Menu Icon

Debt Rattle October 29 2024

Oct 292024
 
 October 29, 2024  Posted by at 9:25 am Finance Tagged with: , , , , , , , , , , , , ,  82 Responses »


Jules Adler Panorama de Paris vu du Sacré Coeur 1935

 

• Will Donald Trump Get His Revenge? (Susan Quinn)
• Leftists Are Terrified About What Will Happen To Them If Trump Wins (ZH)
• Worst. Nazi. Rally. Ever. (Margolis)
• Kamala Is Just A Vessel; We Are Running Against Something Far Bigger (MN)
• Speaking of Abortion (James Howard Kunstler)
• Trump’s 19th-Century Solution to Fiscal Disaster (David Stockman)
• Trump Campaign Slams Harris Over Beyonce ‘Lies’ (RT)
• Trump To Make Ukraine The EU’s Problem – FT (RT)
• I Don’t Want War With Russia – Vance (RT)
• University Professors Approaching Near Unanimity as a Democratic Lock (Turley)
• Bezos Explains Why WaPo Dropped Presidential Endorsements (RT)
• Steve Bannon To Be Released From Prison One Week Ahead Of Election (JTN)
• How America Was Destroyed (Paul Craig Roberts)
• The Enormous Constraints Faced By Netanyahu (Juan Cole)
• BRICS Make History – Can They Keep the Momentum? (Pepe Escobar)
• Slovak PM Fico Warns Of Continued Attempts On His Life (RT)
• Volkswagen Planning Mass Layoffs – Workers’ Council Chief (RT)

 

 

 

 

ABC

MSG


https://twitter.com/i/status/1850691657303519451
https://twitter.com/i/status/1850654136293024210

Elon

Stossel

 

 

 

 

Trump is not looking for revenge. He and his X-men team have bigger fish to fry. Trump’s “revenge” will be that what happened to him since 2015 -lawfare- can never happen again.

“…the changes he will make will be in the way government operates, not mere petty payback to individual miscreants…”

• Will Donald Trump Get His Revenge? (Susan Quinn)

There’s almost nothing that Donald Trump likes better than throwing his adversaries off their game; he likes to be unpredictable, confusing and in charge. It gives him an edge in achieving his goals. He’s kept his adversaries guessing to the extent that he will pay them back for their lawfare and deep-state machinations, and not surprisingly, they expect the worst. Yet he has said repeatedly that victory in the election will be his revenge. They don’t know what to make of it. A Trump senior advisor made the following observation: “President Trump has made clear that success will be the best revenge,’ Trump senior adviser Brian Hughes said. ‘When others have weaponized government and legal institutions against him for political interference, he will return these institutions to their constitutional purpose of protecting Americans’ liberty and creating a safe and prosperous nation again.

But since the political Left almost always chooses to see deceit in Trump’s comments, they don’t believe he is sincere. He made it even more unpredictable for them with this: “Look when this election is over, based on what they’ve done, I would have every right to go after them,” Trump said. “And it’s easy because it’s Joe Biden, and you see all the criminality, all of the money that’s going into the family and him, all of this money from China, from Russia, from Ukraine.” And then Trump underscored it again, wanting to be sure there was no doubt in the minds of the Left that he could act against them: When asked during a Fox News interview on Wednesday if he plans to use the justice system to punish his political opponents, Trump said: “When this election is over, based on what they’ve done, I would have every right to go after them.” Note that in both of the previous quotations, Trump commented on what he could do, not on what he would do.

Given the incidents of lawfare that Trump has had to endure, the hyperbole spouted by the mainstream media and the political Left, it’s no wonder that Trump would want to take revenge against those who have relentlessly criticized and attacked him. Jonathan Turley, law professor at Georgetown University, has commented several times on the pathetic and weak lawfare attacks that have been launched against Trump from various attorneys and district attorneys. He made this comment a few months ago about Alvin Bragg, Manhattan District Attorney, who twisted the facts of a Trump misdemeanor to transform them into a felony: Like his predecessor, Bragg previously scoffed at the case. However, two prosecutors, Carey R. Dunne and Mark F. Pomerantz, then resigned and started a public pressure campaign to get New Yorkers to demand prosecution.

Pomerantz shocked many of us by publishing a book on the case against Trump — who was still under investigation and not charged, let alone convicted, of any crime. He did so despite objections from his former colleague that such a book was grossly improper. Nevertheless, it worked. Bragg brought a Rube Goldberg case that is so convoluted and counterintuitive that even liberal legal analysts criticized it. It’s no wonder that Trump is relishing the discomfort and fear that he is eliciting in his opponents. They have spent years trying to ruin his reputation, insulting him, discrediting him and trying to humiliate him. Meanwhile, in reflecting on the 2016 election, Trump said the following about Hillary Clinton:

“I could have gone after Hillary. I could have gotten Hillary Clinton very easily. And when they say lock her up, whenever they said ‘lock her,’ you know, they’d start, 30,000 people, ‘lock her up, lock her up.’ What did I do? I always say take it easy, just relax. We’re winning. Take it easy. Take it easy.” He added: “I could have had her put in jail. And I decided I didn’t want to do that. I thought it would look terrible. You had the wife of the president of the United States going to jail. I thought it would be very bad if we did that. And I made sure that didn’t happen, OK? I thought it would be bad.” But now he has reached the point where striking fear in the hearts of his enemies seems righteous. Yet the changes he will make will be in the way government operates, not mere petty payback to individual miscreants. That will be devastating to the Leftist cause. It will also serve as his retribution.

Read more …

“They lament the undeniable shift of global politics to the conservative right while refusing to ask why it’s happening?”

• Leftists Are Terrified About What Will Happen To Them If Trump Wins (ZH)

After being indoctrinated for almost a decade to believe that their political opponents are secret Nazis ready to install a fascist regime, it’s not surprising that Democrats are freaking out over recent polls indicating a potential Trump win in the November elections. Convinced that America 2024 is going to be a repeat of Germany 1933, ignorant leftists are scrambling to determine whether or not to leave the US or “start a revolution.” The anxiety is palpable. The New Yorker recently asserted in an arduous and rambling article spanning centuries of political history and every rhetorical cliche imaginable that, essentially, Trump is likely to win. The outlet describes Kamala Harris as “virtuous” (which is laughable), but they suggest this trait is not respected enough within the American political sphere. They lament the undeniable shift of global politics to the conservative right while refusing to ask why it’s happening?

They simply default to the old low-IQ and low effort accusations of “racism” and “xenophobia”. The New Yorker argues: “Even when it is utterly self-destructive – as in Britain, where the xenophobia of Brexit cut the U.K. off from traditional allies while increasing immigration from the Global South—the apprehension that “we” are being flooded by frightening foreigners works its malign magic. It’s an old but persistent delusion that far-right nationalism is not rooted in the emotional needs of far-right nationalists but arises, instead, from the injustices of neoliberalism…” The mass immigration from the third world continues in Britain because the same progressive elitists are still in charge despite the Brexit vote. That’s why the country is spiraling into a pit of criminality, mass stabbings and a rape epidemic. It’s the reason why the British voted for Brexit in the first place.

Brexit and the end of mass immigration is the will of the majority of the people, just as it’s the will of the majority of people in many parts if Europe and the US. Yet, leftists who pontificate endlessly about the virtues of democracy dismiss the majority when it suits them. It is this arrogance of the political left that has led directly to the rise of the right wing movement that so utterly terrifies them. The problem is, leftists never take responsibility because they see this as an expression of weakness, and also because their moral relativism allows them to rationalize any behavior as necessary “for the greater good.” Their main character syndrome spurs them to believe they are the ultimate good in the world, and if they are the ultimate good then anyone who dares oppose them must be the ultimate evil. This is why they have a tendency to demonize their political opposition in extreme ways. The New Yorker describes Trump as singularly dangerous, comparing him to mobsters, tyrants and even cancer:

“Trumpism is a cancerous phenomenon. Treated with surgery once, it now threatens to come back in a more aggressive form, subject neither to the radiation of “guardrails” nor to the chemo of “constraints.” It may well rage out of control and kill its host…” And this kind of rhetoric is exactly why there have been at least two assassination attempts on Trump’s life; attempts which the leftist media then shamelessly blamed on Trump. It’s also gaslighting, considering the level of tyranny Democrats have engaged in under Biden and the contempt they have displayed for American ideals over the past decade. The fantasy world of the left is rife with paranoia built on a foundation of emotional sand rather than evidence. They see a new Trump term as the end of everything:

“Having lost the popular vote, as he surely will, he will not speak up to reconcile “all Americans.” He will insist that he won the popular vote, and by a landslide. He will pardon and then celebrate the January 6th insurrectionists, and thereby guarantee the existence of a paramilitary organization that’s capable of committing violence on his behalf without fear of consequences. He will, with an obedient Attorney General, begin prosecuting his political opponents…” “When he begins to pressure CNN and ABC, and they, with all the vulnerabilities of large corporations, bend to his will, telling themselves that his is now the will of the people, what will we do to fend off the slow degradation of open debate? Trump will certainly abandon Ukraine to Vladimir Putin and realign this country with dictatorships and against NATO and the democratic alliance of Europe. Above all, the spirit of vengeful reprisal is the totality of his beliefs—very much like the fascists of the twentieth century in being a man and a movement without any positive doctrine except revenge against his imagined enemies…”

Read more …

Which was worse? 1939 or 2024?

• Worst. Nazi. Rally. Ever. (Margolis)

When Donald Trump’s campaign announced plans for a rally at Madison Square Garden, Democrats and their media allies knew they had a problem. Trump was going to pack the house on their turf. So they wasted no time pushing the tired Hitler narrative and claimed that the choice of venue was an homage to a pro-Nazi rally held there in 1939. It wasn’t just liberals in the media pushing this narrative, either. Hillary Clinton accused Trump of “actually re-enacting the Madison Square Garden rally in 1939.” “President Franklin Roosevelt was appalled that neo-Nazis, fascists in America were lining up to essentially pledge their support for the kind of government that they were seeing in Germany. So I don’t think we can ignore it,” Hillary added. Then she doubled down.

“Now, it may be a leap for some people and a lot of others may think, ‘I don’t want to go there. I don’t want to say that.’ “But please open your eyes to the danger that this man poses to our country, because I think it is clear and present for anybody paying attention.” Even the Harris-Walz campaign joined in on the rhetoric. “Donald Trump’s got this big rally going at Madison Square Garden,” Kamala’s running mate Tim Walz said at a campaign event in Henderson, Nevada. “There’s a direct parallel to a big rally that happened in the mid-1930s at Madison Square Garden.” Walz added, “And don’t think that he doesn’t know for one second exactly what they’re doing there.”

Well, the rally took place Sunday night, and boy, talk about the worst Nazi rally ever! In addition to the diverse speakers at the event, a black woman sang the national anthem.

And clearly, Jews didn’t get the memo that this was a “Nazi rally.”

The only Nazi symbols you saw at all came courtesy of the Democrats.

Read more …

“I’m asking you to be excited about the future..”

• Kamala Is Just A Vessel; We Are Running Against Something Far Bigger (MN)

During a historic rally Sunday at Madison Square Garden, president Trump urged that Kamala Harris is purely “a vessel” and in reality the MAGA movement is fighting against “something far more powerful.” Trump told the crowd, “We are not just running against Kamala — She means nothing. She is purely a vessel — We are running against something far bigger than Joe or Kamala and more powerful than them, which is a massive, vicious, crooked, radical left machine that runs today’s Democrat Party.” Trump further asserted that Biden and Harris are “perfect vessels because they’ll never give them a hard time. They’ll do whatever they want.” He continued, “I know many of them. It’s just an amorphous group of people. But they’re smart and they’re vicious, and we have to defeat them. And when I say the ‘enemy from within,’ the other side go crazy.”

Trump added that these people “are doing such harm to our country with their open border policies, record-setting inflation, ‘Green New Scam,’ and everything else they are doing. But we’re not going to let it happen any longer. We’re going to have the biggest victory in the history of our country on November 5 … We’re going to make America great again.” Elsewhere during his speech, Trump urged that his party is one of real unity and inclusion, while the other side is intent on fomenting hatred and division. “We bleed the same blood. We share the same home and we salute the same great American Flag. We are one people, one family, and one glorious nation under God,” Trump declared.

https://twitter.com/i/status/1850696878469337233

Trump vowed to make America stronger than ever before and to bring back the American Dream. Trump told the crowd “I’m asking you to be excited about the future,” further urging “this will be America’s new golden age.” The MSG event was a roaring success, despite deranged leftists demanding it be shut down claiming it was a literal ‘Nazi rally’.

Read more …

“You have not seen such a vivid demonstration of slowly-and-then-all-at-once since the implosion of Lehman Brothers as the collapse of the Democratic Party this fateful October..”

• Speaking of Abortion (James Howard Kunstler)

What were they thinking after they shoved “Joe Biden” into the abyss, like an old refrigerator over the edge of the landfill, and afterward settled — instantly it appears, with no process at all — on Kamala Harris to lead the party to victory in the fall election? I will tell you: they were not thinking at all. The collective mind of the Democrat elite was a vast vacuum devoid of thought, mass, or light, like a corner of deepest space, lacking even a particle of cosmic debris to evoke the existence of existence. Such mindlessness was the consummate expression of a party that for eight years worked every angle of political mental illness toward the loss of its mind, driven by whatever dark energy seeks escape from truth, life, and God — whatever is opposite of creation and being. What you are witnessing is a colossal act of being un-born. The party put out a call to the universe and the universe ordered. . . an abortion of the Democratic Party! You are reminded again: be careful of what you wish for.

And so do things stand one week before the election. You have not seen such a vivid demonstration of slowly-and-then-all-at-once since the implosion of Lehman Brothers as the collapse of the Democratic Party this fateful October. Poor Kamala is just collateral damage at this point. She goes out before some manufactured audience and seven-minutes onstage delivering a door-dash order of precooked blather is all she can stand before being overwhelmed by the emptiness and futility of her task. . . and then she flees back to the waiting limousine (and the chardonnay bottle). Meanwhile, her allies — that is, the Democratic Party’s allies — play their own roles in this political abortion. The LA Times and the WashPo declined their usual proforma endorsements, two kisses of death. Those actions last week provoked nervous breakdowns in both newsrooms, cries of anguish, resignations, professional suicides.

The news media find themselves in a peculiar position, having gone along for years with the gathering mental illness of the Democratic Party, like incompetent parents in a large dysfunctional family, offering unconditional support for their kids’ intolerable and unacceptable behavior. They are flying to pieces now on the CNN chat panels. James Carville, the party’s shriveled Gollum, has gone to IV infusions of Jim Beam, seems like. Jake Tapper gets Sunday schooled by JD Vance and turns into a mewling cat-lady right before your eyes. Anderson Cooper goes all waxy and mute. Joy Reid surrenders to echolalia as her MSNBC fans are subjected to the guest list of P. Diddy’s “freak-offs,” ranting about Hitler. Lawrence O’Donnell is looking more and more like Vincent Price in Return of the Fly. Reality-optional hardly suffices to describe cable news these days.

You’ve got to ask: can they just let it be? Can they just let go of their insane Jacobin rebellion now and let it fade into history? Then, kick back, recuperate, get their minds right, put their house and family in order, and move on as a legit political faction in a functioning republic? Or, do they burn the asylum down? The signals are troubling. They are chattering about Mr. Trump “using the military” against them in the months to come — as if the Abrams tanks were going to roll up to DNC headquarters and blast away. By now, you know that such thoughts expressed by Democratic pols and news pals are always projections of their own wishes. The New York Times published just such a classic paranoid projection exercise last week “. . . telling Americans that if he [Trump] wins, he plans to bend, if not break, our democracy.”

Surely it is too late, with early voting well underway, to stop any ballot harvesting and other election shenanigans as engineered by master fraudster Marc Elias. In fact, frauds are already being discovered (e.g., Lancaster County, PA.) Not a good look. It is exactly what a conspiracy (to commit election fraud) means in law, and the actual people who cooked the ballots and transported them are going to rat-out those who instructed them to do it. Wait for that, and wait for it to pop up elsewhere around the country. This time, watchers are watching, much more carefully.

Read more …

Stockman knows his numbers. Take the following, and then remember (you too, David) that Elon Musk says he can save $2 trillion on spending.

“Trumpian revenue tariffs would generate about $9 trillion over the next decade, or nearly 80% of the $11.5 trillion revenue loss from drastically shrinking the income tax coverage..”

• Trump’s 19th-Century Solution to Fiscal Disaster (David Stockman)

In the last weeks of the campaign, Donald Trump is slicing and dicing the Federal income tax nearly as fast as he served up fries at the McDonald’s drive-thru window last weekend. So far, he has proposed to extend the lower rates, family tax credits, and investment incentives of the 2017 Tax Act after they expire in 2025 and to also exempt tips, Social Security benefits, and overtime wages from the Federal income tax. Those items alone would generate a revenue loss of $9 trillion over the next decade, but he has recently proposed to also exempt firefighters, police officers, military personnel, and veterans from the Federal income tax as well. We estimate the latter would cost another $2.5 trillion in revenue loss over 10 years. As it happens, there are 370,000 firemen, 708,000 policemen, 2.86 million uniformed military personnel, and 18.0 million veterans in the US.

These 22 million citizens have an estimated average income of $82,000 per year, which translates to about $60,000 each of AGI (adjusted gross income). At an average income tax rate of 14.7% these exclusions would generate $250 billion per year of reduced income tax payments. In all, Trump has thus tossed out promises to cut income taxes by $11.5 trillion over the next 10-year budget window. In turn, these sweeping reductions would amount to upwards of 34% of CBO’s estimated baseline income tax revenue of $33.7 trillion over the period. Alas, even in the halcyon days of Reagan supply-side tax cutting no one really dreamed of eliminating fully one-third of the so-called crime of 1913 (the 16th Amendment which enabled the income tax).

10-Year Revenue Loss:
Extend the 2017 Trump tax cuts: $5.350 trillion.
Exempt overtime income: $2.000 trillion.
End Taxation of Social Security benefits: $1.300 trillion.
Exempt Tip income: $300 billion.
Exempt Income of Firemen, Policemen, Military and Veterans: $2.500 trillion.
Trump Total Revenue Loss: $11.500 trillion.
CBO Income Tax Baseline Revenue: $33.700 trillion.
Trump Revenue Loss As % of Baseline: 34%.

Then again, Trump may have something virtually epic in mind. To wit, scrapping the income tax entirely in favor of taxing consumption via levies on imported goods and merchandise. “In the old days when we were smart, when we were a smart country, in the 1890s and all, this is when the country was relatively the richest it ever was. It had all tariffs. It didn’t have an income tax,” Trump said at a sit-down with voters in New York on Friday for Fox & Friends. “Now we have income taxes, and we have people that are dying.” The New York Times is deeply alarmed: “The former president has repeatedly praised a period in American history when there was no income tax, and the country relied on tariffs to fund the government.” Actually, however, 19th-century America was even smarter than Trump realizes.

In 1900 total Federal spending amounted to just 3.5% of GDP because back then America was still a peaceful republic and had no Warfare State or even significant standing army at all. And save for the most advanced precincts of Europe, the Welfare State hadn’t yet been invented, either. So, yes, the so-called “revenue tariffs” of the 19th century did meet the income needs of the Federal government to the point of actually balancing the budget year after year between 1870 and 1900. Indeed, the actual annual surpluses were large enough to pay down most of the Civil War debt, to boot. Today, of course, the Warfare State, Welfare State, and the Washington pork barrels account for 25% of GDP. So Trump may be directionally correct in wanting to tax consumption rather than income, but, as usual, he’s off by about seven orders of magnitude when it comes to the size of the Federal budget that needs to be financed.

Still, Trump has stepped up to the plate when it comes to a 21st-century version of the revenue tariff. He has pledged to impose a 20% universal tariff on all imports from all countries with a specific 60% rate for Chinese imports. Based on current US import levels of $3.5 trillion per year from worldwide sources and $450 billion from China, Trump’s tariffs would generate about $900 billion of receipts per annum. To be sure, Trump’s claim that these giant tariffs would be paid for by Chinamen, Mexicans, and European socialists is just more of his standard baloney. Tariffs are paid for by consumers, but that’s actually the hidden virtue of the Tariff Man’s favorite word. The truth is, government should be paid for via taxation on current citizens, not fobbed off in the form of giant debts on future citizens, born and unborn.

So if we are going to have Big Government at 25% of GDP rather than a 19th-century government at 3.5% of GDP, and Trump is a Big Government Man if there ever was one, better that the burden be placed on consumption, not production, income, and investment. After all, today the “makers” get hit good and hard by the current exceedingly lopsided income tax system. Thus, the top 1% pays 46% of income taxes, while the top 5% pays 66% and the top 10% pays 76% of all income taxes. On the other end, by contrast, the bottom 50% pays just 2.3% of individual income taxes, while 40% of all families pay no income tax at all. In any event, the math works out such that the proposed Trumpian revenue tariffs would generate about $9 trillion over the next decade, or nearly 80% of the $11.5 trillion revenue loss from drastically shrinking the income tax coverage and collection rate. So that’s a big step in the direction of fiscal solvency rather than more UniParty free lunches.

Read more …

“They have to use people to get people to come, and then they send buses..”

• Trump Campaign Slams Harris Over Beyonce ‘Lies’ (RT)

Republican presidential candidate Donald Trump has accused Democratic rival Kamala Harris of misleading voters by attracting them to a rally in the belief that they would see a performance by pop superstar Beyonce. Over 30,000 people turned up at the Democratic event on Friday in Houston, Texas, with some expecting a free concert after it was announced that Beyonce would be present. MSNBC and the Washington Post reported ahead of the rally that the superstar singer would appear with Harris during the event, while NBC cited a source as saying that Beyonce was “also expected to perform.” Beyonce earlier approved the use of her song ‘Freedom’ as a soundtrack for the Harris campaign. The 43-year-old Houston native did take to the stage at the event with her former Destiny’s Child bandmate Kelly Rowland, before announcing that she was there as a mother and not as an entertainer.

In a speech that lasted less than five minutes, Beyonce urged rallygoers to support abortion rights, after Harris called on voters to “mobilize” on November 5 in support of reproductive freedom. “It’s time for America to sing a new song,” Beyonce added. “Our voices sing a chorus of unity. They sing a song of dignity and opportunity. Are y’all ready to add your voice to the new American song,” the singer said, welcoming Harris onto the stage. Speaking at a Michigan rally on Saturday, Trump hit out at the apparent failure of the Harris campaign to meet supporters’ expectations. “Beyonce went up and spoke for a couple of minutes and then left, and the place went crazy,” Trump stated, adding that “they booed the hell out of everybody.”

“They thought she was going to perform… it’s crazy. They have to use people to get people to come, and then they send buses. We don’t send buses. Everybody comes. We’re just going to make America great again. It’s very simple,” the former president added. Tim Murtaugh, a senior adviser to Trump, claimed that organizers of the Democratic rally had “lied to build a crowd.” While the front rows at the rally appeared supportive as Harris proceeded with her speech after seeing Beyonce off the stage, clips on social media indicated booing and heckling at the back, with some apparently leaving the venue in disappointment. The vice president has been backed by American pop sensation Taylor Swift as well as Usher, Eminem, and Cardi B, while Trump has received endorsements from SpaceX CEO Elon Musk, rapper 50 Cent, and popular journalist Tucker Carlson.

Read more …

“Russia gets a guarantee of neutrality from Ukraine,” while Germany and other EU countries foot the bill for Ukraine’s reconstruction..”

• Trump To Make Ukraine The EU’s Problem – FT (RT)

Donald Trump will leave the enforcement of any peace deal between Russia and Ukraine to European powers, one of the former US president’s advisers has told the Financial Times. The plan is one of several floated by Trump’s advisers and allies, all of which involve the US refusing to deal with the aftermath of the conflict. Trump has promised to bring a rapid end to the ongoing conflict if he is elected president in November. However, he has offered few specifics as to how he would do this, save for pressing Vladimir Putin and Vladimir Zelensky into peace talks with US aid to Kiev as leverage. In the absence of any concrete peace plan, a host of Trump’s current and former advisers have outlined how they think the former president could achieve this goal.

One unnamed “long-term Trump adviser” told the Financial Times on Monday that the Republican candidate could resolve the conflict with “a reimagining of the failed Minsk agreements of 2014 and 2015,” under which Kiev agreed to grant some autonomy to the majority Russian-speaking regions of Donetsk and Lugansk. This time around, the adviser said, the deal would be enforced by EU peacekeepers. “There are two things America will insist on,” he said. “We will not have any men or women in the enforcement mechanism. We’re not paying for it. Europe is paying for it.” Reviving the Minsk agreements would likely present several major challenges.

After multiple European leaders admitted that they never intended to abide by the 2014 and 2015 agreements, Moscow does not believe that the EU can play the role of honest broker, Russian Foreign Minister Sergey Lavrov said earlier this month. Furthermore, Donetsk and Lugansk – along with Kherson and Zaporozhye – have since joined the Russian Federation, and any peace deal must take into account this “territorial reality,” the Kremlin has said. Fred Fleitz, a former CIA analyst who served in Trump’s White House, told the British newspaper that the US could “freeze the conflict” along the current front line, and negotiate a lasting settlement with Russia at a later date. Ukraine would not give up its territorial claims in the meantime, Fleitz said, explaining that this plan counts on delaying a final agreement until “Putin leaves the stage.”

However, Fleitz conceded that he does not speak for Trump and does not know the former president’s foreign policy plans. The most detailed proposal has been put forward by Trump’s running mate, Ohio Senator J.D. Vance. Speaking to former US Navy SEAL and podcast host Shawn Ryan last month, Vance said that the current frontline could be demilitarized and fortified, ensuring that “Russia doesn’t invade again.” In exchange, “Russia gets a guarantee of neutrality from Ukraine,” while Germany and other EU countries foot the bill for Ukraine’s reconstruction. The current American policy of “throw[ing] money at this problem, [and] hope[ing] the Ukrainians are able to achieve a military victory” is “stupid,” Vance told Ryan.

Read more …

“I think that we should try to pursue avenues of peace.”

• I Don’t Want War With Russia – Vance (RT)

The US is not at war with Russia and should not seek one, Republican vice-presidential nominee J.D. Vance has said, when asked whether he would brand President Vladimir Putin an “enemy” of America. The senator from Ohio was asked during his appearance on NBC’s Meet the Press on Sunday whether he saw the Russian leader “as an ally or an enemy.” Putin is “clearly an adversary, he is a competitor,” but Washington needs to be “smart about diplomacy too,” Vance responded. ”Just because we don’t like somebody doesn’t mean that we can’t occasionally engage in conversations with them,” he suggested. Host Kristen Welker pushed him further on whether he would directly refer to Putin as an enemy. ”We are not at war with him. And I don’t want to be at war with Vladimir Putin’s Russia,” the senator said. “I think that we should try to pursue avenues of peace.”

The same logic applies to China, Vance said, adding that he perceives it as a greater threat to American interests than Russia. The US may not like having to talk to its rivals, but in the case of the Ukraine conflict, resolving it will require negotiations, the senator pointed out. When asked whether former President Donald Trump would take the US out of NATO, Vance assured that he wouldn’t. If his running mate returns to office, the country will honor its commitment to the organization, but the bloc “is not just a welfare client, it should be a real alliance,” he said. Vance was referring to Trump’s criticism of insufficient defense spending by its European members.

Moscow has identified NATO’s enlargement in Europe as a threat to its national security and a key reason for the deterioration of relations with the West. The organization’s increasing involvement in Ukraine since the 2014 armed coup in Kiev and promise to bring Ukraine into the fold have contributed in a major way to setting off the ongoing hostilities, Russian officials have said. The current Democratic administration has pledged to stand by Kiev “for as long as it takes” to defeat Russia and has pushed other nations to do the same. Despite the hundreds of billions of dollars spent on Ukraine aid, Kiev’s troops are currently retreating along many parts of the front. Trump has claimed while campaigning that he would end the hostilities in 24 hours, if elected.

Read more …

“..he and others continue to saw feverishly on the branch upon which we all sit in higher education..”

• University Professors Approaching Near Unanimity as a Democratic Lock (Turley)

The 2024 presidential election is shaping up to be the single most divisive election in our history. The public is split right down the middle with almost every group splintering between former president Donald Trump and Vice President Kamala Harris. There is, however, one group that seems almost unanimous: professors. A new survey of more than 1,000 professors shows that seventy-eight percent will vote for Harris and only eight percent will vote for Trump. Other than a poll of the Democratic National Committee, there are few groups that are more reliably Democratic or liberal. For anyone in higher education, the result is hardly surprising. The poll tracks what we already know about the gradual purging of departments around the country of conservative, libertarian, and dissenting professors.

Indeed, the lack of political and intellectual diversity may be turning some donors and even applicants from higher education. With failing revenue and applications, universities are starting to re-embrace commitments to neutrality on political issues. Some, however, are doubling down on advocacy and orthodoxy. In an op-ed this week, Wesleyan University President Michael Roth called on universities to reject “institutional neutrality” and officially support Kamala Harris. Calling neutrality “a retreat,” Roth compared Trump’s election to the rise of the Nazis and insisted that schools should “give up the popular pastime of criticizing the woke and call out instead the overt racism.” He added, without a hint of self-awareness or irony, that “we should not be silenced because of fears of appearing partisan.”

In my book “The Indispensable Right: Free Speech in an Age of Rage,” I discuss the intolerance in higher education and surveys showing that many departments no longer have a single Republican as faculties replicate their own views and values. So not only are professors voting en mass for Harris, Roth would have the schools themselves work openly for her election. That ideological echo chamber is hardly an enticement for many who are facing rising high tuition costs with relatively little hope of being taught by faculty with opposing views. There are obviously many reasons why faculty may reject Trump specifically, but this poll also tracks more generally the self-identification and contributions of faculty. A Georgetown study recently found that only nine percent of law school professors identify as conservative at the top 50 law schools — almost identical to the percentage of Trump voters found in the new poll.

Notably, Roth acknowledged that the current lack of intellectual diversity in higher education had become so extreme that there might be a need for “an affirmative action program for conservatives.” However, he and others continue to saw feverishly on the branch upon which we all sit in higher education in calling for even greater political advocacy. There is little evidence that faculty members have any interest in changing this culture or creating greater diversity at schools. In places like North Carolina State University a study found that Democrats outnumbered Republicans 20 to 1.

Recently, I had a debate at Harvard Law School with Professor Randall Kennedy on whether Harvard protects free speech and intellectual diversity. This year, Harvard found itself in a familiar spot on the annual ranking of Foundation for Individual Rights and Expression (FIRE): dead last among 251 universities and colleges. Harvard has long dismissed calls for greater free speech protections or intellectual diversity. It shows.

Read more …

University professors are not the only group with such an outsized bias. MSM editors and writers have it just as much. And Bezos will not solve that by withholding an endorsement. His hiring practices need to change. Or his paper is toast.

• Bezos Explains Why WaPo Dropped Presidential Endorsements (RT)

The Washington Post has abandoned its decades-long tradition of endorsing a US presidential candidate to earn back the trust of the American public, the newspaper’s owner, billionaire Jeff Bezos, has said. He explained his reasoning in an op-ed published by the Post on Monday after facing intense backlash from current and former staff. The newspaper has been endorsing candidates since 1976, but announced the suspension of the practice on Friday, prompting several editors to resign. The Post’s editorial board endorsed Hillary Clinton in 2016 and Joe Biden in 2020. According to CNN, the Post’s staffers had drafted an endorsement of the Democratic candidate, Vice President Kamala Harris, which was ultimately not approved by the management. Bezos began his Monday’s op-ed by citing a recent Gallup poll, which found that nearly 70% of Americans have little or no trust in the media.

“Our profession is now the least trusted of all. Something we are doing is clearly not working,” the entrepreneur wrote, adding that “most people believe the media is biased.” “Presidential endorsements do nothing to tip the scales of an election,” he continued. “What presidential endorsements actually do is create a perception of bias. A perception of non-independence. Ending them is a principled decision, and it’s the right one.” The founder of Amazon and aerospace manufacturer Blue Origin admitted that the decision to drop endorsements so close to Election Day on November 5 was the result of “inadequate planning.” At the same time, he insisted that neither campaign had affected his decision-making, and that the move to abandon endorsements was not connected to last week’s meeting between Republican presidential candidate, former President Donald Trump, and Blue Origin top executives in Austin, Texas.

A total of 21 of the Post’s opinion columnists signed a statement, describing the non-endorsement as “a terrible mistake.” They argued that “this isn’t the right moment, when one candidate is advocating positions that directly threaten freedom of the press and the values of the Constitution.” Three of the newspaper’s 10-person editorial board have since stepped down. More than 200,000 people – or about 8% of the Post’s paid subscribers – had canceled their digital subscription by midday on Monday, according to NPR. The decision to end endorsements was criticized by many prominent journalists, including the Post’s former longtime executive editor Marty Baron.

Last month, Patrick Soon-Shiong, the owner of the Los Angeles Times, announced that the newspaper would also not be making presidential endorsements. The move faced similar backlash, with editorials editor Mariel Garza resigning in protest. Throughout his campaign, Trump has blasted “the lying media” for what he said was a long history of unfair coverage of him and his time in office. The Harris campaign and allies have similarly accused pro-Trump media outlets of amplifying “desinformation.”

Read more …

“The Trump ally is expected to hold a press conference on Tuesday afternoon in Manhattan, just hours after his release.”

• Steve Bannon To Be Released From Prison One Week Ahead Of Election (JTN)

Former President Donald Trump’s ally Steve Bannon will be released from prison on Tuesday, exactly one week ahead of the 2024 presidential election. Bannon was sentenced to four months in prison at a federal facility in Danbury, Connecticut, in 2022 after he was convicted by a jury on two Contempt of Congress charges for not complying with a congressional subpoena. A judge had allowed Bannon, who was a first-time offender, to delay his sentence while he appealed the convictions but was eventually ordered to report to prison in July. The Trump ally is expected to hold a press conference on Tuesday afternoon in Manhattan, just hours after his release.

Sam Mangel, Bannon’s prison consultant, told ABC News on Monday that Bannon taught U.S. history and government to other inmates while he was behind bars, and that he was respected by other inmates. “I’m sure he’s quite glad to put it behind him and move on with his life,” Mangel said. “From what I’m told, he feels he’s got a lot left to accomplish now.” Although Bannon will be released from the Connecticut prison, he still faces criminal charges related to an alleged scheme to defraud donors over the construction of a border wall on the United States southern border. That trial is scheduled for December, and he has pleaded not guilty to all charges, including conspiracy, fraud, and money laundering.

Read more …

“..the US military is there to use lethal force to suppress those who object. If Trump’s win is too lopsided to be subject to theft, there can be a cybersecurity attack that prevents a vote count..”

• How America Was Destroyed (Paul Craig Roberts)

Those who control the Democrat Party are concerned about Kamala’s election chances. Little wonder. She represents the most anti-American, anti-Constitution, anti-white, anti-peace regime in US history. Top Democrats are concerned that Trump will not only take the swing states, despite the multiple theft mechanisms Democrats have in place, but also some blue states. Polls are revealing that a majority of men of color see Trump as a leader of America and Kamala as a destroyer of America. Those who control the Democrat party, most certainly not the people, are also disturbed by reports of the heavy early voting by Trump supporters. Trump encouraged early voting, because in 2020 Democrats managed to prevent many Trump supporters from voting on election day.

The downside to early voting by Trump supporters is it gives Democrats an idea how many votes they have to steal in order to “win.” It is a no-win situation for Trump supporters. If you wait until election day, voting machine failure, closed precincts, and other excuses can be used to keep you from voting. But if you vote early, you signal to the Democrats how many votes they have to steal. They are well set up to steal them. The Democrats in two swing states have already said that it will be days before they will have the vote count. These days are the time they need to produce the fraud that wins for them. A Democrat and a free election are mutually exclusionary. Arizona officials, for example, say it will take 2 weeks to tabulate the vote count. The Democrats in Pennsylvania and Wisconsin say they are unable to declare election results for several days after the election.

Until 2020–the Big Steal–the US has not had a problem of producing a vote count on time. Why do Americans accept the election theft implied by a delayed vote count with ballot boxes coming in by the truck loads long after voting is closed? On October 14, I reported on this website that the Biden regime had issued one month before the presidential election a military directive 5240.01. The directive says the US military can be used to come to the aid of civilian police to quell domestic disturbance and can use lethal force against US citizens. I provided a link to the directive. Fourteen days later I have seen no mention of this directive in the presstitute media.

Now ask yourself where the authority comes from for an executive branch cabinet department to overturn an act of Congress. Where did the Biden regime Department of Defense get the authority to overturn American tradition and the Posse Comitatus Act? That there has been no protest against this illegal and unconstitutional Defense Department directive indicates how close the US is to a tyranny. As we learned from the hoax “Jan 6 Insurrection,” it is a simple matter for those in authority to declare “insurrections.” They can do it again. It has now been admitted that 200 federal agents were at work on January 6 trying to orchestrate an insurrection. Next time there will be 2,000. As the Democrats are in power, they can create an “insurrection” prior to the vote count.

[..] So, some of the swing states have said that election results will not be timely reported. When the results are misreported, the US military is there to use lethal force to suppress those who object. If Trump’s win is too lopsided to be subject to theft, there can be a cybersecurity attack that prevents a vote count. Putin and Trump can be blamed for an insurrection orchestrated by the FBI, and the Democrats will be declared by the American whore media as the winner. This sounds far-fetched, but it isn’t.

Read more …

“Israel could not gain overflight permissions from Turkey, Iraq or any of the Gulf Cooperation Council states (Kuwait, Bahrain, Qatar, Saudi Arabia, the United Arab Emirates, and Oman). Sean Matthews at Middle East Eye points out that as a result, the Israelis would have had to fly down the Red Sea, go west across the Gulf of Aden, and approach Iran from the Arabian Sea. It is a long way around.”

• The Enormous Constraints Faced By Netanyahu (Juan Cole)

The limited strikes on Iran carried out by Israeli fighter-jets early on Saturday morning Tehran time above all demonstrated the constraints under which even this extremist Israeli government has to operate. The bombings are said to have been limited to military targets, including missile manufacturing facilities.The first constraint Israel faced was logistical. The Netanyahu government could not have its fighter jets fly straight to Iran, which would have allowed a more extensive set of attacks. Israel could not gain overflight permissions from Turkey, Iraq or any of the Gulf Cooperation Council states (Kuwait, Bahrain, Qatar, Saudi Arabia, the United Arab Emirates, and Oman). Sean Matthews at Middle East Eye points out that as a result, the Israelis would have had to fly down the Red Sea, go west across the Gulf of Aden, and approach Iran from the Arabian Sea. It is a long way around. They would have had to bring along large hulking refueling planes. This long, clumsy flight path limited what the Israelis could accomplish.

Extremist Israeli Prime Minister Benjamin Netanyahu had earlier not ruled out hitting Iran’s nuclear facilities or its oil fields. Iran, however, essentially held the GCC countries hostage, warning that if US-backed Israel hit Iranian oil fields, Tehran would retaliate against US-backed Arab oil monarchies in the Gulf such as Saudi Arabia. The Biden administration is trying to woo those countries into recognizing Israel, and having a berserker Israeli government draw them into hostilities with Iran would instead make these Arab countries flee both the US and the possible Israeli embrace. For some diplomatic purposes, as with detente with Iran, Saudi Arabia has already gone to China instead. According to Middle East Eye, Iran’s foreign minister, Abbas Araghchi, had announced Tuesday that Iran had been promised by the Gulf Arabs that they would not allow their air space or soil to be used for Israeli attacks on Iran. At the same time, Joe Biden pressured Israel not to attack Iranian nuclear facilities or oil fields.

I view Netanyahu as an adventurer who has been attempting to widen the war so as to force the Biden administration to support him. Although Iran backs Hamas, the CIA assessed that the ayatollahs had no idea Hamas was planning to carry out the October 7 attacks, and, indeed, that the Iranian leadership had declined to support Hamas during the past year precisely because they were furious that Yahya Sinwar had tried to drag them into a war without so much as consulting them. Iran also put pressure on Hezbollah not to provoke a war with Israel. That is, though Iran certainly supports anti-Israel guerrilla groups in the region and enjoys harassing the Israelis through them and their rockets and drones, it doesn’t appear to have acted aggressively given the ferocity of Netanyahu’s genocide in Gaza.

Netanyahu struck the Iranian embassy in Damascus last spring in an obvious attempt to bring Iran into the war, and Iran replied with a missile barrage that the US shot down. Then this summer Netanyahu assassinated Ismail Haniyeh, the civilian head of the Hamas Party politburo (which is not the same as the al-Qassam Brigades paramilitary). The assassination was carried out in Tehran, in a clear attempt to get Iran’s goat. Likewise, Netanyahu’s creepy pager booby trap attack on Hezbollah personnel (and some Iranians, such as the Iranian ambassador to Lebanon) and his assassination of Hassan Nasrallah in September were in part aimed at humiliating Iran. Iran’s October 1 missile barrage at Israel was mostly shot down by the US, but some missiles got through and one hit an Israeli military base. This attack was revenge for the killings of Haniyeh and Nasrallah.

Israel’s riposte was so limited that it might well not elicit any response from Iran, drawing a line under this phase of the Israel-Iran conflict. But Netanyahu was forced into a limited response by the Arab Gulf states (two of which –Bahrain and the Emirates– recognize Israel) and by the Biden administration. The refusal of overflight permissions by the GCC states also limited what Israel could accomplished with its F-35s. I view Iran’s missile program as largely defensive. They have used it against Israel twice this year, and both came in response to Israeli provocations (provocations that I believe to be deliberate on Netanyahu’s part). Israel has made the point that its jets can now reach Iran with extensive refueling. Iran has made the point that a swarm of missile attacks can penetrate Israel’s missile defenses and hit an Israeli military base.

Each side is seeking some form of deterrence against the other, a deterrence that has broken down this year because of Israel’s aggression in Gaza and Lebanon and its anti-missile defenses. I think Iran will be satisfied if it feels that a restoration of deterrence has been achieved. I don’t think Netanyahu is defending; I think he is attacking and attempting to expand his influence in the region. For that reason, it will be difficult to reestablish deterrence between the two countries. For the moment, however, all-out war seems to have been averted.

Read more …

“..BRICS China crisscrossing Eurasia from east to west while BRICS Russia/Iran/India crisscross it from north to south..”

• BRICS Make History – Can They Keep the Momentum? (Pepe Escobar)

The not so simple twists of fate always allow certain cities to make their mark in History in ineffable ways. Yalta. Bretton Woods. Bandung – a 1955 de-colonization staple. And now Kazan. The BRICS summit in Kazan, capital of Tatarstan, under the Russian presidency was historic in more ways than one – followed with riveting attention by the whole Global Majority and with perplexity by a great deal of the declining Western order. It did not change the world – not yet. But Kazan should be seen as the departing station of a high-speed train journey towards the emerging multi-nodal new order. The metaphor was also spatial: the pavilions at the Kazan Expo center “station” holding the summit simultaneously connected to the airport and to the aero-express train to the city. The rippling effects of BRICS 2024 in Kazan will be perceived for weeks, months and years ahead. Let’s start with the breakthroughs.

The Kazan Manifesto
1.The Kazan Declaration. That is no less than a detailed diplomatic manifesto. Yet because BRICS is not a revolutionary agent – as its members do not share an ideology – arguably the next best strategy is to propose real reform, from the UN Agenda 2030 to the IMF, the World Bank, the WTO, the WHO and the G20 (whose summit is next month in Rio). The kernel of the Kazan Declaration – which had been debated for months – is to move in practice towards in-depth institutional changes and to reject Hegemony. The Declaration will be presented to the UN Security Council. There’s no doubt the Hegemon will reject it. This paragraph sums up the reform drive: “We condemn the attempts to subject development to discriminatory politically motivated practices, including but not limited to unilateral coercive measures that are incompatible with the 5 principles of the UN Charter, explicit or implied political conditionality of development assistance, activities, aiming at compromising the multiplicity of international development assistance providers.”

2. The BRICS Outreach session. That was Bandung 1955 on macro-steroids: a microcosm of how the new, really de-colonized, non-unilateral world is being born. President Putin opened and handed the floor to the leaders and heads of delegations of other 35 nations, most at the highest level, including Palestine, plus the UN Secretary General. Quite a few speeches were nothing short of epic. The session lasted 3h25. It will be circulating all across the Global Majority for years. The session tied up with the announcement of the new 13 BRICS partners: Algeria, Belarus, Bolivia, Cuba, Indonesia, Kazakhstan, Malaysia, Nigeria, Thailand, Turkiye, Uganda, Uzbekistan, Vietnam. A strategic tour de force including 4 Southeast Asian powerhouses; the top two Central Asian “stans”; 3 Africans; 2 Latin Americans, and NATO member Turkiye.

3. The Russian BRICS presidency itself. Arguably no other nation would have been able to pull off such a complex and impeccably organized summit, held after over 200 BRICS-related meetings throughout the year across Russia conducted by unnamed sherpas, members of working groups and the BRICs Business Council. Security was massive – for obvious reasons, considering the odds of a false flag/terrorist attack.

4. Connectivity corridors. That is the main geoeconomic theme of Eurasia integration, and Afro-Eurasia integration as well. Putin explicitly named, more than once, the new growth drivers of the near future: Southeast Asia and Africa. Both happen to be key partners of several high-profile Chinese Belt and Road Initiative (BRI) projects. Additionally, Putin named the top two connectivity corridors of the future: the Northern Sea Route – which the Chinese describe as the Arctic Silk Road – and the International North-South Transportation Corridor (INSTC), where the three drivers are BRICS members Russia, Iran and India. So that translates as BRICS China crisscrossing Eurasia from east to west while BRICS Russia/Iran/India crisscross it from north to south, with ramifications in all latitudes. And with all the energy add-ons, with Iran positioning itself as a crucial energy hub, opening the finally feasible possibility of building the Iran-Pakistan-India (IPI) pipeline, one of the unfinished sagas of what I described in the early 2000s as Pipelineistan.

Read more …

“..because of his “attitudes towards Ukraine.”

• Slovak PM Fico Warns Of Continued Attempts On His Life (RT)

Slovak Prime Minister Robert Fico, who survived an assassination attempt in May, has revealed that he faced a potential second attempt on his life, due to his stance on the Ukraine conflict. Fico was shot at close range by an activist who opposed the PM’s views on relations with Kiev. An armed man was detained at an event commemorating a World War II battle in eastern Slovakia in early October, the prime minister revealed in an interview to Bratislava-based internet outlet Standard on Sunday. Fico said the man “hates” him because of his “attitudes towards Ukraine.” According to the prime minister, “a fully loaded weapon” was found on the suspect when he passed through a metal detector. The event in question was held on October 6 to mark the 80th anniversary of the Battle of the Dukla Pass between German and Soviet forces on the border with Poland. The celebrations were attended by Fico, Slovak President Peter Pellegrini, and members of the government and parliament.

Fico has been an outspoken critic of the EU’s policy of providing lethal aid to Ukraine in its fight with Russia, calling instead for a diplomatic solution to the conflict. In May, Fico was shot four times at close range by a man who, according to Slovakia’s Special Criminal Court, was largely motivated by the decision by the prime minister and his government not to send arms to Ukraine. “I was lucky,” Fico told Standard, commenting on the shooting. He went on to describe the alleged shooter, Juraj Cintula, as a political activist who had attended Fico’s public meetings while “probably” planning the attack. Following the shooting, Fico argued that the assassination attempt emanated from foreign-backed politicians who refuse to accept his government’s policies that prioritize Slovakia’s interests over the agendas of major Western powers.

Read more …

“Throughout its almost 90-year history, the carmaker has never closed a plant in its home country..”

• Volkswagen Planning Mass Layoffs – Workers’ Council Chief (RT)

Volkswagen is looking to significantly reduce its workforce in Germany and shut down several factories in the country, amid a major overhaul aimed at lowering costs and increasing return on sales, the head of the carmaker’s Works Council has announced. Daniela Cavallo explained to employees in Wolfsburg on Monday that Volkswagen management is “absolutely serious” about the plans and that the move is “not saber-rattling in the collective bargaining round,” Reuters reported. Throughout its almost 90-year history, the carmaker has never closed a plant in its home country. The last time it shut down any of its facilities was in 1988 in the US. “It is a firm intention to let the locations’ regions bleed dry and the clear intention to send tens of thousands of Volkswagen employees into mass unemployment,” Cavallo said.

Her comments come as the automotive giant has been negotiating for several weeks with unions over plans to overhaul its business in order to remain competitive in light of weaker demand from China and Europe. She did not specify which of the ten Volkswagen plants operating in Germany would be shut down or exactly how many of its roughly 300,000 workers in the country would be laid off, but noted that all remaining facilities would be affected by the changes and that “none of them are safe.” Cavallo also stated that Volkswagen management is demanding a 10% pay cut and no pay raises for the next two years. Cavallo stressed, however, that the German government must urgently come up with a plan to ensure that the country’s economy does not “go down the drain.”

She noted that Volkswagen and other European companies are in agreement as to the nature of the problems they are facing, such as slower-than-expected electric transition as well as fierce competition from Chinese automotive brands entering Europe. “We are not far apart when it comes to analyzing the problems. But we are miles apart on the answers to them,” Cavallo said. Earlier this month, the Sueddeutsche Zeitung newspaper reported that the German economy is expected to contract for a second year in a row as it struggles to keep up with soaring energy costs after cutting itself off from Russian gas. Over the past year, the German government has noted a 5.3% drop in the country’s industrial output as orders for domestic-made goods have also plummeted. Experts at the Berlin-based Forum for a New Economy have warned that Germany’s failures are expected to turn the 2020s into a “lost decade” for the country as it suffers “the worst economic downturn since World War II.”

Read more …

 

 

 

Oxi

 

 

Makary

 

 

RFK
https://twitter.com/i/status/1850974386528166152

 

 

Crow
https://twitter.com/i/status/1850822295465369739

 

 

Peggy and Molly

 

 

Squid

 

 

Good old days

 

 

 

 

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

 

 

 

 

 

Debt Rattle April 30 2020

Apr 302020
 
 April 30, 2020  Posted by at 11:05 am Finance Tagged with: , , , , , , , , , , , , , , , ,  21 Responses »


Wyland Stanley Golden Gate Bridge under construction 1935

 

• FBI Notes Detail Effort To Frame Michael Flynn (Solomon)
• Handwritten Notes, Emails Reveal FBI Agents Set Perjury Trap For Flynn (SAC)
• Steele Testifies Hillary Clinton, Susan Rice Knew About His Anti-Trump Research
• The NY Times Used to Correct Its Whoppers. But Not These (Kuntz)
• WHO Declines Comment On Remdesivir In COVID-19, Hopes For Best (R.)
• Fauci Says Leak Concerns Fueled His White House Revelation Of Remdesivir Tests (R.)
• Britain Has Europe’s Second Highest COVID-19 Death Toll (R.)
• UK To Miss 100,000 Coronavirus Tests Target, Minister Admits (G.)
• Seoul Tests Find False Positives, Not Reinfections In Recovered Patients (KH)
• After Aggressive Mass Testing, Vietnam Says It Contains COVID19 Outbreak (R.)
• Los Angeles To Offer Free Coronavirus Tests To All Residents (NBC)
• Small Farms, Stressed And Underfunded, Struggle For Coronavirus Relief (IC)
• COVID19 Crisis Will Wipe Out Demand For Fossil Fuels – IEA (G.)
• Swedish City To Dump Ton Of Chicken Manure In Park To Deter Visitors (G.)
• Stock Surge Is A Bear Market Rally That Will Collapse – Bianco (CNBC)

 

 

• US records 2,502 #coronavirus deaths in past 24 hours:

• Ben Hunt @EpsilonTheory
– 2,390 Americans died today of CV-19, the sixth worst day of this nat’l disaster. 2,470 Americans died yesterday, the fifth worst day of this nat’l disaster. I bet you didn’t know that. I bet you thought the death toll was improving. Now ask yourself, WHY wasn’t I told this?

• The coronavirus may have killed more people in the U.S. than is officially known: Total deaths in 7 hard-hit states are nearly 50% above normal, CDC data shows. That’s 9,000 more deaths than were reported as of April 11 in official counts.

 

 

 

Yesterday we had 6,120 new deaths. Today it’s 10,135. Not sure what caused that surge. I did the screenshots at roughly the same time.

• Cases 3,232,992 (+ 83,759 from yesterday’s 3,149,233)

• Deaths 228,520 (+ 10,135 from yesterday’s 218,385)

 

 

 

From Worldometer yesterday evening -before their day’s close-

 

 

From Worldometer – Among Closed Cases, Deaths have fallen to 18%

 

 

From SCMP: Note: SCMP has a new layout for its tracker.

 

 

From COVID19Info.live: Note: watch Peru, it’s rising fast. As are Russia and Brazil, Mexico.

 

 

 

 

Found something not corona to start off with today. What an insane tale this has already become. Sidney Powell has promised more soon.

Think back before she became Flynn’s lawyer, and now look at this. The man had been bankrupted by these shenanigans; I still wonder who pays her.

So we have Comey, McCabe, Priestap. And then what about Obama, Hillary, Biden?

• FBI Notes Detail Effort To Frame Michael Flynn (Solomon)

A senior FBI official’s handwritten notes from the earliest days of the Trump administration expressed concern that the bureau might be “playing games” with a counterintelligence interview of then-National Security Adviser Michael Flynn to get him to lie so “we could prosecute him or get him fired.” The notes and other emails were provided to Flynn’s lawyers under seal last week and released Wednesday night by court order, providing the most damning evidence to date of potential politicalization and misconduct inside the FBI during the Russia probe. The notes show FBI officials discussed not providing Flynn a Miranda-like warning before his January 2017 interview — a practice normally followed in such interviews — so that he could be charged with a crime if he misled the agents, the officials said.

“What is our goal? Truth/Admission or to get him to lie, so we can prosecute him or get him fired?,” the handwritten notes of the senior official say. The notes express further concern the FBI might be “playing games.” Multiple officials confirmed to Just the News that the author of the notes is William Priestap, the now-retired FBI Assistant Director for Counterintelligence and the ultimate supervisor for fired agent Peter Strzok, who led the Russia probe. Justice Department officials are investigating whether Priestap’s notes were written in conjunction with meetings he had with top leaders like then-Director James Comey and then-Deputy Director Andrew McCabe, officials said.

A special prosecutor is reviewing DOJ’s and the FBI’s handling of the Flynn prosecution, which led to the former Trump adviser and retired general pleading guilty to lying to the FBI under a plea deal with Special Counsel Robert Mueller in the Russia case. Flynn’s lawyer Sidney Powell filed a court motion last week saying new evidence has emerged showing Flynn was “framed” and his conviction should be dismissed. The officials said the notes are part of that new evidence and had been withheld from Flynn’s defense team for years even though they were potential evidence of innocence.

Read more …

There’s plenty to be said against Flynn, that’s not it. I think of his lobbying for Turkey in 2016.

The Sparrow Project @sparrowmedia on Twitter:

PRO TIP: “The FBI are not your friends, don’t lionize the FBI. Also, Michael Flynn is an Islamophobic, criminal, neo-crusader who should be sent to the gallows for the brutality he oversaw in JSOC, and at Camp Bucca in Iraq, brutality that ultimately gave birth to ISIS.”

• Handwritten Notes, Emails Reveal FBI Agents Set Perjury Trap For Flynn (SAC)

U.S. District Court Judge Emmet G. Sullivan unsealed four pages of stunning FBI emails and handwritten notes Wednesday, regarding former Trump National Security Advisor Michael Flynn, which allegedly reveal the retired three star general was targeted by senior FBI officials for prosecution, stated Flynn’s defense attorney Sidney Powell. Those notes and emails revealed that the retired three-star general appeared to be set up for a perjury trap by the senior members of the bureau and agents charged with investigating the now-debunked allegations that President Donald Trump’s campaign colluded with Russia, said Sidney Powell, the defense lawyer representing Flynn. Moreover, the Department of Justice release 11 more pages of documents Wednesday afternoon, according to Powell.

What is especially terrifying is that without the integrity of Attorney General Bill Barr and U.S. Attorney Jensen, we still would not have this clear exculpatory information as Mr. Van Grack and the prosecutors have opposed every request we have made,” said Powell. It appears, based on the notes and emails that the Department of Justice was determined at the time to prosecute Flynn, regardless of what they found, Powell said. “The FBI pre-planned a deliberate attack on Gen. Flynn and willfully chose to ignore mention of Section 1001 in the interview despite full knowledge of that practice,” Powell said in a statement. “The FBI planned it as a perjury trap at best and in so doing put it in writing stating ‘what is our goal? Truth/ Admission or to get him to lie so we can prosecute him or get him fired.”

The documents, reviewed and obtained by SaraACarter.com, reveal that senior FBI officials discussed strategies for targeting and setting up Flynn, prior to interviewing him at the White House on Jan. 24, 2017. It was that interview at the White House with former FBI Special Agent Peter Strzok and FBI Special Agent Joe Pientka that led Flynn, now 61, to plead guilty after months of pressure by prosecutors, financial strain and threats to prosecute his son. Powell filed a motion earlier this year to withdraw Flynn’s guilty plea and to dismiss his case for egregious government misconduct. Flynn pleaded guilty in December 2017, under duress by government prosecutors, to lying to investigators about his conversations with Russian diplomat Sergey Kislyak about sanctions on Russia. This January, however, he withdrew his guilty plea in the U.S. District Court in Washington, D.C.

He stated that he was “innocent of this crime” and was coerced by the FBI and prosecutors under threats that would charge his son with a crime. He filed to withdraw his guilty plea after DOJ prosecutors went back on their word and asked the judge to sentence Flynn to up to six months in prison, accusing him of not cooperating in another case against his former partner. Then prosecutors backtracked and said probation would be fine but by then Powell, his attorney, had already filed to withdraw his guilty plea.

The documents reveal that prior to the interview with Flynn in January, 2017 the FBI had already come to the conclusion that Flynn was guilty and beyond that the officials were working together to see how best to corner the 33-year military veteran and former head of the Defense Intelligence Agency. The bureau deliberately chose not to show him the evidence of his phone conversation to help him in his recollection of events, which is standard procedure. Even stranger, the agents that interviewed Flynn later admitted that they didn’t believe he lied during the interview with them.

Read more …

As if we couldn’t have guessed. Note the role played by Victoria Nuland.

• Steele Testifies Hillary Clinton, Susan Rice Knew About His Anti-Trump Research

Steele recently testified in a British court that he believed both then-Democratic presidential nominee Hillary Clinton and then-Obama National Security Adviser Susan Rice were aware of his dossier research as it was going on in summer 2016. The testimony makes his most direct link yet between his Russia collusion research and the top of the Clinton campaign and Obama White House. Steele told a British court he believed he had been hired by the Fusion GPS firm owned by Glenn Simpson through the Democratic National Committee-linked law firm Perkins Coie to assist the Clinton campaign during the election, according to a transcript of the testimony.

“I presumed it was the Clinton campaign, and Glenn Simpson had indicated that. But I was not aware of the technicality of it being the DNC that was actually the client of Perkins Coie,” Steele testified in March under questioning from lawyers for Russian bankers suing over his research. “You knew it was the leadership of the Clinton presidential campaign didn’t you?” a lawyer for the businessmen asked. “I believed it was the campaign. Yes,” he answered. “The leadership of the Clinton campaign?” he was asked. “Fine, the leadership of the campaign,” Steele conceded. The lawyer persisted. “You also understood that Hillary Clinton herself was aware of what you were doing?” the lawyer asked. “I think Glenn had mentioned it, but I wasn’t clear,” Steele answered.

Then Steele was confronted with what lawyers said were notes he took at a meeting with the FBI in 2016 in which he purported to tell agents that Clinton was aware of his research. The lawyers read from those notes during the court proceedings. The notes, according to the transcript, read: “We explained that Glenn Simpson/GPS Fusion was our commissioner but the ultimate client were the leadership of the Clinton presidential campaign and that we understood the candidate herself was aware of the reporting at least, if not us.” The lawyers prodded: “It’s your note, so we assume it’s accurate?” “Yes,” Steele answered during the March 17 testimony. You can read that testimony here.

[..] A day later in additional testimony, Steele was asked how he came to present some of his dossier findings to the U.S. State Department during an October 2016 meeting with then-Deputy Assistant Secretary of State Kathleen Kavalec. The former British MI6 agent turned private intelligence investigator said his meeting was set up by State officials Jonathan Winer and Victoria Nuland after longtime Clinton adviser and friend Strobe Talbott had reached out to him. “The meeting was set up by a State Department official called John Winer,” Steele explained. “At your request?” the lawyers asked. “No, at his request, his suggestion. He invited us into meet, as I understood it, at her request, Assistant Secretary of State Nuland,” Steele answered.

Read more …

Not much use waxing nostalgic about a washed out rag.

• The NY Times Used to Correct Its Whoppers. But Not These (Kuntz)

The New York Times is widely admired for owning up to its errors. In addition to the corrections it runs each day, it has a tradition of publishing extensive Editor’s Notes and even full-length investigations when it has determined that flawed reporting misled readers and botched the rough first draft of history.[..] During the last few years the Times has published two other sets of deeply flawed articles that also demand such extended corrections: “The 1619 Project” and its Trump-Russia coverage. It is a sign of how much the Times, and mainstream journalism in general, have changed that it appears highly unlikely the “paper of record” will correct the record.

[..] The Trump-Russia coverage, even with caveats pinning assertions to sources rather than solid evidence, clearly created a false impression that Donald Trump and his team were in cahoots with the Russians. It’s hard to believe that former Times Executive Editor Max Frankel would have written an op-ed for the paper declaring that an “obvious bargain [was] reached during the campaign of 2016” between the Trump campaign and Russia if he hadn’t read those unmistakable insinuations in the Times. The Trump campaign is suing the Times for libel over Frankel’s claims. (Full disclosure: I was hired as an editor at the Times in 1988 under Frankel.)

A fuller accounting by the Times is especially necessary because the media’s pushing of Trump-Russia conspiracy theories was central to an unprecedented and possibly criminal effort to subvert or remove a president under false pretenses. Unless the Times and other sources come clean about who was feeding them misleading and partisan information, we may never understand this momentous chapter of history. Protecting confidential sources is, of course, one of the bedrocks of journalism. The free flow of information depends on people being able to share hard truths without jeopardizing their careers or lives.

But not when sources lie or mislead. When that happens, the confidentiality deal is off and “your responsibility would be to set the record straight,” Lynn Walsh, ethics chair of the Society of Professional Journalists, confirmed to me recently in a general conversation about SPJ’s standards for anonymous sourcing. When sources engage in gross deception on a matter of such import, even committing national security crimes in the process, the news media involved should honor their higher duty – to their readers or viewers – to expose the malfeasance and correct the record.

Read more …

Even the WHO won’t commit. A handful scary reports of people dying from 70-year old, tried and tested and never lethal, chloroquines, followed by upbeat though opaque stories on remdesivir.

Note the tweet below about 65,000(!) Italian RA, lupus patiens on long term hydroxychloroquine. Deadly, right? With a 90% reduction in COVID19 infection rate…

One difference: chloroquine patents have run out, so no big profits for “investors”. Which they will get from remdesivir if it “works”.

• WHO Declines Comment On Remdesivir In COVID-19, Hopes For Best (R.)

A top World Health Organization official declined comment on Wednesday on reports that Gilead Science’s remdesivir could help treat COVID-19, the respiratory disease caused by the novel coronavirus, but said that further data was needed. “I wouldn’t like to make any specific comment on that, because I haven’t read those publications in detail,” Dr Mike Ryan, head of the WHO’s emergencies programme, told an online briefing in response to a question, adding it can sometimes take a number of publications to determine a drug’s efficacy. “Clearly we have the randomised control trials that are underway both in the UK and US, the ‘Solidarity trials’ with WHO. Remdesivir is one of the drugs under observation in many of those trials. So I think a lot more data will come out,” he said. Ryan added: “But we are hopeful this drug and others may prove to be helpful in treating COVID-19.”

Read more …

Reauters headline spells it out: “US Stocks Surged As Hopes For An Effective COVID-19 Treatment Prompted A Broad Rally”.

• Fauci Says Leak Concerns Fueled His White House Revelation Of Remdesivir Tests (R.)

Concerns over leaks compelled the top U.S. infectious disease official to reveal data on Gilead Sciences Inc’s experimental drug remdesivir, the first in a scientifically rigorous clincial trial to show benefit in treating COVID-19. The dramatic announcement by Dr Anthony Fauci in the Oval Office on Wednesday prompted concerns among scientists that the Trump administration was raising hopes about a coronavirus treatment before sharing the full data with researchers. As a cautionary example of inflating the potential value of a therapy, some pointed to President Donald Trump’s repeated endorsements of malaria drug hydroxychloroquine as a treatment, with no evidence that it works. Newer data suggests the malaria treatments may carry significant risks for some sufferers of the respiratory disease caused by the virus.


Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID), which is running the trial, said he took the first opportunity to get the word out that patients taking a dummy treatment or placebo should be switched to remdesivir in hopes of benefiting from it. He expressed concern that leaks of partial information would lead to confusion. Since the White House was not planning a daily virus briefing, Fauci said he was invited to release the news at a news conference with Louisiana Gov. John Bel Edwards(D). “It was purely driven by ethical concerns,” Fauci told Reuters in a telephone interview. “I would love to wait to present it at a scientific meeting, but it’s just not in the cards when you have a situation where the ethical concern about getting the drug to people on placebo dominates the conversation.”

Read more …

The numbers tell us it’s a matter of days before Britain overtakes Italy in having most deaths in Europe.

• Britain Has Europe’s Second Highest COVID-19 Death Toll (R.)

Britain now has Europe’s second highest official COVID-19 death toll with more than 26,000, according to figures published on Wednesday that raised questions about Prime Minister Boris Johnson’s response to the outbreak. Some 26,097 people died across the United Kingdom after testing positive for COVID-19 as of April 28 at 1600 GMT, Public Health England (PHE) said, citing daily figures that included deaths outside of hospital settings for the first time. That means the United Kingdom has suffered more COVID-19 deaths than France or Spain have reported, though less than Italy, which has Europe’s highest death toll and the second worst in the world after the United States.

“We must never lose sight of the fact that behind every statistic there are many human lives that have tragically been lost before their time,” Foreign Secretary Dominic Raab told reporters. “We are still coming through the peak and…this is a delicate and dangerous moment in the crisis.” Such a high UK death toll increases the pressure on Johnson just as opposition parties accused his government of being too slow to impose a lockdown to limit contagion from the new coronavirus, too slow to introduce mass testing and too slow to get enough protective equipment to hospitals. Johnson returned to work on Monday after recuperating from COVID-19, which had left him gravely ill in intensive care at the peak of the coronavirus outbreak. He celebrated the birth of a baby son on Wednesday.

Opposition Labour Party leader Keir Starmer criticised Johnson’s response to the world’s worst public health crisis since the 1918 influenza outbreak. Johnson had spoken of Britain’s “apparent success” in tackling COVID-19 in a speech to the nation on Monday. “We are possibly on track to have one of the worst death rates in Europe,” Starmer told parliament. “Far from success, these latest figures are truly dreadful,” he added, referring to previously published data. Starmer said his calculations showed 27,241 had died in the UK from COVID-19, the lung disease caused by the coronavirus. In mid-March the government’s chief scientific adviser said keeping Britain’s death toll below 20,000 would be a “good outcome”.

Read more …

Government reveal their failures piecemeal, after shouting out loud about BIG targets. This model does require cooperation of the media at all times.

• UK To Miss 100,000 Coronavirus Tests Target, Minister Admits (G.)

The UK government is likely to miss its target of carrying out 100,000 coronavirus tests by the end of April, a cabinet minister has admitted. After weeks of ministers insisting the deadline would be met, Robert Buckland, the justice secretary, said it was “probable that we won’t” reach it on Thursday but said it was likely in the next few days. “Even if we don’t hit it, we will in the next few days hit that target. We are up to 52,000 being tested, capacity is rising and I think it was right to set an ambitious target. Sometimes if you don’t hit a target on the due date, the direction of travel is the most important thing. And I believe we are going to get there and move beyond it because we need more,” he told Sky News.

The target was set by Matt Hancock, the health secretary, on 2 April as the government came under pressure over low testing levels. At that point, there was capacity for 12,799 daily tests in England, with just over 10,650 tests carried out. The total as of 9am on Wednesday was 52,429 tests with capacity to do 73,000, but only 33,000 individuals were tested because of multiple retests. [..] .. hospital leaders launched a strident attack on the government’s testing strategy, regardless of the target. Saffron Cordery, the deputy chief executive of NHS Providers, which represents foundation trusts in England, dismissed the 100,000 target as a “red herring” that distracted from the lack of a coherent overall strategy.

NHS Providers said in a report on Wednesday: “NHS trust leaders believe they have done all they can to support the national testing effort so far but are increasingly frustrated with the lack of clarity on how the testing regime will be developed for this next phase. “At the moment they feel they are on the end of a series of frequent tactical announcements extending the testing criteria to new groups with no visibility on any longer term strategy, and are being expected at the drop of a hat to accommodate these changes with no advance notice or planning.”

Read more …

Might be good news. Might even be very good. But it’s also yet another condemnationn of testing as a whole.

• Seoul Tests Find False Positives, Not Reinfections In Recovered Patients (KH)

South Korea’s infectious disease experts said Thursday that dead virus fragments were the likely cause of over 260 people here testing positive again for the novel coronavirus days and even weeks after marking full recoveries. Oh Myoung-don, who leads the central clinical committee for emerging disease control, said the committee members found little reason to believe that those cases could be COVID-19 reinfections or reactivations, which would have made global efforts to contain the virus much more daunting. “The tests detected the ribonucleic acid of the dead virus,” said Oh, a Seoul National University hospital doctor, at a press conference Thursday held at the National Medical Center.


He went on to explain that in PCR tests, or polymerase chain reaction tests, used for COVID-19 diagnosis, genetic materials of the virus amplify during testing, whether it is from a live virus or just from fragments of dead virus cells that can take months to clear from recovered patients. The PCR tests cannot distinguish whether the virus is alive or dead, he added, and this can lead to false positives. “PCR testing that amplifies genetics of the virus is used in Korea to test COVID-19, and relapse cases are due to technical limits of the PCR testing.” As of Sunday, 263 people in Korea tested positive for the disease again after being declared virus-free, of which 17 were minors or teens, the National Medical Center said. “The respiratory epithelial cell has a half-life of up to three months, and RNA virus in the cell can be detected with PCR testing one to two months after the elimination of the cell,” Oh said.

Read more …

I saw the first graph here and thought something doesn’t add up. Vietnam didn’t do mass testing, 213,000 in a country of 96 million people is nothing compared to the 6.1 million in the 320 million US.

What the second graph shows is the clue: Vietnam tests a lot compared to confirmed cases.

• After Aggressive Mass Testing, Vietnam Says It Contains COVID19 Outbreak (R.)

Vietnam, a country of 96 million people which shares a border with China, is signalling that it has succeeded where many wealthier and more developed countries have not by containing the new coronavirus. The government is officially reporting a relatively small 270 cases and zero deaths. That puts the country on course to revive its economy much sooner than most others, according to several public health experts interviewed by Reuters. Its slightly more populous regional neighbour the Philippines, in comparison, has reported almost 30 times as many cases and more than 500 deaths. These public health experts say Vietnam was successful because it made early, decisive moves to restrict travel into the country, put tens of thousands of people into quarantine and quickly scaled up the use of tests and a system to track down people who might have been exposed to the virus.

“The steps are easy to describe but difficult to implement, yet they’ve been very successful at implementing them over and over again,” said Matthew Moore, a Hanoi-based official from the U.S. Centers for Disease Control and Prevention (CDC), who has been liaising with Vietnam’s government on the outbreak since early January. He added that the CDC has “great confidence” in the Vietnamese government’s response to the crisis. Vietnam increased the number of laboratories that can test for COVID-19, the disease caused by the new coronavirus, from three at the beginning of the outbreak in January, to 112 by April. As of Wednesday, 213,743 tests had been conducted in Vietnam, of which 270 were positive, according to health ministry data. That ratio of 791 tests to every confirmed case is by far the highest in the world, according to data from health ministries compiled by Reuters. The next highest, Taiwan, has conducted 140 tests for every case.

[..] “It is organised, it can make country-wide policy decisions that get enacted quickly and efficiently and without too much controversy,” said Guy Thwaites, director of the Oxford University Clinical Research Unit in Ho Chi Minh City. Thwaites said the number of positive tests processed by his organisation’s lab was in line with government data. He said the hospital where he works on the wards – Ho Chi Minh City’s 550-bed Hospital for Tropical Diseases, serving a population of 45 million people in southern Vietnam – had not admitted any additional cases not reflected in the government’s numbers. “If there was ongoing and unreported or unappreciated community transmission, we would have seen the patients in our hospital. We have not,” he said. Thwaites said his organisation’s lab increased capacity from being able to do around 100 tests a day to around 1,000 a day.

Read more …

Get yourself tested. Don’t wait.

• Los Angeles To Offer Free Coronavirus Tests To All Residents (NBC)

Los Angeles will begin offering free coronavirus tests to all residents no matter if they have symptoms or not, Mayor Eric Garcetti said Wednesday. Garcetti said that all residents of Los Angeles County can get the tests. The website to schedule tests says it is open to any county resident regardless of symptoms. Those with symptoms will be given priority. The mayor said he believes Los Angeles is the first major city to offer tests to all residents. He said they now have enough testing capacity to handle the increased tests. Testing rules had previously been relaxed to allow grocery store workers, first responders and other essential workers with exposure to the virus to get tests regardless of whether they have symptoms. Health officials say that even those without symptoms can spread the virus.

Read more …

All you need to know is America doesn’t like small. But people can still buy from small farms. All it may take is some effort.

• Small Farms, Stressed And Underfunded, Struggle For Coronavirus Relief (IC)

Before coronavirus hit, farmers in the U.S. were already hurting from years of falling food prices, severe weather, and, more recently, President Donald Trump’s trade war. “We’ve had a record number of farm bankruptcies [in the U.S.], total farm debt is at $425 billion, [and farmer] incomes have fallen by about half since 2013,” said Eric Deeble, policy director at the National Sustainable Agriculture Coalition, which supports small and mid-sized family farms. Now, with the global pandemic closing factories and restaurants and disrupting supply chains, already stressed farms are grappling with lower demand and fewer markets to sell in, as well as a presidential administration that favors relief for big businesses over small.

Small farmers in particular — those who sell directly to farmers markets, schools, and other local food hubs — are facing an existential crisis, as they face slim odds of accessing competitive federal stimulus money. They have reason to be pessimistic. In recent years, federal subsidies to help struggling farmers have flowed almost exclusively to large corporate farms. Of the roughly $28 billion the Trump administration has distributed to food producers to offset losses from his trade wars, almost all went to big farms. Advocates for small farmers say this is driven in part by the preference of Trump’s agriculture secretary, Sonny Purdue, who has encouraged farmers to get bigger farms if they wanted to stay in business. “Big get bigger and small go out … and that’s what we’ve seen,” he told a group of Wisconsin dairy farmers in 2018, echoing Richard Nixon’s agriculture secretary, who infamously told farmers in the 1970s to “get big or get out.”

While 91 percent of U.S. farms are small — defined by the federal government as an operation with gross cash income under $250,000 — large farms account for 85 percent of the country’s farm production. The public health crisis has already had a devastating impact on agriculture across the country. A report released in mid-March by the National Sustainable Agriculture Coalition estimated that small farms would see a $689 million decline in sales from March to May this year due to Covid-19, leading to a payroll decline of $103 million and a total loss to the economy of $1.3 billion. Now, as the pandemic shows no sign of slowing, the coalition worries that the impact for small farmers will be even more substantial — which could lead many small farms to permanently close.

Read more …

When are they planning to tell us that renewable energy is not renewable?

• COVID19 Crisis Will Wipe Out Demand For Fossil Fuels – IEA (G.)

Renewable electricity will be the only source resilient to the biggest global energy shock in 70 years triggered by the coronavirus pandemic, according to the world’s energy watchdog. The International Energy Agency said the outbreak of Covid-19 would wipe out demand for fossil fuels by prompting a collapse in energy demand seven times greater than the slump caused by the global financial crisis. In a report, the IEA said the most severe plunge in energy demand since the second world war would trigger multi-decade lows for the world’s consumption of oil, gas and coal while renewable energy continued to grow. The steady rise of renewable energy combined with the collapse in demand for fossil fuels means clean electricity will play its largest ever role in the global energy system this year, and help erase a decade’s growth of global carbon emissions.


Fatih Birol, the IEA’s executive director, said: “The plunge in demand for nearly all major fuels is staggering, especially for coal, oil and gas. Only renewables are holding up during the previously unheard of slump in electricity use.” Renewable energy is expected to grow by 5% this year, to make up almost 30% of the world’s shrinking demand for electricity. The growth of renewables despite a global crisis could spur fossil fuel companies towards their goals to generate more clean energy, according to Birol, but governments should also include clean energy at the heart of economic stimulus packages to ensure a green recovery. “It is still too early to determine the longer-term impacts,” said Birol. “But the energy industry that emerges from this crisis will be significantly different from the one that came before.”

Read more …

What makes Sweden so successful.

• Swedish City To Dump Ton Of Chicken Manure In Park To Deter Visitors (G.)

The university town of Lund in Sweden is to dump a tonne of chicken manure in its central park in a bid to deter up to 30,000 residents from gathering there for traditional celebrations to mark Walpurgis Night on Thursday. “Lund could very well become an epicentre for the spread of the coronavirus on the last night in April, [so] I think it was a good initiative,” the chairman of the local council’s environment committee, Gustav Lundblad, told the Sydsvenskan newspaper. “We get the opportunity to fertilise the lawns, and at the same time it will stink and so it may not be so nice to sit and drink beer in the park,” Lundblad said, adding that the only potential drawback was that the smell may not be confined to the park.


“I am not a fertiliser expert, but as I understand it, it is clear that it might smell a bit outside the park as well,” Lundblad admitted. “These are chicken droppings, after all. I cannot guarantee that the rest of the city will be odourless. But the point is to keep people out of the city park.” Sweden has opted for a light touch approach to containing Covid-19, eschewing the strict lockdowns imposed by its Nordic neighbours and much of the rest of Europe and favouring personal responsibility over draconian enforcement. Walpurgis Night, celebrated on 30 April, is widely marked across central and northern Europe with parties and bonfires. The festivities are classed as “spontaneous” so cannot be banned by authorities, but to avoid the risk of spreading the coronavirus many towns and cities in Sweden have asked citizens to give the tradition a miss this year.

Read more …

Just in case you still thought there are financial markets.

• Stock Surge Is A Bear Market Rally That Will Collapse – Bianco (CNBC)

Market researcher James Bianco warns April’s big run will collapse. His reason: Investors are too bullish. “I understand the market has been up a lot since the March low. But what I see in the market is a retracement rally that looks very similar to the first type of rallies that you get in protracted bear markets,” the Bianco Research president told CNBC’s “Trading Nation” on Wednesday. Bianco warned last month the coronavirus turmoil would be worse than the financial crisis. In early March, he put all his money in cash and never looked back — despite the bounce. So far this month, the S&P 500 is up almost 14%. If the trend holds, it’ll be the index’s best showing since 1974.


Meanwhile, the Dow is up more than 12% in the same period and is on track for its best monthly performance since January 1987. “We’ll revisit the 2,200 S&P low, if not make a lower low — probably by late summer,” he said. “That’s going to come because we’re going to find out now is a critical time for the market.” Bianco predicts there will be an overwhelming realization that life isn’t getting back to normal when then economy starts to reopen. “What the market seems to be thinking is we’re going to restart, and we’re all going to pretend that it’s 2019,” said Bianco. “And, we’re all going to stand on the subway platform with 500 other people waiting for the next train.”

Read more …

 

We try to run the Automatic Earth on people’s kind donations. Since their revenue has collapsed, ads no longer pay for all you read, and your support is now an integral part of the process.

Thanks for your generosity.

 

 

Before the lockdowns:

 

 

 

 

 

 

 

Support the Automatic Earth for your own good.

 

Debt Rattle January 31 2019

Jan 312019
 
 January 31, 2019  Posted by at 10:27 am Finance Tagged with: , , , , , , , , , , , , , , ,  8 Responses »


René Magritte The key to the fields 1936

 

• Dovish Fed Sparks Stock-Market Rally And Tanks The US Dollar (MW)
• Will The EU To Cave On May’s Brexit At The Very Last Minute? (ZH)
• China Manufacturing Contracted For The Second-Straight Month In January (CNBC)
• Macron Has Declared War On The French People – Yellow Vest Activist (RT)
• UK Consumer Borrowing Slowed Sharply In December, Says Bank of England (Ind.)
• British Car Production Slumps To Five-Year Low (G.)
• US Refiner CITGO Caught In Venezuela Political Upheaval (R.)
• Russia Vows To Defend Its Venezuelan Oil Assets (RT)
• US Regime Change Laboratory Created Venezuela’s Coup Leader
• Facebook Reports Record Profit, Stock Surges 12% After Earnings (MW)
• Mueller: Evidence Against Russian Firm Used In Disinformation Campaign (CNBC)
• Mueller Claims Evidence Shared Leaked To ‘Discredit Investigation’ (RT)
• Mueller Says Russians Are Altering Evidence From Investigation (Ind.)
• Acropolis Museum Director: British Museum Not Owner Of Parthenon Marbles (K.)

 

 

Powel’s Fed started off promising, but now concedes that it doesn’t want functioning markets. Too risky for the rich.

• Dovish Fed Sparks Stock-Market Rally And Tanks The US Dollar (MW)

The Federal Reserve and its chairman, Jerome Powell, changed their tune Wednesday, striking a surprisingly dovish tone that sparked a stock-market rally, tanked the U.S. dollar and roiled other financial markets. The Fed hinted that it may be at the end of its rate-hike cycle and further surprised investors by issuing a separate statement regarding its balance sheet, indicating that its efforts to reduce the $4 trillion asset portfolio could end sooner than expected. The tone was seen as an about-face from the Fed’s hawkishly received December meeting when it delivered its fourth rate increase of 2018. “This is one of the most dovish turnarounds by a Fed chair that I have ever seen in my 30-year career,” said Tom di Galoma, managing director at Seaport Global Holdings.

And the initial reaction across markets appeared in keeping with the perceived shift. The message delivered by the Fed “just couldn’t be much better for both bonds and equities and for the credit markets that track Treasurys,” said Mark Grant, chief global strategist at B. Riley FBR, in a note. [..] Not everyone was popping the champagne. Some economists feared the Fed had eroded its credibility, caving in to market pressure. “Talk about a Fed put,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note, referring to the idea that central bank policy makers have grown increasingly sensitive over the years to stock-market declines and stand ready to intervene in an effort to provide calm.

Read more …

Someone in Britain appears to be spreading rumors about Brussels willing to give in. Is that just so May will still be PM at the end of March? Are the Brits going to risk that based on rumors alone?

• Will The EU To Cave On May’s Brexit At The Very Last Minute? (ZH)

After a series of embarrassing Parliamentary defeats (and still more embarrassing triumphs over a series of no-confidence votes), Theresa May is we imagine reveling in what was a rare win for on Tuesday: MPs backed an amendment that calls for removing the backstop from her Withdrawal agreement and replacing it with a commitment to find something better after the prime minister vowed to ask the EU to reopen negotiations (something she has reportedly been trying to persuade the block to do behind the scenes for weeks now with little apparent success).

Now that she’s won what her cabinet believes is enough support for a modified version of the deal, having finally corralled a majority for something resembling her current deal, the hard work truly begins: Convincing the EU to reopen negotiations on the withdrawal agreement, something officials have publicly insisted will not happen (though there have been whispers that they have been slowly coming around to the idea). In a speech on Wednesday, European Commission President Jean Claude Juncker blasted the vote as irresponsible and once again insisted that removing the backstop from the agreement is out of the question. “This is not a game,” he said, according to Bloomberg.

If there’s anything new to take away from the developments of the past two days, it can be found in a Bloomberg report published Wednesday afternoon that effectively confirmed what many have long suspected: That there won’t be any movement on the deal – either from the EU or, likely, the UK, until the last possible minute. According to BBG, EU diplomats have pointed to a last-minute summit set for March 21 and March 22 – just a week before Brexit Day – as the likely time when a deal may finally be struck.

“The European Union is prepared to take Brexit down to a last-minute, high-stakes summit rather than cave into U.K. Prime Minister Theresa May’s demands over the next few weeks, diplomats said. Although May is getting ready to head back to Brussels to reopen the Brexit deal that she negotiated over the past 18 months, the EU isn’t planning to give her any concessions before she returns for a vote in the British Parliament on Feb. 14, according to the diplomats. Behind closed doors, European officials are sticking to their well-coordinated public line that they won’t rework the deal.”

Read more …

And that’s official numbers.

• China Manufacturing Contracted For The Second-Straight Month In January (CNBC)

China said on Thursday its manufacturing activity contracted for the second-straight month in January — another sign that the world’s second-largest economy is slowing down amid domestic headwinds and the ongoing trade dispute with the U.S. The official manufacturing Purchasing Managers’ Index (PMI) for January was 49.5, according to the Chinese National Bureau of Statistics. That’s higher than the 49.3 expected by analysts in a Reuters poll, and the 49.4 reported in the previous month when China’s manufacturing PMI fell into contraction territory for the first time since July 2016. The PMI — a widely-watched indicator — is a survey of businesses in a specific industry about the operating environment.

A reading above 50 signals expansion in the sector from the previous month, while one below 50 represents contraction. Meanwhile, China’s services PMI for January came in at 54.7 — better than the 53.8 reported in the previous month, according to official data. The services sector accounts for more than half of the Chinese economy and has helped cushion the impact of a slowing manufacturing industry. Despite the better-than-expected PMI numbers, some economists said the statistics — particularly the manufacturing data — still point to a weakening Chinese economy.

Read more …

See my article last night: Flash-Balls, Pitchforks And A Backstop

• Macron Has Declared War On The French People – Yellow Vest Activist (RT)

The French government won’t stop the Yellow Vests by force, but only by doing what the people demand, according to prominent protester Jerome Rodrigues, who may remain blind in one eye after being injured by the police. “The president [Emmanuel Macron] declared war on us and our injuries are battle wounds. The traumatic weapons are equipped with collimators [optical sights] – such equipment is used on the battlefield, at war,” Rodrigues told RT. “I never thought that such a thing could happen in France,” he added, describing what the country has been going through in recent months as “dark times.” The activist, who calls himself “a hyper pacifist,” was broadcasting live on Facebook from a rally in Paris last weekend when a police officer fired at him from an LBD 40 non-lethal gun.

A projectile hit him in the eye, leading to hospitalization and a medically induced coma. The man said “there are no guarantees that the injured eye will be able to see again.” Now we understand that by going to a rally we put ourselves at risk of becoming victims of the government. It happened to me, but could’ve well happened to anyone,” Rodrigues said. The French authorities are employing violence to scare the people off the streets, but “we won’t retreat,” he said. Rodrigues promised to resume protesting after he gets better, saying that his family fully supported him in this decision.

Read more …

The hurt is only starting.

• UK Consumer Borrowing Slowed Sharply In December, Says Bank of England (Ind.)

UK consumer borrowing slowed sharply in December, adding to the impression of weakening confidence among households ahead of Brexit. The Bank of England reported that the annual growth of unsecured lending in the month fell to 6.6 per cent, down from 7.2 per cent in November. This was the weakest figure since December 2014. Credit card lending growth slowed to 7.1 per cent, down from 7.9 per cent the previous month. Surveys have shown consumer confidence to be at a 5 year low due, in part, to concerns over Brexit.

The Bank of England’s credit conditions survey showed last week showed that demand over the next three months for such unsecured lending is expected by lenders to be the weakest since the survey began in 2007. Household spending accounts for around 60 per cent of the UK economy, and any weakening of the appetite for consumers to spend will be negative for overall GDP growth. The UK economy grew by 0.6 per cent in the third quarter of 2018 but GDP growth is likely to have fallen sharply in the final three months of the year as business investment and household spending fell.

Read more …

Good! Fewer cars!

• British Car Production Slumps To Five-Year Low (G.)

British car production dropped to a five-year low in 2018, as manufacturers warned that fears of a no-deal Brexit have prompted a slump in new investment. UK car factories produced 1.52m vehicles last year, 9.1% fewer than 2017, according to figures published on Thursday by the Society of Motor Manufacturers and Traders (SMMT), the UK auto industry lobby group. Production for the British market fell by 16.3%. Investment into British car manufacturing almost halved during the year to £588.6m, a fall which the SMMT blamed on Brexit uncertainty.

Publicly announced investments were lower than in any year since 2012, the first year comparable data was collected. “Investment is effectively stalled,” said Mike Hawes, the SMMT’s chief executive. “Industry is waiting to see what happens. Business is sitting on its hands in terms of investment.” The global automotive industry is already struggling with multiple challenges. Car sales in China fell in 2018 for the first time since the 1990s, while demand for diesel vehicles in Europe has been rocked by the regulatory backlash to Volkswagen’s emissions-cheating scandal.

Read more …

CITGO is a Venezuelan refiner.

• US Refiner CITGO Caught In Venezuela Political Upheaval (R.)

Citgo Petroleum Corp, the eighth largest U.S. refiner and Venezuela’s top foreign asset, is in the middle of a tug-of-war as the Trump administration tries to use the company as leverage to topple Venezuelan President Nicolas Maduro. Following the U.S. decision to impose sanctions on Venezuela’s oil industry this week, both sides have engaged in aggressive moves for control of Citgo, which has roots in the United States dating back 100 years, but has been owned by Venezuela’s state-owned Petroleos de Venezuela, or PVDSA, for three decades.

[..] As Guaido this week worked with Washington to wrest control of the company, Venezuela responded by ordering dozens of Citgo’s expatriate staff in the United States to return to Caracas by the end of February, people familiar with the matter said. Earlier in the week, Citgo sent a team of executives to Washington amid efforts by Guaido and the U.S. government to appoint a new board of directors for Citgo, the people said. PDVSA also has said it would pursue legal efforts to block a Citgo takeover. White House national security adviser John Bolton on Wednesday tweeted photos confirming the meeting with Citgo executives. “The United States is continuing to work to make sure that the economic benefits of Venezuela’s resources are not pilfered by Maduro and his cronies,” he wrote.

[..] The Houston-based company has accumulated cash and credit lines in recent months as dividends payments to Caracas have been blocked by U.S. sanctions imposed in 2017. [..] Citgo has been struggling to refinance a revolving line of credit, a task that must be completed by July

Read more …

Putin: So far, so soft.

• Russia Vows To Defend Its Venezuelan Oil Assets (RT)

Russia will defend its interests in Venezuela within the international law using “all mechanisms available to us,” Dmitry Peskov, spokesman for Russia’s President Vladimir Putin, told Russian media on Tuesday. Russia has kept close ties with Venezuelan President Nicolas Maduro and has extended loans to Venezuela, including oil firm Rosneft lending money to Venezuela’s state-held firm PDVSA. Rosneft has extended $6 billion of loans to PDVSA, which needs to be fully redeemed in crude oil supplies by the end of this year. According to S&P Global Platts, as of November 2018, Venezuela had $3.1 billion outstanding loan to repay to Rosneft. The Russian company also has five joint upstream projects with PDVSA in Venezuela.

However, the US Treasury slapped another round of sweeping sanctions against PDVSA on Monday, in order to “help prevent further diverting of Venezuela’s assets by Maduro and preserve these assets for the people of Venezuela.” The US backed last week Juan Guaido, the chairman of the National Assembly, as the legitimate president of Venezuela, after Guaido declared himself interim president. “The path to sanctions relief for PdVSA is through the expeditious transfer of control to the Interim President or a subsequent, democratically elected government,” Secretary of the Treasury Steven T. Mnuchin said. The Kremlin considers the sanctions against PDVSA as “illegal”, a sign of “unfair competition” and an attempt to interfere with Venezuela’s internal affairs, Peskov said on Tuesday. Russia is assessing the potential consequences of the sanctions on PDVSA for Moscow, Peskov added.

Read more …

Dan Cohen and Max Blumenthal paint the picture.

• US Regime Change Laboratory Created Venezuela’s Coup Leader

Before the fateful day of January 22, fewer than one in five Venezuelans had heard of Juan Guaidó. Only a few months ago, the 35-year-old was an obscure character in a politically marginal far-right group closely associated with gruesome acts of street violence. Even in his own party, Guaidó had been a mid-level figure in the opposition-dominated National Assembly, which is now held under contempt according to Venezuela’s constitution. But after a single phone call from from US Vice President Mike Pence, Guaidó proclaimed himself president of Venezuela. Anointed as the leader of his country by Washington, a previously unknown political bottom-dweller was vaulted onto the international stage as the US-selected leader of the nation with the world’s largest oil reserves.

Echoing the Washington consensus, the New York Times editorial board hailed Guaidó as a “credible rival” to Maduro with a “refreshing style and vision of taking the country forward.” The Bloomberg News editorial board applauded him for seeking “restoration of democracy” and the Wall Street Journal declared him “a new democratic leader.” Meanwhile, Canada, numerous European nations, Israel, and the bloc of right-wing Latin American governments known as the Lima Group recognized Guaidó as the legitimate leader of Venezuela. While Guaidó seemed to have materialized out of nowhere, he was, in fact, the product of more than a decade of assiduous grooming by the US government’s elite regime change factories.

Alongside a cadre of right-wing student activists, Guaidó was cultivated to undermine Venezuela’s socialist-oriented government, destabilize the country, and one day seize power. Though he has been a minor figure in Venezuelan politics, he had spent years quietly demonstrating his worthiness in Washington’s halls of power.

Read more …

Amid reports that at least 50% of its accounts are fake.

• Facebook Reports Record Profit, Stock Surges 12% After Earnings (MW)

After weeks of controversy, Facebook Inc. reported record profits — about $1 billion more than any previous quarter — as the company beat Wall Street expectations for fourth-quarter earnings and revenue late Wednesday, sending shares soaring. Record profits, a growing user base and healthy top line suggest that Facebook’s base of advertisers is continuing to pour dollars into the social networking giant’s swath of apps and services that now attract 2.7 billion people a month around the world. The strong results cap weeks of negative news cycles that has evidently left Facebook relatively unscathed.“Facebook has had so much bad news — even this week,” Forrester analyst Brigitte Majewski said over the phone, referring to another scandal that surfaced this week.

“But you can’t deny the numbers. They’ve had an increase in daily active users, and growth in all regions.” The company reported $6.88 billion in net income for the fourth quarter, which amounts to $2.38 a share, up from $1.44 a share in the year-ago period. Analysts’ average estimates for fourth-quarter profits called for $2.18 a share, according to FactSet. Overall, Facebook logged sales of $16.91 billion, up from $12.97 billion in the year-ago period, beating Wall Street expectations for sales of $16.39 billion, according to FactSet. Facebook’s main source of revenue is ads, which brought in 93% of revenue, up from 89% in the year-earlier period.

Read more …

A few versions of the same thing, first CNBC and RT, different for obvious reasons, then Independent, who report what most others completely missed (NY Post is an exception), which is that Mueller claims the evidence was altered.

• Mueller: Evidence Against Russian Firm Used In Disinformation Campaign (CNBC)

Special counsel Robert Mueller claimed Wednesday that evidence in one of his criminal cases related to Russian interference in the 2016 presidential campaign was recently used in an online disinformation campaign, apparently to discredit Mueller’s investigations. Mueller made that allegation in a court filing in his criminal case pending against Concord Management and Consulting, a Russian company owned by Yevgeny Prigozhin, the oligarch who is known as “Putin’s chef.” The special counsel charged Concord Management last year with funding a multimillion-dollar social media disinformation campaign to bolster the presidential campaign of Donald Trump.

Mueller’s filing Wednesday objects to Concord’s request that the special counsel be compelled to disclose documents he has deemed “sensitive” to the defendant and its employees as it prepares for trial.Concord wants to be able to send that information to Russia for review by company officers and employees. But Mueller said in his filing that doing so “unreasonably risks the national security interests of the United States.” The special counsel said that Concord should not be given such sensitive material because of alleged misuse in October by an unknown party of “non-sensitive” materials already in Concord’s possession as a result of the normal discovery process that litigants use to share information during a court case.

Mueller said that “sensitive” materials identifies individuals and entities that have not been criminally charged, but whom “the government believes are continuing to engage in operations that interfere with lawful U.S. government functions like those activities charged in the indictment.” [..] The special counsel said that, “On October 22, 2018, the newly created Twitter account @HackingRedstone published the following tweet: ‘We’ve got access to the Special Counsel Mueller’s probe database as we hacked Russian server with info from the Russian troll case Concord LLC v. Mueller. You can view all the files Mueller had about the IRA and Russian collusion. Enjoy the reading!'”

Read more …

What Mueller really wants is to stop Concord from fighting his probe. He never expected them to come to court. He thought they were just more anonymous Russians he could accuse of anything he wanted without being called on it.

• Mueller Claims Evidence Shared Leaked To ‘Discredit Investigation’ (RT)

In an apparent bid to shield his case against alleged Russian trolls from legal challenge, special counsel Robert Mueller claimed some evidence previously provided was hacked and published to discredit his probe. On Wednesday, Mueller filed a motion to oppose discovery in case against Concord Management and Consulting LLC, which he indicted last February on charges of running the Internet Research Agency, also known as the “St. Petersburg troll factory.” “Sensitive” evidence in the case cannot be turned over to Concord’s lawyers, because that would make it accessible to their clients in Russia – and back in October, Mueller claimed, someone claimed to have hacked Concord’s computers and posted evidence previously handed over online “as part of a disinformation campaign aimed (apparently) at discrediting ongoing investigations into Russian interference in the US political system.”

It was that claim that got the attention of the media and the ‘Russiagate’ crowd. What Mueller actually alleges is less headline-worthy and far more tenuous. Namely, on October 22 last year, a Twitter account @HackingRedstone claimed to have gained “access to the Special Counsel Mueller’s probe database as we hacked Russian server with info from the Russian troll case Concord LLC v. Mueller,” offering “all the files Mueller had about the IRA and Russian collusion.” According to a footnote in the filing, Mueller’s team was informed of this by an unnamed reporter. However, the Twitter account referenced comes up as suspended, and aside from that notice there are no entries for it in the Internet Archive, making Mueller’s claim impossible to independently verify.

The webpage allegedly linked in the tweet is said to have contained “file folders with names and folder structures that are unique to the names and structures of materials… produced by the government in discovery.” Of the 300,000 files on the site, “over 1,000” matched the hashtag values of documents provided by Mueller to Concord, the filing said. Mueller argued these must have been obtained from Concord, because the FBI “found no evidence” that US government servers fell victim to any hack involving the files. Somewhat confusingly, the filing argued that many other file names used a reference to the Relativity database, which the US government “has not used” to store materials related to this case. Concord’s lawyers have informed the court that the company’s computers have not been hacked, but Mueller’s filing accused them of lying, saying that the webpage contained “actual discovery materials from this case.”

[..] To wit, Mueller is making an assertion based on a tweet and a webpage – that currently do not exist – to argue that it should not disclose further “sensitive” evidence to defendants in a Russiagate case.

Read more …

How did the majority of news outlets miss that Mueller claims the info was altered? They didn’t read it?

• Mueller Says Russians Are Altering Evidence From Investigation (Ind.)

Russians have obtained evidence from special counsel Robert Mueller’s inquiry into Moscow’s interference in US politics and altered it in a bid to discredit the probe, federal prosecutors have claimed. The files were shared with attorneys working for Concord Management and Consulting, a Russian company that allegedly funded hacking operations by Russia’s Internet Research Agency (IRA), they said in a court filing. The sharing evidence and documents between prosecutors and defence lawyer as part of routine discovery is common legal practice. But the files shared by Mr Mueller’s investigation were later uploaded and disseminated on Twitter in October.

However, the files shared online, “appear to have been altered and disseminated as part of a disinformation campaign aimed (apparently) at discrediting ongoing investigations into Russian interference in the US political system,” the court filing states. A team had reviewed files to determine that roughly 1,000 files linked to by that account out of 300,000 available matched non-public evidence provided. “The fact that the file folder names and folder structure on the webpage significantly match the non-public names and file structure of the materials produced in discovery, and the fact that over 1,000 files on the webpage match those produced in discovery, establish that the person(s) who created the webpage had access to at least some of the non-sensitive discovery produced by the government in this case,“ the filing states.

Concord Management was among 13 Russian entities or people to be charged in connection with Mr Mueller’s investigation last February. Mr Mueller’s team has charged dozens of Russian individuals or entities for attempting to influence the 2016 presidential election, primarily through hacking Democratic Party email systems. The most recent filing argued that attorneys for Concord should not be given access to “sensitive” evidence gathered for the case. It said: “The person who created the webpage used their knowledge of the non-sensitive discovery to make it appear as though the irrelevant files contained on the webpage were the sum total evidence of ‘IRA and Russian collusion’ gathered by law enforcement in this matter in an apparent effort to discredit the investigation.”

Read more …

Amal Clooney told Greece in 2015 to take Britain to an international court. They didn’t.

The marbles stem from 2,500 years ago. Their splendor is unmatched, at least until the Romans, and the Middle Ages. They were stolen by Britain when the Ottomans had invaded Greece.

• Acropolis Museum Director: British Museum Not Owner Of Parthenon Marbles (K.)

The British Museum is not the legal owner of the Parthenon Marbles and therefore the long-running dispute with Greece over their fate could only be resolved with their unconditional repatriation and not with a lending plan, the director of the Acropolis Museum, Dimitrios Pandermalis, reportedly told German public radio on Wednesday. “The full return of the Parthenon Marbles is the only solution. Everything that is inextricably linked to the monument must be reunited,” he was quoted as telling Deutschlandfunk, adding that the sculptures exhibited in London form an integral part of the monument. He also said his museum would gladly offer something to the British Museum in exchange for the marbles’ return, without going into details.

Pantermalis was responding to Hartwig Fischer, the director of the British Museum, who dismissed the possibility of returning them to Greece, arguing that their exhibition in London is in “a context of world cultures.” “The Trustees of the British Museum feel the obligation to preserve the collection in its entirety, so that things that are part of this collection remain part of this collection,” he was quoted as telling Greek daily Ta Nea in an interview published on January 26. Asked if that is the reason why the Museum will not permanently return the Sculptures, he replied: “Yes”. In another part of the same interview he said they are “in the fiduciary ownership of the Trustees of the Museum.”

Fischer also said that the removal of the marbles from Greece in the 19th century could be seen as “a creative act.” The sculptures are the work of great Athenian sculptor Phidias who added them to the Parthenon in the fifth century BC. In the early 19th century, men working for the 7th Earl of Elgin dismantled a large part of the frieze and shipped the sculptures back to London.

Read more …

Debt Rattle June 7 2017

Jun 072017
 
 June 7, 2017  Posted by at 9:25 am Finance Tagged with: , , , , , , , , , ,  4 Responses »


Olivier Drot Morning in Downtown Athens June 7 2017

 

• Spring Rally in Stocks, Bonds, Gold and Bitcoin Unnerves Investors (WSJ)
• Trump’s America Is Facing a $13 Trillion Consumer Debt Hangover (BBG)
• Bars Open Early Tomorrow So People Can Drink While Watching Comey Testify (BI)
• Other Times Unemployment Has Been This Low, It Didn’t End Well (WSJ)
• UK’s May Says She’d Rip Up Human Rights Law to Beat Terrorists (BBG)
• Corbyn: UK Foreign Policy Increases Terrorism Risk. Most Britons Agree (Ind.)
• Australia’s Economy Marks Record 26 Years Without Recession (AFP)
• Australians Curb Spending As Household Debt Balloons (R.)
• Is There A Magic Money Tree? Yes Children, But That’s The Wrong Question (G.)
• Santander Buys Struggling Spanish Banco Popular For €1 (BBG)
• Don’t Count on China as Next Climate Crusader (WSJ)
• Gimme Shelter (Jim Kunstler)
• 98% Of Greeks Downbeat About Their Current Economic Situation (K.)

 

 

The inevitable result of no price discovery for years on end. Do note that no price discovery also means there are no investors.

• Spring Rally in Stocks, Bonds, Gold and Bitcoin Unnerves Investors (WSJ)

Stocks, bonds, gold and bitcoin—assets that rarely move in unison—have all been surging this spring, an everything rally that leaves investors confounded about how to play the plodding U.S. expansion and vulnerable to sharp reversals in fortune. Major U.S. stock indexes have soared to records this month, reflecting some investors’ confidence in the continued U.S. economic recovery along with expectations that large technology firms will accrue further market-share gains. At the same time prices of bonds, which often decline when stocks are rising, have risen lately, as U.S. inflation readings cooled off alongside a slowdown in some key industries. Gold has gained following terror attacks in the U.K., and turmoil in U.S. politics centering on the administration’s legislative prospects and a key congressional hearing this week featuring former FBI director James Comey.

The simultaneous gains have begun to concern some investors. Many point to a wave of money that is driving up asset prices, tied in part to lower bond yields and a lower dollar—a confluence of events they say feels good while it lasts but can’t go on forever. “We do think there are distortions” in the markets, said Iman Brivanlou, who oversees high-income equities at asset manager TCW. The Dow Industrials this month have posted two record closes, their first since March, and the 30-stock index remains just 0.33% below its all-time high despite a decline Tuesday of 47.81 points to 21136.23. The Nasdaq Composite Index has hit more than three dozen new highs this year, reflecting the surge of red-hot tech stocks such as Alphabet and Amazon.com , both of which this month have surpassed $1,000 a share. Bitcoin has tripled this year, hitting a record high Tuesday.

At the same time, U.S. bond yields on Tuesday sank to their 2017 low at 2.147% and the price of gold, long viewed as a barometer of market concern about potential risks ahead, settled at $1,294.40, its highest in seven months. A Goldman Sachs Group index of financial conditions that takes into account credit spreads, equity prices and other market gauges, this month suggested the easiest conditions since early 2015, before the Federal Reserve began lifting rates. Another measure of stress in U.S. money markets fell to near its lowest in seven years, while measures of expected stock-market swings have been at the lowest in a decade.

Read more …

A global issue.

• Trump’s America Is Facing a $13 Trillion Consumer Debt Hangover (BBG)

After bingeing on credit for a half decade, U.S. consumers may finally be feeling the hangover. Americans faced with lackluster income growth have been financing more of their spending with debt instead. There are early signs that loan burdens are growing unsustainably large for borrowers with lower incomes. Household borrowings have surged to a record $12.73 trillion, and the%age of debt that is overdue has risen for two consecutive quarters. And with economic optimism having lifted borrowing rates since the election and the Federal Reserve expected to hike further, it’s getting more expensive for borrowers to refinance. Some companies are growing worried about their customers. Public Storage said in April that more of its self-storage customers now seem to be under stress.

Credit card lenders including Synchrony Financial and Capital One Financial are setting aside more money to cover bad loans. Consumer product makers including Nestle posted slower sales growth last quarter, particularly in the U.S. Companies may have reason to be concerned. Consumer spending notched its weakest gain in the first quarter since the end of 2009, a problem in an economy where consumers account for 70% of spending, though analysts expect the dip to be transitory. And debt delinquencies are rising even as the job market shows signs of strength. “There are pockets of consumers that are going to be sorely tested,” said Christopher Low, chief economist at FTN Financial. “We’ve conditioned American consumers to use debt to close the gap between their wages and their spending. When the Fed hikes, riskier borrowers are going to get pinched first.”

Since the 2008 financial crisis, the Fed has kept rates low to encourage companies and consumers to borrow more and spur economic growth. Much of the gains in household debt since 2012 have come from student loans, auto debt and credit cards. Over that time, wage growth has averaged around 2.2% a year, and the pace has been slowing for much of this year. Even if economists forecast that income growth will accelerate, those pickups have remained elusive. Donald Trump won the U.S. presidential election in part by convincing voters that he understood their economic pain. Keeping up with household debt payments is still broadly manageable for consumers. As of the end of last year, the ratio of principal and interest payments to disposable income for Americans was just shy of 10%, less than the average going back to 1980 of 11.33%.

And it’s too soon to say whether growing signs of pain among borrowers are just a return to more normal levels of delinquencies or evidence of a more serious credit downturn. Loan delinquencies are creeping higher after plunging from 2010 until the middle of 2016, but are still below historical averages.

Read more …

This can only disappoint. The echo chamber is overcrowded.

• Bars Open Early Tomorrow So People Can Drink While Watching Comey Testify (BI)

If you want to have a drink while watching former FBI director James Comey testify before the Senate Intelligence Committee on Thursday, you’re in luck. Bars in Washington, DC, San Francisco, and Houston, Texas, are opening early on Thursday to screen Comey’s testimony, which is scheduled to begin at 10 a.m. EST. “Come on… you know you want to watch the drama unfold this Thursday,” Shaw’s Tavern, which will be serving $5 Stoli vodka and “FBI” sandwiches, wrote on Facebook. “Grab your friends, grab a drink and let’s COVFEFE!”

Read more …

Oh boy, you can’t win, can you?

• Other Times Unemployment Has Been This Low, It Didn’t End Well (WSJ)

There have been only three fleeting periods in the past half-century when the U.S. unemployment rate was as low as it is today. This would be cause for celebration but for one disturbing fact: in hindsight, each period was associated with boiling excesses that led to serious economic trouble. Low unemployment of the late 1960s preceded an inflation spiral in the 1970s. The late 1990s bred the Dot-com bubble and bust. The mid-2000s saw the buildup and collapse of U.S. housing. While there is reason to believe today’s economy isn’t boiling over as in the past, those episodes call for caution. “It’s not a matter of superstition, it’s a matter of being mindful of the history of what such a low unemployment rate usually is followed by,” said Michael Feroli, chief U.S. economist of J.P. Morgan Chase.

While initially a welcome development, low unemployment in the 1960s laid the groundwork for a buildup of wage and price pressures, spurred on by low interest rates and aggressive government spending programs. The unemployment rate dropped to 4.3% in September 1965 and then below 4%. Today’s unemployment rate, also at 4.3%, could drop below 4% in the next year if it maintains its present trajectory. Unemployment returned again to 4.3% in January 1999. This time the inflation rate remained below 2% and it seemed that, unlike the late 1960s, the economy wasn’t overheating. But asset prices—the stock market in particular—soared after what had already been a long climb. The DJIA shot above 10000 for the first time in March 1998. Highflying tech companies commanded billion-dollar valuations with no profits to report. In hindsight, an internet bubble grew out of control.

Read more …

Hoping to get the nazi vote?

• UK’s May Says She’d Rip Up Human Rights Law to Beat Terrorists (BBG)

Prime Minister Theresa May said she’d be willing to tear up human rights legislation in the battle against terrorists, as security continued to dominate the final days of the U.K. election campaign. Speaking to supporters at a campaign event in Slough, west of London, the premier said she wanted to make it easier for the authorities to deport foreign terror suspects and to limit the freedoms of individuals who pose a threat but who can’t be prosecuted in court. “If our human rights laws stop us from doing it, we will change the laws so we can do it,” May said. “If I am elected as prime minister on Thursday, that work begins on Friday.” May is facing criticism over her record overseeing U.K. homeland security in the wake of two terrorist attacks in two weeks ahead of Thursday’s national vote.

Read more …

Those arms sales will be under heavy pressure no matter who wins.

• Corbyn: UK Foreign Policy Increases Terrorism Risk. Most Britons Agree (Ind.)

An overwhelming majority of people agree with Jeremy Corbyn that British involvement in foreign wars has put the public at greater risk of terrorism, according to a new poll. The exclusive ORB survey for The Independent found 75% of people believe interventions in Iraq, Afghanistan and Libya have made atrocities on UK soil more likely. The poll – conducted before Saturday night’s devastating attack – comes after Mr Corbyn was lambasted for suggesting foreign policy decisions were linked to terrorism in the UK and that the “war on terror” had failed. The deadly strike at London Bridge and Borough Market, the third attack in Britain in as many months, has seen security dominate the final days of the election campaign, with cabinet ministers squabbling over whether it could have been stopped.

Theresa May’s record as Home Secretary has been questioned and she has faced a call to resign over the matter from Mr Corbyn, not to mention a former aide to ex-Prime Minister David Cameron. In the wake of the Manchester attack, which killed 22 people last month, the Labour leader highlighted the potential role foreign military interventions play in increasing the likelihood of atrocities in the UK. Despite experts like Baroness Eliza Manningham-Bullerformer, a former MI5 chief, and Baroness Pauline Neville-Jones, ex-chair of the Joint Intelligence Committee, expressing similar views, he was accused by Conservatives of making excuses for terrorism.

But the ORB survey for The Independent found three-quarters of people – taking in all age groups, political persuasions and social classes – agreed Britain’s military involvement in Iraq, Afghanistan and Libya had increased the risk of terrorist acts. Within that, some 68% of Tory voters agreed foreign wars have enhanced the risks of terrorism at home. So did 80% of Labour supporters and 79% of people that voted for the Liberal Democrats in 2015.

Read more …

This is hilarious in combination with the next article.

• Australia’s Economy Marks Record 26 Years Without Recession (AFP)

Australia marked a world-record 26 years without a recession Wednesday, as the economy grew 0.3% in the first-quarter, official data showed. The Australian Bureau of Statistics put the annual rate of growth at 1.7%, down from 2.4% in the previous three months. The soft quarterly reading was widely expected by analysts amid the impact of category four Cyclone Debbie on eastern Australia in late March, weaker trade figures and tepid wages growth. “The results today demonstrate the continued resilience of the Australian economy,” Treasurer Scott Morrison told reporters. The Australian dollar rallied by a quarter of a US cent to 75.27 cents just after the data was released, as some analysts had predicted a negative first-quarter reading.

Australia last recorded two negative quarters of economic growth in March and June 1991, before enjoying 103 quarters without a recession to equal the record set by the Netherlands. Economists said the resources-rich nation’s long stretch of expansion was supported by economic reforms in the 1980s and 1990s, such as the floating of the local currency, a flexible labour market, financial sector and capital markets deregulation and lower tariffs. Australia has also benefited from China’s economic growth and hunger for natural resources, which led to an unprecedented mining investment boom and record commodity prices. But economists have warned that economic growth in the next few years may not be as rosy. “In the context of the past few years, it is still a fairly weak outcome,” JP Morgan economist Tom Kennedy told AFP of the latest figures.

Read more …

A record run without a recession entirly paid for with leveraged private debt: “They are all on a budget. Everyone’s got all their money in houses, that’s how it is.”

• Australians Curb Spending As Household Debt Balloons (R.)

Australia’s economy may have achieved a remarkable winning streak, avoiding a recession for 25 years, but there are now clear signs that the consumers who have driven much of the growth are running out of puff. With cash interest rates at a record low and house prices near record highs, the nation’s household debt-to-income ratio has climbed to an all-time peak of 189%, according to the Reserve Bank of Australia (RBA). That means there are an increasing number of people who have little cash for discretionary spending – on everything from cars to electrical appliances and new clothes – as their pay packets get consumed by large mortgages and high rental payments in the country’s red-hot property market.

And it’s not as if a sudden plunge in home prices would help – it might well expose and exacerbate the problem, at least in the short run, squeezing many who have bought into the frothy market with high mortgage repayments and little equity in their homes. “We are seeing a considerable spike in stress even in more affluent households. Large mortgages, big commitments but no income growth,” said Digital Finance Analytics (DFA) Principal Martin North. “Stressed households are less likely to spend at the shops, which acts as a drag anchor on future growth.” North estimates a record 52,000 households risk default in the next 12 months and that 23.4% of Australian families are under mortgage stress, meaning their income does not cover ongoing costs. That compares with about 19% a year ago.

“People are up to their ears in mortgages,” said Brad Smith, a car sales consultant at MotorPoint Sydney which has seen a stark slowdown in sales in the past six months. “They are all on a budget. Everyone’s got all their money in houses, that’s how it is.” Australians are also facing a cash crunch because price inflation in essential items such as food, electricity and insurance is accelerating at a 3.4% annual rate at a time when Australian wages are rising at their slowest pace on record, just 1.9% in the year to March. Meanwhile, growth in retail sales, personal loans and luxury car sales are all at multi-year lows, suggesting the household sector – nearly 60% of Australia’s A$1.7 trillion ($1.3 trillion) economy – is under severe strain.

Read more …

Steve Keen’s efforts are having an effect.

• Is There A Magic Money Tree? Yes Children, But That’s The Wrong Question (G.)

Does anyone who has witnessed the pomp and circumstance of the Queen’s Jubilee, the funnelling of public money into Syrian airstrikes, or the systematic cutting of taxes for the rich really think we’re not paying nurses properly because we simply don’t have the money? Absolutely not: we don’t pay nurses properly because the government makes a choice not to. This fact calls to mind the words of the Texan minister Robert Fulghum: “It will be a great day when our schools have all the money they need, and our air force has to have a bake-sale to buy a bomber”. But the magic money tree is not a just daft expression in terms of how governments spend public money, it’s also misleading in terms of how the economy works as a whole.

Since 2008, we’ve been encouraged to see the economy like a household budget: if households spend too much money, they need to cut down on living costs so they don’t get into too much debt. To that end, the magic money tree says that if we spend too much money, we can’t just simply grow more. But actually, a country’s whole economy can grow more money if it needs to. Since 2009 the Bank of England has created £453bn of new electronic money to buy debt from the private sector using a mechanism called quantitative easing. Yes, you read that right: the Bank of England has created £453,000,000,000 of new money in the last eight years. Turns out the magic money tree is pretty big. Growing money is possible because an economy is nothing like a household budget. In a household, money comes in via people’s wages and goes out via living costs.

But in an economy, we all pay each other’s wages. Money doesn’t just travel in one direction in the economy, it circulates around. It’s the difference between one car driving in one end of a tunnel and out of the other, and lots of cars zigzagging around Spaghetti Junction. The issue isn’t whether we can grow money or not (we can – that’s just a fact), it’s where the money goes once it’s been grown. And the problem is that it doesn’t go to nurses, teachers or the public services they work for. It goes to institutions such as banks. The nurse in the BBC debate was highlighting a problem that exists across the whole economy: real wages haven’t increased for more than a decade, and this has meant more people have been relying on credit cards, with personal debt now higher than it was before the 2008 crash.

In other words, the fact that the nurse hasn’t had a pay rise is not just bad for her, it’s bad for all of us – because if that nurse is not earning enough, she won’t be spending money. And if she does spend money, she’ll do it by getting into unsustainable debt – which is itself outrageous considering the important, skilled work nurses do.

Read more …

Raise €7 billion to buy a bank for €1.

• Santander Buys Struggling Spanish Banco Popular For €1 (BBG)

Banco Popular Espanol has been taken over by Santander after European regulators deemed that the bank was likely to fail. Popular will continue to operate under “normal business conditions” after all the bank’s shares and capital instruments were transferred to Santander, said the EU’s Single Resolution Board. The purchase price was €1, according to a statement. Santander plans to raise about €7bn (£6.1bn) of capital as part of the transaction. Popular had been looking for a buyer or a possible share sale after its balance sheet was battered by soured real estate loans that eroded its capital.

Its shares have dropped 53pc since the beginning of last week. In a statement, the ECB, which oversees the largest banks in the eurozone, said: “The significant deterioration of the liquidity situation of the bank in recent days led to a determination that the entity would have, in the near future, been unable to pay its debts or other liabilities as they fell due. “Consequently, the ECB determined that the bank was failing or likely to fail and duly informed the Single Resolution Board (SRB), which adopted a resolution scheme entailing the sale of Banco Popular Espanol to Banco Santander.”

Read more …

That Paris accord is a hoax.

• Don’t Count on China as Next Climate Crusader (WSJ)

For years, a wide spectrum of groups in the U.S. lectured, cajoled and entreated China to go green. Multinationals and nonprofits teamed up with Chinese environmental groups to promote eco-friendly causes; Coca-Cola restored forests in the upper Yangtze. U.S. labs offered scientific support. Academics collaborated on research. The former Treasury secretary, Hank Paulson, championed China’s disappearing wetlands, a haven for migratory birds. The well-funded effort amplified voices within China demanding the government take action. It was, says Orville Schell, a longtime China watcher and environmentalist, “the most effective missionary work in the past couple hundred years.” So it’s an irony of historic proportions how the roles have reversed: China, the world’s worst polluter by far, is now a convert on climate change while the White House under Donald Trump has turned apostate.

In pulling out of the 2015 Paris climate-change agreement, Mr. Trump has repudiated a signal accomplishment of the Obama presidency: persuading Beijing to become a partner in the effort to prevent the planet from heating up to the point of no return. Without China’s support, the Paris deal might have fallen apart. Mr. Paulson issued a statement saying he was dismayed and disappointed. “We have left a void for others to fill,” he said. When it comes to the environment, China is still torn by conflicting priorities. It has installed more solar and wind capacity than any other nation—and plans to invest another $360 billion in renewable energy between now and 2020. The economy is rebalancing away from heavy industry and manufacturing toward much cleaner services and consumption.

Coal consumption has declined for three straight years. On current trends, many scientists expect that China will reach peak carbon emissions well before its target date of 2030 under the Paris accord. Yet Beijing remains committed to rapid growth. And coal is still king. Just ask the residents of Beijing. Whenever economic policy makers set out to boost growth, spending flows to new real-estate and infrastructure projects, the steel mills around the capital fire up their coal furnaces—and commuters reach for their face masks. This winter was particularly hard on the lungs. A spending splurge meant that Beijing’s average pollution levels last year were double the national standard set by the State Council.

Read more …

“How could they fail to come up with a video of the Donald and Vladimir swatting each other playfully with birch switches in a Moscow banya?”

• Gimme Shelter (Jim Kunstler)

“Have you all lost your mind?” Vladimir Putin replied to one of Megyn Kelly’s thrusts about alleged Russian perfidy toward the US in the gala interview that debuted her new Sunday Night star-chamber on NBC. Old Vlad put his finger on something there. His view of the late goings-on in America is like that of the proverbial detached Martian observer of strange Earthly doings, rattling his antennae and clicking his mouth-parts in mirth. To which retort, by the way, one would have to answer, ”Yes, absolutely.” The toils of slow economic collapse, accompanied by the ceaseless effort by various arms of the Deep State to spin “the narrative” around the voting public’s collective head, has driven the polity insane. And this, of course, is on view in the bedlam that US politics has become, Trump and all.

I’m waiting for The New York Times to run the three-column headline that says Russia Racist, Misogynist, and Islamophobic to finally bring together the programmed paranoia of NeoCon / DemProg alliance with the esprit de corp of the new collegiate Red Guard. Mr. Putin does not have to lift a finger to detonate the groaning garbage barge of US domestic affairs. It’s already ignited and is faring toward a very peculiar species of civil war. You can be sure that the NeoCon/DemProg axis is determined to get rid of Trump at all costs. Impeachment requires some sort of high crime or misdeamenor. So far, going on a year, they haven’t come up with any evidence that the Golden Golem of Greatness acted as a Russian agent in some fashion, and that itself has got to be a little suspicious, considering the thousands of clerks in the spinning mills of those legendary seventeen Intel outfits the government runs.

How could they fail to come up with a video of the Donald and Vladimir swatting each other playfully with birch switches in a Moscow banya? Five TV sitcom writers could surely come up with an angle — as long as it was a plausible entertainment. In the meantime, Trump prevails, the mad bull elephant of the Republican herd, majestically swinging his trunk against everything breakable in the political china shop while trumpeting “Covfefe! Covfefe!” Last week it was the Paris Climate Accords. The op-ed writers in the usual places bounced off the walls of their virtual rubber room in response. Paul Krugman had to be dragged down to hydrotherapy at the NYT after he set his hair on fire. And Rachel Maddow practically popped a carotid artery in her muscular neck from all that shrieking.

I’m a bit more sanguine about the US withdrawal. To me, the Paris Accords were just another feel-good PR stunt enabling politicians to pretend that they could control forces that are already way out-of-hand, an international vanity project of ass-covering. The coming economic collapse will depress global industrial activity whether anybody likes it or not, and despite anyone’s pretense of good intentions — and then we will have a range of much more practical problems of everyday life to contend with.

Read more …

It’s getting time to rise up.

• 98% Of Greeks Downbeat About Their Current Economic Situation (K.)

Greeks are among the most pessimistic people in the world, according to the findings of a survey by the Pew Research Center which found that many Europeans as well as Japanese and Americans feel better about their national economies now than before the global financial crisis nearly a decade ago. Questioned about their national economy, only 2% of Greeks were upbeat, the lowest rate among the 32 countries polled. The Dutch, Germans, Swedes and Indians see their national economies in the most positive light, with more than 80% expressing optimism. The Pew survey also detected widespread concern about the future. A median of just 41% said they believed that a child in their country today would grow up to be better off financially than their parents. The most pessimistic about prospects for the next generation are the French (9%), the Japanese (19%) and the Greeks (21%).

Read more …

Debt Rattle December 26 2016

Dec 262016
 
 December 26, 2016  Posted by at 10:09 am Finance Tagged with: , , , , , , , , , , ,  6 Responses »


Paul Gauguin Christmas Night (The Blessing of the Oxen) , 1902-1903

• One Industry Will Keep Holding North America Together (CNBC)
• China Bank Calls Documents ‘Fake’ After Bond Default Linked To Alibaba (R.)
• The Trump Rally Is Young (CNBC)
• What Is Productivity And Why Is The UK’s So Poor? (G.)
• What’s Behind Obama’s Attacks On Putin (Carley)
• British Councils Admit Massive Use Of Spying Powers On Public (G.)
• Humankind Has Created 30 Trillion Tons Of Stuff (F.)
• Being Busy Is Not Cool (Awl)
• The Man Who Saved 200 Syrian Refugees (TL)

 

 

Brilliant headline.

• One Industry Will Keep Holding North America Together (CNBC)

Texas-refined gasoline fuels Mexican cars. Natural gas from Canada helps heat the Midwest and cool California. Electricity flows over the northern and southern U.S. borders in both directions. The interconnections in the North American energy industry are huge and growing — and could grow even closer during the Trump administration unless it decides to alter the flow of a key U.S. export (and import) — at the border. The U.S., Canada and Mexico have intentionally worked to combine the advantages of their energy resources. President-elect Donald Trump has said he would renegotiate NAFTA between the U.S., Canada and Mexico. While the new administration seems to be very friendly to the energy sector, there are still questions about whether there could be changes that affect the intricate web of energy connections between the three countries.

“It’s not so simple to say we’re going to renegotiate the trade deals. We set up the system to create those inter-linkages. You just can’t overnight legislate or executive order that away. If you try to do that, it’s going to have negative economic impacts, not just for the economies on the border but for these specific industries, like energy,” said Scott Anderson, chief economist at Bank of the West. Trump’s selection of former Texas Gov. Rick Perry as energy secretary, is seen as a positive for the oil and gas industry. Perry has spoken favorably about North America as an energy power house, including Mexico and Canada. Perhaps one of the most surprising recent developments is the boom in U.S. natural gas that’s flowing across the southern border, and the ambitious plans by the Mexican government to build more pipelines to take U.S. natural gas throughout Mexico and as far as Mexico City.

[..] The energy picture changed dramatically for North America in the last decade. The push by the U.S. energy industry into hydraulic fracking and horizontal drilling unleashed an energy boom, making the U.S. the world’s biggest producer of natural gas and placing it firmly among the top three oil producers. That has changed the situation for all of North America, at a time when Mexico’s oil and gas output was in decline and Canada found some of its potential oil output landlocked. The ties between the three countries go way back. In the early 1900s, the U.S. began sharing electricity with its neighbors, and Canada is now a significant net exporter of electricity to the U.S.

One catalyst has been Mexico’s program of energy reform, intended to break the hold of state-owned Pemex on its industry and bring new private investment to Mexico’s energy industry. The decline in big part was due to a lack of investment by the government in Petroleos Mexicanos, and its increasing reliance on Pemex revenue stream for its own budget. “Before shale, the U.S. was importing a lot more gas from Canada,” said Anthony Yuen, global energy analyst at Citigroup. The U.S. was also worried not that long ago that it would need to import LNG, liquefied natural gas. But the shale boom changed everything.

Read more …

Fraud and shadow banking. Makes you wonder how pervasive this is. I have an idea.

• China Bank Calls Documents ‘Fake’ After Bond Default Linked To Alibaba (R.)

The fate of a defaulted $45 million Chinese corporate bond sold through an Alibaba-backed online wealth management platform was thrown into doubt on Monday, after a bank said letters of guarantee for the bonds were counterfeit. China Guangfa Bank said guarantee documents, official seals and personal seals presented by the insurer of the bonds “are all fake” and that it has reported the matter to the police. The dispute highlights challenges in China’s loosely regulated online finance industry, where retail investors often buy high-yielding bonds and other assets, expecting them to be “risk-free” due to guarantees provided by various parties. At the center of the latest dispute are 312 million yuan ($45 million) worth of high-yielding bonds issued by southern Chinese phone maker Cosun Group that defaulted this month.

The bonds were sold through Zhao Cai Bao, an online platform run by Ant Financial Services Group, the payment affiliate of e-commerce firm Alibaba. Ant Financial has asked Zheshang Property and Casualty Insurance, which wrote insurance on the bonds, to repay investors. On Sunday, Zheshang Insurance published two documents on its website that it said were from CGB carrying the bank’s official seals, and that guaranteed Zheshang Insurance policies for the Consun bonds. The letters were issued at CGB’s Huizhou branch in December 2014, when the Cosun bonds were sold, Zheshang Insurance said.On Monday, CGB said the documents were fake and that it had reported the incident to police as “suspected financial fraud.” The dispute follows instances of financial fraud this year including forged bond agreements that led to brokerage Sealand Securities sharing potential losses of up to $2.4 billion. In May, the government advised banks to be vigilant after several cases of bill fraud.

Read more …

Well, yeah, that too.

• The Trump Rally Is Young (CNBC)

A trade war with China – a country with a $473 billion of bilateral trade with America in the first ten months of this year – is an implausible assumption. But a serious conversation about the fact that Chinese exports to America represent three-quarters of that business is long overdue and entirely appropriate. The President-elect Donald Trump is seeking a better deal for America. That should be easy to understand and support for any fair- and free-trader. And, rest assured, Washington’s intent to correct its huge trade imbalance with China is not coming as a surprise to Beijing. The Zhongnanhai mandarins know that their trade surpluses with the U.S. – $366 billion in 2015 and $289 billion in the first ten months of this year – are difficult issues that must be addressed. That is the substance of the problem.The rest is rhetoric.

Mr. Trump’s opening salvo used legitimate trade remedies,such as import tariffs, anti-dumping investigations, and possibly other measures if China was recognized as an exchange-rate manipulator. China has announced that it would respond with unspecified retaliatory measures, but President Xi Jinping talked about the need for Sino-American cooperation in his congratulatory phone call to Mr. Trump. The Chinese also liked the appointment of Iowa Governor Terry Branstad as an envoy to Beijing. They called him a “friend of China” and noted that he has known Mr.Xi since 1985. Difficult trade negotiating rounds are quite common. In this particular case, Washington also has the option of using non-confrontational measures to reduce the existing trade imbalance.

A change in the corporate taxation is one of them. That could bring back American manufacturing producing Chinese exports to the U.S. Some leaders of the U.S. Business Roundtable – a forum of 192 companies that account for most of investment activity in the United States – doubt that a large amount of that business can be quickly repatriated. They feel confident, however, that appropriate corporate tax cuts would keep firms producing and reinvesting their profits in the U.S. The corporate tax reform is at the top of Mr. Trump’s agenda, and that is perhaps one of the most effective trade signals he can send to China. Indeed, reducing the incentive for the exodus of American manufacturing, and bringing some of it back, would also stop large technology transfers that are part of mandatory Sino-American joint ventures for American firms doing business in China.

Read more …

Lazy?

• What Is Productivity And Why Is The UK’s So Poor? (G.)

Productivity is a guide to how good a country is at delivering the goods and services that are bought and sold. Technically, it is the rate of output per unit of input, measured per worker or by the number of hours worked. In layman’s terms, it is a measure of what goes in and what comes out. In some sectors, productivity is easy to measure. A factory that makes 1,000 cars a day with 50 workers is twice as productive as a factory that requires 100 workers to do the same job. In other parts of the economy, assessing whether productivity has improved is harder and less objective. At face value a fast-food joint that employed the same number of chefs to cook the same number of hamburgers as they did a year earlier would not be showing any increase in productivity.

But if the quality of the hamburgers improved, that would be a productivity gain and statisticians would try to capture the improvement in the official figures. There are a number of ways in which a firm can make itself more productive. It can invest in new machinery that makes the production process more efficient. It can employ more highly skilled staff. It can train workers so that they can fully exploit the equipment they are using. It is through productivity improvements that living standards rise. For many years, the annual increase in productivity in the UK averaged around 2%, although there were periods when it was lower and periods when it was higher. Each year since the early 1990s, the Office for National Statistics has published an international comparison of productivity.

This showed that UK productivity was 9% lower than the average of the other six members of the G7 (the US, Japan, Germany, France, Italy and Canada) but this gap narrowed to 4% by the time of the 2007 financial crisis. Since then, however, productivity in the UK has barely grown and the gap with the rest of the G7 has widened to 18%. The gap with Germany is 35% and with the US 30%. There have been a number of explanations for the dramatic deterioration in productivity: the availability of unskilled cheap labour has deterred firms from investment; the poor quality of UK roads, railways and broadband network; the shrinkage of the financial sector, which had been a source of high-productivity jobs in the boom before the 2007 crisis; and the misallocation of capital to “zombie” firms kept alive by ultra-low interest rates rather than to dynamic new enterprises.

Read more …

“Maybe the Americans [..] can use high tech trampolines to get into space and do without Russian technology.”

• What’s Behind Obama’s Attacks On Putin (Carley)

Relations between Russian president Vladimir Putin and US president Barack Obama are poisoned and irretrievably damaged. It’s therefore a good thing that Obama is leaving office on 20 January. Bad US-Russian relations are of course nothing new. Since the Anglo-American war against Iraq in 2003, the US-Russian relationship has been headed downhill. For Obama, it appears that everything has gotten personal. The US president often acts like a petulant adolescent, jealous of a high school rival. You know, the kid who does everything better than he does. The lad takes it badly and won’t let it go. He challenges his nemesis to some new contest at every opportunity only to lose again and again. That’s got to be hard on the ego. Between Obama and Putin there have been many such encounters. Nor can it help that western cartoonists so often ridicule Obama as out of his depth in comparison to Putin.

Let’s consider Obama’s remarks at his last press conference on Friday, 16 December. «The Russians can’t change us or significantly weaken us», said Obama: «They are a smaller country. They are a weaker country. Their economy doesn’t produce anything that anybody wants to buy, except oil and gas and arms. They don’t innovate». This was insulting both Putin and his country, but not enough apparently for Obama. «They [the Russians] can impact us if we lose track of who we are. They can impact us if we abandon our values. Mr. Putin can weaken us, just like he’s trying to weaken Europe, if we start buying into notions that it’s okay to intimidate the press, or lock up dissidents, or discriminate against people because of their faith or what they look like».

What on earth is Mr. Obama talking about? Intimidate the press? The Moscow newspapers and television media are loaded with «liberals». Many Russians call them «fifth columnists». They are «people with ‘more advanced’ worldview[s] who do not tolerate ‘Russian propaganda’ themselves», according to one colleague in Moscow. But Mr. Putin tolerates them and pays them no mind. «Lock up dissidents… discriminate against people»? What alternate reality does Mr. Obama live in? Doesn’t produce anything people want to buy? The United States buys rocket engines that it does not now produce at home. Maybe the Americans, a Russian commentator joked, can use high tech trampolines to get into space and do without Russian technology.

[..] You have to give credit to Obama; he was ambitious, aiming for a big prize and the humiliation of Russia and its president. Again, he was thwarted not so much by President Putin but by the Russian people of the Crimea who immediately mobilised their local self-defence units backed by «polite people», Russian marines stationed in Sevastopol, to kick out the Ukrainians with scarcely a shot fired. They organised a referendum to approve entry into the Russian Federation. Reunification was quickly approved by a huge majority and celebrated in Moscow. Putin gave a remarkably candid speech, explaining the Russian position. «NATO remains a military alliance,’ he said, «and we are against having a military alliance making itself at home right in our backyard or in our historic territory. I simply cannot imagine that we would travel to Sevastopol to visit NATO sailors. Of course, most of them are wonderful guys, but it would be better to have them come and visit us, be our guests, rather than the other way round».

Read more …

And why not?

• British Councils Admit Massive Use Of Spying Powers On Public (G.)

Councils were given permission to carry out more than 55,000 days of covert surveillance over five years, including spying on people walking dogs, feeding pigeons and fly-tipping, the Guardian can reveal. A mass freedom of information request has found 186 local authorities – two-thirds of the 283 that responded – used the government’s Regulation of Investigatory Powers Act (Ripa) to gather evidence via secret listening devices, cameras and private detectives. Among the detailed examples provided were Midlothian council using the powers to monitor dog barking and Allerdale borough council gathering evidence about who was guilty of feeding pigeons. Wolverhampton used covert surveillance to check on the sale of dangerous toys and car clocking; Slough to aid an investigation into an illegal puppy farm; and Westminster to crack down on the selling of fireworks to children.

Meanwhile, Lancaster city council used the act, in 2012, for “targeted dog fouling enforcement” in two hotspots over 11 days. A spokeswoman pointed out that the law had since changed and Ripa could only now be used if criminal activity was suspected. The permissions for tens of thousands of days were revealed in a huge freedom of information exercise, carried out by the Liberal Democrats. It found that councils then launched 2,800 separate surveillance operations lasting up to 90 days each. Critics of the spying legislation say the government said it would only be used when absolutely necessary to protect British people from extreme threats. Brian Paddick, the Lib Dem peer who represents the party on home affairs, said: “It is absurd that local authorities are using measures primarily intended for combating terrorism for issues as trivial as a dog barking or the sale of theatre tickets. Spying on the public should be a last resort not an everyday tool.”

Read more …

Masters of destruction. Who think they’re creators.

• Humankind Has Created 30 Trillion Tons Of Stuff (F.)

Over the course of history, humans have made a lot of stuff — buildings, bottles, oil tankers, iPhones. Some of it is useful; a lot of it ends up being junk. It’s more than enough to leave behind a fossil legacy, were humanity to disappear. And as a species, our collection of stuff is only getting bigger. Researchers publishing in the peer-reviewed journal The Anthropocene Review now estimate that the sum material output of humankind exceeds 30 trillion tons. Spread evenly, that would amount to 110 lbs of human-made stuff for every square meter of Earth’s surface, as FORBES contributor Eric Mack pointed out. That’s a huge number. Here are some other, totally massive ways to conceive of our collective output: That’s about 16.8% of the weight of Mount Everest.

Now let’s visualize that number in terms of human-made things. It takes 5.9 billion Type D GVWR school buses at 10,000 lbs each to match all of humanity’s creations on Earth. If you’d prefer to view it in terms of larger objects such as Boeing 747-8 jet liners or International Space Stations, you’ll be looking at totals of 123 million and 66 million, respectively. If doomed cruise liners are your preferred unit of measurement, you would need over 647,ooo Titanics to come close to the immense weight of humanity’s creations. Increasing the size of your vessel to a 102-thousand ton Nimitz-class aircraft carrier, and you cut down the number of boats you’ll need to 293 thousand.

Read more …

“Oh you’re in a hurry? Now we’re definitely not crossing the river.”

• Being Busy Is Not Cool (Awl)

Because I personally only understand the world through different types of animals, I’m going to use an animal analogy to describe what I think. Let’s say you’re leading a horse and a donkey toward a river. When you reach the little slope that dips down to the riverbank, both of them are gonna pause and be like, “Hey, is this a good idea?” Typically, with a horse, maybe you tug the rope a little and, even though he’s still skeptical, a lot of the time he’ll defer to your logic. “I must be missing something here, it must be safe if you’re saying it is.” He’ll walk down the bank to investigate. The donkey is the opposite. If he has stopped to assess a situation and you try to force his hand before he’s ready, he digs in even deeper. “Oh you’re in a hurry? Now we’re definitely not crossing the river.”

Convincing behavior can be a signal of emotional bias, which can be a signal of poor judgment. In other words, if you need me to cross this river so badly, you’re probably not thinking of my best interest too closely, so let me look over your work. And if you want to rush me along? Seems like a tally mark in the “scam” column tbh. Busyness is the river our culture is trying to get us to cross. To use another example, let’s say someone bursts into the office on Monday morning announcing that everyone has to see the new Star Wars movie because it’s amazing and they’ve never seen anything like it. I’d immediately assume, “This person doesn’t know what they’re talking about.” Why? Because I am a donkey. I know anyone who’s seen a movie that moved them emotionally or made them them think some new thoughts doesn’t automatically burst through a door like a manic sitcom character evangelizing everyone they encounter. That’s not how that feeling acts. And it’s the same with being busy: signifying is not the same as being.

Read more …

“When we think of Italians or Irish, we don’t think of them as immigrants. They’re just people.”

• The Man Who Saved 200 Syrian Refugees (TL)

When Jim Estill decided to sponsor 50 Syrian refugee families, he didn’t tell anyone about it at first—not his accountant, not his friends, not even his wife. It was the summer of 2015, and the death toll in Syria had reached a quarter of a million people, while another four million had fled the country. All summer long, the news reported horror stories of Syrians drowning in the Mediterranean. Humanitarian aid programs were being cut across the Middle East. As he watched the news, Estill got worked up. “I didn’t want to be 80 years old and know that I did nothing during the greatest humanitarian crisis of my time,” he says. Estill was disturbed by the wave of xenophobia that had emerged during the Harper administration.

He wanted to demonstrate how refugees could help enrich our society. One of his best friends, Franz Hasenfratz, was a refugee who fled Communist Hungary. Hasenfratz went on to establish Linamar, a car-parts manufacturer, which is Guelph’s largest employer, with nearly 10,000 employees. “I was trying to drown out the xenophobes,” Estill says. “When we think of Italians or Irish, we don’t think of them as immigrants. They’re just people.” So he did some math. He checked Kijiji to find out how much apartments in Guelph were renting for, googled child tax benefits and GST/HST rebates in Ontario, and formulated a monthly food budget. He estimated that $30,000 could support a family of five for one year. He multiplied that number by 50 and realized the total cost—$1.5 million—was one he could easily afford.

[..] After Labour Day, Estill called a slew of local religious organizations—including three churches, a mosque, a Hindu temple and a synagogue—and aid agencies like the Salvation Army. On September 29, 10 civic leaders sat down in Estill’s boardroom at Danby. He’d made a PowerPoint presentation titled Refugees: The Right Thing to Do. Muhammed Sayyed, the president of the Muslim Society of Guelph, was amazed that so many faith groups were participating, even though most of the refugees would be Muslim. When he met Estill, he was filled with gratitude. “I thought, Wow, there are still people like him,” he said. An hour after the group sat down, the project was launched. The Muslim Society of Guelph would create the infrastructure, handle the paperwork and lead the volunteers. Estill would sustain the program with monthly donations. The group partnered with the Islamic Foundation of Toronto, which was a sponsorship agreement holder. This meant Estill could choose which refugees he wanted to sponsor.

Read more …


Debt Rattle December 16 2016

Dec 162016
 
 December 16, 2016  Posted by at 9:46 am Finance Tagged with: , , , , , , , , , ,  2 Responses »


John Vachon Big Four Cafe, Cairo, Illinois 1940

• Obama’s Blunder; Trump’s Gambit (Rickards)
• Trump Rally May Not Last Long – Marc Faber (CNBC)
• This Stock Rally Is More Hope Than Substance (WSJ)
• China, Others are Dumping US Treasurys as Never Before (WS)
• The Longer China’s Record M&A Spree Lasts, The Stranger The Deals Get (BBG)
• ECB Bond Buying Props Up Oil, Cars, Guns, Drones, Gambling, Handbags (DQ)
• EU Agrees Dutch Demands On Ukraine Deal To Avoid ‘Present For Russia’ (R.)
• Justin Trudeau: ‘Globalisation Isn’t Working For Ordinary People’ (G.)
• Crackdown On Cash Is An Attack On The Poor And A Reward For Banks (Soos)
• Why Are the Media Taking the CIA’s Hacking Claims at Face Value? (Nation)
• Turkey Has Back-Up Plans If EU Fails To Keep Visa-Free Travel Promises (AFP)
• “Without Antibiotics, Essentially You Do Not Have Modern Medicine” (R.)
• The Shattering Effect Of Roads On Nature (G.)

 

 

We need more refreshing views like this. Actual thinking people.

• Obama’s Blunder; Trump’s Gambit (Rickards)

[..] Russia is a more natural ally of the U.S. than China. Russia is a parliamentary system, albeit with autocratic overtones; China is a Communist dictatorship. Russia has empowered the Orthodox Church in recent decades, while China is officially atheistic. Russia is encouraging population growth while China’s one child policy and sex-selective abortions resulted in the deaths of over twenty million girls. These cultural aspects – elections, Christianity, and family formation – provide Russia with a natural affinity to western nations. Russia is also superior to China militarily despite recent Chinese advances. That makes Russia the more desirable ally in any two-against-one scenario.

The most powerful argument for embracing Russia to checkmate China is energy. The U.S. and Russia are the two largest energy producers in the world. U.S. energy production is set to expand with the support of the Trump administration. Russian production will expand also based in part on initiatives led by Rex Tillerson of Exxon, soon to be Secretary of State. China has few oil and natural gas reserves and relies heavily on dirty forms of coal and some hydropower. The remainder of China’s energy needs is met through imports. An energy alliance between the U.S. and Russia, supported by Saudi Arabia, could leave the Chinese economy and, by extension, the standing of the Communist Party of China, in jeopardy. That threat is enough to insure Chinese compliance with U.S. aims.

An emerging U.S.-Russian entente could also lead to the alleviation of western economic sanctions on Russia. This would open the door to an alliance between Germany and Russia. Those two economies have near perfect complementarity since Germany is technology rich and natural resource poor, while Russia is the opposite. Isolation of Russia is a fool’s errand. Russia is the twelfth largest economy in the world, has the largest landmass of any country in the world, is a nuclear power, has abundant natural resources, and is a fertile destination for direct foreign investment. The Russian culture is highly resistant to outside pressure, but open to outside cooperation. Just as fifty years of U.S. sanctions failed to change Cuban behavior, U.S. sanctions will not change Russian behavior except for the worse.

Engagement, not confrontation is the better course. The new Trump administration gets this. [..] Fortunately it’s not too late to reestablish a balance of power that favors the United States. China is a rising regional hegemon that should be constrained. Russia is a natural ally that should be empowered. The U.S. has blundered in its foreign policy for the past eight years. A new Trump administration has an opportunity to reverse those blunders by building bridges to Russia, and it seems to be moving in that direction.

Read more …

“..Ronald Reagan and Herbert Hoover also began their tenures with huge rallies, followed by crashes…”

• Trump Rally May Not Last Long – Marc Faber (CNBC)

If President-elect Donald Trump’s rhetoric ends up fueling a trade war with China, it’s the U.S. that will take it on the chin, Marc Faber, the publisher of the Gloom, Boom & Doom report, told CNBC on Friday. “Mr. Trump is not particularly keen on China,” Faber told CNBC’s “Squawk Box” on Friday. “There may be some trade war escalation or trade restrictions with China, which in my view would rather be negative for the U.S. than for China.” Trump has certainly set his sights on China. On the campaign trail, Trump repeatedly accused China of manipulating its currency in order to give its exports an advantage over U.S.-made goods, and he threatened to slap a tariff of up to 45% on Chinese imports.

While China’s yuan has fallen against the U.S. dollar in recent months, policymakers on the mainland have been intervening to support the currency, not weaken it. But Faber, who is also known as Dr. Doom for his usually pessimistic predictions, noted that China wouldn’t be easily cowed. “China does not depend on the U.S. The U.S. is still its largest export destination as a country, but taken together, all the emerging markets are for China much more important,” Faber noted. China exported about $482 billion in goods to the U.S. last year, more than any other country exported to the United States, according to the Office of the United States Trade Representative. The U.S. exported about $116 billion in goods to China in 2015, putting its goods trade deficit $366 billion.

[..] “We have a credit bubble in China, like, by the way, everywhere else in the world. It’s just bigger in China and that, in my view, will have to be deflated,” he said. Dr. Doom also wasn’t trusting Wall Street’s rally since Trump’s election, nothing that Presidents Ronald Reagan and Herbert Hoover also began their tenures with huge rallies, followed by crashes. On Thursday, the Dow Jones rose 59.71 points, or 0.3%, to close at 19,858.24, after climbing at one point to a mere 50 points away from hitting the 20,000 mark. Faber said that the U.S. market was getting toppish. “If you want to be in equities, the U.S. market is now at the most expensive level compared to Europe, Japan and emerging economies it’s ever been,” he said.

Despite Thursday’s gains, “there were more new 12-month lows than new highs.” He wasn’t optimistic on how much further the market can run. “In March 2017, the U.S. bull market will be eight years old. By any standard, this is a very aging bull market. By June 2017, the economic recovery will be eight years old. By any standard, a recovery that is very mature,” he noted. Faber was also pessimistic about the market’s prospects under the Trump administration. “We have to be very careful when we talk about investments. We have a lot of volatility coming toward us. I think that in general people are far too optimistic about the U.S. becoming again a great country,” he said. “I doubt that one man alone can do it.”

Read more …

“When you have an adrenaline rush you don’t feel pain. It’s when the adrenaline wears off that you feel it.”

• This Stock Rally Is More Hope Than Substance (WSJ)

Janet Yellen may not have an armored horse, but her effect on the bull market looks very like the ineffective stab of a picador. The stock market bull seemed to be badly hurt after the U.S. Federal Reserve chairwoman’s words on Wednesday. The Fed raised interest rates and said policy makers expected three rate increases next year, while Ms. Yellen said the economy is near full capacity and doesn’t need fiscal stimulus—suggesting rates will rise even faster if president-elect Donald Trump goes ahead with promised tax cuts. But after their stumble, stocks regained their feet on Thursday, with the S&P 500 recovering to where it was before Fed Day. A mere picador is never enough to take down a bull.

The true danger to this latest bull run—the Trump rally—comes from itself. The genius of a matador is to wear out the bull by persuading it to keep charging, entrancing the audience in the process. The stock market has been attracted by the flourishes of Mr. Trump, the appealing prospect of tax cuts and infrastructure spending. The question for the next month is whether the bull will be worn out before Mr. Trump even takes office. When markets move a long way very fast, they become vulnerable. Late investors who pile on to little more than momentum have less confidence in their positions. The more momentum builds, the more it hurts if the bull trips and those momentum investors jump off. This market has moved very fast indeed.

The post-election rotation from defensive stocks to economically sensitive cyclical shares has been the biggest of any similar period since the bounce back after the Lehman crash. The 10-year bond’s losses have almost matched the selloff of the 2013 taper tantrum. And the dollar has surged 9% against the yen, taking it to its strongest since 2002 against a basket of currencies. There are plenty of reasons to worry about whether Mr. Trump’s policies will be implemented quickly, or will be as big-league as he has said. So long as those remain worries for another day, the market can keep rising. David Bloom, head of foreign-exchange strategy at HSBC, says investors who missed out on the fast moves in stocks, bonds and the dollar after the election are now being sucked into the trade to avoid missing out. “We’re in a euphoric time,” he said. “When you have an adrenaline rush you don’t feel pain. It’s when the adrenaline wears off that you feel it.”

Read more …

We can only imagine where the dollar would be without this mass sell-off.

• China, Others are Dumping US Treasurys as Never Before (WS)

All kinds of things are now happening in the world of bonds that haven’t happened before. For example, authorities in China today halted trading for the first time ever in futures contracts of government bonds, after prices had swooned, with the 10-year yield hitting 3.4%. Trading didn’t resume until after the People’s Bank of China injected $22 billion into the short-term money market. What does this turmoil have to do with US Treasurys? China has been dumping them to stave off problems in its own house…. The US Treasury Department released its Treasury International Capital data for October, and what it said about the dynamics of Treasury securities is a doozie of historic proportions. Net “acquisitions” of Treasury bonds & notes by “private” investors amounted to a negative $18.3 billion in October, according to the TIC data.

In other words, “private” foreign investors sold $18.3 billion more than they bought. And “official” foreign investors, which include central banks, dumped a net $45.3 billion in Treasury bonds and notes. Combined, they unloaded $63.5 billion in October. In September, these foreign entities had already dumped a record $76.6 billion. They have now dumped Treasury paper for seven months in a row. Over the past 12 months through October, they unloaded $318.2 billion. A 12-month selling spree in this magnitude has never occurred before. There have been a few months of timid net selling in 2012, and some in 2013, and a few in 2014, but no big deal because the Fed was buying under its QE programs. But then, with QE tapered out of the way, the selling picked up in 2015, and has sharply accelerated in 2016.

This chart (via Trading Economics), going back to the early 1980s, shows just how historic this wholesale dumping (circled in red) of US Treasury bonds and notes by foreign entities has been: The chart is particularly telling: It shows in brutal clarity that foreign buyers funded the $1 trillion-and-over annual deficits during and after the Financial Crisis, with net purchases in several months exceeding $100 billion. The other big buyer was the Fed. But since last year, the world has changed. China, once the largest holder of US Treasurys, has been busy trying to keep a lid on its own financial problems that are threatening to boil over. It’s trying to prop up the yuan. It’s trying furiously to stem rampant capital flight. It’s trying to keep its asset bubbles, particularly in the property sector, from getting bigger and from imploding – all at the same time. And in doing so, it has been selling foreign exchange reserves hand over fist.

Read more …

Beijing’s own policies come back to bite it hard. Fully predictable too.

• The Longer China’s Record M&A Spree Lasts, The Stranger The Deals Get (BBG)

It’s no wonder the country’s regulators are getting concerned. This month, Chinese agencies including the National Development and Reform Commission said they’re closely watching “irrational” outbound purchases in sectors including entertainment and real estate, without naming specific deals. The heightened scrutiny coincides with a broader government effort to limit capital outflows, posing a risk to global takeover volumes after Chinese firms began rivaling their U.S. counterparts as the biggest buyers of overseas assets this year. For the Wall Street bankers helping to sell Western companies, the changing regulatory environment could make a delicate balance even trickier. Advisers need to court a widening pool of Chinese acquirers while at the same time making sure the companies are savvy enough to complete their deals.

“The M&A landscape has shifted focus to Chinese buyers,” said Brian Gu at JPMorgan Chase, the top-ranked adviser on Chinese outbound acquisitions tracked by Bloomberg this year. “How to solicit credible potential Chinese buyers now becomes an essential part of a pitch for any global sell-side mandates.” More than 360 Chinese companies announced their first cross-border acquisitions in the initial 11 months of this year, with the combined size of the transactions more than doubling from the full year 2015, according to data compiled by Bloomberg. Sifting through those new ranks of Chinese acquirers takes some work. When EQT Partners decided to sell Germany’s EEW Energy from Waste, its bankers at Morgan Stanley arranged for executives to meet potential buyers in Shanghai, Beijing and Hong Kong weeks before it began soliciting bids.

[..] While Chinese policy makers have been supportive of outbound acquisitions that help domestic companies gain foreign technology and strengthen industries seen as important drivers of economic growth, the worry is that some deals are being used as a way to move money offshore or make quick profits by re-listing acquired businesses at higher valuations in China. “Some of these companies invest outside of their core competency because they want to get money out of China, as they see the Chinese yuan will continue to depreciate,” said Christopher Balding, a professor at Peking University’s HSBC Business School in Shenzhen, without naming any specific deals.

Read more …

Nice piece of research from Don Quijones. Title is mine, couldn’t help myself.

• ECB Bond Buying Props Up Oil, Cars, Guns, Drones, Gambling, Handbags (DQ)

In June 2016, the ECB activated its corporate bond buying program, ostensibly to revive the Eurozone’s stalled economy. The program has been shrouded in secrecy, as the ECB has refused to reveal the identity of most of the companies, divulging only the International Securities Identification Number (ISIN) of the bonds, but not the amounts. The ECB coordinates the overall effort, but the actual buying is done by the national central banks. Now the non-profit Corporate Europe Observatory (CEO) has cracked the code, so to speak: Finding the names via the ISIN code is a simple job. CEO has looked them all up to see what investments the ECB has found worthy of public money. Unfortunately, a lack of transparency at the ECB means the amounts held in bonds of individual corporations are not revealed.

While many pension funds do release this information, it seems that the common national bank for hundreds of millions of European citizens is unable to! Nevertheless, a lot can be learned from the lists… For instance, the fact that Europe’s oil majors have been particularly spoiled, with the ECB splurging on bonds issued by Shell no less than 11 times. The central bank bought bonds from Italian oil company Eni 16 times, Spain’s Repsol six times, Austrian OMV six times, and Total 7 times. Gas companies have also fared remarkably well. When counting the purchase of bonds in Spain, for example, 53% are from companies involved in the natural gas sector. The corresponding number in Italy is an astounding 68%. Also well favored are Europe’s biggest car companies, in particular those from Germany, with Daimler and BMW tied in top spot with 15 purchases apiece. The ECB also bought seven times bonds issued by Volkswagen, despite the reputational and financial fallout from its emissions scandal.

And it bought Renault bonds three times. Other companies on CEO’s list of coddled giants include Thales, a French producer of missiles, rifles, armored vehicles, and military drones, which has been engulfed in a spate of corruption scandals in recent years; France’s three major water corporations, Suèz, Vivendi, and Veolia; Novomatic, an Austrian-based gambling company owned by billionaire Johan Graf; and luxury goods companies like LVMH, producer of Moët & Chandon champagne, Hennessy cognac, and Louis Vuitton women’s handbags. These are just some of the corporations benefiting handsomely from a bond-buying binge that has already reached some €46 billion (as of Nov. 25, 2016). When the ECB buys these bonds, it inflates the bond prices and pushes their yields down, which is the purpose, and it thus lowers the cost of capital for this companies even further. By the end of the program, which is “scheduled” to finish in September, 2017, the ECB is expected to have lavished around €125 billion on them.

But that’s not the worst of it. As we reported in August, the ECB has admitted that it is not only buying already-issued bonds trading in secondary markets, as the public was initially led to believe; it is also buying bonds from companies via so-called “private placements.” These debt sales are not open to the broader market, so there’s no need for a prospectus. Only a small number of institutional investors participate. Private placements are not unusual. What’s new is that the ECB is using them to buy bonds. This was done discreetly, but it was leaked – and the ECB had some explaining to do. The central bank’s new role as “debt-buyer of first resort” raises a whole litany of concerns. It grants the ECB an almost god-like grip over Europe’s financial markets. And according to The Wall Street Journal, Citigroup figured “that bonds eligible for ECB purchases have already outperformed ineligible bonds by roughly 30% since the bond-buying program was announced in March.”

Read more …

A Dutch referendum in April voted down the EU association deal with Ukraine. PM Rutte now pretends that with a few minor tweaks it’s acceptable regardless. Rutte will now take it to his parliament for approval, which would overwrite the referendum result. Democracy. They’re handing the entire continent to Wilders and Le Pen on a platter. Oh, and who does Rutte blame for his behavior? You got it, Russia.

• EU Agrees Dutch Demands On Ukraine Deal To Avoid ‘Present For Russia’ (R.)

EU leaders agreed on Thursday to additional Dutch demands over a landmark deal establishing closer ties with Ukraine, Maltese Prime Minister Joseph Muscat said. The EU’s so-called association agreement with Ukraine is central to the former Soviet republic’s efforts to move closer to the West. Mass street protests toppled a pro-Russian Ukrainian president in 2014 after he tried to ditch it. The Netherlands is the only EU country that has not ratified the deal, which fosters closer political ties and aims to free up trade between Ukraine and the bloc, after Dutch voters rejected it in a referendum last April. The Hague has asked the EU for additional guarantees to ensure the deal does not lead to EU membership for Ukraine.

Asked if all 28 EU leaders have arrived to a common position on the Dutch demand, Muscat said: “Yes, there is agreement.” Dutch Prime Minister Mark Rutte will now take it to his parliament for approval, which would overwrite the referendum result. Rutte told reporters before the talks that it was crucial to get a united European stance in the face of an emboldened Russia. “Russia is an increasing risk, look what happened in Crimea and eastern Ukraine and rockets being placed between Poland and Lithuania. You cannot, as the Netherlands … break this unity, that is why I’m so motivated to get this done,” he said.

Read more …

Justin is trying to make me believe that building pipelines is the way to go towards a “carbon-free economy”. Sure. He’s turning into soundbite man.

• Justin Trudeau: ‘Globalisation Isn’t Working For Ordinary People’ (G.)

[..] A silver lining for Trudeau may lie in Trump’s pledge to resurrect plans for TransCanada’s Keystone XL pipeline. When the Obama administration rejected the plan last year, Trudeau said in a statement he was “disappointed” in the decision. When Trudeau called Trump to congratulate him after the election, the two briefly spoke about Keystone, said Trudeau, adding that it remains to be see how the US will move forward with plans for the pipeline. Any reluctance to move forward on climate change south of the border could be a boon for Canadian companies across various sectors, said Trudeau. “I know Canada is well positioned to pick up some of the slack and when people finally realise that it’s a tremendous business opportunity to lead on climate change, Canada will already have a head start.”

[..] Last week’s announcement of a national carbon price is a key part of Trudeau’s environmental policy – one that has been derided by environmentalists for enabling the expansion of fossil fuels, compensated by initiatives that include investments in clean tech and promises to phase out federal subsidies for oil and gas companies. The policy saw Trudeau recently approve a liquefied natural gas project in British Columbia as well as two pipelines that will offer Alberta’s oil sands nearly a million barrels a day in increased capacity. The approvals have sparked broad opposition among environmentalists, some First Nations and several of the communities affected by the planned infrastructure projects. “There is a number of people out there who’ve always [believed] if you stop pipeline, you stop the oil sands,” said Trudeau. “Well, actually as we’ve seen, it doesn’t work that way and what we end up with is much more oil by rail.”[..]

The government’s environmental policy takes a long view on the transition to a carbon-free economy, said Trudeau. “It’s not going to happen in a day, or in a week, but it will happen over years and perhaps a decade or two,” he said. “I know there are people out there extremely passionate about the environment, who don’t think I made the right decision on approving a couple of pipelines. But I think that everyone can see at least what it is we’re trying to do and that we’re consistent with what I’ve always said which is, you protect the environment and you build a strong economy at the same time.” The double-barrelled approach, said Trudeau, echoes his government’s broader effort to address the tensions currently wreaking havoc on the political status quo around the world. “People get that we need jobs, we need a protected environment,” he said. “On the other hand, if people have no jobs, if they have no opportunity, they’re not going to worry about protection of the air and water if they can’t feed their kids.”

Read more …

I don’t know that throwing in the drug legalization topic is very relevant. Just ‘hands off!’ should do it.

• Crackdown On Cash Is An Attack On The Poor And A Reward For Banks (Soos)

The Coalition government recently announced a taskforce to investigate and recommend ways to deal with the so-called black economy. This primary revolves around business transactions conducted in cash to evade taxes. Other justifications concern the illicit drug trade and welfare fraud. The plan is to clamp down on this aspect of the black economy to make it more difficult for workers, businesses and households to evade tax, boosting taxation revenue. It is estimated the black economy accounts for about 1.5% of GDP or $21bn. There is also speculation that the $100-dollar bill may be removed from circulation. The Coalition government’s explanations seem sensible, with the mass media generally supportive. Yet, there are robust arguments why the Australian public should oppose this move – mostly because the government is trying to deal with problems it created itself.

The drug trade in Australia is thriving and constitutes a considerable portion of the black economy. This illegal trade, however, only exists because the government criminalises it. The primary reason offered is that it prevents the production and consumption of dangerous substances for recreational purposes. It clearly does nothing of the sort. By criminalising drugs, product is manufactured in unregulated and uncertain conditions, leading to vastly inferior quality relative to that in the legal and regulated pharmaceutical industry. Huge monopolistic profits are reaped by drug cartels and those in the supply chain, leading to a significant loss of taxable income. None of this would happen if the drug trade was legalised – and there is growing acceptance that it should be.

In short, the government cannot use the pretext of clamping down on an industry which is presently illegal by claiming the cash transactions facilitates the existence and growth of it when it is the government’s own criminalisation policy which brought it into existence. By legalising, billions of dollars of taxes could be raised through the GST, income tax and externality/sin taxes. Another area of alleged concern is welfare fraud. Recipients of welfare payments can work in the black economy, making a modest income without reporting it. If this were properly reported, welfare payments would be reduced. Again, this is a problem government has itself created. While the government and certain sections of the mass media pretend Australia has an out-of-control welfare system, the facts demonstrate Australia has some of the smallest welfare expenditures relative to GDP, easily the most well-targeted and has the highest “target-efficiency” (each dollar in spending reduces income inequality the most) in the OECD.

Read more …

I’d like to ignore this tale (who reads the WaPo anymore), but the Nation has a passable one: “..the CIA has “(1) attempted to overthrow more than 50 governments, most of which were democratically-elected, (2) attempted to suppress a populist or nationalist movement in 20 countries, (3) grossly interfered in democratic elections in at least 30 countries, (4) dropped bombs on the people of more than 30 countries, (5) attempted to assassinate more than 50 foreign leaders.”

• Why Are the Media Taking the CIA’s Hacking Claims at Face Value? (Nation)

In 1977, Carl Bernstein published an exposé of a CIA program known as Operation Mockingbird, a covert program involving, according to Bernstein, “more than 400 American journalists who in the past 25 years have secretly carried out assignments for the Central Intelligence Agency.” Bernstein found that in “many instances” CIA documents revealed that “journalists were engaged to perform tasks for the CIA with the consent of the managements of America’s leading news organizations.” Fast-forward to December 2016, and one can see that there isn’t much need for a covert government program these days.

[..] The high-profile anchors and analysts on CNN, CBS, ABC, and NBC who have cited the work of The Washington Post and The New York Times seem to have come down with a bad case of historical amnesia. The CIA, in their telling, is a bulwark of American democracy, not a largely unaccountable, out-of-control behemoth that has often sought to subvert press freedom at home and undermine democratic norms abroad. The columnists, anchors, and commentators who rushed to condemn Trump for not showing due deference to the CIA seem to be unaware that, throughout its history, the agency has been the target of far more astute and credible critics than the president-elect.

In his memoir Present at the Creation, Truman’s Secretary of State Dean Acheson wrote that about the CIA, “I had the gravest forebodings.” Acheson wrote that he had “warned the President that as set up neither he, the National Security Council, nor anyone else would be in a position to know what it was doing or to control it.” Following the Bay of Pigs fiasco, President John F. Kennedy expressed his desire to “to splinter the CIA into a thousand pieces and scatter it to the winds.” The late New York Senator Daniel Patrick Moynihan twice introduced bills, in 1991 and 1995, to abolish the agency and move its functions to the State Department which, as the journalist John Judis has observed, “is what Acheson and his predecessor, George Marshall, had advocated.”

[..] To see what a corrosive effect outside powers can have on democratic processes, one need look no further than the 1996 Russian presidential election, in which Americans like the regime-change theorist Michael McFaul (later US Ambassador to Russia from 2012–14) interfered in order to keep the widely unpopular Boris Yeltsin in power against the wishes of the Russian people. For its part, the CIA has a long history of overthrowing sovereign governments the world over. According to historian William Blum, the CIA has “(1) attempted to overthrow more than 50 governments, most of which were democratically-elected, (2) attempted to suppress a populist or nationalist movement in 20 countries, (3) grossly interfered in democratic elections in at least 30 countries, (4) dropped bombs on the people of more than 30 countries, (5) attempted to assassinate more than 50 foreign leaders.”

Read more …

Yada yada

• Turkey Has Back-Up Plans If EU Fails To Keep Visa-Free Travel Promises (AFP)

President Recep Tayyip Erdogan said Thursday Turkey had back-up plans if the EU failed to keep its promise over visa-free travel for Turks to the passport-free Schengen zone. Turkey and the EU signed a controversial deal in March, in which Ankara agreed to take back Syrian migrants landing on Greek islands in return for incentives including €3 billion in funds and visa-free travel. “If we do not get the expected outcome regarding the visa issue… if promises are not fulfilled, Turkey will no doubt have a plan B and it will have a plan C,” Erdogan warned during a news conference with his Slovenian counterpart in Ankara.

“We do not have to say ‘yes’ to every decision made about us. The EU has given us nothing so far,” he added, without elaborating. Ties between Brussels and Ankara have been strained since a failed July 15 coup in Turkey. The rocky relationship worsened after the European Parliament voted last month in favour of halting long-stalled membership talks with Turkey over its post-coup crackdown, a non-binding vote which Erdogan branded worthless. Turkey accuses the EU of failing to show enough solidarity after the failed putsch while Brussels has repeatedly urged Turkey to act within the rule of law as it arrests tens of thousands of people suspected of links to coup plotters.

Read more …

Horror story.

• “Without Antibiotics, Essentially You Do Not Have Modern Medicine” (R.)

For nearly two years, a killer stalked the patients of Providence Alaska Medical Center. It was a bacteria called Acinetobacter baumannii, a common cause of infections in hospitals. This one was different. After a rash of mild cases in early 2011, doctors began seeing highly drug-resistant infections in patients, said Dr Megan Clancy, an infectious-disease specialist at the Anchorage, Alaska, hospital. And the bacteria was attacking more patients than just the severely ill ones who are the usual victims of drug-resistant “superbugs.” Clancy took emergency measures. Infected patients were isolated. Staff and visitors had to adhere to strict hand-washing and other infection-control protocols. Furniture and equipment were scrubbed to remove a microbe that can stubbornly persist on all sorts of surfaces.

Clancy also contacted outside researchers for help. They found that a strain of the bacteria had acquired a rare combination of traits. Bacteria typically are either highly resistant to drugs or highly virulent. This strain was both. Doctors quickly burned through the antibiotics used as the second and third lines of defense against superbugs. This strain shook them off. “When you start running out of medications, it gets pretty desperate,” Clancy said. Eventually, they turned to colistin. This powerful antibiotic was largely abandoned in the 1960s for its toxic side effects. Out of necessity, it has become in recent years a weapon of last resort against the worsening superbug scourge.

But in some of the Alaska cases, even colistin didn’t work. For public health officials, that’s the nightmare scenario. “It’s the worst of all possible worlds: You have a bacteria that is good at establishing infection, and it can’t be treated with antibiotics,” said Dr Robert Clifford, a microbiologist at the Walter Reed Army Institute of Research who studied the outbreak.

Read more …

Needs much more attention. This is how we kill the living world.

• The Shattering Effect Of Roads On Nature (G.)

Rampant road building has shattered the Earth’s land into 600,000 fragments, most of which are too tiny to support significant wildlife, a new study has revealed. The researchers warn roadless areas are disappearing and that urgent action is needed to protect these last wildernesses, which help provide vital natural services to humanity such as clean water and air. The impact of roads extends far beyond the roads themselves, the scientists said, by enabling forest destruction, pollution, the splintering of animal populations and the introduction of deadly pests. New roads also pave the way to further exploitation by humans, such as poaching or mining, and new infrastructure.

An international team of researchers analysed open-access maps of 36m km of road and found that over half of the 600,000 fragments of land in between roads are very small – less than 1km2. A mere 7% are bigger than 100km2, equivalent to a square area just 10km by 10km. Furthermore, only a third of the roadless areas were truly wild, with the rest affected by farming or people. The last remaining large roadless areas are rainforests in the Amazon and Indonesia and the tundra and forests in the north of Russia and Canada. Virtually all of western Europe, the eastern US and Japan have no areas at all that are unaffected by roads. The scientists considered that land up to a kilometre on each side of a road was affected, which they believe is a conservative estimate.

Read more …

Debt Rattle November 27 2016

Nov 272016
 
 November 27, 2016  Posted by at 10:14 am Finance Tagged with: , , , , , , , , , ,  1 Response »


Unknown Paris 1900

• This Is The Greatest Suckers’ Rally Of All Time: David Stockman (CNBC)
• More Than Half Of New Yorkers One Paycheck Away From Homelessness (Gothamist)
• US Thanksgiving, Black Friday Store Sales Fall 10.4%, Online Rises (R.)
• Dollar to Benefit if $2.5 Trillion in Cash Stashed Abroad Is Repatriated (WSJ)
• China’s Property Frenzy And Surging Debt Raises Red Flag For Economy (AFP)
• India’s Rural Economy Hit Hard As Informal Lending Breaks Down (R.)
• UK MPs Launch New Attempt To Interrogate Tony Blair Over Iraq (G.)
• First Brexit then Trump. Is Italy Next For The West’s Populist Wave? (G.)
• Clinton Camp Splits From White House On Jill Stein Recount Push (G.)
• Justin Trudeau Ridiculed Over Praise Of ‘Remarkable’ Fidel Castro (G.)
• Military Veterans Seek New Role In South Africa Poaching War (AFP)

 

 

Sell everything!

• This Is The Greatest Suckers’ Rally Of All Time: David Stockman (CNBC)

The Trump rally raged on this week with all major U.S. indexes hitting record highs, but despite the historic run, David Stockman is doubling down on his call for investors to sell everything. “This 5% eruption is meaningless. It’s some robo machine trying to tag new highs,” Stockman said Tuesday on CNBC’s “Fast Money,” in a dismissal of the S&P 500 rally. “I see a recession coming down the pike in 2017. The stock market is going to go down and it’s going to stay down long and hard because, for the first time in 25 years, there’s nothing to bail it out.” This echoed the initial call Stockman made Nov. 3, when he urged investors to sell stocks and bonds before the presidential election. However, since the Nov. 8 election, the Dow Jones industrial average has gained 4% en route to surpassing 19,000.

Additionally, the S&P 500 and Nasdaq also hit record highs in the same time period, gaining 3% and 4%, respectively. Yet Stockman, who was director of the Office of Management and Budget under President Ronald Reagan, reaffirmed that markets are heading for disaster. “My call stands. Sell the stocks, sell the bonds, get out of the casino,” Stockman explained to CNBC in an off-camera interview. “Bonds have already cratered by nearly $2 trillion worldwide and have miles to go. This isn’t a rotation into stocks, either. It’s the greatest sucker’s rally ever.” Stockman, author of “Trumped: A Nation on the Brink of Ruin… And How to Bring It Back,” lamented that there will be no Trump stimulus or Reagan-style boom.

He further added that he expects “an unprecedented fiscal bloodbath” resulting from the $20 trillion worth of debt that the U.S. currently has on the books. “This isn’t Ronald Reagan with a clean $1 trillion balance sheet and with a fluke GOP and a Southern Democratic coalition that only materialized because he got shot,” Stockman said in reference to John Hinkley Jr. attempting to assassinate Reagan in Washington, D.C., in 1981. “Nor is it LBJ in 1965 with a thundering electoral mandate and a massive congressional majority for the Great Society.” On the contrary, Stockman, who initially predicted that Trump would win the election, added that Washington will be in chaos by June. This is because he anticipates ongoing disruptions from the tea party, which Stockman doesn’t foresee as allowing additional deficit increases.

Read more …

“..landlords are increasingly claiming “chronic rent delinquency” after just a single late payment..”

• More Than Half Of New Yorkers One Paycheck Away From Homelessness (Gothamist)

More than half of all New Yorkers don’t have enough money saved to cover them in the event of a lost job, medical emergency, or other disaster, according to a new report by the Association for Neighborhood & Housing Development. Nearly 60% of New Yorkers lack the emergency savings necessary to cover at least three months’ worth of household expenses including food, housing, and rent, but that statistic isn’t spread evenly across the five boroughs. The Bronx has the highest rate of families without adequate emergency savings: in Mott Haven, Melrose, Hunts Point, Longwood, Highbridge, South Concourse, University Heights, Fordham, Belmont, and East Tremont, 75% of families have inadequate emergency savings.

The Staten Island neighborhoods of Tottenville and Great Kills have the lowest rate, with just 41% of families lacking the funds necessary to cover three months’ worth of expenses. Without these savings, families who face emergencies could be at risk of eviction, foreclosure, damaged credit, and even homelessness. In Brooklyn, families in Brownsville (70%), Bed-Stuy (67%), Bushwick (68%), East New York (67%), and South Crown Heights/Prospect Heights (67%) are the most at-risk—in Manhattan, an average of 67% of families in Harlem, Washington Heights, and Inwood lack necessary savings. In Queens, the neighborhoods with the highest%age of these households were Elmhurst/Corona (64%), Rockaway/Broad Channel (60%), Sunnyside/Woodside (59%), and Jackson Heights (59%).

As DNAinfo notes, advocates say that rental assistance is crucial in preventing homelessness citywide, especially in neighborhoods where rents rise faster than incomes—many of which overlap with the neighborhoods where families lack adequate savings. And although an increase in rental assistance services like the one proposed by Queens Assemblyman Andrew Hevesi could cost the cost $450 million in state and federal funding, it would be more cost-effective than allowing more families to enter the chronically underfunded shelter system. Many tenants don’t know where to get emergency rental assistance, which can prevent them from falling behind on their rent. And landlords are increasingly claiming “chronic rent delinquency” after just a single late payment, which allows them to begin eviction proceedings earlier on than they would otherwise.

Read more …

“Net sales on Black Friday slid 10.4% for brick-and-mortar chains..”

• US Thanksgiving, Black Friday Store Sales Fall 10.4%, Online Rises (R.)

Sales and traffic at U.S. brick-and-mortar stores on Thanksgiving Day and Black Friday declined from last year, as stores offered discounts well beyond the weekend and more customers shopped online. Internet sales rose in the double digits on both days, surpassing $3 billion for the first time on Black Friday, according to data released on Saturday. Data from analytics firm RetailNext showed net sales at brick-and-mortar stores fell 5.0% over the two days, while the number of transactions fell 7.9%. Preliminary data from retail research firm ShopperTrak showed that shopper visits to such stores fell a combined 1% during Thanksgiving and Black Friday when compared with the same days in 2015.

The data highlights the waning importance of Black Friday, which until a few years ago kicked off the holiday shopping season, as more retailers start discounting earlier in the month and opened their doors on Thanksgiving Day. “We knew it (holiday season) was going to be off to a slow start,” Shelley Kohan, vice president of retail consulting at RetailNext, said. “The first couple of weeks with the election were a complete distracter from the normal course of business and…a warmer climate in November may have made the sales more stubborn,” she said, adding that she saw sales picking up in December.

Net sales on Black Friday slid 10.4% for brick-and-mortar chains, according to RetailNext. “Stores that opened on Thursday were not very busy on Black Friday,… and while the Thanksgiving Day opt-outs were busier on Black Friday, they didn’t see the crowds they saw in previous years,” NPD group’s Chief Industry analyst Marshal Cohen said. Still, total holiday season sales are expected to jump 3.6% to $655.8 billion this year, according to the National Retail Federation, due to a tightening job market.

Read more …

Only if buybacks are banned.

• Dollar to Benefit if $2.5 Trillion in Cash Stashed Abroad Is Repatriated (WSJ)

Part of $2.5 trillion in profits held overseas by companies such as Apple and Microsoft could be heading back to the U.S., a move analysts say could further fuel the U.S. dollar’s powerful rally. U.S. corporations have been holding billions in earnings and cash abroad to avoid paying a 35% tax that would be levied whenever the money is brought home. President-elect Donald Trump has said he would propose a one-time cut of the repatriation tax to 10% to lure money back to the U.S. that can be spent on hiring, business development and funding Mr. Trump’s fiscal stimulus proposals. Market optimism that the stimulus plan can generate U.S. economic growth and push the Federal Reserve to raise interest rates has buoyed the dollar against a basket of major trading partners toward 14-year-highs since the Nov. 8 presidential election.

Now, some say the prospect of companies repatriating perhaps hundreds of billions of dollars could offer more impetus to the U.S. currency’s rally. “However small, however big this flow of money will be, it will be positive for the case of dollar strength,” said Daragh Maher at HSBC. “There will most likely be an inflow into dollars.” When a company repatriates earnings from abroad, it may have to exchange the local currency for the U.S. dollar. The $2.5 trillion hoard of overseas earnings is highly concentrated in the technology and pharmaceutical sectors, according to Capital Economics. Microsoft held about $108 billion in earnings overseas as of 2015, while pharmaceutical giant Pfizer had $80 billion. General Electric had $104 billion overseas, according to Capital Economics. Analysts note that many companies already hold their overseas earnings in U.S. dollar assets, which would mute the demand for dollars.

Read more …

Famous last words: “The notion that Chinese people do not like to borrow is clearly outdated..”

• China’s Property Frenzy And Surging Debt Raises Red Flag For Economy (AFP)

Chinese household debt has risen at an “alarming” pace as property values have soared, analysts have said, raising the risk that a real estate downturn could wreak havoc on the world’s second largest economy. Loose credit and changing habits have rapidly transformed the country’s famously loan-averse consumers into enthusiastic borrowers. Rocketing real estate prices in major Chinese cities in recent years have seen families’ wealth surge. But at the same time they have fuelled a historic boom in mortgage lending, as buyers race to get on the property ladder, or invest to profit from the phenomenon. Now the debt owed by households in the world’s second largest economy has surged from 28% of GDP to more than 40% in the past five years.

“The notion that Chinese people do not like to borrow is clearly outdated,” said Chen Long of Gavekal Dragonomics. The share of household loans to overall lending hit 67.5% in the third quarter of 2016, more than twice the share of the year before. But this surge has raised fears that a sharp drop in property prices would cause many new loans to go bad, causing a domino effect on interest rates, exchange rates and commodity prices that “could turn out to be a global macro event”, ANZ analysts said in a note. While China’s household debt ratio is still lower than advanced countries such as the US (nearly 80% of GDP) and Japan (more than 60%), it has already exceeded that of emerging markets Brazil and India, and if it keeps growing at its current pace will hit 70% of GDP in a few years.

It still has some way to go before it outstrips Australia, however, which has the world’s most indebted households at 125% of GDP. The ruling Communist party has set a target of 6.5-7% economic growth for 2017, and the country is on track to hit it thanks partly to a property frenzy in major cities and a flood of easy credit. But keeping loans flowing at such a pace creates such “substantial risks” that it could be a “self-defeating strategy”, Chen said. China’s total debt – including housing, financial and government sector debt – hit 168.48 trillion yuan ($25 trillion) at the end of last year, equivalent to 249% of national GDP, according to estimates by the Chinese Academy of Social Sciences, a top government think tank.

Read more …

“..the informal sector accounts for [..] 80% of employment..”

• India’s Rural Economy Hit Hard As Informal Lending Breaks Down (R.)

Life was good for Mitharam Patil, a wealthy money lender from a small village in the Indian state of Maharashtra. Small-time financiers like Patil would typically lend cash to farmers and traders every day, providing a vital source of funding for a rural economy largely shut out of the banking sector, albeit at interest rates of about 24%. All that came crashing down on Nov. 8, when Prime Minister Narendra Modi banned 500 and 1,000 rupee ($7.30-$14.60) banknotes, which accounted for 86% of currency in circulation. The action was intended to target wealthy tax evaders and end India’s “shadow economy”, but it has also exposed the dependency of poor farmers and small businesses on informal credit systems in a country where half the population has no access to formal banking.

Patil was stuck with 700,000 rupees ($10,144) of worthless cash. He can also only withdraw up to 24,000 rupees from his account every week, barely enough for his own personal needs given he also works as a farmer. That is bad news for farmers and traders who had come to depend on Patil, despite his high interest rates, given that bank branches are located far from the village, while the process to obtain loans is long and cumbersome. It may also hurt India’s economy, as the informal sector accounts for 20% of GDP and 80% of employment. The country is due to report July-September GDP on Wednesday. “Sowing of winter crops has been started and farmers badly need money. But I couldn’t lend (to) them due to restrictions on withdrawal,” Patil said.

Some farmers and small businesses say India’s informal credit system has ground to a virtual halt, despite government measures to steer more funds to them, including 230 billion rupees in crop loans. Not only are money lenders struggling to lend, they are also struggling to get paid. Saumya Roy, CEO of Vandana Foundation, a micro finance firm, said it has encountered difficulties in collecting payments from borrowers, which will have a knock-on effect on how much they can lend to others. “We can’t go on lending and suffer losses,” she said. “How can we force people to pay back when they don’t have money to buy food. How will they pay us?”

Read more …

That should be fun.

• UK MPs Launch New Attempt To Interrogate Tony Blair Over Iraq (G.)

A cross-party group of MPs will make a fresh effort to hold Tony Blair to account for allegedly misleading parliament and the public over the Iraq war. The move, which could see Blair stripped of membership of the privy council, comes as the former prime minister tries to re-enter the political fray, promising to champion the “politically homeless” who are alienated from Jeremy Corbyn’s Labour and the Brexit-promoting government of Theresa May. The group, which includes MPs from six parties, will put down a Commons motion on Monday calling for a parliamentary committee to investigate the difference between what Blair said publicly to the Chilcot inquiry into the war and privately, including assurances to then US president George W Bush.

Backing the motion are Alex Salmond, the SNP MP and former first minister of Scotland; Hywel Williams, Westminster leader of Plaid Cymru; and Green party co-leader Caroline Lucas. Senior Tory and Labour MPs are also backing the move, which reflects widespread frustration that the publication of the Chilcot report in July, after a seven-year inquiry, did not result in any government action or accountability for Blair. Salmond said some MPs believe that senior civil servants were “preoccupied with preventing previous and future prime ministers being held accountable”. He said: “An example should be set, not just of improving government but holding people to account.”

He pointed to last week’s Observer story revealing that, according to documents released under the Freedom of Information Act, the inquiry was designed by senior civil servants to “avoid blame” and reduce the risk that individuals and the government could face legal proceedings. Salmond also noted that documents show many officials involved in planning the inquiry, including current cabinet secretary Sir Jeremy Heywood, were involved in the events that led to war. The new motion will be debated on Wednesday in Commons time allotted to the SNP.

Read more …

What Renzi’s Dec. 4 constitutional referendum tries to achieve: “They’re sealing the system off so it can’t be changed in the future.”

• First Brexit then Trump. Is Italy Next For The West’s Populist Wave? (G.)

On a bitterly cold evening, MPs and senators representing the Five Star Movement (M5S), launched by Beppe Grillo, the comedian-turned-political rabble rouser, implored a packed piazza to use a referendum on the constitution on Sunday 4 December to send the prime minister, Matteo Renzi, packing. Renzi, the telegenic, youthful leader of the centre-left Democratic party (PD), has placed his authority behind proposals to limit the powers of the senate, Italy’s second chamber. His plan involves cutting the number of senators from 315 to 100, all of whom would be appointed – rather than elected, as at present – and restricting their power to influence legislation.

Since 1948 the Italian constitution has preserved a perfect balance of powers between the two houses of parliament, frequently leading to legislative gridlock in Rome. Renzi claims that slimming down the role of the senate will, along with other reforms to strengthen executive power, finally free governments to govern. Crucially, he has indicated he will step down if the vote goes against him. In other eras, a dry and technical debate might have preoccupied a few constitutional cognoscenti. But these are not ordinary times in western democracies. In Ferrara’s Piazza Trento e Trieste, Alessandro Di Battista, a rising star of Grillo’s movement, issued a populist call to arms. Renzi’s referendum, he told the crowd, was just the latest gambit by a political class determined to insulate itself from the people it should serve.

“This unelected senate will be constituted by the arselickers of the various parties”, said Di Battista, “and by those who are in trouble with the courts and need parliamentary immunity. They’re sealing the system off so it can’t be changed in the future.” Such a devious manoeuvre should, he said, come as no surprise: “There are two Italys: on the one side the very wealthy few who look after themselves, and on the other the masses who live every day with problems of transport and public health.” As his audience launched into a favourite Five Star chant, “A casa! A casa!” (“Send them home”), Di Battista referenced the political earthquake that was in everyone’s mind. “The election of Donald Trump is the American people’s business,” he said. “But what that election does show is that so many citizens are simply not taking the establishment’s bait any more.”

Read more …

Did Stein really raise more money for this than for her entire 2016 campaign?

• Clinton Camp Splits From White House On Jill Stein Recount Push (G.)

Hillary Clinton’s presidential campaign said on Saturday it would help with efforts to secure recounts in several states, even as the White House defended the declared results as “the will of the American people”. The campaign’s general counsel, Marc Elias, said in an online post that while it had found no evidence of sabotage, the campaign felt “an obligation to the more than 64 million Americans who cast ballots for Hillary Clinton”. “We certainly understand the heartbreak felt by so many who worked so hard to elect Hillary Clinton,” Elias wrote, “and it is a fundamental principle of our democracy to ensure that every vote is properly counted.”

In response, President-elect Donald Trump said in a statement: “The people have spoken and the election is over, and as Hillary Clinton herself said on election night, in addition to her conceding by congratulating me, ‘We must accept this result and then look to the future.’” Wisconsin began recount proceedings late on Friday after receiving a petition from Jill Stein, the Green party candidate. Stein claims there are irregularities in results reported by Wisconsin as well as Michigan and Pennsylvania, where she plans to request recounts next week, having raised millions of dollars from supporters. Trump called Stein’s effort a “scam” and said it was “just a way … to fill her coffers with money, most of which she will never even spend on this ridiculous recount”. “The results of this election should be respected instead of being challenged and abused,” he added, “which is exactly what Jill Stein is doing.”

Read more …

I bet you there’s hardly a single American -or European- who knows Cuba has been one of Canada’s most popular holiday destinations for many years.

• Justin Trudeau Ridiculed Over Praise Of ‘Remarkable’ Fidel Castro (G.)

Justin Trudeau, the Canadian prime minister, has been mocked and criticised over his praise of the late Cuban leader Fidel Castro. Following the death of Castro, Trudeau, whose father had a close relationship with the revolutionary, released a statement mourning the loss of a “remarkable leader”. Castro, who died on Friday aged 90, won support for bringing schools and hospitals to the poor but also created legions of enemies for his ruthless suppression of dissent. Trudeau’s comments were markedly more positive than most western leaders, who either condemned Castro’s human rights record or tip-toed around the subject. Instead, Trudeau warmly recalled his late father’s friendship with Castro and his own meeting with Castro’s three sons and brother – Raul, Cuba’s current president – during a visit to the island nation earlier this month.

“While a controversial figure, both Mr Castro’s supporters and detractors recognized his tremendous dedication and love for the Cuban people who had a deep and lasting affection for ‘el Comandante’,” Trudeau said in the statement. He called Castro “larger than life” and “a legendary revolutionary and orator”. Fidel Castro was an honorary pall bearer at the 2000 funeral of Trudeau’s father, former prime minister Pierre Trudeau. In 1976, the senior Trudeau became the first Nato leader to visit Cuba under Castro’s rule, at one point exhorting “Viva Castro!”. “I know my father was very proud to call him a friend and I had the opportunity to meet Fidel when my father passed away,” Trudeau said.

Read more …

Better be careful with private armies getting involved.

• Military Veterans Seek New Role In South Africa Poaching War (AFP)

In another life, Lynn was a sniper in Afghanistan, Damien trained paramilitary forces in Iraq, and John worked undercover infiltrating drug cartels in central America. Now all three are back in action, this time fighting what they describe as a “war” against poachers in southern Africa as the killing of rhinos escalates into a crisis that threatens the survival of the species. In 2008, less than 100 rhinos were poached in South Africa, but in recent years numbers have rocketed with nearly 1,200 killed in 2015 alone. Faced with such slaughter, conservationists and government authorities have been desperately searching for ways to protect the animals.

Many ideas have been tried, including drones, tracking dogs, satellite imagery, DNA analysis, hidden cameras and even cutting horns off live animals before poachers can get to them. But the killing has continued, and now military veterans from the United States, Australia and elsewhere have been drafted to bring their expertise to the uphill battle to save the rhinos. “You have animals who are targeted by people using automatic weapons,” Damien Mander, a former Australian Navy special forces officer, told AFP. “You can not go to the communities and ask them nicely to stop. This is a war. We are fighting a war out there.”

Read more …

Debt Rattle November 5 2014

Nov 052014
 
 November 5, 2014  Posted by at 2:34 pm Finance Tagged with: , , , , , , , , , , ,  5 Responses »


Mathew Brady Units of XX Army Corps, Army of Georgia on Pennsylvania Avenue, Washington DC May 24 1865

• Ayn Rand vs Adam Smith: The Only Midterm Election That Counts (Paul B. Farrell)
• Singer’s Elliott: U.S. Growth Optimism Unwarranted as Data ‘Cooked’ (Bloomberg)
• This Stock Market Rally Is For Suckers (MarketWatch)
• BOJ’s Kuroda Vows To Hit Price Goal, Stands Ready To Do More (Reuters)
• US Will Benefit Most From Japan’s Pension Fund Reform (CNBC)
• Draghi To Face Challenge On ECB Leadership Style (Reuters)
• EU Cuts Growth Outlook as Inflation Seen Below ECB Forecast (Bloomberg)
• Euro Area Limping Toward Deflation Fuels QE Calls as ECB Meets (Bloomberg)
• ECB Needs Japanese Lessons (Bloomberg)
• Look Out Below! Oil Is Not Done Falling (CNBC)
• Oil Continues To Slide, With Brent At Lowest In Over Four Years (MarketWatch)
• T. Boone Pickens: The Real Problem With Oil (CNBC)
• Russia-Ukraine Crisis Shields EU Gas From Oil Price Rout (Bloomberg)
• New Junk-Bond Derivatives Are Hot as Traders Get Creative (Bloomberg)
• IMF Gave Richer Countries Wrong Austerity Advice: Internal Auditor (Reuters)
• China Home Buyers Rushing Online to Finance Downpayments (Bloomberg)
• 25 Years Since The Wall Fell, Germany’s Best Days Are Behind It (MarketWatch)
• A Crazy Idea About Italy (Jim O’Neill)
• Signs, Wonders and QE Heroics (James Howard Kunstler)

To the extent there’s any actual choices to be made in these kinds of elections. Why waste your time?

• Ayn Rand vs Adam Smith: The Only Midterm Election That Counts (Paul B. Farrell)

Forget who controls the Senate. There is one and only one election that matters, an election that will decide the global balance of power this century. Specific candidates on any other ballot are irrelevant. The one race will be decided by the only two real candidates that count. All other candidates, regardless of political party, are merely pawns, surrogates, proxies for the two real candidates in this grand battle. And the winner not only wins for their party,but also gets to promote their brand of capitalism. They win the future. Get it? The winner between these two key candidates gets more than domination of the American political system. These two candidates are in a battle to dominate the world, gain control of the world’s natural resources in a totally unrestricted free market—to drill with Russia in the Arctic Ocean, drill for oil on America’s public lands and national forests, to export domestic oil, to build pipelines, haul oil in rail tankers across state lines, to frack for oil under public rivers, risk fresh water supplies, and so much more.

Yes, the only two candidates in the only election that counts today and in every other election this century are: Adam Smith, a moral philosopher and father of American capitalism thanks to the publication of his classics on economics, “The Wealth of Nations,” and its companion “The Theory of Moral Sentiments.” Adam Smith’s opponent on the ballot is his archrival, Ayn Rand, author of several 20th century works on capitalism, including “Atlas Shrugged” and “The Fountainhead.” But remember: all other candidates, on every ballot, are just proxy votes for these two candidates who will decide the balance of power in the world and the survival of the planet. Yes, it’s that simple. These two icons face off in a brutal battle for the soul of capitalism and control of the collective conscience of America.

Read more …

Not a fan of the man, but he’s dead on here.

• Singer’s Elliott: U.S. Growth Optimism Unwarranted as Data ‘Cooked’ (Bloomberg)

Paul Singer’s Elliott Management Corp. said optimism on U.S. growth is misguided as economic data understate inflation and overstate growth, and central bank policies of the past six years aren’t sustainable. The market turmoil in the first half of October may be a “coming attractions” for the next real crash that could turn into a “deep financial crisis” if investors lose confidence in the effectiveness of monetary stimulus, Elliott wrote in a third-quarter letter to investors, a copy of which was obtained by Bloomberg News. “Nobody can predict how long governments can get away with fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers and fake income growth,” New York-based Elliott wrote. “When confidence is lost, that loss can be severe, sudden and simultaneous across a number of markets and sectors.” Six years of near-zero interest rates and three rounds of asset purchases by the Federal Reserve have fueled economic growth and helped U.S. stocks more than triple from their 2009 low when including dividends.

The stock market has rebounded 8.3% through yesterday from a six-month low on Oct. 15, fueled by better-than-forecast economic data and improving earnings reports. The 70-year-old Singer, one of the biggest backers of Republican politicians, reiterated criticism that monetary policies won’t create lasting growth. While the U.S. is doing better than the rest of the world, the acceleration in the second quarter only reversed a “terrible” first quarter and has yet to be sustained in the remainder of the year, Elliott wrote. “We do not think this optimism is warranted, and we think a lot of the data is cooked or misleading,” Elliott, which manages $25.4 billion and was founded by Singer in 1977, wrote. “A good deal of the economic and jobs growth since the crisis has been fake growth, with very little chance of being self-reinforcing and sustainable.” Elliott said that the reported growth numbers are too high because the official inflation number is understating actual inflation by as much as 1% a year.

That’s because economists focus on measures such as core inflation or make “hedonic adjustments” for improvements in the quality of consumer goods. Inflation is also distorted “by the increasing gap between the spending basket of the well-off and that of the middle class,” the firm said. “The inflation that has infected asset prices is not to be ignored just because the middle-class spending bucket is not rising in price at the same rates as high-end real estate, stocks, bonds, art and other things that benefit from” quantitative easing, Elliott wrote. The unemployment rate, at 5.9% in September, doesn’t reflect that the workforce participation rate is at a 35-year low, according to Elliott, and that full-time jobs have been replaced by part-time jobs, and high-paying jobs by relatively low-paying jobs. Real wages, the firm said, have been stagnant since the financial crisis.

Read more …

And it’s a very well executed set-up too.

• This Stock Market Rally Is For Suckers (MarketWatch)

After last week’s remarkable U.S. stock market rally, a lot of investors are cheering. After all, the Dow made an all-time high, won back the lost 1,000 points, and ignored the 8% pullback. I hate to be a party-pooper, but this is not a time to celebrate, but rather to be cautious. What could go wrong? Let’s begin by analyzing last week’s hollow Halloween rally:

1. On Friday, Oct. 31, five stocks were primarily responsible for Dow’s advance. The previous day, Visa had accounted for around 123 points of the 221-point rally. Take away Visa and the rally was a lot less impressive.

2. Friday’s surge was prompted by the Bank of Japan, which promised more stimuli (I’m guessing they are on QE 35, but who’s counting?) Since March 2000, the Nikkei 225 has tumbled from 20,000 to 16,000, so maybe more stimuli from the BOJ is needed (just kidding).

3. On Friday, there were no plus-1000 ticks on the NYSE Tick, which tells you that the rally was another head-fake without institutional involvement. Typically, you will see at least four or five plus-1000 ticks on bullish days.

4. In addition, volume was low, especially for the last day of the month.

5. Moreover, the S&P 500 that day did not rise above its overnight high, which is generally a sign of domestic weakness. During the day, it did not take out the previous all-time high. If this were a true bull market, breadth, volume, and institutional presence would have been a lot stronger.

6. Only five out of 20 stocks led the transports. If this were a broad-based rally, more of the transports would have participated.

Read more …

You would expect falling oil prices to provide the Japanese, like Americans, with some very welcome, even necessary, financial breathing room. But PM Abe and BoJ’s Kuroda will have none of it. And no matter how you look at it, there’s something at best curious about a central bank that decides to throw ‘free money’ at an economy BECAUSE it sees falling resource prices, which would supposedly make money available already.

• BOJ’s Kuroda Vows To Hit Price Goal, Stands Ready To Do More (Reuters)

Bank of Japan Governor Haruhiko Kuroda, who last week stunned global financial markets by expanding a massive monetary stimulus program, said the central bank is ready to do more to hit its 2% price goal and recharge a tottering economy. Kuroda stressed the BOJ is determined to do whatever it takes to hit the inflation target in two years and vanquish nearly two decades of grinding deflation. “There’s no change to our policy of trying to achieve 2% inflation at the earliest date possible, with a roughly two-year time horizon in mind,” the central bank chief said in a speech at a seminar on Wednesday. “There are no limits to our policy tools, including purchases of Japanese government bonds,” he said in response to a question from a private analyst after the speech. The BOJ shocked global financial markets last week by expanding its massive stimulus spending in a stark admission that economic growth and inflation have not picked up as much as expected after a sales tax hike in April.

Kuroda said while inflation expectations have been rising as a trend, the BOJ decided to ease to pre-empt risks that slumping oil prices will slow consumer inflation and delay progress in shaking off the public’s deflationary mind-set. “In order to completely overcome the chronic disease of deflation, you need to take all your medicine. Half-baked medical treatment will only worsen the symptoms,” he said. Kuroda repeated the BOJ’s projection that Japan will likely hit the bank’s price target sometime in the next fiscal year beginning in April 2015, supported by the expanded quantitative and qualitative easing (QQE) program. While he stressed that Japan’s economy continued to recover moderately, Kuroda said falling commodity prices could be risks to the outlook if they reflected weakness in global growth.

Read more …

See The Revenge Of A Government On Its People

• US Will Benefit Most From Japan’s Pension Fund Reform (CNBC)

U.S. assets will be the biggest benefactor of the Japanese Government Investment Pension Fund’s (GPIF) decision to more than double its target allocation of foreign stocks to 25%, analysts say. The changes to the $1.1 trillion pension fund coincided with the Bank of Japan’s shocking decision to ramp up stimulus on Friday, which sent global equity markets soaring. “The shift for international equities going to 25% of pension fund holdings is fairly big news,” said Tobias Levkovich, chief equities strategist at Citigroup in a note published on Friday. “It establishes a new incremental buyer of shares and the U.S. should be a significant beneficiary,” he said. The overall contribution to non-Japanese stocks could approach $60 billion of new purchases, half of which could go to the U.S. by the end of 2015, said Citigroup’s Levkovich, noting that stocks on Wall Street should start to feel the benefit this year.

“Foreign investors typically buy large cap stocks which have greater index impact,” he said. “Thus, one cannot ignore the possibility that stock prices jump above our year-end 2014 S&P 500 target on this news.” Other analysts agree. “It’s pretty realistic [that the U.S. will receive most of the benefit] if you look at where the Japanese feel comfortable investing their money,” Uwe Parpart, managing director and head of research at Reorient Financial Markets told CNBC. “This is a pension fund making the investment they are not going to punt into small caps or anything of that sort they need large, liquid stocks that over decades have had a reliable return,” he said. But Parpart is not convinced the inflows would make a huge difference to stock market performance. “$30 billion sounds like a lot of money, but stretched over a period of time it’s not going to move markets,” he said. “But obviously it’s a nice shot in the arm.”

Furthermore, an increase in the pension fund’s international bond allocation to 15% from 11% should boost demand for Treasurys, driving further inflows into the U.S., analysts at HSBC said in a note published Tuesday. Meanwhile, the GPIF will reduce is domestic bond allocation to 35% from 60%. “The BoJ’s increase in asset purchases should be more than enough to cover the aggressive reduction in Japanese Government Bond (JGB) holdings planned by the GPIF, allowing JGB yields to stay pinned down,” said Andre de Silva, head of global emerging market rates research at HSBC. “Ultra-low JGB yields imply that the relative valuations for other core rates ie. U.S. Treasuries and other bond substitutes have been further enhanced,” he said. “Demand for yield-grabbing would intensify amongst Japanese investors, boosting overseas investments.”

Read more …

“… the Italian ECB chief has acted increasingly on his own or with just a handful of trusted aides, sidelining even key heads of department.” Hey, you wanted a Goldman guy, now sit on it!

• Draghi To Face Challenge On ECB Leadership Style (Reuters)

National central bankers in the euro area plan to challenge European Central Bank chief Mario Draghi on Wednesday over what they see as his secretive management style and erratic communication and will urge him to act more collegially, ECB sources said. The bankers are particularly angered that Draghi effectively set a target for increasing the ECB’s balance sheet immediately after the policy-making governing council explicitly agreed not to make any figure public, the sources said. “This created exactly the expectations we wanted to avoid,” an ECB insider said. “Now everything we do is measured against the aim of increasing the balance sheet by a trillion (euros)… He created a rod for our own backs.” Irritation among national governors who hold a majority on the 24-member council could limit Draghi’s space for bolder policy action in the coming months as the bank faces crucial choices about whether to buy sovereign bonds to combat falling inflation and economic stagnation.

Some members intend to raise their concerns with Draghi at the governors’ traditional informal working dinner on Wednesday before their formal monthly rate-setting meeting on Thursday, the sources interviewed by Reuters said. Many people at the central bank, which manages a single currency for 18 European Union member states, welcomed Draghi’s greater informality when he took over from Jean-Claude Trichet of France in 2011. His efforts to keep meetings short, delegate and brainstorm more, were received as a breath of fresh air. However, as decisions to loosen monetary policy and resort to further unconventional measures have become more contentious, insiders say the Italian ECB chief has acted increasingly on his own or with just a handful of trusted aides, sidelining even key heads of department. “Mario is more secretive… and less collegial. The national governors sometimes feel kept in the dark, out of the loop,” said one veteran ECB insider. “Jean-Claude used to consult and communicate more,” another ECB source said. “He worked a lot to build consensus.”

Read more …

So what? Every forecast everywhere gets revised downwards all the time. It’s simply the way things work.

• EU Cuts Growth Outlook as Inflation Seen Below ECB Forecast (Bloomberg)

The European Commission cut its growth forecasts for the euro area as the bloc’s largest economies struggle to put the ravages of the debt crisis behind them after two recessions in six years. Gross domestic product in the 18-nation region will rise by 0.8% this year and 1.1% in 2015, down from projections for 1.2 and 1.7% in May, the Brussels-based commission said today. It lowered its projections for Germany, Europe’s largest economy, and said inflation in the euro area will be even weaker than the European Central Bank predicts. “The legacy of the global financial and economic crisis lingers on,” said Marco Buti, the head of the commission’s economics department. “Slack in the EU economy remains large and is weighing on inflation, which is also being dragged down by tumbling energy and food prices.”

The bleaker outlook highlights the fledgling nature of the euro area’s recovery and the deflation threat that has compelled the ECB to take unprecedented stimulus measures. While unemployment is beginning to decline from a record high, core economies such as Germany and France are facing some of the growth challenges that afflicted the periphery at the start of the debt crisis. Today’s report forecasts inflation at 0.8% in 2015, less than half the ECB goal of just under 2%. That’s more pessimistic than the central bank’s own projection of 1.1%. The commission sees inflation quickening to 1.5% in 2016, compared with the ECB outlook for 1.4%.

European stocks declined for a second day and German, French and Italian bonds rose. The yield on the German 10-year bund fell 4 basis points to 0.81% at 11:17 a.m. London time. The Italian yield dropped 5 basis points to 2.37%. The Stoxx Europe 600 Index slipped 0.1%. The grim assessment for the euro region comes just days before the ECB Governing Council led by President Mario Draghi gathers in Frankfurt for its monthly policy meeting. The ECB has cut its benchmark rate to a record-low 0.05% and began buying covered bonds to boost inflation and rekindle growth. “Country-specific factors are contributing to the weaknesses of economic activity in the EU and the euro area in particular,” Jyrki Katainen, commission vice president for competitiveness, told reporters in Brussels. These include “deep-seated structural problems” and “public and private debt overhang,” he said.

Read more …

The never ending Bloomberg promo.

• Euro Area Limping Toward Deflation Fuels QE Calls as ECB Meets (Bloomberg)

The euro area is edging closer to the moment that deflation risks become reality. Companies cut selling prices by the most since 2010 as they attempted to boost sales in the face of a flagging economy and slowing new orders, Markit Economics said today. This in turn is squeezing profit margins and reducing resources for hiring and investing, damping chances of an economic rebound, the London-based company said. The European Central Bank is pumping money into the banking system to fuel inflation that hasn’t met policy makers’ goal since early last year.

With a gauge of manufacturing and services activity pointing to sluggish growth at best, it is under pressure to add to long-term loans and already announced asset-purchase plans to prevent a spiral of price declines in the 18-nation currency bloc. “This month’s data make for grim reading, painting a picture of an economy that is limping along and more likely to take a turn for the worse than spring back into life,” said Chris Williamson, Markit’s chief economist. “The combined threat of economic stagnation and growing deflationary risks will add to pressure on the ECB to do more to stimulate demand in the euro area, strengthening calls for full-scale quantitative easing.”[..] While Markit said the data are in line with gross domestic product expanding 0.2% in the fourth quarter, new orders slowed to the weakest level in 15 months and employment declined for the first time in almost a year. That “suggests that the pace of growth may deteriorate in coming months,” said Williamson.

Read more …

Sometimes I wonder what the job requirements are for Bloomberg staff. Like now. Europe should do what Japan does? That highly successful role model?

• ECB Needs Japanese Lessons (Bloomberg)

Economists like to warn about Japanification, the risk that a country will follow the desultory experience of Japan, which slumped into deflation in 1999 and for all intents never climbed out. As Europe slides closer to deflation, the European Central Bank should heed the historical experience and the current efforts by the Bank of Japan to resuscitate growth. The euro area is perilously close to deflation. The ECB target – consumer price inflation of just under 2% – grows more distant. The European Commission said yesterday it sees euro-area inflation running at just 0.8% in 2015, as it cut its prediction for the region’s growth this year to 0.8% from the 1.2% it anticipated in May. And yet, the ECB’s balance sheet has been shrinking as the BoJ’s has swollen.

The Bank of Japan announced last week that it’s boosting purchases of Japanese government bonds to a record annual amount of 80 trillion yen, or more than $700 billion. My colleague William Pesek points out that the Japanese central bank has now effectively cornered the domestic market in government debt, creating a bubble in the bond market. He’d prefer more economic reforms than increased quantitative easing. Europe would also benefit from more labor-market changes and fiscal stimulus. But neither the ECB nor the Bank of Japan has a mandate to overhaul fiscal policy or employment practices. In the absence of government action, central banks can only fill the void. The shock-and-awe that BoJ Governor Haruhiko Kuroda sprang on investors isn’t likely to be repeated at tomorrow’s ECB meeting, even though there is scant prospect that the central bank’s inflation target will be met anytime soon.

Two weeks into the covered-bond purchase program designed to flood cash into the economy, the ECB has purchased just 4.8 billion euros ($6 billion) so far. Draghi said earlier this week that the scope for buying asset-backed securities is “rather large,” yet I can’t find a single market participant who expects the plan to succeed in swelling the ECB balance sheet by enough to do the job – unless it repeats the government bond purchases it made between 2010 and 2012, and on a much grander scale:

Read more …

Huh? “What the Saudis are doing is business as usual. They change the price formula each month. The problem is there’s an implication that it’s business as usual in terms of production. The problem is if they continue to produce what they’ve been producing in the last two months, the market is headed for trouble”

• Look Out Below! Oil Is Not Done Falling (CNBC)

Oil prices could have a hard time finding a floor after Saudi Arabia trimmed prices in the face of growing North American oil production. The market took the price cut this week as another sign the kingdom is willing to use pricing as a lever to preserve its market share, rather than cut production in what is now an oversupplied market. Even if it was not the intention, some traders took the Saudi move as a sign the kingdom would like falling prices to slow U.S. shale production. U.S. West Texas Intermediate fell sharply on Tuesday, dipping close to the psychologically key $75-a-barrel level, before closing at a three-year low of $77.19, off $1.59 per barrel. Brent fell along with it to $82.82 a barrel, the lowest settle since October 2010, after Saudi Arabia set a new price in the U.S. 45 cents lower than November’s level. “The managed money longs still outnumber shorts 3.5-to-1. If this isn’t a heavy exodus of the money manager longs, we could still have a significant drop, especially if all these factors that are driving us lower continue to weigh on the markets,” he said.

“The dollar strength and also fears of slowing economic conditions in Europe and China are still continuing to play a role.” There was initially a muted reaction to the Saudi announcement Tuesday as the market focused on dollar strength and other factors. “I don’t think the probability is we’re looking at a meltdown or collapse. If there was a global price war, it could go between $30 and $50 a barrel but more realistically, we’re within 10% of the bottom,” said Tom Kloza, senior oil analyst at Gasbuddy.com. “What the Saudis are doing is business as usual. They change the price formula each month. The problem is there’s an implication that it’s business as usual in terms of production. The problem is if they continue to produce what they’ve been producing in the last two months, the market is headed for trouble, and downward pressure will be more significant than upward pressure,” said Kloza.

Read more …

Nobody loves you when you’re down and out.

• Oil Continues To Slide, With Brent At Lowest In Over Four Years (MarketWatch)

Crude-oil futures extended losses in Asian trade Wednesday, with the U.S. oil benchmark at its lowest in more than three years and Brent at its lowest in over four years. On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at $76.81 a barrel, down $0.38 in the Globex electronic session. December Brent crude on London’s ICE Futures exchange fell $0.60 to $82.22 a barrel. Crude oil finished at a 3-year low on Tuesday. A steady stream of weak economic data from Europe is weighing on Brent crude oil prices, pushing it lower along with the drop in U.S. oil prices, analyst Tim Evans at Citi Futures said.

“The downward revision in the eurozone macroeconomic outlook and the further decline in prices were both more of a confirmation that a bearish trend remains than any stunning new development,” he said. Mr. Evans said a psychological limit of $80 a barrel may help limit the drop in Brent crude prices. Financial markets are looking to Thursday’s European Central Bank meeting for a boost. Meanwhile, oil markets are still pressured by a strong U.S. dollar, weak demand projections and oversupply concerns. “Yesterday’s support levels were shattered likely due to markets anticipating further cuts from other OPEC countries,” analyst Daniel Ang at Phillip Futures said. He pegged support for Brent crude at $82 a barrel and that for WTI at $75.84 a barrel.

Read more …

“Domestic oil companies need to stop drilling for oil … ” Why not tell the Saudis that? How about we discuss: The Real Problem With T. Boone Pickens instead?

• T. Boone Pickens: The Real Problem With Oil (CNBC)

Many energy investors think there’s a powerful force working against them in the market. Investor T. Boone Pickens thinks they’re right, but the problem isn’t what they think. Pickens says that the big issue in the energy market isn’t OPEC or the strong dollar; he says it’s supply and he also says domestic drillers are to blame. “Domestic oil companies need to stop drilling for oil,” Pickens insisted on CNBC’s “Street Signs.” “We’ve overdrilled oil (in the U.S). Now we’ve gotten ourselves in a spot. We need to slow down.” In other words, the abundance of oil that’s now accessible in North America because of improved technology has generated a supply imbalance. However, Pickens does not expect that dynamic to last; ultimately he expects markets to balance out, with drillers reducing supply.

“Of course nobody wants to be the first to blink,” Pickens added. “But, when the domestic drillers start feeling real pain (from low prices), they will blink.” In fact, Pickens thinks the dynamics are shifting, already. Not only does he anticipate a reduction in domestic supply but he said markets are moving into a bullish time of year. “November and December are good months,” he said. Therefore, Pickens believes supply will decrease, at a time when demand increases. Given the potential catalysts, Pickens isn’t looking for oil to sit at historic lows for long. “I can see this lasting through year end. But in the first quarter of next year I think we hit the low and then I expect prices to recover.”

Read more …

‘Shields’? Curious choice of words.

• Russia-Ukraine Crisis Shields EU Gas From Oil Price Rout (Bloomberg)

The risk of disruptions to Russian natural gas flows through Ukraine this winter is protecting European prices from the rout that sent oil to a four-year low. U.K. gas for next quarter fell 13% since mid-June, less than half the 29% plunge in Brent crude over that time. While Brent is typically the benchmark used to set the price on almost half the gas supply in Europe, the Russia-Ukraine conflict and demand fundamentals in the market are having a bigger impact on prices than the decline in oil. First-quarter supply interruptions are still possible as Ukraine may struggle to pay Russia the full $3.1 billion by year-end under an agreement brokered by the European Union last week for gas already consumed, according to Societe Generale SA.

Gazprom said it received the first tranche of payments today. The EU, which gets 15% of its fuel from Russia via Ukraine, sought to avoid repeats of 2006 and 2009, when supplies to the bloc were disrupted amid freezing weather. “Right now, gas prices in Europe are really linked to the Russian-Ukrainian crisis, so I don’t think the impact from oil is as big as it could be,” Edouard Neviaski, chief executive officer of GDF Suez Trading, a unit of France’s biggest utility, said in an interview in London. “Gas prices have gone down a little bit, but nothing of the same magnitude.”

Read more …

Whenever the financial world gets ‘creative’, things blow up and we pay.

• New Junk-Bond Derivatives Are Hot as Traders Get Creative (Bloomberg)

When it gets tough to maneuver in the junk-bond market, traders can either give up or get creative. Many of them are opting for creativity these days. There’s been a surge in demand for a relatively new index of derivatives that aims to replicate the risk and return of high-yield bonds. As volatility soars to the most in more than a year, trading in a total-return swaps index reached a record $4 billion in September from almost nothing in May, according to data compiled by Morgan Stanley. The demand is in part coming from fund managers who are looking for ways to be agile as individual investors become more fickle, pulling money out and then putting it back in, said Sivan Mahadevan, a credit strategist at Morgan Stanley. For example, investors have yanked $24 billion from high-yield bond mutual funds this year, with sentiment turning particularly sour in the three months ended Sept. 30, data compiled by Wells Fargo show. Yet they poured $2.5 billion into the funds in the week ended Oct. 29.

Investors also face a harder environment to maneuver in. The volume of dollar-denominated junk bonds outstanding has swelled 81% since 2008, but the market’s structure hasn’t evolved much. It still consists of thousands of individual bonds governed by unique documents, traded much the way they were a decade ago. “Market fragmentation and liquidity constraints in a large part of the bond market make managing fund-flow volatility particularly challenging,” Mahadevan wrote in a report. The concern is that after six years of near-zero interest rates from the Federal Reserve and a largely one-way trade into bonds, a reversal of that demand will cause debt values to plunge as there won’t be many willing and available buyers on the other side. So it’s no wonder investors are turning to derivatives to quickly adjust their holdings in a market that policy makers have said looks like a bubble.

Read more …

Sure, Lagarde, why not simply make your own auditing office look like a bunch of inept fools?

• IMF Gave Richer Countries Wrong Austerity Advice: Internal Auditor (Reuters)

The International Monetary Fund ignored its own research and pushed too early for richer countries to trim budgets after the global financial crisis, the IMF’s internal auditor said on Tuesday. The Washington-based multilateral lender, concerned about high debt levels and large fiscal deficits, urged countries like Germany, the United States and Japan to pursue austerity in 2010-11 before their economies had fully recovered from the crisis. At the same time, the IMF advocated loose monetary policies to sustain growth and boost demand in advanced economies, initially ignoring the possible spillover risks of such policies for emerging market countries, the Independent Evaluation Office, or IEO, said in a report that analyzed the IMF’s crisis response. “This policy mix was less than fully effective in promoting recovery and exacerbated adverse spillovers,” the IEO wrote. The IMF advises its 188 member countries on economic policy, and provides emergency financial assistance to its members on the condition they get their economies back on track.

The internal auditor said the IMF should have known that the combination of tight fiscal policy and expansionary monetary policy would be less effective in boosting growth after a crisis. Evidence showed that the private sector’s focus on reducing debt made it less susceptible to monetary stimulus. In 2012, the IMF finally admitted that it had underestimated how much budget cuts could hurt growth and recommended a slower pace for austerity policies. But its auditor said the IMF’s own research showed this relationship even before the crisis. IMF Managing Director Christine Lagarde said the IMF’s advice was reasonable, given the information and economic growth forecasts it had in 2010. “I strongly believe that advising economies with rapidly rising debt burdens to move toward measured consolidation was the right call to make,” Lagarde said in a statement.

Read more …

So much for the Chinese having no housing debt.

• China Home Buyers Rushing Online to Finance Downpayments (Bloomberg)

Qian Kaishen and his wife almost gave up in August on buying a bigger home. As apartments at Shanghai Villa, a project they liked near the city’s Hongqiao Airport, started selling, the money they had saved for the deposit was tied up in a 5%-return investment. Then property agency E-House China Holdings Ltd. offered the couple a 280,000 yuan ($45,546) one-year bridge loan at zero interest. The loan came from online investors through E-House’s Internet finance website. It covered about half the down payment and was just enough to make up the shortfall. “Now we’re good both on our investment and home purchase plan,” Qian, 31, who works for a local logistics company, said by phone from Shanghai.

“We would’ve given up if it weren’t for the loan. I don’t like borrowing from my parents or relatives, especially because we have the money.” E-House is joining peer-to-peer lenders to finance down payments for buyers struggling to scrape together a deposit after home prices had tripled since 2000. Mortgage lending remains tight, even after the central bank eased its policy in September, as banks anticipate an extended property market decline because of a high supply of housing, according to Standard Chartered.Home prices in China are now equivalent to 40 years’ average income for a 100-square-meter (1,076-square-foot) apartment. That compares with 26 years’ median income in New York for an apartment of the same size. The average price of a typical 900-square-foot home in Singapore is 11 times the median household income, while that for a 50-square-meter flat in Hong Kong is 14 times, according to local official data.

In China, homebuyers need to pay a minimum down payment of 30% of the purchase price for a first home, and at least 60% for a second before they can take out a mortgage. The limits are the result of a four-year campaign to stem property speculation. Those restrictions have helped drive demand for the down payment loans. “The phenomenon emerged in the past year or two largely because of mortgage restrictions and high down-payment requirements,” said Zhang Haiqing, a Shanghai-based research director at Centaline Group, China’s biggest property agency. The central bank on Sept. 30 eased some mortgage rules to make it easier to purchase second properties in a bid to revive the market. “We can’t exclude the possibility that as the market recovers, more people will want to buy and some of them will still have to use this channel because they don’t have the money,” Zhang said.

Read more …

Every nation’s best days are behind it. That is, if you focus on economic growth. As they all do.

• 25 Years Since The Wall Fell, Germany’s Best Days Are Behind It (MarketWatch)

On Sunday, Nov. 9, it will be a quarter of a century since the Berlin Wall came down. The reunification that followed was a triumph for the German nation. The scars of World War Two were finally healed, and Germany became one of the richest and most successful countries in the world. Certainly compared to much of its history, there was never a better time to be a German. And yet, as that anniversary is rightly celebrated, it is possible that the next quarter century will not be nearly as good. In fact, Germany faces a series of daunting problems. Its population is about to shrink sharply, threatening its prosperity. Its export-driven economic model look increasingly dated, based on huge trade surpluses, and driving down real wages. Education is poor, there is little investment, and no signs that it can compete in new technologies the way it did in industries such as automobile and chemicals.

Worse, it is threatened by a belligerent Russia on one side, and a resentful, impoverished, resentful eurozone periphery on the other, which is likely to increasingly blame Germany for its economic troubles. The European Union, the linchpin of its security and foreign policy, is under huge pressure as a result of the eurozone crisis, which the German elite has terribly mismanaged. The chances are that the next quarter of a century will not be nearly as good for Germany as the last 25 years were. When David Hasselhoff — of Knight Rider fame, and for some mysterious reason a huge star in Germany — performed at the Berlin Wall on New Year’s Eve in 1989, he was presiding over a moment when two halves of a divided nation came together. There were plenty of doubts at the time, both about whether West Germany could cope with a bankrupt East, and about whether the rest of Europe could cope with a reunited Germany.

Read more …

Interesting views from ‘former’ Goldmanite O’Neill. Have Italy impose punitive taxes on the Germans.

• A Crazy Idea About Italy (Jim O’Neill)

I’ve spent a good deal of my 35 years as an economic and financial analyst puzzling over Italy. Studying its economy was my first assignment in this business – as a matter of fact, Italy was the first foreign country I ever flew to. I’m just back from a vacation in Puglia and Basilicata. Over the decades, the question has never really changed: How can such a wonderful country find it such a perpetual struggle to succeed? All the while, Italy has pitted weak government against a remarkably adaptable private sector and a particular prowess in small-scale manufacturing. An optimist by nature, I’ve generally believed these strengths would prevail and Italy would prosper regardless. In the days before Europe’s economic and monetary union, though, it had one kind of flexibility it now lacks: a currency, which it could occasionally devalue. These periodic injections of stronger competitiveness were a great help to Fiat and other big exporters, and to smaller companies too. The rest of Europe had mixed feelings about this readiness to restore competitiveness through devaluation – meaning at their expense.

When discussions began about locking Europe’s exchange rates and moving to a single currency, opinions divided among the other partners, notably Germany and France, on what would be in their own best interests. Many German conservatives, including some at the Bundesbank, doubted Italy’s commitment to low inflation, which they wanted to enshrine as Europe’s chief monetary goal. On the other hand, leaving Italy outside the euro would leave their own competitiveness vulnerable to occasional lira devaluations. In the end, of course, the decision was made to bring Italy in. The fiscal rules that were adopted at the same time – including the promise to keep the budget deficit below 3 percent of gross domestic product — can be seen as an effort to force Italy to behave itself. Now and then I wondered if some saw them as a way to make it impossible for Italy to join at all. In any event, Italy found itself doubly hemmed in, with no currency to adjust and severely limited fiscal room for maneuver.

The results haven’t been good. It’s ironic that between 2007 and 2014 Italy has done better than most in keeping its cyclically adjusted deficit under control – yet its debt-to-GDP ratio has risen sharply. The reason is persistent lack of growth in nominal GDP, itself partly due to an overvalued currency and tight budgetary restraint. Italy is the euro area’s third-largest economy and its third-most populous country. Given this, the scale of its debts and everything we’ve learned about Europe’s priorities during the creation of the euro and since, I’ve always presumed that, in the end, Germany would do whatever was necessary to protect Italy from the kind of financial blow-up that hit Greece in 2010. Now I am starting to wonder.

Read more …

” .. the Potemkin stock market, a fragile, one-dimensional edifice concealing the post-industrial slum that the on-the-ground economy has become behind it.”

• Signs, Wonders and QE Heroics (James Howard Kunstler)

“Holy smokes,” Janet Yellen must have barked last week when Japan stepped up to plug the liquidity hole left by the US Federal Reserve’s final taper trot to the zero finish line of Quantitative Easing 3. The gallant samurai Haruhiko Kuroda of Japan’s central bank announced that his grateful nation had accepted the gift of inflation from the generous American people, which will allow the island nation to fall on its wakizashi and exit the dream-world of industrial modernity it has struggled through for a scant 200 years.

Money-printing turns out to be the grift that keeps on giving. The US stock markets retraced all their October jitter lines, and bonds plumped up nicely in anticipation of hot so-called “money” wending its digital way from other lands to American banks. Euroland, too, accepted some gift inflation as its currency weakened. The world seems to have forgotten for a long moment that all this was rather the opposite of what America’s central bank has been purported to seek lo these several years of QE heroics — namely, a little domestic inflation of its own to simulate if not stimulate the holy grail of economic growth. Of course all that has gotten is the Potemkin stock market, a fragile, one-dimensional edifice concealing the post-industrial slum that the on-the-ground economy has become behind it.

Then, as if cued by some Satanic invocation, who marched onstage but the old Maestro himself, Alan Greenspan, Fed chief from 1987 to 2007, who had seen many a sign and wonder himself during that hectic tenure, and he just flat-out called QE a flop. He stuck a cherry on top by adding that the current Fed couldn’t possibly end its ZIRP policy, either. All of which rather left America’s central bank in a black box wrapped in an enigma, shrouded by a conundrum, off-gassing hydrogen sulfide like a roadkill ‘possum. Incidentally, Greenspan told everybody to go out and buy gold — which naturally sent the price of gold spiraling down through its previous bottom into the uncharted territory of worthlessness. Gold is now the most unloved substance in the history of trade, made even uglier by the overtures of Mr. Greenspan.

Read more …

Debt Rattle November 4 2014

Nov 042014
 
 November 4, 2014  Posted by at 12:22 pm Finance Tagged with: , , , , , , , , , , ,  12 Responses »


DPC Looking south on Fifth Avenue at East 56th Street, NYC 1905

• Dollar Smashes Through Resistance As Mega-Rally Gathers Pace (AEP)
• WTI Falls to 3-Year Low on Saudi Price Cut as US Supply Climbs (Bloomberg)
• Saudis Cut Crude Prices to US in December Amid Shale Boom (Bloomberg)
• Gross Says Deflation a ‘Growing Possibility’ Threatening Wealth (Bloomberg)
• Deep Divisions Emerge over ECB Quantitative Easing Plans (Spiegel)
• Why The ECB May Not Want To Join The QE Dance (CNBC)
• Japan Creates World’s Biggest Bond Bubble (Bloomberg)
• Marc Faber: Japan Is Engaged in a Ponzi Scheme (Bloomberg)
• BOJ Easing Seen Boosting Chances Abe Will Raise Sales Tax (Bloomberg)
• Japan Pension Fund Strategy Shift Adds $187 Billion To Stocks (Bloomberg)
• EU Leaders Weigh Plan For Greek Exit From Bailout (FT)
• Greek Far-Left PM-in-Waiting Smells Power, Moves To Center (Reuters)
• Euro Woes Pressuring Eastern EU States Into More Easing (Bloomberg)
• Spain Bondholders Told Catalans Offer Best Chance of Repayment (Bloomberg)
• JPMorgan Faces US Criminal Probe Into FX Trading (Bloomberg)
• Venezuela, With World’s Largest Reserves, Imports Oil (USA Today)
• Lingering Slump In Real UK House Prices Outside London Belies Bubble Fears (AEP)
• Scandalously Low Pay Should Not Be The New Normal (Guardian)
• Australia Trade Deficit More Than Doubles On Commodity Prices (BBC)
• Rich Guys Running for Office Struggle With Voters in Land of Frozen Wages (Bloomberg)

The only safe haven left, as we’ve been saying for a very long time. The inevitable outcome, because: “Corporate debt in dollars across Asia has jumped from $300bn to $2.5 trillion since 2005. More than two-thirds of the total $11 trillion of cross-border bank loans worldwide are denominated in dollars.”

• Dollar Smashes Through Resistance As Mega-Rally Gathers Pace (AEP)

The US dollar has surged to a four-year high against a basket of currencies and has punched through key technical resistance, marking a crucial turning point for the global financial system. The so-called dollar index, watched closely by traders, has finally broken above its 30-year downtrend line as the US economy powers ahead and the Federal Reserve prepares to tighten monetary policy. The index – a mix of six major currencies – hit 87.4 on Monday, rising above the key level of 87. This reflects the plunge in the Japanese yen since the Bank of Japan launched a fresh round of quantitative easing last week. Data from the Chicago Mercantile Exchange show that speculative dollar bets on the derivatives markets have reached a record high, with the biggest positions against sterling, the New Zealand dollar, the Canadian dollar, the yen and the Swiss franc, in that order.

David Bloom, currency chief at HSBC, said a “seismic change” is under way and may lead to a 20pc surge in the dollar over a 12-month span. The mega-rally of 1980 to 1985 as the Volcker Fed tightened the screws saw a 90pc rise before the leading powers intervened at the Plaza Accord to cap the rise. “We are only at the early stages of a dollar bull run. The current rally is unlike any we have seen before. The greatest danger for markets and forecasters is that they fail to adjust their behaviour to fully reflect a very different world,” he said. Mr Bloom said the stronger dollar buys time for other countries engaged in currency warfare to “steal inflation”, now a precious rarity that economies are fighting over. The great unknown is how long the US economy itself can withstand the deflationary impact of a stronger dollar. The rule of thumb is that each 10pc rise in the dollar cuts the inflation rate of 0.5pc a year later.

Hans Redeker, from Morgan Stanley, said the dollar rally is almost unstoppable at this stage given the roaring US recovery, and the stark contrast between a hawkish Fed and the prospect of monetary stimulus for years to come in Europe. “We think this will be a 4 to 5-year bull-market in the dollar. The whole exchange system is seeking a new equilibrium,” he said. “We think the euro will reach $1.12 to the dollar by next year and will be even weaker than the yen in the race to the bottom.” Mr Redeker said US pension funds and asset managers have invested huge sums in emerging markets without considering the currency risks. “They may be forced to start hedging their exposure, and that could catapult the dollar even higher in a self-fulfilling effect.” The dollar revival could prove painful for companies in Asia that have borrowed heavily in the US currency during the Fed’s QE phase, betting it would continue to fall.

Data from the Bank for International Settlements show that the dollar “carry-trade” from Hong Kong into China may have reached $1.2 trillion. Corporate debt in dollars across Asia has jumped from $300bn to $2.5 trillion since 2005. More than two-thirds of the total $11 trillion of cross-border bank loans worldwide are denominated in dollars. A chunk is unhedged in currency terms and is therefore vulnerable to a dollar “short squeeze”. The International Monetary Fund said $650bn of capital has flowed into emerging markets as a result of QE that would not otherwise have gone there.

Read more …

Major reset on the way.

• WTI Falls to 3-Year Low on Saudi Price Cut as US Supply Climbs (Bloomberg)

West Texas Intermediate dropped to the lowest intraday level in three years as Saudi Arabia cut prices for crude exports to U.S. customers amid speculation that stockpiles increased. Brent extended losses in London. Futures fell as much as 3.7% to $75.84 a barrel, the weakest since Oct. 4, 2011. Saudi Arabian Oil Co. reduced December differentials for all grades it ships to the U.S., while supplies to Asia and Europe were priced higher, according to an e-mailed statement yesterday. U.S. crude inventories climbed by 1.9 million barrels last week to a four-month high, a Bloomberg News survey shows before government data tomorrow. Oil slid in October by the most since May 2012 as leading members of the Organization of Petroleum Exporting Countries resisted calls to cut output.

Global supplies are rising, with the U.S. pumping at the fastest pace in more than three decades. “Saudi Arabia isn’t inspiring the sentiment that they are trying to force customers to take less,” Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, said by e-mail. “The only solution seen by the market to reduce the oversupplied outlook is an OPEC cut led by Saudi Arabia.”

Read more …

Killing the competition.

• Saudis Cut Crude Prices to US in December Amid Shale Boom (Bloomberg)

Saudi Arabian Oil Co. lowered the cost of its crude to the U.S., where production is the highest in three decades, deepening a selloff that sent prices to the lowest in more two years. The state-owned producer, known as Saudi Aramco, lowered the premium for Arab Light relative to U.S. Gulf Coast benchmarks by 45 cents a barrel to the smallest since December. medium and heavy grades were also down 45 cents and extra light oil 50 cents. Aramco increased the cost to Asia and Europe. Swelling supplies from producers outside OPEC drove oil prices into a bear market last month as global demand growth slowed. Middle Eastern producers are increasingly competing with cargoes from Latin America, North Africa and Russia for buyers, as well as with U.S. production that has jumped 54% in the past three years.

“The Saudi move speaks to them wanting to preserve market share in the U.S., where it has slipped recently,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said yesterday by phone. “It looks like the Saudis are comfortable with prices and demand.” West Texas Intermediate, the U.S. benchmark, fell 55 cents to $78.23 a barrel in electronic trading on the New York Mercantile Exchange at 7:02 a.m. London time. The contract slid $1.76 to $78.78 yesterday, the lowest settlement since June 28, 2012. Brent, the global benchmark, lost 79 cents to $83.99 a barrel on the ICE Futures Europe exchange. “The market is reacting as though Saudi Arabia is going to flood the Gulf and is going to compete with shale production,” Michael Hiley, head of energy OTC at LPS Partners Inc. in New York, said yesterday by phone.

Read more …

” … governments worldwide are struggling to create inflation and stimulate growth.” They can’t and they won’t. There’s too much debt. And adding more will cause the opposite of what they see they want.

• Gross Says Deflation a ‘Growing Possibility’ Threatening Wealth (Bloomberg)

Bill Gross, in his second investment outlook since joining Janus Capital Group, said deflation is a “growing possibility” as governments worldwide are struggling to create inflation and stimulate growth. Central banks around the world have made “a damn fine attempt” at fueling inflation, yet their efforts have pushed up financial assets, rather than prices in the real economy, Gross wrote in his outlook titled “The Trouble with Porosity and Prosperity.” “The real economy needs money printing, yes, but money spending more so, and that must come from the fiscal side – from the dreaded government side – where deficits are anathema and balanced budgets are increasingly in vogue,” he wrote. Until then, the possibility of deflation is a challenge to wealth creation, according to Gross. The 70-year-old Gross, who last month started managing Janus Global Unconstrained Bond Fund, has forecast subdued market returns in what he calls the ‘new normal,’ a view he and Pimco first expressed in 2009 coming out of the financial crisis.

At Pimco, Gross ran the $201.6 billion Total Return fund, the world’s biggest bond mutual fund, which had trailed peers since the beginning of 2013 as he misjudged the timing and impact of the Federal Reserve’s tapering of its stimulus. Gross left the firm he co-founded in 1971 after his deputies threatened to quit and management debated his ouster, according to people familiar with the matter. Gross, whose investment commentaries are known for their colorful anecdotes and comparisons, in today’s outlook called himself a “philosophical nomad” with a foundation formed from sand. The 21st century economy is built on the sand of finance instead of the firmer foundation of investment and innovation, he wrote. “Stopping the printing press sounds like a great solution to the depreciation of our purchasing power but today’s printing is simply something that the global finance based economy cannot live without,” he wrote.

Read more …

Nothing’s changed in a long time when it comes to points of view.

• Deep Divisions Emerge over ECB Quantitative Easing Plans (Spiegel)

To prevent dangerous deflation, the ECB is discussing a massive program to purchase government bonds. Monetary watchdogs are divided over the measure, with some alleging that central bankers are being held hostage by politicians. [..] At first glance, there’s little evidence of the sensitive deals being hammered out in the Market Operations department of Germany’s central bank, the Bundesbank. The open-plan office on the fifth floor of its headquarters building, where about a dozen employees are staring at their computer screens, is reminiscent of the simple set for the TV series “The Office”. There are white file cabinets and desks with wooden edges, there is a poster on the wall of football team Bayern Munich, and some prankster has attached a pink rubber pig to the ceiling by its feet. The only hint that these employees are sometimes moving billions of euros with the click of a mouse is the security door that restricts access to the room.

They trade in foreign currencies and bonds, an activity they used to perform primarily for the German government or public pension funds. Now they also often do it for the ECB and its so-called “unconventional measures. Those measures seem to be coming on an almost monthly basis these days. First, there were the ultra low-interest rates, followed by new four-year loans for banks and the ECB’s buying program for bonds and asset backed securities – measures that are intended to make it easier for banks to lend money. As one Bundesbank trader puts it, they now have “a lot more to do.” Ironically, his boss, Bundesbank President Jens Weidmann, is opposed to most of these costly programs. They’re the reason he and ECB President Mario Draghi are now completely at odds.

Even with the latest approved measures not even implemented in full yet, experts at the ECB headquarters a few kilometers away are already devising the next monetary policy experiment: a large-scale bond buying program known among central bankers as quantitative easing. The aim of the program is to push up the rate of inflation, which, at 0.4%, is currently well below the target rate of close to 2%. Central bankers will discuss the problem again this week. It is a fundamental dispute that is becoming increasingly heated. Some view bond purchases as unavoidable, as the euro zone could otherwise slide into dangerous deflation, in which prices steadily decline and both households and businesses cut back their spending. Others warn against a violation of the ECB principle, which prohibits funding government debt by printing money. Is it important that the ECB adhere to tried-and-true principles in the crisis, as Weidmann argues? Or can it resort to unusual measures in an emergency situation, as Draghi is demanding?

Read more …

Germany.

• Why The ECB May Not Want To Join The QE Dance (CNBC)

As one major central bank – the U.S. Federal Reserve – closes the quantitative easing door, markets are hoping another – the European Central Bank – will throw it wide open again. Many economists now expect that ECB President Mario Draghi will usher in a quantitative easing (QE) policy, involving buying up countries’ sovereign debt, early in the New Year. Something definitely needs to be done in the euro zone. Unemployment remains stubbornly high at 11.5% and inflation, at 0.4%, doesn’t look that far away from the deflation danger zone. Two of its biggest economies, France and Italy, are going to need extra wriggle room to meet their budgetary targets – and even Germany, the stalwart of recent years, looks less confident than for some time. Yet is QE that something? The most obvious problem with a bond-buying program, particularly when it involves buying up sovereign debt, is the potential political fallout.

How can you make sure that you’re not giving some countries in the single currency bloc an unfair advantage, particularly if they have already been helped out by tens of billions of euros in bailout aid during the financial crisis? No wonder Germany’s anti-European Union party, Alternative für Deutschland, is causing Angela Merkel almost as much trouble as the U.K. Independence Party is for David Cameron. And can QE really be that effective? In the U.K. and U.S., effectively printing money has helped to reduce credit spreads and, therefore, the cost of borrowing. Yet the euro zone already has low credit spreads and borrowing rates, after a series of actions by the ECB. The gap between the cost of short and long-term borrowing for Germany, for example, is already much smaller than it was in the U.S. before QE was introduced there. If funding does not seem to be filtering through to the real economy already, how could the ECB ensure that, by pumping more money into the system, it reached the right places?

Read more …

Bubble, Ponzi, it’s all of the above. It’s setting the world ablaze as we speak.

• Japan Creates World’s Biggest Bond Bubble (Bloomberg)

Ten years from now, will Bank of Japan Governor Haruhiko Kuroda be regarded as a genius or a madman? Kuroda’s shock-and-awe stimulus move on Oct. 31 delighted markets and won him plaudits as a monetary virtuoso. Japan, the conventional wisdom tells us, has finally gotten serious about ending deflation, and isn’t it wonderful. But what happens when a central bank buys up an entire bond market? We’re about to find out as Kuroda, like some feverish hedge fund manager, corners Japan’s. Neglected in all the celebrating: To reach a 2% inflation goal that’s both arbitrary and meaningless, the BOJ is destroying Japan’s standing as a market economy. In announcing that it will boost purchases of government bonds to a record annual pace of $709 billion, the central bank has just added further fuel to the most obvious bond bubble in modern history — and helped create a fresh one on stocks. Once the laws of finance, and gravity, reassert themselves, Japan’s debt market could crash in ways that make the 2008 collapse of Lehman Brothers look like a warm-up.

Worse, because Japan’s interest-rate environment is so warped, investors won’t have the usual warning signs of market distress. Even before Friday’s bond-buying move, Japan had lost its last honest tool of price discovery. When a nation that needs 16 digits in yen terms to express its national debt (it reached 1,000,000,000,000,000 yen in August 2013) sees benchmark yields falling, you’ve entered the financial Twilight Zone. Good luck fairly pricing corporate, asset-backed or mortgage-backed securities. Considered in relation to gross domestic product, Kuroda’s purchases make the U.S. Federal Reserve’s quantitative-easing program look quaint. The Fed, of course, is already ending its QE experiment, while Japan is doubling down on one that dates back to 2001. Kuroda’s latest move means Japan’s QE scheme could last forever. The BOJ has willingly become the Ministry of Finance’s ATM; reversing the arrangement will be no small task.

All this liquidity has made for surreal events in Tokyo. Take the news that Japan’s $1.2 trillion Government Pension Investment Fund will dramatically rebalance its portfolio away from bonds. Japan has enormous public debt and a fast-aging population, and now the world’s biggest pension pool is shifting to stocks. Yet somehow, 10-year yields are just 0.43%. The explanation, of course, is that the parts of the market the BOJ doesn’t already own are sedated by its overwhelming liquidity. The BOJ is now on a financial treadmill that’s bound to accelerate, demanding ever more multi-trillion-dollar infusions to keep the market in line.

Read more …

Stating the obvious. But Faber doesn’t know what deflation is: “In some sectors of the economy you can have inflation, and in some sectors, deflation.” No, you cannot.

• Marc Faber: Japan Is Engaged in a Ponzi Scheme (Bloomberg)

What do you think about what Bill Gross is saying? Do you think deflation is a real possibility for the United States?

I think the concept of inflation and deflation is frequently misunderstood. In some sectors of the economy you can have inflation, and in some sectors, deflation. But if the investment implication of Bill Gross is that – and he is a friend of mine, i have high regards for him. If the implication is that one should be long US Treasury’s, to some extent i agree. The return on 10-year note’s will be miserable , 2.35% for the next 10 years if you hold them to maturity. However, if you compare that to french government bonds yielding today 1.21% , i think that’s quite a good deal. For japanese bonds, a country that is engaged in a ponzi scheme, bankrupt, they have government bond yields yielding 0.43%. go ahead. I think they are engaged in a Ponzi scheme in the sense that all the government bonds that the treasury issues are being bought by the bank of japan. I think the good news is for Japan, most countries are engaged in a ponzi scheme and it will not end well, but as Carlo Ponzi proved, it can take a long time until the whole system collapses.

Read more …

Yeah, why not finish it off even faster?

• BOJ Easing Seen Boosting Chances Abe Will Raise Sales Tax (Bloomberg)

The Bank of Japan’s extra stimulus increases the chances of Prime Minister Shinzo Abe going ahead with a plan to raise the nation’s sales tax, a survey by Bloomberg News shows. Nine of 10 economists responding after the central bank’s surprise move on Oct. 31 expect Abe to increase the levy, which is currently 8% after a 3%age-point bump in April. A decision on whether to lift the tax to 10% in October next year is expected by the end of this year after the government takes account of economic data including gross domestic product figures for the third quarter. The BOJ’s easing may give Abe a firmer footing to pursue measures for longer-term fiscal deficit reduction, including an increase in the sales levy, Moody’s Investors Service said in an e-mailed report.

“Progress on those two policy fronts will ultimately determine the success or failure of Abenomics and its monetary policy strategy,” Moody’s said. The BOJ’s expansion of stimulus puts the spotlight back on Abe’s policies. He’s under pressure to accelerate efforts to strengthen corporate governance, deregulate agriculture, increase female participation in the workforce and secure trade agreements to fuel long-term growth. While deciding on whether Japan can handle another sales-tax hike to help rein in the world’s heaviest debt burden, he is also considering how much to lower company taxes.

Read more …

The casino’s open for business.

• Japan Pension Fund Strategy Shift Adds $187 Billion To Stocks (Bloomberg)

Japan’s public retirement savings manager is set to pump $187 billion into stock markets across the globe as the world’s biggest pension fund implements a new investment strategy aimed at enhancing returns. The Government Pension Investment Fund will have to buy 9.8 trillion yen ($86 billion) of Japanese shares and 11.5 trillion yen of foreign equities to meet the asset-allocation targets it set last week, based on holdings in June. GPIF needs to cut 23.4 trillion yen of domestic debt, the data show. The Topix index soared 4.3% Oct. 31 in anticipation of the allocations and on the Bank of Japan’s unexpected stimulus boost, which included tripling purchases of exchange-traded funds. The measure jumped 2.6% today. The domestic bonds GPIF needs to pare could be bought by the BOJ in as little as two months. The fund will end up owning more than 6% of Japan’s equity market once it completes the strategy shift, with that investment enough to buy everything listed in New Zealand, Greece and Morocco combined.

“If you consider the amount of money that’s involved, this will probably have more impact on stocks than the BOJ’s buying of ETFs,” said Takashi Aoki, a Tokyo-based fund manager at Mizuho. “We can expect material support for the market.” Brokerages led gains among the Topix’s 33 industry groups today, soaring 9.4%. The broader gauge posted the highest close in six years, while the Nikkei 225 traded above 17,000 for the first time since 2007 before paring gains. GPIF will put half its assets in equities, equally split between Japanese and foreign markets, according to targets published Oct. 31 after markets closed. That’s up from 12% each under the fund’s previous strategy. The announcement came just hours after the BOJ expanded easing, saying it will buy 8 trillion yen to 12 trillion yen of sovereign debt per month. The pension manager allocated 35% of its holdings to domestic bonds, down from 60%, and boosted foreign debt to 15% from 11%. The new figures don’t include a target for short-term assets, while the previous ones did.

Read more …

With the weaknesses ahead, the dumbest plan yet. Greek yields are already under heavy fire. And now they want to make us believe Greece can stand on its own, and still remain in the eurozone?

• EU Leaders Weigh Plan For Greek Exit From Bailout (FT)

Euro zone leaders are weighing a plan to allow Greece to exit its four-year-old bailout at the end of the year by converting nearly €11 billion of unused rescue funds into a backstop for Athens for when it raises cash from the markets on its own. The plan, which will be discussed at a meeting of euro zone finance ministers in Brussels on Thursday,would allow Antonis Samaras, Greek prime minister, to declare an end to the quarterly reviews by the hated “troika” of bailout monitors ahead of parliamentary elections, which could come as early as March. At the same time, backers of the plan believe it would give financial markets the security of knowing Athens could draw on the credit line in an emergency.

The credit line would come from the euro zone’s €500 billion rescue fund, meaning it would still require monitoring from Brussels, albeit less onerous than at present. By tapping €11 billion originally earmarked for shoring up by Greek banks, euro zone officials hope to avoid political resistance from Germany. “In political terms, the money has already been made available to the Greek authorities,” said an EU official involved in the negotiations. Mr Samaras’s hopes of a “clean exit” from Greece’s €172 billion second bailout –which would mean no line of credit or additional outside monitoring – were dashed last month when Greek bonds were sold off in a mini-panic after he announced his intention to finish the bailout at the end of the year without any follow-on program. “A completely clean exit is highly unlikely,” said the EU official. [..]

The biggest remaining stumbling block remains the role of the International Monetary Fund in the plan. Unlike the EU, whose Greek bailout runs out of cash this year, the IMF program is due to run into 2016. The IMF has become a lightning rod for political anger in Greece – Poul Thomsen, the blunt Dane who heads the IMF’s Greek team, has to travel in Athens with a significant security detail – and Greek political leaders are eager to eject the Fund from the program. “It’s not helpful to have them camping in Athens,” said one Greek official, referring to prolonged negotiations over the last bailout review which took nine months to complete. But a group of euro zone countries led by Germany have insisted the IMF remain part of the program, arguing the Fund’s independence and credibility is essential to gaining support for a credit line in the Bundestag.

Read more …

Disappointing development for all Greeks.

• Greek Far-Left PM-in-Waiting Smells Power, Moves To Center (Reuters)

Alexis Tsipras, leader of Greece’s far-left Syriza party, recently traveled to Frankfurt and Rome to meet European leaders. He is softening his confrontational tone with Greece’s international lenders. He has a drafted an agenda for the first 100 days of a future government. The 40-year-old former student Communist is acting like a prime minister in waiting. Syriza, once a fringe far-left movement, is now the most popular party in Greece, representing the many voters who feel punished by the country’s EU/IMF bailout. In May, the party easily won European elections and gained the governor’s seat for Greece’s most populous region. Today, it polls higher than any other party, leading by a margin of between 4 and 11 points over Prime Minister Antonis Samaras’s conservatives. One poll shows Tsipras as the most popular political leader in the country. “The big change has begun. The old is on its way out. The new is coming,” Tsipras thundered in a recent speech to parliament. “No one can stop it.”

Key to Syriza’s ascent, party officials say privately, is a calculated effort to moderate the radical leftist rhetoric that prompted German magazine Der Spiegel to name Tsipras among the most dangerous men in Europe in 2012. The party still rails against austerity measures and a bailout-driven “humanitarian crisis”. It wants to reverse minimum wage cuts, freeze state layoffs and halt state asset sales. But Syriza no longer threatens to tear up the bailout agreement or default on debt. Instead, officials say it supports the euro and wants to renegotiate the bailout by using the same pro-growth arguments of partners France and Italy. Syriza’s transformation mirrors the political progression of other anti-establishment fringe parties, such as the Northern League in Italy, that changed tactics after gaining parliamentary power and became more mainstream political forces.

It also reflects how Greece has turned a page on the dark days of the euro zone crisis four years ago, when Athens’ profligate spending risked bringing down the entire euro project. Then, a Tsipras victory at the polls was widely seen as a trigger for a bank run and Greece’s exit from the euro. Recently, however, Tsipras has held talks with European Central Bank chief Mario Draghi in Frankfurt and Austrian President Heinz Fischer. Syriza’s threadbare headquarters, where a portrait of Che Guevara once hung on the wall, is undergoing a makeover to include new desks and an expanded press room. “This is not the Alexis Tsipras of 2010,” said Blanka Kolenikova, European analyst for IHS Global Insight. “Since the last election Syriza’s rhetoric has calmed down. Tsipras is preparing for the fact that he might be leading a government so he needs to prove that he is approachable and flexible.”

Read more …

Still want to join?

• Euro Woes Pressuring Eastern EU States Into More Easing (Bloomberg)

Low inflation, flagging growth, and the European Central Bank’s stimulus bias will probably force eastern members of the European Union to cut interest rates to record lows this week. Reduced borrowing costs will be cemented in three monetary policy decisions on consecutive days before the outcome of the ECB’s deliberations on Nov. 6, economists predict. They forecast Romania and Poland will reduce rates today and tomorrow, while Czech officials will maintain their own benchmark close to zero a day later as they ponder their stance on stemming gains in the koruna. Prone to contagion from economic woes in the euro region, their main export market and source of funding, eastern European countries keep a close eye on policy moves in the single currency area.

Now they’re facing border-jumping deflation and ECB loosening that are making the zloty, the leu and their peers stronger and endangering slowing growth. “You have the disinflation trend passing through, you have the ECB policy driving the currency side,” Simon Quijano-Evans, the London-based head of emerging-market research at Commerzbank AG, said by phone yesterday. “If central banks were not to react correspondingly, you’d have downside pressure on growth appearing as well. We don’t really see any major inflation pressure, so there is no real need to keep rates on hold at these sorts of levels.”

Read more …

Referendum in 5 days. Let’s hope it will be a peaceful one.

• Spain Bondholders Told Catalans Offer Best Chance of Repayment (Bloomberg)

Spanish bondholders would be well advised to engage with Catalan officials since they may hold the key to getting repaid, according to Oriol Junqueras, leader of the separatist group Esquerra Republicana. Bond investors should recognize that Spain will struggle to contain its public debt when interest rates rise, and that the alternative to dealing with Catalonian separatists may be the anti-establishment Podemos party, said Junqueras. Podemos, which topped a national opinion poll this week, plans to audit Spanish government debt to assess how much is legitimate. “We all suspect interest rates won’t stay low forever,” Junqueras, who heads the most popular group in Catalonia, said in an interview yesterday. “One good way to prepare for that would be to talk to Catalan politicians.”

Junqueras has identified Spain’s public debt of more than €1 trillion ($1.3 trillion) as a weakness for the central government, as his alliance of separatists tries to force Prime Minister Mariano Rajoy to negotiate over Catalan independence. A flashpoint looms on Nov. 9, when Catalans including Junqueras propose holding an informal ballot on secession. They scaled back their plans last month after Rajoy rallied the Constitutional Court to block a non-binding referendum. Even the goal of an informal consultation this weekend may be frustrated. Spain’s highest court is due to meet tomorrow to consider a second challenge to the Catalan plans by the central government. Catalonian President Artur Mas said last week he plans to push ahead with the ballot whatever the court says.

In the event of a split, Catalans might draw on the precedent of the Dayton Accords relating to the former Yugoslavia and offer to take on 9% of Spain’s public debt, or about 90 billion euros, said Junqueras. That equates to Catalonia’s share of Spanish public spending over the past 25 years, he said. “That’s a legitimate criteria,” said Junqueras. “We could propose that.” Alternatively, the liabilities of the Spanish sovereign could be divided up based on Catalonia’s 21% contribution to the state’s tax revenue, he said. That would see the Catalans take on about €210 billion. “It would be good for the markets to talk to Catalan society about this as soon as possible,” he said. “That would be better for everyone.”

Read more …

A few more billions in taxpayer money will be paid in fines.

• JPMorgan Faces US Criminal Probe Into FX Trading (Bloomberg)

JPMorgan Chase said it faces a U.S. criminal probe into foreign-exchange dealings and boosted its maximum estimate for “reasonably possible” losses on legal cases to the highest in more than a year. The firm is cooperating with the criminal investigation by the Department of Justice as well as inquiries by regulators in the U.K. and elsewhere, it said yesterday in a quarterly report. The largest U.S. bank said it might need as much as $5.9 billion to cover losses beyond reserves for legal matters, up $1.3 billion from the end of June, and the most since since mid-2013. “In recent months, U.S. government officials have emphasized their willingness to bring criminal actions against financial institutions,” the bank wrote of the general legal environment. “Such actions can have significant collateral consequences for a subject financial institution, including loss of customers and business.”

Chief Executive Officer Jamie Dimon, 58, who led the New York-based firm through $23 billion in settlements last year, is contending with an international probe into whether traders at the biggest banks sought to profit by rigging currency rates. Citigroup and Zurich-based UBS disclosed last week they also face criminal inquiries by the Justice Department into their foreign-exchange dealings. Citigroup cut third-quarter results to include a $600 million legal charge. “These investigations are focused on the firm’s spot FX trading activities as well as controls applicable to those activities,” JPMorgan said its report. While the company is in talks to resolve the cases, “there is no assurance that such discussions will result in settlements,” it said. Banks are facing foreign-exchange probes by authorities on three continents, people with knowledge of the situation have said. Richard Usher, JPMorgan’s chief currency dealer in London, left the company amid efforts to settle a U.K. probe into allegations of foreign-exchange rigging. He hasn’t been accused of any wrongdoing.

Read more …

Makes one wonder what would have happened if ‘we’ had supported Venezuela, instead of hindering it every possible step of the way

• Venezuela, With World’s Largest Reserves, Imports Oil (USA Today)

For the first time in its 100-year history of oil production, Venezuela is importing crude – a new embarrassment for the country with the world’s largest oil reserves. The nation’s late president Hugo Chávez often boasted the South American country regained control of its oil industry after he seized joint ventures controlled by such companies as ExxonMobil and Conoco. But 19 months after Chávez’s death, the country can’t pump enough commercially viable oil out of the ground to meet domestic needs — a result of the former leader’s policies. The dilemma — which comes as prices at U.S. pumps fall below $3 per gallon — is the latest facing the government, which has been forced to explain away shortages of basic goods such as toilet paper, food and medicine in the past year.

“The government has destroyed the rest of the economy, so why not the oil industry as well?” says Orlando Rivero, 50, a salesman in Caracas. “How much longer do we have to hear that the government’s economic policies are a success when all we see is one industry after another being affected?” While Venezuela has more than 256 billion barrels of extra-heavy crude, the downside is that grade contains a lot of minerals and sulfur, along with the viscosity of molasses. To make it transportable and ready for traditional refining, the extra-heavy crude needs to have the minerals taken out in so-called upgraders, or have it diluted with lighter blends of oil. The latter tactic is what state oil company Petroleos de Venezuela SA (PDVSA) is using since it doesn’t have the money to build upgraders, which perform a preliminary refining process, and its partners have been unwilling to pony up cash because of the risk of doing business in the country.

Read more …

Ambrose tries to deny the obvious.

• Lingering Slump In Real UK House Prices Outside London Belies Bubble Fears (AEP)

British house prices have fallen 35pc in real terms since the peak in 2007 and remain stuck at levels last seen at the start of the century once London is excluded, according to hard data from the Land Registry. “We are not in a bubble or anywhere near it. We’re still climbing out of a trough. The number of mortgages as a share of all homes is the lowest in almost thirty years,” said Michael Saunders from Citigroup. A study by consultants London Central Portfolio said average prices for the country as a whole were £133,538 in September, if London is stripped out. They are down from a peak in £158,494 in 2007. This is a 16pc fall in nominal terms but the full scale of the correction has been disguised by accumulated inflation over these years, deliberately engineered by the Bank of England to avoid a debt-deflation trap. Prices in absolute terms are back to 2004 levels. The drop in real house prices from the peak has been closer to 35pc. This is comparable to the sort of house price shock seen in large parts of the eurozone but the social and economic effects are entirely different.

House prices in central London have decoupled from the British economy and reflect vast concentrations of wealth in the hands of rich foreigners looking for a safe-haven. There are indications that some of the money coming from Asia is leveraged tenfold and falsely designated as cash, but this is chiefly a problem for banks in Hong Kong or China rather than for British regulators. “I do not think it is a policy issue for the Bank of England if foreigners want to overpay for property in London,” said Mr Saunders. Real house prices in Britain are still hovering at levels reached in 2002 during the dotcom bust and the 9/11 attacks in the US, when much of the developed world was in recession. “Fears of a national house price bubble have been wildly premature,” said Naomi Heaton, head of London Central Portfolio. Mrs Heaton said the worry is that the Bank of England will be bounced into interest rate rises too early by a chorus of warnings about eye-watering prices in London, which have distorted perceptions of the broader picture.

While eight million people live in the property zone classified as London, some 56m people live elsewhere. “The furore about a house price bubble over recent months has been totally unhelpful. It is simply not justified outside London,” she said. The parallel between the property cycle in Britain and the Netherlands is illuminating. Both had similar house price and credit surges before the Lehman crisis, and both have seen steep falls in real terms since then. The difference is that Holland has not been able to take countervailing measures to stop a deep slide in nominal prices due to the constraints of EMU membership. The result is that a third of all mortgages are now underwater and household debt ratios are rising. Negative equity in Britain is just 8pc. The picture is far worse in Spain where house prices have dropped 44pc in nominal terms, and where over half of all mortgages are in negative equity by some estimates.

Read more …

The Living Wage debate in the UK. Too late?

• Scandalously Low Pay Should Not Be The New Normal (Guardian)

There’s the man who comes into the west London food bank, ashamed he can’t feed his children this week, though he works full-time at the Charing Cross hospital. There’s the trainee childcare worker I met there last Friday, who certainly can’t feed and heat herself on her pay. They leave with basic dry food in carrier bags, but no answer to an economy that ordains lifetimes of pay no family can live on. They are members of a growing army of 5.28 million – the 22% – paid less than a living wage to keep body and soul together. “Predistribution” was Ed Miliband’s much mocked word, by which he meant fair pay from employers, not benefit top-ups from government. Making employers pay the living wage once looked set to become Labour’s signature theme. The simple message that a week’s pay should be enough to keep a family out of poverty resonated with the public. Polls strongly support it. Fair pay, not benefits or subsidies to miserly employers, brought Labour into being – so why is the party in danger of letting this strong emblematic policy slip away?

The voluntary living wage rate has now risen 20p to £7.85 an hour (£9.15 in London) for companies that have signed up. But that improvement contrasts with a crisis of shrinking pay that is draining the Treasury of tax receipts and leaving taxpayers to pick up the benefit top-up bill for mean employers. Not for 140 years has pay fallen so far and for so long. Worse, this looks increasingly like the new normal. The pay gap between women and men is growing again too: women form the bulk of the lowest paid. Another 250,000 fell below the living wage in the last year, but the true state of pay is hidden by official figures, which ignore the 1.7 million self-employed, most not entrepreneurs but minicab drivers. The number of people on the minimum wage has doubled since 1999: it is becoming the norm not the floor.

Read more …

The rising USD makes many victims.

• Australia Trade Deficit More Than Doubles On Commodity Prices (BBC)

Australia’s trade deficit more than doubled to A$2.26bn (£1.2b; $1.96bn) in September, data showed. Exports rose just 1% in the month, while imports were up 6% as Australia brought in more fuel. The deficit, a balance of goods and services, widened a lot more than market expectations of A$1.95bn and compared to a revised deficit of A$1.013bn in July. Falling prices of key commodities like iron ore is being blamed for the jump. “The trade deficit for September came in worse than expected with falling commodity prices clearly weighing on export values,” said AMP Capital chief economist Shane Oliver. Export earnings in Australia, home to some of the world’s biggest miners like BHP Billiton and Rio Tinto, have been impacted by the slump in prices.

The price of iron ore is down 40% this year, while thermal coal prices are hovering near five-year lows of A$63 a ton on oversupply in the market and slower demand from China. The two commodities are Australia’s top two exports. Added to the ballooning trade deficit on Tuesday was revised employment data, which showed a weaker labour market. New figures showed that 9,000 jobs were lost in August, compared to previous estimated rise of 32,100. But, the number of jobs lost in September was revised to 23,700, less than an initial estimate of 29,700. The unemployment rate, however, was up to 6.2% in September from a previous estimate of 6.1%. Mr Oliver of AMP said the economic data showed a mixed picture of the economy, which resulted in the Reserve Bank of Australia (RBA) leaving interest rates at a record low of 2.5% in its policy meeting today. “Revised jobs data up to September now shows a slightly weaker jobs market over the last two months than previously reported with unemployment now drifting up,” he said.

Read more …

Y’all sing along now: ‘This is America, can’t you see, little pink houses for you and me.’

• Rich Guys Running for Office Struggle With Voters in Land of Frozen Wages (Bloomberg)

Two millionaires vying for governor in Florida are bickering over who’s had the more cushy life. “You grew up with plenty of money, Charlie,” Florida Republican Governor Rick Scott said to Charlie Crist, the Democrat, a line he would repeat five times during a recent hour-long debate. But it’s Scott who flies around in a private jet and is “worth about $100 or $200 million,” countered Crist, arguing that such wealth has made Scott “out of touch” with Florida. Five years into an economic recovery that has sent stocks and corporate profits soaring while weekly wages stagnate, millionaire candidates are fending off attacks on their bank accounts and business records in races from Connecticut to Georgia to Kentucky. “We shouldn’t be too surprised that politicians are coming under fire for their wealth,” said Nicholas Carnes, a public policy professor at Duke University in Durham, North Carolina, who studies the occupations and earnings of elected officials.

“We’re still recovering from the effects of the recession. There are still a lot of people facing hard economic times.” Wealth hasn’t been much of an impediment to U.S. electoral success in the past. Former Presidents Franklin Roosevelt, John F. Kennedy, George W. Bush and his father, George H.W. Bush are among the millionaire office-holders from both parties. In recent years, a strain of economic populism that also has a long history in U.S. politics has seen a revival in the wake of the 18-month recession that ended in June 2009. In part that’s because it accelerated a trend of rising income inequality in the country: Average income for the top 5% of households grew 38% from 1989 to 2013, compared with an increase of less than 10% for all others, according to the Federal Reserve. The median usual pay for Americans employed full-time was $790 per week in the third quarter, about a dollar less per week than just before the start of the recession, Labor Department figures show.

Read more …