Wyland Stanley “J.A. Herzog Pontiac, 17th & Valencia Sts., San Francisco.” 1936
All these financne guys don’t think she’ll do it without letting them know well in advance. But that would defeat the very purpose.
• Yellen Removes Another Obstacle To An Eventual Rate Hike (MarketWatch)
Federal Reserve Chairwoman Janet Yellen on Tuesday took another step closer to the first rate hike since 2006. In testimony to the Senate, Yellen signaled to financial markets the Fed would soon drop the word “patient” from its forward guidance. She softened the blow with several dovish comments that suggest no hurry about actually moving. Markets had expected that when the Fed dropped “patient” from its policy statement that it would mean the a rate hike would follow in the next couple of meetings. That interpretation came from signals Yellen had sent in December. Now, however, Yellen stressed that the Fed wasn’t on automatic pilot and only wanted the flexibility to move “on a meeting-by-meeting basis.”
Several analysts said a June rate hike remained on the table if the Fed decides to drop the word “patient” from its policy statement on March 17-18. Several Fed officials have said they want to drop “patient” from the Fed’s next policy meeting scheduled in mid-March. Minutes of the January meeting released last week showed Fed officials were concerned with how the market might react if “patient” was dropped. Tom Simons, an economist at Jefferies in New York, said Yellen had effectively neutered the word so it no longer even matters whether the word stays or goes in the Fed’s next policy statement. “Now ‘patient’ doesn’t mean a whole lot,” Simons said.
No end to insanity.
• US Government’s ‘New Rule’ Allows Banks To Completely Make Sh#t Up (Simon Black)
Banks still use accounting tricks to hide their true condition. Bloomberg showcased one such technique last year, exposing the way that many US banks are rebooking their assets from “available for sale (AFS)” to the “held-to-maturity (HTM)” designation. This is a very subtle move that means nothing to most people. But to banks, it’s a highly effective way of concealing losses they’ve suffered in their investment portfolios. Banks ordinarily buy bonds and other securities with the purpose of generating a return on that money until they have to, you know, give it back to their depositors. That’s why they’re called “available for sale,” because the bank has to sell these assets to pay their depositors back. But here’s the problem– many of these investments have either lost money, or they soon will be. And banks don’t want to disclose those losses.
So instead, they simply redesignate assets as HTM. It’s like saying “I don’t care that these bonds aren’t worth as much money as when I bought them because I intend to hold them forever.” Thing is, this simply isn’t true. Banks don’t have the luxury of holding some government bond for the next 30-years. This is money they might have to repay their customers tomorrow, which makes the entire charade intellectually dishonest. That doesn’t stop them. JP Morgan alone boosted its HTM mortgage bonds from less than $10 million to nearly $17 billion (1700x higher) in just one year. This is a huge shift. Nearly every big bank is doing this, and is doing it deliberately. This is no accident. And there’s only one reason to do it—to use accounting minutia to conceal losses. But the accounting tricks don’t stop there. And in many cases they’re fueled by the government.
One recent example is how federal regulators created a new ‘rule’ which allows banks to consciously reduce the risk-weighting they assigns their assets. The Federal Financial Institution Examination Council recently told banks that, “if a particular asset . . . has features that could place it in more than one risk category, it is assigned to the category that has the lowest risk weight.” This gives banks extraordinary latitude to underreport the risk levels of their investments. Bankers can now arbitrarily decide that a risky asset ‘has features’ of a lower risk asset, and thus they can completely misrepresent their investments. Bottom line, it’s becoming extremely difficult to have confidence in western banks’ financial health. They employ every trick in the book to overstate their capital ratios and understate their risk levels. This, backed by a central bank that is borderline insolvent and a federal government that is entirely insolvent.
All the right words.
• Greek Finance Chief: We Want To Regain EU’s Trust (CNBC)
Greece’s new government wants to re-establish trust with the rest of Europe, the country’s finance minister told CNBC, as Athens obtained a four-month extension of its bailout program. “The reason why we have this four-month period is to re-establish bonds of trust between us and our European partners as well as the IMF in order to build a new contract between us and our partners so as to put an end to this debt inflationary spiral,” Yanis Varoufakis said in an interview in Athens. On Tuesday, euro zone finance ministers accepted a list of Greek reform proposals, but warned that the reforms must be expanded in detail before new bailout funding would be released. IMF managing director Christine Lagarde called the proposals “sufficiently comprehensive to be a valid starting point” but said they lacked “clear assurances.”
Varoufakis said implementing new legislation concerning corruption and tax evasion is his top priority. As to whether European officials will approve each and every measure passed in parliament, he said “there is going to be a great deal of toing and froing between us and the institutions and our partners.” The trained economist was also critical of the tense negotiation process with euro zone finance ministers, saying they were dominated by “legalisms.” “You know what I think the main problem is, European finance ministerial meetings are seldom about finance, they’re more about process and rules…and I’m not good at that. I think that when we’re talking about macroeconomics, when we’re talking about Greece’s recovery, I don’t think we have the moral right to talk as if this is applying rules.”
Leftist political party Syrzia’s principal task of reducing Greece’s $366 billion debt has been flatly rejected. Several Greeks, noticeably senior politician Manolis Glezos, claim the party has bent too much to European creditors, making it no different from the previous administration. But Varoufakis rejected the notion that Syrzia has been unfaithful to Greeks: “We got elected to renegotiate Greece’s deal with our partners. What is a negotiation; it’s an attempt to find a compromise. The fact that we compromised is not a U-turn. A U-turn would have been to have led this negotiation to an impasse, and we didn’t do that because we’re interested in a mutually beneficial agreement.”
Click the link to see all the specific proposals for Syriza to comply with EU demands, while keeping its promises to voters. It will undergo a thousand changes, but at least everyone can see now what has been put on the table.
• Greek Finance Minister’s Full Letter To The Eurogroup (Kathimerini)
Dear President of the Eurogroup: In the Eurogroup of 20 February 2015 the Greek government was invited to present to the institutions, by Monday 23rd February 2015, a first comprehensive list of reform measures it is envisaging, to be further specified and agreed by the end of April 2015. In addition to codifying its reform agenda, in accordance with PM Tsipras’ programmatic statement to Greece’s Parliament, the Greek government also committed to working in close agreement with European partners and institutions, as well as with the International Monetary Fund, and take actions that strengthen fiscal sustainability, guarantee financial stability and promote economic recovery. The first comprehensive list of reform measures follows below, as envisaged by the Greek government. It is our intention to implement them while drawing upon available technical assistance and financing from the European Structural and Investment Funds.
Truly Yanis Varoufakis, Minister of Finance, Hellenic Republic=
No broad vision at the Guardian.
• Greece Has Lost The Gamble But Can Still Come Up Trumps (Guardian)
Tsipras and finance minister Yanis Varoufakis have been criticised for sending out mixed messages, referencing Nazi Germany, longingly gazing towards Russia, and even their untucked shirts. But Greece’s liquidity weaknesses were clear long before Syriza won the elections, and were exploited to the fullest by its lenders. The country’s fragility lies in the fact that it cannot fund itself and is shut out of international bond markets. Between this and the absence of a credible plan to exit the euro, even for use as a negotiating tool, Tsipras and Varoufakis were left with very few options. Whether they blundered into a deal or secured it with clever cajoling is a trivial matter at the moment.
Athens’ diplomatic indiscretions and a helter-skelter approach to negotiations have been matched by stubbornness and contempt in other European capitals. In this environment, everyone can shirk their responsibilities. Greek leaders can substitute progressive policymaking with populist bluster, while their European counterparts can continue to peddle the myth that Greeks have received European solidarity but given nothing in return. If all sides withdraw to these positions over the coming months the Greek people, who have experienced the worst economic downturn since the 1930s and the sharpest fiscal adjustment western Europe has ever seen, will pay an even heavier price than they have over the past five years. There is a great historical responsibility on all those involved to ensure that punishment on one side and retribution on the other are not the main policy drivers over the months to come.
There remains a small window of opportunity in which Syriza can change the narrative. One of the most important concessions it gained in Brussels was to be the main author of its own reform programme – previous governments were merely handed a checklist of changes from its lenders. Of course, the creditor nations will still push for some unpopular measures. But Tsipras and Varoufakis will have a unique chance to show if they are truly committed to tackling Greece’s chronic problems brought about by its decaying institutions, including the public administration and judicial system. These changes could have broad appeal among Greeks, and may also help alter the sour mood that has emerged between Greece and the eurozone over the past few weeks.
Worse for the others than it is for China.
• How Addiction To Debt Came Even To China (Martin Wolf)
Balance sheets matter. This is the biggest lesson of the financial crises that have rolled across the world economy. Changes in balance sheets shape the performance of economies, as credit moves in self-fulfilling cycles of optimism and pessimism. The world economy has become credit addicted. China could well be the next victim. If we think about balance sheets in the world economy of today, four questions arise. First, what determines vulnerability? Second, where are vulnerabilities now appearing? Third, how are countries coping with the legacy of old debt crises? Finally, can the world economy cope with the new vulnerabilities? Start with the sources of vulnerability. In economies with liberalized financial sectors, the driver towards disaster is far more often private than public imprudence.
Rising property prices and expanded mortgage lending drive many credit booms. A deterioration in the public sector’s balance sheets usually then follows crises. Failure to recognize this link between private excess and public borrowing is wilful blindness. In an update of work on debt and deleveraging, McKinsey notes that between 2000 and 2007, household debt rose as a proportion of income by one-third or more in the US, the UK, Spain, Ireland and Portugal. All of these countries subsequently experienced financial crises. Indeed, huge increases in private sector credit preceded many other crises: Chile in 1982 was an important example of this connection. Ruchir Sharma of Morgan Stanley argues that the 30 most explosive credit booms all led to a slowdown, often a crisis.
A rapid change in the ratio of credit to gross domestic product is more important than its level. That is partly because some societies are able to manage more debt than others; it is partly because a sudden burst in lending is likely to be associated with a sudden collapse in lending standards. Thus, in seeking new vulnerabilities, we need to look for economies that have had sharp rises in private debt. China leads the pack, with a rise of 70 percentage points in the ratio of corporate and household debt to GDP between 2007 and 2014 . If we add financial sector debt, the rise in gross private indebtedness is 111 percentage points. With government debt included, it is 124 percentage points.
China’s huge credit boom has several disquieting features. Much of the rise in debt is concentrated in the property sector; “shadow banking” — that is lending outside the balance sheets of the formal financial institutions — accounts for 30% of outstanding debt, according to McKinsey; much of the borrowing has been put on off-balance-sheet vehicles of local governments; and, above all, the surge in debt was not linked to a matching rise in trend growth, but rather to the opposite. This does not mean China is likely to experience an unmanageable financial crisis. On the contrary, the Chinese government has all the tools it needs to contain a crisis. It does mean, however, that an engine of growth in demand is about to be switched off. As the economy slows, many investment plans will have to be reconsidered. That may start in the property sector. But it will not end there. In an economy in which investment is close to 50% of GDP, the downturn in demand (and so output) might be far more severe than expected.
More bigger bubble.
• China Readies Measures to Counter Housing Market Slump (Bloomberg)
China is preparing measures to counter a housing market slump and will roll them out if the economy needs support, people with knowledge of the matter said. The government could reduce down-payment requirements for second-home purchases, the people said, declining to be identified as the information isn’t public. Another possible step would be to let homeowners sell properties without paying sales tax after two years, down from five years. China’s new-home prices posted a record year-on-year decline in January, according to Bloomberg Intelligence analysis of government data tracking 70 cities.
Implementation of the new easing policies will depend on whether an economic downturn continues or worsens, the people said. An interest-rate cut in November and the removal of some curbs have failed to revive the property industry. In September, the central bank allowed lower down payments and mortgage rates for some people applying for loans for second homes. As a result of past efforts to curb property speculation and rein in price gains, minimum down payments for second homes are now at least 60%.
On course for dying British boys and girls.
• Britain To Send Military Advisers To Ukraine, Announces Cameron (Guardian)
Britain was pulled closer towards a renewed cold war with Russia when David Cameron announced UK military trainers are to be deployed to help Ukraine forces stave off further Russian backed incursions into sovereign Ukraine territory. The decision – announced on Tuesday but under consideration by the UK national security council since before Christmas – represents the first deployment of British troops to the country since the near civil war in eastern Ukraine began more than a year ago. Downing Street said the deployment was not just a practical bilateral response to a request for support, but a signal to the Russians that Britain will not countenance further large scale annexations of towns in Ukraine.
The prime minister said Britain would be “the strongest pole in the tent”, and argued for tougher sanctions against Moscow if Russian-backed militias in eastern Ukraine failed to observe the provisions of a ceasefire agreement reached this month with the Ukrainian president, Petro Poroshenko. Downing Street said some personnel would be leaving this week as part of the training mission. Initially 30 trainers will be despatched to Kiev with 25 providing advice on medical training, logistics, intelligence analysis and infantry training. A bigger programme of infantry training is expected to follow soon after taking the total number of trainers to 75. They will not be sent to the conflict zone in eastern Ukraine. Personnel involved in the training elements could spend one or two months in the country, with a command and control deployment lasting up to six months. [..]
He said there was no doubt about Russian support for the rebels. “What we are seeing is Russian-backed aggression, often these are Russian troops, they are Russian tanks, they are Russian Grad missiles. You can’t buy these things on eBay, they are coming from Russia, people shouldn’t be in any doubt about that. “We have got the intelligence, we have got the pictures and the world knows that. Sometimes people don’t want to see that but that is the fact.” He added: “If there was major further incursion by Russian-backed forces and effectively Russian forces into Ukraine, we should be clear about what that is. That is trying to dismember a democracy, a member of the United Nations, a sovereign state on the continent of Europe, and it’s not acceptable.”
The level of dumb-f#cked-ness is deafening.
• UK Military Training In Ukraine: Symbolic Move That Risks Russian Ire (Guardian)
Britain’s decision to dip its toe into the Ukraine crisis is hardly likely to have a decisive impact on the outgunned and struggling Ukrainian army, but it serves the symbolic purpose of taking a stake in the country’s defence. The 75 British trainers bound for Ukraine in the coming days will provide instruction in command procedures, tactical intelligence, battlefield first aidand logistics, and assess the national army’s infantry training needs. The overall aim, said UK defence sources, was to “improve the survivability” of Ukrainian troops who have been pummelled by heavy artillery, reportedly from weapons such as self-propelled howitzers supplied by Russia in support of the separatists, some of which appear to have been being fired from Russian soil.
The British trainers will be deployed well away from the frontlines, in western Ukraine, to eliminate the risk of British and Russian soldiers inflicting casualties on each other. But it is likely the move will be seized on in Moscow as proof of President Vladimir Putin’s claims that the Russian-backed separatists are fighting a Nato ‘foreign legion’. American advisers will be arriving in spring to train four companies of the Ukrainian National Guard at the Yavoriv training area near the Polish border. The British effort appears to be coordinated with that mission, and by getting its soldiers on the ground first, David Cameron’s coalition government will seek to counter recent criticism that it has been marginalised in the international diplomacy aimed at stopping the war.
It was a Franco-German initiative that led to the latest ceasefire agreement in Minsk between Putin, Angela Merkel and François Hollande earlier this month. That truce shows little sign of taking hold, and sanctions so far do not seem to have dissuaded Putin from intervention in eastern Ukraine, leaving western capitals struggling to come up with other methods of demonstrating their resolve to resist Russian encroachment. For now, training is seen as being of more long-term value than supplying arms to Ukrainian troops, and less directly confrontational with Moscow. “I think it’s obvious that the prime minister was seriously stung by the domestic political response to his absence from the Minsk diplomacy, and therefore feels compelled to take a strong position,” said Shashank Joshi, senior research fellow at the Royal United Services Institute. “I also think it reflects a not-unreasonable judgment that the Minsk agreement is breaking down, and that further coercive diplomacy is inevitable.
Debt prison. The entire nation.
• IMF Package for Ukraine: Some Pesky Macros (Constantin Gurdgiev)
Ukraine package of funding from the IMF and other lenders remains still largely unspecified, but it is worth recapping what we do know and what we don’t.Total package is USD40 billion. Of which, USD17.5 billion will come from the IMF and USD22.5 billion will come from the EU. The US seemed to have avoided being drawn into the financial singularity they helped (directly or not) to create. We have no idea as to the distribution of the USD22.5 billion across the individual EU states, but it is pretty safe to assume that countries like Greece won’t be too keen contributing. Cyprus probably as well. Ireland, Portugal, Spain, Italy – all struggling with debts of their own also need this new ‘commitment’ like a hole in the head.
Belgium might cheerfully pony up (with distinctly Belgian cheer that is genuinely overwhelming to those in Belgium). But what about the countries like the Baltics and those of the Southern EU? Does Bulgaria have spare hundreds of million floating around? Hungary clearly can’t expect much of good will from Kiev, given its tango with Moscow, so it is not exactly likely to cheer on the funding plans… Who will? Austria and Germany and France, though France is never too keen on parting with cash, unless it gets more cash in return through some other doors. In Poland, farmers are protesting about EUR100 million that the country lent to Ukraine. Wait till they get the bill for their share of the USD22.5 billion coming due.
Recall that in April 2014, IMF has already provided USD17 billion to Ukraine and has paid up USD4.5 billion to-date. In addition, Ukraine received USD2 billion in credit guarantees (not even funds) from the US, EUR1.8 billion in funding from the EU and another EUR1.6 billion in pre-April loans from the same source. Germany sent bilateral EUR500 million and Poland sent EUR100 million, with Japan lending USD300 million. Here’s a kicker. With all this ‘help’ Ukrainian debt/GDP ratio is racing beyond sustainability bounds. Under pre-February ‘deal’ scenario, IMF expected Ukrainian debt to peak at USD109 billion in 2017. Now, with the new ‘deal’ we are looking at debt (assuming no write down in a major restructuring) reaching for USD149 billion through 2018 and continuing to head North from there.
Maybe the Russians will just do it and have the charade over with.
• Kiev Cash-For-Gas Fail Could Cost EU Its Supply In 2 Days – Gazprom (RT)
Russia will completely cut Ukraine off gas supplies in two days if Kiev fails to pay for deliveries, which will create transit risks for Europe, Gazprom has said. Ukraine has not paid for March deliveries and is extracting all it can from the current paid supply, seriously risking an early termination of the advance settlement and a supply cutoff, Gazprom’s CEO Alexey Miller told journalists. The prepaid gas volumes now stand at 219 million cubic meters. “It takes about two days to get payment from Naftogaz deposited to a Gazprom account. That’s why a delivery to Ukraine of 114 million cubic meters will lead to a complete termination of Russian gas supplies as early as in two days, which creates serious risks for the transit to Europe,” Miller said.
Earlier this month, Russian Energy Minister Aleksandr Novak estimated Ukraine’s debt to Russian energy giant Gazprom at $2.3 billion. In the end of 2014, Kiev’s massive gas debt that stood above $5 billion, forced Moscow to suspend gas deliveries to Ukraine for nearly six months. On December 9, Russia resumed its supplies under the so-called winter package deal, which expires on April 1, 2015. [..] On Monday, Ukrainian state energy company Naftogaz accused Gazprom of failing to deliver gas that Kiev had paid for in advance. Naftogaz says Russia has broken an agreement to deliver 114 million of cubic meters of natural gas to Ukraine by delivering only 47 million cubic meters.
During a meeting with President Vladimir Putin on February 20, Russian Prime Minister Dmitry Medvedev expressed concern about an increase in daily applications by Ukraine for the supply of gas, TASS reports. He noted that “Ukraine’s consumers have requested a larger supply; the volume has increased by 2.5 times. This means that the prepaid volumes left are enough for no more than two to three days.”
Kiev is not capable of saying anything true.
• East Ukraine Artillery Withdrawal In Focus – As Poroshenko Buys UAE Weapons (RT)
While the foreign ministers of France, Germany, Russia and Ukraine were meeting in Paris to talk about the Eastern Ukraine peace settlement, it was revealed that the Ukrainian president has struck a deal on arms supplies from the UAE. The four ministers agreed on the need for the ceasefire to be respected, as well as on the need to extend the OSCE mission in Eastern Ukraine, reinforcing it with more funding, personnel and equipment. It’s important for Kiev troops and the rebels to start withdrawing heavy weapons right now, without waiting for the time “when not a single shot is fired,” Russian Foreign Minister Sergey Lavrov said after the meeting.
He added that his German and French counterparts thought it a positive development that the Donetsk and the Lugansk rebels had started to pull their artillery back. “The situation has significantly improved, that was acknowledged by my partners,” Lavrov said. “However, sporadic violations are being registered by the OSCE observers.” The withdrawal of heavy weaponry by Kiev troops and the rebels is part of the ceasefire deal struck in Minsk earlier in February. The Donetsk militia has announced it is complying. “Today at 9 am our units continued the pullback of heavy weaponry from the separation line,” said Eduard Basurin, spokesman for the self-proclaimed Donetsk People’s Republic, Tass news agency reported. [..]
Ukrainian President Petro Poroshenko has meanwhile reached an agreement on weapons supplies from the United Arab Emirates. That’s according to a Facebook post by advisor to Ukrainian Interior Minister, Anton Gerashchenko. The deal was struck with the Crown Prince of Abu Dhabi and deputy supreme commander of the UAE Armed Forces, Mohammed bin Zayed bin Sultan Al Nahyan. “It’s worth emphasizing that unlike Europeans and Americans, the Arabs aren’t afraid of Putin’s threats of a third world war starting in case of arms and ammunition supplies to Ukraine,” Gerashchenko wrote. He also said he believed the UAE blamed Russia for the drop in oil prices. “So, this is going to be their little revenge,” the adviser said.
Gerashchenko said the types of weapons to be delivered and the volume of the supplies could not be disclosed. The UAE supplying weapons to Ukraine could be part of a US covert operation, former US diplomat James Jatras told RT. “This discussion in Washington about supplying weapons has been going on for some time. Usually that indicates that some kind of a covert program is already in operation and that we already are supplying some weapons directly,” he said. Jatras added that it is hard to believe that UAE would sell these weapons to Ukraine “without a green light from Washington.”
Nobody expects anything other than a stink on Wall Street anymore. Pecunia DOES olet.
• Lure of Wall Street Cash Said to Skew Credit Ratings (Bloomberg)
Michelle Choi, an analyst for Moody’s Investors Service, gave a credit rating to bonds issued by a New Jersey town in September. In October, she switched sides and started working for the town’s underwriter, Morgan Stanley. Choi is one of hundreds of employees at Moody’s and other credit-rating companies, including Standard & Poor’s and Fitch Ratings, who’ve gone to work for Wall Street since the 2008 financial crisis exposed the conflicts at the heart of the ratings business. While there’s no evidence that Choi’s job-hunting influenced the grade she gave Evesham Township’s debt, the rising number of job changes in the industry raises a question: can credit analysts be impartial about grading bonds while looking for employment at banks that underwrite them? The ratings companies say the answer is yes.
An academic study by longtime industry observers suggests otherwise. “The fact that analysts can get employed by the issuers is a problem and the SEC should be doing something about it,” said Marcus Stanley, policy director at Americans for Financial Reform, a Washington-based coalition of 200 advocacy groups. Ratings analysts can work for issuers immediately because there’s no rule about a waiting period like there is in other industries. Accountants, in some cases, must wait one year before working for a company they audited. Choi’s new job at Morgan Stanley is “an internal risk function and is not part of the underwriting group,” said Mary Claire Delaney, a Morgan Stanley spokeswoman. Since 2008, more than 300 analysts have left the major ratings companies for jobs at banks and other debt issuers, according to U.S. SEC data.
Last year alone, more than 80 people made the switch, the most since the SEC began compiling such data in 2006. That’s out of a total of about 4,000 analysts employed by the ratings firms, according to SEC data. The migration shows that the credit graders and Wall Street banks are as close as ever. Their symbiotic relationship first came to widespread attention in the aftermath of the 2008 credit bust, when Moody’s and S&P were accused of inflating the rankings of mortgage bonds in order to win and keep business from underwriters. The U.S. Justice Department has been investigating the role the two played in the fiasco, and this month S&P agreed to pay $1.5 billion, without admitting guilt, to settle cases with state and federal authorities. The investigation into Moody’s continues.
More threats.
• Militants, Migrants And The Med: Europe’s Libya Problem (BBC)
Islamic State militants in Libya have vowed to attack Europe. Meanwhile, boatloads of migrants flee the collapsing state for European shores. Could the Mediterranean migration mask an influx of militants? Italy and Egypt have warned that Islamic State (IS) militants could hide among thousands of migrants rescued by European patrols. Both countries are troubled by the situation in Libya and have an interest in influencing it. However, neither has given any evidence to support its warnings. The migrants are mostly from Syria and sub-Saharan Africa. The idea that they pose a threat evokes a vicious logic at odds with humanitarian imperatives: refugees bring conflict, as conflict breeds refugees. What threat do the migrant boats pose? And what – if anything – can be done about it? Last week, Libyan militants allied to IS released a video that appeared to show the beheading of 21 Egyptian prisoners. The choreography echoed videos shot in Iraq and Syria.
However, instead of desert, the prisoners were positioned on a beach, against the grey Mediterranean Sea. Addressing the camera, a masked man promised attacks in Europe. “And now we are south of Rome, on the land of Islam, Libya,” he said, “sending you another message.” The video is thought to have been filmed near Sirte, a Libyan coastal town where Islamic State has gained a foothold. A few miles off that coast last week, an Italian operation rescued some 2,000 migrants from stormy waters. As one of the empty vessels that had carried the migrants was being towed away, a speedboat swept off the Libyan shore. The men aboard it were armed with assault rifles and, according to Italian officials, they wanted their boat back. The confrontation was the latest sign that some of the armed groups thriving in the Libyan chaos are also involved in human-trafficking.
Kudos to the man. A giant.
• Lester Brown: ‘Vast Dust Bowls Threaten Tens Of Millions With Hunger’ (Guardian)
Vast tracts of Africa and of China are turning into dust bowls on a scale that dwarves the one that devastated the US in the 1930s, one of the world’s pre-eminent environmental thinkers has warned. Over 50 years, the writer Lester Brown has gained a reputation for anticipating global trends. Now as Brown, 80, enters retirement, he fears the world may be on the verge of a greater hunger than he has ever seen in his professional lifetime. For the first time, he said tens of millions of poor people in countries like Nigeria, India, Pakistan and Peru could afford to eat only five days a week. Most of the world was exhausting its ground water because of overpumping. Yields were flatlining in Japan. And in northern and western China, and the Sahel region of Africa – an area already wracked by insurgency and conflict – people were running out of land to grow food.
Millions of acres of were turning into wasteland because of over-farming and over-grazing. “We are pushing against the limits of land that can be ploughed and the land available for grazing and there are two areas of the world in which we are serious trouble now,” Brown said. “One is the Sahel region of Africa, from Senegal to Somalia. There is a huge dust bowl forming now that is actually stretching right across the continent and that dust bowl is removing a lot of top soil, so eventually they will be in serious trouble,” he said. In areas of China, villagers were abandoning the countryside because the land was too depleted to raise flocks or grow food. “At some point there will be a reckoning,” he said.
“They will be abandoning so much land, both for farming and for grazing, that it will restrict their efforts to expand food production.” The result would be far worse than anything America saw in the 1930s. “Our dust bowl was serious, but it was confined and within a matter of years we had it under control … these two areas don’t have that capacity.” Brown has previously used his broad vision and his fluency with data to identify and explain major developments in the global food system and environment – as a junior analyst for the US Department of Agriculture, founder of the first US environmental thinktank, the Worldwatch Institute, and now as founder and president at the Earth Policy Institute. This latest warning – that demand for food is fast outstripping supply – may be one of his last as an institutional insider.
Great piece by Albert the Über-Hippie. I finally get to post something by him.
• The Amherst Cauldron (Albert Bates at ClubOrlov)
Wall Street Bankers watch warily from their penthouse eyries the power that populist movements like Occupy is gaining, especially in Albany but also in the New England States. Determined to thwart them, lest a revolt gather momentum against their interests, they decide to funnel millions of dollars to right wing rabble, to cause massive trouble… and to then wrest order out of the ensuing chaos (this part of their plan was always a bit sketchy, but they couldn’t think of anything better). Unfortunately, the only psychologically normal right-wing rabble they can find wouldn’t pass the physical due to weight issues and is permanently glued to giant plasma TV screens with their mouths stuffed full of cheese doodles, and so they have to go with the rejects: skinheads, neo-Nazis, gun freaks and prepper wing-nuts.
A State Department official is tasked with feeding and herding these rejects together. After a sudden and severe downturn in the stock market, the economy goes into free-fall and events spin out of control. Anarchist rallies take place throughout New England. A prominent Goldman Sachs broker’s Connecticut estate is overrun and videos posted to YouTube show pearled chandeliers and gold faucets. Throughout New England, grassroots efforts drive legislators to enact sweeping reforms. A new “uniform code” of banking reforms, designed to break finance cartels and prosecute fraud, takes hold among the states, snatching the initiative away from the bureaucratic heel-draggers at the federal level.
Then comes the great day that changes everything. It starts as a small protest march in Albany, to which the State Police predictably overreact. But then a group of snipers, of unknown provenance, kill a hundred or so people, both protesters and police among them. After that incident, a group of rioters, some secretly in the pay of Wall Street and coordinated by the US State Department, seize the Capitol in Albany. Much to everyone’s surprise, the New York National Guard defects to the rebel side. Despite impassioned pleas from the Canadian Premier, Washington does not send in troops to restore order. In the anarchy that is Albany, a slate of fresh faces wins a statewide referendum and forms a new state government.
It is quickly endorsed by other parts of the emergent “New England Federation” of states, all of which want to push back against the Wall Street bankers and their corruption by enlarging the scope of the uniform code. But the federally-funded wing-nuts also move quickly to consolidate their power, pushing through a wide-reaching agenda of oppressive laws. Some states in New England try to distance themselves, while others serve as apologists. Maine surprises everyone when it decides that it wants nothing to do with any of this and votes to secede and join Canada. Washington vows to take Maine back but it is trying to walk a narrow line with Canada, whose fossil fuel resources it views as indispensable.
David is right of course, but not everyone can afford his lack of patience.
• Kick-The-Can Has Morphed Into A Blatant Farce (David Stockman)
Kick-the-can has morphed into a blatant farce. Everywhere in the world central banks and financial officialdom are engaging in desperate, juvenile maneuvers to buy time – amounting to hardly a few weeks at a go. Never before has the debt-saturated, speculation-ridden global casino rested upon such a precarious foundation. This week, for instance, Janet Yellen will again waste two days of Congressional hearings in forked-tongue equivocations about an absolutely stupid issue. Namely, the exact date when money market interest rates will be permitted to blip upward from the zero bound by even 25 basis points. But this “lift-off” drama is flat-out surreal.
How could it possibly matter whether ZIRP will have been in place by 80 months or 83 months from its inception point way back in December 2008? There is not a single household or business on main street America which will change its behavior in the slightest during the next year regardless of whether the federal funds rate is 5 bps, 30 bps or 130 bps. The whole Kabuki dance in the Eccles Building is about hand signals to Wall Street carry traders; its a reflection of the desperate fear of our monetary politburo that having inflated for the third time this century the mother of all financial bubbles, they must now keep it going literally one meeting at a time—lest it splatter again and destroy the illusion that an egregious spree of money printing has saved the main street economy.
Likewise, it now transpires that the bruising political war of words between the Germans and the “radical” Greek government has been suspended for another few weeks. And the reason is a pathetic fear that unites the parties despite their irreconcilable substantive policy differences. Namely, that the markets will crater upon even a hint that a real solution is on the table, and that the way to keep the beast at bay is to cover their eyes, kick-the-can and hope something turns up to avert the next crisis a few weeks down the road. Still, this is getting beyond juvenile. If there were any adults in the room they would focus on quickly shaping a workable Greek default and exist—-not on perpetuating the lie that Greece can ever recover from its debt servitude to the EU superstate and IMF.
“We will remove from …”
• “Remove From Governments The Ability To Interfere With [Our] Rights” (Snowden)
If people lose their willingness to recognize that there are times in our history when legality becomes distinct from morality, we aren’t just ceding control of our rights to government, but our agency in determing our futures. How does this relate to politics? Well, I suspect that governments today are more concerned with the loss of their ability to control and regulate the behavior of their citizens than they are with their citizens’ discontent. How do we make that work for us? We can devise means, through the application and sophistication of science, to remind governments that if they will not be responsible stewards of our rights, we the people will implement systems that provide for a means of not just enforcing our rights, but removing from governments the ability to interfere with those rights.
You can see the beginnings of this dynamic today in the statements of government officials complaining about the adoption of encryption by major technology providers. The idea here isn’t to fling ourselves into anarchy and do away with government, but to remind the government that there must always be a balance of power between the governing and the governed, and that as the progress of science increasingly empowers communities and individuals, there will be more and more areas of our lives where—if government insists on behaving poorly and with a callous disregard for the citizen—we can find ways to reduce or remove their powers on a new—and permanent—basis. Our rights are not granted by governments. They are inherent to our nature. But it’s entirely the opposite for governments: their privileges are precisely equal to only those which we suffer them to enjoy.
We haven’t had to think about that much in the last few decades because quality of life has been increasing across almost all measures in a significant way, and that has led to a comfortable complacency. But here and there throughout history, we’ll occasionally come across these periods where governments think more about what they “can” do rather than what they “should” do, and what is lawful will become increasingly distinct from what is moral. In such times, we’d do well to remember that at the end of the day, the law doesn’t defend us; we defend the law. And when it becomes contrary to our morals, we have both the right and the responsibility to rebalance it toward just ends.
Brilliant article by Ian Martin.
• London: A Set Of Improbable Sex Toys Poking Gormlessly Into The Air (Guardian)
I wonder what in 100 years from now it will be, London. The city that privatised itself to death. Abandoned to nature, maybe, the whole place a massive, feral version of that mimsy garden bridge over the Thames currently being planned by the giggling classes. Poor London, the ancient and forgotten metropolis, crumbling slowly into an enchanted urban forest. Imagine. In 2115, all the lab-conjured animals in Regent’s Park Jurassic Zoo are free to roam, reliving their evolution. A diplodocus there, grazing in the jungled Mall. Look, a stegosaurus asleep in the ruins of Buckingham Palace. High above the forest canopy, a lone archaeopteryx soars, where once hundreds of drones glided through YouTubed firework displays.
Perhaps eminent historians will study London in the early 21st century, see how its poorer inhabitants were driven out, observe how its built environment was slowly boiled to death by privatisation. And they will wonder why people tolerated this transfer of collective wealth from taxpayers to shareholders. And they will perhaps turn their attention to Eduardo Paolozzi’s fabled mosaics at Tottenham Court Road underground station. Back in 2015, a debate has bubbled briefly, after some of these lovely, publicly owned mosaic murals were quietly dismantled as part of the station’s thorough £400m Crossrail seeing-to. I say “debate”; it was really only that polarised quackbait thing we have now: Click If You Think The Mosaics Are Great, We Should Save What’s Left Of Them v Smash Them Up They’re Ugly, Anyway Who Cares It’s Just Patterns On A Wall.
Arguments about the aesthetics of Paolozzi’s mosaics missed the point, it seemed to me, which has less to do with the merit of the art itself and more to do with what, in the long run, it turned out the art was for. Paolozzi’s legacy had stood intact for three decades. Not just as 1,000 sq m of charming, optimistic art, but as 1,000 sq m of commercial retardant. You can’t paste an ad on to a wallful of public art. You can’t fix one of those irritating micromovies over it, telling a vacuous five-second story about investments or vitamins or hair. The Paolozzi mosaics went up as decorative art, just as privatisation was about to explode like a dirty bomb all over the public realm. What survives at Tottenham Court Road station is a brave, forlorn little seawall set against a stormtide of corporate advertising.