Shanghai Composite Index lost 0.4 percent while South Korea’s KOSPI shed 1.6 percent. Japan’s Nikkei, which slumped 5 percent the previous day, had a volatile session. It swerved in and out of the red, falling more than 1 percent to a 20-month-low at one stage, before ending the day with a gain of 0.9 percent. “In addition to concerns toward the U.S. economy, the markets are now having to grapple with growing turmoil in the White House which has raised political risk ahead of the year-end,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.

The CIA and MI6 are watching.

• ‘We’re Not Far From Zuckerberg Getting Subpoenaed’ (Ind.)

David Carroll, an associate professor at Parsons School of Design in New York, said this week may finally have dealt Facebook its “knockout” blow. As an outspoken critic of the way Facebook uses people’s data, Prof Carroll is currently suing Cambridge Analytica under the Data Protection Act following the UK firm’s role in mining data from 87 million Facebook users for the purpose of political profiling during the 2016 US presidential elections. But the latest revelations that other tech firms were given access to people’s private messages was beyond even what he thought Facebook was capable of. “Even as someone who is deeply sceptical of Facebook, I was surprised by the latest revelations,” he told The Independent.

“I didn’t know it could be that bad in terms of scope and scale. But it all seems to fit with Zuckerberg’s master plan for global domination.” The first lawsuit against Facebook regarding the Cambridge Analytica scandal, which affected more than 87 million users, comes courtesy of the attorney general of the District of Columbia. It is unlikely to be the last, given Facebook is also currently facing probes by the US Securities and Exchange Commission, the Federal Trade Commission and the Department of Justice – and that’s just in the US. A relatively insignificant fine of £500,000 that was handed to Facebook in the UK may be dwarfed following investigations by the Irish data protection regulator, which are being seen as the first serious test of Europe’s new General Data Protection Regulation.

But with more than 2 billion users worldwide and an annual revenue of more than $40 billion in 2017, it will take more than a fine to have any significant impact on Facebook. Prof Carroll has called for Facebook CEO Mark Zuckerberg and other senior executives to be subpoenaed and thinks it might not be long before that becomes a reality. “We need to get them under oath and ask them questions they cannot dodge. It will depend on the Mueller investigation. It’s imaginable additional facts come to our knowledge to justify Zuckerberg’s subpoena and we find out how much he knew and when. We need more to justify it but we’re not that far from getting there.”

Elect your decision makers at random. That way they can’t be bought by special interests. And that’s just one of many advantages.

James Bridle is the author of New Dark Age: Technology and the End of the Future.

• How Can We Break The Brexit Deadlock? Ask Ancient Athens (Bridle)

In the central marketplace of ancient Athens, around 350BC, there stood a machine called the kleroterion. This was a six-foot-high slab of stone that had a series of slots on the front, and a long tube bored down from the top to the base. Those up for selection for the various offices of state would insert metal ID tags, called pinakia, into the slots, and a functionary would pour a bucket of coloured balls, suitably shaken, into the top of the tube. The order in which the balls emerged would determine who took which role, some for the day, some for a year.

Today the kleroterion survives, in fragments, in Athens’ Museum of the Ancient Agora, alongside other pieces of democratic technology such as the clepsydra, a water clock used to time orators’ speeches and the fragments of pottery, called ostraka, on which they scratched the names of the too-powerful politicans they wished to see banished from the city, and from which we derive the modern word “ostracism”. The method of governance embodied in the kleroterion, which dates back to the very establishment of democracy, is called sortition, meaning selection by lot, as opposed to election by vote. The Athenians believed that the principle of sortition was critical to democracy. Aristotle declared that: “It is accepted as democratic when public offices are allocated by lot; and as oligarchic when they are filled by election.”

But along the way, sortition – and the even more exciting possibility of actual banishment – has fallen out of most democracies’ toolkits. Sortition in ancient Athens had a number of important qualities. First, those eligible for selection included the entire suffrage (which, it must be noted, was at the time limited to adult male citizens). Second, it applied to much more than jury selection, which is the only form in which sortition survives in most places today, and included magistrates, legislators and the main governing councils of the city – all the important posts, in fact, bar the military. And third, and perhaps most significantly, it both embodied and enabled transparent and participatory governance: that is, anybody could come down to the agora and not merely see but understand how the machine worked – and anyone could be selected by it.

No, your reputation’s pretty much shot.

• Brexit Made The UK A Global Joke. Can We Rebuild Our Reputation? (Kampfner)

Britain is now the butt of global mirth and cringe-making sympathy. I spent most of this autumn on trips trying to link our creative industries with those of other countries. From Mexico City to Montreal, Amsterdam to Tallinn, the welcome starts with the avuncular hand on the shoulder, a sigh and a reference to “our British friends”, followed by “I hope you’re all right”. Consternation over the original referendum decision long ago gave way to bafflement over the chaos. “What on earth is Mrs May doing playing pantomime host in the House of Commons at a time like this?” someone asked me last week. “We used to think that you were serious, reliable people.” Americans and Europeans used to tune in to our parliamentary antics to wonder at the jousting.

Now they are baffled that we continue to play games at a time like this. I am constantly asked why we hark on about the second world war, as if we are stuck in time and are not proud of our achievements since. The gulf between those trying to sell the UK’s skills and modernity and the poor calibre of our political culture is hitting hard. Business groups, which had been surprisingly cowed, are now waking up to the dangers of the brain drain. It is not just young, ambitious Europeans who are moving home, apparently to our prime minister’s delight. The movement of talented Britons to other countries is steady and will grow, as the reality of Brexit sinks in. Why work in a country that regards economic self-harm as just one of those things you have to get through? Why work in a country that permits people to come rather than welcomes them?

Putin moves silently.

• Arab League Set To Readmit Syria Eight Years After Expulsion (G.)

Gulf nations are moving to readmit Syria into the Arab League, eight years after Damascus was expelled from the regional bloc over its brutal repression of peaceful protests against President Bashar al-Assad. At some point in the next year it is likely Assad will be welcomed on to a stage to once again take his place among the Arab world’s leaders, sources say. Shoulder to shoulder with the Saudi crown prince, Mohammed bin Salman, and Egypt’s latest autocrat, General Abdel Fatah al-Sisi, the moment will mark the definitive death of the Arab spring, the hopes of the region’s popular revolutions crushed by the newest generation of Middle Eastern strongmen.

Syria was thrown out of the Arab League in 2011 over its violent response to opposition dissent, a move that failed to stem the bloodshed that spiralled into civil war. Now though, a regional thaw is already under way. This week, the Sudanese president, Omar al-Bashir, became the first Arab League leader to visit Syria in eight years, a visit widely interpreted as a gesture of friendship on behalf of Saudi Arabia, which has shored up ties with Khartoum in recent years. Pro-government media outlets posted pictures of the two leaders shaking hands and grasping each other’s arms on a red carpet leading from the Russian jet that ferried Bashir to Damascus along with the hashtag “More are yet to come”.

50 plant species? Who’s that going to impress?

• More Than 50 Australian Plant Species Face Extinction Within Decade (G.)

More than 50 Australian plant species are under threat of extinction within the next decade, according to a major study of the country’s threatened flora. Just 12 of the most at-risk species were found to be listed as critically endangered under national environment laws – the Environment Protection and Biodiversity Conservation Act – and 13 had no national threatened listing at all. The scientists behind the research, published in the Australian Journal of Botany this month, say the results point to a need for re-evaluation of Australia’s national lists for threatened plants. It is the first major assessment of the status of Australia’s threatened flora in more than two decades. Plants account for about 70% of Australia’s national threatened species list, with 1,318 varieties listed as either critically endangered, endangered or vulnerable.

The research team assessed species that met criteria for either a critical or endangered listing at national or state levels to track their rate of decline. They did this by reviewing all available literature on the plants – including recovery plans, conservation advice and peer-reviewed research – and conducting interviews with 125 botanists, ecologists and land managers with expertise on particular geographic regions or species. The study examined 1,135 species, including 81 that were unearthed through the interview process as being eligible for a critically endangered or endangered listing but did not have one. It found 418 plants had continued declines in their population and a further 265 species had insufficient monitoring information available to determine their status.

The scientists concluded that 55 species were at high risk of extinction within the next 10 years, with fewer than 250 individual plants or only a single population remaining. They found just 12 of the most imperilled species were listed under the EPBC Act as critically endangered and 13 had no listing at all. They said there were also 56 species of plants currently on the critically endangered list that they assessed as having no documented declines or that were stable or even increasing.

Dumping on the Donald

Dec 252018

December 25, 2018 Posted by Raúl Ilargi Meijer at 12:27 pm Primers Tagged with: allegations, Christmas, Donald, emperor, Guardian, Holidays, innuendo, king, Mattis, Mnuchin, MSM, Mueller, National Enquirer, Powell, Spiegel, Syria, Trump, truth 9 Responses »

Rembrandt van Rijn The Adoration of the Magi 16xx

I still had some things I didn’t talk about in Sunday’s Trump Derangement International, about how the European press have found out that they, like the US MSM, can get lots of viewers and readers simply by publishing negative stories about Donald Trump. The US president is an attention magnet, as long as you only write things about him designed to make him look bad.

The Guardian is only too happy to comply. They ran a whole series of articles on Sunday to do juts that: try to make Trump look bad. Note that the Guardian editorial team that okayed the articles is the same as the one that allowed the fake Assange/Manafort one, so their credibility is already shot to pieces. It’s the magic triangle of today’s media profits: spout non-stop allegations against Russia, Trump and Julian Assange, and link them when and where you can. It doesn’t matter if what you say is true or not.

Anyway, all the following is from the Guardian, all on December 23. First off, Adam Gabbatt in New York, who has painstakingly researched how Trump’s businesses, like Trump Tower and the Trump store, don’t appear to have sufficiently (as per him) switched from Happy Holidays to Merry Christmas. Sherlock Holmes would have been proud. A smash hit there Adam, bring out the handcuffs.

Trump’s ‘Merry Christmas’ Pledge Fails To Manifest

During Donald Trump’s presidential campaign he talked often about his determination to win one particular war. A war that had been raging for years, he said. Specifically: the war on Christmas. But despite Trump’s repeated claims that “people are saying Merry Christmas again” instead of the more inclusive “happy holidays”, there are several places where the Christmas greeting is absent: Trump’s own businesses.

The Trump Store, for example. Instead of a Christmas gift guide – which surely would be more in keeping with the president’s stated desire for the phrase to be used – the store offers a holiday gift guide. “Shop our Holiday Gift Guide and find the perfect present for the enthusiast on your list,” the online store urges. “Carefully curated to celebrate the most wonderful time of year with truly unique gifts found only at Trump Store. Add a bow on top with our custom gift wrapping. Happy Holiday’s!”

The use of the phrase “Happy Holiday’s” [sic] in Trump marketing would seem particularly egregious. The long-standing “War-on-Christmas” complaint from the political right is that stores use the phrase “Happy Holidays”, rather than specifically mentioning the Christian celebration. It is offered as both an example of political correctness gone mad, and as an effort to erase Christianity from the US.

It’s just, I think that if Trump had personally interfered to make sure there were Merry Christmas messages all around, you would have remarked that as president, he’s not allowed to be personally involved in his businesses. But yeah, you know, just to keep the negativity going, it works, no matter how fluffy and hollow.

Second, still on December 23, is Tom McCarthy for the Guardian in New York. Who talks about Robert Mueller’s phenomenal successes. Mueller charged 34 people so far. In a case that involves “this complexity which has international implications, aspects relying on the intelligence community, complicated cyber components”. It really says that.

And yes, that’s how many people view this. What do they care that Mueller’s original mandate was to prove collusion between the Trump campaign and ‘Russians’, and that he has not proven any collusion at all so far, not even with 34 people charged? What do they care? It looks like Trump is guilty of something, anything, after all, and that’s all the circus wants.

Robert Mueller Has Enjoyed A Year Of Successes … 2019 Could Be Even Stronger

One measure of special counsel Robert Mueller’s prosecutorial success in 2018 is the list of former top Donald Trump aides brought to justice: Michael Cohen pleaded guilty, a jury convicted Paul Manafort, a judge berated Michael Flynn. Another measure is the tally of new defendants that Mueller’s team charged (34), the number of new guilty pleas he netted (five) and the amount of money he clawed back through tax fraud cases ($48m).

Yet another measure might judge Mueller’s pace compared with previous independent prosecutors. “I would refer to it as a lightning pace,” said Barb McQuade, a University of Michigan law professor and former US attorney. “In a case of this complexity which has international implications, aspects relying on the intelligence community, complicated cyber components – to indict that many people that quickly is really impressive work.”

But there’s perhaps a more powerful way to measure Mueller’s progress in his investigation into Russian interference in the 2016 US election and links between Moscow and the Trump campaign; that’s by noticing how the targets of his investigation have changed their postures over the course of 2018, from defiance to docility – or in the case of Trump himself, from defiance to extreme, hyperventilating defiance.

In reality, you would be at least as correct if you would claim that Robert Mueller’s investigation has been an abject failure. Not one iota of collusion has been proven after 20 months and $20 million in funds have been used. And any serious investigation of Washington’s culture of fixers and lobbyists would land at least 34 people who have committed acts that border on or over illegality. And in a matter of weeks, for a few hundred bucks.

Third, still on December 23, is Julian Borger in Washington, who’s been elected to convey the image of chaos. Trump Unleashed, says our modern day Shakespeare. With Jim Mad Dog Mattis characterized as “.. the last independently minded, globally respected, major figure left in the administration”... Again, it really says that.

Because woe the man who tries to bring US troops home, or even promises to do so a few days before Christmas. For pulling out America’s finest, Donald Trump is being portrayed as something eerily close to the antichrist. That truly is the world on its head. Bringing troops home to their families equals chaos.

Look, guys, if Trump has been guilty of criminal behavior, the US justice system should be able to find that out and convict him for it. But that’s not what this is about anymore. A million articles have been written, like these ones in the Guardian, with the sole intention, evidence being scarce to non-existent, of smearing him to the extent that people see every subsequent article in the light of a man having previously been smeared.

Chaos At Home, Fear Abroad: Trump Unleashed Puts Western World On Edge

The US stumbled into the holiday season with a sense of unravelling, as a large chunk of the federal government ground to a halt, the stock market crashed and the last independently minded, globally respected, major figure left in the administration announced he could no longer work with the president. The defense secretary, James Mattis, handed in his resignation on Thursday, over Donald Trump’s abrupt decision to pull US troops out of Syria.

On Saturday another senior official joined the White House exodus. Brett McGurk, the special envoy for the global coalition to defeat Isis and the US official closest to America’s Kurdish allies in the region, was reported to have handed in his resignation on Friday. That night, senators flew back to Washington from as far away as Hawaii for emergency talks aimed at finding a compromise on Trump’s demand for nearly $6bn for a wall on the southern border, a campaign promise which has become an obsession.

Now look at the next headline, December 23, Graeme Wearden, Guardian, and ask yourself if it’s really Trump saying he doesn’t agree with the rate hikes that fuels the fears, or whether it’s the hikes themselves. And also ask yourself: when Trump and Mnuchin both deny reports of Trump firing Powell, why do journalists keep saying the opposite? Because they want to fuel some fears?

From where I’m sitting, it looks perfectly logical that Trump says he doesn’t think Powell’s decisions are good for the US economy. And it doesn’t matter which one of the two turns out to be right: Trump isn’t the only person who disagrees with the Fed hikes.

The main suspect for 2019 market turmoil is the inevitable fallout from the Fed’s QE under Bernanke and Yellen. And there is something to be said for Powell trying to normalize rates, but there’s no doubt that may hasten, if not cause, turmoil. Blaming it on Trump not agreeing with Jay Powell is pretty much as left field as it gets.

White House Attacks On Fed Chair Fuel Fears Of Market Turmoil In 2019

Over the weekend, a flurry of reports claimed Donald Trump had discussed the possibility of firing the Federal Reserve chairman, Jerome Powell. Such an unprecedented move would trigger further instability in the markets, which have already had their worst year since the 2008 crisis. US officials scrambled to deny Trump had suggested ousting Powell, who was appointed by the president barely a year ago.

The Treasury secretary, Steven Mnuchin, tweeted that he had spoken to the president, who insisted he “never suggested firing” Powell, and did not believe he had the right to do this. However, Trump also declared – via Mnuchin – that he “totally disagrees” with the Fed’s “absolutely terrible” policy of raising interest rates and unwinding its bond-buying stimulus programme, piling further pressure on the US’s independent central bank.

And now, in the only article in the Guardian series that’s December 24, not 23, by Victoria Bekiempis and agencies, the plunging numbers in the stock markets are Trump’s fault, too.

Trump ‘Plunging Us Into Chaos’, Democrats Say, As Markets Tank And Shutdown Persists

Top Democrats have accused Donald Trump of “plunging the country into chaos” as top officials met to discuss a growing rout in stock markets caused in part by the president’s persistent attacks on the Federal Reserve and a government shutdown. “It’s Christmas Eve and President Trump is plunging the country into chaos,” the two top Democrats in Congress, House speaker nominee Nancy Pelosi and Senate minority leader Chuck Schumer, wrote in a joint statement on Monday. “The stock market is tanking and the president is waging a personal war on the Federal Reserve – after he just fired the Secretary of Defense.”

Trump criticized the Federal Reserve on Monday, describing it as the “only problem” for the US economy, even as top officials convened the “plunge protection team” forged after the 1987 crash to discuss the growing rout in stock markets. The crisis call on Monday between US financial regulators and the US treasury department failed to assure markets, and stocks fell again amid concern about slowing economic growth, the continuing government shutdown, and reports that Trump had discussed firing Federal Reserve chairman Jerome Powell.

The last one is from one Jonathan Jones, again December 23, again for the Guardian. And it takes the top award in the narrative building contest.

Again, the Guardian editorial team that okayed this article is still the same as the one that allowed the fake Assange/Manafort one, an editorial team that sees no problem in making things up in order to smear people. To portray Trump, Assange and anyone who’s had the misfortune of being born in Russia as suspicious if not outright criminal.

But look at what Jones has to say, and what Guardian editor-in-chief Kathy Viner and her ilk allowed and pressured him to say. He wants to have a say in how Trump should dress (seasonal knitwear), he evokes the image of Nazi architect Albert Speer for no reason at all, and then it’s a matter of mere inches until you arrive at Trump as a king, an emperor, an inner tyrant.

“He’s in a tuxedo!”, Like that’s a bad thing for Christmas. “She’s in white!”. Oh dear, call the pope. If both Trumps would have put on Christmas sweaters in front of a fire, the writer would have found something negative in that.

Trump Portrait: You Couldn’t Create A Creepier Yuletide Scene If You Tried

The absence of intimacy in the Trumps’ official Christmas portrait freezes the heart. Can it be that hard to create a cosy image of the presidential couple, perhaps in front of a roaring hearth, maybe in seasonal knitwear? Or is this quasi-dictatorial image exactly what the president wants to project? Look on my Christmas trees, ye mighty, and despair! If so, it fuels suspicions that it is only the checks and balances of a 230-year-old constitution that are keeping America from the darkest of political fates. You couldn’t create a creepier Yuletide scene if you tried. Multiple Christmas trees are currently a status symbol for the wealthy, but this picture shows the risks.

Instead of a homely symbol of midwinter cheer, these disciplined arboreal ranks with their uniform decorations are arrayed like massed soldiers or colossal columns designed by Albert Speer. The setting is the Cross Hall in the White House and, while the incumbent president cannot be held responsible for its architecture, why heighten its severity with such rigid, heartless seasonal trappings? Everything here communicates cold, empty magnificence. Tree lights that are as frigid as icicles are mirrored in a cold polished floor. Equally frosty illuminations are projected on the ceiling. Instead of twinkling fairy magic, this lifeless lighting creates a sterile, inhuman atmosphere.

You can’t imagine kids playing among these trees or any conceivable fun being had by anyone. It suggests the micromanaged, corporate Christmas of a Citizen Kane who has long since lost touch with the ordinary, warm pleasures of real life. In the centre of this disturbing piece of conceptual art stand Donald and Melania Trump. He’s in a tuxedo, she’s wearing white – and not a woolly hat in sight. Their formal smartness adds to the emotional numbness of the scene. Trump’s shark-like grin has nothing generous or friendly about it. He seems to want to show off his beautiful wife and his fantastic home rather than any of the cuddly holiday spirit a conventional politician might strive to share at this time.

It begs a question: how can a man who so glaringly lacks anything like a common touch be such a successful “populist”? What can a midwestern voter find in this image to connect with? Perhaps that’s the point. After more than two centuries of democracy, Trump is offering the US people a king, or emperor. In this picture, he gives full vent to his inner tyrant. If this portrait contains any truth about the state of America and the world, may Santa help us all.

I realize that you may be tired of the whole story. I realize you may have been caught in the anti-Trump narrative. And I am by no means a Trump fan. But I will keep on dragging you back to this. Because the discussion should not be based on a handful of media moguls not liking Trump. It should not be based on innuendo and smear. If Trump is to be convicted, it must be on evidence.

And there is no such evidence. Robert Mueller has charged 34 people, but none with what his mandate was based on, none with Russia collusion. This means that the American political system, and democracy itself, is under severe threat by the very media that are supposed to be its gate keepers.

None of this is about Trump, or about whether you like him or not, or even if he’s a shady character or not. Instead, it’s about the influence the media have on how our opinions and ideas about people and events are being shaped on a daily basis.

And once you acknowledge that your opinions of Trump, Putin et al, even without any proof of a connection between them, are actively being molded by the press you expect to inform you about the truth behind what goes on, you will have to acknowledge, too, that you are a captive of forces that use your gullibility to make a profit off you.

If our media need to make up things all the time about who’s guilty of what, because our justice systems are incapable of that, then we have a problem so enormous we may not be able to overcome it in our present settings.

Alternatively, if we trust our justice systems to deliver true justice, we don’t need a hundred articles a day to tell us how Trump or Putin are such terrible threats to our world. Our judges will tell us, not our journalists or media who are only in it for a profit.

I can say: “let’s start off 2019 trying to leave prejudice behind”, and as much as that is needed and you may agree with me, it’s no use if you don’t realize to what extent your views of the world have been shaped by prejudice.

I see people reacting to the star writer at Der Spiegel who wrote a lot about Trump, being exposed as a fraud. I also see people trying to defend Julian Assange from the Guardian article about his alleged meetings with Paul Manafort, that was an obvious big fat lie (the truth is Manafort talked to Ecuador to help them ‘sell’ Assange to the US).

But reacting to the very obvious stuff is not enough. The echo chamber distorts the truth about Trump every single day, and at least six times on Sunday, as this essay of mine shows. It’s just that after two years of this going on 24/7, it is perceived as the normal.

Everyone makes money dumping on the Donald, it’s a proven success formula, so why would the Guardian and Der Spiegel stay behind? They’d only hurt their own bottom line.

It has nothing to do with journalism, though, or news. It’s smear and dirt, the business model of the National Enquirer. That’s how far our once truthful media have fallen.

Debt Rattle December 23 2018

Dec 232018

December 23, 2018 Posted by Raúl Ilargi Meijer at 10:24 am Finance Tagged with: Brexit, China, Corbyn, Israel, Krakatau, loneliness, Mattis, Mnuchin, Mueller, Powell, Trump, tsunami, volcano 9 Responses »

Caravaggio Adoration of the Shepherds 1609

• Krakatau-Triggered Tsunami Kills At Least 168 In Indonesia (R.)

• David Collum’s 2018 Year In Review: “The Year Everything Changed”

• Corbyn Faces Furious Labour Backlash Over Backing Brexit (G.)

• UK To Tackle Loneliness Crisis With £11.5m Cash Injection (G.)

• If Truth Cannot Prevail Over Material Agendas We Are Doomed (PCR)

• Mnuchin Refutes Report That Trump Wants Powell Fired (MW)

• Trump’s Political Viagra (Jatras)

• We Know How Trump’s War Game Ends (Taibbi)

• Send the Mad Dog to the Corporate Kennel (McGovern)

• Is China Getting Too Close To Israel? (ATimes)

Krakatau in 1883 is the stuff of legend. It affected climate all over the world.

“When the Krakatoa volcano in Indonesia erupted in 1883, the resulting debris caused vibrant red sunsets around the world for up to three years afterward.”

It also killed 30,000+. But it was still much weaker than Tambora in 1811, also Indonesia, which killed over 70,000.

• Krakatau-Triggered Tsunami Kills At Least 168 In Indonesia (R.)

A tsunami killed at least 168 people and injured hundreds on the Indonesian islands of Java and Sumatra following an underwater landslide believed caused by the erupting Anak Krakatau volcano, officials and media said on Sunday. Hundreds of homes and other buildings were “heavily damaged” when the tsunami struck along the rim of the Sunda Strait late on Saturday, Sutopo Purwo Nugroho, spokesman for the disaster mitigation agency, said. Thousands of residents were forced to evacuate to higher ground. There was no estimate on the number of missing. TV images showed the seconds when the tsunami hit the beach and residential areas in Pandeglang on Java island, dragging with it victims, debris, and large chunks of wood and metal.

The eruption of Krakatau in 1883 killed more than 36,000 people in a series of tsunamis. Anak Krakatau is the island that emerged from the area once occupied by Krakatau, which was destroyed in 1883. It first appeared in 1927 and has been growing ever since. Saturday’s tsunami was the latest in a series of tragedies that have struck Indonesia, a vast archipelago, this year. Successive earthquakes flattened parts of the tourist island of Lombok, and a double quake-and-tsunami killed thousands on Sulawesi island. Nearly 200 people died when a Lion Air passenger plane crashed into the Java Sea in October.

Authorities warned residents and tourists in coastal areas around the Sunda Strait to stay away from beaches and a high-tide warning remained in place through till Dec. 25. “Those who have evacuated, please do not return yet,” said Rahmat Triyono, an official at the Meteorology, Climatology and Geophysics Agency (BMKG). President Joko Widodo, who is running for re-election in April, said on Twitter that he had “ordered all relevant government agencies to immediately take emergency response steps, find victims and care for the injured”.

Breaking News: Deadly tsunami strikes Indonesia after volcanic eruption. @weathernetwork #Tsunami pic.twitter.com/o7ZREkUVO4

— Amanda Weldon (@WeldonAmanda) December 23, 2018

Dave Collum still produces his endless end of the year reviews, and he’s still a good friend and avid reader of the Automatic Earth. Even though Twitter sort of shadow banned him from my feed.

• David Collum’s 2018 Year In Review: “The Year Everything Changed”

Sources I sit in front of a computer 16 hours a day gerrymandering my brain, at least three of which are dedicated to non-chemistry pursuits. I’m a huge fan of Adam Taggart and Chris Martenson (Peak Prosperity), Tony Greer (TG Macro), Doug Noland (Credit Bubble Bulletin), The Automatic Earth, Grant Williams (Real Vision and Things That Make You Go Hmmm), Raoul Pal (Real Vision), Bill Fleckenstein (Fleckenstein Capital), Mike Krieger (Liberty Blitzkrieg), Demetri Kofinas (Hidden Forces), James Grant (Grant’s Interest Rate Observer), Campus Reform, and any nonsense spewed by Twitter legend @RudyHavenstein.

There are so many others, many of whom I consider friends that I am simply waiting to meet. ZeroHedge is by far my preferred consolidator of news; it’s an acquired taste and requires a filter, but I think those rogues are great. Twitter is a window to the world if managed correctly—especially for a chemist attempting to connect with the finance world. Warning: the Holy Grail of maximizing follower counts is an illusion; it produces a counterproductive hyperconnectivity that makes extracting signal from noise difficult. So much flow, so little time.

The half of British who don’t want Brexit have no-one to speak for them. That is a volatile situation. And potentially explosive.

• Corbyn Faces Furious Labour Backlash Over Backing Brexit (G.)

Jeremy Corbyn is facing a storm of criticism from Labour activists and MPs after suggesting he would press ahead with Brexit if the party won a snap general election. In a sign that he is losing backing among overwhelmingly pro-Remain Labour supporters, Corbyn was also accused of betraying the party membership by appearing reluctant to back the idea of supporting Remain in a second referendum. The first signs of a serious internal revolt from party members on the left, who helped propel him to the leadership, came after Corbyn gave an interview to the Guardian in which he suggested he thought Brexit should go ahead and said EU state-aid rules would prevent a Labour government intervening to support UK industries.

His anti-EU tone drew immediate criticism from party supporters and members who had successfully persuaded the leadership to back the possibility of a second referendum at Labour’s annual conference in Liverpool in September. Richard Brooks, a Labour member, activist and co-founder of For our Future’s Sake (FFS), a pro-Remain youth and student-led organisation, said Corbyn risked losing the backing of young people as well as the mass Labour membership he had promised to empower. “Jeremy Corbyn is in danger of betraying and losing the support of millions of young people and students who very nearly propelled him to Downing Street last year, and whose support he needs if he is to ever to become prime minister.

“Students and young people will not forget or forgive politicians who sell them down the river by backing a Brexit that limits our life opportunities and makes us poorer,” he said.

Because there’s nothing that cannot be bought.

• UK To Tackle Loneliness Crisis With £11.5m Cash Injection (G.)

A coffee caravan in rural Suffolk, furniture restoration projects for men and organised rambles for the recently bereaved are among more than a hundred initiatives being backed with a £11.5m fund to tackle Britain’s epidemic of loneliness. One hundred and twenty-six projects have been chosen to receive up to £100,000 each in the first ever government-backed fund to tackle a problem that the prime minister, Theresa May, described as “incredibly damaging to our humanity” when she launched a national loneliness strategy in October. The projects will target a wide range of groups from isolated Pakistani women in Bradford to young LGBTQ+ in Bristol and lonely elderly men in Cornwall.

The government believes the health impact of loneliness is on a par with obesity and smoking. It says loneliness is associated with a greater risk of smoking, coronary heart disease and stroke as well as an increased risk of depression, low self-esteem, sleep problems and Alzheimer’s disease. Mims Davies, the minister for loneliness, said: “I am committed to encouraging open conversations around this sensitive topic to reduce the stigma and create an environment where everyone is better connected.”

Rural Coffee Caravan in Suffolk will buy a new camper van that will travel to quiet villages in the East Anglian countryside and set up temporary cafes. It is also using the money to extend an initiative that involves pubs giving out free coffee on Monday mornings. “Loneliness is just so damaging,” said Ann Osborn, its director. “Lonely people are more likely to have problems with obesity, have heart disease and suffer from depression. But also they cut themselves off and so the community suffers.

Well, truth is gone from the media already…

• If Truth Cannot Prevail Over Material Agendas We Are Doomed (PCR)

Throughout the long Cold War Stephen Cohen, professor of Russian studies at Princeton University and New York University was a voice of reason. He refused to allow his patriotism to blind him to Washington’s contribution to the confict and to criticize only the Soviet contribution. Cohen’s interest was not to blame the enemy but to work toward a mutual understanding that would remove the threat of nuclear war. Although a Democrat and left-leaning, Cohen would have been at home in the Reagan administration, as Reagan’s first priority was to end the Cold War. I know this because I was part of the effort. Pat Buchanan will tell you the same thing.

[..] Today Cohen is stressed that it is the United States that thinks it can win a nuclear war. Washington speaks openly of using “low yield” nuclear weapons, and intentionally forecloses any peace negotiations with Russia with a propaganda campaign against Russia of demonization, villification, and transparant lies, while installing missile bases on Russia’s borders and while talking of incorporating former parts of Russia into NATO. In his just published book, War With Russia?, which I highly recommend, Cohen makes a convincing case that Washington is asking for war.

I agree with Cohen that if Russia is a threat it is only because the US is threatening Russia. The stupidity of the policy toward Russia is creating a Russian threat. Putin keeps emphasizing this. To paraphrase Putin: “You are making Russia a threat by declaring us to be one, by discarding facts and substituting orchestrated opinions that your propagandistic media establish as fact via endless repetition.” Cohen is correct that during the Cold War every US president worked to defuse tensions, especially Republican ones. Since the Clinton regime every US president has worked to create tensions. What explains this dangerous change in approach?

One little rumor can last an entire Christmas season.

• Mnuchin Refutes Report That Trump Wants Powell Fired (MW)

President Donald Trump, reportedly angry over the U.S. central bank’s decision to raise interest rates last week, has talked about ousting Federal Reserve Chairman Jerome Powell, according to Bloomberg News. The report, based on “four people familiar with the matter,” said they were not convinced Trump would move against Powell, but that the president’s ire remained elevated over rising interest rates. Rates are climbing at the same time that the stock market has wiped out 2018 gains. In a Saturday evening tweet, Treasury Secretary Steven Mnuchin said he has spoken with the president and Trump said, “I totally disagree with Fed policy. I think the increasing of interest rates and the shrinking of the Fed portfolio is an absolute terrible thing to do at this time especially in light of my major trade negotiations which are ongoing, but I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so.”

On Friday, Trump’s economic team split publicly over the Fed. Trump’s trade adviser Peter Navarro told a Japanese newspaper that “we” — presumably meaning the White House — didn’t want to see any more interest-rate hikes from the central bank. The Fed has penciled in two rate hikes for 2019. Navarro said that would be “two too many.” “We don’t understand why the Fed is acting so contractionary at a time when there’s no inflation to worry about,” he said. White House chief economist Kevin Hassett said he disagreed with Navarro. “That’s Peter speaking for himself,” Hassett insisted. “I think the appropriate position for an economist in the White House is to respect the independence of the Fed and not comment on their policies,” Hassett said.

Is Trump finally getting the chutzpah to implement his promises?

• Trump’s Political Viagra (Jatras)

After two years of getting rolled by the Washington establishment, it seems that President Donald Trump woke up and suddenly realized, “Hey – I’m the president! I have the legal authority to do stuff!” • He has announced his order to withdraw US troops from Syria. • His Defense Secretary James Mattis has resigned. There are rumors National Security Adviser John Bolton may go too. (Please take Secretary of State Mike Pompeo with you!) • He announced a start to withdrawing from Afghanistan. • He now says he will veto a government funding bill unless he gets $5 billion for his Wall, and as of 12:01 AM Washington time December 22 the federal government is officially under partial shutdown.

All of this should be taken with a big grain of salt. While this week’s assertiveness perhaps provides further proof that Trump’s impulses are right, it doesn’t mean he can implement them. The Syria withdrawal will be difficult. The entire establishment, including the otherwise pro-Trump talking heads on Fox News, are dead set against him – except for Tucker Carlson and Laura Ingraham. Senator Lindsey Graham is demanding hearings on how to block the Syria pullout. Congress hardly ever quibbles with a president’s putting troops into a country, where the Legislative Branch has legitimate Constitutional power. But if a president under his absolute command authority wants to pull them out – even someplace where they’re deployed illegally, as in Syria – well hold on just a minute!

We are being told our getting out of Syria and Afghanistan will be a huge “gift” to Russia and Iran. Worse, it is being compared to Barack Obama’s “premature” withdrawal from Iraq (falsely pointed to as the cause of the rise of ISIS) and will set the stage for “chaos.” By that standard, we can never leave anywhere. This will be a critical time for the Trump presidency. (And if God is really on his side, he soon might get another Supreme Court pick.) If he can get the machinery of the Executive Branch to implement his decision to withdraw from Syria, and if he can pick a replacement to General Mattis who actually agrees with Trump’s views, we might start getting the America First policy Trump ran on in 2016.

Wait, we do? Matt sounds a bit confused here.

• We Know How Trump’s War Game Ends (Taibbi)

So we’re withdrawing troops from the Middle East. GOOD! What’s the War on Terror death count by now, a half-million? How much have we spent, $5 trillion? Five-and-a-half? For that cost, we’ve destabilized the region to the point of abject chaos, inspired millions of Muslims to hate us, and torn up the Geneva Convention and half the Constitution in pursuit of policies like torture, kidnapping, assassination-by-robot and warrantless detention. It will be difficult for each of us to even begin to part with our share of honor in those achievements. This must be why all those talking heads on TV are going crazy.

Unless Donald Trump decides to reverse his decision to begin withdrawals from Syria and Afghanistan, cable news for the next few weeks is going to be one long Scanners marathon of exploding heads. “Today’s decision would cheer Moscow, ISIS, and Iran!” yelped Nicole Wallace, former George W. Bush communications director. “Maybe Trump will bring Republicans and Democrats together,” said Bill Kristol, on MSNBC, that “liberal” channel that somehow seems to be populated round the clock by ex-neocons and Pentagon dropouts. Kristol, who has rarely ever been in the ballpark of right about anything — he once told us Iraq was going to be a “two month war” — might actually be correct.

Trump’s decisions on Syria and Afghanistan will lay bare the real distinctions in American politics. Political power in this country is not divided between right and left, and not even between rich and poor. The real line is between a war party, and everyone else. This is why Kristol is probably right. The Democrats’ plan until now was probably to impeach Trump in the House using at minimum some material from the Michael Cohen case involving campaign-finance violations.

“Like all members of the military profession I never had an original thought until I left the service. My mental faculties remained in suspended animation..”

• Send the Mad Dog to the Corporate Kennel (McGovern)

Outgoing Defense Secretary Gen. James “Mad Dog” Mattis was famous for quipping, “It’s fun to shoot some people.” It remains a supreme irony that Mattis was widely considered the only “adult in the room” in the Trump administration. Compared to whom? John Bolton, the rabid neocon serving as national security adviser? That would be the epitome of “condemning with faint praise.” [..] Mattis was simply incapable of acknowledging the self-destructive, mindless nature of U.S. “endless war” in the Middle East, which candidate-Trump had correctly called “stupid.” In his resignation letter, Mattis also peddled the usual cant about the indispensable nation’s aggression being good for the world.

Mattis was an obstacle to Trump’s desire to pull troops out of Syria and Afghanistan (and remains in position to spike Trump’s orders). Granted, the abrupt way Trump announced his apparently one-man decision was equally stupid. But withdrawal of ground troops is supremely sane, and Mattis was and is a large problem. And, for good or ill, Trump — not Mattis — was elected president. Historically, Marines are the last place to turn for sound advice. Marine Gen. Smedley Butler (1881-1940), twice winner of the Medal of Honor, was brutally candid about this, after he paused long enough to realize, and write, “War is a Racket”: “I suspected I was just part of a racket at the time. Now I am sure of it. Like all members of the military profession I never had an original thought until I left the service. My mental faculties remained in suspended animation while I obeyed the orders of the higher- ups. …”

Next up are ports in Chesapeake Bay?

• Is China Getting Too Close To Israel? (ATimes)

China is constructing seaports at two sites where the US 6th Fleet deploys, in Haifa next to Israel’s main naval base and Ashdod near Tel Aviv, prompting concerns about China’s military potential in the Mediterranean Sea and Middle East. “The civilian [Chinese] port in Haifa abuts the exit route from the adjacent [Israeli] navy base, where the Israeli submarine fleet is stationed and which, according to foreign media reports, maintains a second-strike capability to launch nuclear missiles,” Israel’s Haaretz media reported. “No one in Israel thought about the strategic ramifications,” Haaretz said in September. The guided-missile destroyer USS Arleigh Burke visited Haifa on October 25 in support of the 6th Fleet which is headquartered in Naples, Italy.

Shanghai International Port Group (SIPG) signed the Haifa contract in 2015, began construction in June, and is to operate the Bayport Terminal for 25 years starting from 2021. SIPG signed memorandums of understanding with U.S. ports in Seattle, Washington in 2006 and Georgia Ports Authority in 2004, plus Barcelona, Spain, in 2006. SIPG also works with European ports in Rotterdam, Hamburg and London, and two ports in Japan, its website said. China Harbor Engineering, one of China’s biggest government-owned enterprises, is meanwhile constructing a port at Ashdod, 25 miles (40 kilometers) south of Tel Aviv.

“At $3 billion, this is one of the biggest overseas investment projects in Israel, ever, and also one of the biggest for the Chinese company, China Harbor Engineering,” wrote Arthur Herman, senior fellow at the Washington-based Hudson Institute think tank in November. “Ashdod on the Mediterranean coast is the destination of fully 90 percent of Israel’s international maritime traffic,” Herman said.

Debt Rattle November 24 2018

Nov 242018

November 24, 2018 Posted by Raúl Ilargi Meijer at 10:33 am Finance Tagged with: Assange, Brexit, crypto, Ecuador, FANGMAN, Gibraltar, Labour, Macron, McDonnell, Mnuchin, oil, Trump 12 Responses »

Joseph Mallord William Turner The Sun Rising over Water 1825-30

• Britain’s Opposition Labour Party Plots Overthrow Of Capitalism (R.)

• This Sell-Off is Just One Step in Methodical Unwind of Stock Prices (WS)

• Oil Plunges More Than 6% Despite Potential OPEC Cut (R.)

• Bitcoin Loses 25% Of Its Remaining Value During Thanksgiving Week (CNBC)

• Trump Dismisses Report He Is Unhappy With Treasury’s Mnuchin (R.)

• Holiday Doings and Undoings (Kunstler)

• Rising Fuel Price Protests Should Serve As A Red Alert For Macron (I.ie)

• Gibraltar Rocks Final Stages Of Brexit Negotiation (AFP)

• Ecuador Ousts Its London Ambassador, ‘Last Diplomat Assange Knew’ (RT)

• Prosecution of Julian Assange, America’s Betrayal of Its Own Ideals (CD)

• Why You Should Care About the Julian Assange Case (Taibbi)

• Anonymous Blows Lid Off Huge Psyop In Europe Funded By UK & US (RT)

You really think you can win an election saying this?

• Britain’s Opposition Labour Party Plots Overthrow Of Capitalism (R.)

The British Labour Party’s would-be finance minister, John McDonnell, has a message for the world: he is deadly serious about overthrowing capitalism and building a socialist society. McDonnell, 67, who describes Karl Marx as one of his main influences, has been at the vanguard of a left-wing revival in Britain’s main opposition party under fellow socialist Jeremy Corbyn. He has promised sweeping nationalization, higher public spending and an overhaul of the banking system. Asked about his entry in the Who’s Who directory of influential people which lists his passion for “generally fermenting the overthrow of capitalism”, McDonnell said it was a joke about beer-making, but he agrees with the principle.

“I believe it. I am serious in my intent. I want to transform this economy,” McDonnell told Reuters in an interview. “That means evolving into a system which can achieve that equality, that democracy, that fairness, and tackles the major challenges that we are facing.” With PM Theresa May’s grip on power looking ever more vulnerable as she faces the most perilous crisis of her premiership struggling to win backing for her Brexit deal, Labour are increasingly confident that they will be the next guardians of the world’s fifth-largest economy. McDonnell’s gambit is that the social discontent in Britain which fueled the shock 2016 Brexit vote runs much deeper, and that voters who feel left behind by decades of unchecked capitalism and wounded by years of public spending cuts will rally to his call.

“(It was) like everyone’s grievance went into one vote,” McDonnell said. The polls show that is only part of the picture: voters are tired of economic austerity and unhappy with May’s Brexit negotiations, but Labour are only marginally ahead of the ruling Conservative Party. Some commentators have suggested they should be polling better against a government in disarray. Nevertheless, the combination of an unsated appetite for change and a Brexit-inspired political crisis which has trashed the centrist orthodoxy of British politics, has left Labour confident they will soon win power. McDonnell said his ambition is create the most radical government in modern British history even as the country is grappling with its exit from the EU, the most complex negotiations in Europe since the end of World War Two.

[..] McDonnell has outlined a program of nationalizing the railways, energy and water companies and the postal service, raising taxes on businesses and the wealthy. This would be combined with increased spending on education, skills training, and health care, and harnessing the financial sector to help fund a huge infrastructure investment. At his party’s annual conference two months ago, McDonnell did little to conceal the scale of his ambition. Businesses were stunned by his plan to force all large companies to hand over a tenth of their equity to their workforce.

Possible.

• This Sell-Off is Just One Step in Methodical Unwind of Stock Prices (WS)

It was an ugly Monday and Tuesday followed by a Wednesday that at first look like a real bounce but ended with the indices giving up their gains. This was followed, mercifully, by Thursday when markets were closed, which was followed unmercifully by Friday, during which the whole schmear came unglued again. The S&P 500 index dropped 0.7% on Friday to 2,632 and 3.8% for Thanksgiving week, though this week is usually – by calendar black-magic – a good week, according to the Wall Street Journal: During Thanksgiving weeks going back a decade, the S&P 500 rose on average 1.3%. This leaves the S&P 500 index 1.5% in the hole year-to-date. It’s now back where it had first been on November 30, 2017:

Clearly, when seen over the longer term, the sell-off for now still belongs to the small-fry among sell-offs, with S&P 500 down just 10.5% from its peak:

The Dow dropped 0.7% on Friday and 4.4% during Thanksgiving week, to 24,286. It’s 1.75% in the hole for the year. Technically speaking, it’s not even in a correction, being down only 9.9% from its peak. And the Nasdaq, dropped 0.5% on Friday and 4.3% during Thanksgiving week. According to the Wall Street Journal, during Thanksgiving week over the past 20 years, the Nasdaq rose on average 1.3%. So this is no good for calendar-black-magic aficionados. Where’s the free-wheeling holiday spirit? The Nasdaq is now down 14.7% from its peak at the end of August but remains up 0.5% year-to-date. The Russell 2000 small-caps index edged down today and is down 14.5% from its peak on August 31. It’s 3% in the hole year-to-date and right back where it had first been on September 27, 2017:

The seven FANGMAN stocks – Facebook, Amazon, Netflix, Google’s parent Alphabet, Microsoft, Apple, and NVIDIA – fell 1.3% on Friday in combined market cap. Over Thanksgiving week, they have now plunged 6.7%, or by $259 billion. Those are real dollars gone in four trading days with just seven stocks. Since their combined market-cap peak of $4.63 trillion at the end of August, nearly $1 trillion — $994 billion to be precise – has dissolved into ambient air, as their combined market cap has plunged 21.5% in ca. 12 weeks. But if you look at them as individual stocks, it’s even worse. The saving grace for the group as a whole was Microsoft, the second largest stock by market cap, which is threatening to become the largest stock shortly if Apple continues to fall at this pace. Three of the seven have already plunged by 38% to nearly 50%. Two more have plunged by 26% to 27%.

What is it, 34% since the high this year?

• Oil Plunges More Than 6% Despite Potential OPEC Cut (R.)

Oil prices slumped more than 6 percent on Friday, with Brent set for a 12-percent plunge this week, as fears that supply would overpower demand intensified, even as major producers considered cutting output. Oil supply, led by U.S. producers, is growing faster than demand and to prevent a build-up of unused fuel such as the one that emerged in 2015, OPEC is expected to start trimming output after a meeting on Dec. 6. But this has done little so far to prop up prices, which have dropped more than 20 percent so far in November, in a seven-week streak of losses. Deep trade disputes between the world’s two biggest economies and oil consumers, the United States and China, have weighed upon the market.

“The market is pricing in an economic slowdown – they are anticipating that the Chinese trade talks are not going to go well,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “The market doesn’t believe that OPEC is going to be able to act swiftly enough to offset the coming slowdown in demand.” [..] Market fears over weak demand intensified after China reported its lowest gasoline exports in more than a year amid a glut of the fuel in Asia and globally. Stockpiles of gasoline have surged across Asia, with inventories in Singapore, the regional refining hub, rising to a three-month high while Japanese stockpiles also climbed last week. Inventories in the United States are about 7 percent higher than a year ago.

Starting to feel serious.

• Bitcoin Loses 25% Of Its Remaining Value During Thanksgiving Week (CNBC)

Bitcoin continued its move lower Friday, struggling to find footing after a week of pain for the world’s largest cryptocurrency. The digital asset hit a low of $4,119 Friday, according to data from CoinDesk, bringing its seven-day losses to more than 25 percent. In dollar terms, bitcoin’s value dropped by about $1,400 over that time frame. Other cryptocurrencies didn’t hold up this week either. Not a single one in the top 28 by market capitalization was trading in the green Friday, according to CoinMarketCap.com. XRP, the second-largest by market capitalization, fell 6 percent Friday, bringing its one-week losses to 10 percent. Ether was down 7 percent in 24 hours and lost roughly 30 percent for the week.

The total market capitalization for cryptocurrencies fell to $138.6 billion Friday, according to CoinMarketCap data, its lowest level since September 2017. Since its peak, the market has lost about $700 billion in value, according to the data. The tumble for bitcoin started abruptly last week when it fell below $6,000 and hit a new low for the year. The plunge followed what had been a surprisingly calm few months for bitcoin and a break from the rest of its volatile trading year. Since then, prices have hit new 13-month lows and struggled to move out of the $4,300 range. The price dips are a stark contrast from last Thanksgiving when the cryptocurrency was entering a hot streak thanks to a wave of new retail investors. Since that holiday week last year, prices are down by more than 55 percent.

“They never like to ask me for a quote b/c it would kill their story..”

• Trump Dismisses Report He Is Unhappy With Treasury’s Mnuchin (R.)

U.S. President Donald Trump said on Twitter on Friday that he was quite happy with Treasury Secretary Steven Mnuchin’s performance, after The Wall Street Journal reported that the president was dissatisfied with Mnuchin. “I am extremely happy and proud of the job being done by @USTreasury Secretary @stevenmnuchin1,” Trump said in a tweet. The Journal reported that Trump blames Mnuchin for the appointment of Federal Reserve Chairman Jerome Powell, who has been steadily raising U.S. interest rates. Trump is concerned that higher rates could undercut economic gains ahead of his 2020 reelection bid, the newspaper reported.

Quoting unnamed sources, the Journal said Trump has also expressed displeasure with Mnuchin over stock market turbulence and the Treasury secretary’s skepticism about the White House trade actions against China. “The FAKE NEWS likes to write stories to the contrary, quoting phony sources or jealous people, but they aren’t true. They never like to ask me for a quote b/c it would kill their story,” Trump said on Twitter. Trump has repeatedly criticized the Fed’s rate increases under Powell. In October, he called the Fed “crazy,” “ridiculous” and “my biggest threat.”

A year ago when Trump picked Powell to head the Federal Reserve, Mnuchin, a former Goldman Sachs banker, was a strong advocate of his nomination. The Wall Street Journal, citing a person familiar with the matter, said Trump, in a conversation with someone who praised Mnuchin’s performance, mentioned stock market volatility and said: “If he’s so good, why is this happening?”

“..Somehow I doubt that this Christmas will win the Bing Crosby star of approval.”

• Holiday Doings and Undoings (Kunstler)

Somehow I doubt that this Christmas will win the Bing Crosby star of approval. Rather, we see the financial markets breaking under the strain of sustained institutionalized fraud, and the social fabric tearing from persistent systemic political dishonesty. It adds up to a nation that can’t navigate through reality, a nation too dependent on sure things, safe spaces, and happy outcomes. Every few decades a message comes from the Universe that faking it is not good enough. The main message from the financials is that the global debt barge has run aground, and with it, the global economy. That mighty engine has been chugging along on promises-to-pay and now the faith that sustained those promises is dissolving.

China, Euroland, and the USA can’t possibly meet their tangled obligations, and are running out of tricks for rigging, gaming, and jacking the bond markets, where all those promises are vested. It boils down to a whole lot of people not getting paid, one way or the other — and it’s really bad for business. Our President has taken full credit for the bubblicious markets, of course, and will be Hooverized as they gurgle around the drain. Given his chimerical personality, he may try to put on an FDR mask — perhaps even sit in a wheelchair — and try a few grand-scale policy tricks to escape the vortex. But the net effect will surely be to make matters worse — for instance, if he can hector the Federal Reserve to buy every bond that isn’t nailed to some deadly derivative booby-trap.

But then he’ll only succeed in crashing the dollar. Remember, there are two main ways you can go broke: You can run out of money; or you can have plenty of worthless money.

Urban vs rural. Just like in America.

• Rising Fuel Price Protests Should Serve As A Red Alert For Macron (I.ie)

Within the space of a week, the gilets jaunes have managed to tap into wider discontent with Macron’s presidency and policies, gaining opposition support and momentum as a result. These are not the usual protests or strikes co-ordinated by political parties or unions in France. With no official organisation, no identified leader and no political affiliation, the gilets jaunes phenomenon has been almost completely co-ordinated on social media where it declares “[This] comes about only from the French people”. [..] one thing is certain: their actions have chimed with the public. This despite chaos across France last weekend with roads blocked by protesters at some 2,000 locations. Two people were killed – one when a driver panicked and accidentally accelerated their car into the crowd – in the protests and hundreds reported injured.

Nevertheless, a number of polls have shown that almost three-quarters of French voters approve of the demonstrations, one survey found that more than half of those who voted for Macron support them. The planned tax increases – the price of diesel is due to go up another 6.5 cents per litre and petrol by 2.9 cents – are to come into force in January. They follow a 23pc rise in the cost of diesel and 15pc in petrol in the past year. Internationally, Macron has made much of his commitment to battling climate change and these hikes are part of his domestic policies on that front. His ministers have also argued that the higher price of crude globally also necessitates a rise but protesters complain that fuel taxes have been increasing steadily over the past four years.

One survey this week found that 82pc believe Macron should drop the plans. It also showed that particular demographics – the self-employed and business leaders, plus pensioners and low-income households – were most supportive of the gilets jaunes. The episode also highlights the rift between France’s urban elite and those in its poor rural peripheries. Workers who rely on their cars to get to their jobs in the countryside are particularly aggrieved by the planned tax increases.

One more topic they try to push into the limitless future.

• Gibraltar Rocks Final Stages Of Brexit Negotiation (AFP)

Preparations for a summit to endorse Britain’s deal to quit the European Union risked running aground on the rock of Gibraltar Friday, as Spain defended its veto over the fate of the tiny territory. Britain’s Prime Minister Theresa May and leaders of the other 27 EU member states are to meet Sunday to approve their divorce agreement and set a course for negotiating their future post-Brexit relationship. But Spanish officials emerged from talks Friday warning that Prime Minister Pedro Sanchez might not attend unless it is guaranteed that no future accord on EU relations involving Gibraltar will be signed without Madrid’s specific assent.

Visiting Cuba, Sanchez said that if the Gibraltar row is not resolved, he might not go to Brussels on Sunday, warning: “If there’s no agreement, it’s very clear hat will happen, there very probably won’t be a European Council.” In Brussels, Luis Marco Aguiriano Nalda, Spain’s secretary of state for European affairs, said Madrid wanted London to put in writing that it shared Madrid’s interpretation of the negotiated Brexit deal regarding Gibraltar. “We have demanded that it be published by the British authorities before the European Council on Sunday,” he said. In London, however, a Downing Street source said he did not know what document Aguiriano could be referring to and added: “We have negotiated on behalf of the whole of the UK family. That includes Gibraltar and the overseas territories.”

The torture never stops.

• Ecuador Ousts Its London Ambassador, ‘Last Diplomat Assange Knew’ (RT)

Ecuador’s President Lenin Moreno has terminated the credentials of his UK ambassador, who has been at the center of negotiating the fate of WikiLeaks co-founder Julian Assange, as concerns mount over the whistleblower’s safety. The decree, with which Moreno effectively sacked Ecuador’s London ambassador Abad Ortiz, was published by WikiLeaks on Wednesday. The document does not offer any explanation as to why Ortiz, who had been his country’s ambassador to the UK since 2015, is now being permanently recalled. Nor does it name a successor for the outgoing diplomat. The decree is effective immediately.

WikiLeaks tweeted that Abad, appointed to the office under President Rafael Correa, was the last diplomat the long-term self-exiled editor knew in the embassy. “All diplomats known to Assange have now been transferred away from the embassy,” the whistleblowing site claimed. This new and sudden twist in the Assange saga has been met with concern by his supporters, with some suggesting that Moreno is doing Washington’s bidding by removing people who might have stood by Assange and opposed his potential handover to the British police – which is expected to bring about a swift extradition to the US. The dismissal has been called “a silent pro-US coup.”

Best piece on Assange in a while, from Nozomi Hayase.

• Prosecution of Julian Assange, America’s Betrayal of Its Own Ideals (CD)

Just as the Founding Fathers of the United States, by revolting against the autocratic rule of King George were regarded as traitors, by aiding ordinary people expose and defy unjust secret law, WikiLeaks too has been branded as an enemy of the state. Trump’s Secretary of State and the former CIA director, Mike Pompeo calls WikiLeaks a non-state hostile intelligence agency, claiming that the organization threatens American values and needs to be shut down. Members of the US Congress urged the Ecuadorian President to persecute Assange, calling him a “dangerous criminal” and a “threat to global security”. While all these vicious verbal attacks are thrown at him, Assange remains in confinement, over the past months, being completely shut out from the outside, being continually deprived of fresh air, access to medical care and sunlight by the UK government in violation of UN rulings.

All wars start and are fueled by lies and propaganda. Once it was the Vietnam War, where under the command of the US President Lyndon B. Johnson, the Gulf of Tonkin lies unleashed military forces into Southeast Asia. Then came the invasion of Iraq with the former Secretary of State Colin Powell’s speech at the UN, falsely claiming Iraq had ‘Weapons of Mass Destruction’. This battle against free speech is another secret war of this empire. It now has become a fog of war, where with the hype of Russia Gate that was created out of thin air, the public was prevented from seeing who the real enemies are.

Taibbi’s piece is okay, and he says some good things, but he doesn’t appear to like Assange, and fails to hide that.

Valid point he makes: The -secret- charges vs Assange have nothing to do with Trump, they pre-date his presidency by years.

• Why You Should Care About the Julian Assange Case (Taibbi)

It always seemed that Assange viewed his primary role as being a pain in the ass to this increasingly illegitimate system of secrets, a pure iconoclast who took satisfaction in sticking it to the very powerful. I didn’t always agree with its decisions, but Wikileaks was an understandable human response to an increasingly arbitrary, intractable, bureaucratic political system. That it even had to exist spoke to a fundamental flaw in modern Western democracies — i.e. that our world is now so complex and choked with secrets that even releasing hundreds of thousands of documents at a time, we can never be truly informed about the nature of our own societies. Moreover, as the Snowden episode showed, it isn’t clear that knowing unpleasant secrets is the same as being able to change them.

In any case, the institutions Wikileaks perhaps naively took on once upon a time are getting ready to hit back. Frankly it’s surprising it’s taken this long. I’m surprised Assange is still alive, to be honest. If Assange ends up on trial, he’ll be villainized by most of the press, which stopped seeing the “lulz” in his behavior for good once Donald Trump was elected. The perception that Assange worked with Vladimir Putin to achieve his ends has further hardened responses among his former media allies. As to the latter, Assange denies cooperating with the Russians, insisting his source for the DNC leak was not a “state actor.” It doesn’t matter. That PR battle has already been decided.

Courts have held reporters cannot be held liable for illegal behavior of sources. [..] It’s always been the source’s responsibility to deal with that civil or criminal risk. The press traditionally had to decide whether or not leaked material was newsworthy, and make sure it was true. The government has been searching for a way to change that equation. The Holy Grail would be a precedent that forces reporters to share risk of jail with sources. Separate from Assange, prosecutions of leakers have sharply escalated in the last decade. The government has steadily tiptoed toward describing publishers as criminal conspirators.

It’s impossible to know exactly what recent news about an indictment means until we see it (the Reporters’ Committee for the Freedom of the Press has already filed a motion to unseal the charges). If there is a case, it could be anything in the federal criminal code, perhaps even unrelated to leaks. Who knows? But the more likely eventuality is a prosecution that uses the unpopularity of Assange to shut one of the last loopholes in our expanding secrecy bureaucracy. Americans seem not to grasp what might be at stake. Wikileaks briefly opened a window into the uglier side of our society, and if publication of such leaks is criminalized, it probably won’t open again.

Europe needs an enemy. Or rather, NATO does.

• Anonymous Blows Lid Off Huge Psyop In Europe Funded By UK & US (RT)

Anonymous has published documents which it claims have unearthed a massive UK-led psyop to create a “large-scale information secret service” in Europe – all under the guise of countering “Russian propaganda.” In a document dump on November 5, the group exposed the UK-based ‘Integrity Initiative’, said to have been established by the ominously titled Institute for Statecraft in 2015. The main objective is “to provide a coordinated Western response to Russian disinformation and other elements of hybrid warfare.” The Institute for Statecraft is affiliated with the NATO HQ Public Diplomacy Division and the Home Office-funded ‘Prevent’ program, so objectivity is, of course, at the forefront of their work.

Operating on a budget of £1.9 million (US$2.4 million), the secretive Integrity Initiative consists of “clusters” of local politicians, journalists, military personnel, scientists and academics. The team is dedicated to searching for and publishing “evidence” of Russian interference in European affairs, while themselves influencing leadership behind the scenes, the documents claim. The UK establishment appears to be conducting the very activities of which it and its allies have long-accused the Kremlin, with little or no corroborating evidence. The program also aims to “change attitudes in Russia itself” as well as influencing Russian speakers in the EU and North America, one of the leaked documents states.

At present, the vast network allegedly has clusters for Spain, France, Germany, Italy, Greece, the Netherlands, Lithuania, Norway, Serbia, and Montenegro… but there’s more! According to the Anonymous leak, major plans to expand the sphere of influence throughout eastern Europe, the US, and Canada, as well as the MENA region, are allegedly underway. The clusters’ work is apparently done under absolute secrecy via concealed contacts embedded throughout British embassies, the leak claims, some of which are listed as part of the documentation.

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