RT : What is the likelihood that the US will go through with and actually impose economic sanctions on China if it does not implement the new sanctions regime against North Korea? Jim Rogers : Sanctions are sanctions. They could do sanctions which are not very important or don’t do much damage. And then they will have good public relations which says they have sanctions, but it is meaningless. I would suspect if anything, that is what they will start with. If they put sanctions on China in a big way, it brings the whole world economy down. And in the end, it hurts America more than it hurts China because it just forces China and Russia and other countries closer together. Russia and China and other countries are already trying to come up with a new financial system. If America puts sanctions on them, they would have to do it that much faster and in the end America will lose its monopoly on the financial system, which will hurt America more than anybody.
RT : What do you think, is it an empty rhetoric and saber-rattling from Donald Trump because he said “those [UN] sanctions are nothing compared to what ultimately will have to happen” without specifying what he meant by that. Do you think this is just mere bluff on the part of the US, or would it really use the ‘nuclear option’? JR : If it uses a nuclear option for sanctions, it will hurt America much more than will hurt North Korea, it will hurt America much more than it will hurt China, Russia and everybody else. It will force the rest of the world to find an alternative to the US financial system. If he does that, it is going to cause a lot of turmoil in the world financial economy and in the end it is going to hurt America more than it is going to hurt anybody else. I would give you an example, if you look at Russian agriculture right now – America put sanctions on Russian agriculture trying to hurt Russia, but it has helped Russian agriculture. Russian agriculture is booming now. In the end, America has hurt itself more than it has hurt anybody else.
RT : If that happens, what would the consequences be for the global economy? Could this end up becoming a global economic crisis? JR : We are probably going to have a global economic problem, maybe even crisis, in the next couple of years. This may be one of the things that start it. There is always something which starts a crisis. If America does something like this, this could be the thing that did it. In 1929, it started when America started a huge trade war with the rest of the world and the economists said, “please, this is a mistake,” but America did that anyway. And then we had a great collapse and The Great Depression of the 1930s.
Total unfunded liabilities in state and local pensions have roughly quintupled in the last decade. You read that right – not doubled, tripled or quadrupled: quintupled. That’s nice when it happens on a slot machine, not so nice when it’s money you owe. The graph [shows] that unfunded pension liabilities for state and local governments was $2 trillion. But that assumes an average 7% compound return. What if we assume 4% compound returns? Now the admitted unfunded pension liability is $4 trillion. But what if we have a recession and the stock market goes down by the past average of more than 40%? Now you have an unfunded liability in the range of $7–8 trillion.We throw the words a trillion dollars around, not realizing how much that actually is. Combined state and local revenues for the US total around $2.6 trillion.
Following the next recession (whenever that is), the unfunded pension liabilities for state and local governments will be roughly three times the revenue they are collecting today, and that’s before a recession reduces their revenues. Can you see the taxpayer stuck between a rock and a hard place? Two immovable objects meeting? The math just doesn’t work. Pension trustees don’t face personal liability. They’re literally playing with someone else’s money. Some try very hard to be realistic and cautious. Others don’t. But even the most diligent can’t control when the next recession comes, or when the stock market will crash, leaving a gaping hole in their assets while liabilities keep right on rising. I have had meetings with trustees of various government pensions.
Many of them want to assume a more realistic discount rate, but the politicians in their state literally refuse to allow them to assume a reasonable discount rate, because owning up to reality would require them to increase their current pension funding dramatically. So they kick the can down the road. Intentionally or not, state and local officials all over the US made pension promises that future officials can’t possibly keep. Many will be out of office when the bill comes due, protected from liability by sovereign immunity. We are starting to see cities filing for bankruptcy. That small ripple will be a tsunami within 7–10 years.
U.S. stocks have risen more in the past eight years than in almost any other post-World War II time of economic growth, as defined by the National Bureau of Economic Research. The logic here is that economic expansions fuel bull markets and so it’s reasonable to measure market recoveries after a period of macro contraction ends. Using that definition, let’s review how the S&P 500 has performed during the last ten economic recoveries. To be precise, the birth of the stock market’s bull market is dated as the first day after an NBER-defined recession has ended. The market run continues through the peak. The S&P 500 Index jumped 172% from July 2009, when the current expansion started, through Wednesday. The biggest advance was about 300% and occurred from April 1991 to March 2001, when Internet-related stocks soared.
As Capital Speculator blog’s James Picerno notes, the question before the house: Will the momentum of late endure long enough to overtake the 1991-2001 record in duration and/or magnitude? If so, the bull market in the here and now has to last another 463 trading days, which translates into a market rally that goes deep into 2019. There’s just one thing wrong… Remember – the ‘market’ is not the ‘economy’… or maybe it is in the new normal?
I provide a simple numerical explanation of how austerity works at the micro (individual person, industrial sector, or country) and the macro level (country, or group of countries in a currency union).
Dan Davies, senior research adviser at Frontline Analysts, argued there’s no point in attempting to value bitcoin as if it were just another type of security. “It’s not a security with some intrinsic value, rather it’s a currency that in the long term is governed by an exchange rate driven by trade or volume of transactions,” Davies said. The fact that a significant proportion of bitcoins is hoarded or held for investment doesn’t disqualify it from being a currency, according to Davies. But the BTC/USD BTCUSD, -3.37% exchange rate is entirely determined by speculative portfolio capital flows right now, he said, leaving it difficult to assign fair value. Viewing bitcoin as a currency makes it possible, at least in theory, to come up with a long-term exchange rate by using the quantity theory of money.
The formula is: MV = PT, where money supply multiplied by its velocity equals the price level multiplied by the transaction volume. Since both price and transaction volume is expressed in U.S. dollars, the price of bitcoin would be 1/BTCUSD, Davies said. In this case, bitcoin’s supply is fixed at 21 million and money velocity for normal currencies is usually at around 10, according to Davies. So, the long-term fundamental value of bitcoin equals the long-term value of transactions that will be carried out in bitcoin divided by 210 million (21 million bitcoins multiplied by velocity). The hardest value to plug into this formula is the transaction volume. If, for example, bitcoin was used primarily for global trade in illicit drugs, the figure would be around $120 billion, which is an estimate the U.N. used in 2014.
“I used that number a few years ago, but we would have to come up with a different estimate, as bitcoin is clearly used for things other than illicit drugs now,” Davies said. Davies declined to offer an updated number, saying he needed to do more research. But doubling that transaction volume number to $240 billion, for example, and dividing by 210 million produces a value of $1,142, around a third of the current exchange rate of $3,569. That isn’t far from an estimate that Mohamed El-Erian, chief economic adviser at Allianz Global Investors, recently suggested as a fair value for bitcoin. In an interview with CNBC, El-Erian said the fair price should be about half or a third of what it is now. El-Erian argued the currency will only survive as a peer-to-peer means of payment and governments won’t allow mass adoption.
My talk at the Summer Academy of the Club of Rome was mainly a presentation of my latest book, “The Seneca Effect” (Springer 2017). In practice, of course, a book contains many more things than you can say in a 40 minute speech. So, I tried to concentrate on the idea that the behavior I call “the Seneca Curve” is very common, even universal. Below, you can see the Seneca Curve: things go up slowly but collapse rapidly, as the Roman philosopher Seneca said first some two thousand years ago. You may have heard the old Latin motto, “Natura non facit saltus” (Nature doesn’t make jumps) meaning that things change gradually, not abruptly. It may be true in many circumstances but, in practice, it is wholly normal that Nature accumulates energy potentials (as when you inflate a balloon) and then releases them all of a sudden (as when you puncture a balloon).
There are reasons why Nature behaves in this way, but the point I made at the school was not so much about why the curve is so common but how human beings are not normally aware of it. In fact, our thought is often shaped by the idea that things will continue evolving the way they have been evolving up to a certain point. Just think about economic growth, and you’ll notice how economists expect it to continue forever. It goes without saying that the economy is one of those complex systems which are most vulnerable to the Seneca collapse. So, I tried to stress that the understanding that the Seneca Curve exists and it is common is a recent discovery. Even though Seneca had understood it by intuition already almost 2000 years ago, in its modern form it is less than a century old. It was proposed for the first time by Jay Forrester in the 1960s and it was enshrined in “The Limits to Growth” study of 1972, even though the term “Seneca Effect” was not used.
During my talk, I showed this image to evidence how our ideas on the path that complex systems follow evolved over time. You see how modern the idea of “overshoot” (and the subsequent collapse) is. Malthus just didn’t have it. Despite being often accused of catastrophism, he couldn’t envisage societal collapse; he lacked the necessary intellectual tools. He was an optimist! Today, we have this concept. We know that complex systems tend not just to decline, they tend to collapse. But this perception is totally missing in the general debate. When you mention societal collapse, there are two possible reactions. The most common one is that such a thing will never happen.
Then, if you manage to convince people that it is possible, they endeavor to do everything they can to keep the system going; whatever it takes. They don’t realize that when you exceed the carrying capacity of the system, you have to come back, one way or another. And the more you try to stay above the limit, the faster and the harsher the return will be. What you have to do is to ease the collapse, follow it, not try to stop it. Otherwise, it will be worse.
Only business owners with no real estate properties will qualify for a partial write-off of corporate debts in the context of the extrajudicial settlement mechanism. This criterion excludes the owner’s main residence and the production properties, i.e. the professional properties used for the entrepreneurial activity. That was the decision that the technical experts of the country’s creditors are said to have reached with representatives of Greek banks and the Independent Authority for Public Revenue, while there was also convergence on setting the criteria for debt settlement for companies owing between €20,000 and €50,000. In this latter category of debtors, which mostly comprise small enterprises, a standardized procedure will be adopted for assessing repayment capacity and the determination of the amount that the debtor will have to pay on a regular basis.
The Greece firesale will never come anywhere near the €60 billion, but everyone keeps mentioning the number. Their entire railway system went for €45 million. Selling off an entire country is a very bad idea. Europe will find out, but too late.
“It is obvious. Our policies have changed radically, ” says Stergios Pitsiorlas, the deputy economy and development minister, whose airy office is visited daily by bankers, hedge-fund managers and industrialists jockeying for bargains. “Being leftwing doesn’t mean you are also a fool. It doesn’t mean, in the words of Lenin, that we are useful idiots. Let’s speak seriously. Those who complain that Greece is being sold off, that Greece will lose out, don’t know what they are talking about.” Tall, bearded and bespectacled, Pitsiorlas is the point man in Athens’s attempt to raise €60bn (£53bn) through privatisations – sales that, increasingly, have become the focus of international creditors keeping the debt-stricken country afloat. In what has been called the most ambitious sell-off in modern European history, assets ranging from public utilities and transport companies to marinas and hotels are up for grabs.
[..] Privatisations are central to completion of a new round of bailout negotiations with the EU and IMF. Greece’s third, €86bn, rescue programme is due to end next summer and Tsipras has made a clean exit from it, which would herald Athens’s return to the markets, an overarching goal. But hurdles lie ahead. On Friday, eurozone finance ministers warned that continued persecution of the country’s former statistics chief, Andreas Georgiou, could dent international confidence and derail chances of recovery. Officials also raised the prospect of fresh austerity should Greece fail to hit the primary surplus target of 3.5% – a prospect made likely by a huge shortfall in tax revenues. But in a week when the Italians finally took control of Greece’s state-owned train network (acquired by Italy’s own state operator for a paltry €45m) Pitsiorlas is optimistic.
He cites the takeover of Piraeus port by the Chinese shipping conglomerate Cosco as an example of what privatisations can bring: “They will make it the biggest port in Europe and that will boost other professions, create thousands of jobs, revitalise shipyards, which they are also looking at, pave the way to better trains, roads and logistic centres, and trigger development and growth.” In five years, he enthuses, Greece will be a very different place, cosmopolitan and vibrant. “There are rules which need to be observed but ultimately everything will be solved,” he insisted, referring to the obstacles Eldorado and others have encountered. “A miracle will happen. There will be huge change … but the state can’t do it alone, the private sector has to be involved.”
Beijing will suspend construction of major public projects in the city this winter in an effort to improve the capital’s notorious air quality, official media said on Sunday, citing the municipal commission of housing and urban-rural development. All construction of road and water projects, as well as demolition of housing, will be banned from Nov. 15 to March 15 within the city’s six major districts and surrounding suburbs, said the Xinhua report. The period spans the four months when heating is supplied to the city’s housing and other buildings. China is in the fourth year of a “war on pollution” designed to reverse the damage done by decades of untrammelled economic growth and allay concerns that hazardous smog and widespread water and soil contamination are causing hundreds of thousands of early deaths every year.
Beijing has promised to impose tough industrial and traffic curbs across the north of the country this winter in a bid to meet key smog targets. In the capital, it is aiming to reduce airborne particles known as PM2.5 by more than a quarter from their 2012 levels and bring average concentrations down to 60 micrograms per cubic metre. Last year the city experienced near record-high smog in January and February, which the government blamed on “unfavourable weather conditions” Some ‘major livelihood projects’ such as railways, airports and affordable housing may be continued however, providing they are approved by the commission, said the report.
The European Union said President Donald Trump’s administration is shifting its approach to a landmark global agreement on climate change, an assertion which was quickly denied by the White House. The U.S. signaled that it’s no longer seeking to withdraw from the pact and then renegotiate it, but rather wants to re-engage with the Paris Agreement from within, said EU’s climate chief Miguel Arias Canete. He spoke in an interview from Montreal, where the U.S., China, Canada and almost 30 other countries gathered to discuss the most-sweeping accord to date to protect the environment. “Our position on the Paris agreement has not changed. @POTUS has been clear, US withdrawing unless we get pro-America terms,” White House Press Secretary Sarah Huckabee Sanders said on Twitter.
Announcing plans to quit the pact, Trump said in June that the agreement favored other countries at the expense of U.S. workers and amounted to a “massive redistribution” of U.S. wealth. Trump’s administration last month began the formal process of exiting from the climate accord, drawing fire from allies and foes alike. EU climate commissioner Canete made the comments about a change of stance after meeting with Everett Eissenstat, deputy director of the National Economic Council and deputy assistant to the president for international economic affairs. “Now we don’t see the messages that they are withdrawing from the Paris agreement radically,” Canete said, adding that the countries at Saturday’s meeting agreed not to seek a re-negotiation of the Paris deal.
Number 4 in the UK charts, but the BBC refuses to play it. It’s just so well done, and so timely, that none of that matters. It’s 40 years ago that the same happened with the SexPistols’ “God save the Queen”. The BBC ban pushed the song up the charts.
NHS crisis, education crisis, u turns … you can’t trust Theresa May. Let’s get this into the top 40. Download now and force the BBC to play it on our airwaves. All proceeds from downloads of the track between 26th May and 8th June 2017 will be split between food banks around the UK and The People’s Assembly Against Austerity. Download from the following links: (Please note we previously released a version of Liar Liar in 2010 so don’t download the wrong one! Correct track is called ‘Liar Liar GE2017’)
The quality of debate in the 2017 UK General election has been generally terrible. The Tories have been trying to push the “There’s no such thing as a Magic Money Tree” line, and falling straight into the “Don’t think of a pink elephant” problem. This line is known in economic and political circles as The Noble Lie. The Magic Money Tree does exist. They all know it does. When there is a bank to bail out, does anybody ask where the money is coming from? When there is a nuclear missile system that needs building? How about when a foreign nation needs bombing? Like the elephant in the room The Tree cannot be mentioned, because then the electorate might start asking awkward questions about public services – perhaps we should have some? – and taxation – are we overtaxed for the size of government we have, given that we still have people without work?
Once you know about The Tree you might have your politicians delay a casino build and build a hospital instead. You might let the rich people keep their coins, but stop them using them to reserve scare doctors and teachers for their own purposes ahead of the general population. The Tories want to privatise everything, and Labour want to hit rich people hard with taxation sticks. There are no doubt reasons for these fetishes that psychologists would find fascinating. But they are damaging to our nation. They get in the way of doing the job. The debate we should be having is about the size of government we want. And then we instruct our government to provide that. Taxation then is just a thermostat on the wall. You count the bodies in the unemployment queue. If there are too many there is too much taxation and you turn the dial down. If there aren’t any and prices are hotting up, you may have too little taxation so you turn the dial up a little.
Alex Douglas explains in Getting Money out of Politics that the debate is one about resource allocation: “you don’t need to worry about ‘where the money will come from’ to pay for this or that programme or public service. Think about this instead: Are there enough resources to provide the proposed service? Is there enough wood, bricks, glass, PVC, to build new council houses? Is there enough land to build them on? Are there enough builders to build them? If not, are there enough apprenticeships to train them? Are there enough staff in the schools and hospitals? If not, are there enough colleges to train them? If not, are there enough resources to create more of these?” So let’s drop the pretence and get onto the real debate. We know that the last 40 years has been about the magic of the market and that government must constrain itself. It must do as it is told by a small number of unelected technocrats sitting in a central bank ivory tower.
Watch these 6 minutes. And then watch it again and again until you understand it. The world will never look the same. Share it wherever you can. Make people literate.
A nation’s currency is a wonderful, powerful thing. Learn how countries like the U.S.—which issue their own sovereign currency—can afford to use that currency to serve their citizens. Get inspired about our untapped potential, and learn to be less worried about the so-called “national debt”!
Earlier today I came across an article about President Trump’s new budget from Fox News, and in this article the author makes a startling claim… “The hard fact is that the past decade’s $10 trillion in deficit spending has produced the worst economic growth as measured by Gross Domestic Product in our nation’s history. You read that right, in the past decade our nation’s economy grew slower than even during the Great Depression. This stagnant, new normal, low-growth economy is leaving millions of working age people behind who have given up even trying to participate, and has led to a malaise where many doubt that the American dream is attainable.
When I first read that, I thought that this claim could not possibly be true. But I was curious, and so I looked up the numbers for myself. What I found was absolutely astounding. The following are U.S. GDP growth rates for every year during the 1930s…
1930: -8.5%
1931: -6.4%
1932: -12.9%
1933: -1.3%
1934: 10.8%
1935: 8.9%
1936: 12.9%
1937: 5.1%
1938: -3.3%
1939: 8.0%
When you average all of those years together, you get an average rate of economic growth of 1.33%. That is really bad, but it is the kind of number that one would expect from “the Great Depression”. So then I looked up the numbers for the last ten years…
2007: 1.8%
2008: -0.3%
2009: -2.8%
2010: 2.5%
2011: 1.6%
2012: 2.2%
2013: 1.7%
2014: 2.4%
2015: 2.6%
2016: 1.6%
When you average these years together, you get an average rate of economic growth of 1.33%. I thought that was a really strange coincidence, and so I pulled up my calculator and ran all of the numbers again and I got the exact same results. The 1930s certainly had more big ups and downs, but the average rate of economic growth during that decade was exactly the same as we have seen over the past 10 years. And of course the early 1940s turned out to be a boom time for the U.S. economy, while it appears that our rate of economic growth is actually slowing down. As I noted yesterday, U.S. GDP growth during the first quarter of 2017 was just 0.7%.
So could the US of course. The problem in Europe is it’s too late now. Getting it right would be seen as too negative in Germany, and it’s Germany, and Germany alone, that ultimately takes ll the main decisions in the EU.
The Office for National Statistics (ONS) published last week some figures which show how a successful monetary union works in practice. It is not obvious at first sight, from the dry heading: “regional public sector finances”. The ONS collects information on the amounts of public spending and money raised in taxes across the regions of the UK. The difference is the so-called fiscal balance of the region. Only three regions generate a surplus. In London, the South East and the East of England, total tax receipts exceed public spending. The capital has a healthy positive balance of £3,070 per head, followed by the South East at £1,667 per head. Essentially, these two regions subsidise the rest of the UK. Public spending in the North East, for example, is £3,827 per person above the level of taxes raised in that region.
In Wales, it is even higher at £4,545. No wonder that one of the first things Carwyn Jones, leader of the Welsh Assembly, said after the Brexit vote was: “Wales must not lose a penny of subsidy”. The region which benefits most is Northern Ireland, which gets £5,437 per head more than it generates in tax. Scotland, to complete the picture, receives around half of that, at £2,824 per person. There is a lot of debate around Brexit and the border between the North and the Republic of Ireland. There is even talk of reunification, but on these numbers the Republic would be mad to want it. Essentially, the regions receive these subsidies because they are running deficits on their trade balance of payments. The exports of goods and services from the North East, for example, to the rest of the UK are much less than it imports.
In balance of payments jargon, the subsidy it receives is a monetary transfer from the rest of the country, principally from London and the South East. The ONS does not actually produce regional balance of payments statistics. But the fact that most regions receive these large transfers implies that they are just not productive enough to sustain their living standards by their own efforts. All the regions are in the sterling monetary union. Those running trade deficits cannot devalue to try to improve their position. They must instead rely on subsidy. Exactly the same principles apply in the Eurozone. The massive difference of course is that there is no central Eurozone government to make sure the weaker performing regions receive the necessary funding.
This is why President Macron and Chancellor Merkel announced they will examine changes to treaties to allow for further Eurozone integration. Even the hardline German finance minister, Wolfgang Schauble, said: “a community cannot exist without the strong vouching for the weaker ones”. To be sustainable, a monetary union needs large transfers between its regions. London and the South East already put their hands deep into their pockets for the rest of the UK. Gordon Brown did get one thing spectacularly right. He kept us out of the Euro.
As previewed last night, the jobs “whisper” risk was to the downside, and in what was a very disappointing print released moments ago by the BLS, the whisper was spot on with only 138K jobs added in May, far below the 185K estimate, and below the lowest estimate of 140K. This was the second lowest print going back all the way to last October. Additionally, April’s big beat of 211K was revised substantially lower to only 174K, suggesting that any expectation the Fed may have had of “evidence” the recent economic slowdown was transitory was just crushed.
The change in total payrolls for March was revised down from +79,000 to +50,000, and the change for April was revised down from +211,000 to +174,000. With these revisions, employment gains in March and April combined were 66,000 less than previously reported. This means that over the past 3 months, job gains have averaged 121,000 per month, a far cry from the 181,000 average jobs added over the past 12 months. To be sure, as SouthBay Research points out, a big reason for the unexpected miss was the sharp seasonal adjustment favtor, which was the biggest going back to the financial crisis days:
Not helping the Trump agenda, manufacturing jobs declined sharply, posting the weakest growth of 2017.
While on the surface, the payrolls report, the wage growth and the unemployment rate (which dropped for all the wrong reasons) were disappointing, a quick look inside the underlying data reveals even more troubling trends, such as that in addition to the number of employed workers dropping by 233K according to the household survey, the composition of these jobs raised even more red flags because in May the US lost 367,000 full time jobs offset by the gain of 133,000 part time jobs.
Putting this number in context, it was the biggest drop in full-time jobs going back to June 2014. And in this context, we are happy to announce that while manufacturing jobs once again declined by 1,000, the waiter and bartender recovery continues to hum along, with 30,000 workers added in “food services and drinking places.”
China has reported annual growth rates since the panic of 2008 of between 6.7% and 12.2%, with a steady downward trend since early 2010. If China’s growth engine is running out of steam, as I’ve described, how has China managed to maintain such relatively high growth rates? The answer is contained in three key words: debt, deflation and waste. Waste is a blunt word referring to non-productive investment. The investment component of China’s GDP is about 45% of the total. Most major economies show about 25% to 35% for investment. But at least half the Chinese investment is wasted. It goes to projects that will never produce an adequate return, either on an absolute basis or relative to alternative uses of the funds. If this wasted investment is subtracted from GDP, similar to a one-time write off under general accounting principles, then 8% growth would be 6.2%, and 6% growth would be 4.7%.
[..] Any economy can produce short-term growth by incurring debt and using the proceeds as government spending, tax cuts, investment, or grants. This is nothing more than the classic Keynesian fiscal stimulus with its mystical “multiplier” effect that produces more than $1.00 in aggregate demand for every $1.00 borrowed and spent. In fact, there’s ample evidence that the Keynesian multiplier only exists when an economy is in recession or the very early stages of an expansion, and when its debt levels are relatively low and sustainable. Highly indebted economies in the late stages of an expansion do not conform to Keynes’ theory of a multiplier. Unfortunately for China, it is both highly indebted and has not suffered a recession for eight years. China should therefore expect the GDP multiplier on new debt used for spending or infrastructure to be less than 1.
That is exactly what the data shows. The chart below measures credit intensity defined as the number of units of local currency needed to produce one unit of growth. The local currency metric is a measured by central bank money printing to monetize debt, and is therefore a proxy for the debt itself. The chart shows that in China today, it takes $4.00 of money printing to produce $1.00 of growth. This is up significantly from 2008 when it took $1.70 of money printing to produce $1.00 of growth. This shows that the Keynesian multiplier is less than 1, in fact it’s 0.25 in China today. (Only Europe shows a true multiplier where less than one unit of new money can produce a unit of growth).
A race to the bottom in oil prices may not have many winners, but Russia is certain it can survive. It’s less sure about hedge funds. “We’re actually ready to live forever with the oil price at $40 or below,” Russian Economy Minister Maxim Oreshkin said in a Bloomberg Television interview at the St. Petersburg International Economic Forum on Thursday. “All macroeconomic policy is now based on the assumption of the oil price of $40.” While the world’s biggest energy exporter has made clear it’s hunkering down for years of depressed oil prices, “forever” might be a slight exaggeration, according to the head of Russia’s second-largest bank. Still, “I fully agree with the minister that the oil price is no threat to the economy,” VTB Group CEO Andrey Kostin said during a panel on Friday. As Russia’s future economic plans increasingly converge around crude at that level, Oreshkin says he’s baffled by a more bullish turn taken by hedge funds.
Bets on rising WTI prices jumped the most this year just as Saudi Arabia and Russia were mustering support for the deal they struck in Vienna last month, U.S. Commodity Futures Trading Commission data show. “The oil price within one or two years might be much lower, and those funds which are on the other side of the deals on hedging for one, for two years – they are taking huge risks,” Oreshkin said. Hedge funds’ WTI net-long position – the difference between bets on a price rise and wagers on a drop – rose 20% in the week ended May 23, according to the CFTC. The number had plunged 50% in the previous four weeks. Net-long positions in benchmark Brent – which trades at a small premium to Russia’s Urals export blend – rose 17%, data from ICE Futures Europe showed. Oreshkin questioned “the strategy of those hedge funds” that are striking deals with shale producers for one to two years. “Because the risks are there,” he said.
Instead of reporting precisely what he said, and certainly meant, about fabricated allegations of Russian US election hacking, The Times deliberately misrepresented his recent comments. Interviewed in France by Le Figaro, he repeated what he said many times before. No Russian interference occurred, no evidence suggesting it. “Who is making these allegations,” he asked? “Based on what? If these are just allegations, then these hackers could be from anywhere else and not necessarily from Russia.” Putin knows no hacking occurred. Information was leaked from one or more DNC insiders, no foreign governments involved. He stressed “(i)t makes no sense for (Russia) to do such things. What for?” Speaking to heads of international news agencies on the sidelines of the St. Petersburg Economic Forum, he said “no hackers can influence a foreign election campaign in a significant way.”
“No information leaked this way would resonate with the voters and affect the outcome. We don’t do this at a state level, have no intention of doing it, and on the contrary, we are fighting against it.” He also stressed Moscow’s involvement in creating multi-world polarity. Some countries (meaning US-led Western ones) want Russia contained to further their national interests. “They do this through all kinds of actions that are outside the framework of international law, including economic restrictions,” Putin explained. “Now, they see that this is not working and has produced no results. This irritates them and rouses them into using other methods to pursue their aims and tempts them to up the stakes.” “But we do not go along with these attempts, do not offer pretexts for action. They therefore need to invent pretexts out of nowhere.” Russia, China and Iran are the leading forces against Washington’s hegemonic ambitions – why they’re surrounded by US bases and targeted for regime change.
Addressing the issues of hackers, he said they “can be anywhere…in any country in the world…At the governmental level, we never engage in this. This is what is most important.” He explained attacks can occur from outside Russia made to look like they occurred from its territory. “Modern technology allows that. It is very easy.” It’s a CIA and NSA hacking method to blame Russia, China, Iran or other targeted countries for actions they didn’t commit. “(M)ost important is I am deeply convinced that no hackers can have a real impact on an election campaign in another country,” Putin stressed. “You see, nothing, no information can be imprinted in voters’ minds, in the minds of a nation, and influence the final outcome and the final result.” Those were his recent comments, clearly indicating no Russian direct or indirect involvement in US election hacking or against any other countries.
Instead of reporting what Putin said as I did above, The NYT headlined “Putin Hints at US Election Meddling by ‘Patriotically Minded Russian,” inferring possible state involvement he clearly explained didn’t happen time and again. The Times claimed he “(s)hift(ed) from his previous blanket denials…” False! He did no such thing! The Times: “(H)is comments…were a departure from the Kremlin’s previous position: that Russia had played no role whatsoever in” US election hacking. Fact: His comments repeated what he said many times before, no departure from his position or from any other Russian officials. The Times lied. The Times: “The boundary between state and private action…is often blurry, particularly in matters relating to the projection of Russian influence abroad.”
Again The Times inferred what didn’t happen. If Russian election hacking occurred, incriminating evidence would have been revealed long ago. There’s none, proving accusations are groundless. Instead of truth-telling on this and numerous other vital issues, especially geopolitical ones, notably on Russia, The Times consistently publishes rubbish. Everything it’s reported on alleged Russian US election hacking is disinformation, deception and fake news. Believe none of it.
Owning your own home may be the Kiwi dream but some North Shore homeowners are “drowning in debt” without hope of being mortgage-free. New data from credit information website CreditSimple.co.nz showed North Shore homeowners under 55 had an average debt of $542,600: the highest debt in the country. The information also showed Shore homeowners over 55 still owed an average $381,500. This was the second-highest debt in the country, just behind central Auckland’s older homeowners with an average mortgage of $393,200. Brian Pethybridge, the manager of North Shore Budget Service, was not surprised by the figures. “It’s a phenomenon that’s going to rear it’s head basically because mortgages were $500,000 and now they’re looking at $1 million,” he said. “The options that you had before are limited. It’s a sign of the times.”
According to QV’s latest residential house values, the average house on the Shore was valued at $1.195m, up 8.5% on last year. Pethybridge said many North Shore homeowners were unlikely to pay off their mortgage by the time they retired. Many people’s retirement plans involved selling the house and moving to a cheaper area or a retirement village, he said. But Pethybridge warned there was no guarantee house prices would keep on going up. Another risk was that interest rates could go up and homeowners would not be able to service their mortgage repayments, he said. Banks were already warning people to be prepared to pay 7% interest, and Pethybridge remembered a time when interest rates went “up and up”. Some people were already paying interest-only on their mortgage, meaning the debt was not going down, he said.
To critics of President Donald Trump’s decision to withdraw the U.S. from the Paris climate accord, it may seem like presidential fiat is a very dysfunctional way to do foreign policy. How, exactly, is such overwhelming power consistent with checks and balances? How can one man, even if he is the president, single-handedly alter our international obligations? The short answer is the Constitution, not so much in its origins as in its evolution. It’s an important reminder that the tremendous power of the imperial presidency isn’t an unmitigated good – at least when you don’t like the policies of the person holding office. It’s important to note that President Barack Obama put the U.S. into the Paris climate deal exactly the same way Trump took the U.S. out, namely by unilateral executive action.
Obama couldn’t have gotten two-thirds of the Senate to approve a climate protection treaty. That’s the constitutional requirement for a treaty, as designed by the framers, who for the most part didn’t contemplate that the president would be able to commit the U.S. internationally without the participation of Congress. Understanding that he couldn’t turn the Paris deal into a treaty, Obama turned to a tool used by modern presidents to streamline international deal-making: the executive agreement. An executive agreement doesn’t bring all the domestic legal effects of a treaty. Under the Constitution’s supremacy clause, treaties become the law of the land, which is not the case for executive deals. But that isn’t a huge difference today.
Executive agreements are internationally binding like treaties, because international law isn’t focused on domestic processes like ratification but on the promise to join the compact. The Supreme Court has weakened treaties by requiring explicit language for them to have direct domestic legal effect. And the court has also held that executive agreements can affect some domestic legal rights, a reflection of expanded presidential authority. Indeed, the Paris accord was designed to accommodate the reality that Obama needed to be entering into an executive agreement, not a treaty. It doesn’t call itself a treaty or a protocol but an agreement. And it is in practical terms largely nonbinding, calling for countries to set targets without setting sanctions for noncompliance.
Some conservatives have argued that the Paris accord really is a treaty and should have been submitted to the Senate. But whether they’re right or wrong is a matter courts ordinarily wouldn’t address. Given that Obama entered the Paris accord unilaterally, there isn’t much doubt that Trump can withdraw unilaterally. And liberals who would like to think otherwise would do well to recall that without the executive agreement option, the U.S. wouldn’t have joined the deal in the first place. What’s more remarkable still is that, even if the Senate had approved the Paris accord as a treaty, Trump could have withdrawn without getting the Senate’s consent.
After suffering a devastating election loss to the weakest candidate the GOP has ever had to offer, establishment liberals have stopped at nothing to rationalize their miserable defeat to reality television star Donald J. Trump, even concocting outlandish McCarthyite theories of foreign interference, in what seems to be intentional, purely for the obfuscation of the Democratic Party’s own deficiencies. Bereft of any evidence whatsoever, political elites accused our old Cold War nemesis, Russia, of interfering in the American presidential election to favor the GOP’s Donald Trump over Democratic Party darling Hillary Clinton. Mass liberal outrage and the Democratic Party’s newfound super-patriotism prompted investigation into foreign hacking claims and the Office of the Director of National Intelligence released its intelligence report on Russian interference in early January.
Despite its grandiose promises of revealing irrefutable evidence of the Kremlin’s direct involvement, the ODNI failed to deliver. Although lauded by both establishments as “damning,” the ODNI’s highly publicized intelligence report provided not a shred of evidence linking Russia to the hacking of the DNC; thus, concluding absolutely nothing. Political analysts, journalists, and those bearing at least some critical thinking ability dismissed the report altogether, as the first half contained nothing but baseless assertions, inconsistencies, and contradictions, while the second half was devoted entirely to irrelevant Russia Today bashing.
One would think that the increased potential of nuclear armageddon would dissuade political elites from accusing a nuclear power of such crimes without solid proof, but liberals never cease to amaze. Unfazed by popular skepticism and/or the general lack of evidence of Russia’s involvement, the liberal bourgeoisie, conjuring recycled Cold War sentiments, advanced their partisan crusade against Trump, painting him as some sort of Russian puppet installed to do the unconditional bidding of President Vladimir Putin. Eleven months have passed since the birth of these Russian hacking conspiracies, but the Trump-Russia non-scandal has persisted to dominate American political discourse ever since — with skepticism in the minority, surviving as fringe thought, at best. Trump’s actual conflicts of interest and legitimate criticism of his policies have drowned into irrelevance as his every tweet receives 24×7 coverage and the liberal mainstream media entertains any and every conspiracy theory of Russian collusion known to man.
“Did incoming officials in earlier election transitions never meet with Russian diplomats on the way to assuming their duties? And if they did meet, what do you suppose they talked about? The Baltimore Orioles pitching prospects?”
The extraordinary thought disorders of this moment in history are equally distributed across the political spectrum. They’re an inevitable product of what Sigmund Freud identified as the discontents of civilization, but they grow especially acute as that civilization enters an economic crack-up zone. The craziness is equally distributed while the nation’s wealth is not. The old middle, or center, is imploding both economically and psychologically, concentrating distortions of reality at each end, Left and Right. The disordered thought in Trumpism is as self-evident as (a) covfefe, though it came into being out of the authentic pain of those classes that bear the brunt of accelerating collapse. The thought disorders among Trump’s adversaries interest me more, because they emanate from the far more educated ranks of society, the place where rational leadership is supposed to spawn.
If you can’t depend on those people to think straight in difficult times, then it raises the question of what exactly is the value of an advanced education? For instance: the incredible new idea put out by CNN that it is verboten for officials in the government — the president especially — to meet with the Russian ambassador to the United States. I’ve asked this question before, but obviously it needs to be repeated in the face of this persistent nonsense: why do you think nations send diplomats to other lands if not to meet with and communicate with government officials? Since when — and why — are we shocked that a US president would meet in the White House with the Russian ambassador and foreign minister? Did previous presidents not meet with Russian diplomats? Did incoming officials in earlier election transitions never meet with Russian diplomats on the way to assuming their duties?
And if they did meet, what do you suppose they talked about? The Baltimore Orioles pitching prospects? The newest fusion cuisine? Or serious matters of mutual geopolitical interest? Do American diplomats in Moscow avoid meeting with Russian leaders? Why do we even bother to send them there? Whether it is a misunderstanding of reality by the educated people who work on Cable TV news, or a malicious twisting of the public’s credulity, it is producing a grievous breakdown in collective coherence with the potential of causing enormous political mischief in American life. The Dem/Prog “resistance” may think that it is taking a bold stand against a rogue government, but it is only making itself look dangerously unreliable as a supposed alternative to Trumpism.
EU member states can use public funds to help struggling banks dispose of soured loans, but only within the limits of laws put in place since the financial crisis, according to an EU report. While EU law normally stipulates that the need for “extraordinary public financial support” means a bank is failing and should be wound down, an exception is made for temporary state aid, known as a precautionary recapitalization, to address a capital shortfall identified in a stress test. “It seems conceivable” for governments to use such aid to finance an impaired-asset measure, the May 31 report states. The document says the conditions in EU law for giving state aid to a solvent bank must be observed.
“Dealing with the issue of high NPLs should not imply any deviation from the rules of the banking union,” it states, referring to the package of laws intended to bolster financial stability and deepen integration in the bloc. Andrea Enria, head of the European Banking Authority, has been one of the most vocal proponents of allowing state aid for banks that incur losses in the course of selling bad loans. He told EU lawmakers in April that state aid could be used to “deal promptly and decisively with the significant legacy of asset-quality problems in the European banking sector, which remains a drag on the EU economy.” Freeing up public money to offset banks’ losses could help to chip away at the €1 trillion bad-debt mountain and could smooth the way for bailouts in the EU’s hardest-hit countries, including Cyprus, Portugal and Italy.
Construction work on a $7.9bn project to develop a sprawling coastal Olympics complex and Athens’s former airport will begin in six months, the Greek government has said. State minister Alekos Flabouraris said on Friday that the leftist administration’s privatisation agency had given the go-ahead to a consortium of Abu Dhabi and Chinese investors backed by the Chinese conglomerate Fosun, which owns 12% of the British holiday company Thomas Cook, to turn the site into a major resort. It had been earmarked as a metropolitan park but was largely abandoned for the past decade. Now the consortium plans to build a 200-hectare (494-acre) park along with apartments, hotels and shopping malls at the site, which also includes some venues from the 2004 Olympics.
Greece committed to sell off state assets under the terms of the international bailout keeping its economy afloat since 2010. Its main private property developer, Lamda, signed a deal in 2014 to build on the Hellenikon coastal area, in one of Europe’s biggest real estate development projects. The announcement came as Greece’s statistics service, Elstat, said the economy expanded in the first three months of 2017, upwardly revising a previous flash estimate in May that showed a 0.1% quarterly contraction. Data showed the economy grew by 0.4% in January to March compared with the final quarter of 2016 when GDP contracted by 1.1%. [..] Under a deal with its EU/IMF lenders, Athens needs to speed up the Hellenikon investment and address any forestry and archaeological issues.
It’s done. Bannon 1 – 0 Kushner. President Donald Trump announced the U.S. would withdraw from the Paris climate pact and that he will seek to renegotiate the international agreement in a way that treats American workers better. “So we are getting out, but we will start to negotiate and we will see if we can make a deal, and if we can, that’s great. And if we can’t, that’s fine,” Trump said Thursday, citing terms that he says benefit China’s economy at the expense of the U.S. “In order to fulfill my solemn duty to protect America and its citizens, the United States will withdraw from the Paris climate accord, but begin negotiations to re-enter either the Paris accord or really an entirely new transaction on terms that are fair to the United States, its businesses” and its taxpayers, Trump said.
As Bloomberg reports, Trump’s announcement, delivered to cabinet members, supporters and conservative activists in the White House Rose Garden, spurns pleas from corporate executives, world leaders and even Pope Francis who warned the move imperils a global fight against climate change. As we noted earlier, we should prepare for the establishment to begin its mourning and fearmongering of the disaster about to befall the world. Pulling out means the U.S. joins Russia, Iran, North Korea and a string of Third World countries in not putting the agreement into action. Just two countries are not in the deal at all – one of them war-torn Syria, the other Nicaragua. The Hill notes that many Republicans on Capitol Hill are likely to support pulling out of the Paris deal – 20 leading Senate Republicans, including Majority Leader Mitch McConnell (R-Ky.) asked Trump to do just that last week.
Withdrawing from Paris would greatly please conservative groups, which have orchestrated an all-out push in opposition to the pact. “Without any impact on global temperatures, Paris is the open door for egregious regulation, cronyism, and government spending that would be disastrous for the American economy as it is proving to be for those in Europe,” said Nick Loris, a fellow at the Heritage Foundation. “It is time for the U.S. to say ‘au revoir’ to the Paris agreement,” he said.
And use to NOT have their leader appear on TV. I’m thinking a decision by the new (American?!) campaign team installed after the Snap announcement. “Stay away from the camera, it can only do you harm!” Boris PM by July 1?
The Conservatives raised more than 10 times as much as Labour last week, partly thanks to a donation of over £1m from the theatre producer behind The Book of Mormon and The Phantom of the Opera. John Gore, whose company has produced a string of hit musicals, gave £1.05m as part of the £3.77m received by the Conservatives in the third week of the election campaign. In the same time, Labour received only £331,499. The Electoral Commission only publishes details of donations over £7,500, so the smaller donors who make up most of Labour’s fundraising are not identified. Almost all Labour’s larger donations came from unions, including £159,500 from Unite. The new figures show the Conservatives have received £15.2m since the start of 2017, while Labour has received £8.1m.
The large donations came as the poll lead held by the Conservatives and Theresa May appeared to fall following controversies around her social care policy. In the week starting 17 May, the Liberal Democrats received £310,500, of which £230,000 came from the Joseph Rowntree Reform Trust and £25,000 came from the former BBC director general Greg Dyke. The Women’s Equality party received £71,552, with Edwina Snow, the Duke of Westminster’s sister who is married to the historian Dan Snow, giving £50,000. Ukip’s donations fell dramatically to £16,300 from £35,000 the previous week. Political parties can spend £30,000 for every seat they contest during the regulated period. There are 650 seats around the country, meaning that parties can spend up to £19.5m during the regulated period in the run-up to the election.
Befitting a surprise election, the manifestos from the main parties contained surprises. Labour is shaking off decades of shyness about nationalisation and tax increases for the rich and for the first time in decades has a policy agenda that is not Tory-lite. The Conservatives, meanwhile, say they are rejecting “the cult of selfish individualism” and “belief in untrammelled free markets”, while adopting the quasi-Marxist idea of an energy price cap. Despite these significant shifts, myths about the economy refuse to go away and hamper a more productive debate. They concern how the government manages public finances – “tax and spend”, if you will.
The first is that there is an inherent virtue in balancing the books. Conservatives still cling to the idea of eliminating the budget deficit, even if it is with a 10-year delay (2025, as opposed to George Osborne’s original goal of 2015). The budget-balancing myth is so powerful that Labour feels it has to cost its new spending pledges down to the last penny, lest it be accused of fiscal irresponsibility. However, as Keynes and his followers told us, whether a balanced budget is a good or a bad thing depends on the circumstances. In an overheating economy, deficit spending would be a serious folly. However, in today’s UK economy, whose underlying stagnation has been masked only by the release of excess liquidity on an oceanic scale, some deficit spending may be good – necessary, even.
The second myth is that the UK welfare state is especially large. Conservatives believe that it is bloated out of all proportion and needs to be drastically cut. Even the Labour party partly buys into this idea. Its extra spending pledge on this front is presented as an attempt to reverse the worst of the Tory cuts, rather than as an attempt to expand provision to rebuild the foundation for a decent society. The reality is the UK welfare state is not large at all. As of 2016, the British welfare state (measured by public social spending) was, at 21.5% of GDP, barely three-quarters of welfare spending in comparably rich countries in Europe – France’s is 31.5% and Denmark’s is 28.7%, for example. The UK welfare state is barely larger than the OECD average (21%), which includes a dozen or so countries such as Mexico, Chile, Turkey and Estonia, which are much poorer and/or have less need for public welfare provision. They have younger populations and stronger extended family networks.
The third myth is that welfare spending is consumption – that it is a drain on the nation’s productive resources and thus has to be minimised. This myth is what Conservative supporters subscribe to when they say that, despite their negative impact, we have to accept cuts in such things as disability benefit, unemployment benefit, child care and free school meals, because we “can’t afford them”. This myth even tints, although doesn’t define, Labour’s view on the welfare state. For example, Labour argues for an expansion of welfare spending, but promises to finance it with current revenue, thereby implicitly admitting that the money that goes into it is consumption that does not add to future output.
The banker at the other end of the phone line was furious, recalled Shanghai lawyer Wang Chaoyu. A pile of steel pledged as collateral for a loan of almost $3 million from his bank, China CITIC, had vanished from a warehouse on the outskirts of the city. Just several months earlier, in mid-2013, Wang and the banker had visited the warehouse and verified that the steel was there. “The first time I went, I saw the steel,” recalled Wang, an attorney at Beijing DHH Law Firm, which represents the Shanghai branch of CITIC. “Afterwards, the banker got in contact with me and said, ‘The pledged assets are no longer there.’” The trouble had begun in 2012, after CITIC loaned the money to Shanghai Hanning Iron and Steel, a privately held steel trader. Hanning failed to meet payments, according to a mediation agreement reviewed by Reuters, and CITIC took ownership of the steel.
It was when CITIC moved to retrieve the collateral that the banker visited the warehouse and discovered that the 291-tonne pile of steel was no longer there, Wang said. The bank is still in court trying to recoup its losses. The missing collateral is a setback for CITIC. But it is indicative of a much wider problem that could endanger the health of China’s financial system – fraudulent or “ghost” collateral. When bank auditors in China go looking, they too often find that collateral recorded on the books simply isn’t there. In some cases, collateral that has been pledged simply doesn’t exist. In others, it disappears as borrowers in financial distress sell the assets. There are also instances in which the same collateral has been pledged to multiple lenders. One lawyer said he discovered that the same pile of steel was used to secure loans from 10 different lenders.
With the mainland facing its slowest growth in over a quarter of a century, defaults are mounting as borrowers struggle to repay their loans. The danger of fraudulent collateral in this situation, say economists, is that it exacerbates the problem of bad debt for China’s banks, increasing the risk of financial turmoil. As growth slows, lenders can expect more nasty surprises, said Xin Qingquan at Chongqing University. More instances of fake collateral will arise, he said. [..] There are no official statistics or estimates of the problem. But fraudulent collateral is “a huge issue,” said Violet Ho, co-head of Greater China Investigations and Disputes Practice at Kroll, which conducts corporate investigations on the mainland. “Often you also see that the paperwork around collateral may be dodgy, and the bank loan officer knows, the intermediary knows, and the goods owner knows – so it’s essentially a Ponzi scheme.”
[..]Bad loans are mounting fast. Officially, just 1.74% of commercial bank loans were classified as non-performing at the end of March. But some analysts say lenders often mask the true level of bad debt and so the figure is likely much higher. Fitch Ratings said in a report last September that it had estimated non-performing loans in China’s financial system could be as high as 15% to 21%. This in a banking sector that has undergone a massive credit expansion. The value of outstanding bank loans ballooned to $17.2 trillion at the end of April from $5.8 trillion at the end of 2009, according to data from China’s central bank. In September last year, the Bank for International Settlements warned that excessive credit growth in China meant there was a growing risk of a banking crisis in the next three years.
The Bank of Japan’s assets apparently exceeded 500 trillion yen ($4.49 trillion) as of the end of May, growing to rival the country’s economy as the central bank continues its debt purchases under an ultraeasy monetary policy. The bank’s total assets stood at 498.15 trillion yen as of May 20. By the time the month ended Wednesday, its holdings of Japanese government bonds had increased by another 2.24 trillion yen. Assuming that the BOJ had not significantly reduced its non-JGB assets, its balance sheet almost certainly crossed over the 500 trillion yen mark into uncharted territory. The BOJ’s balance sheet began expanding at a rapid clip after Governor Haruhiko Kuroda launched unprecedented quantitative and qualitative easing in April 2013. At around 93%, the scale of the Japanese central bank’s assets in proportion to GDP has no close match. Latest data shows that the U.S. Fed held roughly $4.5 trillion in assets, which is equivalent to 23% of the country’s GDP.
The ECB’s balance sheet, at about €4.2 trillion ($4.71 trillion) is larger than the BOJ’s, but it still sits at around 28% of the eurozone GDP. The BOJ in September shifted its policy focus from QE to controlling the yield curve, but the bank is still snapping up JGBs to keep long-term rates at around zero. The central bank has stood firm on its pledge to continue expanding its balance sheet to boost currency supply until Japan’s consumer price inflation is steadily above 2%. This suggests that the BOJ’s balance sheet will continue expanding past the 500 trillion yen mark. This prospect makes some financial experts uneasy. Once the inflation target is finally met, and the BOJ starts raising interest rates, the bank will have to pay more in interest to financial institutions’ reserve deposits than it will earn from its low-yielding JGB holdings.
Between 20% and 25% of the nation’s shopping malls will close in the next five years, according to a new report from Credit Suisse that predicts e-commerce will continue to pull shoppers away from bricks-and-mortar retailers. For many, the Wall Street firm’s finding may come as no surprise. Long-standing retailers are dying off as shoppers’ habits shift online. Credit Suisse expects apparel sales to represent 35% of all e-commerce by 2030, up from 17% today. Traditional mall anchors, such as Macy’s, J.C. Penney and Sears, have announced numerous store closings in recent months. Clothiers including American Apparel and BCBG Max Azria have filed for bankruptcy. Bebe has closed all of its stores.
The report estimates that around 8,640 stores will close by the end of the year. Retail industry experts say Credit Suisse may have underestimated the scope of the upheaval. “It’s more in the 30% range,” Ron Friedman, a retail expert at accounting and advisory firm Marcum said of the share of malls that he predicts will close in the next five years. “There are a lot of malls that know they’re in big trouble.” By ignoring new shopping centers being built, the research note took an overly simplistic view of the changing landscape of shopping centers, said analyst David Marcotte, senior vice president with Kantar Retail. “There are still malls being built,” Marcotte said. “Predominantly outlet malls and lifestyle malls.”
Now don’t get me wrong. Do I think Emmanuel Macron, a former Rothschild investment banker whose “ambition was always two steps ahead of his experience”, is the second coming of Charles de Gaulle? Do I think Donald freakin’ Trump is a modern day Andrew Jackson? Bwa-ha-ha-ha-ha-ha … good one! But here’s what I do think: • Something old and powerful is happening in the real world to crush the status quo political systems of every Western democracy. • Something predictably sad is happening in the political world to replace the old guard candidates with self-absorbed plutocrats like Trump and pretty boy bankers like Macron. • Something new and powerful is happening in the investment world to divorce political risk and volatility from market risk and volatility. The old force repeating itself in the real world is nicely summed up by these two charts, the most important charts I know. They’re specific to the U.S., but applicable everywhere in the West.
First, the Central Banker’s Bubble since March 2009 and the launch of QE1 has inflated U.S. household wealth far beyond what the nominal growth rate of the U.S. economy would otherwise support. This is a classic bubble in every sense of the word, with the primary difference from prior vast bubbles being its concentration and focus in financial assets — stocks and bonds — which are held primarily by the rich. Who wins the Academy Award for creation of wealth inequality in a supporting role? Ladies and gentlemen, I give you the U.S. Federal Reserve.
And as the second chart shows, this central bank largesse has sharply accelerated the massive shift in wealth to the Rich from the Rest, a shift which began in the 1980s with the Reagan Revolution. We are now back to where we were in the 1930s, where the household wealth of the bottom 90% of U.S. wage earners is equal to the household wealth of the top one-tenth of 1% of U.S. wage earners.
So look … I’m not saying that the current level or dynamics of wealth inequality is a good thing or a bad thing. I’m just saying that it IS. And I understand that there are insurance programs today, like social security and pension funds, which are not reflected in this chart and didn’t exist in the 1930s, the last time you saw this sort of wealth inequality. I understand that there are a lot more people in the United States today than in the 1930s. I understand that there are all sorts of important differences in the nature of wealth distribution between today and the 1930s. I get all that. What I’m saying, though, is that just like in the 1930s, there is a political price to be paid for this level of wealth inequality. That price is political polarization and electoral rejection of status quo parties.
[..] downgrades of bonds issued by local governments raise the interest rates those governments must pay on holders of its debt, thereby costing those communities up to hundreds of millions of dollars annually, according to the report, which was released Wednesday by the non-profit Roosevelt Institute’s ReFund America Project and focused on recent downgrades by Moody’s in relatively impoverished, predominantly-black localities. The more recent report [..] took a granular look at a few communities whose budgets were impacted by downgrades, which drive the prices of bonds down while raising the interest rate at which the government has to pay its bondholders. New Jersey was set to lose $258 million annually as a result of a Moody’s ratings drop, the report calculated, using the spread between interest rates on bonds with different Moody’s credit ratings and the amount of debt affected by the downgrade.
Moody’s announced a downgrade of the New Jersey’s $37 billion in publicly-issued debt to A3, six levels below the agency’s top rating of Aaa, in late March. The agency attributed the downgrade to “significant pension underfunding, including growth in the state’s large long-term liabilities, a persistent structural imbalance and weak fund balances,” as well as a tax cut that would decrease revenues by $1.1 billion over the next four years. New Jersey’s city of Newark — which is 52.4% African American and 33.8% Hispanic, compared to 12.6% and 16.3%, respectively, on the national level, according to U.S. Census data — was slated to lose an estimated $10 million annually as a result of a Moody’s downgrade, the report calculated. Newark’s median household income was just over $33,000, compared to nearly $54,000 nationwide, as of 2015.
That year, Moody’s downgraded Newark’s $374 million in general obligation unlimited tax bonds to Baa3, one level above junk bond status. The rating change, Moody’s said in the press release, reflected “the city’s further weakened financial position since last year,” along with its “reliance on market access for cash flow, history of aggressively structured budgets typically adopted late in the year and uncertainty around continued financial support from the state of New Jersey.” Further west, Chicago Public Schools (CPS) also stood to suffer tremendously from a Moody’s rating drop. The report authors calculated that the school system would lose out on $290 million annually from a September 2016 Moody’s downgrade to B3, five ranks below the highest junk bond rating. Nearly 40% of students are African American, 46.5% are Hispanic and 80.2% are considered “economically disadvantaged,” according to October 2016 CPS data.
Illinois had its bond rating downgraded to one step above junk by Moody’s Investors Service and S&P Global Ratings, the lowest ranking on record for a U.S. state, as the long-running political stalemate over the budget shows no signs of ending. S&P warned that Illinois will likely lose its investment-grade status, an unprecedented step for a state, around July 1 if leaders haven’t agreed on a budget that chips away at the government’s chronic deficits. Moody’s followed S&P’s downgrade Thursday, citing Illinois’s underfunded pensions and the record backlog of bills that are equivalent to about 40% of its operating budget. “Legislative gridlock has sidetracked efforts not only to address pension needs but also to achieve fiscal balance,” Ted Hampton, Moody’s analyst, said in a statement.
“During the past year of fruitless negotiations and partisan wrangling, fundamental credit challenges have intensified enough to warrant a downgrade, regardless of whether a fiscal compromise is reached.” Illinois hasn’t had a full year budget in place for the past two years amid a clash between the Democrat-run legislature and Republican Governor Bruce Rauner. That’s left the fifth most-populous state with a record $14.5 billion of unpaid bills, ravaged entities like universities and social service providers that rely on state aid and undermined Illinois’s standing in the bond market, where investors have demanded higher premiums for the risk of owning its debt. Moody’s called Illinois “an outlier among states” after suffering eight downgrades in as many years.
“The rating actions largely reflect the severe deterioration of Illinois’ fiscal condition, a byproduct of its stalemated budget negotiations,” S&P analyst Gabriel Petek said in a statement. “The unrelenting political brinkmanship now poses a threat to the timely payment of the state’s core priority payments.” Illinois’s 10-year bonds yield 4.4%, 2.5 percentage points more than those on top-rated debt. That spread – a measure of the perceived risk – is the highest since at least January 2013 and more than any of the other 19 states tracked by Bloomberg.
Uber reported yesterday that its NET LOSS totaled more than $700 million last quarter, despite pulling in a whopping $3.4 billion in revenue. (This means they spent at least $4.1 billion!) That’s the latest in a string of massive, 9-figure quarterly losses for the company. The only question I have is– how much cocaine are these people buying? Seriously, it’s REALLY HARD to spend so many billions of dollars. You could have over 100,000 employees (‘real’ employees, not Uber drivers) and pay them $150,000 EACH and still not blow through that much money in a single quarter. Even if you think about Research & Development, Uber still managed to burn through almost as much cash as NASA’s $4.8 billion budget last quarter. The real irony is that this company is worth $70 BILLION. And Uber is far from alone. Netflix is also worth $70 billion; and like Uber, they can’t make money.
Over the last twelve months Netflix burned through over $1.7 billion in cash, and they made up for it by going deeper into debt. The list goes on and on– Snapchat debuted with a $30 billion valuation after its IPO, only to subsequently report that they had lost $2.2 billion in the previous quarter. Telecom company Sprint is still somehow worth more than $30 billion despite having over $40 billion in debt and burning through more than $6 billion over the last three years. And then there’s Twitter, a rudderless, profitless company that is still worth over $13 billion. This is pure insanity. If companies that burn through obscene piles of cash and have no clear path to profitability are worth tens of billions of dollars, it seems like any business that’s cashflow positive should be worth TRILLIONS. None of this makes any sense, and investing in this environment is nothing more than gambling. Sure, it’s always possible these companies’ stock prices increase even more. Maybe Netflix and Twitter quadruple despite continuing losses and debt accumulation. Maybe Bitcoin surges to $50,000 next month. And maybe the Dallas Cowboys finally offer me the starting quarterback position next season.
Sometime this year, world public and private plus unfunded pensions will surpass $300 trillion. That is not even counting the $100 trillion in US government unfunded liabilities. Oops. These obligations cannot be paid. A time is coming when the market and voters will realize this. Will voters decide to tax “the rich” more? Will they increase their VAT rates and further slow growth? Will they reduce benefits? No matter what they decide, hard choices will bring political turmoil. And that, of course, will mean market turmoil. We are coming to a period I call “the Great Reset.” As it hits, we will have to deal, one way or another, with the largest twin bubbles in the history of the world. One of those bubbles is global debt, especially government debt. The other is the even larger bubble of government promises.
The other is the even larger bubble of government promises. History shows it is more than likely that the US will have a recession in the next few years. When it does come, it will likely blow the US government deficit up to $2 trillion a year. Obama took eight years to run up a $10 trillion debt after the 2008 recession. It might take just five years after the next recession to run up the next $10 trillion. Here is a chart my staff at Mauldin Economics created in late 2016 using Congressional Budget Office data. It shows what will happen in the next recession if revenues drop by the same percentage as they did in the last recession (without even counting likely higher expenditures this time).
And you can add the $1.3 trillion deficit in this chart to the more than $500 billion in off-budget debt—and add a higher interest rate expense as interest rates rise. The catalyst could be a European recession that spills over into the US. Or it might be one triggered by US monetary and fiscal mistakes. Or a funding crisis in China, or an emerging-market meltdown. Whatever the cause, the next recession will be just as global as the last one. And there will be more buildup of debt and more political and economic chaos.
The price of raw ivory in Asia has fallen dramatically since the Chinese government announced plans to ban its domestic legal ivory trade, according to new research seen by the Guardian. Poaching, however, is not dropping in parallel. Undercover investigators from the Wildlife Justice Commission (WJC) have been visiting traders in Hanoi over the last three years. In 2015 they were being offered raw ivory for an average of US$1322/kg in 2015, but by October 2016 that price had dropped to $750/kg, and by February this year prices were as much as 50% lower overall, at $660/kg. Traders complain that the ivory business has become very “difficult and unprofitable”, and are saying they want to get rid of their stock, according to the unpublished report seen by the Guardian. Worryingly, however, others are stockpiling waiting for prices to go up again.
Of all the ivory industries across Asia, it is Vietnam that has increased its production of illegal ivory items the fastest in the last decade, according to Save the Elephants. Vietnam now has one of the largest illegal ivory markets in the world, with the majority of tusks being brought in from Africa. Although historically ivory carving is not considered a prestigious art form in Vietnam, as it is in China, the number of carvers has increased greatly. The demand for the worked pieces comes mostly from mainland China. Until recently, the chances of being arrested at the border slim due to inefficient law enforcement. But the prices for raw ivory are now declining as the Chinese market slows; this is partly due to China’s economic slowdown, and also to the announcement that the country will close down its domestic ivory trade.
China’s ivory factories were officially shut down by 31 March 2017, and all the retail outlets will be closed by the end of the year. Other countries have been taking similarly positive action on ivory, although the UK lags behind. Theresa May quietly dropped the conservative commitment to ban ivory from her manifesto, but voters have picked it up and there has been fury across social media. “All the traders we are speaking to are talking about what’s going on in China. It’s definitely having a significant impact on the trade,” said Sarah Stoner, senior intel analyst at the WJC. “A trader in one of the neighbouring countries who talked to our undercover investigators said he didn’t want to go to China anymore – it was so difficult in China now, and friends of his were arrested and sitting in jail. He seemed quite concerned about the situation,” said Pauline Verheji, WJC’S senior legal investigator.
Audi’s emissions scandal flared up again on Thursday after the German government accused the carmaker of cheating emissions tests with its top-end models, the first time Audi has been accused of such wrongdoing in its home country. The German Transport Ministry said it has asked Volkswagen’s luxury division to recall around 24,000 A7 and A8 models built between 2009 and 2013, about half of which were sold in Germany. VW Chief Executive Matthias Mueller was summoned to the Berlin-based ministry on Thursday, a ministry spokesman said, without elaborating. The affected Audi models with so-called Euro-5 emission standards emit about twice the legal limit of nitrogen oxides when the steering wheel is turned more than 15 degrees, the ministry said.
It is also the first time that Audi’s top-of-the-line A8 saloon has been implicated in emissions cheating. VW has said to date that the emissions-control software found in its rigged EA 189 diesel engine does not violate European law. The 80,000 3.0-liter vehicles affected by VW’s emissions cheating scandal in the United States included Audi A6, A7 and Q7 models as well as Porsche and VW brand cars. The ministry said it has issued a June 12 deadline for Audi to come up with a comprehensive plan to refit the cars. Ingolstadt-based Audi issued a recall for the 24,000 affected models late on Thursday, some 14,000 of which are registered in Germany, and said software updates will start in July. It will continue to cooperate with Germany’s KBA motor vehicle authority, Audi said.
Just a few hours after Megyn Kelly announced on NBC’s Today show that she would be interviewing Vladimir Putin in St Petersburg tomorrow at the International Economic Forum, Showtime released the first trailer and extended clip for The Putin Interviews, a sit-down with the Russian president conducted by the film-maker Oliver Stone for a four-part special that premieres on 12 June. Promoted as “the most detailed portrait of Putin ever granted to a Western interviewer”, The Putin Interviews spawned from several encounters over two years between Stone, director of politically oriented films including JFK and Nixon, and Putin. The interviews are to air as four one-hour installments, landing just a week after Kelly’s discussion with Putin, the centerpiece of her news magazine show on NBC, which premieres on Sunday night.
In the extended clip released on Thursday, Stone and Putin can be seen driving in a car with an English translator in the backseat, discussing topics such as Edward Snowden’s whistleblowing and Russian intelligence. “As an ex-KGB agent, you must have hated what Snowden did with every fiber of your being,” Stone asks in the clip. “Snowden is not a traitor,” Putin replies. “He did not betray the interests of his country. Nor did he transfer any information to any other country which would have been pernicious to his own country or to his own people. The only thing Snowden does, he does publicly.”
Two weeks before a critical Eurogroup summit, German Finance Minister Wolfgang Schaeuble launched a broadside at Prime Minister Alexis Tsipras, claiming that the leftist premier has not shifted the burden of austerity away from poorer Greeks as he had pledged. In his comments, Schaeuble also maintained that party influence on the Greek public administration has increased rather than decreased during Tsipras’s time in power, noting that ruling party officials have been appointed to the country’s privatization fund. Greek government sources responded tersely to Schaeuble’s criticism. “The responsibility of Schaeuble in managing the Greek crisis has been recorded historically,” one source said. “There is no point in his ascribing it to others.”
Meanwhike Germany’s Die Welt reported that the ECB had similar views on the need for Greek debt relief to the IMF, and indicated that Schaeuble might be facing pressure to make unpopular decisions ahead of elections scheduled to take place in Germany in September. Tsipras, for his part, apparently sought to lower expectations in comments on Thursday. During a visit to the Interior Ministry, he said the government’s goal was “fulfilling the country’s commitments” linked to Greece’s third international bailout. He dodged reporters’ questions about whether he expected to leave a European Union leaders’ summit on June 22 wearing a tie – something he has pledged to do only when Greece secures debt relief. “The important thing is that I don’t leave with further burdens,” Tsipras said.
Aides close to Tsipras will be closely following a Euro Working Group meeting scheduled for June 8 for indications about what kind of deal creditors are likely to put on the table at the Eurogroup summit planned for June 15. If the solution that is in the works is deemed to be too politically toxic, it is likely that Tsipras will undertake another round of telephone diplomacy with key EU leaders such as German Chancellor Angela Merkel and French President Emmanuel Macron. He spoke to several prominent EU leaders earlier this week to underline the Greek government’s conviction that it has honored its promises to creditors and it is their turn to reciprocate with debt relief.
Doctors may soon have a new weapon in the long-running war between antibiotics and bacteria. It’s a Swiss Army knife of a drug that’s tens of thousands of times more effective in lab tests against dangerous antibiotic-resistant bacteria. Starting with the discovery of penicillin in 1928, scientists and doctors have been finding and making molecules that weaken or kill bacteria in a range of different ways to help humans survive infections. And as soon as humans started employing these antibiotics, bacteria began evolving to beat those attacks. That has started to become a huge problem. So-called superbugs like methicillin-resistant Staphylococcus aureus (MRSA) can ward off some of our most potent antibiotics, making infections by these bacteria extremely hard to treat.
Not only that, but their existence poses a strategic challenge as well, forcing doctors to think hard about when and where they use certain antibiotics, lest bacteria develop resistance to them and render them less effective. Vancomycin is one antibiotic that has stayed effective even as others have been been brought down by resistant bacteria. That’s because of the way vancomycin works: by latching onto one of the building blocks bacteria use to build their cell walls, like the microscopic equivalent of a bully stealing your shovel in the sandbox and not giving it back. (In this analogy, we’re on the bully’s side.) By interfering with such a critical cellular process in such a fundamental way, vancomycin makes it hard for bacteria to develop a simple mutation to defeat the antibiotic. That makes vancomycin one of our last lines of defense for treating infections like MRSA that others can’t.
It’s why the World Health Organization (WHO) added the drug to its list of essential medicines. Naturally, some bacteria have found ways to fight vancomycin, the most common being to substitute a different cell wall building block that the antibiotic can’t latch onto. Taking vancomycin out of doctors’ quivers would be a big blow. Which is why the WHO also lists vancomycin-resistant bacteria at number four and five on its list of the most threatening antibiotic-resistant microbes. So. To try to make sure vancomycin can beat those resistant bacteria, and stay effective for the next few decades—a reasonable lifetime for an antibiotic—chemists Dale Boger, Nicholas Isley and Akinori Okano at the Scripps Research Institute in California opened up the hood to make a few adjustments to the molecule.
After swapping out one part and bolting on a couple others, the group’s souped-up vancomycin was about 25,000 times more potent against resistant bacteria, and it had better endurance. They describe their work in the Proceedings of the National Academy of Sciences. The major change was to the region of the molecule that grabs those cell wall building blocks, which are called D-alanyl-D-alanine. Resistant bacteria have learned to substitute the very similar D-alanyl-D-lactate, which your standard vancomycin can’t bind to very well, limiting its effectiveness. The researchers changed an oxygen atom for two atoms of hydrogen, making a new version of vancomycin that could hang onto either building block.
When Carly Fiorina started at Hewlett-Packard Co in July 1999, one of her first acts as chief executive officer was to start buying back the company’s shares. By the time she was ousted in 2005, HP had snapped up $14 billion of its stock, more than its $12 billion in profits during that time. Her successor, Mark Hurd, spent even more on buybacks during his five years in charge – $43 billion, compared to profits of $36 billion. Following him, Leo Apotheker bought back $10 billion in shares before his 11-month tenure ended in 2011. The three CEOs, over the span of a dozen years, followed a strategy that has become the norm for many big companies during the past two decades: large stock buybacks to make use of cash, coupled with acquisitions to lift revenue.
All those buybacks put lots of money in the hands of shareholders. How well they served HP in the long term isn’t clear. HP hasn’t had a blockbuster product in years. It has been slow to make a mark in more profitable software and services businesses. In its core businesses, revenue and margins have been contracting. HP’s troubles reflect rapid shifts in the global marketplace that pressure most large companies. But six years into the current expansion, a growing chorus of critics argues that the ability of HP and companies like it to respond to those shifts is being hindered by billions of dollars in buybacks. These financial maneuvers, they argue, cannibalize innovation, slow growth, worsen income inequality and harm U.S. competitiveness. [..]
A Reuters analysis shows that many companies are barreling down the same road, spending on share repurchases at a far faster pace than they are investing in long-term growth through research and development and other forms of capital spending. Almost 60% of the 3,297 publicly traded non-financial U.S. companies Reuters examined have bought back their shares since 2010. In fiscal 2014, spending on buybacks and dividends surpassed the companies’ combined net income for the first time outside of a recessionary period, and continued to climb for the 613 companies that have already reported for fiscal 2015.
In the most recent reporting year, share purchases reached a record $520 billion. Throw in the most recent year’s $365 billion in dividends, and the total amount returned to shareholders reaches $885 billion, more than the companies’ combined net income of $847 billion. The analysis shows that spending on buybacks and dividends has surged relative to investment in the business. Among the 1,900 companies that have repurchased their shares since 2010, buybacks and dividends amounted to 113% of their capital spending, compared with 60% in 2000 and 38% in 1990.
The high-drama highway arrest of a prominent hedge fund manager. Seizures of computers and phones at Chinese mutual funds. The investigations of the president of Citic Securities Co. and at least six other employees. Now, add the probe of China’s former gatekeeper of the IPO process himself. The arrests or investigations targeting the finance industry in the aftermath of China’s summer market crash have intensified in recent weeks, creating a climate of fear among China’s finance firms and chilling their investment strategies. At least 16 people have been arrested, are being investigated or have been taken away from their job duties to assist authorities, according to statements and announcements compiled by Bloomberg News.
The authorities’ goal is to root out practices such as insider trading as part of China’s anti-corruption campaign, and a desire by “some in the political leadership to find scapegoats to blame” for the market crash, according to Barry Naughton, a professor of Chinese economy at the University of California in San Diego. “Together these are creating uncertainty and anxiety that can only undermine the effort to make these markets work better,” he said by e-mail. Chinese authorities have long encouraged funds and brokerages to create new investment products to keep the finance industry along a development path. Now that’s been halted by regulators’ raids, arrests by police and anti-corruption investigations of even regulators themselves by the Communist Party’s disciplinary committee.
JPMorgan and Credit Suisse have scaled back products that allowed foreign investors to bet on stock declines. At least one Chinese research firm has withdrawn information it used to provide to the market, calling it “too sensitive.” The government’s response to the market crash was intervention: state-directed purchases of shares, a ban on initial public offerings and restrictions on previously allowed practices, such as short selling and trading in stock-index futures. Next, high-ranking industry figures came under scrutiny as officials investigated trading strategies, decried “malicious short sellers” and vowed to “purify” the market.
Policy makers say “now we’re innovating, so you can all come in – using high-frequency trading, hedging, whatever – to play in our markets,” Gao Xiqing, a former vice chairman of the China Securities Regulatory Commission, told a forum in Beijing on Nov. 6. “A few days later, you say no, the rules we made are not right, there are problems with your trading, and we’re putting you in jail for a while first.”
Chinese President Xi Jinping on Wednesday sought to reassure regional economic and political leaders that his government will keep the world’s No. 2 economy growing. In a speech to a business conference on the sidelines of the Asia-Pacific Economic Cooperation summit, Mr. Xi said China is committed to overhauling its economy and raising the living standards of its people. China’s growth fell to a six-year low of 6.8% in the latest quarter as Beijing tries to shift the economy away from reliance on trade and investment. The slowdown, which has been unfolding for several years, has rippled around the world, crimping growth in countries such as South Korea and Australia that were big exporters to China. “The Chinese economy is a concern for everyone, and against the background of a changing world must cope with all sorts of difficulties and challenges,” Mr. Xi said. But China would “preserve stability and accelerate its development,” he said. “We will work hard to shift our growth model from just expanding scale to improving its structure.”
Wall Street is again leading to the corridors of central banks. From Minneapolis to Paris, investors and financiers are increasingly being hired to help set monetary policy less than a decade since the banking crisis roiled the world economy and chilled their public-sector employment prospects. Academic studies of historical voting records at central banks suggest the new trend may mean an increased bias towards tighter monetary policy. Last week’s appointment of Neel Kashkari to run the Federal Reserve Bank of Minneapolis as of January means a third of the Fed’s 12 district banks will soon be run by officials with past ties to Goldman Sachs. Kashkari also worked for Pimco and managed the U.S. Treasury’s $700 billion rescue of banks during the financial crisis.
The New York Fed’s William Dudley was Goldman’s chief U.S. economist for almost a decade before joining the central bank in 2007, while recently appointed Dallas Fed President Robert Steven Kaplan spent 22 years at Goldman and rose to become its vice chairman of investment banking. Although Patrick Harker joined the Philadelphia Fed from the University of Delaware he also served as an independent trustee of Goldman Sachs Trust. Fed Vice Chairman Stanley Fischer and Atlanta Fed President Dennis Lockhart both spent time working for Citigroup Inc. Fed Governor Jerome Powell worked as an investment banker early in his career for Dillon, Read & Co., which eventually became part of Switzerland’s UBS.
It’s not just the Fed. Bank of England Governor Mark Carney and European Central Bank President Mario Draghi both famously worked for Goldman before entering central banking, yet they have recently been joined by others with financial backgrounds. The new head of the Bank of France, Francois Villeroy de Galhau, spent 12 years at BNP Paribas SA, becoming its chief operating officer in 2011. Meanwhile, in September, Gertjan Vlieghe joined the BOE’s Monetary Policy Committee from hedge fund Brevan Howard having also previously worked for Deutsche Bank. So what does the re-emergence of financiers in the halls of central banks mean for monetary policy at a time when it’s set to diverge internationally?
The world desperately needs to recover Keynes, but to do so it also needs to confront some deeply uncomfortable truths about the nature of power and the acceptance or otherwise of ideas. In his 1902 Imperialism, John Hobson observed: “No one can follow the history of political and economic theory during the last century without recognizing that the selection and rejection of ideas, hypothesis, and formulae, the moulding of them into schools or tendencies of thought, and the propagation of them in the intellectual world, have been plainly directed by the pressure of class interests. In political economy…….we find the most incontestable example.” (Hobson, 1902, pp. 218-19)
Given the pressure of class interests on today’s economic ideas and on the economics profession, the long-standing neglect of Keynes’s ideas, most significantly here in Cambridge, comes as no surprise. The “moulds of schools of thought” now dominant in both economics, but also wider society, have led to a vast and prolonged failure of the global economy. A failure to provide people with work, stability, a decent standard of living – and in the light of this weekend’s events in Paris – security. According to the ILO around 200 million people are now unemployed. The Middle East and North Africa has the highest rate of youth unemployment in the world. Even before 2008, 170 million people had no work.
Today most economists regard unemployment as a non-event; not worthy of consideration as a major indicator of economic health. Instead the economics profession seeks only to impose the consequent failure of economic activity as the new norm – “Secular Stagnation”. The appalling conditions of the world today – in Europe, high levels of unemployment, the dominance of liberal, unfettered finance, an ‘independent’ central bank, political tensions and divisions and the rise of right-wing and even fascist parties – are precisely the conditions that Keynes sought to eradicate. From the time of his rejection of the gold standard, Keynes was concerned with the prevention of economic crises.
In the wake of the great depression, he wanted to establish conditions for the restoration of prosperity and to prevent such events ever recurring again. In this Keynes clearly failed. But this failure was through no fault of his own. For the Keynes that survived into conventional wisdom and most importantly, the Keynes that has survived into the lecture theatre – if he is mentioned at all – is a gravely distorted and diminished figure.
When Qatar agreed to buy 24 French Rafale fighter jets in a €6.3 billion contract at the end of April, it represented yet another major success for France’s arms industry, coming hot on the heels of further multi-billion euro sales of Rafales to Egypt and India. The deals have been hailed by Hollande and his government. According to France’s Minister of Defence Jean-Yves Le Drian, in comments made to the Journal du Dimanche newspaper Sunday, the Qatar contract brought the value of the country’s arms exports to more than €15 billion this year so far. That sum is already more than the €8.06 billion for the whole of 2014, which itself was the highest level seen since 2009 – suggesting a continued upward trajectory for the French arms trade and one that is providing a much-needed salve to the country’s economic woes.
But some of these deals have raised more than a few eyebrows, with anti-arms trade campaigners critical of France’s willingness to sell weapons to countries with less than stellar human rights records. These concerns are only set to rise when Hollande heads first to Doha on Monday and then Saudi Arabia’s capital of Riyadh the day after, where furthering the recent success of the French arms industry is likely to be one of his top priorities. Saudi Arabia has already proved a lucrative trading partner for French arms manufacturers, most recently in a deal signed in November that saw the kingdom buy €2.7 billion of French weapons and military equipment to supply the Lebanese army. The oil-rich country is currently on something of an arms spending spree.
Last year, the Saudis surpassed India to become the world’s biggest arms importer, upping its spending by 54% to €5.8 billion, according to a report by industry analyst IHS. France, thanks to some adept diplomatic manoeuvering in recent years, is well placed to take advantage of the Saudi cash cow. Paris has been an increasingly close ally of Riyadh ever since it was among the most vocal in backing military intervention against Syria’s President Bashar al-Assad, a key ally of Shiite Iran – one of Sunni Saudi Arabia’s main regional rivals. The strategic alliance has been boosted by France’s tougher stance on a nuclear deal with Iran than the Saudi’s traditional western partner, the US.
Furthermore, French Foreign Minister Laurent Fabius visited the kingdom in April to show France’s support for the Saudi-led military intervention in Yemen. If Hollande can help secure new arms deals with the Saudis, then he could make the sums involved in this year’s earlier successes look like small change. He may have to overlook certain moral issues to do so, however. The kingdom, where the ultra-conservative Wahhabi form of Islam dominates, is one of the world’s most restrictive and repressive states, where public executions are common practise, women are forbidden from obtaining a passport and blasphemers are punished with whippings.
The present situation is untenable. We have a “single currency” in name, but not in reality. The price of money in the Eurozone depends not on the creditworthiness of businesses and households, but on the creditworthiness of the sovereign in the country in which they happen to be located. So businesses and households in Germany can obtain finance at lower rates than businesses and households in Italy. This gives Germany an enduring credit advantage over weaker countries, making it all but impossible for weaker countries to close the competitiveness gap. The Eurozone monetary system is a simply massive “postcode lottery”.
Despite their fine words about breaking the toxic link between sovereigns and banks, the Eurozone authorities have abjectly failed to do this. Indeed, at times the actions of Eurozone institutions have actually strengthened this link, rather than resolving it: the ECB’s LTROs, for example, were openly used to finance bank lending to governments in Spain and Italy. The failure to mutualise the costs of resolving failed banks leaves individual sovereigns on the hook for Europe-wide, and even global, financial disasters: while the principle of creditor bail-in simply exposes sovereigns in a different way. In 2012, the Greek PSI blew large holes in the balance sheets of Greek banks and pension funds, holes which were plugged by the Greek sovereign at a cost of yet more unsustainable borrowing, because the welfare costs to the Greek population of allowing the banks and pension funds to fail were far too great.
It is an insult to genuine monetary unions, such as those in the US, Canada, the UK and Switzerland, to call this a “monetary union”. The Euro is a common name for member state currencies, not a common currency. Politicians pay lip service to the idea of a common currency, insisting on independence of monetary policy and free flows of capital – when it suits them. But when it no longer suits them, they impose capital controls and pressure the ECB into doing their bidding. Successive crises have demonstrated that the coherence of the union comes a very poor second to national interests – along with notions of fairness, justice and social cohesion.
The U.K. plans to develop new nuclear reactors and gas-fired power plants to cut carbon emissions and limit costs to consumers. Gas and nuclear are both “central to our energy secure future,” Energy Secretary Amber Rudd will say in a speech Wednesday, according to prepared remarks e-mailed by her office. She’ll say they’re both needed to replace ageing coal-fired power stations, which are “not the future.” “In the next 10 years, it’s imperative that we get new gas-fired power stations built,” Rudd will say. “There are plans for a new fleet of nuclear power stations, including at Wylfa and Moorside. This huge investment could provide up to 30% of the low carbon electricity which we’re likely to need through the 2030s.”
The emphasis on nuclear and gas signals a further retreat from renewable energy after Rudd slashed several subsidy programs, arguing they risk exceeding Treasury spending limits. Renewables have taken a battering since Prime Minister David Cameron’s Conservatives came to power in May, with ministers announcing planned cuts to programs subsidizing solar power, onshore wind, biomass and energy efficiency. Rudd’s comments will come in a speech that her office has trailed for months as one that will “reset” energy policy in this country. She is expected to say that the new approach “means controlling subsidies and balancing the need to decarbonize with the need to keep bills as low as possible,” according to her department.
California has yet to see the full force of El Nino, and it’s already tripping up the state’s power-demand forecasters. The state saw “significant” electricity price spikes in the third quarter as El Nino made it difficult to predict how much power would be needed on hot summer and fall days, the California Independent System Operator Corp. said Monday in a report. Record rainfall and regional cloud cover in Southern California also perplexed forecasters, the grid operator said. “With El Nino, California and the Southwest tends to get more storminess and that is inherently more challenging to forecast,” Matt Rogers, president of Commodity Weather Group, said. “The extra cloudiness and sporadic storminess this autumn as well as some heat spikes early in the third quarter can be attributed to El Nino influences.”
El Nino describes the warming of the equatorial Pacific caused by weakening trade winds that normally push sun-warmed waters to the west. It is expected to bring higher-than-average rainfall to California, which is in the midst of a four-year drought. The weather phenomenon has already contributed to Pacific typhoons and drought concerns in parts of Southeast Asia. In California power markets, the odd weather led to “load forecast errors on several days with particularly high loads,” according to the report. In September, there was a “relatively high percentage of intervals” when prices spiked above $1,000 a megawatt-hour in the 5-minute market.
As an American investment giant that manages the retirement savings of millions of university administrators, public school teachers and others, TIAA-CREF prides itself on upholding socially responsible values, even celebrating its role in drafting United Nations principles for buying farmland that promote transparency, environmental sustainability and respect for land rights. But documents show that TIAA-CREF’s forays into the Brazilian agricultural frontier may have gone in another direction. The American financial giant and its Brazilian partners have plowed hundreds of millions of dollars into farmland deals in the cerrado, a huge region on the edge of the Amazon rain forest where wooded savannas are being razed to make way for agricultural expansion, fueling environmental concerns.
In a labyrinthine endeavor, the American financial group and its partners amassed vast new holdings of farmland despite a move by Brazil’s government in 2010 to effectively ban such large-scale deals by foreigners. While the measure thwarted the ambitions of other foreign investors, TIAA-CREF pressed ahead in a part of Brazil rife with land conflicts, exposing the company and its partners to claims that they acquired farms from a shadowy land speculator accused of employing gunmen to snatch land from poor farmers by force. The documents offer a glimpse into how one of America’s largest financial groups took part in what some in the developing world condemn as land grabs. Responding in 2010 to surging international interest in the country’s land, Brazil’s attorney general significantly limited foreigners from carrying out large-scale farmland acquisitions.
Investors sometimes view such deals as a way to diversify their portfolios. But some government officials and activists contend that they uproot poor farmers, transfer the control of vital food-producing resources to a global elite and destroy farming traditions in exchange for industrial-scale plantations producing food for export. “I had heard of foreign funds trying to get around Brazilian legislation, but something on this scale is astonishing,” said Gerson Teixeira, the president of the Brazilian Association for Agrarian Reform and an adviser to members of Congress, referring to the documents about TIAA-CREF’s farmland deals in Brazil.
Between 1989 and 2010, U.S. attorneys seized an estimated $12.6 billion in asset forfeiture cases. The growth rate during that time averaged +19.4% annually. In 2010 alone, the value of assets seized grew by +52.8% from 2009 and was six times greater than the total for 1989. Then by 2014, that number had ballooned to roughly $4.5 billion for the year, making this 35% of the entire number of assets collected from 1989 to 2010 in a single year. Now, according to the FBI, the total amount of goods stolen by criminals in 2014 burglary offenses suffered an estimated $3.9 billion in property losses.
This means that the police are now taking more assets than the criminals. The police have been violating the laws to confiscate assets all over the country. A scathing report on California warns of pervasive abuse by police to rob the people without proving that any crime occurred. Even Eric Holder came out in January suggesting reform because of the widespread abuse of the civil asset forfeiture laws by police. Bloomberg News has reported now that Stop-and-Seize authority is turning the Police Into Self-Funding Gangs. They are simply confiscating money all under the abuse of this civil asset forfeiture where they do not have to prove you did anything.:
…in the U.S., I see some troubling signs of a shift toward low-end institutions. Bounty hunting was a recent example (now happily going out of style). Another example is the use of private individuals or businesses to collect taxes, a practice known as tax farming. A third has been the extensive use of mercenaries in lieu of U.S. military personnel in Iraq and elsewhere. Practices such as these can save money for the government, but they encourage abuses by reducing oversight. I’ve recently been reading about an even more worrying example of low-end statecraft: Stop-and-seize.
This term refers to a practice, increasingly common since the turn of the century, of police confiscating people’s property without making an arrest or obtaining a warrant. That may not sound legal, but it is! The police simply pull you over and take your money. A Washington Post investigative report from a year ago explains: “[A]n aggressive brand of policing [is spreading] that has spurred the seizure of hundreds of millions of dollars in cash from motorists and others not charged with crimes…Thousands of people have been forced to fight legal battles that can last more than a year to get their money back. Behind the rise in seizures is a little-known cottage industry of private police-training firms…
A thriving subculture of road officers…now competes to see who can seize the most cash and contraband, describing their exploits in the network’s chat rooms and sharing “trophy shots” of money and drugs. Some police advocate highway interdiction as a way of raising revenue for cash-strapped municipalities. “All of our home towns are sitting on a tax-liberating gold mine,” Deputy Ron Hain of Kane County, Ill., wrote in a self-published book under a pseudonym…Hain’s book calls for “turning our police forces into present-day Robin Hoods.” With government unable to pay police as much as they need or would like, police are confiscating their revenue directly from the populace.
President Vladimir Putin on Wednesday set up a commission to combat terrorism financing, the Kremlin said, in another sign of the Russian leader’s heightened focus on what he says is a fight against Islamic State militants. After attacks in Paris killed 129 people on Friday, security dominated the G20 summit at the weekend, where the group’s leaders, in a rare departure from their usual focus on the global economy, agreed to step up border controls and aviation security and crack down on terrorist financing.
In a decree, effective immediately, Putin ordered the prosecutor general’s office, the central bank and regional authorities to submit any information they may have on suspicious activities to the commission. On Tuesday, the Kremlin said a bomb brought down the Russian passenger plane that crashed in the Sinai Peninsula in Egypt last month, killing all 224 people on board. The decree orders submission to the commission of any information on suspicious activities of organisations and individuals who are not on a list of those against whom there is sound information about their involvement in extremist activities or terrorism, in order to freeze their assets.
In a call with senior Obama administration officials Tuesday evening, several governors demanded they be given access to information about Syrian refugees about to be resettled by the federal government in their states. Top White House officials refused. Over a dozen governors from both parties joined the conference call, which was initiated by the White House after 27 governors vowed not to cooperate with further resettlement of Syrian refugees in their states. The outrage among governors came after European officials revealed that one of the Paris attackers may have entered Europe in October through the refugee process using a fake Syrian passport. (The details of the attacker’s travels are still murky.)
The administration officials on the call included White House Chief of Staff Denis McDonough, Deputy Secretary of Homeland Security Alejandro Mayorkas, State Department official Simon Henshaw, FBI official John Giacalone, and the deputy director of the National Counterterrorism Center John Mulligan. On the call several Republican governors and two Democrats – New Hampshire’s Maggie Hassan and California’s Jerry Brown – repeatedly pressed administration officials to share more information about Syrian refugees entering the United States. The governors wanted notifications whenever refugees were resettled in their states, as well as access to classified information collected when the refugees were vetted. “There was a real sense of frustration from all the governors that there is just a complete lack of transparency and communication coming from the federal government,” said one GOP state official who was on the call.
Eastern European nations are toughening their opposition to German Chancellor Angela Merkel’s plan to force them to take in refugees, arguing that the EU’s immigration policies may have aided last week’s terrorist attacks in Paris. Bulgarian Foreign Minister Daniel Mitov on Tuesday called discussions on quotas for migrants “absurd” following the events in Paris, while Poland’s incoming Prime Minister Beata Szydlo said a day earlier the EU should review its stance on immigration, pledging to accept refugees only if they don’t endanger security. At least 129 people were killed in Paris on Friday, with a Syrian passport found next to the body of one of the suicide bombers registered on the Greek island of Leros, suggesting the holder may have come into Europe claiming to be a political refugee.
The EU is increasingly split along east-west lines over how to deal with the immigration crisis as the European Commission estimates 3 million asylum seekers may be heading toward the bloc by 2017. A group of formerly communist countries led by Hungary, one of the nations most affected by the flood of migrants, have opposed German-led efforts to introduce a quota system to settle them, drawing criticism that the recipients of billions of euros in aid from western Europe aren’t willing to help their richer neighbors. “The opposition to the quotas has already been there before the attacks,” said Otilia Dhand, an analyst at political-risk consultancy Teneo Intelligence in Brussels. “The attacks are now being used as an additional argument.”
Merkel, who allowed an estimated 1 million asylum seekers into Germany this year, seeks to relocate those fleeing war and civil strife in the Middle East and North Africa across the 28-nation EU. The plan is straining her ties with countries such as Poland and the Baltic nations, which count on German backing for continued sanctions on Russia following President Vladimir Putin’s annexation of Ukraine’s Crimean peninsula in 2014. Asked whether Syrian refugees can be successfully integrated into society, Merkel told reporters on Tuesday the answer is a “clear yes.” Integration means following the rules and laws of the host country, getting a chance to “participate in society” and being placed into a community prepared to be tolerant and more multi-ethnic, she said.
Such sentiment isn’t widely shared by eastern European politicians, who remain wary of opening their societies to foreigners, including those with different religious beliefs. “Discussing quotas at this point has become absurd,” top Bulgarian diplomat Mitov said in an interview with public radio on Tuesday. “This isn’t the way to solve the problem and to approach it.” Hungary plans to challenge the plan in EU courts, Justice Minister Laszlo Troscsanyi told reporters the same day.
A surge in activity from Nigeria’s Islamist insurgency Boko Haram – now the world’s deadliest terrorist group – and Islamic State in Iraq and Syria has driven an 80% increase in the number of people killed by terrorists in 2014, this year’s Global Terrorism Index showed. In total, 32,658 people were killed in terrorist attacks in 67 countries last year, according to the index, released on Tuesday by the Institute for Economics and Peace (IEP). The world is reeling from the terrorist attacks in Paris last Friday, which killed at least 129 people. But the index showed that 80% of last year’s terrorist killings were carried out in just five countries: Iraq, Nigeria, Afghanistan, Pakistan and Syria. “We can see the trauma [terrorist attacks] create in the west, but think how much trauma they create in all these other countries in the world,” said Steve Killelea, executive chairman of the IEP.
The index showed a close link between terrorism and people being forced to flee. Of 11 countries with more than 500 deaths from terrorism, 10 had “the highest levels of refugees and [internal] migration in the world”, the index said. The sharp rise in terrorist activity noted in the report is fuelling migration out of areas controlled by Isis and into neighbouring countries. According to figures from the UN’s High Commissioner for Refugees, 369,904 people have fled Iraq and and 4.29 million have fled Syria. “There’s a strong relationship between terrorism and ongoing conflict. What we’re seeing is people are fleeing the conflicts, and so actually tackling the conflicts and terrorism are one and the same,” Killelea said.
Refugee spending by European Union nations may receive some reprieve from the bloc’s budget rules if the governments can show proof that outlays are linked to extraordinary circumstances, the European Commission said. None of the draft budget plans submitted to the EU ran the risk of “particularly serious non-compliance” with debt and spending rules, the Brussels-based commission said on Tuesday. France’s budget plan suggests it won’t meet a 2017 deadline – already extended in a move to avoid unprecedented fines – to correct its deficit, it said. Italy, Austria and Lithuania were found to be at risk of not meeting their 2016 budget targets.
The EU executive said that when countries are faced with “unusual events outside the control of the government,” nations can increase spending without drawing budget-related sanctions. The commission said it is “willing to use these provisions” for 2015 and 2016 budget requirements, as long as countries can provide “observed data” to show they’re following the rules. “This means that deviations deriving only and directly from the net extra costs of the refugee crisis will not lead to any stepping up in the procedures,” the commission said. It also promised not to open new deficit-related proceedings if countries keep their deficit “close to” the 3% limit, even if refugee spending causes a breach.
In the wake of terrorist attacks that devastated Paris, French President Francois Hollande said extra spending to ensure France’s security is more important than European budget rules. “The security pact is more important than the stability pact,” he told lawmakers on Monday in Versailles. Debt is starting to fall across the EU for the first time since the beginning of the euro area’s debt and financial crisis, Commission Vice President Valdis Dombrovskis said in a statement. At the same time, he said, progress across Europe is uneven. “The problem of high debt is still holding back a faster recovery,” Dombrovskis said. “It is important for governments to continue implementing responsible fiscal policies and for others to continue cleaning up their public finances.”
“The temperature inside the Olympic hockey stadium near the old Athens airport at Elliniko, which houses refugees, had started to drop. There was no hot water in the shower. I saw a newborn baby. Its Afghan mother had been gripped by labor pains on board the boat and she gave birth on a Lesvos beach. It was not possible for the baby to take a bath there because it would freeze, so I took it home along with its parents. We gave it a warm bath and something to eat before putting it down to sleep. When the family left the island two days later, we felt like relatives saying goodbye.” The stories shared by volunteers helping the thousands of migrants and refugees arriving in the country, such as this relayed to Kathimerini by George Vichas, a cardiologist and director of the Metropolitan Community Clinic at Elliniko, are deeply moving.
But they are also highly revealing of the huge challenges facing refugees as weather conditions worsen and state support remains sorely lacking. “The Elliniko venue is expected to house refugees and migrants also in the coming months. A few days ago, some 500 people were temporarily sheltered here. But how are they expected to stay here if the place is not heated?” Vichas says. At the reception center of the Metropolitan Community Clinic, Vichas has set up a second clinic. “On a daily basis, we receive help from one or two pediatricians, two to three pathologists, a cardiologist, an orthopedic surgeon and a pulmonologist,” Vichas says. Their work is aided by six to seven volunteers from the Fair Planet nonprofit organization. “They are very experienced in dealing with refugees as many of them have worked abroad,” he says.
As winter sets in, the clinic is trying to collect sleeping bags and thermal clothes and blankets. “We need people’s support, things will be pretty tough. The state is regrettably absent from all this,” Vichas says, adding that doctors from the Hellenic Center for Disease Control and Prevention (KEELPNO) only drop by the center for two hours between Monday and Friday. “When 500 refugees arrived here on a Saturday evening, they were examined by volunteer doctors,” he says. Nikitas Kanakis, president of Doctors of the World Greece, says the organization is concerned that, as the weather worsens, up to 200,000 refugees could find themselves trapped in Greece. “We are trying to prepare ourselves also for that scenario and have asked for help from branches in other countries,” he says.
Swiss volunteers are helping in Idomeni, near Greece’s northern border with the Former Yugoslav Republic of Macedonia (FYROM), while volunteers from the Netherlands and France are helping out on Chios and Lesvos. On an operational level, Doctors of the World is preparing small flexible groups that can reach more refugee facilities. “Our doctors are at the end of their tether. Over the past months they have been examining about 200 people per day. State care is nowhere to be seen. Greek society is providing clothes, food and care for refugees. How is the state helping?” says Kanakis, who is also critical of the European Union’s failure to deal with the mounting crisis. “Why does the EU not create a safe passage for refugees instead of leaving them at the mercy of traffickers and the Aegean Sea?”
The collapse in oil prices following the shale revolution has stolen the limelight for investors mulling the end of the commodities supercycle. But the real “poster child for problems in commodities markets is perhaps the global steel industry,” according to Macquarie analysts led by Colin Hamilton, the firm’s global head of commodities research. The front-month contract for U.S. hot-rolled coil steel futures traded on the New York Mercantile Exchange is down nearly 40% year-over-year/ Forecasts for a boom in Chinese consumption helped spur a rise in production that left the segment with a massive glut. The successful realization of economic rebalancing in China, meanwhile, necessarily entails a material slowdown in that nation’s demand for steel. Macquarie observes that global steel consumption has contracted on an annual basis throughout 2015.
“With 1.6 billion tonnes of consumption globally, steel remains the lynchpin of industrial growth,” wrote Hamilton. “However, the growth part of this equation is an increasing problem, and not only in China.” India, which has the potential to buoy demand for steel, is also contributing significantly to supply growth. Bloomberg Intelligence’s Yi Zhu notes that 37 million metric tons of production capacity in India are currently under construction or in planning to be added. “The only people who still seem to think there is significant upside in global steel consumption akin to the past decade are the major iron ore producers—for example BHP’s belief global steel consumption will hit 2.5 billion tonnes by 2030—just a further 50% upside required there!” Hamilton wrote in a separate note.
Arguably, overcapacity across the commodity complex is a perverse side effect of years of near-zero interest rates and asset purchases by the Federal Reserve. Lower input prices, however, can have a silver lining. For example, the collapse in oil prices, in simple terms, represents a transfer of wealth from major oil conglomerates to consumers. The largest positive effects accrue to lower-income households that spend a heftier portion of take-home pay on energy costs. “A world of cheap money not only sees new capacity built, it also means existing capacity doesn’t disappear,” explains Hamilton. “While most regions are well off their peak production levels over the last decade, permanent capacity closures have been few and far between.”
Hedge funds have turned more pessimistic on oil as prices flirted with $40 a barrel for the first time since August. “The speculators keep trying to pick the bottom and keep getting burned,” Michael Lynch, president of Strategic Energy & Economic Research said. Money managers’ short bets in West Texas Intermediate crude surged 21% in the week ended Nov. 10, according to data from the Commodity Futures Trading Commission. The net-long position dropped 16%. The release of the figures was delayed because of Veterans Day on Nov. 11. Oil inventories in developed countries have expanded to a record of almost 3 billion barrels because of massive supplies from both OPEC and non-OPEC producers, the International Energy Agency said in a report on Nov. 13.
WTI slipped to the lowest level since August before the CFTC release Monday. Thirty-nine oil tankers are waiting near Galveston, Texas, up from 30 in May, according to vessel-tracking data compiled by Bloomberg. “There’s been concern about excess supply in the market for a while now and that’s been strengthened by the IEA report,” Lynch said. [..] Oil inventories surged because of increased global production, OPEC said on Nov. 12. U.S. crude supplies rose to 487 million barrels as of Nov. 6, the highest for this time of year since 1930, the Energy Information Administration reported on Nov. 12. “We think the next few months will be very weak,” Sarah Emerson, managing director of ESAI Energy said by phone. “The market is focused on inventories. Prices shouldn’t rally in the coming year unless we have a disruption.”
When the Arab Spring broke out in 2011, Saudi Arabia headed it off by pumping $130 billion into the economy, raising wages, improving services, and providing jobs for its growing population. Saudi Arabia has one of the youngest populations in the Middle East, many of whom are unemployed and poorly educated. Some 25% of the population lives in poverty. Money keeps the lid on, but – even with the heavy-handed repression that characterizes Saudi political life – for how long? Meanwhile they’re racking up bills with ill-advised foreign interventions. In March, the kingdom intervened in Yemen’s civil conflict, launching an air war, a naval blockade, and partial ground campaign on the pretense that Iran was behind one of the war’s factions – a conclusion not even the Americans agree with.
Again, the Saudis miscalculated, even though one of their major allies, Pakistan, warned them they were headed for trouble. In part, the kingdom’s hubris was fed by the illusion that US support would make it a short war. The Americans are arming the Saudis, supplying them with bombing targets, backing up the naval blockade, and refueling their warplanes in midair. But six months down the line the conflict has turned into a stalemate. The war has killed 5,000 people (including over 500 children), flattened cities, and alienated much of the local population. It’s also generated a horrendous food and medical crisis and created opportunities for the Islamic State and al-Qaeda to seize territory in southern Yemen. Efforts by the UN to investigate the possibility of war crimes were blocked by Saudi Arabia and the US.
As the Saudis are finding out, war is a very expensive business – a burden they could meet under normal circumstances, but not when the price of the kingdom’s only commodity, oil, is plummeting. Nor is Yemen the only war that the Saudis are involved in. Riyadh, along with Qatar and the United Arab Emirates, are underwriting many of the groups trying to overthrow Syrian president Bashar al-Assad. When antigovernment demonstrations broke out there in 2011, the Saudis – along with the Americans and the Turks – calculated that Assad could be toppled in a few months. But that was magical thinking. As bad as Assad is, a lot of Syrians – particularly minorities like Shiites, Christians, and Druze – were far more afraid of the Islamists from al-Qaeda and the Islamic State than they were of their own government.
So the war has dragged on for four years and has now killed close to 250,000 people. Once again, the Saudis miscalculated, though in this case they were hardly alone. The Syrian government turned out to be more resilient than it appeared. And Riyadh’s bottom line that Assad had to go just ended up bringing Iran and Russia into the picture, checkmating any direct intervention by the anti-Assad coalition. Any attempt to establish a no-fly zone against Assad will now have to confront the Russian air force – not something that anyone other than certain US presidential aspirants are eager to do.
Smart move. There is more sympathy for ISIS in Saudi Arabia than in any other country. And a lot of -private- Saudi capital goes towards funding it. And we sell them smart bombs.
The U.S. State Department has approved the sale of thousands of smart bombs worth a total of $1.29 billion to Saudi Arabia to help replenish supplies used in its battle against insurgents in Yemen and air strikes against Islamic State in Syria, U.S. officials familiar with the deal said on Monday. The Pentagon’s Defense Security Cooperation Agency (DSCA), which facilitates foreign arms sales, notified lawmakers on Friday that the sales had been approved, the sources said. The lawmakers now have 30 days to block the sale, although such action is rare since deals are carefully vetted before any formal notification.
The proposed sale includes thousands of Paveway II, BLU-117 and other smart bombs, as well as thousands of Joint Direct Attack Munitions kits to turn older bombs into precision-guided weapons using GPS signals. The sales reflect President Barack Obama’s pledge to bolster U.S. military support for Saudi Arabia and other Sunni allies in the Gulf Cooperation Council after his administration brokered a nuclear deal with their Shiite rival Iran. The weapons are made by Boeing and Raytheon, but the DSCA told lawmakers the prime contractors would be determined by a competition.
I brought this up the other day: how much control over the yuan does Beijing give up with its desired inclusion in the ‘SDR basket’? And how does that play out when things go downhill for China?
The offshore yuan’s discount to the onshore spot rate widened to the most this month amid speculation the People’s Bank of China will rein in intervention now that the currency is on the cusp of winning reserve status. The difference between the yuan’s exchange rates in Hong Kong and Shanghai rose to as much as 417 pips on Monday, data compiled by Bloomberg show. It last exceeded 400 pips on Oct. 28, prompting suspected intervention by the PBOC the following day. [..] IMF Managing Director Christine Lagarde said late Friday that her staff have recommended the yuan be included in its Special Drawing Rights basked, as all operational issues including a sufficient gap between the onshore and offshore rates had been solved.
The Washington-based lender’s board will vote to approve inclusion on Nov. 30. “As the yuan’s inclusion is largely a done deal, we expect the PBOC to reduce foreign-exchange intervention and allow a wider spread between the onshore and offshore yuan,” said Ken Cheung, a Hong Kong-based currency strategist at Mizuho Bank Ltd. The central bank’s tolerance level may have widened to 500 pips from 400 pips before the IMF announcement and it will probably allow more depreciation via weaker fixings, he said.
India’s merchandise exports contracted for the eleventh consecutive month in October, as shipments of petroleum products continued to decline on lower crude oil prices, and external demand remained weak amid tepid global economic recovery. Exports contracted 17.5% from a year ago to $21.3 billion while imports shrank 21.2% to $31.1 billion, leaving a trade deficit of $9.8 billion, data released by the commerce ministry showed on Monday. In comparison, China’s October exports fell 6.9% from a year ago, down for a fourth month, while imports slipped 18.8%, leaving the country with a record high trade surplus of $61.64 billion. India’s dip in exports was driven mainly by a 57.1% drop in shipments of petroleum products to $2.5 billion.
The ministry has sent a cabinet note on the long-pending interest subsidy scheme for providing rupee credit to exporters at a subsidized interest rate. However, the cabinet is yet to take a view on it. India aims to take exports of goods and services to $900 billion by 2020 and raise the country’s share in world exports to 3.5% from 2% now. Exports in the past four fiscal years have been hovering at around $300 billion. India’s current account deficit (CAD) further contracted in the first quarter of 2015-16, as lower global crude oil prices helped rein in India’s import bill.
Big deal: if budget rules are no longer applicable to France, they are to nobody. Schengen is gone, budget restrictions are gone; why still have an EU?
France has invoked emergency powers to sweep aside EU deficit rules and retake control over its economy after the terrorist atrocities in Paris, pledging a massive in increase and security and defence spending whatever the cost. President Francois Hollande said vital interests of the French nation are at stake and there can be no further justification for narrowly-legalistic deficit rules imposed by Brussels. “The security pact takes precedence over the stability pact. France is at war,” he told the French parliament. Defence cuts have been cancelled as far out as 2019 as the country prepares to step up its campaign to “eradicate” ISIS, from the Sahel in West Africa, across the Maghreb, to Syria and Iraq. At least 17,000 people will be recruited to beef up the security apparatus and the interior ministry, fast becoming the nerve centre of the country’s all-encompassing war against the ISIS network.
The new forces include 5,000 new police and gendarmes, 1,000 customs officials, and 2,500 prison guards. “I assume it will lead to an increase in expenses,” he said. The combined effect amounts to a fiscal stimulus and may ultimately cushion the economic damage of terrorist attacks for the tourist industry, but the “rearmament” drive spells the end of any attempt to meet deficit limit of 3pc of GDP enshrined in the Stability and Growth Pact. With France in open defiance, the reconstituted pact is now effectively dead. The European Commission expects the French deficit to be 3.4pc of GDP next year and 3.3pc in 2017, but the real figure is likely to be much higher and will last through to the end of the decade. The concern is that this could push the country’s debt yet higher from 96.5pc of GDP to nearer 100pc, made worse by the effects of deflation on debt dynamics.
Mr Hollande said France will invoke article 42.7 of the Lisbon Treaty, the solidarity clause obliging other member states to come to his country’s help by “all means in their power”. It would be beyond parody for Brussels to continue insisting on budget rules in such a political context. The French economy is slowly recovering as the triple effects of a weak euro, cheap oil, and quantitative easing by the ECB combine to create a short-term blast of stimulus, but it still remains remarkably depressed a full six years into the post-Lehman cycle of global expansion. Growth crept up to 0.3pc in the third quarter after stalling earlier in the year. Unemployment is still stuck at 10.7pc and has actually risen over recent months. “Momentum may fade in 2017 as tailwinds peter out,” said the Commission.
Finland’s parliament will debate next year whether to quit the euro, a senior parliamentary official said on Monday, in a move unlikely to end membership of the single currency but which highlights Finns’ dissatisfaction with their country’s economic performance. The decision follows a citizens’ petition which has raised the necessary 50,000 signatures under Finnish rules to force such a debate, probably the first such initiative in any country of the 19-member euro zone. “There will be signature checks early next year and a parliamentary debate will be held in the following months,” said Maija-Leena Paavola, who helps guide legislation through parliament. The petition – which will continue to gather signatures until mid-January – demands a referendum on euro membership, but this would only go ahead if parliament backed the idea.
Despite the initiative, a Eurobarometer poll this month showed 64% of Finns backed the common currency, though that is down from 69% a year ago. But the Nordic country has suffered three years of economic contraction and is currently performing worse than any other country in the euro zone. Some Finns say the country’s prospects would improve if it returned to the markka currency and regained the ability to set its own interest rates, pointing to the example of neighboring Sweden, which is outside the euro. The markka could then devalue against the euro, making Finnish exports less expensive. “Since 2008 the Swedish economy has grown by 8%, while ours has shrunk by 6%,” said Paavo Vayrynen, a Finnish member of the European Parliament who launched the initiative.
Nomi is a fan of the Automatic Earth and our Debt Rattles, which she calls: “the most comprehensive daily rundown of main stream and alternative press articles out there!” Makes her an even smarter cookie.
Too big to fail is a seven-year phenomenon created by the most powerful central banks to bolster the largest, most politically connected US and European banks. More than that, it’s a global concern predicated on that handful of private banks controlling too much market share and elite central banks infusing them with boatloads of cheap capital and other aid. Synthetic bank and market subsidization disguised as ‘monetary policy’ has spawned artificial asset and debt bubbles – everywhere. The most rapacious speculative capital and associated risk flows from these power-players to the least protected, or least regulated, locales. There is no such thing as isolated ‘Big Bank’ problems. Rather, complex products, risky practices, leverage and co-dependent transactions have contagion ramifications, particularly in emerging markets whose histories are already lined with disproportionate shares of debt, interest rate and currency related travails.
The notion of free markets, mechanisms where buyers and sellers can meet to exchange securities or various kinds of goods, in which each participant has access to the same information, is a fallacy. Transparency in trading across global financial markets is a fallacy. Not only are markets rigged by, and for, the biggest players, so is the entire political-financial system. The connection between democracy and free markets is interesting though. Democracy is predicated on the idea that every vote counts equally, and in the utopian perspective, the government adopts policies that benefit or adhere to the majority of those votes. In fact, it’s the minority of elite families and private individuals that exercise the most control over America’s policies and actions.
The myth of a free market is that every trader or participant is equal, when in fact the biggest players with access to the most information and technology are the ones that have a disproportionate advantage over the smaller players. What we have is a plutocracy of government and markets. The privileged few don’t care, or need to care, about democracy any more than they would ever want to have truly “free” markets, though what they do want are markets liberated from as many regulations as possible. In practice, that leads to huge inherent risk. Michael Lewis’ latest book on high frequency trading seems to have struck some sort of a national chord. Yet what he writes about is the mere tip of the iceberg covered in my book. He’s talking about rigged markets – which have been a problem since small investors began investing with the big boys, believing they had an equal shot. I’m talking about an entirely rigged political-financial system.
Greece reached an agreement with its lenders on financial reforms early on Tuesday, its finance minister said, removing a major obstacle holding up fresh bailout loans for the cash-starved country. Athens signed up to a new aid program worth up to €86 billion earlier this year, but payment of part of an initial tranche had been held up over disagreement on regulations on home foreclosures and handling tax arrears to the state. “There was an agreement on all the milestones … whatever was required,” Finance Minister Euclid Tsakalotos told reporters after meeting representatives of European institutions and the IMF on aid disbursement.
Tsakalotos said the deal meant Parliament could now ratify the set of reforms to law, and that deputy eurozone finance ministers, known as the Euro Working Group, would on Friday endorse the deal. That would allow a €2 billion aid disbursement and about €10 billion in recapitalization aid to the country’s four main banks, he said. Greece has been keen to complete its first assessment under the new bailout package, its third since 2010, so it can start talks with lenders on debt relief.
U.K. consumer prices fell for a second month in October, extending the weakest bout of inflation in more than half a century. The Office for National Statistics said prices declined 0.1% from a year earlier, matching the median forecast of economists in a Bloomberg survey. That’s the third negative reading this year and largely reflects weaker global commodity costs. Core inflation, which excludes volatile food and energy prices, accelerated to 1.1% from 1%. The Bank of England expects inflation to remain low into 2016 before picking up toward its 2% target. BOE Governor Mark Carney has highlighted core inflation as an important measure for policy makers as they weigh when to begin interest rate increases after keeping them at a record low for more than six years.
Consumer-price inflation has been below 1% all this year and less than 2% since the end of 2013. Britain last saw a sustained period of price declines in 1960, according to a historic series constructed by the statistics office. In forecasts published this month, the BOE said inflation is likely to reach its goal in late 2017 and accelerate to 2.2% a year later. Services inflation, a proxy for domestic price growth, was at 2.2% in October. “In the absence of sharp movements in global commodity prices, inflation is likely to accelerate quickly beyond October as the direct impact of past falls in oil drops out,” said Dan Hanson, an economist at Bloomberg Intelligence in London. “Evidence that this is happening is likely to be enough for the BOE to begin monetary tightening in May.”
One thing seems assured: hard-line governments are coming soon. Politically, the West had boundary problems that go way beyond the question of national borders to the core psychology of modern liberalism. When is enough of anything enough? And then, what are you really willing to do about it? The answer lately among the Western societies is to do little and do it slowly. The behavior of college administrators and faculties in the USA these days is emblematic of this cowardly dithering. Intellectual despotism reigns on campus and the university presidents roll over like possums. They don’t have the moral strength to defend free speech as the campus witch-hunts ramp up.
The result will be first the intellectual death of their institutions (brain death), and then the actual death of college per se as a plausible route to personal socioeconomic development. The financial racketeering that has infected higher education — the engineering of the gargantuan college loan scam in tandem with the multiplication of “diversity” deanships and tuition inflation — pretty much guarantees an implosion of that system. The cowardice in the college executive suites is mirrored in our national politics, where no persons of real standing will dare step forward to oppose the juggernaut of Hillary-the-Grifter, or take on the clowning Donald Trump on the grounds of his sheer mental unfittedness to lead a government. In case you haven’t noticed, the center not only isn’t holding, it gave way some time ago.
The long emergency is showing signs of morphing into something like civil war. The Maoists on campus apparently want to turn it into race war, too. So many forces are in motion now and they are all tending toward criticality. The European Union may not survive the reestablishment of boundaries, since it was largely based on the elimination of them. Spain and Portugal are back to breaking down politically again. The Paris bloodbath has discredited Angela Merkel’s plea for “tolerance” — of what is proving to be an intolerable alien invasion. The only political figure on the scene who doesn’t appear to be talking out of his ass is Vlad Putin, who correctly stated at the UN that undermining basic institutions around the world was not a good idea.
What a difference a single massacre can make! • Just a week ago the EU couldn’t possibly figure out anything to do to stop the influx of “refugees” from all those countries the US and NATO had bombed into oblivion. But now, because “Paris changed everything,” EU’s borders are being locked down and refugees are being turned back. • Just a week ago it seemed that the EU was going to be swamped by resurgent nationalism, with incumbent political parties poised to get voted out of power. But now, thanks to the Paris massacre, they have obtained a new lease on life, because they can now safely embrace the same policies that a week ago they branded as “fascist.”
• Just a week ago the EU and the US couldn’t possibly bring themselves admit that they are utterly incompetent when it comes to combating their own creation—ISIS, that is—and need Russian help. But now, at the après-Paris G-20 summit, everybody is ready to line up and let Putin take charge of the war against terrorism. Look—the Americans finally found those convoys of tanker trucks stretching beyond the horizon that ISIS has been using to smuggle out stolen Syrian crude oil—after Putin showed them the satellite photos! Am I being crass and insensitive? Not at all—I deplore all the deaths from terrorist attacks in Iraq, in Syria, in Lebanon, and in all the other countries whose populations did absolutely nothing to deserve such treatment. I only feel half as bad about the French, who stood by quietly as their military helped destroy Libya (which did nothing to deserve it).
Note that after the Russian jet crashed in the Sinai there weren’t all that many Facebook avatars with the Russian flag pasted over them, and hardly any candlelight vigils or piles of wreaths and flowers in various Western capitals. I even detected a whiff of smug satisfaction that the Russians got their comeuppance for stepping out of line in Syria. Why the difference in reaction? Simple: you were told to grieve for the French, so you did. You were not told to grieve for the Russians, and so you didn’t. Don’t feel bad; you are just following orders.
The reasoning behind these orders is transparent: the French, along with the rest of the EU, are Washington’s willing puppets; therefore, they are innocent, and when they get killed, it’s a tragedy. But the Russians are not Washington’s willing puppet, and are not innocent, and so when they get killed by terrorists, it’s punishment. And when Iraqis, or Syrians, or Nigerians get killed by terrorists, that’s not a tragedy either, for a different reason: they are too poor to matter. In order to qualify as a victim of a tragedy, you have to be each of these three things: 1. a US-puppet, 2. rich and 3. dead.
Putin said at the G20 summit that Russia has presented examples of terrorism financing by individual businessmen from 40 countries, including from member states of the G20. “I provided examples related to our data on the financing of Islamic State units by natural persons in various countries. The financing comes from 40 countries, as we established, including some G20 members,” Putin told reporters following the summit. The fight against terrorism was a key topic at the summit, according to the Russian leader. “This topic (the war on the terror) was crucial. Especially after the Paris tragedy, we all understand that the means of financing terrorism should be severed,” the Russian president said. Russia has also presented satellite images and aerial photos showing the true scale of the Islamic State oil trade.
“I’ve demonstrated the pictures from space to our colleagues, which clearly show the true size of the illegal trade of oil and petroleum products market. Car convoys stretching for dozens of kilometers, going beyond the horizon when seen from a height of four-five thousand meters,” Putin told reporters after the G20 summit. The Russian president also said that Syrian opposition is ready to launch an anti-ISIL operation if Russia provides air support. “A part of the Syrian opposition considers it possible to begin military actions against ISIL with the assistance of the Russian air forces, and we are ready to provide that assistance,” the Russian president said. If this happens, the army of Syrian President Bashar Assad, on the one hand, and the opposition, on the other hand, will fight a common enemy, he outlined.
Russian President Vladimir Putin said Monday that the United States has shown a certain willingness to resume cooperation with Russia in several areas. “It seemed to me that, at least at an expert level, at the level of discussing problems, there was, indeed, a clear interest in resuming work in many areas, including the economy, politics, and the security sphere,” Putin told reporters. Vladimir Putin said that Russia needs support from the US, Saudi Arabia and Iran in the fight against terrorism. “It’s not the time to debate who is more effective in the fight against ISIL, what we need to do is consolidate our efforts,” president Putin added.
“Assuming there were higher powers behind the Russian plane bombing than just a bunch of cave-dwelling a la carte terrorists, those arrested may just be tempted enough by the $50 million award to reveal who the mastermind behind this particular terrorist attack was.”
The world may have moved on from the tragic terrorist attack that took place just three weeks ago above Egypt’s Sinai peninsula, which killed all 224, but for some inexplicable reason Russia refused to admit what was obvious to most from the first minutes since ISIS released a video clip of the midair explosion: that the crash was the result of a bomb set to go off shortly after take off. But no longer. Moments ago the Kremlin confirmed for the first time on Tuesday that a bomb did bring down a Russian passenger plane that crashed over the Sinai Peninsula in Egypt on Oct. 31, killing all 224 people on board. “One can unequivocally say that it was a terrorist act,” Alexander Bortnikov, the head of Russia’s FSB security service, told a meeting chaired by President Vladimir Putin.
Bortnikov added that during the flight, a homemade device with the power of 1.5 kilograms of TNT was detonated. “As a result, the plane fell apart in the air, which can be explained by the huge scattering of the fuselage parts of the plane.” This not the first time that Russia has faced “barbarous terrorist crimes, more often without apparent causes, outside or domestic, as it was with the explosion at the railway station in Volgograd at the end of 2013.” Bortnikov added: “We haven’t forgotten anything or anyone. The murder of our nationals in Sinai is among the bloodiest crimes in [terms of] the number of casualties.” Putin also spoke, vowing to find and punish the culprits behind the Sinai plane attack. “Our military work in Syria must not only continue. It must be strengthened in such a way so that the terrorists will understand that retribution is inevitable.”
“The murder of our people in Sinai is among the bloodiest crimes in terms of the number of victims. We won’t wipe the tears out of our souls and hearts. This will remain with us forever. But it won’t stop us from finding and punishing the perpetrators.” According to RT, Russia will act in accordance with Article 51 of the UN Charter, which provides for countries’ right to self-defense, Putin said. “Those who attempt to assist criminals should be aware that the consequences of such attempts will be entirely their responsibility,” he added. Finally, just to make sure Russia gets its blood debt repaid, The Russian Federal Security Service director also announced a reward of $50 million for information on those behind the terror attack on the A321.
More than half the nation’s governors – 27 states – say they oppose letting Syrian refugees into their states, although the final say on this contentious immigration issue will fall to the federal government. States protesting the admission of refugees range from Alabama and Georgia, to Texas and Arizona, to Michigan and Illinois, to Maine and New Hampshire. Among these 27 states, all but one have Republican governors. The announcements came after authorities revealed that at least one of the suspects believed to be involved in the Paris terrorist attacks entered Europe among the current wave of Syrian refugees. He had falsely identified himself as a Syrian named Ahmad al Muhammad and was allowed to enter Greece in early October.
Some leaders say they either oppose taking in any Syrian refugees being relocated as part of a national program or asked that they be particularly scrutinized as potential security threats. Only 1,500 Syrian refugees have been accepted into the United States since 2011, but the Obama administration announced in September that 10,000 Syrians will be allowed entry next year. The Council on American-Islamic Relations said Monday, “Defeating ISIS involves projecting American ideals to the world. Governors who reject those fleeing war and persecution abandon our ideals and instead project our fears to the world.”
Authority over admitting refugees to the country, though, rests with the federal government – not with the states – though individual states can make the acceptance process much more difficult, experts said. American University law professor Stephen I. Vladeck put it this way: “Legally, states have no authority to do anything because the question of who should be allowed in this country is one that the Constitution commits to the federal government.” But Vladeck noted that without the state’s participation, the federal government would have a much more arduous task. “So a state can’t say it is legally objecting, but it can refuse to cooperate, which makes thing much more difficult.”
Canada’s prime minister Justin Trudeau has faced calls to delay bringing in 25,000 Syrian refugees by the end of the year due to security concerns prompted by the Paris terror attacks. While an online petition against fast-tracking Syrian asylum seekers’ bids to relocate to Canada gained steam, the premier of Saskatchewan province, Brad Wall, urged the prime minister to “suspend” the move. “I understand that the overwhelming majority of refugees are fleeing violence and bloodshed and pose no threat to anyone,” Wall wrote in an open letter. “However, if even a small number of individuals who wish to do harm to our country are able to enter Canada as a result of a rushed refugee resettlement process, the results could be devastating,” he added.
The Islamic State group has claimed responsibility for the bomb and gun attacks that killed at least 129 people in Paris on Friday. In another part of Canada, Quebec Immigration Minister Kathleen Weil said it was still ramping up to welcome the refugees, adding she is confident security will not be compromised. “I did get assurances from [Immigration Minister John] McCallum and [Public Safety Minister] Ralph Goodale that all the measures are being taken to ensure that the newcomers have been properly vetted.” Dueling online petitions for and against a delay, meanwhile, had amassed more than 55,000 and 25,000 signatures, respectively by midday Monday. One cited “national security” concerns in asking for a postponement, while the other blasted the first for stoking “despicable and inhumane xenophobic” attitudes.
The UN has warned of months of extreme weather in many of the world’s most vulnerable countries with intense storms, droughts and floods triggered by one of the strongest El Niño weather events recorded in 50 years, which is expected to continue until spring 2016. El Niño is a natural climatic phenomenon that sees equatorial waters in the eastern Pacific ocean warm every few years. This disrupts regular weather patterns such as monsoons and trade winds, and increases the risk of food shortages, floods, disease and forest fires. This year, a strong El Niño has been building since March and its effects are already being seen in Ethiopia, Somalia, Kenya, Malawi, Indonesia and across Central America, according to the World Meteorological Organisation. The phenomenon is also being held responsible for uncontrolled fires in forests in Indonesia and in the Amazon rainforest.
The UN’s World Meteorological Organization warned in a report on Monday that the current strong El Niño is expected to strengthen further and peak around the end of the 2015. “Severe droughts and devastating flooding being experienced throughout the tropics and sub-tropical zones bear the hallmarks of this El Niño, which is the strongest in more than 15 years,” said WMO secretary-general Michel Jarraud. Jarraud said the impact of the naturally occurring El Niño event was being exacerbated by global warming, which had already led to record temperatures this year. “This event is playing out in uncharted territory. Our planet has altered dramatically because of climate change,” he said. “So this El Niño event and human-induced climate change may interact and modify each other in ways which we have never before experienced. El Niño is turning up the heat even further.”
In 1997, the phenomenon led to severe droughts in the Sahel and the Indian subcontinent, followed by devastating floods and storms, which killed thousands of people and caused billions of dollars of damage across Asia, Latin America and and Africa. The WMO said countries are expected to be much better prepared for a strong El Niño now than they were in 1997, but governments and charities are warning of serious food shortages and floods. “While difficult to predict, the El Niño this year looks set to be the strongest on record. This is a real threat to people’s lives, health and livelihoods across the world, which will see increased calls for humanitarian assistance as people struggle to grow crops, face water shortages and disease,” said a spokeswoman at Britain’s Department for International Development.
Greek authorities say 1,244 refugees and economic migrants have been rescued from frail craft in danger over the past three days in the Aegean Sea, as thousands continue to arrive on the Greek islands. A coast guard statement Monday said rescuers responded to a total 34 incidents since Friday morning, near the islands of Lesbos — where most migrants head — Chios, Samos, Kos, Kalolimnos and Megisti. The count does not include thousands more people who safely made the short but often deadly crossing from nearby Turkey’s western coast.
Greece’s coast guard says a plastic boat carrying refugees or migrants has overturned near the coast of the eastern Aegean island of Kos, killing at least eight people. The coast guard said Tuesday it had rescued seven people and had located eight bodies, two of which were still trapped inside the overturned vessel. Crews were searching for between three and five more people listed as missing. It was not immediately clear how the boat overturned, or what the passengers’ nationality was.
Japan has slid back into recession for the fifth time in seven years amid uncertainty about the state of the global economy, putting policymakers under growing pressure to deploy new stimulus measures to support a fragile recovery. The world’s third-largest economy shrank an annualised 0.8% in July-September, more than a market forecast for a 0.2% contraction, government data showed on Monday. That followed a revised 0.7% contraction in the previous quarter, fulfilling the technical definition of a recession which is two back-to-back quarterly contractions. It is the fifth time Japan has entered recession since 2008, a so-called “quintuple dip”. The Nikkei share average dipped sharply by at the opening of trade on Monday as the poor figures compounded nervousness on markets in the wake of the Paris terror attacks.
But it recovered to just 1% down at lunchtime on the hope that the news would force policymakers to launch another round of stimulus measures. “The headline was weak, but the market is shifting to expectations for more measures,” said Mitsushige Akino at Ichiyoshi Asset Management. The yen rose slightly, reflecting its safe haven status against the euro. But the outlook for the Japanese economy remains weak. Many analysts expect the economy to grow only moderately in the current quarter as companies remain hesitant to use their record profits for wage rises, underscoring the challenges premier Shinzo Abe faces in pulling the country out of stagnation with his “Abenomics” stimulus policies. The dismal reading may affect debate among politicians and policymakers on how much fiscal spending should be earmarked in a supplementary budget that is expected to be compiled this fiscal year.
Stock markets in Asia Pacific have fallen sharply in the wake of the Paris terror attacks and downbeat economic data. Leading the losers was the Nikkei index in Japan which tumbled nearly 1.3% as official figures showed that the country’s economy had entered recession for the fifth time in seven years. The widely tracked CBOE volatility index or “fear gauge” was at its highest level since 2 October and bourses in Australia, South Korea and Hong Kong all saw substantial falls of more than 1% in early trading. In Europe, futures trade pointed to sharp falls in the main markets with the FTSE100 predicted to be down 40 points or around 0.6% at the open and the Dax in Germany down 1%. The French financial markets were due to open as usual on Monday, with extra security measures taken for staff, stock and derivatives, the Euronext exchange said.
The CAC40 French bourse was set to open 2% lower on Monday. With concerns about how European leaders would respond to the Paris attacks, the euro was sold heavily in Asian trading and fell to a six-month low of $1.071. Global security concerns were better news for some commodities, however, as Brent crude oil was up 1% at $44.92 a barrel after shedding 1% on Friday. US crude was up about 0.54% at $40.96 a barrel. Gold added about 0.5% to stand at $1,091.96 an ounce. “Risk aversion is on the rise and we are seeing broad-based U.S. dollar strength across the board and this may continue until the year end as recent economic data has also disappointed,” said Mitul Kotecha, head of Asian FX and rates strategy at Barclays in Singpore.
America’s busiest ports are sending a warning about the U.S. economy. For the first time in at least a decade, imports fell in both September and October at each of the three busiest U.S. seaports, according to data from trade researcher Zepol Corp. analyzed by The Wall Street Journal. Combined, imports at the container terminals at the ports of Los Angeles, Long Beach, Calif. and around New York harbor, which handle just over half of the goods entering the country by sea, fell by just over 10% between August and October. The declines came during a stretch from late summer to early fall known in the transportation world as peak shipping season, when cargo volumes typically surge through U.S. ports.
It is a crucial few months for the U.S. economy as well: High import volumes can signal a confident view on the economy among retailers and manufacturers, while fears of a slowdown grow when ports are quiet. Economists are divided as to whether the peak season slump signals a short-term hiccup for the U.S. economy, or marks the start of a sustained period of weakness. Some say the slump is being driven by businesses that have cut back on imports because of a weak economic outlook, which could point to sluggish global growth ahead. Others say it is a side effect of a massive inventory buildup that took place earlier in the year. Despite the weak peak, imports in the first 10 months of the year at the nation’s busiest ports are still up 4% from a year earlier, Zepol data show.
Rather than ordering huge shipments of goods in the late summer and early fall, more businesses are stocking up throughout the year and holding on to inventories for longer. “There was a little bit of overdoing it in the beginning of the year,” said Ethan Harris at Bank of America Merrill Lynch. “Once we adjust to it, I would expect that business picks up again, shipping picks up again, container imports should pick up again.” But the missing peak season has been a major headache for trucking companies, railroads and steamship lines. One large maritime carrier, Singapore’s Neptune Orient Lines, told investors there was “no peak season” in North America as an explanation for a $96 million quarterly loss.
Some of the country’s biggest trucking companies and railroads have recently reported weaker-than-expected earnings. Many have cut the rates they charge customers as demand sagged during what is usually their strongest months. For trucking companies in particular the turnabout has been abrupt, with some companies pivoting from expressing concerns about tight capacity to worries about future profits in the space of a few weeks. Whether it proves a temporary drag or not, the inventory unwind has a long way to go. Nationwide, the seasonally adjusted ratio of inventories to sales at U.S. retailers, wholesalers and manufacturers in September was at 1.38, up from 1.31 in September 2014 and the highest reading for that month since 2001, according to the U.S. Census Bureau.
Something very strange is happening in the world of fixed income. Across developed markets, the conventional relationship between government debt – long considered the risk-free benchmark – and other assets has been turned upside-down. Nowhere is that more evident than in the U.S., where lending to the government should be far safer than speculating on the direction of interest rates with Wall Street banks. But these days, it’s just the opposite as a growing number of Treasuries yield more than interest-rate swaps. The same phenomenon has emerged in the U.K., while the “swap spread” as it’s known among bond-market types, has shrunk to the smallest on record in Australia.
Part of it simply has to do with the fact that investors are pushing up yields on Treasuries – which guide rates for just about everything – as the Federal Reserve prepares to raise borrowing costs for the first time in a decade. But in many ways, it reflects the unintended consequences of post-crisis rules designed to make the financial system stronger. Those changes have made it cheaper and safer to use derivatives to hedge risk, and more onerous and expensive for bond dealers to make markets in the safest securities. “These kinds of dislocations can be expected to grow over time,” said Aaron Kohli at Bank of Montreal, one of 22 primary dealers that trade directly with the Fed. “The market structure and regulatory structure has evolved in a period with very low volatility. Once you take that away, it’s not clear what the secondary implications of that will be.”
It’s hard to overstate how illogical it is when swap spreads are inverted. That’s because it suggests that governments are less creditworthy than the very financial institutions they bailed out during the credit crisis just seven years ago. And as the Fed prepares to end its near-zero rate policy, those distortions are coming to the fore. The rate on 30-year swaps, which allow investors, companies and traders to exchange fixed interest rates for those that fluctuate with the market, and vice versa, has been lower then comparable yields on Treasuries for years now as pension funds and insurers increasingly hedged their long-term liabilities. But in the past three months, spreads on shorter-dated contracts have also quickly turned negative. Now, five-year swap rates are 0.05 percentage points lower than similar-maturity Treasuries, while those due in three years are also on the verge of flipping.
Investors betting that China won’t take another run through the bull’s market shop ought to be careful. Things are looking more settled than in August, when a surprise devaluation by China sent paroxysms through global markets. Stocks in developed countries have mostly recovered, even as investors contend with the likelihood the Federal Reserve will raise rates. One possible reason for the calm is that investors may have reckoned that China, having backed off after witnessing the problems that it unleashed in August, is loath to repeat the experience. Indeed, the value of the yuan has been remarkably stable since the summer’s policy change. But this may have only created a false sense of security among investors. A decision expected later this month from the IMF on whether to include the yuan in its reserve currency basket may have China holding off on any sudden moves.
Once that decision is made, China may feel freer to let the currency fall. If so, it wouldn’t take much to unsettle markets again. This summer’s yuan devaluation was relatively minor, falling by just 3% versus the dollar over three days. Yet it set off fears of a series of competitive devaluations. Other currencies fell against the dollar, and commodity prices came under heavy pressure. One reason that is such a concern: In recent years, there has been a marked increase in dollar-denominated lending outside the U.S., much of it coming through bond issuance rather than banks, and much of it destined for emerging-market borrowers. The Bank for International Settlements estimates that the amount of dollar-denominated credit extended to nonbanks outside the U.S. reached $9.7 trillion in the first quarter this year, from $5.3 trillion at the end of 2007.
For commodity producers straining under dollar debt loads, like Brazil, the pain can be acute. The MSCI Emerging Markets Index, which had already been under pressure this summer, fell by 13% in two weeks after China’s move. It has since gained back much of that lost ground. So what happens next? The “X” factor is Chinese capital flows. Part of the reason China blinked in August is that the move triggered a large outflow of cash. This is inherently destabilizing because it undermines the ability of China’s central bank to keep the financial system liquid. For years, China relied on inflows to boost money supply. When money is flowing out, banks starve for cash.
China’s biggest banks aren’t happy about being included in international rules that require them to raise extra capital to protect taxpayers in the event of a renewed bout of financial turmoil. It’s hard not to sympathize.China, after all, wasn’t responsible for the global financial crisis. Unlike in the U.S. or Europe, not a single bank collapsed. The country sailed through the upheaval largely unscathed, cushioned by a record $586 billion stimulus plan.Seven years after the collapse of Lehman, the total loss-absorbing capacity, or TLAC, rule is all about the tender loving care of the general public. The idea is that by making banks sell bonds that are explicitly exposed to losses, a lender that fails can be wound down and recapitalized without the government having to resort to taxpayer-funded bailouts.
Here again, China has cause for complaint. The TLAC rule is designed for a world in which systemically important banks, and the bond investors who funded them, could engage in risky behavior without having to bear the consequences. A world of moral hazard, in other words. Creditors of a bank were implicitly relying on the state to back them up and therefore didn’t pay much attention to what the institutions were doing, as Mark Carney, head of the Financial Stability Board, which designed the rule, noted last week. Governments poured hundreds of billions of dollars into banks after the 2008 crisis: Much of that went to rescue bondholders, whose claims were equal to those of depositors.
But China doesn’t work like that. All the biggest and most systemically important banks in China are controlled by the state, so the country isn’t exposed to the kind of moral hazard that laid waste to public finances in the U.S. and Europe. And Chinese taxpayers will ultimately remain on the hook for anything major that goes wrong with those banks, with or without a TLAC rule. The FSB included China’s four biggest lenders on its list of the world’s too-big-to-fail institutions: Industrial & Commercial Bank of China, Bank of China, China Construction Bank and Agricultural Bank of China. They lobbied hard to be excluded, using various reasons in their submissions, including the fact that customer deposits account for a large proportion of total liabilities, making for a lower liquidity risk than for banks whose focus is primarily on wholesale funding.
There are practical as well as philosophical objections. To meet the board’s requirements, Chinese banks may have to sell as much as 4.4 trillion yuan ($690 billion) of securities, according to ICBC’s estimates. That’s going to be a challenge, to put it mildly, in a bond market with a total size of about $5.2 trillion. China’s bond market has been growing, though it remains equal to only about half the size of the country’s $10.4 trillion economy. The U.S. bond market, by contrast, is about one and a half times the size of the economy. What’s worse, the biggest players in China’s bond market are…Chinese banks. Since lenders aren’t allowed to buy each others’ bonds for TLAC purposes (for obvious reasons), that means the effective size of the bond market is even smaller.
Chinese firms listed in New York are finding out the hard way that it’s easier to love global investors than leave them. As dozens plan buyouts and a return home in search of higher valuations, companies that were once Wall Street’s darlings for the first time face the wrath of minority shareholders. Asset managers are publicly demanding better premiums, reflecting historical valuations and not 2015’s slide. In deals collectively worth $40 billion, some 33 mainland China companies have unveiled plans this year to be taken private and delisted from the Unites States, according to Thomson Reuters data. But a cottage industry of hedge funds and lawyers is coalescing around those determined not to accept low-ball bids for their assets.
“We want to put as much pressure as possible,” said portfolio manager Lin Yang at FM Capital, a Britain-based hedge fund backed by the Libyan sovereign wealth fund that owns 1.4% of medical firm China Cord Blood. FM Capital is urging a group of mainland China investors to raise a buyout offer, saying the shares are worth 2.5 times the proposed bid. “If no shareholder challenges the offer, it will go through on the cheap,” said Lin. Peaking at a valuation of $615 million in August this year, China Cord Blood’s market capitalization has shrunk to just over $500 million; the bid was made in late April, valuing the target at $512 million.
There’s no deadline for the China Cord Blood buyout offer is and it’s unclear what the outcome will be; the company didn’t respond to email seeking comment. But minority investors have scored notable successes this year: In one case, Chinese investment firm Vast Profit Holdings raised by 34% a March buyout offer that initially valued dating service Jianyuan.com at $178.9 million after pressure from U.S. asset manager Heng Ren Investments and others.
Over the last few months, a great deal of attention has been devoted to financial-market volatility. But as frightening as the ups and downs of stock prices can be, they are mere froth on the waves compared to the real threat to the global economy: the enormous tsunami of debt bearing down on households, businesses, banks, and governments. If the US Federal Reserve follows through on raising interest rates at the end of this year, as has been suggested, the global economy – and especially emerging markets – could be in serious trouble. Global debt has grown some $57 trillion since the collapse of Lehman Brothers in 2008, reaching a back-breaking $199 trillion in 2014, more than 2.5 times global GDP, according to the McKinsey Global Institute.
Servicing these debts will most likely become increasingly difficult over the coming years, especially if growth continues to stagnate, interest rates begin to rise, export opportunities remain subdued, and the collapse in commodity prices persists. Much of the concern about debt has been focused on the potential for defaults in the eurozone. But heavily indebted companies in emerging markets may be an even greater danger. Corporate debt in the developing world is estimated to have reached more than $18 trillion dollars, with as much as $2 trillion of it in foreign currencies. The risk is that – as in Latin America in the 1980s and Asia in the 1990s – private-sector defaults will infect public-sector balance sheets. That possibility is, if anything, greater today than it has been in the past.
Increasingly open financial markets allow foreign banks and asset managers to dump debts rapidly, often for reasons that have little to do with economic fundamentals. When accompanied by currency depreciation, the results can be brutal – as Ukraine is learning the hard way. In such cases, private losses inevitably become a costly public concern, with market jitters rapidly spreading across borders as governments bail out creditors in order to prevent economic collapse. It is important to note that indebted governments are both more and less vulnerable than private debtors. Sovereign borrowers cannot seek the protection of bankruptcy laws to delay and restructure payments; at the same time, their creditors cannot seize non-commercial public assets in compensation for unpaid debts. When a government is unable to pay, the only solution is direct negotiations. But the existing system of debt restructuring is inefficient, fragmented, and unfair.
The deadline to dispense further rescue loans to debt stricken Greece was extended by eurozone countries once again on Sunday amid continuing deadlock between Athens and its creditors. With negotiations still bogged down over failure to agree on a new foreclosure law – legislation the leftist-led government says would push austerity-hit Greeks over the edge – lenders postponed a critical Eurogroup Working Group until Tuesday. The meeting, a final assessment of the reform progress Athens has made since it signed up to a third bailout in July, is crucial to unlocking €2bn in rescue loans and €10bn for the recapitalisation of Greek banks. Finance ministers gathered in Brussels last week had insisted talks should be concluded by Monday, to trigger the release of the next instalment of the €86bn euro bailout programme.
But announcing the delay, Jeroen Dijsselbloem who chairs the Eurogroup of euro area finance ministers, also heaped praise on Greece saying headway had been made. “I welcome that good progress has been made between the Greek authorities and the institutions in the discussions on the measures included in the first set of milestones,” the Dutch politician said in a statement Sunday. “Agreement has been reached on many issues.” The Eurogroup Working Group sets the tone for decisions taken by finance ministers representing EU member states in the single currency. Talks were meant to have been completed by mid-October but have repeatedly stalled on the issue of how much protection local home-owners should be given in the event of defaulting on mortgages. Greek banks have been weighed down by a mountain of bad loans with lenders claiming that many are the result of strategic defaulters deliberately failing to keep up with payments.
“From next year EU “bail-in” rules take effect. Then the Italian government will no longer simply be able to bail out banks but will have to make bondholders and depositors pay up first.”
Yoram Gutgeld last week made one of the most astonishing economic statements I have heard in a long time. The adviser to PM Matteo Renzi said in an interview that Italy’s economy was immune to global developments for the next 12 to 24 months because of the tax cuts and reforms of the present administration. The idea that a G7 club of rich nations is immune to the global economy is ludicrous. This is the 21st century. Granted, Mr Gutgeld may have spoken as the prime minister’s spin-doctor. That is part of his job. But what worries me is that the Italian government is not ready for when the impact of the slowdown in China and emerging markets hits Europe. Friday’s preliminary figures for eurozone GDP show that the slowdown has started. Italy’s quarter-on-quarter growth rates have been falling: from 0.4% in the first quarter to 0.3% in the second to 0.2% in the third.
Italy’s ability to sustain a healthy rate of growth is critical — for the country’s political stability, for its young people with no hope of finding work, for debt sustainability and in particular for its future in the eurozone. The euro has brought Italy nothing but stagnation. Real GDP is now at the same level as at the start of 2000, a year after the euro was launched. GDP today is 9% below the pre-crisis level in early 2008. If Italy fails to bounce back strongly from this recession, it is hard to see how it can stay in the eurozone. At some point it might well be in the country’s undisputed economic self-interest to leave and devalue. So when we ask whether the economic recovery is sustainable, we are not having a technical dialogue about economics. We are talking about Italy’s future in Europe.
There are three reasons why I am sceptical. The first is evident in last Friday’s GDP data. Italy is not exceptional. The second reason is the lack of restructuring of Italian banks. The stock of non-performing loans as a percentage of all loans is about 10%, which is close to the peak level in the current cycle. Many of the small and medium-sized banks are in effect insolvent. The clean-up of the banking system — following the 2008 crisis and the two subsequent recessions — has yet to happen. If it does, it will take place in a much tougher regulatory environment. From next year EU “bail-in” rules take effect. Then the Italian government will no longer simply be able to bail out banks but will have to make bondholders and depositors pay up first.
Can we be sure the rotten banks will continue to sustain the recovery in this environment? My third concern is Mr Renzi’s fiscal policy choices. His priority has been to ensure that these create more winners than losers. This is exactly what Silvio Berlusconi did when prime minister. And it should come as no surprise that Mr Renzi ends up with similar policies. Instead of reforming the public administration or the judiciary, he has opted for a cut in the housing tax. This will win votes but will not deliver the change to the economy. We have been here before.
An unprecedented number of migrants from Asia, Africa and the Middle East have headed for Europe this year in their quest for safety and prosperity. Yet for almost a quarter of its youths, the continent is no wonderland. On average, 23% of Europeans aged between 18 and 24 years old are contemplating moving to another country to escape the financial situation at home, according to a report by Intrum Justitia, Europe’s biggest debt collector. “What our survey shows is that many young people in several parts of Europe are considering moving to other countries and that is sad since it indicates that many young people lack hope for their economic future,” Erik Forsberg, Intrum Justitia’s acting CEO, said in the report. Still, the refugees who are escaping violent conflicts and coming to Europe “is another, much more acute problem,” he said.
What’s perhaps no coincidence, some of the highest percentages in the survey involve countries that have been the least welcoming of refugees. Hungary, which built a razor-wire fence along its southern border to keep them out, topped the survey with 60% of its young people considering a move. Poland and Slovakia, both unhappy with redistributing refugees across the EU, followed with 41% and 40%, respectively. The percentage of those considering a move abroad was also well above 30% in Italy, Portugal and Greece, according to the company’s European Consumer Payment Report, which surveyed 22,400 people in 21 countries. Those numbers correlate closely with national youth unemployment rates.
They underscore the quandary facing many EU nations – particularly those still grappling with the fallout from Europe’s debt crisis – when it comes to dealing with the hundreds of thousands of asylum seekers arriving from Syria and other war zones in the Middle East. Some of their governments tend to justify their reluctance to welcome refugees by arguing that they already have enough to cope with trying to provide for their own citizens. At about 21%, the average unemployment rate for Europeans under age 25 is double the overall jobless rate for the 28-member bloc. While 67% of those surveyed said they had “a reasonable chance of substantially improving their economic situation in life,” 17% see no prospect of a better life. One in five of those polled expect their children to be worse off financially.
German Chancellor Angela Merkel pushed back against critics of her open-door policy on refugees, saying those fleeing war zones shouldn’t have to bear the blame for the terrorist attacks in Paris. Merkel’s comments during a Group of 20 summit in the Turkish coastal resort of Antalya Sunday were a rebuff to domestic opponents who cited the slaughter in the French capital as evidence that the chancellor must reverse her stance and turn people away. A statement by the Greek authorities that raised the possibility one of the assailants may have entered Europe posing as a refugee raised the pressure on Merkel still further. She hit back in her only public comments on the first day of the two-day summit of world leaders that’s taking place in the shadow of the Paris attacks.
Merkel called for a swift investigation into the motives behind the terrorist carnage to “find out who the perpetrators were, who’s behind them and what connections there were.” “We owe it to the victims and their relatives, but also for the sake of our own security,” Merkel told reporters. “And we owe it to all the innocent refugees who are fleeing from war and terrorism.” Merkel said she’d discuss efforts to resolve the Syrian conflict with Russian President Vladimir Putin late Sunday, then again in a one-on-one meeting with U.S. President Barack Obama on Monday, as she steps up her international diplomacy aimed at stemming the flow of refugees to Europe.
In Germany, some among her political allies stoked further tension over the projected arrival of some one million refugees this year alone. Friday night’s attack in Paris “changes everything,” Markus Soeder, a member of the Bavarian state government, said in a Twitter post. Merkel said that G-20 leaders, who will release a statement Monday on fighting the terrorist threat, were sending a “decisive signal” that all forms of terrorism will be defeated. A key element is resolving the war in Syria peacefully and as soon as possible, she said. “We all know that time is running out to return hope to the millions of refugees,” Merkel said. “It’s also completely clear – and that’s borne out by the discussions here – that we have to tackle the root cause of where the refugees are coming from.”
Two U.S. states have said they will not allow the resettlement of Syrian refugees following the terrorist attacks in Paris that killed 129 people on Friday. Alabama Governor Robert Bentley said in a statement Sunday that he would oppose any attempt to relocate Syrian refugees to Alabama through the U.S. Refugee Admissions Program. “The acts of terror committed over the weekend are a tragic reminder to the world that evil exists and takes the form of terrorists who seek to destroy the basic freedoms we will always fight to preserve,” he said in a statement issued Sunday. “I will not place Alabamians at even the slightest, possible risk of an attack on our people.”
There have been no Syrian refugees relocated in Alabama to date, Bentley said, but added that the Alabama Law Enforcement Agency is working with the Federal Bureau of Investigation, Department of Homeland Security and federal intelligence partners to monitor any possible threats. The statement added that law enforcement presence had been increased at big events in Alabama to further insure the safety of citizens. It added that there had been no credible intelligence of any terrorist threats in the state. The news came at the same time as the local media in Detroit reported Michigan state would look to take similar action.
Governor Rick Snyder’s office released a statement Sunday saying it would not be accept any Syrian refugees until the U.S. Department of Homeland Security fully reviewed its procedures, according to the Detroit Free Press. “Michigan is a welcoming state and we are proud of our rich history of immigration,” Snyder said in the statement, according to the news publication. “But our first priority is protecting the safety of our residents.” Kristine Van Noord, a refugee program manager for Bethany Christian Services in Michigan, told a local radio station in October that the organization settled 27 Syrian refugees in the last fiscal year and was expecting the number for next year to be “much, much higher.” President Barack Obama has previously stated that his administration would accept at least 10,000 displaced Syrians over the next year.
The collapse of two dams at a Brazilian mine has cut off drinking water for quarter of a million people and saturated waterways downstream with dense orange sediment that could wreck the ecosystem for years to come. Nine people were killed, 19 are still listed as missing and 500 people were displaced from their homes when the dams burst at an iron ore mine in southeastern Brazil on Nov. 5. The sheer volume of water disgorged by the dams and laden with mineral waste across nearly 500 km is staggering: 60 million cubic meters, the equivalent of 25,000 Olympic swimming pools or the volume carried by about 187 oil tankers.
President Dilma Rousseff compared the damage to the 2010 oil spill by BP in the Gulf of Mexico and Environment Minister Izabella Teixeira called it an “environmental catastrophe.” Scientists say the sediment, which may contain chemicals used by the mine to reduce iron ore impurities, could alter the course of streams as they harden, reduce oxygen levels in the water and diminish the fertility of riverbanks and farmland where floodwater passed. Samarco Mineração, a joint venture between mining giants Vale and BHP Billiton and owner of the mine, has repeatedly said the mud is not toxic. But biologists and environmental experts disagree. Local authorities have ordered families rescued from the flood to wash thoroughly and dispose of clothes that came in contact with the mud.
“It’s already clear wildlife is being killed by this mud,” said Klemens Laschesfki, professor of geosciences at the Federal University of Minas Gerais. “To say the mud is not a health risk is overly simplistic.” As the heavy mud hardens, Laschesfki says, it will make farming difficult. And so much silt will settle along the bottom of the Rio Doce and the tributaries that carried the mud there that the very course of watershed could change. “Many regions will never be the same,” he says.
This article is an attempt to chart what might happen in terms of climate change, both in terms of science, and particularly the potential politics, if we see a serious financial collapse followed by further contraction due to peaking energy and resources. Despite this being quite a likely scenario, there is barely anything written on the topic. Peak oilers, often end up thinking that we don’t need to worry about climate change because peak energy will take care of it for us. I think this view is strongly mistaken. While it is true that peak energy leads to less emissions than would otherwise be possible, we still end up in the zone of highly likely runaway climate change, and there will still be much that needs doing on an activist front in order to minimise our risk.
On the other hand, climate change activists are often blind to the possibility of financial collapse or even peak energy collapse. Accordingly, I think their strategies are based on business as usual continuing, which I don’t think is realistic. Climate change activists tend to already know that their hopes to create a mass movement that will convince governments to act, and act enough, are likely to fail, but it’s a long shot worth fighting for if the current context is all you have to go on. What I’m offering below is simply an alternative long shot, one I think is more likely to succeed, considering it is based more on the short term interests of the population rather than long term interests, which are harder to get people active on.
Below is a brief analysis of what financial collapse means for the climate, followed by an analysis of potential political scenarios, and particular detail on what I see as the most likely strategies to create a safe climate. These include a decentralised movement to reduce greenhouse gas concentrations, emphasising a shift to permaculture and appropriate technology, the continuation of the anti-emissions movement, a mass movement mobilising to take what’s left of our industrial capacity out of the hands of elites, and put it into good use drawing down carbon, remediating the planet and providing for our needs. This scenario could definitely be seen as an unlikely long shot; however, considering the situation we find ourselves in, a long shot is much better than no shot.
Large swathes of the northern hemisphere, home to some 2 billion people, could suffer increasing water shortages due to shrinking snowpacks, researchers said on Thursday. Data shows reduced snowpacks – the seasonal accumulation of snow – will likely imperil water supplies by 2060 in regions from California’s farmlands to war-torn areas of the Middle East, according to a team of scientists in the United States and Europe. In total, nearly a hundred water basins dependent on snow across the northern hemisphere run the chance of decline. “Water managers in a lot of places may need to prepare for a world where the snow reservoir no longer exists,” said Justin Mankin, the study’s lead author and a researcher at Columbia University’s Earth Institute in New York, in a statement.
Basins in northern and central California, the Ebro-Duero basin in Portugal, Spain and southern France and the Shatt al-Arab basin affecting much of the Middle East including Iraq and Syria count among those most sensitive to changes, the study shows. In these areas, global warming is disrupting snow accumulation, which acts as a seasonal source of water when it melts, the researchers said. Still, across most of North America, northern Europe, Russia, China and southeast Asia, rainfall is projected to continue meeting demand, according to the study published in the online journal Environmental Research Letters. Earlier this year, amid a devastating drought in California, U.S. authorities reported that a dry, mild winter had left the country’s Western mountain snowpack at record low levels.
9/11, 3/11, 7/7, 11/13 = New York, Madrid, London, Paris
Better to wait a day before writing, after a night like that. What does one write after such a night anyway? And why write anything at all if you can be dead sure to always antagonize some one on some side of some spectrum, ideological or not, no matter what you write, unless you tag some safe official line, and even then, or especially then?
Better to soak in what the official media have to say, or so one might think. After all, they got all the resources and the reporters and the analysts and -access to- the politicians, and most of all the attention of the people.
Unfortunately, all that firepower -pun intended- is used only to tag official lines. To provide air space to ‘leaders’ who profess their utmost grief and sadness and anger and solidarity over barbarous criminal “acts of war” that they swear will be avenged with all the power they have. It’s so predictable it’s like all of their spin doctors have been sent on a Caribbean holiday at the same time, and together.
Still, it also doesn’t seem very appropriate to address the economic issues we usually talk about, at least not at first glance. Respect for victims and families must come first, that is a given. Then again, it does seem appropriate, out of that very same respect, to get to the bottom of what’s behind these attacks that will at final count leave perhaps 200 people dead on what started as a nice and balmy autumn evening in the city of lights. And the politicians’ truisms and platitudes don’t exactly help.
But how does one go about that truth finding? French President Hollande declared eerily early in the ‘game’ he was sure ISIS is behind the tragedy, and ISIS statements seem to confirm that conclusion. But what is ISIS? And where does it come from?
It’s no longer really credible to entirely ignore the role of the west, including France, in the origins of the ‘movement’, if it can be called that. From Al Queda to ISIS, and scores of groups and factions in between and beyond, there is at least some kind of link to western military action in the middle East. And that link goes back quite a few years, if not decades.
So if we really want to pay the kind of respect to the victims that comes with trying to figure out what’s behind these attacks, it would seem that we can’t get it done without a critical look at our own roles in what led up to this. Not to say that we’re the only guilty party, or that the perpetrators are not cuckoos, but to say we’re not credible if we completely ignore our own roles and don’t look in a mirror.
Hence, the first reaction we probably might want to have is that it’s enough alright with the ‘us’ vs ‘them’ meme. Even if, or exactly because, that reaction is, obviously, 180º removed from what the initial reactions to the attacks are, whether they’re provoked by media coverage or not. And they are. It cannot be only ‘us’ vs ‘them’. No black, no white. To understand this world you need a lot more than that.
If we try to phrase it that way, and we’re only halfway decent and honest about it, there’s no escaping that in the final analysis we indeed are them. We’re not like them, we are them. ‘We’ have spread terror, death and mayhem across the Middle East and North Africa (MENA) regions for a long time (to a large extent because that’s where the oil is, but that’s a story for a different day).
And then ‘we’ took it up a notch with the removal of the likes of Saddam and Gaddafi, leaving rudderless societies in their wake.
We can’t pretend to be honest and still ignore the fact that for many people in the Middle East a day like this Friday 13th is their everyday routine. And that that’s what makes them refugees. Many Parisians -or New Yorkers, for that matter- would do the same, get out of Dodge, if this were a common event in their city. Not only because of the danger and the fear, but also because there would be no functioning society or economy left, and hence no future.
No matter how you look at it, there’s no denying it’s kind of ironic that attacks on Beirut that were similar in many regards to the ones in Paris, even took place at the same time, and similar attacks on several other places, receive no media coverage at all in the west, while the Paris attacks dominate all western media.
That is not a coincidence. And it’s not either because most Americans would find it as easy to find Damascus or Beirut on a map as they would Paris. That is, they would not. But still Paris is on American TV about 48/7 (that’s the attention span limit), interrupted only by either a Kardashian body part -or two- or by the single The Donald’s body part that sticks in memory.
And that’s where we find our link to economics, because in geo-politics as in economics, we, all of us, think, talk and live exclusively in narratives. We have stories pre-fabricated for us, and these stories determine how we see the world, and our lives, and other people’s lives and dreams and wishes.
That is to say, whatever it is we want and dream of is per definition just and justified, and other people’s desires are not, as soon as they threaten to interfere with ours. As we read ad nauseam post-Paris in literally countless references to the ‘freedom’ that ‘we’ have and ‘they’ hate, and to ‘our way of life’ that is under threat -with nary a soul knowing what that way is.
We cannot forever fool ourselves and others into believing that we are the good guys and ‘the others’ are the bad guys. It’s tempting, and there’s a whole behemoth media apparatus to confirm it, but it doesn’t get us any closer to what happened, and why, and therefore no closer to paying our full and due respect to those who died in Paris on 11/13.
“They” don’t resent us for our freedom, “they” resent us for not allowing them to have their freedom, too. We need to recognize at some point that we owe our affluence to the misery of others, not to our superior intelligence or morals or religion or way of life. But there’s not a single voice among us which wants to make that recognition happen.
We are not a benevolent force, no matter what we tell ourselves or how many times we repeat it. We are a civilization of oppressors. Just like the Romans and the Mongols and so many others before and after. We seek to uphold our status and our wealth at the expense of others, of strangers, people who live conveniently far enough away in conveniently impoverished conditions.
We have been building our empire this way since well before Columbus, we’ve greatly expanded it over the past 500 years, and we’re now looking at the terminal phase of that empire. Just like the Romans and the Mongols and so many others before and after.
Interestingly enough, it’s our own technological prowess and ‘progress’ that leads us into that phase. The very moment we started exporting our oil drilling technologies, our smartphones, our databases and most of all our modern weaponry to what we still see as colonies, the very foundations of our civilization and our power started eroding.
But that’s getting too philosophical, and it would require too many words and lead us too far astray from Paris and the due diligence we owe those who lost their lives and those who mourn them.
Pope Francis said in a reaction to the Friday 13th attacks: “This is not human”. Unfortunately, 2000 years of Christianity say he’s dead wrong, wrong as he could be. This is very human. It’s as human as feeling an overbearing love for our children. It’s all human.
It’s very human, too, to go for the ‘us’ vs ‘them’ meme. Because it feels good, and you can be sure it makes those around you feel good too. Which is a big help in times of fear and insecurity and not having the answer, not having any other answers than the ubiquitous ones the media feed you.
But that still is not what the dead deserve. They deserve much more. They deserve that we try the best we can, not to settle for the first thing that comes to our reptilian minds. Not to make our entire lives come down to just fight or flight, but to attempt to find that area in between that is as close to truth finding as we know we can come.
To honor the dead, we need to look inside ourselves, and inside the societies we live in. And only when we’ve found, and eradicated, those things that make both us, and our communities, ‘guilty by association’ -for lack of a better term-, will we have paid proper respect to those who lost their lives.
The build-up of emerging-market credit began just as the rich world’s financial system started to creak in 2007. According to figures collated by JP Morgan, private-sector debt in emerging markets rose from 73% of GDP at the end of 2007 to 107% of GDP by the end of last year. These figures include loans made by banks and bonds issued by companies. Including the credit extended by non-bank financial institutions (so-called “shadow banks”) for the handful of emerging markets where such estimates are available gives a steeper rise and a higher total burden: 127% of GDP. The credit boom in emerging markets was in large part a response to the credit bust in the rich world. Fearing a depression in its richest export markets, the authorities in China brought about a massive increase in credit in 2009.
Meanwhile a flood of capital escaping the paltry yields on offer in developed economies pushed interest rates lower in developing ones. This search for yield by rich-world investors took them to ever more exotic places. A dollar-denominated government bond issued in 2012 by Zambia, a copper-rich country with an average GDP per person of $1,700 a year, offered just 5.4% interest; even so, it was 24 times oversubscribed as rich-world investors clamoured to buy. The following year a state-backed tuna-fishing venture in Mozambique, a country even poorer than Zambia, was able to raise $850m at an interest rate of 8.5%.
In contrast to the credit booms in America and Europe, where households were the main borrowers, three-quarters of the private debt burden in emerging markets is shouldered by businesses: corporate debt has ballooned from less than 50% of GDP in 2008 to almost 75% by 2014. Much of the lending was done in Asia, notably in China. But Turkey, Brazil and Chile also saw substantial increases in the ratio of company debt to GDP. Construction firms (notably in China and Latin America) increased their leverage a great deal. The oil and gas industry was a big player, too, according to the IMF’s latest Global Financial Stability Report.
Unaccountable forces removed from democratic control are today in control in the European Union, President Michael D Higgins has declared in one of the most pointed speeches of his term in office. “The present institutional structure of the European Union can be seen as reflecting the distribution of political power in recent decades, decades that have seen the emergence of a new financialised global order, where unaccountable agencies and forces removed from democratic oversight or control are in the ascendancy,” he said. He made the speech as he opened the Royal Irish Academy’s Centre for the Study of the Moral Foundations of Economy and Society. The anti-austerity street protests in many EU states, he said, could be seen as “not just the mechanical result of deplorable levels of unemployment and deteriorating material circumstances”, but also a reflection of a “breakdown of trust between citizens and their institutions”.
Deep injury has been inflicted on people’s moral outlook in recent decades by an extraordinarily narrow version of economics which had cut ties with its ethical and philosophical roots, Mr Higgins said. European leaders must remain “attentive and open”, he added saying, “a social view of Europe demands that our fellow citizens should never be seen merely as ‘consumers’ of public policies, driven by a sense of their sectional interests.” He was confident, he said, that the new educational centre “will contribute in an important way, over the years to come, in tackling the deep injuries inflicted upon our moral imaginations by the extraordinary ascendancy in recent decades of what is an extraordinarily narrow version of economics”.
This connection “of economy, ecology and ethics” and “of policy, theory and method”, had been at the centre of his presidency, “because I believe that they are essential to reading and understanding the current situation in which we find ourselves”. Referring to upcoming commemorations in Ireland, he said: “One can legitimately wonder, for example, what shape would our economy and society have assumed, had our fellow citizens kept alive, during Ireland’s recent economic boom, the cultural, philosophical, political and moral motivations which underpinned the Irish national revival, or the spirit of other historical movements for social and political reform such as the co-operative movement. “We neglected the contribution of the co-operative instinct to our social cohesion,” he said.
Goldman Sachs’s decision to close down its loss-making Bric fund was a symbolic reminder that the days are gone when the economic rise of Brazil, Russia, India and China (the four countries from which the fund drew its name) seemed guaranteed. Indeed, Brazil and Russia are both in recession. The US Federal Reserve’s plans to raise interest rates from near zero, which many experts now expect to happen next month, could deepen the agony of countries already struggling with plunging currencies and rising borrowing costs. The International Monetary Fund has warned of a flurry of bankruptcies in emerging economies as rates rise.
“A lot of these countries haven’t been helping themselves: Taiwan, Korea; they’ve all been cranking up their own credit growth,” says Russell Jones of Llewellyn Consulting, an economics advisory firm. But he too believes the world should escape a general slump. “I don’t think we’re on the cusp of a major downturn — probably more of the same.” Simon Evenett of St Gallen University in Switzerland, who collates detailed data for the thinktank Global Trade Alert, offers an alternative explanation for the recent slide in trade volumes. He calculates that about half of the fall, since exports peaked in September last year, has been caused by the commodity price rout; but the rest, rather than evidence of sickly global demand, has resulted from a creeping rise in protectionism.
His analysis suggests the declines have overwhelmingly taken place in just 28 categories of product. “That’s very concentrated; that makes me doubt that it’s a global downturn.” Eight of these categories are commodities; but the rest map closely on to areas where countries have taken protectionist measures. In the wake of the financial crisis, policymakers from the G20 countries pledged not to resort to the tit-for-tat protectionism that led to collapsing trade volumes in the wake of the Great Crash of 1929, and was ultimately seen as a contributor to the Great Depression. Since then, there has been little sign of anything with the scope of America’s Smoot-Hawley Act of 1930, which slapped import tariffs on more than 800 products.
But Evenett says there has been a flurry of more subtle manoeuvres: restricting public procurement to domestic firms, for example, or quietly tightening regulations to raise the bar against imports. “I think the China story is adding spice to it, but I think there’s more going on here,” he says. He is concerned that unless action is taken, politicians will continue to throw sand in the wheels of the international trading system. If he’s right, the downturn seen so far may not be sending a warning signal about global demand; instead, it would be best read as a measure of the fragility of globalisation.
With China’s yuan taking the biggest step yet toward joining the dollar and euro as a top-rank reserve currency, the global economy may be approaching an era of greater stability. So say economists who highlight the dollar’s role in the biggest financial crises in recent decades. Drawn to the liquidity and security of the unit of the world’s biggest economy, investors and governments relied on the dollar and produced dislocations including historically low borrowing costs in the 2000s even as the Federal Reserve raised interest rates. Rushes toward the safety of the dollar challenged global policy makers in 2008 as money markets seized up, prompting the Fed to open swap lines with counterparts that remain in place today.
China responded in 2009 with a call for reducing reliance on the dollar, with central bank Governor Zhou Xiaochuan floating the idea of a “super-sovereign” reserve currency. While the proposal fell flat, Zhou and his allies began a campaign to win inclusion for the yuan in the IMF’s special drawing rights unit. The SDR, as it’s called, is a kind of overdraft account for members of the IMF, convertible into dollars, euros, pounds and yen. The fund’s staff said Friday that the yuan has now met the qualification terms for inclusion in the SDR. “The current configuration of the global monetary-financial system that is centered and increasingly dominated by the dollar is not a stable or a sustainable one,” Stephen Jen of SLJ Macro Partners, a former IMF economist, wrote with colleague Joana Freire last week.
Some 87% of foreign-exchange trading involves the dollar, the most recent survey by the Bank for International Settlements showed. “The role of the U.S. dollar as the world’s dominant vehicle currency remains unchallenged,” the BIS said in 2013, noting that the euro had declined in the wake of the European debt crisis. With the world’s second-largest economy and as the number-one trading nation, China may offer the global system a currency that can complement the dollar. For now, restrictions on the ability to take money in and out of China, and on what foreign investors can buy, mean the yuan’s role will be limited.
When the long-delayed official report into the near-collapse of HBOS is released on Thursday former bank bosses James Crosby, Andy Hornby and Lord Stevenson will be braced for a fresh round of condemnation. But if the report’s 500 pages are likely to revive painful criticism of their role in the demise of Britain’s biggest mortgage lender and savings institution, its publication also marks a crucial moment for a lesser known former executive at the bank: Paul Moore. Moore, 57, emerged some years ago as the whistleblower at HBOS. He said he was sacked as head of group regulatory risk at the end of 2004 – less than two years after joining – after warning that the then fast-growing bank was too strongly motivated by sales.
His views were first aired in public shortly after the bank had to be rescued by Lloyds in September 2008. The enlarged institution was later bailed out with £20bn of taxpayer money. On learning that the publication of the report by the Financial Conduct Authority and Bank of England – first promised in 2013 – has finally been scheduled for Thursday, Moore said: “I’m a bit nervous and a bit frightened and I hope and pray I’m not going to have to fight for the next five years.” His main fear now, he says, is that the report could turn out to be “a cover-up and a fudge”. If he was writing it, he says, he would refer the directors not just for banning orders but for criminal investigation, as well as demanding a proper judicial inquiry into the auditing of all the big banks and the conduct of the credit ratings agencies.
That is not all. “I would name and shame in the most rigorous detail the ludicrously bad regulators,” says Moore. Thursday’s report will be published alongside an analysis of the decision by the City regulator at the time of the collapse, the Financial Services Authority, to punish only one HBOS banker – Peter Cummings, who ran the bank’s commercial lending arm and has now been banned for life from the City and fined £500,000. Work on the official report only began after the enforcement action against Cummings, although in 2013 the parliamentary commission on banking standards, set up in the wake of the Libor-rigging scandal, published its own account of the collapse. It accused Crosby, Hornby and Stevenson of “colossal” management failures and questioned why it was only Cummings who had been censured by the City regulator.
Earlier evidence Moore had given to the Treasury select committee in 2009 had been so damning it led to a fresh examination of the role of Crosby, and forced his resignation as deputy chairman of the then City regulator, the Financial Services Authority. When Moore’s allegations were first aired at the select committee, Crosby had insisted there was no substance to them. A report – commissioned from the bank’s auditors, KPMG – concluded that he lost his job because of personality clashes inside the lender and not that Crosby sacked him because of warnings that HBOS was “going too fast”. Crosby has since handed back his knighthood and 30% of his pension, and keeps out of the public eye.
The government is hoping to clinch the release of €2 billion in loan funding, and another €10 billion for Greek banks, after a tough round of negotiations with representatives of the country’s international creditors which has focused mainly on the issue of nonperforming loans and foreclosures of primary residences. The money is linked to a series of additional measures that Greece must legislate next week before turning to a second set of prior actions including even more contentious reforms such as higher taxes on farmers and an overhaul of the pension system. Greece is already running behind schedule on reforms. But authorities are hoping the creditors will show some flexibility so the process of recapitalizing Greece’s banks is not derailed.
Talks are already under way within the key ministries on the next round of reforms. Labor and Social Security Minister Giorgos Katrougalos, whose ministry is overseeing the difficult task of pension reform, aims to reach a “comprehensive” agreement with creditors and approve it in Parliament by early next month, according to sources. The hope is that the creditors will reward an active effort by Greeks to make up for lost time by making some concessions in the pension overhaul. Already Greek authorities are seeking to soften the impact of the pension overhaul by exploring the possibility of increasing the social security contributions of employers and workers instead of further reducing monthly payouts.
Other politically contentious challenges the government faces in the coming weeks include raising taxes on Greek farmers, creating a new tax system, creating a task force that will manage a new fund for privatizing state assets and drafting new measures to meet fiscal targets for the next two years. SYRIZA officials have expressed concerns about the impact on social cohesion of the bailout program’s austerity measures, which has already struck the leftists’ popularity, according to opinion polls.
The ECB has ordered Portugal’s Novo Banco to fill a €1.4 billion hole in its finances, possibly delaying its planned sale and hampering Lisbon’s efforts to draw a line under its biggest banking collapse. The request to repair Novo Banco, created from the failed Banco Espirito Santo (BES), presents a challenge for any anti-austerity, Socialist-led government that could come to power in coming weeks after a parliamentary vote this week. Of nine banks across the euro zone tested by the ECB as a follow-through on wider checks last year, only Novo Banco was found to be short of capital. It has two weeks to present a plan of action and nine months to plug the gap. The Bank of Portugal said in a statement that Novo Banco had already started working on a plan to raise capital through asset sales to meet the shortfall.
The plan will be presented in the coming weeks. The central bank failed to sell Novo Banco in September as the bids it received were seen as too low. The result of the ‘stress test’ means the sale can resume. “Preparation for the new phase of the sale process will be initiated immediately, now that one of the main factors of uncertainty hanging over the previous process is out of the way,” the Bank of Portugal said. The Bank of Portugal is in charge of the sale process under the terms of the €4.9 billion rescue plan for BES, which was carried out by a bank resolution fund that is formally the responsibility of Portugal’s other banks. The government lent part of the money to the fund used in the rescue and must be repaid.
I come from a privileged Francophone community in Lebanon. This has meant that I have always seen France as my second home. The streets of Paris are as familiar to me as the streets of Beirut. I was just in Paris a few days ago. These have been two horrible nights of violence. The first took the lives of over 40 in Beirut; the second took the lives of over 120 people and counting in Paris. It also seems clear to me that to the world, my people’s deaths in Beirut do not matter as much as my other people’s deaths in Paris. We do not get a “safe” button on Facebook. We do not get late night statements from the most powerful men and women alive and millions of online users. We do not change policies which will affect the lives of countless innocent refugees. This could not be clearer. I say this with no resentment whatsoever, just sadness.
It is a hard thing to realize that for all that was said, for all the progressive rhetoric we have managed to create as a seemingly united human voice, most of us members of this curious species are still excluded from the dominant concerns of the “world”. And I know that by “world”, I am myself excluding most of the world. Because that’s how power structures work. I do not matter. My “body” does not matter to the “world”. If I die, it will not make a difference. Again, I say this with no resentment. That statement is merely a fact. It is a political fact, true, but a fact nonetheless. Maybe I should have some resentment in me, but I am too tired. It is a heavy thing to realize. I know that I am fortunate enough that when I do die, I will be remembered by friends and loved ones.
Maybe my blog and an online presence might even gather some thoughts by people around the world. That is the beauty of the internet. And even that is out of reach to too many. Never so clearly as now have I understood what Ta-Nehisi Coates wrote about when he spoke of the Black Body in America. I think there is a story to be told of the Arab Body as well. The Native American Body. The Indigenous Body. The Latin American Body. The Indian Body. The Kurdish Body. The Pakistani Body. The Chinese Body. And so many other bodies. The Human Body is not one. It sure feels that it should be by now. Maybe that in itself is an illusion.
But maybe it is an illusion worth preserving because without even that vague aspiration towards oneness on the part of some part of the body, I am not sure what sort of world we would be living in now. Some bodies are global, but most bodies remain local, regional, “ethnic”. My thoughts are with all the victims of today’s and yesterday’s horrific attacks, and my thoughts are with all those who will suffer serious discrimination as a result of the actions of a few mass murderers and the general failure of humanity’s imagination to see itself as a unified entity. My only hope is that we can be strong enough to generate the opposite response to what these criminals intended. I want to be optimistic enough to say that we are getting there, wherever “there” might be. We need to talk about these things. We need to talk about Race. We just have to.
How long will it be before European liberalism cracks? The aftermath of a terrorist massacre is the worst time to make predictions. The extremity of the outrage pushes policy-makers and citizens to play with equally outraged responses. It is worth steadying yourself with the thought that until Friday night, Europe’s response to terrorism has not been extreme. Despite gruesome predictions to the contrary, European democracies have not turned themselves into police states. There have been no backlashes or pogroms against Muslims. EU countries, including Britain, have remained free and good societies overall; nations we can be proud of in our necessarily grudging way, for all the faults and abuses we must tackle.
People running from real terror know our true state better than we do. They flee to Europe, not from Europe. Callous though it may sound today to say it, the modest response to terrorism is the consequence of the modesty of the violence. Since al-Qaida’s assault on the World Trade Center and the Pentagon in 2001, the most striking feature of Islamist terrorism in Europe is how little of it there has been. You can give credit to police forces and intelligence agencies for arresting suspects before they strike. You can repeat the essential point that we are up against Islamism, not Islam, and most Muslims want nothing to do with totalitarian religion. Whatever the reason, the practical consequence remains that no one in power has felt the need to move towards anything resembling martial law.
Europe has “just” endured the attacks on Madrid and the 7/7 assault on London, and the actual and attempted murders of Jews, satirists, freethinkers in Paris, Brussels, Copenhagen and Marseille. Beyond that, there have been “lone wolf” killers of the type who did for poor Lee Rigby. I am not pretending that Europe has stayed the same. After Islamists sanctioned the murder of cartoonists who mocked Muhammad, a cowardly self-censorship spread across the arts and journalism, which was all the more cowardly for being unacknowledged. But it remains true that radical Islam has not forced a radical break with the past.
If you could travel in a time machine, you would see the continuities between our world and the Britain or France or Denmark of 20 years ago hugely outweigh the differences. I do not mean to minimise Islamist crimes when I say that Europe has been lucky. From Nigeria to Afghanistan, a clerical fascist doctrine that mandates mass murder and self-murder has pushed whole regions into civil war. Yet divinely sanctioned violence has failed to engulf our continent. Suspects are still innocent until proved guilty beyond reasonable doubt. The European convention on human rights remains in force. Terrorism is still subject to the rule of law, not martial law. In spite of all the provocations, we are what we once were.
After a terrorist attack killed more than 120 people and injured hundreds more on Friday, France imposed border controls and authorities discovered a Syrian passport on one of the attackers. While it’s not clear whether any of the assailants were migrants themselves, the attack has nonetheless reignited the debate over Europe’s migrant crisis. As Quartz notes, the attacks attributed to ISIS are anything but good news for migrants in Europe. Marine Le Pen, the leader of the far-right National Front party in France, told reporters on Saturday that “urgent action is needed” to “annihilate” Islamic fundamentalism. Le Pen went on to advocate that France regain control of its borders and expel “illegal migrants.”
In Poland, incoming Minister of European Affairs Konrad Szymanski announced today that the country will not accept migrants without security guarantees. In September, Poland agreed to accept 4,500 refugees as part of a European Union quota system. In the U.S., the role the country should play in this refugee crisis is a subject of continued partisan debate. President Obama announced in September that at least 10,000 Syrian refugees will be resettled in the U.S. over the next year. While this number might seem small compared to the 4 million total refugees created by the war since 2011, it represents a marked jump from the fewer than 2,000 Syrian refugees accepted last year. But some GOP candidates argued against the administration’s policy by suggesting that ISIS militants could infiltrate the country by hiding among refugees.
According to Vox, Ben Carson, Ted Cruz, Mike Huckabee, and Rick Santorum quickly cited the Paris attacks to justify closing the borders to more Syrian refugees. On the Democratic side, Hillary Clinton, Martin O’Malley, and Bernie Sanders have remained mostly quiet on the subject so far. All three have publically expressed their condolences for the victims and their families, but no one has yet made the leap to policy. Meanwhile, to the north, Canada has its own ambitious refugee agenda to assess. Newly elected Canadian PM Justin Trudeau committed to resettling 25,000 Syrian refugees by the end of the year — a number deemed unrealistic by some observers. [..] the Toronto Star reported earlier today that the country remains steadfast in its plan despite the Paris attacks. Ultimately, how the recent events will affect the debate surrounding migration in Europe and beyond remains to be seen. What is clear is that there are 4 million people displaced by the crisis and, for them, a solution will need to be reached.
Syrians who fled a brutal war and often undertook deadly sea journeys to settle in France reacted with horror to Friday’s terror attacks in Paris, and said they recognized the enemy all too well. “Syrians left Syria in dangerous ways to live in peace, but the killers followed them to Europe,” said Moaz Shaklab, a businessman from the Syrian city of Homs who settled in France two years ago as a refugee. The Paris attacks could spark new waves of Islamophobia in France and beyond — and with it fear of the refugees pouring into Europe from Syria and other countries. This is exactly what ISIS wants; the group has vowed to make it impossible for Muslims to exist peacefully in the West. Yet citizens in France share an ally against Islamic extremism in most refugees settling there.
Many newly arrived Syrians sought to escape the terror of ISIS and other jihadi groups, in addition to the brutal campaign being waged by Bashar al-Assad. Many worked against ISIS and other jihadi groups before leaving or have friends and family doing so now. “We’re united with the French people against terrorism,” Shaklab said. “And we don’t forget that they are united with us to get our freedom.” French police officials told the AP on Saturday that they had found a Syrian passport at the scene of an attack that they believed belonged to an assailant. But because of the refugee crisis, fake Syrian passports are now prevalent and easy to obtain.
Whether or not the passport is authentic, news of its discovery promised to help to fan refugee fears — which may have been the intent of the man who brought it to the scene. Sakher Edris, a journalist and political organizer who worked against both ISIS and the Syrian government before fleeing to France this summer, said he expected a backlash against refugees following the attacks. “We are really scared,” he said. “French people are kind, and it’s understandable to have some backlash, but we want them to know that we are with them against terror.”
It’s not like this is any kind of secret. In 2010, thanks to WikiLeaks, we learned that the State Department, under the direction of then-Secretary of State Hillary Rodham Clinton, knew full well where the money for foreign terrorism came from. It came from countries and not from a faith. It came from sovereign states and not from an organized religion. It came from politicians and dictators, not from clerics, at least not directly. It was paid to maintain a political and social order, not to promulgate a religious revival or to launch a religious war. Religion was the fuel, the ammonium nitrate and the diesel fuel. Authoritarian oligarchy built the bomb. As long as people are dying in Paris, nobody important is dying in Doha or Riyadh.
Saudi Arabia is the world’s largest source of funds for Islamist militant groups such as the Afghan Taliban and Lashkar-e-Taiba – but the Saudi government is reluctant to stem the flow of money, according to Hillary Clinton. “More needs to be done since Saudi Arabia remains a critical financial support base for al-Qaida, the Taliban, LeT and other terrorist groups,” says a secret December 2009 paper signed by the US secretary of state. Her memo urged US diplomats to redouble their efforts to stop Gulf money reaching extremists in Pakistan and Afghanistan.
“Donors in Saudi Arabia constitute the most significant source of funding to Sunni terrorist groups worldwide,” she said. Three other Arab countries are listed as sources of militant money: Qatar, Kuwait and the United Arab Emirates. The cables highlight an often ignored factor in the Pakistani and Afghan conflicts: that the violence is partly bankrolled by rich, conservative donors across the Arabian Sea whose governments do little to stop them. The problem is particularly acute in Saudi Arabia, where militants soliciting funds slip into the country disguised as holy pilgrims, set up front companies to launder funds and receive money from government-sanctioned charities.
It’s time for this to stop. It’s time to be pitiless against the bankers and against the people who invest in murder to assure their own survival in power. Assets from these states should be frozen, all over the west. Money trails should be followed, wherever they lead. People should go to jail, in every country in the world. It should be done state-to-state. Stop funding the murder of our citizens and you can have your money back. Maybe. If we’re satisfied that you’ll stop doing it. And, it goes without saying, but we’ll say it anyway – not another bullet will be sold to you, let alone advanced warplanes, until this act gets cleaned up to our satisfaction. If that endangers your political position back home, that’s your problem, not ours. You are no longer trusted allies. Complain, and your diplomats will be going home.
Complain more loudly, and your diplomats will be investigated and, if necessary, detained. Retaliate, and you do not want to know what will happen, but it will done with cold, reasoned and, yes, pitiless calculation. It will not be a blind punch. You will not see it coming. It will not be an attack on your faith. It will be an attack on how you conduct your business as sovereign states in a world full of sovereign states… And the still, stately progress of the news from Paris continues. There are arrests today in Brussels, of alleged co-conspirators. The body count has stabilized. New information comes at its own pace, as if out of respect for the dead. In the stillness of the news itself, there is refuge and reason and a kind of wounded, ragged peace, as whatever rolled up from the depths of the sickness of the human heart rolls back again, like the tide and, like the tide, one day will return.
Seventeen nations, spurred on by Friday’s deadly attacks in Paris, overcame their differences on how to end Syria’s civil war and adopted a timeline that will let opposition groups help draft a constitution and elect a new government by 2017. As a first step, the United Nations agreed to convene Syria’s government with opposition representatives by Jan. 1, U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov said Saturday at a joint press conference in Vienna. A cease-fire between the government in Damascus and recognized opposition groups should be in place within six months, according to their statement. The terrorist attacks in Paris galvanized the diplomats, who at previous talks had been unable to resolve the discord within their ranks.
While Russia and Iran had sided with Syrian President Bashar al-Assad, the U.S. and its regional allies had insisted upon his removal. With diplomats bogged down over the question of Assad, terrorist groups like Islamic State, also known as ISIS or ISIL, grew and become more powerful inside Syria. “It is time to deprive the terrorists of any single kilometer in which to hide,” Kerry said. “There can be no doubt that this crisis is not Syria’s alone to bear.” Assad has “cut his own deal” with Islamic State, buying oil from the group and failing to attack militants, Kerry said. Assad’s allies have conveyed that he’s prepared to be serious and engage in talks, but the “proof will be in the pudding,” he said. In a statement posted on Twitter, Islamic State said the Paris attacks that killed 129 people and injured 352 came in retribution for French involvement in the Syrian civil war.
The conflict has so far cost about 250,000 lives, sent millions fleeing the region, and triggered Europe’s worst refugee crisis since World War II. Diplomats meeting in the Austrian capital also decided to place Islamic State, along with the al-Qaeda affiliated Nusra Front terrorist group, on a list of those subject to military strikes even when a cease-fire is in place. The list, managed by the Kingdom of Jordan, may later be expanded to include other groups in Syria, Kerry and Lavrov said. The Paris attacks “show that it doesn’t matter if you’re for Assad or against him,” said Lavrov, “ISIS is your enemy.”
Poland’s new government won’t accept migrant quotas imposed by the European Union, as the terror attacks in France have exposed the weakness in the bloc, the nation’s future minister for European affairs said. “In the wake of the tragic events in Paris, Poland doesn’t see the political possibilities to implement a decision on the relocation of refugees,” Konrad Szymanski was quoted as saying on Wpolityce.pl website on Saturday. “The attacks mean there’s a need for an even deeper revision of the European policy regarding the migrant crisis.” Szymanski’s rejection of the EU quotas hours after Paris was rocked by terrorist attacks underscore the divide among governments in the bloc over the influx of Middle Eastern migrants.
His Law & Justice party will take power in Poland this week after winning last month’s general election on a campaign that tapped into concerns among the country’s conservative Catholic base that too many Muslims are arriving in Europe. Poland’s previous cabinet, led by the Civic Platform party, also opposed efforts led by German Chancellor Angela Merkel to force EU member states to take in more migrants. While incoming Foreign Minister Witold Waszczykowski said Poland will meet an commitment by the Civic Platform to shelter 7,000 refugees, prime minister designate Beata Szydlo referred to the deal as “blackmail.” She will be sworn in on Monday.
A new study suggests that being a little shrimpy might come in handy when the going gets tough. A mass extinction called the Hangenberg event, which took place some 359 million years ago, led to a reduction in vertebrate size for around 40 million years afterward. The research, published Thursday in Science, adds support to the so-called Lilliput Effect, which suggests that mass extinctions cause marked shrinkage in the animal population. To study how fish fared after this devastating extinction, the University of Pennsylvania’s Lauren Sallen (along with Andrew K. Galimberti at the University of Maine) studied 1,120 fish fossils dating back 419 to 323 million years ago. She found that the ancient fish had been increasing in size over time — which is to be expected — but that body size plummeted after 97% of species were wiped out.
“Some large species hung on, but most eventually died out,” Sallan said in a statement. Before the extinction, some fish had grown to be as big as school buses. But in the unstable ecosystem of a post-mass-extinction ocean, only small fish — ones that could reproduce quickly and survive on less food — could thrive. That means an ocean full of enormous sea monsters gave way to an ocean full of sardine-like critters. “[T]he end result is an ocean in which most sharks are less than a meter and most fishes and tetrapods are less than 10 centimeters, which is extremely tiny. Yet these are the ancestors of everything that dominates from then on, including humans,” Sallan said. There’s a very good reason to look into these devastating extinctions of the distant past: Many scientists believe that Earth is on the verge of a sixth mass extinction — one caused by human activity.
Two refugee children died in Greece in two separate incidents on Saturday. A 3-year-old boy drowned off the coast of Chios, in the eastern Aegean, after an engine blast on a refugee boat that threw the passengers in the sea, coast guard officials said. Fifteen other people were rescued while officials arrested an 18-year-old Turk believed to be a trafficker. Meanwhile, a 5-year-old Syrian girl was killed by an oncoming train while she was walking on rail tracks near the town of Alexandroupoli, police said.
You have to go back to August’s selloff to find a week as bad as this one for U.S. equities. Catalysts that drove the S&P 500’s 12% summer tumble, from interest rate dread to a commodities rout, surfaced again after being sidelined during October’s surge. Signs of slowing growth from China to Europe rekindled concern that weakness could spread to America as the Federal Reserve prepares to tighten monetary policy. While equities are nowhere near their August lows, the weekly slump raised concern that the S&P 500’s six-week rally went too far, too fast. Volatility jumped after an October lull, with a measure of price swings surging 40%.
Bank of America says shares are more likely to decline before New Year’s amid weak consumer earnings and the specter of higher borrowing costs. “For the next month and a half I think there may be more downside than upside risk to stocks,” Savita Subramanian at Bank of America said by phone. “The market is going to be more skittish about seeing the first Fed rate hike. We’re not going to get there without a little more volatility.” The S&P 500 Index fell 3.6% in the five days, sliding below its average price for the past 100 days for the first time in three weeks. The decline snapped a run of six weekly gains, the longest rally of the year that included an 8.3% surge in October.
The Chicago Board Options Exchange Volatility Index jumped above 20 for the first time since August, when it touched a four-year high. For Subramanian, who in October lowered her year-end target for the S&P 500 to 2,000 from 2,100, the list of worries is tallying up. Weak corporate earnings and the prospect for higher rates will keep a lid on gains through the remainder of the year, she said in an interview with Bloomberg. “Earnings are not coming in particularly great for sectors like consumer stocks, and on top of that you’ve got the Fed in December,” Subramanian, head of U.S. equity and quantitative strategy, said by phone. “Those all kind of conspire against near-term gains.”
Today Nomi Prins, the keynote speaker who recently addressed the Federal Reserve, IMF and the World Bank, warned King World News “It’s all coming to an end.” Eric King: “Nomi, we went through a round of terror in 2008, and certainly China just went through that again recently when their stock market crashed along with the emerging markets, but when does this whole global Ponzi scheme finally come unraveled?” Nomi Prins: “We are seeing small unravelings all the time. Brazil is doing badly, Mexico is struggling, currencies around the world relative to the dollar are hurting, which means relationships of imports to exports and money coming into those countries are hurting.
China has had problems but its central bank has been big enough and strong enough to boost it at least somewhat back up again. The United States is in complete denial in terms of what the economic indicators are said to be vs what they actually are and how the markets themselves are being continually buoyed either by the Federal Reserve or the Fed’s associations with some of the big banks in terms of continuing to buy Treasury bonds… “The ECB is still on a mission, and as of the November 12th announcement from Mario Draghi, an even stronger mission to continue to infuse those markets with artificial money and perhaps even enhance their quantitive easing program. So you ask, ‘When is this all coming to an end?’
It is all coming to an end, but you have all these actors trying to prop up different pieces of it (the global financial system) and so that’s why there is all this enhanced volatility and you have so many ups and downs (in global markets). (The end will come) when there are no more creative concepts on the part of these central banks to provide the artificial stimulus to the markets. And that could be the middle or the end of 2016, only because one big central bank in play has already committed to doing their part of it (with enhanced stimulus). And so that’s why we continue to have enhanced volatility to the downside in global markets that is also met with intervention, which is unprecedented. But it (the stimulus) does exist and we have to recognize that, as unprecedented and bizarre as it is, and there are indications that it will continue.
And so that keeps the artificial game in play through the middle or fall of 2016. But in the core of markets and economies things are not stable, which is why all of these (volatile) movements are happening. If anything was stable for real, the Federal Reserve would have raised rates years ago, the ECB wouldn’t have needed to come up with another round of quantitative easing, the People’s Bank of China wouldn’t need to reduce the reserve requirements to their financial institutions in order to give them more money to play with — none of that would be happening. So we are in a state of deterioration. The timing of an eventual implosion has to do with when the big banks have nothing left to counteract the artificial markets coming apart that they themselves have created.
“The rotten fruit of the Fed’s seemingly innocuous inaction will now be clear to onlookers as it is ripped to shreds on the battlefield by the powerful credit monster.”
SocGen’s permarealist, Albert Edwards, has been the one person who for the past decade has firmly held the belief that a “deflationary Ice Age” is upon the world – courtesy of an unmanageable debt load – no matter what central banks do. There is, of course, one way to short circuit said Ice Age, and it involves paradropping money in an act of terminal fiat desperation (the outcome is always hyperinflation) onto the general population, something which as we reported last Friday is already in the works courtesy of first Adair Turner and the IMF, and soon all other “very serious people”.
Keep an eye on Japan as this is where said paradropping will be attempted first as Ben Bernanke suggested back in 2003 when he said to “consider for example a tax cut for households and businesses that is explicitly coupled with incremental Bank of Japan purchases of government debt – so that the tax cut is in effect financed by money creation.” But before we get there, here is a snapshot of where, according to Edwards, we are now and why “there” is getting very close. In his latest note he says, quite simply, that it is now too late to put the “Orc-like monster” of excess debt and declining cash flows back in the bottle, and why “the global economy will be thrown into chaos.”
The deeply held wish of central bankers not to de-rail the fragile economic recovery is on display for all to see as they grasp at the slightest excuse for their continued inaction. The UK’s central bank governor, Mark Carney, exceeded all dovish expectations recently in his latest rate flip-floppery. But what is this? The Fed has finally summoned up its courage and looks set to raise rates next month. It is, however, already too late. Having delayed way beyond the point when it might typically have raised rates in previous cycles, it has allowed an Orc-like monster to incubate, hatch and emerge into the sunlight, snarling and ready to do battle.
Free Fed money has led to an unprecedented corporate credit binge of excess spending, especially on share buybacks. This is even bigger than it was at the time of the 2000 technology and telecom bubble. The rotten fruit of the Fed’s seemingly innocuous inaction will now be clear to onlookers as it is ripped to shreds on the battlefield by the powerful credit monster. The global economy will be thrown into chaos.
U.K. prosecutors charged 10 former Deutsche Bank and Barclays employees with manipulating a benchmark interest rate, including high-profile trader Christian Bittar, with an 11th facing indictment as soon as next week. Six traders from Deutsche Bank employees and four from Barclays were charged with conspiracy to manipulate the Euribor benchmark, the Serious Fraud Office said in a statement Friday. Another trader listed anonymously in court documents may also be charged, according to three people familiar with the case. Alongside Bittar, those linked to Deutsche Bank are Andreas Hauschild, Joerg Vogt, Ardalan Gharagozlou, Achim Kraemer and Kai-Uwe Kappauf. Former Barclays employees Colin Bermingham, Carlo Palombo, Philippe Moryoussef and Sisse Bohart also face charges.
The SFO won the first conviction by trial tied to benchmark manipulation in August, when former UBS trader Tom Hayes was found guilty of rigging the London interbank offered rate and sentenced to 14 years in prison. Banks and other financial institutions have paid about $9 billion in fines tied to Libor and other key rates. One other person has pleaded guilty in the Libor probe. Lawyers for Bittar, Hauschild and Moryoussef said they will contest the allegations. Lawyers for the other eight either declined to comment or didn’t immediately respond to requests for comment. The nine men and one woman are scheduled to appear in a London magistrates court on Jan. 11.
Documents distributed in the case have listed an unidentified 11th trader that will be charged, according to people familiar with the matter who declined to be named because the prosecution isn’t public. The trader could be charged as soon as next week, one of the people said. Other than Bermingham, the 10 defendants named by the SFO all live outside Britain, according to an SFO spokeswoman. Bittar and Moryoussef live in Singapore, Bohart in Denmark and Palombo in the U.S. and Italy, while the remaining five are in Germany. All have been notified they face charges. No extradition requests have been made and all appearances will be voluntary at present, the SFO said.
[..] we find out that the ECB – the same ECB where policymakers like to meet with banks and asset managers before major policy meetings, actually had three of the traders accused of gaming Euribor by Britain’s Serious Fraud Office on Friday in a group that helped the the bank craft its response to the financial crisis! From Reuters:
The documents on the ECB website show that former Barclays euro money market desk head Colin Bermingham and Joerg Vogt and Ardalan Gharagozlou from Deutsche Bank – three of 10 people charged by the SFO on Friday – were part of the central bank’s Money Market Contact Group at the height of the crisis. The group regularly met and held conference calls as the central bank scrambled to stabilise markets that were threatening to push debt-strained Greece, Portugal, Ireland and even Italy and Spain out of the euro in 2010 and 2011.
Amusingly, the 10 people charged include Deutsche Bank’s Christian Bittar who can’t seem to get away from his title as rate rigger par excellence (although that’s not the term Anshu Jain used, that’s the spirit of a conversation the ex-Deutsche CEO once had about Bittar with a colleague back in the good ol’ days). Here’s Bloomberg:
U.K. prosecutors charged 10 former Deutsche Bank and Barclays employees with manipulating a benchmark interest rate, including high-profile trader Christian Bittar, with an 11th facing indictment as soon as next week. Six traders from Deutsche Bank employees and four from Barclays were charged with conspiracy to manipulate the Euribor benchmark, the Serious Fraud Office said in a statement Friday. Another trader listed anonymously in court documents may also be charged, according to three people familiar with the case. Alongside Bittar, those linked to Deutsche Bank are Andreas Hauschild, Joerg Vogt, Ardalan Gharagozlou, Achim Kraemer and Kai-Uwe Kappauf. Former Barclays employees Colin Bermingham, Carlo Palombo, Philippe Moryoussef and Sisse Bohart also face charges.
Ok, so the ECB was regularly communicating with three traders who are now charged with manipulating Euribor. Here’s what Francesco Papadia, head of market operations at the ECB during the financial and euro zone debt crises has to say about the group: “They helped understand what was going on beyond what you see on the screens.” If you follow financial markets and that doesn’t strike you as hilarious, then check your pulse. That is, we bet they did “help the ECB what was going on behind the screen”, after all, they were the ones colluding to fix the market! In any case, we’ll have to see what the time frames were here and if there was any overlap between when the allegations stem from and when this ECB committee operated (it’s probably a better bet that the manipulation took place before the euro debt crisis), but in any case, we’ll close with the following amusing quote for now: “The ECB plays no role in the setting of the Euribor rate,” the ECB said in a statement. Are you guys sure about that?…
“Super” Mario Draghi’s nickname is very much justified, according to Angel Gurria, the secretary-general of the Organisation for Economic Co-operation and Development (OECD), who has called on governments to do more to tackle the global growth slowdown. “Central bankers have been the heroes of this story since this financial and economic crisis hit in 2008, but the problem is they have run out of room. It’s time for the governments,” Gurria told CNBC Friday. The most influential central banks in the Western world, the U.S. Federal Reserve, European Central Bank (of which Draghi is president) and the Bank of England, have been running ultra-low interest rates and quantitative easing programs for years in some cases, to try and handle the fallout from the credit crisis.
With the Fed likely to become the first to signal a return to more normal monetary policy by raising rates, potentially as early as December, Gurria gave the central bank his blessing – although he said it should have started sooner. On Monday, the OECD cut its forecast for global growth to around 2.9% this year – well below its long-term average – citing a further sharp downturn in emerging market economies and world trade. Gurria, who was speaking at the G-20 summit of the heads of the world’s largest advanced and emerging economies, said: “The issue is about getting growth and trade back. It’s very ominous that trade is growing at about 2% when the world economy is growing at 2.9%. There’s only five years in the last 50 at which trade has grown at a rate lower than the world GDP and there has always been a recession following that.” “We’ve got to get all cylinders of the growth engine firing again. There is no room for complacency,” he added.
China’s yuan moved closer to joining other top global currencies in the IMF’s benchmark foreign exchange basket on Friday after Fund staff and IMF chief Christine Lagarde gave the move the thumbs up. The recommendation paves the way for the Fund’s executive board, which has the final say, to place the yuan on a par with the U.S. dollar, Japanese yen, British pound and euro at a meeting scheduled for Nov. 30. Joining the Special Drawing Rights (SDR) basket would be a victory for Beijing, which has campaigned hard for the move, and could increase demand for the yuan among reserve managers as well as marking a symbolic coming of age for the world’s second-largest economy. Staff had found the yuan, also known as the renminbi (RMB), met the criteria of being “freely usable,” or widely used for international transactions and widely traded in major foreign exchange markets, Lagarde said.
“I support the staff’s findings,” she said in a statement immediately welcomed by China’s central bank, which said it hoped the international community would also back the yuan’s inclusion. Staff also gave the green light to Beijing’s efforts to address operational issues identified in a report in July, Lagarde said. The executive board, which represents the Fund’s 188 members, is seen as unlikely to go against a staff recommendation and countries including France and Britain have already pledged their support for the change. This would take effect in October 2016, during China’s leadership of the Group of 20 bloc of advanced and emerging economies. China has rolled out a flurry of reforms recently to liberalize its markets and also help the yuan meet the IMF’s checklist, including scrapping a ceiling on deposit rates, issuing three-month Treasury bills weekly and improving the transparency of Chinese data.
Volkswagen is working with banks to put together as much as €20 billion in short-term bridge financing to show that the automaker has adequate liquidity to weather the emissions cheating crisis, two people familiar with the matter said. VW does not need the money currently and is seeking extra funds to create a financial cushion, said the people, who asked not to be identified discussing private talks. The automaker will begin meeting with about a dozen prospective banks on Monday at its headquarters in Wolfsburg, Germany, to go over the proposed funding, which it aims to have in place before the end of the year, the people said.
“We have always considered that a well-diversified portfolio of funding tools gives us the necessary flexibility to offer appropriate and competitive financing options for our customers as well as our industrial investment needs,” Volkswagen said in an e-mailed statement. “It is perfectly normal that we are in a constructive ongoing dialog.” The scandal has spread since Volkswagen first admitted in September to cheating on diesel pollution tests. The carmaker will need to recall as many as 11 million diesel vehicles worldwide and admitted earlier this month that another 800,000 cars had unexplained inconsistencies in carbon dioxide output. By 2017, the price tag of VW’s emissions woes will probably reach about €25 billion, Barclays estimated on Friday.
“It makes perfect sense” to shore up financing, said Sascha Gommel at Commerzbank. “In order to protect their rating, they need to show that liquidity will never become an issue for them, because then you have a vicious circle. If the ratings agencies think you won’t have cash and they downgrade you, then your funding gets more expensive.” Volkswagen has the equivalent of €2.57 billion in bonds maturing this year, €14.3 billion next year and €13.5 billion in 2017. The company said earlier Friday it has put bond financing on hold because it needs time to update its documentation to reflect potential fines and penalties. Thus far, the automaker has set aside €6.7 billion to recall diesel cars and estimated the economic risk of the CO2 irregularities at another €2 billion.
During the 2012 election, President Barack Obama held up his bailout of General Motors as a model in the fight against China’s growing manufacturing dominance, telling voters that the auto rescue would reverse the industry’s multi-decade trend of outsourcing. A single election cycle later, the question of government support for automakers has all but disappeared from the political discourse, yet Detroit is back to sending jobs out of the industrial Midwest. And now GM is leading the way on Chinese outsourcing, announcing it will become the first U.S. firm to import a vehicle made in China to the U.S. It’s about time taxpayers ask what their $50 billion rescue really bought them. Starting next year, GM will import between 30,000 and 40,000 Buick Envision crossovers annually from a plant in Shandong Province.
That won’t make the Envision one of GM’s best-selling models, but it will greatly outsell the only other Chinese-import car on the market, the Volvo S60L. More importantly, GM’s pioneering Chinese import will likely help break down the consumer stigma attached to Chinese cars, leading the way for other automakers to follow suit. If a bailed-out company can get away with selling Chinese cars in the U.S., there’s no doubt that the rest will try too. The Envision is just the tip of GM’s Chinese iceberg: though the firm has not announced further plans to import other vehicles from Asia, it is increasingly making China a hub for new vehicle development and global exports. The next generation of GM’s small- and medium-sized vehicles will be offered with a new engine and high-tech dual-clutch transmission co-developed with its Chinese partner, the Shanghai Automobile Industry Corporation.
The two companies are also jointly creating an entire family of small vehicles to be exported from China to markets around the world. Taxpayers aren’t the only ones GM appears to be abandoning. The United Auto Workers is incensed by the Envision decision. As union vice president Cindy Estrada told the Detroit Free Press in August when the rumors of the plan surfaced, “after the sacrifices made by U.S. taxpayers and the U.S. workforce to make General Motors the profitable quality company it is today, UAW members are disappointed with the tone-deaf speculation that the Envision would be imported from China.” Yet given that the UAW has a new wage-raising contract nearing ratification, it can be argued that the union may have brought some of this disappointment upon itself.
But perhaps it is in Canada, where the government spent $10 billion rescuing G.M. and Chrysler, where anger is most justified. With GM’s “vitality commitment” – made to protect jobs in Canada as a condition of its bailout – expiring at the end of next year, the automaker has already decided to cut 1,000 jobs from its Oshawa, Ontario, plant when production of the Chevrolet Camaro ends there next week. GM has hinted that more outsourcing could follow. And as a new Liberal government is taking power in Ottawa, GM is pushing for “more amenable” subsidies than the $750 million in loans that had been offered by the outgoing Conservatives. If new Prime Minister Justin Trudeau doesn’t bow to GM pressure – turning those loans into grants that it need not repay – the automaker may well pull even more jobs from a country that stood by it at its darkest hour.
The austerity imposed on the Portuguese people by the 1% has resulted in the election of a coalition government of socialists, communists, and a “left bloc.” In the 20th century, socialism and the fear of communism humanized Europe, but beginning with Margaret Thatcher the achievements of decades of social reforms have been rolled back throughout Europe as bought-and-paid for governments have given all preference to the One%. Public assets are being privatized, and social pensions and services are being reduced in order to make interest payments to private banks. When the recent Portuguese vote gave a majority to the anti-austerity bloc, the right-wing Portuguese president, Anibal Cavaco Silva, a creature of Washington and the big banks, announced that the leftwing would not be permitted to form a government, just as the senior British general announced that a Labour Government formed by Jeremy Corbyn would not be permitted to form.
True to her word, Anibal reappointed the austerity prime minister, Passos Coelho. However, the unity of the socialists with the communists and the left bloc swept Coelho from office and the president had to recognize a new government. The new government means that for the first in a long time there is a government in Portugual that possibly could represent the people rather than Washington and the One%. However, if the new government leaves the banks in charge and remains committed to the EU, the current president, previous prime minister, and previous finance minister, Maria Luis Albuquerque, will continue to work to overthrow the people’s will as occurred in Greece. The new Portuguese government cannot escape austerity without nationalizing the banks and leaving the EU. The failure of the Greek government to bite the bullet resulted in the Greek government’s acceptance of the austerity that it was elected to oppose.
While the saying goes “good fences make good neighbors,” it appears the leadership of The EU is starting to get frustrated with the lack of acquiescence among some of the ‘union’s’ newer or more marginal members. In a somewhat stunning statement, following ongoing and contentious meetings to discuss solutions to the migrant ‘problem’, EU Commissioner Timmermanns appeared to warn disagreeable member states, “There is an alternative to everything. I believe in EU cooperation because of all other forms in history have been tried to help Europeans get on better, and with the exception of this one, all other forms have led to war – so let’s stick to this one.” As Elsevier reports (via Google Translate),
European leaders read the last few days the alarm about the survival of the European Union (EU). Prague said Commissioner Frans Timmermans (PvdA) Friday that the EU is only one alternative: war. “The only alternative to the EU is war,” said Timmermans Friday gave a speech at a conference in Prague, said a reporter for The Times of London who attended the speech. Timmermans is the way Europe responds to the migration crisis’ the biggest threat to the EU ever. The Commissioner underlined that countries should cooperate better when it comes to border controls. “Migration is part of life, but we must lead these movements together in the right direction,” said Timmermans.
Matching words Timmermans in the alarmist tone that European leaders were heard in recent days about the survival of the EU. Earlier this week, Timmermans at the House of Europe Lecture in Amsterdam that he fears for the survival of the EU. “I do not optimistic about doing that, because I’m just not.
The current migration crisis is the European ideal of free movement shaking on its foundations. EU President Donald Tusk said that the EU is engaged in “a race against the clock.” “But we are determined to win this race,” said Tusk. “As I warned earlier, the only way not to dismantle the Schengen ensure proper management of the external borders of the EU.” The EU appears to be unable to curb migration flows. Because the borders are not guarded, seeing more and more countries are forced to protect their own borders. Even the welcoming Sweden went on Thursday to intensive checks on the southern border.
Remember when Hank Paulson waved the “Mutual Assured Destruction” card in the face of the U.S. with his infamous “blank check” three page term sheet? Now, it’s Europe’s turn. What’s worse, however, for things to devolve this much, it confirms that the European ‘Union’ is rapidly disintegrating, much more than the recent surge in barbed wire fences around European nations will demonstrate, and as Timmermanns warns, that means war.
Greece’s migration minister on Friday said refugee smuggling in Turkey was conducted in “broad daylight” as he called on the EU to step up relocation plans. “The entries (from Turkey) are happening in an organized fashion,” junior interior minister for migration Yiannis Mouzalas told a news conference. “It is happening in broad daylight, with villages gathering around to watch the refugees being put in boats by the traffickers. There is no secrecy in this,” he said, citing evidence from Turkish media and the Greek coastguard. Greek PM Alexis Tsipras will travel to Turkey next week to press the country’s leaders to take a stronger stance against refugee traffickers.
Turkey “is spending a lot of money, it is holding three million refugees on its soil, but we believe it has the ability and it must acquire the will to stop the flows from its coasts,” Mouzalas said. Greece has been overwhelmed this year by a migration crisis unseen in Europe since the Second World War. The United Nations on Friday said over 800,000 people have crossed the Mediterranean to Europe this year, with over 3,400 dying in the attempt. EU states put together a scheme to share out some 160,000 people inside the bloc, but fewer than 2,000 relocation places have been found so far. And the program is already threatened by undue inflexibility, Mouzalas said.
“One EU country said it was prepared to accept 12 people. We wanted to send 14 as they were a family, and the country did not accept the extra two. Such cancellations could cancel out the substance of relocation,” he said. Greece has pledged to find accommodation for 20,000 refugees by January. Another 20,000 will be temporarily housed in rented flats under a UN scheme, Mouzalas said. And registration centres on Greek islands created with EU funds, known as hotspots, will provide short-term accommodation for over 6,500 people, he said. “If (registration) procedures go smoothly people will stay 48-72 hours” before moving to the mainland, the minister said.
Greece has warned the European Union to obtain specific commitments from Turkey ahead of putting together a €3 billion fund for Ankara to help tackle the refugee crisis. The key role of Turkey in the process of stemming the flow of refugees and migrants was discussed on Friday during the second and last day of a summit in Malta. According to sources, Greek Prime Minister Alexis Tsipras stressed to his EU counterparts that Brussels has to make it clear what it will be getting in return for providing Turkey with emergency funding and assistance. For instance, Tsipras said that in return for receiving new equipment for its coast guard, Turkey should be made to prove that it is cracking down on human-trafficking gangs.
The Greek premier said that if the EU is going to provide money for the construction of reception centers on Turkish soil, then Ankara has to commit to allowing the relocation of refugees to take place directly from these camps. Also, Tsipras said that if the EU is going to lift visa restrictions on Turkish citizens, Ankara’s readmission agreement with Greece should be upgraded to a pact between Turkey and the EU. It is expected that these will be some of the key points that Tsipras will raise when he visits Ankara next week, ahead of an EU-Turkey summit in Brussels on November 29. Tsipras held a meeting with Foreign Minister Nikos Kotzias in Athens on Friday to begin preparation for the upcoming trip to Turkey.
Alternate Minister for Immigration Policy Yiannis Mouzalas said that Greece has no plans to create more spaces at relocation camps on the eastern Aegean islands beyond those needed as part of Athens’s commitment to the EU for the relocation scheme. Mouzalas said that those refugees who will be included in the transfer process would be moved on from the islands to the mainland. He said the government plans to have reception centers capable of holding 2,000 arrivals on Lesvos, 1,500 on Samos, 1,000 on Chios, 1,000 on Kos and around 800 on Leros.
A crowdfunded 100km-long boom to clean up a vast expanse of plastic rubbish in the Pacific is one step closer to reality after successful tests of a scaled-down prototype in the Netherlands last week. Further trials off the Dutch and Japanese coasts are now slated to begin in the new year. If they are successful, the world’s largest ever ocean cleanup operation will go live in 2020, using a gigantic V-shaped array, the like of which has never been seen before. The so-called ‘Great Pacific garbage patch’, made up largely of tiny bits of plastic trapped by ocean currents, is estimated to be bigger than Texas and reaching anything up to 5.8m sq miles (15m sq km). It is growing so fast that, like the Great Wall of China, it is beginning to be seen from outer space, according to Jacqueline McGlade, the chief scientist of the UN environmental programme (Unep).
“We have to admit that there has been a market failure,” she told the Guardian. “Nevertheless, we have to create a market success that brings in new forms of chemistry and technology.” The Ocean Cleanup project aims to do the technology part with a floating barrier as long as the Karman line that reaches from the sea to outer space. Sea currents and winds will be used to passively funnel plastic debris into an elbow made of vulcanised rubber where it can be concentrated for periodic collection by vessels. Sub-sea buoys at depths of up to 30 metres would anchor the contraption in depths of up to 4.5km. Sea currents flowing beneath its booms would allow fish to escape, while hoovering up 42% of the Pacific’s plastic soup. At least, that is the plan.
“Everything is unknown so everything is a potential problem,” said Lourens Boot, the programme’s chief engineer, who has previously worked on offshore oil and gas rigs. “The risk matrix is big, but one by one we are tackling those risks.” One of the biggest has been finance. Charles Moore, the racing boat captain who discovered the floating vortex in 1997, once said that the cost of a cleaning operation would “bankrupt any country”. But around half the scheme’s initial €30m (£20m) budget has now been raised through online donations and wealthy sponsors. In the long term, the project plans to finance itself with a major retail line of ocean plastic fashion wear.
Waves of deadly attacks have held France in a constant state of stress, anger and grief over the past 12 months, as the country has faced a series of deadly assaults and terror acts by radicalized Islamists and jihadists. It all started just before Christmas on December 20, 2014, in the largest suburb of the city of Tours, in Central France, when an attacker of Burundian origin, shouted “Allahu Akbar” [God is great] before attacking officers at a police station with a knife. The assailant, identified as Bertrand Nzohabonayo, injured three policemen before officers took him down. The following day, on December 21, a man in the French city of Dijon run over 11 pedestrians in five areas of the city. The driver – who also shouted “Allahu Akbar” – was arrested. Authorities later stated that the attacker ploughed into passers-by because he suffered from severe psychiatric problems.
On the third day after the initial attack, a man in a white van rammed over ten pedestrians at a Christmas market in the French city of Nantes. The driver is said to have stabbed himself and officials said he appeared to be in an unstable metal condition. One civilian died in those attacks. The spate of attacks forced the French government to heighten security by deploying 300 soldiers onto the country’s streets. In early January, the French nation was in state of horror after a series of five terrorist attacks, which took place in and around Paris. The four attacks killed at least 20 people and wounded dozens more, before three of the assailants were killed by special forces. The fourth terrorist remains at large.
The intimidation of the French public began on January 7, after two gunmen, identified as Cherif and Said Kouachi, attacked the headquarters of the satirical newspaper Charlie Hebdo, over the publication’s depiction of the Prophet Mohammed. Twelve people, including two police officers, were killed in the onslaught, while eleven others were injured. The suspects fled the scene. Hours after the Charlie Hebdo attack, a third assailant, Amedy Coulibaly, shot a 32-year-old man who was out for a run in a park near Coulibaly’s home. On January 8, the same attacker shot and killed a municipal police officer in a suburb of Paris. A street sweeper was also wounded in that attack. The following day, on January 9, the Charlie Hebdo attackers, Cherif and Said Kouachi, attacked a signage production company in Dammartin-en-Goele, taking hostages on premises.
At the same time, Coulibaly, entered a kosher supermarket at Porte de Vincennes killing four people and taking the rest of the people in the store hostage. To neutralize the attackers, French special forces conducted simultaneous raids in Dammartin and at Porte de Vincennes, killing three terrorists. The fourth suspect, believed to be Coulibaly’s wife is still on the run. January’s atrocities became the deadliest act of terrorism in France since 1961, when a bomb on a Strasbourg–Paris train took the lives of 28 people. Following Charlie Hebdo attacks, the French government announced the creation of 2,680 new positions in the French military and intelligence agencies. The €425 million program was unrolled with the sole purpose to monitor a population of approximately 3,000 people with any possible connections to terrorist groups abroad. Furthermore, the government deployed some 122,000 police, military and gendarmes to provide security across France.
But terror in France did not stop there. On June 26, 2015 a French Muslim of North African descent, Yassine Salhi, decapitated his employer before driving his van into gas cylinders at a gas factory near Lyon. This caused an explosion and injured two other people. Prior to ramming his van in an effort to destroy the factory, Salhi placed his boss’s decapitated head on a fence along with two Jihadist black flags. The suspect was arrested after being taken down by the firefighters that rushed to the scene. That attack on the factory near Lyon coincided with a number of other Islamist terrorist attacks that have taken place in Tunisia and Kuwait. Finally, before the monstrous wave of attacks on Friday, a Thalys train traveling from Amsterdam to Paris via Brussels was attacked by an assailant who opened fire in a carriage before being subdued by off duty US servicemen aboard the train. Four people were injured but luckily none fatally.
There have been horrible, disgusting terrorist attacks in France this night, with over 120 dead already reported. In response, premier François Hollande has declared a state of emergency for the first time since the Second World War. The media are subject to state control, gendarmes can enter any private home, and the borders are shut. The borders that have been the last hope for so many refugees crowding the camps of Calais and elsewhere, the borders that are so important to the women, children and men shivering in the rain, their feet rotting, have been closed by a frightened France. Probably the rest of Europe will follow suit. I hope not. A handful of terrorists—maybe French nationals, maybe not—blew up a crowd in a stadium with grenades, killed diners and walkers and concert-goers with guns and suicide bombs, traumatizing Paris to its core.
And what Hollande has done in response is to close the borders, the lifeline to the many suffering people fleeing war in Syria—even before we know for sure who the murderers are, or what their aims were. Reports claim the terrorists fought in Syria’s name. But if they did, and if they were ISIS, then the tens of thousands of refugees shivering in camps hate and fear them as much as the friends and families of the dead of Paris do. The refugees huddling in France, Germany, Turkey, Greece, and elsewhere are not the terrorists. They are fleeing the same terrorists—fleeing death, torture and destruction, trusting their lives to crumbling boats, washing up on shore hated, beaten, half-dead—and we are forsaking them.
I am a member of a Facebook group where people organize aid for the refugee camp in the northern seafront town of Calais. Now a shanty town of a full 6,000 refugees, such aid has never been more needed. Shoes are rotting on the feet of the camp’s dwellers as the weather worsens, food and medical care are scarce, and graves are rapidly filling. The lifesavers in the camp are not the government or the UN refugee groups—they are ordinary people connecting with tiny charities to bring desperately needed wood, food, medicine, blankets, water. Closing the borders as the terrifying war continues in Syria will not punish the terrorists; it will only cause more needless suffering and death, including to innocent children.
Why is Hollande using the refugees as hostages, condemning them with his border closure to a death that is slower but no less certain than that of a head chopped by a guillotine, or that of a concert-goer blown up by a grenade? He only helps the terrorists. ISIS and those in the West who hate the refugees want the same thing: martial law, state control of discourse, the spreading of Islamophobia, and a global atmosphere of suspicion and discord. In such a world, ISIS gets its youthful cannon fodder—those disaffected by the climate of hate and brutal racism—and the Front Nationales, the Ukips, all the soft and hard white supremacists of the world, get their white utopia, where a refugee child cannot migrate but guns and money can.
Tonight, Paris mourns, and the world mourns with Paris. I mourn, and my anguish at needless death drives these words. Forsake vengeance. Open the borders, Hollande. Open them even further than the painful trickle that they allowed before, and let mercy be the response to horror. Open them, Cameron. Let those people fleeing for their lives through the borders—through all the borders—fly all the way through to peace and safety in whatever countries they wish to reach. Open the borders, Obama, and let those people through, those people just like us, just like the diners and concert-goers of Paris, who are trying to save their lives.
If they all die of illness and exposure in their tents, fighting starvation, sickness, fire, fear or hate, it will neither save a single life from terrorism, nor avenge a single soul. Even if terrorists slip in among the refugees, each one of them who dies, each day they are locked down, will make more terrorists, watered by the tears of grief of their families and friends. No high-security level can ever end the threat of terrorism. Only mercy can do that; only the mercy of refuge, of acting like the just countries we believe ourselves to be—rather than what the terrorists believe us to be—can make us safe.
This book shows us the face of Earth’s sixth great mass extinction, revealing that this century is a time of darkness for the world’s birds and mammals. In The Annihilation of Nature: Human Extinction of Birds and Mammals, three of today’s most distinguished conservationists tell the stories of the birds and mammals we have lost and those that are now on the road to extinction. These tragic tales, coupled with eighty-three color photographs from the world’s leading nature photographers, display the beauty and biodiversity that humans are squandering. Gerardo Ceballos, Anne H. Ehrlich, and Paul R. Ehrlich serve as witnesses in this trial of human neglect, where the charge is the massive and escalating assault on living things.
Nature is being annihilated, not only because of the human population explosion, but also as a result of massive commercial endeavors and public apathy. Despite the well-intentioned work of conservation organizations and governments, the authors warn us that not enough is being done and time is short for the most vulnerable of the world’s wild birds and mammals. Thousands of populations have already disappeared, other populations are dwindling daily, and soon our descendants may live in a world containing but a minuscule fraction of the birds and mammals we know today. The Annihilation of Nature is a clarion call for engagement and action. These outspoken scientists urge everyone who cares about nature to become personally connected to the victims of our inadequate conservation efforts and demand that restoration replace destruction. Only then will we have any hope of preventing the worst-case scenario of the sixth mass extinction.
