reality is only those delusions that we have in common...

Saturday, November 14, 2015

week ending Nov 14

Federal Reserve Admits It Has NO IDEA What It’s Doing - AP reports today: Federal Reserve Chair Janet Yellen is stressing the need to review the unconventional monetary policies that central banks around the world deployed in response to the 2008 global financial crisis.  She said Thursday that the post-crisis period offers policymakers an opportunity to assess the effectiveness of the tools and better understand the impact of new regulation. “Policymakers have to carefully weigh the advantages and disadvantages of alternative monetary implementation frameworks in the presence of new policy tools,” Yellen said in remarks at a two-day research conference sponsored by the Fed. Translation: We have no idea what’s going on, or whether or policies are helping or making things worse. Also today, St. Louis Fed Chairman James Bullard said (via Zero Hedge): The Fed “may need to alter some fundamental assumptions about how Fed policy works if U.S. stays in persistent state of low nominal rates, low inflation.”

Fed Watch: Onto The Next Question -- It would seem that a December rate hike is all but certain barring some dramatic deterioration in financial conditions. The October employment report should remove any residual concerns among FOMC members over the underlying pace of activity, clearing the way for the Fed to make good on the strongly worded October FOMC statement. Given the resilience of recent trends, it is tough to see that even a weak-ish November employment report would dissuade the Fed from hiking rates. Quite frankly, regardless of whether you think they should hike rates, if they don't hike rates, the divergence between what they say and what they do would become truly untenable from a communications perspective. Nonfarm payrolls jumped 271k in October, a relief after two weaker reports.  Notably, wage growth accelerated, giving fresh hope that it has broken out of its multiyear doldrums. The Fed will see this as evidence that their estimates of the natural rate of unemployment are more right than wrong:  With unemployment edging below the Fed's current estimate of the natural rate (note that we get updated forecasts in December) and wages showing signs of life, it seems that the Fed is positioned to move forward with a rate hike in December. This is especially if they want to make good on their promise to hike rates at a gradual pace.  Note that the first hike and pace of tightening were never really separate as the Fed would like you to believe. Via the Wall Street Journal, San Francisco Federal Reserve President John Williams makes clear the the pace was in fact dependent on the timing of the first hike. The earlier they start, the more gradual the subsequent pace. The question now arises, however, of what is "gradual"? The general consensus is the "gradual" means 25bp every other meeting. Via Reuters, St. Louis Federal Reserve President James Bullard says there is not fixed definition as of yet.

Fed's Evans: Looking forward to time when Fed can raise rates - Chicago Federal Reserve Bank President Charles Evans, one of the U.S. central bank's most dovish policymakers, said on Tuesday that he looks forward to the time when the economy is strong enough to handle a Fed rate hike. He also suggested the Fed needs to be careful not to raise rates if it will just have to lower them again shortly afterward, a theme he has hit time and again as he as argued against the rate hike that the Fed is currently considering. The Fed has kept rates near zero for nearly seven years since the 2007-09 financial crisis. "I think it's extraordinarily costly to contemplate a high probability that we're going to revisit the zero lower bound, after a period where we've gotten ourselves out of this, over the next 10 years," he said. Evans made the comments during a discussion of U.S. government debt at the University of Chicago's Booth School of Business, where some experts proposed that more coordination between the Fed and fiscal authorities could result in a stronger economy, especially when interest rates are pinned near zero and the Fed has little flexibility on policy actions.

Two Fed officials say rate-hike pace may not always be gradual -- Two Federal Reserve officials said Thursday that the U.S. central bank might not be able to stick to its pledge of gradual rate hikes once they start raising interest rates. In comments to reporters after speeches at the Cato Institute, Richmond Fed President Jeffrey Lacker said the Fed's pledge to move at a gradual pace was simply a forecast. St. Louis Fed President James Bullard said he expected the Fed would not hike rates as fast as they did in 1994 or between 2004 and 2006 but added the Fed would have to respond and hike at a faster pace if the economy showed marked improvement. Both Lacker and Bullard said that their "dots," or expected level of interest rates, are higher than the Fed's median forecast in the dot plot of 1% by the end of 2016.

Fed's Dudley and Evans --First, from the WSJ Economists Overwhelmingly Expect Fed to Raise Interest Rates in December About 92% of the business and academic economists polled by The Wall Street Journal in recent days said they expected the Fed to raise its benchmark federal-funds rate at its Dec. 15-16 policy meeting. Some 5% said the Fed would stay on hold until March and 3% predicted the Fed would keep rates at near-zero even longer.  From NY Fed President William Dudley sees the risks in liftoff as "balanced": The U.S. Economic Outlook and Monetary Policy I see the risks right now of moving too quickly versus moving too slowly as nearly balanced. The weight that one puts on each undoubtedly influences one’s views on when the time will be right to begin to normalize monetary policy and the appropriate short-term rate trajectory thereafter. Chicago Fed President Charles Evans argues for a later liftoff: A Cautious Approach to Monetary Policy Normalization I am far less confident about reaching our inflation goal within a reasonable time frame. Inflation has been too low for too long. Core PCE inflation — which strips out the volatile energy and food components and is a good indicator of underlying inflation trends — has averaged just 1.4 percent over the past seven years. Core PCE inflation over the past 12 months was just 1.3 percent. And inflation according to the total PCE Price Index — which does include food and energy prices — was just 0.2 percent over the past year. Overall, my view of appropriate policy is somewhat more accommodative than those held by the majority of my colleagues.

The Fed's Muddy Monetary Road - Monetary policy is always explained in metaphors. Some involve plumbing (“tightening the credit spigot”); some, sailing (“headwinds”); some, cars (“tapping the brakes”). And sometimes old metaphors don’t fit new circumstances.  Enter Andy Levin, a Dartmouth College economics professor and former adviser to Janet Yellen at the Federal Reserve. He offered a new and (as far as I can tell) original elaboration on the old automotive metaphor at an International Monetary Fund conference last week to explain why the Fed should move very cautiously now to raise interest rates.  If the Fed had “perfect foresight,” he said, then setting interest rates is like “driving a familiar car on a flat rural highway with well-maintained pavement, approaching a stop sign that is clearly visible at a considerable distance.”  The car in this story is the economy. The driver is the Fed, and the Fed knows exactly how the car will react when the brakes are tapped. The stop sign is the moment at which unemployment has fallen to the point where wages start to rise, and the Fed should have raised rates so that the economy (to invoke another metaphor) doesn’t overheat and produce unwelcome inflation.  The smart strategy in this case, then, is to “start applying the brakes well in advance and slow down gradually so that the car comes to a smooth stop.” But those aren’t the circumstances the Fed finds itself in today, Mr. Levin said.  Rather, the Fed is “driving an unfamiliar vehicle up a steep country road that has lots of curves and some muddy conditions, with a stop sign located at the top of the hill that is not yet visible.”  What, then, should the driver do? Don’t drive too fast, of course, but don’t drive too slowly either. “Be careful to preserve momentum and be mindful that the accelerator will be useless if the car gets stuck in the mud,” Mr. Levin advised.

Fed Gov Brainard: US Financial Tightening Already Happening  (MNI) - The U.S. central bank is considering scaling back some of the accommodative monetary policy put in place during the Great Recession, while other economies are looking to increase monetary stimulus. This divergence, Federal Reserve Board Governor Lael Brainard said Friday, has already led to tighter financial condition in the U.S.  "The feedback loop between market expectations of divergence between the United States and our major trade partners and financial tightening in the United States means that material restraint to U.S. conditions is already in place," Brainard, who as a governor votes each year on the policy-setting Federal Open Market Committee, did not directly weigh in on a potential increase in the fed fund rate or comment on the economic outlook. Instead she focused on the interconnectedness of the global economy and cross-border spillovers from unconventional monetary policy. The integration of the U.S. economy with the rest of the world means "a further weakening of foreign growth could pose downside risks to the U.S. outlook," she warned. "Under normal circumstances, policy in the United States could adjust to signs that spillovers from developments abroad were affecting activity in the United States."  But, she added, with U.S. policy rates in constrained by the zero lower bound, where they have been since December 2008, "the ability to offset spillovers from adverse developments in foreign economies with conventional policy is constrained, suggesting greater caution than normal."

Is US Monetary Policy Made in China? - Barry Eichengreen – For much of the year, investors have been fixated on when the Fed will achieve “liftoff” – that is, when it will raise interest rates by 25 basis points, or 0.25%, as a first step toward normalizing monetary conditions.   But, in seeking to gauge changes in US monetary conditions, investors have been looking in the wrong place. Since mid-August, when Chinese policymakers startled the markets by devaluing the renminbi by 2%, China’s official intervention in foreign-exchange markets has continued, in order to prevent the currency from falling further. The Chinese authorities have been selling foreign securities, mainly United States Treasury bonds, and buying up renminbi. This is the opposite of what China did when the renminbi was strong. Back then, China bought US Treasury bonds to keep the currency from rising and eroding the competitiveness of Chinese exporters. As a result, it accumulated an astounding $4 trillion of foreign reserves. And what was true of China was also true of other emerging-market countries receiving capital inflows. These countries’ foreign reserves, mainly held in US securities, topped $8 trillion at their peak last year. The effects of these purchases attracted considerable attention.  Ben Bernanke pointed to purchases of US debt by foreign central banks and governments as a reason why American interest rates were so low. Now this process has gone into reverse. Although no one outside official Chinese circles knows the exact magnitude of China’s foreign-exchange intervention, informed guesses suggest that it has been running at roughly $100 billion a month since mid-August.   Given that reserve managers prefer to avoid unbalancing their carefully composed portfolios, they probably have been selling Treasuries at a rate of roughly $60 billion a month. The effects are analogous – but opposite – to those of quantitative easing.

The Leviathan - Kunstler The Federal Reserve has morphed from being a faceless background institution of the most limited purpose to a claque of necromancers and astrologasters, led by one grand vizier, in full public view pretending to steer a gigantic economic vessel that has, in fact, lost its rudder and is drifting into a maelstrom. For more than a year, the fate of the nation has hung on whether the Fed might raise their benchmark interest rate one quarter of a percent. They talk about it incessantly, and therefore the mob of financial market observers has to chatter about it incessantly, and the chatter itself has appeared to obviate the need for any actual action on the matter. The Fed gets to influence markets without ever having to do anything. And mostly it has worked to produce the false narrative of an advanced economy that is working splendidly well to the advantage of the common good. This is all occurring against the background of a larger global network of economic relations that is quite clearly breaking apart. The rising tensions between the US, Russia, China, and the Euro Union grew out of monetary mischief “innovated” by our central bank, especially the shenanigans around debt monetization, which have created dangerous distortions in markets, trade, and perceptions of national interest. Nations are rattling sabers at one another and bluster is in the air. The world is bankrupt after thirty years of borrowing from the future to throw a party in the present, and the authorities can’t acknowledge that.

Questions for Monetary Policy -- James Bullard, president of the St. Louis Fed, says there are five questions for monetary policy: The five questions

  • What are the chances of a hard landing in China?
  • Have U.S. financial market stress indicators worsened substantially?
  • Has the U.S. labor market returned to normal?
  • What will the headline inflation rate be once the effects of the oil price shock dissipate?
  • Will the U.S. dollar continue to gain value against rival currencies?

I would add: Will wage gains translate into inflation (or something along those lines)?

What the Taylor Rule(s) Say(s) -- The St. Louis Fed has a handy webpage where it shows the implied Fed funds target rate given measures of the output and inflation gaps, and the natural real rate of interest. Here’s recent snapshot I downloaded for my classes. The description of the calculations are very transparently presented: Given a 2% PCE inflation target, the Fed funds rate as of 2015Q2 was just at the implied level.   The careful reader will observe that there are many “Taylor rules”, even from Professor Taylor himself. Besides debates over the proper measures of y, y*, and π (including present or future), and the values of the parameters, there is a crucial debate regarding r*, the real natural rate of interest. For expositional purposes, the St. Louis Fed website uses the 2.5% figure, which — if I were teaching in 2007 — would seem relatively defensible. But for policy purposes, a more nuanced position would seem reasonable. This is where the whole debate over the real natural rate, and more specifically the recent Laubach-Williams estimates come into play. Figure 2 displays the Laubach-Williams estimates as well as the default 2.5% rate used in the above figure.

Why Jeffrey Lacker Is Worried About Inflation -- Jeffrey Lacker, the president of the Federal Reserve Bank of Richmond, was the only member of the Fed’s policy-making committee who voted to raise interest rates in September, and again in October. Mr. Lacker has long expressed skepticism about the benefits of the Fed’s stimulus campaign, and he has been concerned that inflation will begin to rise more quickly as the economy gains strength. Mr. Lacker refers to his views as “old-fashioned,” emphasizing he sees little new in the current environment. He does not think that the relationship between employment and inflation has changed; that the Fed should consider other issues, like financial stability, in setting monetary policy; or that the economic health of other countries should play a larger role in the Fed’s deliberations. “A central bank’s ability to influence inflation and how it does so is essentially unchanged,” Mr. Lacker said Thursday in a speech at the Cato Institute. In an interview Wednesday night, Mr. Lacker also talked about being the only Fed president who has raised rates, why the gold standard was a bad idea and how to improve the Fed’s communications. The answers are lightly edited for clarity.

The Fate Of The December Rate Hike Is In Their Hands -- Following the "blockbuster" jobs report from Friday, bond yields soared across the curve as experts everywhere decided that this time it's different, that this is it: with soaring October jobs, not to mention the biggest annual jump in wages, the Fed was out of excuses. We would like to make three points. First, the October jobs reports was good, certainly at the headline level, but there is one more payrolls release from the BLS before the December 16 FOMC decision; its impact will be far greater on the FOMC's decision especially if it now shows a sharp decline in jobs (before Friday, five of the past six payrolls reports had missed expectations). Second, as we showed yesterday, while the Establishment survey reported an unexpected jump in jobs in October jobs, which rose by 271K, far above the highest estimate even putting the very Fed to shame after St. Louis Fed's Bullard explicitly talked down market expectations the night before while trying to convince the market that slowing jobs is not bad for the economy, a deeper look revealed that the Household survey suggested a far less optimistic picture, with 378,000 of the increase in employed falling in the 55 and over age group, while males 25-54 saw their jobs decline by 119,000.  To find where this increase in wage growth came from, we broke down the weekly payrolls increase (Y/Y %) by the 10 constituent industries that make up the private payrolls (excluding government). What we found was surprising.  Instead of some broad rebound in October wage growth (red bar in the chart below), and certainly not due to payrolls for mining and logging workers, which is plunging, the entire jump in October average hourly wages can be attributed to just one industry - the one highlighted with a yellow in the chart below: construction. Which is why the fate of the December rate hike is suddenly in the hands of some 6.4 million construction workers. If their wages jump in November, a rate hike it is. If their wages suddenly disappoint as the winter is about to unfold, then watch as the yield on the 2Y plunges in a microsecond when the next payrolls report is released as the December rate hike is once again put on indefinite hiatus.

Why Hank Paulson Is Laughing: 4 Of 5 Regional Fed Voters In 2017 Will Be Ex-Goldman -- Spin revolving door, spin.  At a certain level, the staffing of government agencies, regulators, and other public sector bodies with former Wall Streeters and various bulge bracket bigwigs has become so ubiquitous that it’s hardly even news.  Still, it’s worth paying attention to the dynamic because losing track of who’s really running things is a bad idea if you want to understand why it always seems like regulatory outcomes are never commensurate with the crime and if you think monetary policy and all types of other high level decisions regarding the economy are conducted at the behest of those who are ultimately beholden to the bankers.  Case in point: Less than two months ago, Harvard professor Robert S. Kaplan who until 2006 was vice chairman of none other than Goldman Sachs replaced Richard Fisher at the Dallas Fed and amusingly, Fisher went on to become an “advisor” for Barclays. Well, with the appointment of Neel Kashkari to the Presidency of the Minneapolis branch of the Eccles cabal, we get just the latest example of what amounts to egregious regulatory capture. Here’s The New York Times attempting to be polite about it: Mr. Kashkari is the third new president of a regional reserve bank named this year, and all three of the men previously worked at Goldman Sachs.The Philadelphia Fed in March appointed Patrick Harker, a former Goldman trustee, as its new president. The Dallas Fed in August selected Robert Kaplan, a former Goldman vice chairman.  Yes, "all three previously worked at Goldman Sachs." As of course did the second most powerful central banker on the planet... and as did the Treasury Secretary that, with the help of Kashkari, engineered Wall Street's bailout in 2008... and as did well, everyone who's ever been a "somebody" in Europe:

The Economy Is Better — Why Don’t Voters Believe It?  - Cindi Diercks, the 54-year-old owner of a local landscaping business and a leader of a local tea party group, enumerated all that was wrong with the U.S. economy. The Federal Reserve is devaluing the dollar, Diercks said. Too many Americans are on food stamps or other benefits. Government regulation is stifling small businesses (she bore particular animus toward the Occupational Safety and Health Administration, the federal workplace safety regulator). Inflation is too high. Taxes are too high. Government spending is too high. Statistics showing improvement in the economy are misleading if not outright lies. “We don’t know where they’re coming out with those numbers,” Diercks said. “The unemployment rate isn’t down. No one wants to talk about the truth, and I hate it.” The Republican presidential candidates were set to meet that evening in a debate focused on the economy, and Diercks ticked through her options. She liked Rand Paul, but not as much as his father. She didn’t like Donald Trump but appreciated his willingness to say out loud things that other candidates only think to themselves. She emphatically dismissed anyone she deemed part of the “establishment.” Such anti-establishment fervor is hardly uncommon in a campaign that has so far been notable for the success of candidates from outside the political mainstream, especially on the Republican side. Yet Diercks seems in many ways an unlikely messenger for that view. She isn’t a disaffected millennial trying to pay off student loans, or a laid-off factory worker facing the decline of the American manufacturing sector, or a retiree worrying about the long-term viability of Social Security.

Goldman: Decline in Oil Prices boosted GDP by 0.2% in 2015 --A few excerpts from a Goldman Sachs research piece by economist Daan Struyven: Crude oil prices are down more than 50% from their level in mid-2014. As oil prices declined, many observers—ourselves included—expected substantial positive effects from cheaper oil on US growth. But 18 months later, the size of the stimulus—and how much might be left in the tank—remains a source of debate. The energy profile of the US has changed substantially over the past decade. The US is now more self-reliant because of the fracking revolution, and energy investment plays an increasingly important role in the economy.  We revisit the impact of cheaper oil on GDP growth and payrolls using a disaggregated view in this week’s Analyst. Specifically, we exploit the fact that oil-producing states lose from price declines while oil-consuming states gain. The differential effects across states can therefore help uncover the economy-wide impact of oil shocks. Our state-level analysis suggests that a 50% decline in oil prices is associated with an eventual rise in aggregate output of 0.4% and 400,000 to 500,000 extra jobs. These estimates are broadly consistent with our most recent research, but below the impact implied by many earlier studies. Taking together our new state-level estimates as well as our earlier work and a few back-of-the-envelope calculations, our best estimate would be that cheaper oil has boosted GDP growth in 2015 by 0.2 pp. Looking ahead, we think that about 0.1 pp of oil growth stimulus is left in the tank, which should lift growth over the next 18 months.

Is The Fed About To Become "Weather Dependent?" Goldman Says El Nino To Boost Winter Growth -- Make no mistake, there’s been no shortage of discussions about the weather this year in economic circles which is ironic because as we’re fond of reminding you, the only people worse at their jobs than weathermen, are economists. Weather was a frequent go-to scapegoat for poor data earlier in the year as forecasters (the economic kind) seem to be perpetually amazed by snow in the winter (of course that’s nothing a double adjustment to the data can’t fix). Things got even weirder in September when Citi suggested that the Fed shouldn’t rely on weak jobs data in August and September when it comes to setting policy at its September meetings because the bank’s economists had discovered some “residual seasonality” (the term made popular by the San Francisco Fed with a Steve Liesman assist) in the data. What the Fed should do, Citi said, is assume the data is actually better than it looks and count on an upward revision. Ultimately, Citi blamed the “faulty” data on “summer.” Just a month after that, the same Citi and BofAML as well blamed unseasonably warm October weather for poor October retail sales. As BofA put it, “we believe abnormal weather patterns may have biased retail ex-auto sales lower in October. There has been a late start to the winter this year: the average temperature in October was 57.4 degrees Fahrenheit, which is the highest since 1963 and above the historical average of 54.3 degrees. Intuitively, this would depress sales of cold weather apparel, such as coats, hats, boots, etc.” To which we said this: No, BofA, there is nothing “intuitive” about that statement. No one would notice a three degree difference when they walk outside and even if they did, it wouldn’t keep them from buying a "hat".

The Correlation Between Decelerating Debt and Falling GDP - As promised, today we're doing something more interesting with the Federal Reserve's data for the level of private debt that has accumulated over time in the United States than just calculating its amount, it year over year rate of growth (or velocity) and also the rate of change in its year over year growth rate (or acceleration).  Starting with our results for the acceleration for private debt, we first calculated its trailing twelve month average to smooth out the volatility in our results to better capture its general trends during the period from January 1955 through June 2015.  We next extracted the U.S. Bureau of Economic Analysis' data on the quarterly growth rate of real (inflation-adjusted) Gross Domestic Product (GDP) spanning the same period, using linear interpolation to estimate the real growth rate in the months in between the months ending each calendar quarter, and then calculating the trailing twelve month average of the real GDP growth rate to smooth out the volatility in the results and to better capture the general trends in real GDP growth rates over time.  We then graphed both the acceleration of private debt (dotted blue line) and its trailing twelve month average (solid blue line) in the chart below, in which we've also indicated the periods for when the real growth rate of U.S. GDP was falling (shown as the light red vertical bands). For added measure, we've also indicated the periods in which the National Bureau of Economic Research has determined the U.S. economy was in recession (darker red vertical bands).  What we observe in the chart above is a really remarkable correlation. When the general rate of acceleration of private debt in the U.S. is falling, very much more often than not, such periods either precede or coincide with the periods in which the real rate of growth of the U.S. economy was also falling.

Treasury Sells Record $52 Billion in Debt Amid Shortage of Bills -- The Treasury sold $52 billion of four-week bills in its biggest regularly scheduled offering on record as it ramps up sales of short-term securities after cutting back as the U.S. approached its borrowing limit. The bills drew a rate of 0.075 percent as the bid-to-cover ratio, a gauge of demand, fell to 3.34 from 3.46 at the previous sale. Rates on four-week bills had plunged as low as negative 0.05 percent last month amid a shortage of available debt. The surge in issuance comes after after lawmakers late last month reached a deal to avoid a default before the Nov. 3 date when Treasury Secretary Jacob J. Lew had expected the U.S. would reach its borrowing limit. The size of bill offerings has been cut in recent months as the Treasury worked to keep under the debt ceiling. The U.S. on Oct. 27 sold $5 billion of four-week bills at a rate of 0.01 percent, matching the lowest amount offered at an auction since at least 2001. Two bill auctions Monday received tepid interest, with a $30 billion offering of three-month debt drawing the lowest demand in more than two years. Some of the weakness may have been because the Treasury announced the record size of Tuesday’s sale half an hour before Monday’s auctions, prompting investors to step back, according to Thomas Simons, a government-debt economist in New York at Jefferies Group LLC, one of the 22 primary dealers that are obligated to bid U.S. debt sales.

US officials: Israel requesting $5 billion in annual defense aid -- Israel is asking the United States for $5 billion in annual defense aid for a decade, beginning in 2017, US congressional sources told Reuters on Wednesday. Get The Times of Israel's Daily Edition by email and never miss our top stories Free Sign up!The request — a total of $50 billion — is a significant increase from Israel’s current aid package, which stands at close to $3 billion per year. The sources estimated that the White House and Israel would ultimately agree on a sum between $4 billion and $5 billion. The sources stressed that the negotiations were still in the early stages. “First they have to negotiate with the White House,” a senior congressional aide told Reuters. Israel was said earlier this week to have finalized its “shopping list” of desired US military material as part of a new long-term agreement for US defense assistance to Israel to maintain its qualitative edge in the region. On the list, and reportedly approved in principle by the US, is an Israeli request for V-22 Ospreys, planes which are believed capable of reaching Iran and which Israel reportedly sought from the US in 2012 — but later decided not to purchase due to budgetary restraints — when contemplating a strike on Iran’s Fordo enrichment facility. The new list was presented at meetings with senior defense officials from both countries ahead of the planned meeting between Prime Minister Benjamin Netanyahu and President Barack Obama at the White House on November 9. Israeli Defense Minister Moshe Ya’alon was in Washington last week to meet with his counterpart Ashton Carter and discuss the security memorandum to replace the current one, which provided for over $30 billion in US military aid spread over a decade, and will expire in 2018. Israel has already contracted for more than 30 F-35 multirole fighter planes; it may ultimately want 50, or even 75. It also seeks a host of F-15 jets which incorporate Israeli-developed advanced technologies and are considered the “workhorse” of the Israeli Air Force.

Which 2 Nations Received 75% Of America's $5.9 Billion Foreign Military Financing? - According to the U.S. State Government 2013-2015 Foreign Assistance report, an estimated$5.9 billion was spent on foreign military funding alone in fiscal year 2014.  This is equivalent to 17% of the estimated $35 billion spent on total global aid discussed in our previous article. U.S. foreign military aid to countries ranged from $200,000 to $3.1 billion. Of the top 10 recipients, two countries received 75% of the $5.9 billion.  Take a look on the map below to see who is getting the most foreign military financing from the U.S....  Below is a ranking of the the top 10 recipients and their respective world regions.

  • Israel: $3.1B (Middle East)
  • Egypt: $1.3B (Africa)
  • Iraq: $300M (Middle East)
  • Jordan: $300M (Middle East)
  • Pakistan: $280M (Asia)
  • Lebanon: $75M (Middle East)
  • Philippines: $50M (Asia)
  • Colombia: $29M (Latin America)
  • Tunisia: $20M (Africa)

The GOP Debate: Taxes, Taxes and Fewer Taxes -- One of the most compelling exchanges between candidates was the dispute over Mr. Rubio’s tax plan, which calls for an additional $2,500 child tax credit that would be refundable against income and payroll taxes.  Mr. Rubio’s child credit is the centerpiece of the so-called “reformicon” agenda, which de-emphasizes reductions in the top tax rate on wage income in favor of devoting tax breaks to assisting families. Indeed, his proposed top income tax rate of 35% is the highest in the Republican field and is just 4.6 percentage points below today’s top rate. Mr. Rubio pitches the child tax credit as a pro-family policy, and Mr. Paul went right after what the Florida senator sees as a strength.  “Is it conservative to have $1 trillion in transfer payments—a new welfare program that’s a refundable tax credit?” Mr. Paul asked, attempting to label Mr. Rubio’s tax break as a spending program because it would provide checks to families beyond their income tax liability. Mr. Rubio defended his plan, saying he was proud of having a pro-family tax plan.  “Everyone pays payroll tax. This is their money. This is not our money,” Mr. Rubio said. There’s one other thing worth noting about the attack on Mr. Rubio. It came from the right, based in the idea that he was insufficiently conservative and focused on lowering marginal tax rates. Democrats will certainly criticize Mr. Rubio’s tax plan if he’s the Republican nominee. Even though Mr. Rubio has the highest proposed tax rate on wage income, he’s also proposing to eliminate the capital gains tax for new investments, an idea that benefits the wealthiest households and that none of the others on Tuesday’s stage are proposing.

The Flat Tax Goes Mainstream - Remember when the flat tax was a fringe idea? Competitors and others derided it when Steve Forbes made it the center of his 1996 presidential campaign. This time around, the flat tax seems downright popular. Ben Carson, with his plan inspired by Biblical tithing, is perhaps its most famous proponent. But Ted Cruz, Lindsey Graham, Rand Paul, Mike Huckabee and Rick Santorum all advocate some form of across-the-board tax.Proponents of such a tax generally argue that it’s fair. The plan Mr. Huckabee endorses, which replaces income taxes with a 23 percent sales tax, is called the FairTax.“Everybody should pay the same proportion of what they make,” said Mr. Carson of his plan during Tuesday’s debate. “I don’t see how anything gets a whole lot fairer than that.”This is an extraordinary simplistic notion of fairness. Mr. Carson said that under his plan, “You make $10 billion, you pay a billion. You make $10, you pay one.” But that multibillionaire still has $9 billion after tax day, whereas the other person now has just $9 to pay the bills. This is why most people acknowledge that flat taxes are inherently regressive — that is, totally unfair.Most of the candidates plugging the flat tax offer some sort of exemption for the very poor — someone with just $10 would probably be able to keep all of it under their plans. But to suggest that someone making five figures should pay at the same rate as someone making eleven is absurd — not to mention the fact that, as the editorial board has noted, none of the Republicans’ tax plans would generate enough revenue to pay for health care for older Americans and other programs the country needs. Despite all this, the flat tax has become — like Donald Trump’s border wall — a bizarre and terrible idea that candidates are forced to engage with as though it’s serious. The country is worse off for it.

The Tax Code Can Be Simpler. But Not Three Pages. - All the Republican presidential candidates say they want to make the tax code simpler. But no candidate has been more aggressive about simplicity than Carly Fiorina, who says “our tax code needs to go from 73,000 pages down to about three pages.” To be clear, Mrs. Fiorina is not calling for a three-page tax return. She is saying the entire tax law of the federal government — and apparently the accompanying regulations, since the Internal Revenue Code itself is 3,728 pages — should be just a little longer than this article.  On Tuesday, she pointed on Facebook to one way she thinks that could be done: by putting in place a tax plan proposed by the economists Robert Hall and Alvin Rabushka, who have produced draft legislation for a single-rate income tax that runs just 1,120 words. Actually, Mrs. Fiorina is wrong. The Hall-Rabushka legislation is intended to replace not the entire Internal Revenue Code but just Subtitle A, which lays out rules about how much tax is due on what income. That would still leave Subtitles B through K, a further 1,445 pages describing taxes other than the income tax, and setting out important administrative matters like what happens if you don’t pay your taxes. Those pages would need to be retained or replaced with new law, unless Mrs. Fiorina wants the Internal Revenue Service to make up its own rules. Even replacing just Subtitle A with the three-page Hall-Rabushka version could cause significant problems. ”The minute it’s passed, I’m going to call my dean and tell her to pay me only in goods,” said Michael J. Graetz, a tax professor at Columbia Law School. “Buy me a house, buy me some groceries every week, buy me meals.” That’s because the three-page plan avoids complex rules about fringe benefits by saying noncash compensation is tax-free.

Contractors That Defraud the Government the Most Also Spend the Most on Lobbying -- A relatively small handful of federal contractors are responsible for the lion’s share of the $92 billion in fines, settlements, and court judgements assessed  for defrauding taxpayers and other forms of contractor misconduct since 1995, according to a newly updated database published by the Project on Government Oversight (POGO). An analysis by The Intercept finds that the companies responsible for the most instances of misconduct are also at the top of another list: They are among the biggest spenders on money in politics. Boeing, an aircraft manufacturing firm that supplies the government with military equipment, has paid over $1.4 billion in penalties since 1995, according to POGO. Boeing’s misdeeds include overbilling the government on the KC-10 aerial refueling tanker, falsifying invoices, and an assortment of environmental crimes such as contaminating local waterways and spilling jet fuel. POGO has identified over 60 resolved instances of Boeing committing fraud or violating the law, topped only by Exxon Mobil, Lockheed Martin and BP.  But that doesn’t mean Boeing has fallen out of favor with lawmakers. Boeing spends a lot of money to make sure that doesn’t happen. The firm ranks as the second biggest spender on lobbying Congress this year among individual companies — over $16 million for just the first nine months of 2015. Boeing also spent $1.9 million on campaign contributions to local and federal candidates last year. In addition, the company spends an undisclosed sum on trade associations, think tanks, television commercials, and billboards; public relations efforts; and political groups that use “dark money,” 501(c)(6) tax entities that influence elections without disclosing donor information.

Support Elizabeth Warren, and Other Senators in IRS Crack Down on Private Equity Tax Abuse -- Yves Smith - When I had my last meetup in Washington, DC, someone who insisted on remaining anonymous came to deliver me one message, which he argued at length: I should exhort readers to comment regularly on pending regulatory actions during the comment period. He said input from members of the public were far more important than most citizens realize, and that he would regularly mine the comments from closed regulatory matters in his work.  So I hope you’ll be willing to spend a couple of minutes to provide a comment on regulatory guidance proposed by the IRS on a private equity tax abuse, management fee waivers. Most of you have probably heard of the widely-publicized private equity “carried interest” loophole, which allows private equity general partners and hedge fund managers convert their labor income, which would normally be taxed at ordinary income rates, into being treated as capital gains and hence taxed at a much lower rate. The management fee waiver is a smaller but more egregious abuse, which is why the IRS proposed ending it. We’ve described it longer form in previous posts. The short version is it allows general partners to have more of their income from doing their day jobs be taxed at those lower capital gains rates.  A group of Senators is backing the IRS effort. As we wrote in SeptemberElizabeth Warren, Al Franken, Tammy Baldwin, and Sheldon Whitehouse wrote a short, forceful letter supporting IRS efforts to end a long-standing private equity tax dodge, management fee waivers… You’ll also see that the Senators’ letter applauds the IRS for taking the position that this tax scheme was never kosher. That gives the agency the power to challenge past tax filings. This certainly appears warranted, given the strong position the IRS has taken. But heretofore the agency has been unwilling to confront large tax payers with savvy lawyers. Let’s hope Warren and her fellow Senators make sure the IRS follows through and dings the private equity miscreants for back taxes owed.  We’ve attached their letter at the end of this post.

The Trans-Pacific Partnership is a trade agreement, and then some -- Many prominent economists have weighed in on the recently signed Trans-Pacific Partnership (TPP). While their positions range from hostile to supportive, there seems to be general agreement that, in the words of Paul Krugman (2015), “[t]his is not a trade agreement”. Stiglitz and Hersh (2015) even claim it is a “charade” to argue that the Trans-Pacific Partnership is an agreement about free trade. We show in this column that for at least one important sector — the auto industry — tariff cuts included in the agreement are of major importance; tariff differences generate big trade differences in the industry and import duties on cars are exceeding 30% in three major TPP markets. Nevertheless, we concur that TPP contains much more than just tariff reductions. These ‘deeper integration’ policies have major implications for multinational car-makers. This is in line with Baldwin’s (2011) assessment that the ‘basic bargain' underlying agreements has changed from “exchange of market access” to “foreign factories for domestic reforms”.

TPP: rigged ISDS » Investor-to-state dispute settlement (ISDS) places investment tribunals above states, above democracies. This places the development of law beyond democratic scrutiny. At a national level, parliaments can change laws that do not work out well. This is not possible at the supranational level. The transfer of power is as good as definitive: it is practically impossible to withdraw from (deep integration) trade agreements.

  • TPP’s investment chapter, which includes investor-to-state dispute settlement, contains
    – perverse incentives,
    – unfair procedural advantages for the US,
    – a most favoured nation (MFN) loophole,
    – limited, broken safeguards regarding intellectual property (IP) rights.

The arbitrators will be paid for each day worked (under ICSID rules at least 3000 US dollars a day). This creates perverse incentives to accept frivolous cases, let cases drag on, let the only party that can initiate cases (foreign investors) win to stimulate more cases, and to please the officials who can appoint arbitrators. The International Centre for Settlement of Investment Disputes (ICSID) is part of the World Bank; it is the most used ISDS forum. Under TPP, investors can choose this forum (article 9.18 (4)). The president of the World Bank has always been the candidate of the US. Already in 80 cases the president of the World Bank appointed all three the arbitrators.

TPP, Tyranny and Treason -  The final text of the TPP was released Nov 05, 2015. Upon cursory investigation, it has been deemed worse than it's opponents imagined. As if 500 corporate hatchetmen and assassins were put in some all-inclusive Caribbean resort or Mediterranean spa, told to write a trade agreement. We've been told for years by everyone from establishment Democrats and Republicans, to the New York Times, to the Washington Post to the Wall Street Journal, that TPP will be good for America, that America needs the TPP. Now America has 90 days (86 as of the writing of this) to read, research and understand 5,500 pages of crypto-corporate/bureaucratic legalese, that would establish a multi-nation, supra-national court system, purely for corporations to sue nation-states for perceived barriers to trade, and lost profits; a system of laws superior in it's judgement to the laws of all signatory nation-states and their citizens (one nation out of 12 – TPPland - without a Constitution or Bill of Rights.) It would be more than probable, that every law established for the health and welfare of people or the earth, will eventually be challenged as a barrier to trade. It is no stretch to see, with government and it's institutions infiltrated by corporate minions, with globalization and monopoly control become like dogma that can't be questioned, that no law will be made or enforced, that might be perceived as a barrier to trade

Chris Hedges: TPP Is the Most Brazen Corporate Power Grab in American History -  The release Thursday of the 5,544-page text of the Trans-Pacific Partnership—a trade and investment agreement involving 12 countries comprising nearly 40 percent of global output—confirms what even its most apocalyptic critics feared.  “The TPP, along with the WTO [World Trade Organization] and NAFTA [North American Free Trade Agreement], is the most brazen corporate power grab in American history,” Ralph Nader told me when I reached him by phone in Washington, D.C. “It allows corporations to bypass our three branches of government to impose enforceable sanctions by secret tribunals. These tribunals can declare our labor, consumer and environmental protections [to be] unlawful, non-tariff barriers subject to fines for noncompliance. The TPP establishes a transnational, autocratic system of enforceable governance in defiance of our domestic laws.”   The TPP removes legislative authority from Congress and the White House on a range of issues. Judicial power is often surrendered to three-person trade tribunals in which only corporations are permitted to sue. Workers, environmental and advocacy groups and labor unions are blocked from seeking redress in the proposed tribunals. The rights of corporations become sacrosanct. The rights of citizens are abolished. If there is no sustained popular uprising to prevent the passage of the TPP in Congress this spring we will be shackled by corporate power. Wages will decline. Working conditions will deteriorate. Unemployment will rise. Our few remaining rights will be revoked. The assault on the ecosystem will be accelerated. Banks and global speculation will be beyond oversight or control. Food safety standards and regulations will be jettisoned. Public services ranging from Medicare and Medicaid to the post office and public education will be abolished or dramatically slashed and taken over by for-profit corporations. Prices for basic commodities, including pharmaceuticals, will skyrocket. Social assistance programs will be drastically scaled back or terminated. And countries that have public health care systems, such as Canada and Australia, that are in the agreement will probably see their public health systems collapse under corporate assault. Corporations will be empowered to hold a wide variety of patents, including over plants and animals, turning basic necessities and the natural world into marketable products. And, just to make sure corporations extract every pound of flesh, any public law interpreted by corporations as impeding projected profit, even a law designed to protect the environment or consumers, will be subject to challenge in an entity called the investor-state dispute settlement (ISDS) section. The ISDS, bolstered and expanded under the TPP, will see corporations paid massive sums in compensation from offending governments for impeding their “right” to further swell their bank accounts. Corporate profit effectively will replace the common good.

Elizabeth Warren criticizes historic Pacific Rim trade deal -- Senator Elizabeth Warren said Thursday that she is prepared to do everything within her power to stop the historic Pacific Rim trade pact negotiated last month if it hurts American workers. Warren, in an interview with the Globe, criticized the Obama administration for dragging its feet in posting details of the deal, which went up online early Thursday morning -- five weeks after a deal was announced. Continue reading below “The administration has been briefing industry executives and lobbyists for a month and only just now letting the public and elected representatives see it,” she said in her first interview about the deal since a tentative agreement among 12 nations was reached. “If this agreement tilts the playing field further towards multinational corporations and against working families, I’m going to do what I can to make sure Congress doesn’t approve it.” Warren said she is withholding full judgment while she continues poring over details but flagged several “very serious concerns” on Thursday after an initial review. “I went straight for the things I’ve been arguing about,” she said. The deal, known as the Trans-Pacific Partnership, bars tobacco companies from using the trade tribunals to sue countries that pass anti-smoking laws -- a provision Warren praised. But she said that provision just further proves her point. “This is a clear admission by the administration that companies can use and have used the investor-state dispute settlement process to weaken regulations,” she said. “Tobacco regulations are very important, but so are rules against polluting rivers, rules to stop another financial crisis, rules to make nuclear power safer. The administration needs to explain why every other industry can still use ISDS to challenge public interest rules in this agreement.”

Here’s what the Internet hates about the TPP trade deal --  After years of warning that the secretive Trans-Pacific Partnership would be devastating for Internet freedom, intellectual property experts have finally gotten to look at the final draft of the proposed treaty. And they say it’s as bad as they feared. Spanning 30 chapters over thousands of pages, the TPP is enormous. Different civil groups have all kinds of criticisms of the TPP’s provisions, ranging from labor to the environment, though the main theme is that it emphasizes business over civil interests. That shouldn’t be surprising, given that it’s a trade deal, and that corporate lobbyists were given access to the negotiation process that was denied to the press and civil groups. Some of activists' most vocal criticism targets the TPP's intellectual property chapter, which critics say could have sweeping effects on Internet freedoms.  Given that the IP chapter alone is more than 28,000-words long, analysts are still making their way through it, which means there will surely be more to add to this list as they dig deeper. Here are the areas of concern experts have singled out so far. While it isn’t part of the IP chapter, the TPP comes with its own legal system, called the investor-state dispute settlement, which shows why it’s such a big deal if each member country adopts the new measures. In theory, the ISDS is a kind of court to help resolve trade disputes. But the consumer-advocacy group Public Citizen warns that it actually “would not meet standards of transparency, consistency, or due process common to TPP countries’ domestic legal systems or provide fair, independent, or balanced venues.”  The TPP’s legal system, the Electronic Frontier Foundation notes, “can be characterized as a tool for private industry to directly undermine democracy and any public interest rule.” The Office of the United States Trade Representative, which argued the U.S.’s stance for the TPP, previously told the Daily Dot that it wouldn’t agree to anything that contradicts U.S. law—in particular, when it comes to intellectual property, the oft-criticized 1998 Digital Millennium Copyright Act (DMCA). But a close reading, the EFF found, revealed that while the IP chapter seemed to strike a balance between regular Internet users and copyright holders, “all of the provisions that recognize the rights of the public are non-binding, whereas almost everything that benefits rightsholders is binding.”

TPP has provision banning requirements to transfer or access source code - Discussion - Knowledge Ecology International looks at Article 14.17 of the Trans-Pacific Partnership (TPP), which has a provision banning requirements to transfer or provide access to software source code. "I'm wondering how the GPL fares here, and how much money Microsoft spent lobbying to get this included in the TPP, or if the NSA has a role in this. One aspect of this provision is that governments cannot insist on source code transparency, for mass market software, even to address concerns over security or interoperability."

Why the TPP Is Too Flawed for a 'Yes' Vote in Congress | Jeffrey Sachs: Globalization is a positive and powerful force for good, if it is embedded in the right kind of ethical and legal framework. Yet the current draft of the Trans-Pacific Partnership is not worthy of a simple thumbs-up by the Congress. Without jettisoning the purported goals of TPP, the 12 signatories should slow down, take the pieces of this complex trade agreement in turn and work harder for a set of international standards that will truly support global sustainable development. The TPP should be judged on whether it guarantees global economic well-being, not whether it gives advantages to the United States to the detriment of other countries. The ultimate goal of economic policy should be to raise the well-being of all parts of society, including the poor and middle class. Agreements that help the rich at the expense of the poor, capital at the expense of labor, or particular sectors at the expense of consumers should be viewed with skepticism. The agreement, with its 30 chapters, is really four complex deals in one.

  • The first is a free-trade deal among the signatories. That part could be signed today. Tariff rates would come down to zero; quotas would drop; trade would expand; and protectionism would be held at bay.
  • The second is a set of regulatory standards for trade. Most of these are useful, requiring that regulations that limit trade should be based on evidence, not on political whims or hidden protectionism.
  • The third is a set of regulations governing investor rights, intellectual property and regulations in key service sectors, including financial services, telecommunications, e-commerce and pharmaceuticals. These chapters are a mix of the good, the bad and the ugly. Their common denominator is that they enshrine the power of corporate capital above all other parts of society, including labor and even governments.
  • The fourth is a set of standards on labor and environment that purport to advance the cause of social fairness and environmental sustainability. But the agreements are thin, unenforceable and generally unimaginative. For example, climate change is not even mentioned, much less addressed boldly and creatively.

TPP: USTR Froman’s Disinformation Continues to Propagate (And What Is the “Secret Guidance Document”?) -  Lambert Strether - In this post, I’ll continue the focus on TPP goverance issues — apparently, we have “governance” these days, instead of government — by continuing to look at the Investor-State Dispute Settlement (ISDS) system (Chapter 28), andby taking a fresh look at the Trans-Pacific Partnership Commission (Chapter 27). In each case, to get perspective, I’ll take a comparative view: First, by seeing what USTR Michael Froman’s TPP FAQ says about the text, and then by reading the text itself. We’ll see that Froman’s FAQ is… Well, perhaps “a tissue of lies” is a bit strong, even if Froman’s relationship with the truth is at best non-custodial. Let’s stick with disinformation. Unfortunately, our famously free press seems to be taking Froman’s FAQ at face value, thereby falling into absurdities. Finally, I’ll look at — or, more precisely, for — a document that perhaps should be playing a key role in determining what the administration, as opposed to the rest of us, thinks the text means. But first, let’s get a sense of the scope of the effort before us in the coming weeks and months. The TPP is a big document: Photo of 5,554pg TPP on Sessions’ desk. B/C of Fast-Track, it can’t be filibustered, amended or given a treaty vote.    5,554 pages does seem like rather a lot; ObamaCare, for example, is only 906 pages (I downloaded it to check). And even though page-printing and counting exercises are often frowned-upon as political theatre, a reader would have to blast through ~61 pages a day to read the whole thing in 90 days. And that’s 61 pages a day of dense, technical prose crafted by international trade sherpas and corporate lawyers. So when the White House congratulates itself on “Why Transparency Matters in Securing the Most Progressive Trade Deal in History,” take that with a dose of salts, eh?

Fears Over Trans-Pacific Partnership Confirmed - International Trade Union Confederation: Fears of the negative impact of the Trans-Pacific Partnership (TPP) agreement have been confirmed with the text of the agreement finally released on 5 November, after years of secret negotiations. Sharan Burrow, ITUC General Secretary, said “The peoples of the TPP countries are being told to accept a trade deal that risks jobs, public services and democratic rights. There has been no public consultation, but business interests were given an inside track in the negotiations and their influence is written all over the agreement.” “Trade between countries is essential, but this deal hands extensive and unacceptable rights and privileges to multinational corporations to protect their own investments at the expense of the basic principles of democracy. It fails to protect workers and it fails to protect the environment.” The agreement enshrines the notorious Investor-State Dispute Settlement mechanism, which allows companies to sue governments in business-dominated tribunals when they deem that government decisions affect their investments or potential profits. “Business will rule itself, and be able to wield a big stick over governments, while workers are left out in the cold. It’s no wonder that people in countries across the world reject lop-sided agreements like the TPP,” said Burrow.

Hoffa: TPP a punch to the gut of U.S. workers - James Hoffa - The much-awaited text of the 12-nation Trans-Pacific Partnership (TPP) was finally released for public consumption last week. But sunshine and scrutiny of the pact isn’t making the deal look any brighter for workers in Michigan or around the country.  As the Teamsters and others long suspected, the TPP text contains many of the most controversial items included in past lousy trade agreements that will continue to encourage job outsourcing and lower wages for U.S. workers. But it goes even further. Frankly, it makes clear why everyday Americans were kept in the dark about this Pacific Rim deal for so long. Take the beloved “Buy American” procurement program, which has been around for more than 80 years. It was created to give U.S. firms a leg up in securing federal government contracts that keep dollars in this country and Americans working. A report last year found Michigan’s taxpayers finance federal government purchases to the tune of some $13.4 billion annually. That’s an estimated $1,851 that every state taxpayer sends each year to Washington to procure goods. But language included in the TPP procurement chapter jeopardizes Buy American. It would give companies operating in any of the 11 other Pacific Rim member countries equal access to many of the U.S. government contracts that now go to local businesses that build and provide upkeep to key infrastructure in our communities. And that would lead to fewer jobs at home. Other language in the trade deal would also lead to jobs being shipped overseas. For example, because the TPP ends U.S. tariffs with other member nations, competitors there will have open access to the American market while some other countries will slowly phase out their own tariffs in place. The result could be devastating for U.S. workers especially when it comes to competition with Vietnam, which would still have tariffs in place and pay their workers much lower wages.

Five Ways the TPP Is Worse than Past Trade Agreements - Citizens Trade Campaign: As might be expected from a back-room deal negotiated with the aid of hundreds of corporate advisors, while the public and press were shut out, the proposed Trans-Pacific Partnership (TPP) not only continues the awful legacy of past trade agreements that put corporate profits ahead of jobs and wages, the environment and public health — in a number of important ways, the TPP is actually far worse than past agreements. Here are five key examples. .

  • 1.) Worse-than-NAFTA “Rules of Origin” That Threaten U.S. Jobs:  The TPP is so poorly negotiated that it allows products assembled from parts made primarily in third-party countries to enter into the United States duty-free — a major rollback from even the North American Free Trade Agreement (NAFTA).  In this manner, goods made in China and other countries with no TPP obligations what-so-ever, be it on weak labor standards or reciprocal market access, have a back-door mechanism to enter the United States, undercutting U.S. employers.
  • 2.) A Roll Back of Bush-Era Environmental Obligations:  The TPP’s environment chapter rolls back countries’ obligations to “adopt, maintain and implement” important multilateral environmental agreements (MEAs) in comparison to those included in all previous U.S. trade agreements since the George W. Bush administration. 
  • 3.) New Tools for Banks to Challenge Financial Reforms:  For the first time in a U.S. trade agreement, the TPP includes a “minimum standard of treatment” obligation in its financial services chapter, enabling banks, insurance companies, hedge funds and others to use the pact’s controversial investor-state dispute settlement (ISDS) system to attack financial regulations as violating their “expectations” of how they should be treated under the agreement. 
  • 4.) The “Evergreening” of Medicine Patents that Block Access to Medicine:  Once again rolling back progress made during the George W. Bush administration, the TPP requires countries to allow additional 20-year patents for “new uses” of medicines that are already under patent — a process that “evergreens” pharmaceutical companies’ medicine patents well beyond the original two decades, while blocking competition from lower-cost, life-saving generics. 
  • 5.) A “Docking” Procedure to Make the Massive Pact Even Bigger:  Unlike past U.S. FTAs, the TPP also includes a “docking” mechanism that would allow any other countries to join over time.  A wide number, from the Philippines to China, have expressed some interest in doing so.

TPP is about many things, but free trade? Not so much - Let’s be clear about the just-released, negotiated-in-secret Trans-Pacific Partnership deal. Despite how it’s being referred to by journalists, officials and academics, as Nobel prize-winning economist Joseph Stiglitz and economist Adam Hersh have noted, it is definitely not a “free-trade” agreement. It’s much more than that. What are Dr. Stiglitz and others arguing, and why does it matter? Simply put, calling the TPP a free-trade agreement overplays its benefits, plays down its problematic aspects and fundamentally misunderstands what the deal is actually about. Labels matter. Ever since the 1988 “free-trade election,” the virtue of free trade has been unquestioned in Canadian policy circles. Free trade’s victory in the battle of ideas has been so overwhelming that if you can persuade someone that the TPP is a free-trade agreement, then you’ve already won half the battle. Free trade has a specific meaning for economists. The notion that free trade is good is grounded in the theory of comparative advantage. First developed in 1817 by David Ricardo, it states (simplifying quite a bit) that if countries specialize in what they are best at, they can make themselves better off through trade. Costs are lowered, production is maximized and people can buy imports at prices lower than would have prevailed had they produced everything themselves. Many conditions have to hold (and they often don’t) for comparative advantage to work in the real world. Regardless, pro-free-trade arguments implicitly rely on the idea of comparative advantage.

Incoherency on the TPP’s currency “side deal” -- The WaPo’s editorial in support of ratifying the Trans Pacific Partnership 12-country trade deal makes some good points, like you need to learn what’s in this beast before you sound off about it.  I’m working my way through the TPP and will have more to say at a later date. So far, I’ve seen better language in parts of the text than in past agreements, but you’ve got to be careful. It was good to see a requirement for minimum wages in the labor chapter, for example, but I didn’t see anything that would prevent a signatory country from setting a minimum wage at the equivalent of one cent and being in compliance. The dispute settlements process may be improved—the text calls for greater transparency and more input from individual states representing their “public interest,” but only in practice will we know how much substantive input sovereign states have in these multi-country tribunals. The fact that the tobacco industry is explicitly prohibited from bringing dispute cases regarding public health regulations is both a clear, progressive advance, and a worrisome reminder that other safety hazards do not have such carve outs.  But the ed board is incoherent on currency management. There is no currency chapter in the deal, just a side agreement with no enforcement mechanisms against countries managing the value of their currency, typically suppressing its value relative to the dollar to make their exports more price competitive. According to the WaPo, echoing the administration: …this omission is entirely appropriate. Any agreement that intruded so deeply on the monetary policies of the member states, the United States included, would have been rejected by all — in the unlikely event currency ma­nipu­la­tion could have been reduced to an intelligible, legally binding definition in the first place. Differences over currencies are best handled through diplomacy; and, through a side agreement, the TPP negotiations produced promises to avoid unfair currency practices and a first-of-its-kind forum through which countries can press complaints as they arise

TPP Trade Pact Would Give Wall Street a Trump Card to Block Regulations -- Banks and other financial institutions would be able to use provisions in the proposed Trans-Pacific Partnership to block new regulations that cut into their profits, according to the text of the trade pact released this week.   In what may be the biggest gift to banks in a deal full of giveaways to Hollywood, the drug industry and technology firms, financial institutions would be able to appeal any national rules they didn’t like to independent, international tribunals staffed by friendly corporate lawyers.  That could nullify a proposal by Hillary Clinton to impose a “risk fee” on financial firms — or the Elizabeth Warren/Bernie Sanders plan to reinstate the firewall between investment and commercial banks. Financial firms could demand compensation for these measures that would make them too expensive to manage. The TPP, a 12-nation pact with countries in Asia and the Americas that requires congressional approval, includes an investor-state dispute settlement (ISDS) system. This allows foreign companies operating in TPP member countries to enforce the agreement without using that country’s court system. Instead, corporations can sue for monetary damages in independent tribunals before corporate lawyers who can rotate between advocating for investors and judging the cases themselves. The lawyers have an inherent incentive to encourage more challenges with favorable rulings, so they can be paid to arbitrate them. Labor unions who allege violations of the trade deal cannot use ISDS directly; only international investors, i.e. large corporations, can.

TPP – A Recipe for Financial Market Contagion -- Matthew Cunningham-Cook - In response to the mantra, repeated ad nauseam in the media, of “Too Big To Fail”, activists around Occupy Wall Street developed “TIBACO” – that is, too interconnected, big, and complex to oversee.  By reframing the issue that large banks, insurance companies, and hedge funds hold positions in so many areas of the market that it is impossible to engage in any type of effective oversight, it becomes clear that the problem is a financial industry out of control. “Too big to fail” argues that big banks that are so essential to the adequate functioning of the global economy that they need the government to provide a backstop to whatever activities they pursue. TIBACO, on the other hand, makes the case that the system needs to be disaggregated to allow for effective regulatory oversight and to prevent trusts and monopolization. It’s this framework – TIBACO – that should guide any analysis of the TPP’s financial services chapter, which is outside of ISDS, the most important, and of course, least reported on, part of the TPP. This chapter recreates the condition for an explosion of financial industry consolidation – magnifying the effects of a future financial crisis. There are two clear issues with the TPP’s financial services chapter:

    • 1) It mandates that nations – particularly Vietnam and Malaysia- – treat foreign banks in the same manner that they treat their own domestic banks. This will give rise to rapid market consolidation dominated by predominantly American financial firms.
    • 2) It will mandate the partial privatization of Japan Post’s life insurance business – by far the largest untapped life insurance market in the world, with over $1.2 trillion in assets (total life insurance assets in the US were $3.2 trillion in 2011).

Likely the biggest beneficiary from the TPP’s rules – which essentially mandate that any marketing that Japan Post does for its own insurance business must allow for compensated equal time for other TPP partners – is Prudential, the US’s second-largest life insurer, which has worked aggressively, a la Commodore Perry, over the past fifteen years to penetrate the Japanese insurance market. MetLife, the largest life insurer, is also penetrating the Japanese insurance market. In 2011 AIG purchased the Fuji insurance company, one of Japan’s largest, which also has a life insurance subsidiary in Japan.

The real reason Wall Street loves the Trans-Pacific Partnership - Vox -  The core thing the Trans-Pacific Partnership does is try to ensure that US-based financial services companies — many of which are big, globally competitive, and diversified in terms of the kinds of services they can offer — will be able to compete for market share in TPP partner countries. The agreement to openness is, of course, mutual, but in practice nobody expects much to change in terms of foreign banks operating in the United States. On the one hand, the US financial sector is already very open — New York City is the global hub of finance, after all — and lots of foreign-owned financial firms are already active in the United States. On the other hand, there are numerous small carve-outs for the United States listed in an annex, guaranteeing that existing elements of US financial regulation will be exempt from TPP's broad claims. All of this is a big win for the American financial services sector. As the Obama administration puts it, "Rules for trade and investment in the financial services sector in the TPP will ensure that American businesses and workers can serve all these varied markets, promoting economic growth and job development in the United States and throughout the Asia-Pacific region." US-based banks are going to make money selling financial services in Asia, and some of that money will flow into the pockets of people who work in the financial services sector in the United States. That's why the US Coalition for TPP includes the American Insurance Association, Citigroup, Goldman Sachs, and Morgan Stanley. From the White House's viewpoint, this is a good thing. TPP will support high-value exports in a sector where things like cheap Chinese labor are unlikely to carry the day. But if your passion in life is trying to tear down the firms that sit at the commanding heights of the American banking system, it's not such a good thing at all.

Six Problems with GOP Debate on Financial Reform - Mike Konczal --  Last night’s GOP debate was the first to have an in-depth financial reform discussion. Unfortunately, the Republicans seemed like they were being introduced to these issues for the first time, rather than a party reflecting a deep understanding of debates that have been ongoing for eight years. (There was a weird detour into whether or not deposit insurance exists, which I’ll skip, and the less said about their embrace of the gold standard the better.)But it’s worthwhile to dig in now, as these talking points will be with us through the rest of the campaign. There’s six statements I want to examine, the first four of which I believe to be outright wrong. This misdiagnosis causes them to seek out the wrong solutions in the wrong places. The last two statements are interesting to debate. (Transcript via Washington Post.)

Justice Department Doesn’t Deliver on Promise to Attack Monopolies - WSJ: When Obama administration officials came to power vowing tougher antitrust enforcement, among the areas they highlighted was the behavior of dominant companies with monopoly power. The Bush administration, which brought no monopolization cases, was “overly cautious” and adopted a policy that “advocated hesitancy in the face of potential abuses by monopoly firms,” Christine Varney, President Barack Obama’s first Justice Department antitrust chief, said in her initial public appearance in 2009. Her comments received widespread attention and suggested the Obama team might revive the approach of the Clinton administration, which sued Microsoft.   It hasn’t worked out that way. Nearly seven years later, the Obama Justice Department has brought just one monopoly case, against a hospital system in Texas.  The lack of action in the monopoly area highlights the difficulty of mounting such legal challenges in the U.S., even as Europe has used its broad powers to step up its policing of dominant companies. More broadly, the outcome shows the often-wide distance between the goals of a new administration and the sometimes frustrating reality of governing—a point with particular resonance as presidential hopefuls of both parties make grand promises.

The Mega-Danger of Mega-Deals: Monopolies Are Crushing U.S. Workers and Consumers -  Dave Dayen - This week, the American Medical Association formally asked the Department of Justice to block two health insurance mergers (Aetna’s purchase of Humana and Anthem’s acquisition of Cigna) that would reduce that industry to effectively three participants. Left unmentioned was the significant consolidation among health care providers that has helped spur the monopoly formation on the insurer side. After all, insurers lose bargaining power on prices when facing giant medical conglomerates, and regain it when they grow themselves.This week, Anheuser-Busch InBev and SABMiller completed their $106 billion plan to combine, forming the world’s largest brewery, responsible for 30 percent of global beer sales. The new company said it would sell its stake in U.S. bottler MillerCoors to show regulators its commitment to competition. But it’s selling that stake to Molson Coors Brewing, its joint partner in the MillerCoors venture, diminishing its monopoly only by bolstering a large oligopoly partner. Molson Coors would instantly become the second-largest brewer in the U.S., right behind Anheuser-Busch InBev. This week, Apple, Google and Amazon joined forces in a lobbying venture to promote technology-based financial services, or “fintech.” All the founding members of Financial Innovation Now have investments or outright subsidiaries in the fintech space. The teaming of three of the most powerful Silicon Valley firms to exploit a gap in financial regulation represents at least the appearance of collusion between companies nominally thought to oppose one another. It comes at a time when the same tech giants, along with Facebook and Microsoft, have entrenched control over the entire Internet infrastructure, from search to messaging to advertising to video and audio distribution to applications to storage.

Bring Back Antitrust - David Dayen -- THE TIGHT GRIP OF incumbents on the medical-supply industry is far from exceptional. Much of what we buy comes from a deceptively concentrated market. This is all the more surprising, given the wave of competition unleashed by the Internet. The unaware consumer walks into a supermarket and sees aisles brimming with a daunting array of choices. But the majority of products come from just ten manufacturers. You’re made dizzy by the sheer variety of toothpastes, for example, but 70 percent of sales go to just two companies: Proctor & Gamble and Colgate-Palmolive. One company, Luxottica, makes virtually every different brand of sunglasses in the world. They also own nearly all the eyeglass retail outlets, from LensCrafters to Pearle Vision to Sunglass Hut. Several years ago, Tyco bought up all its competitors and now makes practically every plastic hanger in America. You’d be excused for thinking you have many options for booking airline tickets and hotels online, but when the Expedia-Orbitz merger clears, there will only be two (Priceline is the other). America gets its cable and Internet service mostly from four companies, after AT&T’s successful merger with DirecTV. There are only three big airlines, four if you count Southwest; four big commercial banks; and five big trade-book publishers, six before Random House merged with Penguin.

The SEC Cracks Down On The Biggest Market Threat: Short Sellers On Twitter - It's not HFTs; It's not global orchestrated central bank intervention in "markets"; it is not even confirmed manipulation of virtually every asset class by the Too Big To Prosecute banks, who instead of doing research spent time colluding in anonymous chat rooms how to manipulate everything from FX, to Treasurys, to gold. m No: according to the SEC what is truly broken with the markets, and why two-thirds of Millennials have lost faith in stocks, are short sellers "manipulating" stock prices on twitter. In an interview with Bloomberg, SEC chair Mary Jo White (who had to recuse herself from some of the SEC's biggest enforcement cases as a result of her prior work) said that instead of dealing with far more pressing issues for why retail investors have practically deserted the entire market due to its wholesale manipulation by embedded interests, U.S. regulators are "reviewing whether to make short sellers step out of the shadows, as negative comments by research firms increasingly batter share prices." Just as surprising: the SEC is not planning a crackdown on "positive comments by research firms" that send prices surging - because when it comes to "price discovery", the SEC is all about cracking down on manipulation but mostly when it is manipulation leading to lower prices. Bloomberg continues: “It’s a complex sort of landscape, but it is an issue that has our intense attention,” Securities and Exchange Commission Chair Mary Jo White said during an interview on Bloomberg Television on Tuesday in response to a question about whether the agency would consider rules requiring short-selling disclosures by investors. She declined to discuss specific companies.  “Short selling has a legitimate, positive purpose in the marketplace,” White said. “That’s very different, though, than if you manipulate by short selling.” It's not just short-sellers though: it is short sellers on Twitter of all places. "White said Twitter is an information source that must be policed actively, and a 140-character Twitter posting and a four-hour presentation are essentially the same."

Fed Proves Irrelevant in $2.6 Trillion Slice of U.S. Debt Market - The blowout U.S. jobs report for October means the Federal Reserve may be weeks away from raising interest rates. For U.S. savers earning next to nothing on $2.6 trillion of money-market mutual funds, the move will barely register. The reason is that there’s an unprecedented shortfall in the safest assets, especially Treasury bills -- a mainstay of those funds and traditionally the government obligations that are most sensitive to changes in Fed policy. The shortage means some key money-market rates will probably remain near historic lows even if the central bank increases its benchmark from near zero next month. As a share of U.S. government debt, the amount of bills is the lowest since at least 1996, at about 10 percent, and the Treasury is just beginning to ramp up issuance of the securities after slashing it amid the debt-ceiling impasse. Meanwhile, regulators’ efforts to curb risk after the financial crisis are stoking increased demand: Money-market industry rules set to take effect in October 2016 may lead investors and fund companies to shift as much as $650 billion into short-maturity government obligations, according to JPMorgan Chase & Co. “The demand for high-quality short-term government debt securities is insatiable and there is just not enough supply,” “Even given the increased bill sales coming as the debt-limit issue has passed, it won’t keep up with rising demand from regulatory forces. This will keep rates low.”

Bill Black: Why The Banksters Are Winning (interview by Chris Martenson with transcript)  Oh boy. If you have high blood pressure, you may want to avoid listening to this new podcast... Bill Black, expert on Wall Street control fraud, returns to discuss the gross abuses of power rampant in our financial, political and judicial systems. In his estimation, regulation and enforcement of financial crimes have been completely gutted and de-fanged -- intentionally by corrupt politicians, and unintentionally by inept ones. All while the Justice Department turns a blind eye. Click the play button below to listen to Chris' interview with Bill Black (58m:19s)

New York Fed Chief Calls for Improved Wall Street Culture -  A prominent Wall Street regulator on Thursday continued to press senior bankers to clean up the culture of their firms so that they can avoid the sort of recent scandals that have undermined the reputations of big banks.  William C. Dudley, the president of the Federal Reserve Bank of New York, told bankers who had gathered for a conference on ethical culture at the New York Fed, “I think your focus should be less on the search for bad apples and more on how to improve the apple barrels.” Mr. Dudley started his push to improve banks’ culture two years ago with a speech that called the banks’ ethical lapses a “critical problem.” Skeptics have wondered whether the New York Fed has the authority or desire to do what it takes to change behavior on Wall Street. The New York Fed failed to address dangerous weaknesses in big banks before the 2008 financial crisis. And episodes since the crisis, like the so-called London Whale trading scandal at JPMorgan Chase, have raised questions about the effectiveness of its regulation. Still, when it comes to culture Mr. Dudley appears to have made some progress. He has helped assemble an international effort to clean up the banks, under the Group of 30 nations, and on Thursday he had the support of Christine Lagarde, the managing director of the International Monetary Fund, and Stanley Fischer, the vice chairman of the Federal Reserve, both of whom were at the conference. Although Mr. Dudley and Ms. Lagarde talked about the public interest, much of the conference was conducted in private. As a result, the public could not follow what the bankers — including Michael L. Corbat, the chief of Citigroup, and James P. Gorman, the chief of Morgan Stanley — said about their efforts to overhaul their companies’ culture. In the coming days, the Fed will release a broad summary of what was discussed during the conference.

Corporate America deep in debt - Goldman Sachs - Years of low interest rates and a boom in mergers and acquisitions (M&A) have made American companies spend without looking back. This has resulted in the highest corporate debt in a decade, close to $1 trillion, according to a report by Goldman Sachs. "Companies in the United States have taken advantage of low interest rates to issue record levels of debt over the past few years to fund buybacks and M&A. This has driven the total amount of debt on balance sheets to more than double pre-crisis levels," Goldman Sachs analysts headed by Robert Boroujerdi wrote in the note, acquired by Bloomberg. According to the bank, since the global crisis of 2008, almost $1 trillion of goodwill, a type of intangible asset that occurs when one company pays premium for another, has been added to corporate balance sheets due to the US merger and acquisition boom. This led Goldman analysts to conclude that American companies have been unable to make efficient investments. "We view persistently high levels of goodwill when accompanied by consistently low sector-relative financial returns as an indicator that the company has not used its asset base as productively as expected, which can ultimately dampen stock returns," the report says. Goldman analysts say a looming US tax hike, which would be the first in almost 10 years, is likely to make investors more cautious about measures that increase corporate leverage.

Fitch: US High Yield Default Rate Plagued by Energy Sector -- Energy and metals/mining defaults continued unabated midway through the fourth quarter, placing continued pressure on the U.S. high yield default rate, according to Fitch Ratings. Five energy companies either completed distressed debt exchanges (DDEs) or missed a payment in October while five defaults have been recorded so far this month.The energy trailing 12-month (TTM) default rate finished October at 5.3%, the highest point since a 9.7% peak in 1999, while the exploration and production subgroup TTM rate hit 9.0%. The metals/mining sector TTM rate stands at 9.5% while the coal subsector jumped to 27.0%. November defaults for coal producer Hidili Industry International and Essar Steel Algoma Inc. along with a potential filing for Arch Coal Inc. would propel the metals/mining TTM rate above 14% and the coal subsector to 40%. The overall TTM default rate remains subdued and ended October at 2.9% with problems remaining largely contained to energy and metals/mining. The rate not including energy, metals/mining, and Caesars Entertainment Operating Co. is 0.7%. A large majority of this year's metals/mining defaults have been bankruptcies; however, a significant portion of the energy defaults have involved DDEs. In total, 11 energy companies utilized DDEs since the start of April to improve their capital structure and buy time as liquidity and cash flows are pressured by oil prices languishing at nearly $45 per barrel.

Banks said to hold $10tn of ‘risky’ trades - FT  - The repeal of part of the Dodd-Frank financial reforms has left big US banks holding $10tn of “risky” derivatives trades on their books, according to an investigation by Democrats. Senator Elizabeth Warren, a liberal Wall Street foe, said the repeal — which sparked a firestorm when it was slipped into a budget bill in December 2014 — had left federally insured banks exposed to dangerous swaps trades. The rollback of the relevant rule, which followed almost no congressional debate, sparked stinging criticism of Wall Street and cemented perceptions of the pernicious influence of bank lobbyists on Capitol Hill. The rule would have required banks to “push out” swaps trades to entities that are not insured with taxpayer funds. But on Tuesday Ms Warren cited figures from bank regulators indicating that about $10tn of those contracts remained on banks’ books, the first such estimates. The furore over the repeal helped set the stage for Wall Street regulation to feature in the 2016 presidential race with Hillary Clinton and Bernie Sanders, the Democratic contenders, jousting over how to rein in banks’ risk taking. Sheila Bair, former chair of the Federal Deposit Insurance Corporation and now president of Washington College in Maryland, told the FT earlier this year — before she joined the school — that the swaps repeal was a “classic backroom deal.” “There’s no way this would have passed muster if people had openly debated it, so [the banks] had to sneak it on to a must-pass funding bill. For an industry that purports to want to regain public trust, it was an extraordinary thing to do.”

Fitch: US Bank Regulators Cite Weakening Loan Quality (Fitch) US banking regulators' latest report on the Shared National Credits Program (SNC) noted an overall higher level of credit risk throughout the system in 2015, providing further evidence that overall asset quality is potentially trending weaker, says Fitch Ratings. This may lead to higher future loan-loss provisioning, which was already evidenced in third-quarter 2015 with energy-related loan-loss reserve builds. SNC portfolio loan risk is not usually retained by US banks in its entirety. While US banks hold roughly 40% of the SNC's outstanding commitments, the majority of the credit risk continues to reside in the nonbank sector. Of the $228.4 billion in loans classified as "weak" by regulators, nonbanks held $153.0 billion, while US-domiciled banks held just $40.7 billion, and foreign bank organizations held $34.8 billion. Compared with last year's review, classified balances increased 19% while nonaccrual balances were 7% higher, with most of the deterioration attributed to the energy sector. The credit issues highlighted in the report remain focused on leverage lending and, particularly this year, oil and energy exposures. The regulators noted that the banks are making progress in adhering to the leveraged lending guidance issued by regulators in 2013. However, there will still be weak structures cited by the regulators. While no specific grouping of US banks are identified, the sample of loans examined is skewed toward large syndicated loans originated by large banks. The greatest impact on shared loan asset quality was oil price declines affecting exploration and production and oilfield services companies, which represent about 7% of the overall SNC portfolio. Classified oil and gas borrowers rose to $34.2 billion, representing 15.0% of total classified committed loans, up from $6.9 billion or 3.6% in 2014.

Beyond Banking: under attack on all sides -- It is more than seven years since the height of the financial crisis, but the run of disastrous banking news during the past few weeks has revived bad memories. Profit warnings, mass job cuts, share price plunges and defensive capital raisings have abounded. With the aftershocks of 2008 still hitting the global economy — and central banks in the US and UK shying away from normalising ultra-accommodative monetary policies — banks, formerly seen as the powerhouses of growth, are under pressure on every side. Regulation is piling up. Competitors are stealing business. And many lenders are shrinking fast. Is banking in terminal decline? It is certainly in turmoil. Hit by challenging markets and onerous post-crisis regulation, bank profitability has been squeezed hard. Today, even JPMorgan Chase, the most profitable Wall Street bank on recent performance, generates a return on equity of just 12 per cent. That compares with the industry average of about 25-30 per cent pre-crisis. A decade ago, investors would have slammed JPM’s chief executive Jamie Dimon for such a dismal return. Goldman Sachs, another of the banks that has prospered relative to rivals, suffered a near 40 per cent slump in third quarter net income. Goldman’s ROE is now just 7 per cent. There are three simplistic schools of thought about what is going on. The first theory is that this is just a blip induced by excessive regulation; the second, that it is merely a return to normal after an exceptional pre-crisis boom; the third suggests the slow death of banking.

Bank of America Cut Off Finance Sites From Its Data - WSJ: Bank of America Corp. is among a number of financial firms to temporarily cut off the flow of information to some websites and mobile applications that aggregate consumer financial data, according to people familiar with the matter. The bank’s move reflects the rising tension between Wall Street and technology firms over these services, which are popular with consumers and a cause of concern for banks. Several banks have recently posted warnings on their websites discouraging customers from dealing with these financial aggregators. The Wall Street Journal previously reported that J.P. Morgan Chase and Wells Fargo disrupted the data flow to such sites in recent months. “This is a shot across the bow from banks,” Consumers in recent years have flocked to aggregator sites in particular as a way to monitor numerous financial relationships in one place. In the past five years, the number of users on aggregator rose more than sixfold to 20 million, according to the company. While the banks have an interest in protecting their turf and not sharing customers with tech-savvy upstarts, they have also raised concerns that the aggregator sites may threaten consumers’ account security and the performance of bank websites. Banks said they are within their rights to block or slow customers’ access to their own financial data.

Regulators Propose New Rules to Ease Strain of Bank Failures - — A group of financial policy makers has outlined a new framework intended to keep banks around the world from becoming “too big to fail” and requiring government bailouts in a future financial crisis.The proposed rules would require the world’s biggest banks to maintain capital buffers that could absorb potential losses when a bank is failing and prevent further pressure on the financial system. Regulators are seeking to shift the costs of a failing bank to its investors, rather than on taxpayers in a future financial upheaval.The new recommendations were outlined on Monday by the Financial Stability Board, a Switzerland-based group of central bankers and financial regulators from the world’s largest economies.The proposed standards would still have to be adopted by leaders of the Group of 20 big economies, which meet in Turkey this month. The Federal Reserve of the United States announced its own rules for the so-called total loss-absorbing capital in October. in ending ‘too big to fail’ may never be absolute because all financial institutions cannot be insulated fully from all external shocks,” Mark J. Carney, the Bank of England governor and the chairman of the Financial Stability Board, wrote in a letter to the Group of 20 on Monday. “But these proposals will help change the system so that individual banks as well as their investors and creditors beat the costs of their own actions, and the consequences of the risks they take,” he added.

When Collapse Is Cheaper and More Effective Than Reform: We all know why reforms fail: everyone whose share of the power and money is being crimped by reforms fights back with everything they've got. Reforms that can't be stopped by the outright purchase of politicos are watered down in committee, and loopholes wide enough for jumbo-jets of cash to fly through are inserted. The reform quickly becomes "reform"--a simulacrum that maintains the facade of fixing what's broken while maintaining the Status Quo. Another layer of costly bureaucracy is added, along with hundreds or thousands of pages of additional regulations, all of which add cost and friction without actually solving what was broken. The added friction increases the system's operating costs at multiple levels. Practitioners must stop doing actual work to fill out forms that are filed and forgotten; lobbyists milk the system to eradicate any tiny reductions in the flow of swag; attorneys probe the new regulations for weaknesses with lawsuits, and the enforcing agencies add staff to issue fines. None of this actually fixes what was broken; all these fake-reforms add costs and reduce whatever efficiencies kept the system afloat. Recent examples include the banking regulations passed in the wake of the 2008 meltdown and the ObamaCare Affordable Care Act (ACA).

US Taxpayer Set To Bank-Roll Biggest Billionaire Builders -- Just days after the potential for more capital injections for Fannie Mae and Freddie Mac (GSEs) are admitted to, we discover another 'scheme' to enrich the 'have-yachts' on the backs of the 'have-nots'. At the behest of the government, apparently to provide 'affordable' housing for the least creditworthy individuals - just as they did in the not-so-distant past to such cataclysmic ends, GSE's "commitment to providing critical financing for multi-family housing in all markets," has,as Bloomberg reports, enabled billionaires such as Starwood's Barry Sternlicht and Blackstone's Stephen Schwarzmann to cheaply finance two transactions totaling more than $10 billion, implicitly subsidized by the US taxpayer. Even more ironic is that the provision of this 'cheap debt' is helping sustain just the unaffordable surges in rents and prices that are forcing Milennials to live with their parents for longer. Who do billionaires turn to when they want to buy apartment complexes? The U.S. taxpayer. Bloomberg explains... Barry Sternlicht’s Starwood Capital Group and Stephen Schwarzman’s Blackstone Group LP are in talks with Freddie Mac to finance two transactions totaling more than $10 billion, according to people with knowledge of the negotiations. Those discussions come after the government-owned mortgage giant already agreed to back Lone Star Funds’ $7.6 billion deal to buy Home Properties Inc. and Brookfield Asset Management Inc.’s $2.5 billion takeover of Associated Estates Realty Corp. The mortgage guarantor -- which along with its larger counterpart Fannie Mae was rescued in a $187.5 billion taxpayer bailout in 2008 -- is boosting its multifamily lending as their regulator eases restrictions on that part of their business. Cheap debt from the U.S.-backed companies is helping sustain a five-year surge in values for apartment buildings and fueling some of the biggest real estate deals since the financial crisis.

Real Estate Shell Companies Scheme to Defraud Owners Out of Their Homes -  Partially paralyzed and reliant on a wheelchair, Ozella Campbell she saw a commercial urging her to call, a company that offered to buy houses in as-is condition, in cash, and to close the purchase within seven days. She called the toll-free number and within hours, she said, a well-spoken young man appeared at her brownstone, a longtime family home in Bedford-Stuyvesant, a Brooklyn neighborhood in the throes of transformation. The next day, the man’s associate arrived. “He said, ‘You don’t have to pay any more bills,’” said Ms. Campbell, who was $1,000 behind on her electric bill at the time.  A third man, named Alex, ostensibly the boss, arrived next. He promised, Ms. Campbell said, to pay her delinquent mortgage, provide for her housing for two years, and pay her $43,800. He also hired a lawyer for her. All she had to do was sign over the deed to her house. More than a year later, Ms. Campbell, 75, is in limbo. Her former home at 679 Jefferson Avenue is owned by an entity called Jefferson Holding LLC and she is left with her delinquent $529,000 mortgage. “He lied,” she said tearfully of Alex in an interview at the illegally converted garage in Canarsie, Brooklyn, where she lives for now. “He said, ‘Don’t worry, Mrs. Campbell, we’re going to take care of you.’ ” Ms. Campbell never learned Alex’s surname. And when her relatives tried to find Jefferson Holding LLC at its Great Neck, N.Y., address, there was no company there by that name.

Fed Trips over Eye-Popping Commercial Real Estate Bubble, Accidentally Looks, Sees “Early Signs” of “Search for Yield”  - Wolf Richter - No one in his right mind plays in commercial real estate with their own money. Other people’s money is the key. Low interest rates make it happen. Banks are eager to lend. They repackage some of these loans into highly-rated Commercial Mortgage Backed Securities that yield-desperate investors are eager to gobble up, spreading the risk far and wide. CMBS made the prior commercial real estate bubble possible, before it all blew up in 2008. And they’re making it possible now. When it doesn’t work out, as in 2008, it isn’t that much of a problem because other people’s capital gets destroyed. And so prices have been bid up again over the years since the low of May 2009, and miracles have been performed after the crash, and construction cranes are dotting cities, and one of those forests of construction cranes must have triggered something funny in Boston Fed President Eric Rosengren. He opened his eyes and counted these cranes on a short walk in Boston, and for the first time saw what had been ballooning before him for years: a commercial real estate bubble. Or at least now he admitted it, or a tiny part of it, rolled into a speech on Monday that confirmed, to the apparent shock of the stock market, which swooned, that December “could be the appropriate time for raising rates.”  He then veered into “financial stability considerations” and his crane-count moment:  A qualitative indicator in a major city is a simple crane count. When the number of cranes observed on a short walk in a city such as Boston reaches double digits, as is the case today, it is worth reflecting on the sustainability of such growth. It has been one heck of a party in commercial real estate. The Green Street Commercial Property Price Index edged up to 120.6 in October, having nearly doubled from its crash-low in May 2009. It’s now 20.6% higher than it had been at the peak of the prior totally crazy bubble that blew up and collapsed with such spectacular financial pyrotechnics:

RealtyTrac: Foreclosure starts post highest jump in more than four years - Foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 115,134 U.S. properties in October, up 6% from the previous month. This is still down 6% from a year ago, the latest RealtyTrac Foreclosure Market Report for October 2015 showed. The rise was caused primarily by a 12% monthly jump in foreclosure starts, with 48,605 properties starting the foreclosure process for the first time in October. This increase marks the largest month-over-month increase since August 2011, when there was a 24% month-over-month increase. Despite the month-over-month increase, foreclosure starts in October were still down 14% from a year ago.While this increase isn’t a giant surprise, it did exceed expectations. “We’ve seen a seasonal increase in foreclosure starts in October for the past five consecutive years, so it’s not too surprising to see the monthly increase this October,” said Daren Blomquist, vice president at RealtyTrac. “However, the 12% increase this October is more than double the average 5% monthly increase in the past five Octobers, and the even more dramatic monthly increases in some states is certainly a concern. The upward trend in foreclosure starts in those states in some cases could be an indication of fissures in economic fundamentals driving more distress and in other cases is more likely an indication of long-term delinquencies finally entering the foreclosure pipeline,” he added. Broken up, October foreclosure starts increased from the previous month in 34 states, including California (up 21%), Florida (up 13%), New Jersey (up 15%), Illinois (up 20%), Maryland (up 300%), Washington (up 34%), and Michigan (up 37%).Meanwhile, Maryland, New Jersey, Florida, Nevada and Illinois posted the highest state foreclosure rates.

MBA: Mortgage Refinance Applications Decrease in Latest Weekly Survey, Purchase Applications up 18% YoY  --From the MBA: Refinance Applications Decrease in Latest MBA Weekly Survey Mortgage applications decreased 1.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 6, 2015. ..The Refinance Index decreased 2 percent from the previous week. The seasonally adjusted Purchase Index increased 0.1 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 18 percent higher than the same week one year ago. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.12 percent, its highest level since August 2015, from 4.01 percent, with points decreasing to 0.45 from 0.47 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The first graph shows the refinance index. Refinance activity remains low. 2014 was the lowest year for refinance activity since year 2000, and refinance activity will probably stay low for the rest of 2015. The second graph shows the MBA mortgage purchase index. According to the MBA, the unadjusted purchase index is 18% higher than a year ago.

Keeping an Eye on the Housing Market -- In a recent speech, Federal Reserve Bank of San Francisco President John Williams suggested that signs of imbalances were starting to emerge in the form of high asset prices, particularly in real estate. He pointed out that the house price-to-rent ratio had returned to its 2003 level and that, while it may not be at a tipping point yet, it would be important to keep an eye on the situation and act before the imbalance grows too large. President Williams is not the only one monitoring this situation. Many across the industry are keeping a watchful eye on the rapid price appreciation (see here, here, and here), including my colleagues and me at the Atlanta Fed. While it is too soon to definitively know if a bubble is forming, the house price-to-rent ratio seems like a relevant measure to track. Why? Basically, because households have the option to rent or own their home, equilibrium in the housing market is characterized by a strong link between prices and rents. When prices deviate substantially from rents (or vice versa), the cost-benefit calculus in the rent-versus-own equation changes, inducing some households to make a transition. In effect, these transitions stabilize the ratio. In an effort to better understand house price trends, we chart the house price-to-rent ratio at an annual frequency on top of a stacked bar chart depicting year-over-year house price growth (see chart below). Each stacked bar reflects the share of ZIP codes in each range of house price change. Shades of green indicate house price appreciation from the year-earlier level, and shades of red indicate house price decline. The benefit of considering house price trends through the lens of this stacked bar chart is, of course, that it provides a better sense for the distribution of house price change that is often masked by the headline statistic.

Housing: Inventory Build is Over in some Former Distressed Markets -- I don't have a crystal ball, but watching inventory helps understand the housing market.   If inventory kept increasing rapidly in certain markets, then we would eventually see price declines.  However it now appears the inventory build is over in some former distressed markets.   The table below shows the year-over-year change for non-contingent inventory in Las Vegas, Phoenix and Sacramento (October 2015 not available yet for Phoenix and Sacramento).  Inventory declined sharply through early 2013, and then inventory started increasing sharply year-over-year.  This makes sense.  Prices increased rapidly in these markets in 2012 and 2013 (bouncing off the bottom with low inventory).  Higher prices attracted more people to list their homes.  Once prices flattened out, potential sellers weren't as motivated to list their homes.  Unlike following the housing bubble, most of these potential sellers probably don't need to sell, so listings didn't grow to the moon!  Now listing are starting to decline, so prices might increase a little quicker.  As an example, according to Case-Shiller, prices in Phoenix only increased 2.4% in 2014, but have increased 3.5% already this year through August.  For Phoenix, the inventory build ended near the end of 2014.  For Las Vegas, the inventory might have just ended a couple of months ago.  If inventory continues to decline, it seems likely price increases will pick up in Las Vegas. I still expect overall inventory to continue to increase nationally, but this is something to watch.

Post Mortem on Existing Home Sales in September - Lawler: In its latest Existing Home Sales Report released last month, the National Association of Realtors estimated that existing home sales ran at a seasonally adjusted annual rate of 5.55 million in September, way above consensus but very close to my estimate based on regional tracking of local realtor/MLS reports available prior to the NAR’s release. Since then several additional local realtor/MLS reports have been released, and based on all local realtor/MLS reports released for September it appears that if anything the NAR’s estimate of the YOY % increase in home sales for September was a bit low. The NAR’s estimate showed a YOY % increase in unadjusted sales of 8.0% for September, with YOY increases of 10.2% in the Northeast, 10.9% in the Midwest, 8.5% in the West, but only 5.5% in the South. Local realtor reports from the South, however, strongly suggest that home sales in that region grow by significantly more than 5.5% YOY. For the other regions, in contrast, the NAR estimates seem in line with local realtor reports. Of course, this does not necessarily mean that the NAR will revise its September sales estimate higher in this month’s report. The NAR’s sample is based almost entirely from MLS reports from metropolitan areas, while where available I use state-wide realtor reports, and it is possible that the NAR’s sample was not representative of overall sales in the region.

FNC: Residential Property Values increased 6.1% year-over-year in September  - FNC released their September 2015 index data today.  FNC reported that their Residential Price Index™ (RPI) indicates that U.S. residential property values increased 0.2% from August to September (Composite 100 index, not seasonally adjusted).   The 10 city MSA increased 0.5% (NSA), the 20-MSA RPI increased 0.2%, and the 30-MSA RPI increased 0.2% in September. These indexes are not seasonally adjusted (NSA), and are for non-distressed home sales (excluding foreclosure auction sales, REO sales, and short sales).   Notes: In addition to the composite indexes, FNC presents price indexes for 30 MSAs. FNC also provides seasonally adjusted data. The year-over-year (YoY) change was larger in September than in August, with the 100-MSA composite up 6.1% compared to September 2014. The index is still down 14.4% from the peak in 2006 (not inflation adjusted). This graph shows the year-over-year change based on the FNC index (four composites) through September 2015. The FNC indexes are hedonic price indexes using a blend of sold homes and real-time appraisals. Most of the other indexes are also showing the year-over-year change in the 5% range. For example, Case-Shiller was up 4.7% in August, CoreLogic was up 6.4% in September.

Home-Price Growth Cooled a Bit This Summer, Realtors Say - Home-price growth cooled during the height of the summer, according to a report released Thursday, an indication that the market will improve at a more modest clip in the latter half of the year. The median existing single-family home price increased in 154 out of 178 metro areas compared with a year earlier during the third quarter of 2015, according to the National Association of Realtors. In the second quarter, 163 out of 176 metro areas saw year-over-year increases. Far fewer places are seeing dramatic price increases. Just 21 metro areas reported double-digit price gains in the third quarter, compared with 34 metro areas in the second quarter. In the first quarter, 51 metro areas reported double-digit increases compared with a year earlier.Home prices have increased strongly across much of the country throughout the year, in part because prices in many areas fell so sharply during the housing crash and are still recovering. But incomes have grown at a much slower pace, raising fears that first-time buyers are being priced out of the market. “While price growth still teetered near or above unhealthy levels in some markets, the good news is that there was some moderation despite the stronger pace of sales,” said Lawrence Yun, chief economist at the National Association of Realtors.  The median existing single-family home price increased 5.5% in the third quarter from a year earlier to $229,000, compared with 8.2% in the second quarter. Wages have been growing at a rate of about 2% annually.

First-time Buyers Continue to Retreat from U.S. Housing Market - According to an annual survey by the National Association of Realtors (NAR), the share of first-time buyers declined for the third consecutive year and remained at its lowest point in nearly three decades as the overall strengthening pace of home sales over the past year was driven more by repeat buyers with dual incomes. The survey additionally found that nearly 90 percent of all respondents worked with a real estate agent to buy or sell a home; which pushed for-sale-by-owner transactions to their lowest share ever. The 2015 National Association of Realtors Profile of Home Buyers and Sellers continues a long-running series of large national NAR surveys evaluating the demographics, preferences, motivations, plans and experiences of recent home buyers and sellers; the series dates back to 1981. Results are representative of owner-occupants and do not include investors or vacation homes. In this year's survey, the share of first-time buyers declined to 32 percent (33 percent a year ago), which is the second-lowest share since the survey's inception (1981) and the lowest since 1987 (30 percent). Historically, the long-term average shows that nearly 40 percent of primary purchases are from first-time home buyers.

Can't Afford To Buy A House? Buy It Anyway Housing "Experts" Advise --“In metros with high-income growth, unaffordable mortgage payments can become affordable within a few years,” writes Trulia Housing Economist Ralph McLaughlin in a blog post titled “For Millennials, Buying an Unaffordable Home Isn’t Always a Bad Idea”.  Now first, buying an unaffordable home is always a bad idea, just like buying an unaffordable anything.  Sure, it might one day become affordable, but saying it’s a good idea to buy something that you can’t afford because circumstances could eventually conspire to make you richer is like saying it’s a good idea to quit your day job and become a traveling magician because there’s a chance people will love your act. After all, on this logic, one could buy a Ferrari because there's a chance you could win the lottery next week (well, unless you're playing in Illinois where they'll pay you in IOUs). In other words, you can justify anything you want by saying it might turn out ok, but the flaw in that logic seems to have escaped McLaughlin (who has a Ph.D. in Planning, Policy, and Design from the University of California at Irvine) because as you’ll read below, he thinks millennials should consider buying houses where mortgage costs are too high as a percentage of their income on the assumption that based on local trends, their incomes will eventually rise.

Housing Market Faces Slower Growth in 2016, Realtors Say - Home sales will continue to grow next year, but will face headwinds including a lack of first-time buyers and rising mortgage rates, Realtors say. More than 5.4 million existing single-family homes will be sold in 2016, up from an estimated 5.3 million homes sold in 2015, Lawrence Yun, chief economist at the National Association of Realtors, said at the group’s convention Friday in San Diego. Mr. Yun anticipates that median home prices will grow at an annual rate of 5%, compared with 6% this year. Still, Mr. Yun said the market continues to face some steep headwinds.  Pending home sales—a forward-looking measure of the housing market—are on the decline. “Rising home prices are becoming an obstacle for first-time buyers,” he said. Mr. Yun expects the rate for a 30-year fixed mortgage to rise to 4.5% from 3.8% as the Federal Reserve moves to raise short-term interest rates and the economy strengthens. That would make homes even less affordable. The homeownership rate—which already sits near 50-year lows—will dip even further, Mr. Yun said. But that is largely a positive trend, as young people will start moving out of their parents’ basements and become renters. Cristian DeRitis, a senior director at Moody’s Analytics, said he also expects prices and sales to rise. Mr. DeRitis said he is expecting price gains of about 3.3%.

Hotels: RevPAR up 35% over the last 6 years - RevPAR (revenue per available room) was $80.23 last week. For the same week in 2009, RevPAR was $59.28. An increase of 35% in six years.  Here is weekly update on hotel occupancy from STR: US results for week ending 7 November The U.S. hotel industry recorded positive results in the three key performance measurements during the week of 1-7 November 2015, according to data from STR, Inc. In year-over-year measurements, the industry’s occupancy increased 0.2% to 66.4%. Average daily rate for the week was up 3.1% to US$120.73. Revenue per available room increased 3.3% to finish the week at US$80.23. The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.  Hotels are now in the Fall business travel season.

The End of Chapter 11 Bankruptcy Protection - Is Chapter 11 doomed? There are reasons to think that the famous financial reorganization law won’t work much longer in its current form. It has already been widely remarked that the tendency for distressed firms to grant first, second and even third liens on their assets makes reorganization all the more difficult. The bankruptcy code was really not intended for a world where everyone is a secured creditor.  For many years, my research has shown that the growth of credit default swaps has made restructuring more complex by making creditors’ true incentives more opaque. Chapter 11, as written in 1978, is based on the assumption that economic interests and legal interests come as a package, but that is no longer true.  Then there are the safe harbors that remove derivatives, repurchase agreements and securities trades from the crucial protections of the bankruptcy code. It was only a matter of time before smart lawyers figured out that lots of ordinary supply contracts look a lot like swaps or other derivatives if viewed from the right angle. And there is the trend of putting companies’ real estate assets into REITs, or real estate investment trusts. Caesars Entertainment is proposing to put its real estate into a REIT as part of its Chapter 11 plan. But a host of other companies have already made this move or are considering it. REITs benefit from a tax subsidy, provided that they pass on all of their real estate income to shareholders. Separating a firm’s real estate into a distinct corporate entity allows the company to enjoy this subsidy. From a bankruptcy perspective, this means that if any of these companies ends up in bankruptcy – or in Caesars’ case, if it ends up in bankruptcy again – the operating company will no longer have direct control over the company’s real estate.

Debt Serfdom in America: As of October 2015, American consumers owe $8.17 trillion in mortgages, $900 billion in credit cards, and $1.19 trillion in student loans. Home mortgages, credit cards, and student loans occupy the most of the consumer credit market.The consumer credit market is the dream paradise of money merchants, known as moneylenders. Just as pharma companies sell drugs to make money by way of profit, money merchants sell money to make money by way of interest. Note again, money merchants sell money to make money. They sell money to millions of American consumers needing to buy houses, cars, or home appliances. They sell money to millions of American students becoming physicians, lawyers, managers, as well as to college students. Big operators set up banks, brokerage houses, and credit unions. Small operators run payday loans and pawnshops. The rich and the wretched, the lord and the tenant, teachers and students, men and women, all this and all that, except the privileged few, are obligated, in one form or the other, to money merchants.Carrying debt has become a quintessential attribute of American life. And creditworthiness, the ability to borrow money, is the most valued personal asset an individual may garner. Credit monitoring companies gather information about an individual’s “bill payment history, loans, current debt, and other financial information.” Credit reports also inform money merchants where the individual works and lives and whether the individual has been “sued, arrested, or filed for bankruptcy.” Losing creditworthiness can have more severe consequences for an individual than losing liberty, even body limbs.

Despair, American Style, by Paul Krugman -  A couple of weeks ago President Obama mocked Republicans who are “down on America,” and reinforced his message by doing a pretty good Grumpy Cat impression. He had a point: With job growth at rates not seen since the 1990s, with the percentage of Americans covered by health insurance hitting record highs, the doom-and-gloom predictions of his political enemies look ever more at odds with reality. Yet there is a darkness spreading over part of our society. And we don’t really understand why.There has been a lot of comment, and rightly so, over a new paper by the economists Angus Deaton (who just won a Nobel) and Anne Case, showing that mortality among middle-aged white Americans has been rising since 1999. This deterioration took place while death rates were falling steadily both in other countries and among other groups in our own nation.  Even more striking are the proximate causes of rising mortality. Basically, white Americans are, in increasing numbers, killing themselves, directly or indirectly. Suicide is way up, and so are deaths from drug poisoning and the chronic liver disease that excessive drinking can cause.  If you believe the usual suspects on the right, it’s all the fault of liberals. Generous social programs, they insist, have created a culture of dependency and despair, while secular humanists have undermined traditional values. But (surprise!) this view is very much at odds with the evidence. For one thing, rising mortality is a uniquely American phenomenon – yet America has both a much weaker welfare state and a much stronger role for traditional religion and values than any other advanced country. Sweden gives its poor far more aid than we do, and a majority of Swedish children are now born out of wedlock, yet Sweden’s middle-aged mortality rate is only half of white America’s. You see a somewhat similar pattern across regions within the United States. Life expectancy is high and rising in the Northeast and California, where social benefits are highest and traditional values weakest. Meanwhile, low and stagnant or declining life expectancy is concentrated in the Bible Belt.

What Explains the Paradox of an Improving Economy and Miserable Voters - The worlds of politics and economics often talk past each other and that’s especially true right now. The unemployment rate has declined for five years, the economy has been in expansion for more than six years, and the stock market has more than tripled since 2009. You wouldn’t know that from the presidential election where a populist strain of politics often presents the economy in nearly apocalyptic terms. Presidential candidates from the two parties scarcely differ on whether Americans are “being crushed”—it’s mostly a question of whether runaway inequality or runaway government are to blame. When asked by Gallup if they’re satisfied with the direction of the country, only 25% say they are. That’s better than the depths of the recession in 2008, but there’s been no consistent improvement over the past five years. Over at FiveThirtyEight, this has been dubbed the Iowa Paradox: “The economy is better—why don’t voters believe it?” Gallup’s economic confidence index even shows economic confidence deteriorating over the past year, a period in which gas prices have held around $2 to $2.50 a gallon and joblessness has continued to decline.

Americans are piling on record debt - CBS News: Good news! Americans are taking out loans at the fastest pace in years. The bad news? Americans are taking out loans at the fastest pace in years. Total consumer borrowing reached a record high in September of $3.5 trillion, recording the biggest one-month jump since the U.S. entered the Second World War, according to data released last week by the Federal Reserve. At the same time, businesses in recent years have capitalized on low interest rates to issue what Goldman Sachs (GS) analysts say are "record" levels of debt. Most of that money is going to fund repurchases of their own stock, dividend payments, and mergers and acquisitions. "This has driven the total amount of debt on balance sheets to more than double pre-crisis levels," they wrote in a research note.

What Rising Wages: Fed Itself Just Admitted "Household Income Expectations Are Falling Sharply" -- Having noted the plunge in consumer spending expectations to record lows last month, The Fed faces an even bigger problem this month. Despite the apparent wage growth in Friday's magical BLS data, The New York Fed admits "public expectations of future income took a big hit," as the index suffered its biggest one-month decline on record. But the news gets even worse, as 3-year-ahead inflation expectations plunged to record lows(confirming the record low inflation expectations from UMich's) and entirely discounting Stan Fischer's inflation excuses last week. Fianlly, as stocks have stagnated this year as wealth creator for The Fed, consumer expectations of housing price gains have tumbled to series lows. It appears a desperate-to-hike-rates fed is cornered by, as UMIch previously noted, "a disinflationary mindset is taking hold."  As The New York Fed explains, According to a Survey of Consumer Expectations report Monday by the Federal Reserve Bank of New York said, one-year ahead expected inflation ticked up to 2.82% from 2.73% the prior month. But three-year ahead expected inflation ticked down to 2.78% from 2.84% in September, with October's reading resting at its lowest level in a survey that goes back to June 2013. The bank also said the public's expectations of future income took a big hit.Median household income expectations fell to a 2.3% rise, from September's 2.8%. The New York Fed noted this was the biggest one-month drop in the history of the survey and that it was spread across demographic groups.

The Legendary U.S. Consumer Is Out Of Cash In These Cities --Today Macy's dropped a bomb with results that were nothing short of abysmal, and which confirmed that not only the "legendary" U.S. spender, the driving force behind 70% of US GDP, but also foreign shoppers have hunkered down to a greater extent than at any other time during the so-called recovery. Quickly the apologists said that this is not an indicator of overall consumer weakness as much as it is lack of retail strength: the argument being that more spending goes to online markets. There is just one problem: if that were the case, one would see a pronounced deterioration in spending uniformly across US cities. However, not only is that not the case, but there is a very clear distinction in which cities US consumers are doing well, versus cities in which they have been tapped out. We know this courtesy of Bank of America's latest credit and debit card usage data which showed a dramatic divergence among the top 10 US metro areas. As the chart below shows, there is a very distinct slow down in spending in various cities such as Atlanta and Washington DC, both of which saw a sudden and unexpected plunge in retail sales in October compared to their prior 6 month average; sales in Houston on the other hand continue to weaken – the region has experienced essentially no growth in nominal sales over the prior six months. On the upside, the US financial centers, Boston and New York, were the strongest as one would expect.  So for those wondering where the US consumer is all spent out, look no further than the cities at the bottom of this chart.

Retail Sales increased 0.1% in October -- On a monthly basis, retail sales were up 0.1% from September to October (seasonally adjusted), and sales were up 1.7% from October 2014. From the Census Bureau reportThe U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for October, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $447.3 billion, an increase of 0.1 percent from the previous month, and 1.7 percent above October 2014. ... The August 2015 to September 2015 percent change was revised from +0.1 percent to virtually unchanged. This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales ex-gasoline increased 0.1%. The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993. Retail and Food service sales ex-gasoline increased by 4.1% on a YoY basis (1.7% for all retail sales including gasoline). The increase in October was below expectations of a 0.3% increase,and sales in August and September were revised down. This was a weak report, however sales ex-gasoline are still up a decent 4.1% YoY.

Retail Sales: October Retail Sales Disappoint Expectations - The Census Bureau's Advance Retail Sales Report released this morning shows that seasonally adjusted sales in October increased 0.1% month-over-month and are up 1.7% year-over-year. Core Retail Sales (ex Autos) came in at 0.2% MoM and are up only 0.5% YoY. The forecasts were 0.3% for Headline Sales and 0.4% for Core Sales. The chart below is a log-scale snapshot of retail sales since the early 1990s. The two exponential regressions through the data help us to evaluate the long-term trend of this key economic indicator.The year-over-year percent change provides another perspective on the historical trend. Here is the headline series. Here is the year-over-year version of Core Retail Sales. Retail Sales: "Control" Purchases The next two charts illustrate retail sales "Control" purchases, which is an even more "Core" view of retail sales. This series excludes Motor Vehicles & Parts, Gasoline, Building Materials as well as Food Services & Drinking Places. Here is the same series year-over-year. Note the highlighted values at the start of the two recessions since the inception of this series in the early 1990s.

US Retail Spending Growth Turns Sluggish In October -- If you were expecting today’s retail sales report for October to deliver a blowout gain in line with the surprisingly strong rise in payrolls for last month, today’s release on consumer spending is a disappointment. It’s not terrible, but the monthly 0.1% advance in retail consumption is below expectations and a sign that it’s still reasonable to keep expectations in check for anticipating a sharp turnaround for the economy overall in the fourth quarter.  The monthly data is noisy, of course, and there’s the added glitch that the Census Bureau has tweaked its methodology for estimating retail sales. In any case, today’s numbers don’t look particularly strong for the year-over-year trend either. Spending increased a soft 1.7% in October vs. the year-ago level—the slowest rise in six months.  Stripping out gasoline sales paints a brighter profile, which provides some cover for arguing that the bear market in energy is distorting the trend to the downside for tracking retail spending. That’s partly true, although sales ex-gas decelerated to a 4.1% year-over-year gain last month. That’s a healthy pace, but it’s the slowest rise since June, providing more ammunition for arguing that consumer spending isn’t going to impress policymakers on the upside any time soon.

October Retail Sales A Lackluster 0.1% Increase -- The October 2015 Retail Sales report shows retail sales increased 0.1% for the month as auto sales slid by -0.5%.  Without autos & parts sales, retail sales increased 0.2%.  Gasoline sales declined by -0.9%.  Gasoline sales have plunged by 20.1% from a year ago.  Declining gasoline sales are not responsible for such weak consumer demand, for without gas stations considered, retail sales only rose by 0.1%.  Retail sales have now increased 1.7% from a year ago.   Retail sales are reported by dollars, not by volume with price changes removed.  Retail trade sales are retail sales minus food and beverage services and these sales had no change for the month.  Retail trade sales includes gas.  Total October retail sales were $447.3 billion.  Below are the retail sales categories monthly percentage changes.  These numbers are seasonally adjusted.   General Merchandise includes Walmart, super centers, Costco and so on.  Department stores by themselves saw a 0.3% monthly sales increase.  Building materials increased 0.9%, perhaps on people investing more in their homes once again.  Various store retailers had a good month with a 1.8% monthly gain.  Online shopping continues to grow with a monthly increase of 1.4% and an annual gain of 6.7%.  Food and drinking retail sales has gained 6.6% for the year.  Below is a graph of just auto sales.  For the year, motor vehicle sales have increased 6.7%.  Autos & parts together have increased 6.2% Below are the retail sales categories by dollar amounts.   As we can see, autos are by far the largest amount of retail sales.  Autos and parts is more than groceries and almost rivals groceries, bars and restaurants combined.  Graphed below are weekly regular gasoline prices and as prices drop, so do retail sales. The below pie chart breaks down the monthly seasonally adjusted retail sales by category as a percentage of total sales by dollar amounts.  The size of auto sales in comparison to all else never ceases to amaze.

Headline Retail Sales Insignificantly Grew In October 2015.: Retail sales improved insignificantly according to US Census headline data. Our view is that this month's data was weaker than last month, There was a decline of the rolling averages. Consider that the headline data is not inflation adjusted and prices are currently deflating making the data better than it seems. Backward data revisions were downward. Econintersect Analysis:

  • unadjusted sales rate of growth decelerated 0.5 % month-over-month, and up 1.8 % year-over-year.
  • unadjusted sales 3 month rolling year-over-year average growth decelerated 0.5 % month-over-month to 1.8 % year-over-year (note that rolling averages and this months growth are the same).
  • unadjusted sales (but inflation adjusted) up 3.3 % year-over-year
  • this is an advance report. Please see caveats below showing variations between the advance report and the "final".
  • in the seasonally adjusted data - motor vehicles, grocery stores, gas stations and general merchanise stores were weak, but mostly everything else was relatively strong.
  • seasonally adjusted sales up 0.1 % month-over-month, up 1.7 % year-over-year (last month was 2.3 % year-over-year).

Retail Sales Weaker Than Expected, Led by Autos; Car Boom Ending?  This month the retail sales consensus expectation was for a 0.3% rise. The actual reading was  a gain of just 0.1% for the month. In addition, last month's retail sales were revised lower to +0.0% from an initial reading of +0.1%. This was the third consecutive weak report. Nonetheless Bloomberg managed to put an amazing amount of lipstick on today's report. Let's take a look.  Retail sales slowed in October but fundamentally remain solid. Sales rose only 0.1 percent, 2 tenths under the Econoday consensus. But when excluding vehicles, which slipped back after surging in prior months, and when also excluding gasoline stations, where sales once again fell on price weakness, core sales rose a respectable 0.3 percent which hits the consensus. And there are solid gains including for housing-related components of furniture & home furnishings and building materials & garden equipment. Nonstore retailers also show a strong gain as do restaurants. Aside from vehicles and gas, other areas that declined are electronics & appliance stores, grocery stores, and the big category of general merchandise sales. Declines in the latter may be related to import-price effects which are deflating sales. A positive, however, is a gain for department stores which are a subset of general merchandise. Apparel sales, which are definitely being held down by import prices, were unchanged following two small declines. Year-on-year rates really tell the story especially a respectable plus 4.1 percent rate for sales excluding gasoline stations, a component that is down 20.1 percent and has been badly skewing total sales all year. Total sales are up only 1.7 percent. The headline is weak and year-on-year rates did ease off, including for core ex-auto ex-gas to plus 3.5 from 3.8 percent, but this report is better than it looks, showing underlying strength that shouldn't scale down expectations for a December FOMC rate hike.

Economists Blame Mild Weather For Poor Retail Sales -- Weather in the past two months has generally been unseasonably pleasant. Economists say this is bad for shopping as Redbook's Same Store Sales Report shows retail sales year-over year are only up 1.1%.  Sales in Redbook's same-store sample slowed sharply in the November 7 week, to a year-on-year plus 1.1 percent from an already moderate 1.9 percent in the prior week. Unseasonably warm weather has been hurting sales of seasonal goods, which could be a factor in Friday's retail sales report for October. Turning back to November and this report, readings in the early part of the month will be forgotten as attention turns to the holiday kickoff late in the month. Redbook is a weekly measure of comparable store sales at chain stores, discounters, and department stores. Figures for the first week of the month are compared with the average for the entire previous month. When two weeks are available, then these are compared with the average for the previous month, and so on through the month

44 Oil Executives and Truck Drivers Were Just Arrested for a Multimillion-Dollar Scam -  Dozens of New York City-area energy industry executives and truck drivers were arrested Tuesday as part of a law enforcement probe into a suspected scam on customers. DNAinfo reports the bust includes over 40 "owners, executives and truck drivers from some of the city's largest fuel oil companies" who police accuse of rigging oil trucks to shortchange customers on heating oil. The alleged scammers, who DNAinfo reported include eight owners of fuel companies and three transportation depots, are accused of scamming developers and city agencies, including police and fire departments and those serving "the homeless and city schoolchildren." Alleged victims also included the owners of smaller buildings who purchased oil from the companies implicated.  Prosecutors said the trucks were equipped with "diverter valves" that gave fake readouts of how much oil each customer was being delivered, DNAinfo reported. They also allegedly used other tricks to fool measuring devices designed to prevent fraud. According to the New York Times, nearly a dozen unsealed indictments detail the allegations against the defendants, accusing them of stealing $34 million in oil over the course of a single year, or $18 million annually over the course of the yearslong scheme. The cost to the city was $4 million each year.

Preliminary November Consumer Sentiment increases to 93.1 -  The preliminary University of Michigan consumer sentiment index for November was at 93.1, up from 90.0 in October. "Confidence rose in early November mainly due to a stronger outlook for the domestic economy. Overall, the most recent confidence reading was equal to the average during the first ten months of 2015, and higher than any year since 2004. Two trends dominated the early November data: consumers anticipated somewhat larger income increases during the year ahead as well as expected a somewhat lower inflation rate. This meant that consumers held the most favorable inflation-adjusted income expectations since 2007. Moreover, the somewhat larger gains were anticipated by lower income households. Buying plans for large discretionary purchases improved, especially for vehicles. Overall, the data indicate an expected rate of growth in personal consumption expenditures of 2.9% in 2016. " This was above the consensus forecast of 92.0.

September 2015 Wholesale Sales Improve but Remains In Contraction: The headlines say wholesale sales improved year-over-year with inventory levels remaining at levels associated with recessions. The best way to look at this series may be the unadjusted data three month rolling averages which decelerated keeping the long term downtrend in play. Note that Econintersect analysis is year-over-year - the analysis is based on the change from one year ago. Econintersect Analysis:

  • unadjusted sales rate of growth accelerated 1.2 % month-over-month.
  • unadjusted sales year-over-year growth is down 3.6 % year-over-year
  • unadjusted sales (but inflation adjusted) down 6.0 % year-over-year
  • the 3 month rolling average of unadjusted sales decelerated 1.1 % month-over-month, and down 4.3 % year-over-year. There has been a general deceleration trend since late 2014.
  • unadjusted inventories up 4.5 % year-over-year (acceleration of 0.3 % month-over-month), inventory-to-sales ratio is 1.27 which is historically is at recessionary levels (but with deflation in this sector this ratio is not operative)..

US Census Headlines based on seasonally adjusted data:

  • sales up 0.5 % month-over-month, down 4.7% (last month was reported down 3.9 %) year-over-year
  • inventories up 0.5 % month-over-month, inventory-to-sales ratios were 1.20 one year ago - and are now 1.31.
  • the market (from Bloomberg) expected inventory month-over-month change between 0.0 % to 0.3 % (consensus 0.1 %) versus the +0.5 % reported.

Wholesale Trade Inventories Surge Led By Autos  -- Autos are the sales Energizer bunny. Nothing seems to slow them down. Wholesale Inventories Surprised to the Upside, led by autos.  Wholesale inventories rose 0.5 percent in September following an upward revised 0.3 percent gain in August. The September build appears to be intentional based on a 0.5 percent rise in September sales that keeps the stock-to-sales ratio for wholesalers unchanged at 1.31. Inventories of autos rose 2.3 percent as wholesalers try to keep up with what is very strong retail demand for autos. Excluding autos, the stock-to-sales wholesale ratio is unchanged at 1.27.  Inventory draws reflecting gains in sales include computer equipment, electrical goods, and apparel. Wholesale inventories of furniture rose on a swing lower for sales. Inventories in general are heavy and businesses, waiting for a pick up in sales, are being careful to keep them in check. Today's results are in line with Commerce Department assumptions and should have little bearing on third-quarter GDP revisions.

Wholesale Inventories Have Never Been Higher Relative To Sales, Ever -- Having risen to its highest level since the middle of the last two recessions, wholesale inventories-to-sales ratio remains at cycle highs at 1.31x. With wholesale sales and inventories both rising 0.5% (both more than expected), however, the absolute difference between sales and inventories has never been higher, leaving either major inventory liquidation ahead (or a miracle in sales). Wholesale inventories have now risen 4.7% YoY, as Sales have fallen 3.9% YoY. Finally, Auto inventories-to-sales ratio dropped very modestly (thanks to the surge in sales), but remains deep in 2008/9 crisis territory. If we keep building it... they are just not coming...  The absolute spread between inventories and sales has never been wider... What happens next? The Fed is the only thing "enabling" zombie firms to carry such huge amounts of inventory... and they are about to leave the party.  Charts: Bloomberg

U.S Business Inventories Unexpectedly Rise 0.3% In September: With retail and wholesale inventories showing notable increases, the Commerce Department released a report on Friday showing unexpected growth in U.S. business inventories in the month of September. The report said business inventories rose by 0.3 percent in September after inching up by a revised 0.1 percent in August. Economists had expected inventories to come in unchanged compared to the flat reading originally reported for the previous month. The unexpected increase in business inventories was partly due to the growth in retail inventories, which swelled by 0.8 percent in September after rising by 0.5 percent in August. Wholesale inventories also climbed by 0.5 percent in September following a 0.3 percent increase in August. On the other hand, the report said manufacturing inventories fell by 0.4 percent in September, matching the drop seen in the previous month. The Commerce Department also said business sales came in unchanged in September after sliding by 0.6 percent in August. Retail sales were unchanged for the month, while a 0.5 percent increase in wholesale sales offset a 0.4 percent drop in manufacturing sales. With inventories rising and sales unchanged, the total business inventories/sales ratio crept up to 1.38 in September from 1.37 in August. The ratio came in at 1.31 a year ago. The Commerce Department also said business inventories in September were up by 2.5 percent year-over-year, while business sales fell at an annual rate of 2.8 percent. by RTT Staff Writer For comments and feedback: Business News

Business Inventories Rise More Than Expected; Inventory to Sales Ratio Highest in Recovery; Retailers Overestimating Demand? -- Business expectations are high and rising as measured by a new high in the inventory-to-sales ratio.  The Econoday Consensus Expectation was for no growth in inventories, but the actual result was +0.3 percent.  That rise sent the inventory-to-sales ratio to the highest point in the recovery.  Business inventories rose a higher-than-expected 0.3 percent in September on a back-up of inventories in the retail sector. The build is a plus for third-quarter GDP revisions but may not be a plus for future production and employment. Retail inventories surged 0.8 percent in September while sales came in flat, in turn raising the inventory-to-sales ratio to 1.48 from 1.47 for the highest of the recovery. Ratios across most retail subcomponents moved incrementally higher.  This report's other two components, which were previously released, include a 0.4 percent decline for factory inventories and a 0.5 percent rise for wholesales inventories. Had this morning's retail sales report for October proved stronger, the September build for retail inventories would be no concern. But the October sales report proved soft, raising the risk that retailers may be over-estimating holiday demand.

Businesses Are Stocking More Than They’re Selling. What Does It Mean? -- U.S. businesses are filling warehouses, lots and shelves with more goods, a welcome development for one measure of third-quarter economic growth but a potential drag if consumers don’t start snapping up more merchandise. In September, overall business sales were flat but inventories climbed 0.3%. That pushed the inventory-to-sales ratio to its highest level since the waning months of the recession, the Commerce Department said on Friday. If they keep piling up, outsized inventories could even be a harbinger of economic slowdown or recession.  The inventory-to-sales ratio measures how many months it takes to sell off inventories based on the current sales pace. It’s one way to determine if companies have too much or too little product on hand—businesses want to have enough so they don’t miss out on sales but not so much that things are sitting around for months at a time. What’s driving the surge in inventories? It’s mostly retailers, which includes auto dealers, but manufacturers’ and wholesalers’ inventories also have been creeping up. But the figures aren’t wildly out of line with prerecession norms. If companies believe they have too much stock on hand, they won’t order new products. When the recession hit, for example, consumer spending plummeted and companies were stuck loads of unsold goods. The ratio skyrocketed to 1.48 early in 2009. Warehouses slowly emptied but companies were cautious about new orders, so the ratio bottomed out at 1.24 early in 2011.

U.S. business inventories rise; third-quarter growth likely to be raised | Reuters: U.S. business inventories unexpectedly rose in September amid flat sales, suggesting the government's third-quarter economic growth estimate could be revised higher later this month. The Commerce Department said on Friday inventories increased 0.3 percent after an upwardly revised 0.1 percent gain in August. Inventories in August were previously reported to have been unchanged. Economists polled by Reuters had forecast inventories being unchanged in September. Inventories are a key component of gross domestic product. Retail inventories excluding autos, which go into the calculation of GDP, increased 0.5 percent in September after a similar rise in August. September's increase in inventories excluding autos was more than the government estimated in its advance GDP report last month. That report estimated that inventories sliced off 1.44 percentage points from GDP growth in the third quarter, leaving output expanding at a 1.5 percent annual rate. Wholesale inventory data this week also suggested the drag from inventories was probably not as large as estimated in the third-quarter GDP snapshot. Following the wholesale inventory data, economists expected that third-quarter GDP could be revised up to as high as a 1.9 percent rate later this month. In September, business sales were unchanged after declining 0.6 percent in August. At September's sales pace, it would take 1.38 months for businesses to clear shelves, compared to 1.37 months in August.

September 2015 Business Inventories Grow.: Econintersect's analysis of final business sales data (retail plus wholesale plus manufacturing) shows unadjusted sales improved compared to the previous month - but there was a decline of the rolling averages. Even with inflation adjustments, business sales are in contraction. The inventory-to-sales ratios remain at recessionary levels. Econintersect Analysis:

  • unadjusted sales rate of growth accelerated 0.7 % month-over-month, and down 2.7 % year-over-year
  • unadjusted sales (but inflation adjusted) down 0.8 % year-over-year
  • unadjusted sales three month rolling average compared to the rolling average 1 year ago decelerated 0.7 % month-over-month, and is down 3.0 % year-over-year.
  • unadjusted business inventories growth accelerated 0.1 % month-over-month (up 2.4 % year-over-year with the three month rolling averages decelerating), and the inventory-to-sales ratio is 1.4 which is at recessionary levels (well above average for this month). However, these ratios may be distorting the real picture as inventory values may not be properly revalued for inflation (first in, first out).
  • seasonally adjusted sales unchanged month-over-month, down 2.8 % year-over-year (it was reported down 3.1 % last month).
  • seasonally adjusted inventories were up 0.3% month-over-month (up 2.5 % year-over-year), inventory-to-sales ratios were up from 1.31 one year ago - and are now 1.38.
  • market expectations (from Bloomberg) were for inventory growth of 0.0 % to 0.3 % (consensus 0.0 %) versus the actual of +0.3 %.

US Q3 GDP tracking 2.1 after September business inventories - Total business inventories rose 0.3% m/m in September, well above forecast (-0.1%) and consensus (0.0%) expectations. Part of the better-than-expected result came from strong wholesale inventory growth reported earlier this week. Outside of wholesale inventories, about 0.1pp of the 0.3% m/m rise was driven by nonautomotive retail inventories. This series, the only piece of new information from the business inventories report with implications for GDP growth, rose 0.5% m/m. The BEA had assumed a sharp 0.5% m/m decline for September in the advance estimate of Q3 GDP. Stronger-than-expected nonautomotive retail inventory growth in September, along with an upward revision to August, suggests that inventories were a much smaller drag on GDP growth than previously thought. "We now estimate the change in private inventories subtracted 0.7pp from Q3 real GDP growth, half of the 1.4pp drag reported in the BEA's advance estimate. Our Q3 GDP tracking estimate rose four-tenths after rounding, to 2.1%", says Barclays.

The Last Two Times Business Inventories Were This High Relative To Sales, The US Was In A Recession -- Business Inventories jumped 0.3% MoM in September (notably more than the 0.0% change expected) and the highest since June led by a surge in Retailers restocking (+0.8% despite sales being unchanged). Retailers Sales are up 1.7% YoY but Retailers' Inventories are up 5.1% YoY. With Sales unchanged (manufacturers -0.4%), the inventories-to-sales ratio surged to 1.38x - the highest since the financial crisis. Like retail sales, the last 2 times inventories were this high relative to sales, The US was in recession. Charts: Bloomberg

Rail Week Ending 07 November 2015: Now 52 Week Rolling Average Is In Contraction: Week 44 of 2015 shows same week total rail traffic (from same week one year ago) and monthly total rail traffic (from same month one year ago) declined according to the Association of American Railroads (AAR) traffic data. Intermodal traffic contracted year-over-year, which accounts for approximately half of movements. and weekly railcar counts continued in contraction. October 2015 is down 4.3% over October 2014. Now the year-over-year rolling average is below than the year-over-year rolling average of one year ago.  A summary of the data from the AAR: For this week, total U.S. weekly rail traffic was 539,165 carloads and intermodal units, down 5.2 percent compared with the same week last year. Total carloads for the week ending Nov. 7 were 272,063 carloads, down 8.7 percent compared with the same week in 2014, while U.S. weekly intermodal volume was 267,102 containers and trailers, down 1.5 percent compared to 2014. Four of the 10 carload commodity groups posted an increase compared with the same week in 2014. They included: miscellaneous carloads, up 24.1 percent to 9,862; motor vehicles and parts, up 6 percent to 17,877; and grain, up 5.2 percent to 23,428 carloads. Commodity groups that posted decreases compared with the same week in 2014 included: petroleum and petroleum products, down 19.7 percent to 12,999 carloads; metallic ores and metals, down 18 percent to 20,574 carloads; and coal, down 16 percent to 94,974 carloads. For the first 44 weeks of 2015, U.S. railroads reported cumulative volume of 12,277,219 carloads, down 4.7 percent from the same point last year; and 11,773,679 intermodal units, up 2 percent from last year. Total combined U.S. traffic for the first 44 weeks of 2015 was 24,050,898 carloads and intermodal units, a decrease of 1.5 percent compared to last year.

US Freight “Plummets,” Worst October since 2011 - Transportation is a gauge into how well the real economy is doing. And it just keeps getting worse. In October, the number of freight shipments in North America fell from September, in line with the patterns of the past few years, but it fell more sharply than before. And year-over-year, shipments dropped 5.3% to hit the worst level for October since 2011, according to the Cass Freight Index, after having already plunged in the prior month to the worst level for a September since 2010. Cass put it this way: This month’s decline was much sharper than in recent years and can be directly correlated to falling imports and exports as well as decreased domestic manufacturing levels. Burdened by bloated inventories, and under the shadow of a possible interest rate increase by the Federal Reserve, businesses cut back on new orders placed in the last three or four months. This is resulting in lower import volumes, less freight to move, and faltering industrial production. With the dollar still strengthening, export growth decelerated in the third quarter. With the exception of January and February, the index has been lower year-over-year every month, which makes for a very crummy year:

PPI-FD November 13, 2015: Demand for services had been holding up producer prices but not for the last two reports. PPI-FD fell an unexpected 0.4 percent in October vs Econoday expectations for a 0.2 percent gain and vs a low estimate of minus 0.1 percent. Year-on-year, prices are down a very sizable 1.6 percent. Services prices fell 0.3 percent in October following what was then an unexpected 0.4 percent decline in September. Year-on-year, services prices are up only 0.1 percent. Services are supposed to be insulated from global effects including price effects, and the downturn for this reading does not point to 2 percent target inflation anytime soon. Energy prices were unchanged in the month but are down very sharply year-on-year, at 21.5 percent. Food prices fell 0.8 percent for a 4.2 percent year-on-year decline. Excluding food and energy, prices fell 0.3 percent for a second straight month with the year-on-year reading at plus 0.1 percent. Excluding food, energy & services, prices fell 0.1 percent with the year-on-year at plus 0.4 percent. Finished goods readings are also very weak, down a total 0.3 percent in the month for a 4.1 percent year-on-year decline. Export prices fell 0.3 percent for a 3.7 percent on year decline. This report, like import & export prices released earlier this week, is soft throughout and does not point to any pressure for next week's consumer price report. The employment side of the Fed's mandate may be showing pressure, but not prices, at least not yet.

October 2015 Producer Prices Year-over-Year Deflation Again Grows: The Producer Price Index year-over-year deflation grew. The intermediate processing continues to show a large deflation in the supply chain. The PPI represents inflation pressure (or lack thereof) that migrates into consumer price. The BLS reported that the headline Producer Price Index (PPI) finished goods prices (now called final demand prices) year-over-year inflation rate dropped to -1.6 %.   In the following graph, one can see the relationship between the year-over-year change in crude good index and the finish goods index. When the crude goods growth falls under finish goods - it usually drags finished goods lower.   Removing food and energy (core PPI) was originally done to remove the noise from the index, however the usefulness in the twenty-first century is questionable except in certain specific circumstance.  Econintersect has shown how pricing change moves from the PPI to the Consumer Price Index (CPI). This YoY change implies that the CPI, should continue to come in well below 1.0% YoY.

Producer Price Index: Tenth Consecutive Month of YoY Decline - Today's release of the October Producer Price Index (PPI) for Final Demand came in at -0.4% month-over-month seasonally adjusted, up from -0.5% in September. It is down -1.6% year-over-year, the tenth consecutive month of YoY shrinkage. Core Final Demand (less food and energy) came in at -0.3% MoM, down from 0.2% the previous month and is up 1.7% YoY.The forecasts were for 0.2% headline and 0.1% core. Here is the summary of the news release on Finished Goods: The Producer Price Index for final demand decreased 0.4 percent in October, seasonally adjusted. Final demand prices moved down 0.5 percent in September and were unchanged in August. On an unadjusted basis, the final demand index fell 1.6 percent for the 12 months ended in October, a record 12-month decline for this index, which was introduced in November 2009. In October, 70 percent of the decrease in the final demand index can be traced to prices for final demand services, which moved down 0.3 percent. The index for final demand goods declined 0.4 percent. More… The Headline Finished Goods for September came in at -0.3% MoM and is down -4.1% YoY. Core Finished Goods were down -0.3% MoM and up 1.7% YoY. Now let's visualize the numbers with an overlay of the Headline and Core (ex food and energy) PPI for finished goods since 2000, seasonally adjusted. The plunge since mid-2014 in headline PPI is, of course, energy related -- now off its interim low set in April. Core PPI has remained relatively stable since early 2014.

PPI Unexpectedly Declines Second Month; Another Big Decline Likely Next Month --  Economists expected US strength would hold up producer prices but they have been way off the mark for two consecutive months.  Following last month's 0.5% decline the Bloomberg Economists' Consensus was for a bounce to +0.2%. Instead, the PPI declined by 0.4%, well below the lowest economist's estimate of -0.1%.  Demand for services had been holding up producer prices but not for the last two reports. PPI-FD fell an unexpected 0.4 percent in October vs Econoday expectations for a 0.2 percent gain and vs a low estimate of minus 0.1 percent. Year-on-year, prices are down a very sizable 1.6 percent. Services prices fell 0.3 percent in October following what was then an unexpected 0.4 percent decline in September. Year-on-year, services prices are up only 0.1 percent. Services are supposed to be insulated from global effects including price effects, and the downturn for this reading does not point to 2 percent target inflation anytime soon. Energy prices were unchanged in the month but are down very sharply year-on-year, at 21.5 percent. Food prices fell 0.8 percent for a 4.2 percent year-on-year decline. Excluding food and energy, prices fell 0.3 percent for a second straight month with the year-on-year reading at plus 0.1 percent. Excluding food, energy & services, prices fell 0.1 percent with the year-on-year at plus 0.4 percent. Finished goods readings are also very weak, down a total 0.3 percent in the month for a 4.1 percent year-on-year decline. Export prices fell 0.3 percent for a 3.7 percent on year decline. This report, like import & export prices released earlier this week, is soft throughout and does not point to any pressure for next week's consumer price report. The employment side of the Fed's mandate may be showing pressure, but not prices, at least not yet.

A renewed deflatioinary pulse: This morning's economic reports are just the latest sign that there has been a renewed deflationary pulse in the US and global economy in the last several months. To begin with, producer prices declined again (blue in the graph below). We can expect consumer prices (red) to follow suit (at a lesser rate) when they are reported next week: It isn't just oil. Here is the Bloomberg industrial metals index, which just set yet another new 5 year low: The mirror image, of course, with an assist from increasing certainty of imminent Fed tightening, is that the US$ has strengthened yet again, right up through this week: So the weekly AAR rail freight report has declined further (blue) compared with last year (red): Trucking, from the Cass Trucking Index, has similarly lurched lower compared with last year in the last 2 months: And business inventories, reported this morning, rose +0.3% in September, meaning a renewed increase in the inventory-to-sales ratio: The bright spot is that the world champion US consumer continues to show why they deserve their gold medal, as real retail sales even per capita made yet another new high in September, and if the CPI shows any decline next week (which is likely) set yet another high in October:

What Rate Hike: Annual PPI Drops Most On Record Even As Gas Prices Rise In October -- Just in case the latest retail sales miss (where every major spending category missed across the board) wasn't bad enough, moments ago the BLS also reported the October PPI, which also was a disaster if only for the Fed, with the headline print sliding even deeper into deflation at -1.6%, down from -1.1% in September, and missing expectations of -1.2%.  PPI's excluding the volatile series also missed sharply:

  • PPI Ex food and energy up barely 0.1%, Exp. 0.5%, down from 0.8%
  • PPI Ex food, energy and trade up 0.4%, Exp. 0.5%, last 0.5%

But the real pain emerged on a year over year basis, where the headline drop was the worst decline in history!

Update: Framing Lumber Prices down Sharply Year-over-year  -- Here is another graph on framing lumber prices. Early in 2013 lumber prices came close to the housing bubble highs. The price increases in early 2013 were due to a surge in demand (more housing starts) and supply constraints (framing lumber suppliers were working to bring more capacity online).   Prices didn't increase as much early in 2014 (more supply, smaller "surge" in demand). In 2015, even with the pickup in U.S. housing starts, prices are down year-over-year.  Note: Multifamily starts do not use as much lumber as single family starts, and there was a surge in multi-family starts. Overall the decline in prices is probably due to more supply, and less demand from China.  This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through October 2015 (via NAHB), and 2) CME framing futures. Right now Random Lengths prices are down about 12% from a year ago, and CME futures are down around 21% year-over-year.

Import and Export Prices November 10, 2015 - Cross border price pressures continue to move lower. Import prices fell 0.5 percent in October including a steep 5 tenths downward revision to September to minus 0.6 percent. And it's not just gasoline! Nonpetroleum import prices fell 0.4 percent for the 10th decline in a row. Year-on-year, total import prices are down 10.5 percent, which is right in line with trend, with nonpetroleum down 3.4 percent for the largest drop since October 2009. The story on the export side is the much same with export prices down 0.2 percent for a year-on-year decline of minus 6.7 percent. Excluding agricultural products, export prices fell 0.3 for a year-on-year decline of minus 6.1 percent. Prices have been falling steadily for about a year in this report with declines also appearing for finished goods in what is a very important deflationary trend. Import prices for capital goods are down 2.3 percent year-on-year with vehicles down 1.6 percent and consumer goods down 0.6 percent. The export side is similar including a 2.4 percent year-on-year decline for consumer goods. By country, contraction is steepest with Canada where import prices fell 1.0 percent in the month for a 20.5 percent year-on-year decline. Latin America is next, also down 1.0 percent in the month for a year-on-year decline of 14.7 percent. Import prices fell 0.1 percent with China where the year-on-year rate is minus 1.4 percent while prices with Europe actually rose 1 tenth in the month for a year-on-year minus 2.9 percent. Contraction in import prices not only reflects low commodity prices but also the strength of the dollar which has been giving U.S. buyers more for their dollars, while contraction in export prices reflects generally deflationary global trends. Fed policy makers may be worried that slack has been absorbed in the labor market but they are also concerned about the continued lack of price pressure, the latter speaking against the urgency for a rate hike.

U.S. import prices fall on petroleum, range of goods – U.S. import prices fell more than expected in October as the cost of petroleum and a range of goods declined, a sign that a strong dollar and soft global demand continued to exert downward pressure on imported inflation. The Labor Department said on Tuesday import prices dropped 0.5 percent last month after a revised 0.6 percent decline in September. Import prices have now fallen in 14 of the last 16 months. Economists had forecast import prices slipping 0.1 percent after a previously reported 0.1 percent fall in September. In the 12 months through October, prices tumbled 10.5 percent. Dollar strength and a sharp decline in oil prices have weighed on inflation, which is persistently running below the Federal Reserve’s 2 percent target. Weak inflation pressures, however, are unlikely to deter the U.S. central bank from raising interest rates next month after job growth surged in October and the unemployment rate fell to a 7-1/2-year low of 5.0 percent. A tightening labor market could give Fed officials confidence that inflation will gradually move toward its target. Last month, imported petroleum prices fell 2.1 percent after declining 6.0 percent in September. Import prices excluding petroleum dropped 0.4 percent, the largest decrease since January. That reflected the impact of the dollar’s 16.6 percent rise against the currencies of the United States’ main trading partners since June 2014. Import prices excluding petroleum fell 0.2 percent in September. In October, imported food prices dropped 1.0 percent, also the largest decline since January, after falling 0.7 percent in September. Industrial supplies prices fell 1.4 percent after declining 2.9 percent in September. Prices for imported capital goods fell 0.1 percent, while prices for imported automobiles dropped 0.3 percent, the biggest fall since February.

US Import Prices Tumble, Ex-Fuel Drop Biggest Since 2009 As World Races To Export Its Deflation - The global export of deflation continues as import prices to the US dropped 0.5% MoM in October (notably more than expected) and recent history was revised markedly lower with the 7th miss in 2015. Year-over-year, prices also fell more than expected - down 10.5% vs -9.4% exp. - the biggest miss since April and hovering near the weakest in the cycle. This is the 15th month in a row of year-over-year declines in import prices. Yet another miss: 15th month in a row of YoY declines... But most critically, Ex-petroleum, this is the biggest drop in import prices since 2009... As the world exports its deflation to America's shores.  Charts: Bloomberg

Import and Export Price Year-over-Year Deflation Continues in October 2015.: Trade prices continue to deflate year-over-year, and energy prices again had little to do with this month's decline. Import Oil prices were down 2.0 % month-over-month, and export agricultural prices decreased 0.1 %.   with import prices down 0.5 % month-over-month, down 10.5 % year-over-year;  and export prices down 0.2 % month-over-month, down 6.7 % year-over-year.. There is only marginal correlation between economic activity, recessions and export / import prices. Prices can be rising or falling going into a recession or entering a period of expansion. Econintersect follows this data series to adjust economic activity for the effects of inflation where there are clear relationships According to the press release: All Imports: Overall import prices decreased 0.5 percent in October, continuing a downward trend for the index in 2015. Prices for U.S. imports previously decreased 0.6 percent in September, 1.8 percent in August, and 0.9 percent in July. The price index for overall imports declined 10.5 percent between October 2014 and October 2015, after decreasing 2.1 percent for the year ending in October 2014. All Exports: The price index for U.S. exports declined 0.2 percent in October, following decreases of 0.6 percent in September and 1.4 percent in August. Lower prices for both agricultural exports and nonagricultural exports factored into the overall decrease in October. Overall export prices also declined over the past 12 months, decreasing 6.7 percent after a 0.7-percent decline for the year ending in October 2014.

Mysterious electric car startup looking to build $1B factory — The luxury electric car market may be small, but it’s lucrative enough to get another jolt — this time from a mysterious startup that says it wants to re-imagine how people interact with their autos. The startup’s name is Faraday Future, and it has been hunting for a place to build what it says will be a $1 billion manufacturing plant for a new line of cars. Four states are contenders and the company says to expect an announcement within weeks. Headquartered in a low-profile office just south of Los Angeles, Faraday is holding a lot of details close. Though it won’t confirm the source of its funds, documents filed in California point to a parent company run by a Chinese billionaire who styles himself after Apple’s late Steve Jobs. Based on the few other public clues, Faraday is following the path blazed by Tesla Motors, its would-be rival hundreds of miles away in Silicon Valley. Like Tesla, Faraday’s car will be all-electric, and debut at the high end. The startup of about 400 employees has poached executive talent from Tesla and also draws its name from a luminary scientist — Michael Faraday — who helped harness for humanity the forces of nature. Even Faraday’s public announcement that California, Georgia, Louisiana and Nevada are finalists for the factory mirrors the approach Tesla took to build a massive battery factory. Nevada won that bidding war among several states last year by offering up to $1.3 billion in tax breaks and other incentives. Faraday hopes to distinguish itself by branding the car less as transportation than a tool for the connected class.

NFIB: Small Business Optimism Index unchanged in October  -- From the National Federation of Independent Business (NFIB): Small Business Optimism Flat Lined in October: The Index of Small Business Optimism was unchanged in October, posting no change after a rise of only 0.2 points in September and a gain of only 0.5 points in August. ...Although the labor market components posted minor declines, they held at historically strong levels. This graph shows the small business optimism index since 1986. The index was unchanged at 96.1 in October

October 2015 Small Business Optimism Index Unchanged: The National Federation of Independent Business's (NFIB) optimism indexwas unchanged in October, posting no change after a rise of only 0.2 points in September and a gain of only 0.5 in August. The market was expecting the index between 96.0 to 97.2 with consensus at 96.4 - versus the actual at 96.1 NFIB chief economist Bill Dunkelberg states: The October NFIB survey gave no indication of a resurgence in growth in the small business sector with the Index remaining below the 42 year average of 98. The labor market components might have held at historically strong levels but this time owners reported no net growth in employment, which is a significant drop from reports in the previous four months.

Weekly Initial Unemployment Claims unchanged at 276,000  -- The DOL reported: In the week ending November 7, the advance figure for seasonally adjusted initial claims was 276,000, unchanged from the previous week's unrevised level. The 4-week moving average was 267,750, an increase of 5,000 from the previous week's unrevised average of 262,750.  There were no special factors impacting this week's initial claims.  The previous week was unrevised at 276,000.  The following graph shows the 4-week moving average of weekly claims since 1971.

BLS: Jobs Openings increased to 5.5 million in September -- From the BLS: Job Openings and Labor Turnover Summary - The number of job openings was little changed at 5.5 million on the last business day of September, the U.S. Bureau of Labor Statistics reported today. Hires and separations were little changed at 5.0 million and 4.8 million, respectively. Within separations, the quits rate was 1.9 percent for the sixth consecutive month, and the layoffs and discharges rate remained unchanged at 1.2 percent. ... ... Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. ... There were 2.7 million quits in September, little changed from August. The number of quits has held between 2.7 million and 2.8 million for the past 13 months after increasing steadily since the end of the recession. The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS. This series started in December 2000. Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market turnover. When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs. Jobs openings increased in September to 5.526 million from 5.377 million in August. The number of job openings (yellow) are up 18% year-over-year compared to September 2014. Quits are unchanged year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").  Job openings are just below the record high set in July, although Quits have leveled off.

Job Openings Rise Above 5.5 Million, But the Hiring Rate Remains Little Changed - The U.S. economy had over 5.5 million job openings as of the last business day of September, the second-highest tally of available jobs in the 15 years the Labor Department has collected this data. Yet what once would have been hailed as unambiguously good news has been confounded in recent years—even as job openings rise, the rate of hiring has not risen to match it. That trend continued this month, with the level of hiring declining slightly from 5.1 million to 5 million. The Labor Department’s monthly Job Openings and Labor Turnover Summary, known as Jolts, comes out with a one-month lag to the main monthly jobs report. In that report, released last week, the Labor Department reported that the economy added 271,000 jobs last month. But the Jolts report is still closely watched by economists for the look it provides at the labor markets’ underlying churn—the millions of people each month who quit one job or are laid off and the millions who are hired into a new job. While the number of available job openings have soared to unprecedented levels, the rate of hiring and voluntary job separation remains much lower. The number of people who voluntarily quit their job and the number of people who were laid off or fired was little changed. While not everyone who quits a job does so happily, in aggregate, job quitting is a barometer of the economy’s health. The rate of job quitting rises with a strong economy, as workers have confidence they’ll be able to find something better—or because they already have a better position lined up. The percent of workers who voluntarily quit their job has held at 1.9%.  In the years prior to the recession, the rate was typically above 2%.

Hiring lags as economy slows over the summer -- Today’s release of the September Job Openings and Labor Turnover Survey (JOLTS) data corroborates the story we saw in August and September’s jobs reports, as hiring slowed and the economy added a paltry number of jobs (note that the JOLTS data comes with a one-month lag relative to monthly jobs numbers, so the much-improved October jobs report data is not reflected in today’s release). Although the number of job openings increased to 5.5 million in September, this was after a large decrease to from 5.7 to 5.4 million in August. But the main data point we should focus on is the hires rate, which actually fell in September from 3.6 percent to 3.5 percent, the lowest it has been in a year. In September, there were 1.4 active job seekers for every job opening. Although this decline is a welcome improvement in the JOLTS ratio, it is important to remember that there are still almost 8 million unemployed workers and over 3.5 million estimated “missing workers” who have left the labor force altogether because job opportunities have been so weak. In fact, there is still a significant gap between the number of people looking for jobs and the number of job openings. The figure below shows the levels of unemployed workers and job openings. You can see the labor market improve over the last five years, as the number of unemployed workers falls and job openings rise. In a stronger economy (like the one shown in the initial year of data), these levels would be much closer together.

JOLTS Hires and Quits turn negative YOY; Labor Market Conditions Index uninspiring  -- When it comes to the monthly JOLTS reports, most commentators in my opinion are missing the big story, focusing only on the job openings number without paying attention to the pattern of this series during the 2002-07 expansion.  And when it comes to that pattern, we have had an important change of trend. Here are openings (blue), actual hires (red), and quits (green) since the inception of the JOLTS series:   Keep in mind that, while this series looks extremely useful, because there is only 15 years of history, there is only one complete business cycle with which to compare. During that cycle, both hiring and quits peaked well before job openings. As shown above, the peaks in hiring and the trough in voluntary quits, was the first signal that the expansion was decelerating. Now let's zoom in on the YoY% change in last 3 years: While job openings have skyrocketed, both actual hires and quits stalled, and this month both turned negative YoY for the first time since the 1-month 2012 pause. This is an important indication that we are past mid-cycle. Further, there is a labor market disconnect, as employers are not filling a record number of openings. As to why those openings are going unfilled, I have seen a fair amount of survey information where employers are complaining of not being able to find appropriately skilled candidates. Just yesterday we got the National Federation of Independent Business's report, in which the respondents labeled the inability to find qualified applicants as their number 2 concern (behind the perennial #1 taxes), ahead of the amount of sales:

September 2015 JOLTS Job Openings Improve Predicting Improving Jobs Numbers: The BLS Job Openings and Labor Turnover Survey (JOLTS) can be used as a predictor of future jobs growth, and the predictive elements show that the year-over-year growth rate of unadjusted private non-farm job openings improved significantly from last months poor numbers. The growth trends upward in the 3 month averages, downward in the 2015 averages, and upward in the year-over-year averages. There was no market expectations published by Bloomberg this month. The trend lines now are now declining for 2015 however the three month trend is now up.

  • the number of unadjusted PRIVATE jobs openings - which is the most predictive of future employment growth of the JOLTS elements - shows the year-over-year growth improved. The year-over-year growth of the unadjusted non-farm private jobs opening rate (percent of job openings compared to size of workforce) also improved.
  • The graph below looks at the year-over-year rate of growth for job opening levels and rate.

The relevance of JOLTS to future employment is obvious from the graphic below which shows JOLTS Job Openings leading or coincident to private non-farm employment. JOLTS job openings are a good predictor of jobs growth turning points.

US Government Shocked To Find Job Openings Continue To Surge Above Actual Hires - Something odd is happening in the US labor market. As the BLS reports in its latest JOLTS report, "the number of hires has exceeded the number of job openings for most of the JOLTS history" which should make intuitive sense for any normal, "growing" economy, where the labor market works as expected. However, as JOLTs also adds, "over the past year, this relationship has changed as job  openings have outnumbered hires for several months." This is how this shocking inverted relationship looks like:  What is really happening is that hires have plateaued and at 5.049MM in September, were the lowest since April! The last time we have seen such a dramatic peak in hiring was in 2005-2006, just before the economy and the market crashed. Is the labor market rolling over? The JOLTs economists at the BLS are very confused, as the following shows: Hires exceeded job openings for over thirteen years, between December 2000 and July 2014. Job openings exceeded hires for the first time in August 2014, although hires then outnumbered job openings for the next five months. Since February 2015, however, this new relationship has persisted with job openings exceeding hires for eight consecutive months At the end of the most recent recession in June 2009, there were 1.3 million more hires throughout the month than there were job openings on the last business day of the month. In September 2015, there were 477,000 fewer hires throughout the month than there were job openings on the last business day of the month. So what is going on here? Simple: a broken labor market, in which as a result of 94 million people out of the labor force, most of whom have been out of a job for years and have lost their "hirability", US businesses are unable to grow and fill open slots, as a result hiring is sliding. And, since hiring is so low, the other end of the job pipeline, separations, are also painfully low.

October Is A Positive Unemployment Report  (20 graphs) The October unemployment report is a pleasant surprise in comparison to recent months.  Less people were dropped out of the labor force for the month, a welcome change.  The labor participation rate though did not change from the October 1977 record lows.  The official unemployment rate did tick down a tenth of a percentage point to 5.0%.  Overall, this month's report is a surprise on the positive side.  This article overviews and graphs the statistics from the Employment report Household Survey also known as CPS, or current population survey.  Those employed increased by 320,000 this month and stands at 149,120,000.  From a year ago, the ranks of the employed has increased by 1.86 million, but that annual gain is much less than it was a month ago.  Those unemployed decreased by -7,000 to stand at 7,908,000.  From a year ago the unemployed has decreased by -1.075 million.  Below is the month change in unemployed and as we can see, this number typically has wild swings from month to month.   Those not in the labor force actually decrease this month by -97,000 to 94.51 million.  The below graph is the monthly change of the not in the labor force ranks.  Those not in the labor force has increased by 2,09,000 in the past year.   While this month the deluge seems to have abated, those not in the labor force have grown more than those employed in the last year. The labor participation rate remained the same, 62.4%, and this is a 38 year low.  Below is a graph of the labor participation rate for those between the ages of 25 to 54.  The rate is 80.7%, which is a 0.1 percentage point change from last month.  Using the prime working years participation rate proves the record lows cannot be explained away by retirement and higher education pursuits.  The civilian labor force, which consists of the employed and the officially unemployed, increased by 313 thousand this month, negating last month's decline.  The civilian labor force has grown by 785,000 over the past year.  This annual growth rate is really low.  New workers enter the labor force every day from increased population inside the United States and immigration, both legal and illegal.  The small annual figure also implies people are dropping out of the labor force.  Notice how those not in the labor force has grown much bigger than the civilian labor force.  Those not in the labor force now grows faster than the population which has the potential to work.  Below is a graph of those not in the labor force, (maroon, scale on the left), against the noninstitutional civilian population (blue, scale on the right). Notice how those not in the labor force crosses the noninstitutional civilian population in growth and the accelerated growth started happening right in 2008.  The increase cannot be explained by retiring baby boomers alone and notice the recent uptick.

Rosenberg on Labor Force Participation Rate -- David Rosenberg, chief economist at Gluskin Sheff wrote about the Labor Force Participation Rate (LFPR) in his daily "Breakfast with Dave" newsletter: THEY AIN’T COMING BACK.  The title says it all. Here is the introduction and his conclusion (a long piece):  There has been a surprisingly large amount of commentary writing off the improvement in the U.S. unemployment rate — which dipped below the Congressional Budget Office’s estimate of the non-accelerating inflation rate of unemployment (NAIRU) for the first time since February 2008 in October — given that we have not seen an attendant uptick in the labour force participation rate... So, once again, any mention of the participation rate — or alternatively, mentions of a participation rate-adjusted unemployment rate or anything else of along those lines — as an indicator of labour market slack or as an argument for why the unemployment rate is obsolete and should be ignored, especially in the context of the policy discussion. This is similar to my post earlier this year: Why the Prime Labor Force Participation Rate has Declined. Rosenberg focused on the Boomers retiring, however I've argued there are other factors too (People staying in school longer and a slow, but steady decline in prime men participation). But our conclusions are the same: the participation rate has mostly declined due to structural factors, not cyclical.   And the participation rate will continue to decline for the next decade or more.

Still Not Enough Good News on Wages - Greg Ip  - The October jobs report was full of positive signs for the economy but by far the most important was the 0.4% jump in average hourly earnings, which brought the annual increase to 2.5%, the highest since 2009. By broad measures, the labor market has gotten steadily tighter: The unemployment rate, at 5%, is down by half since 2010, and the vacancy rate is the highest since 2000. But until now, there has been precious little sign of broad upward pressure on wages. Many promising monthly jumps were followed by flattening later. Is this one for real? There are reasons to believe it is. In the last year, many companies from Wal-Mart to McDonald’s announced broad-based wage increases for their lowest-paid employees. It was always an open question whether they were responding to public criticism of their low wages, or because they genuinely were having trouble filling job openings. Since self-interest is a more durable influence on business behavior than altruism, the second explanation would be the more encouraging, as it means the wage boosts were more likely to persist even at the expense of narrower profit margins, and that other businesses would have to follow suit. Digging into the October data, it’s still unclear these employers are representative. Retail wages rose 0.2% after a 0.4% rise in September, keeping the annual increase at 3.2%. That’s good, but not a marked acceleration. Leisure and hospitality wages rose 0.4% but that followed a flat September and the annual gain is just 2.5%, which is actually a significant slowing from earlier this year. More broadly, the hourly wage data have been volatile enough that reading a lot into October’s number is dangerous. Even if wages are on an upswing, there is nothing in the last few years to suggest a rapid acceleration is in the works.

This is your paycheck at full employment…maybe -- Surely one of the most important missing pieces of the current recovery is faster wage growth in response to the tighter job market. Well, last week’s strong jobs report hinted that wage growth could finally be ticking up, at least on average, though it’s too soon to tell for sure. These monthly numbers jump around a bit, but the yearly growth rate of average hourly wages has been slowly picking up speed since June, when it was 2%, through last month, when it was up 2.5%. These are all nominal values, but as inflation has been so unusually low, they imply more purchasing power. This is not an entirely surprising development for those of us who have long argued that full employment is associated with higher pay, as employers, like it or not, must at some point offer higher compensation if they want to get and keep the workers they need to meet the demands for their goods or services. That said, we’re not at full employment yet, at least by my preferred measure—the one cooked up by economist Andy Levin, which takes account of unemployment, involuntary part-timers, and those missing in action from the labor force. Each of those variables has contributed labor market slack in recent years, but the second two are left out of the traditional unemployment measure. At its peak in late 2009, the slack variable was 7 percentage points (ppts) above full employment. Now it’s 2 ptts above the target.  In order to quantify some of these musings, I’ve built a simple model of wage growth. The figure below shows that the model tracks the wage-growth series well, and it also picks up the recent acceleration, again suggesting that we may be at the cusp of faster average wage growth.

Labor Hours decreased in 3rd Quarter… It is noteworthy - From what I read, nobody has pointed out the drop in Nonfarm Business Sector: Hours of All Persons in the 3rd quarter. (seasonally adjusted) The index of hours decreased from 110.66 to 110.53. This is actually noteworthy… Nonfarm Business Sector: Hours of All Persons since 1967. (link to graph) You can see that hours increase through a business cycle. Looking closely at the numbers, hours really do continually increase through the business cycle. There are very few exceptions when hours decrease during an expansion of a business cycle. But when hours do tick downward, normally a recession starts within 3 quarters. That has been the pattern since 1967… There has only been a few exceptions where hours ticked downward with no recession. That is why the decrease in hours during the 3rd quarter is interesting. Are hours peaking? If hours decrease again in the 4th quarter, history says to watch for a slump.

Employment: October Diffusion Indexes  - Some more positive news in the employment report. The BLS diffusion index for total private employment was at 61.8 in October, up from 53.4 in September. For manufacturing, the diffusion index was at 51.9, up from 37.5 in September. Think of this as a measure of how widespread job gains are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS.  Above 60 is very good.  From the BLSFigures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.

Study: U.S. Fracking Boom Added 725,000 Jobs (Reuters) - A U.S. oil and gas drilling boom fueled by hydraulic fracturing technology added about 725,000 jobs nationwide between 2005 and 2012, blunting the impact of the financial crisis, according to a study released on Friday. The findings could play into a debate over so-called fracking, in which water, sand and chemicals are injected into underground shale formations to produce oil and gas reserves that were otherwise inaccessible. "Supporters and opponents of fracking have been debating over the degree to which fracking is benefiting the economy versus affecting the health and environment of our communities," Dartmouth College said in a press release outlining the research, which was led by some of its professors. Drilling activity has declined over the past several months due to sliding oil and gas prices. Researchers conducting the National Bureau of Economic Research study analyzed data from over 3,000 U.S. counties and determined that within 100 miles of new production, $1 million of extracted oil and gas generated $243,000 in wages, $117,000 in royalties and 2.49 jobs. "Aggregating to the national level we conclude that aggregate employment rose by 725,000 jobs due to fracking, causing a reduction in the U.S. unemployment rate of 0.5 percent during the Great Recession," according to the study. It said the study did not take into account the impact of falling energy prices on consumers.

Facts may not be quite in vogue right now, but Obamacare not a job killer. - A few months ago, one of us (Bernstein) noted that the effectiveness of the Affordable Care Act in reducing the number of uninsured was an inconvenient truth for Obamacare’s opponents. Well, here’s another such truth: Anyone who wants to call the ACA a “job killer” is either ignorant of or not interested in the facts. The figure above shows that since the subsidized premium exchanges and Medicaid expansions in 24 states (plus D.C.) came online last year (five other states later followed suit), monthly job growth in the health-care sector has risen sharply. (The monthly changes are jumpy, so we plotted the trend through the data.) Strong health-care employment growth shouldn’t surprise anyone. Demand for labor is derived from the demand for the goods and services that people want and need. Thus, we’d expect the expansion of health coverage to boost jobs in that sector — in addition to driving historically large reductions in the number of Americans without health coverage, saving states money and slowing growth in health-care costs. Yet House Republicans are still trying to repeal parts of the law, claiming that “many of the key elements of Obamacare [are] harming individuals and families [and] hurting job creation.” Fox News commentator Bill O’Reilly maintains that, “While some of the poor benefit, other Americans are punished because the job market is smaller.” Some presidential candidates agree: Jeb Bush calls the ACA “the president’s job-destroying health-care law” and Ted Cruz’s Senate Web site asserts that “Obamacare is causing millions to lose their jobs.” Cruz and Marco Rubio aren’t even content to repeal parts of the law — they want to repeal the entire thing. Even if we’re generous here and assume that those shouting “job killer” mean that the gains in the health-care sector are coming at the expense of the rest of the job market, there’s no evidence to support that claim, either.

Decline and Fall of America's Working Class - Noah Smith -- One big piece of news in the past couple of weeks has been the release of a new paper by recent economics Nobel winner Angus Deaton and his co-author Anne Case. The paper highlights a very disturbing trend -- death rates are increasing for white people in America, especially for working-class middle-aged whites. The increase looks like it has been going on since the late 1990s.  Among other American groups, such as Hispanics and blacks, mortality has fallen across all age and income groups during the past decade and a half. Death rates have also plunged in Europe and in other rich countries. Although some statisticians later found that the mortality increase was a bit less than reported in the Deaton-Case paper, even a slight increase stands in stark contrast to the decline among all other groups.  The trend is concentrated among the less educated. For college-educated whites, mortality fell, much as it did for other racial groups and other nations. For those with some college, mortality was unchanged -- a poor result, but not disastrous. But for white Americans with no college education, deaths have soared.  Something very troubling and very unique is happening to American working-class whites.  The immediate causes of the increase are not hard to identify. Drugs and suicide are the culprits. There is an epidemic of prescription painkiller, alcohol and heroin abuse among American whites. Deaths from alcohol and drug poisoning among middle-class whites have skyrocketed. White suicide rates have also risen dramatically to more than 20 per 100,000 people in the 45-54 age cohort.  But this doesn’t give us a real answer. Why are working-class whites turning to drugs and alcohol? Why are they killing themselves in record numbers? The trend started long before the 2009 recession, so that can’t be the main explanation. Falling household wealth isn’t the reason either, since mortality kept on increasing during the housing boom in the early 2000s. Nor is obesity the obvious cause; Case and Deaton find that obese and non-obese people report similar increases in pain and mental-health problems.

Why the Cure for a Sluggish Economy is Actually Longer Vacations – Dean Baker - What if we could boost the economy with longer vacations? Or with paid family leave? With shorter workweeks? It may sound too good to be true, but hear me out. Economists have long dismissed the idea that an economy could suffer from a persistent shortfall in demand. While most acknowledged that in periods of recession, growth and jobs could be limited by inadequate demand, this was viewed as a temporary story. This view has been badly shaken by the Great Recession. Many prominent economists, including Paul Krugman and Larry Summers, now warn quite explicitly about the country facing a prolonged period of what’s known as secular stagnation. Secular stagnation means the main constraint on the economy is inadequate demand, not a lack of supply. If we are facing secular stagnation, policies that boost demand will lead to more growth and jobs. In principle, it should be easy to boost demand, but as a practical matter, this is proving very difficult. The route economists usually prefer for boosting demand is expansionary monetary policy. This means having the Federal Reserve Board lower interest rates. Lower interest rates spur borrowing for home buying, car purchases, and public and private investment. The problem is that the federal funds rate, the interest rate the Fed most directly controls, has been at zero for almost seven years. It may be possible to push it into negative territory (some European banks have gone negative), but no one thinks we can get very far with negative nominal interest rates. If there are no easy remedies for secular stagnation on the demand side, it is reasonable to turn to the supply side for ways to address the problem. Remember, the story of secular stagnation is that we have too little demand to keep the economy and the workforce fully employed. If we can’t find ways to boost demand, then we can look for ways to reduce supply. Specifically, we can encourage people to work less. This would mean policies that promote shorter workweeks, paid time off for family leave and sick days, and more paid vacation. Reductions in the average number of hours worked per worker could lead employers to hire more employees. A tighter labor market would help to bring the upward pressure on wages and prices needed to combat secular stagnation.

Fast Food Workers Strike in 270 Cities to Demand $15 Minimum Wage -- Fast food workers in 270 cities across the country planned to strike Tuesday to demand a $15 minimum wage, according to strike organizers.  The national protest, which will take place at McDonald’s, Wendy’s, Burger King, KFC and other restaurants, aims to draw attention to 64 million workers who earn less than $15 an hour at those restaurants and elsewhere, organizers said. Strikers also hope to gain union rights. Workers in other fields will join in protests in 500 cities across the country following the food retailer strike, according to a Reuters report. Strike organizers hope to attract the attention of the 2016 presidential candidates, the report said.Fight for $15, the group behind the strike, has the backing of the Service Employees International Union. The federal minimum wage is currently $7.25 an hour, which many have argued does not provide enough income for a stable livelihood. Many cities and states around the country have pushed the minimum wage higher in their jurisdictions.

Minimum Wages Are Great, Except When They're Not - Debate about the minimum wage is often too simplistic. It’s usually just about whether minimum wages are good or bad -- as if the answer would be the same across all of time and space. In reality, the answer should be a nuanced one. Obviously, if we raised minimum wages to $400 an hour, the economy would collapse. Minimum wages that are fine in one area will cost lots of jobs in places where prices overall are lower. Minimum wages will tend to help certain groups and hurt others. The list of qualifications and caveats goes on and on, but is typically drowned out in the partisan shouting. I’d like to add one more caveat to the list. Minimum wages may be perfectly fine when the economy is doing well, but be a drag in times of recession. That could bias us toward thinking that minimum wages are good, if our studies of their effects are limited to prosperous times.  The reasoning behind this argument isn't hard to see. During good times, a rise in theminimum wage to, say, $15 may not be onerous -- it might represent only a small increase over what employers are already paying.   But then a recession comes along. In response to lower demand for their products, companies will naturally want to cut wages temporarily. But the new $15 minimum may make it impossible for them to drop wages enough to keep all their workers employed. These companies will have only one alternative -- lay off workers. That will mean a bigger rise in unemployment than would otherwise happen.

Why income inequality grows as people age -  Economists know that inequality is much lower for younger households than for older households. But unless the reasons for that are clear, formulating appropriate policy aimed at alleviating income inequality is extremely difficult. A key question regarding the cause of income inequality is whether it's caused by differences in ability or luck. Does enhanced skill, training or education put some groups on higher income growth paths than others? Or is it because for some people, temporary changes in income arising from negative factors such as unemployment or a spell of bad health create setbacks that they never fully recover from, while for others positive shocks, such as the good fortune to find a great job, push their incomes higher?  Here's where understanding which of these two potential causes -- ability or luck -- matters in determining the types of policy that will be most effective in reducing the growth in inequality as people age. If divergent income growth paths are mainly due to permanent traits such as the level of education and training, then policy should focus on improving programs that offer these skills, particularly for those at the lower end of the wage and salary distribution. But if the problem is mainly temporary shocks to health, employment and so on that lead to income losses households never fully recover from, then more should be done to alleviate these types of risks to household income.

Talking About Inequality …How about this? In Georgia, you can get a life sentence for a second or succeeding drug offense. Right now, there are 375 people serving those life sentences. 369 of them—more than 98%—are African-American. There’s no population base rate that can explain that discrepancy. One justice on the Georgia Supreme Court found that an African-American with two or more drug priors is 28 times as likely to get a life sentence than a white person with the same record. Or this? On Monday last week, the United States Supreme Court heard oral arguments in Foster v. Chatman. In that case—a death penalty case—the prosecution struck every black member of the jury pool. The law says that you can’t strike a potential juror because of race, so the prosecution came up with facially race-neutral reasons for all of their strikes. Their notes, however, showed that they highlighted the names of the black jurors, marked them with a “B,” identified one of them as the best “if it comes down to having to pick one of the black jurors,” and put the five black jurors at the top of their list of definite strikes—ahead of a white person who said she opposed the death penalty on principle. The all-white jury sentenced the African-American defendant to death. Even after the evidence came to light, the Georgia Supreme Court refused to overturn the verdict.

Obama's immigration action blocked again; Supreme Court only option left -- President Barack Obama's executive action to shield millions of undocumented immigrants from deportation suffered a legal setback on Monday with an appeal to the Supreme Court now the administration's only option. The 2-1 decision by the 5th U.S. Circuit Court of Appeals in New Orleans to uphold a May injunction deals a blow to Obama's plan, opposed by Republicans and challenged by 26 states. The states, all led by Republican governors, said the federal government exceeded its authority in demanding whole categories of immigrants be protected. The Obama administration has said it is within its rights to ask the Department of Homeland Security to use discretion before deporting nonviolent migrants with U.S. family ties. The case has become the focal point of the Democratic president's efforts to change U.S. immigration policy. Seeing no progress on legislative reform in Congress, Obama announced last November he would take executive action to help immigrants. He has faced criticism from Republicans who say the program grants amnesty to lawbreakers. In its ruling, the appeals court said it was denying the government's appeal to stay the May injunction "after determining that the appeal was unlikely to succeed on its merits."

A Nation Of Immigrants: Where America's Newest Citizens Come From -- As mass migration (otherwise known as refugee crises) remains a topic of concern for much of the world, an increasing number of the world's population is choosing to become American citizens (even as those renouncing American citizenship hits record highs). As MarketWatch notes, nearly 800,000 people decided to become American citizens in the last 12 months and more than a third of them came from Asia... Asians comprised the biggest group of new Americans by region, according to recent data from the Department of Homeland Security, edging out those from North America, in which DHS includes those from Central America and the Caribbean. Mexicans remain the single largest group of foreigners who were naturalized as citizens. But by state they are the biggest group in only 24. Among the remaining 26 states plus the District of Columbia, 10 other nationalities claim the top spot, as this map shows. In nine states, Indians made up the biggest group of naturalized citizens. Those from the Dominican Republic, who nationwide topped those from China for the first time in at least a decade, are the biggest group in five states, the DHS data show. One of those states is New Jersey. For two years running, Dominicans have made up the biggest group of naturalizations each year, narrowly exceeding the number of Indians. Here’s the breakdown by state for the 2013 fiscal year.

 Asians, not Hispanics, are going to become the biggest immigrant group in the US - The Pew Research Center's latest report on immigration suggests that the demographics of American immigration are going to see a big change in the coming years. While Hispanics currently make up the largest piece of the American immigrant population, 47% in 2015, with Asians at a distant second with 26%, Pew projections see a swap coming.  The report projects that the Asian immigrant population will overtake the Hispanic population by 2055, reaching 38% in 2065 compared to a 31% Hispanic population. This shouldn't come as a surprise: Asian immigrants have been immigrating to the states in bigger numbers than Hispanics for years now. In 2008, Asian immigrants overtook Central and Southern Americans in terms of arrivals in the US within the past year. Asian immigrants were also the most favored incoming immigrant group, according to an opinion poll in the same study, 47 percent of respondents felt that Asian immigrants had a mostly positive impact on American society.

Half of California's undocumented immigrants are impoverished: study | Reuters: About half of California's undocumented immigrants are poor enough to qualify for Medi-Cal, the state's insurance program for its poorest residents, according to a new report. The study by the Public Policy Institute of California comes amid ongoing discussion in the most populous U.S. state over how to pay for healthcare for the estimated 60 percent of undocumented immigrants who do not have insurance. The report estimates that as many as three million undocumented immigrants live in California, of whom 51 percent are impoverished. A new law set to take effect next year that would allow the children of some undocumented immigrants to apply for Medi-Cal if their families make less annually than $33,500, or 138 percent of the federal poverty level of about $24,000 per year for a family of four. But the state has yet to expand access to the federal Affordable Care Act, commonly referred to as Obamacare, or Medi-Cal itself to undocumented adults. As a result, the San Francisco-based nonpartisan policy research organization said that those who become ill wait until they are very sick and then go to emergency rooms, so that it costs more to treat them than it would if they had received regular preventive care.

Puerto Rico filing says govt. likely to cut services or default on debt before year's end: Puerto Rico's government will likely have to cut back on public services or default on debts before the end of the year because it is running out of cash, the Government Development Bank said in a financial filing. Putting numbers to a warning this summer from Gov. Alejandro Garcia Padilla, the filing late Friday said the U.S. territory had a $370 million overdraft as of Sept. 30 and burned through a $400 million emergency loan from a group of public corporations to keep government operating. It also cut revenue estimates for the current fiscal year by $355 million because of weaker than expected collections. The development bank, which has been the lender of last resort for the island's cash-strapped government, may be insolvent by year's end, the report added.To conserve cash, officials have been holding back payments to suppliers and tax rebates to taxpayers and they are now discussing cutting employee work schedules by two days a week. They have warned that maintaining essential services in the areas of health, education and public safety may force them to institute a debt payment moratorium. The island is struggling to get out of a nearly decade-long slump that has reduced government revenues and spurred a growing exodus of islanders to the U.S. mainland to look for work.

Alaska politicians look at sacred oil check as they search for ways to stem budget deficit— Alaska is facing multibillion-dollar deficits amid chronically low oil prices and relying on savings to help balance the budget. That's not sustainable, and is leaving first-term Gov. Bill Walker with some tough choices as he drafts the next budget. One of those decisions could reduce the amount of the yearly check nearly every Alaskan receives just for living in the state. The dividend, long seen as political dynamite to anyone who tries to tinker with it, could be affected as state leaders look for ways to close the gaping budget hole. Dividends are paid annually from investment earnings from the Alaska Permanent Fund. They are calculated using a five-year rolling average of the fund's performance. Dividends are paid annually from investment earnings from the Alaska Permanent Fund. They are calculated using a five-year rolling average of the fund's performance. Most Alaskans get a dividend, which is based on residency requirements. This year's check was $2,072, paid to about 645,000 people, and was the largest ever. Over the past decade, which included the Great Recession, the check has been as low as $845. The permanent fund itself is a nest egg of sorts, born of the state's early oil wealth and grown through investments. It's currently valued at about $52 billion. The principal cannot be spent, but its earnings — valued at about $7 billion — can be. Legislators have been loath to go there, though, for fear of being seen as "raiding" the fund.

Drug treatment, power utility victims of Illinois budget impasse: Another vendor says it may have to cut off service to the state of Illinois because the state’s inability to pay its bills is threatening the vendor’s ability to continue doing business. In a disconnection-warning letter dated Oct. 29, Southwestern Electric Cooperative Inc. told the state it is behind on its accounts. “As a not-for-profit utility, Southwestern … relies on its members to pay their bill so we, in turn, can pay our bills and provide power to 22,000 homes, hospitals, schools, businesses and industries throughout the state of Illinois,” cooperative CEO Kerry Sloan wrote in the letter, a copy of which was posted Thursday on the Capitol Fax blog site. “Your violation of our service agreement compromises our ability to provide that service and jeopardized the welfare of our membership and the general public,” Sloan wrote. The letter says Southwestern has already exceeded its policies for disconnection for lack of payment and will begin disconnections if it does not receive payment by Dec. 1. Southwestern spokesman Joe Richardson said he could not reveal details of the state’s accounts because Southwestern treats the state as it would any member of the cooperative and provides the same account privacy as it would to an individual.

Only three states score higher than D+ in State Integrity Investigation; 11 flunk | Center for Public Integrity: Key findings:

  • Alaska earns top spot in the State Integrity Investigation ranking of state transparency and accountability, with a C grade and score of 76. Only two others earn better than a D+; 11 states receive failing grades.
  • Michigan is last. State open records laws are riddled with loopholes; many states exempt entire branches of government and use high fees and lengthy delays to suppress controversial material.
  • Most ethics entities are toothless and underfunded. In two out of three states they routinely fail to initiate investigations or impose sanctions when necessary.
  • Many part-time state lawmakers operate with glaring conflicts of interest. In 7 of 10 states, legislators at least occasionally vote on bills that could present a conflict.
  • States score well in several categories, with 29 earning a B- or better for auditing practices and 16 scoring a B- or above for budget transparency.

Controversial Property Seizures by Police Are Soaring -- The controversial policing practice in which law enforcement seize private property regardless of whether or not its owner is charged with a crime has skyrocketed in the last decade, according to a new report.  Civil forfeiture is the seizure of private property by law enforcement agencies that officials suspect of being involved in criminal activity, regardless of whether or not its owner is ever convicted of or even charged with a crime. There are few hard numbers on how many forfeitures are conducted nationwide, but one metric is the total dollar value of what’s seized by the Justice Department and U.S. Treasury every year. (The federal agencies are often involved in forfeitures at both the state and federal level.)   According to the report “Policing for Profit” from the civil liberties law firm the Institute for Justice, assets seized by DOJ and Treasury totaled less than $1 billion every year from 2001 to 2006. By 2014, however, seized assets totaled nearly $4.5 billion, a 485 percent increase from 2001. The second edition of the report was released Tuesday, with updated numbers from the first edition in 2010.  Critics of civil asset forfeiture say that regulations allowing law enforcement agencies to keep a cut of the assets they seize create an incentive for police to plunder citizens regardless of guilt or innocence. “The years 2008 to 2014 were some lean economic years,” report co-author Dick Carpenter told The Washington Post. “Forfeiture is an attractive way to keep revenue streams flowing when budgets are tight.” The report also highlights cases of alleged abuse in which innocent citizens have their property seized by police and are then forced to “navigate a confusing, complex and often expensive legal process to try to win it back.” Read the full report here.

Texas troopers caught skewing racial profiling data by labeling Hispanics and blacks as white: recent investigation revealed that racial profiling data gathered by the Texas Department of Public Safety could not be trusted because some troopers had been labeling minority drivers as white. KXAN reviewed more than 16 million traffic citation records and found that the ethnicity of the drivers had been incorrectly recorded in a significant number of cases. The station found that four of the top five last names recorded as white in the state were traditionally Hispanic names: Garcia, Martinez, Rodriguez and Hernandez. Professor Ranjana Natarajan, who heads the Civil Rights Clinic at the University of Texas School of Law, told KXAN that DPS racial profiling data should be considered unreliable in light of the new findings. “I think there could be accidents every now and then, but the sheer number of the reports that you found, where it looks like the people who are not white are being classified as white, means that there is something else going on here,” Natarajan explained. “What it shows is that, there either seems to be a complete lack of training on the part of DPS officers and other law enforcement officers about how to report people’s race. Or there is deliberate, sort of trying to not follow the policy if they have been trained properly on how to report the race of the drivers whom they stop.”

Why 26 asylum-seekers in a California detention center have stopped eating: Mohammed Zakir Hosain is so lightheaded he can barely walk. His lips are chapped. His tongue, which hasn’t tasted food or water in nearly a week, is dry and swollen. Since Nov. 4, Hosain and 25 other asylum-seekers held at an immigrant detention center in Adelanto have protested their incarceration here by refusing to eat. The group -- which includes a man fleeing anti-gay laws in Ghana and others escaping religious and political persecution in Pakistan, Nepal and Bangladesh -- wants the U.S. Immigration and Customs Enforcement agency to release them from detention while their asylum cases are pending. "We will not eat until we see our freedom," the group wrote in a list of demands. Questions about who qualifies for asylum and what that process should look like have been widely debated in recent years, as hundreds of thousands of Syrian war refugees have sought help in Europe and tens of thousands of minors fleeing violence in Central America have shown up at the southern U.S. border. The hunger strike at California's largest immigrant detention center comes on the heels of similar strikes at other ICE facilities in Louisiana and Texas. In each case, detainees have complained that they should be set free on their own recognizance or on reasonably priced bonds. Some have languished in detention for years while their cases are decided in immigration courts.

It’s Not Just the Drug War - When it comes to uniquely American nightmares, it’s hard to beat our carceral state. Living in a country with 5 percent of the world’s population and 25 percent of the world’s prisoners, many are aware of the human rights catastrophe taking place around them. But when it comes to what’s actually driving this, the explanatory power of standard progressive narratives falls short. The growing unpopularity of the War on Drugs and the number of bipartisan moves to, supposedly, roll back mass incarceration have led some leftists to believe that, finally, the prison-state is about to be cut down to size. Yet a new book by University of Pennsylvania political scientist Marie Gottschalk, Caught: The Prison State and the Lockdown of American Politics, makes it clear that the problem is far worse than commonly suspected, and that the reforms on the table are unlikely to even make a dent in the forces that keep millions behind bars. Contrary to what many progressives believe, Gottschalk argues it’s not primarily the War on Drugs that’s driving this beast. Instead, it’s an all-out assault that “extends a brute egalitarianism across the board.” Jacobin editor Connor Kilpatrick recently got a chance to interview Gottschalk.

Massive Hack of 70 Million Prisoner Phone Calls Indicates Violations of Attorney-Client Privilege -- AN ENORMOUS CACHE of phone records obtained by The Intercept reveals a major breach of security at Securus Technologies, a leading provider of phone services inside the nation’s prisons and jails. The materials — leaked via SecureDrop by an anonymous hacker who believes that Securus is violating the constitutional rights of inmates — comprise over 70 million records of phone calls, placed by prisoners to at least 37 states, in addition to links to downloadable recordings of the calls. The calls span a nearly two-and-a-half year period, beginning in December 2011 and ending in the spring of 2014. Particularly notable within the vast trove of phone records are what appear to be at least 14,000 recorded conversations between inmates and attorneys, a strong indication that at least some of the recordings are likely confidential and privileged legal communications — calls that never should have been recorded in the first place. The recording of legally protected attorney-client communications — and the storage of those recordings — potentially offends constitutional protections, including the right to effective assistance of counsel and of access to the courts.

The US inmates charged per night in jail - BBC News: David Mahoney is $21,000 (£13,650) in debt. Not from credit cards. Not from school loans. He's accumulated the massive tab because of the days he spent locked up in the local jail in Marion, Ohio, which is a small town with a major heroin epidemic. Mahoney, a lanky 41-year-old, has struggled with addiction since he was a teenager, eventually stealing to fuel his habit. He got caught a lot, even burgling the same bar twice.   Today, he's 14 months sober, and is a resident and employee of the Arnita Pittman Community Recovery Center, a sober living house on the northern edge of town. His counsellor says he is doing "awesome" and he hopes to one day to become an addiction counsellor himself. But while Mahoney may have left his habits behind, he can't shake his debt. It has accumulated over 15 years of trouble with the law and is a separate charge from the restitution he must pay to the victims he stole from, or any administrative costs he has incurred by going to court. It comes from a daily "pay-to-stay" fee - sometimes called "pay for stay" - that he was charged by the local jail, the Multi-County Correctional Center. He was charged $50 each day he spent in jail, plus a $100 booking fee. It works almost as if he checked into a hotel and got a bill when he checked out.

Against kindergarten? -  A new study on the mental health effects of kindergarten enrollment ages found strong evidence that a one-year delay dramatically improves a child’s self-regulation abilities even into later childhood. According to the study co-authored by Stanford Graduate School of Education Professor Thomas Dee, children who started kindergarten a year later showed significantly lower levels of inattention and hyperactivity, which are jointly considered a key indicator of self regulation. The beneficial result was found to persist even at age 11. “We found that delaying kindergarten for one year reduced inattention and hyperactivity by 73 percent for an average child at age 11,” Dee said, “and it virtually eliminated the probability that an average child at that age would have an ‘abnormal,’ or higher-than-normal rating for the inattentive-hyperactive behavioral measure.” The study, aptly titled, “The Gift of Time? School Starting Age and Mental Health,” was published Oct. 5, by the National Bureau of Economic Research. A version of the article is also available here as a working paper from the Stanford Center for Education Policy Analysis at the GSE. I have not yet read the study, but it seems to me this paper, along with some other recent results, does not exactly help the case for preschool…

Vast majority of Chicago teachers ready to strike: reports - (Reuters) - A total of 97 percent of Chicago public school teachers, who are negotiating a new contract amid severe statewide budget troubles, said they are prepared to strike if necessary, according to media reports on Monday, citing a union official. The purpose of last Thursday's "practice" vote in the nation's third-largest city was to test the process of collecting the vote and teacher sentiment as negotiations with school officials continue, the union said. The results of the vote were released on Monday. The district, which serves about 400,000 students at more than 600 schools, faces a $1.1 billion structural deficit and thousands of possible teacher layoffs after Christmas. A spokeswoman for the union was not immediately available for comment on the vote. Under state law, at least 75 percent of union members must approve a strike. Union vice president Jesse Sharkey said last week it was too early to say when and if the teachers would strike, but they needed to be prepared.

U.S. campuses hold race protests after Missouri resignations | Reuters: Students will hold events to highlight racial issues at a handful of U.S. college campuses this week, spurred by the impact of protests at the University of Missouri that culminated in the resignation of the school's president and chancellor. Peaceful marches or walkouts have been held, or are planned, at Yale University, Ithaca College and Smith College, though none has yet reached the intensity of demonstrations at Missouri, where hundreds of students and teachers protested what they saw as soft handling of reports of racial abuse on campus. Soon after Tim Wolfe, president of the university, announced he would step down on Monday, a crowd of more than 1,000 gathered peacefully at the Afro-American Cultural Center at Yale University in New Haven, Connecticut, for a "March of Resilience," in solidarity with Missouri. The crowd sang and chanted for an end to racism on campus. The issue has been in focus at Yale after a fraternity turned away black guests at a Halloween party, saying, according to reports at the time, that only white women would be admitted. A walkout is also planned at Ithaca College, a private school in upstate New York.

Are the elite colleges really any better? (education sentences to ponder) -- An article in The Wall Street Journal finds that higher education had 1,020 lobbyists in 2014, third among industries (after pharmaceuticals and electronics). In terms of effectiveness, the article notes the extent to which the Obama administration pulled back on its initial plans for rating colleges. That is from InsideHigherEd, there is nothing more at the link.  And here is another, meatier piece from the same issue, perhaps not totally unrelated, excerpt: …they [the researchers] found that on only one of the five measures, cognitive complexity of the course work, did the elite colleges in the study outperform the nonelite institutions. On two, standards and expectations of the course work and the level of the instructors’ subject matter knowledge, there were no meaningful differences by prestige level. On two others, though — the extent to which the instructors “surfaced” students’ prior knowledge and supported changes in their views, the lower-prestige institutions outperformed the elite ones. That is from a new study which tries to measure, through classroom visits, whether classes at elite colleges are really any better.  That article has many interesting points, including the usual evasive reply from commentators as to whether this really measures anything (“If I’m teaching a 15-week course, does one class really represent the quality of my teaching?” — TC says yes). 

Did the FBI Pay a University to Attack Tor Users? The Tor Project has learned more about last year's attack by Carnegie Mellon researchers on the hidden service subsystem. Apparently these researchers were paid by the FBI to attack hidden services users in a broad sweep, and then sift through their data to find people whom they could accuse of crimes. We publicized the attack last year, along with the steps we took to slow down or stop such an attack in the future: Here is the link to their (since withdrawn) submission to the Black Hat conference: along with Ed Felten's analysis at the time: We have been told that the payment to CMU was at least $1 million. There is no indication yet that they had a warrant or any institutional oversight by Carnegie Mellon's Institutional Review Board. We think it's unlikely they could have gotten a valid warrant for CMU's attack as conducted, since it was not narrowly tailored to target criminals or criminal activity, but instead appears to have indiscriminately targeted many users at once.

Calibrating the Hype about Online Higher Education: "Massive open online courses" (MOOCs) and other aspects of online higher education were white-hot a few years ago, but I'd say that they have cooled off to only red-hot. Two economists who have also been college presidents, Michael S. McPherson and Lawrence S. Bacow discuss the current state of play and offer some insights in "Online Higher Education: Beyond the Hype Cycle," appearing in the Fall 2015 issue of the Journal of Economic Perspectives. Here are some points that caught my eye.  About one-quarter of higher education students took an online course in 2013, and about one-ninth of higher education students took all of their courses online that year.   "The US Department of Education recently began to conduct its own survey of online education as part of its Integrated Post-Secondary Education Data System (IPEDS), with full coverage of the roughly 4,900 US institutions of higher education. As shown in Table 1, IPEDS data indicates that as of 2013, about 26 percent of all students took at least one course that was entirely online, and about 11 percent received all of their education online."  When it comes to the possibility of education technologies that can operate at large scale with near-zero marginal costs, there's a history of overoptimism. Here's a quick sketch of promises about educational radio, and then educational television.

Young women living with parents, relatives at near-record level | Pew Research Center: A larger share of young women are living at home with their parents or other relatives than at any point since the 1940s. A new Pew Research Center analysis of U.S. Census Bureau data shows that 36.4% of women ages 18 to 34 resided with family in 2014, mainly in the home of mom, dad or both. The result is a striking U-shaped curve for young women – and young men – indicating a return to the past, statistically speaking. You’d have to go back 74 years to observe similar living arrangements among American young women. Young men, too, are increasingly living in the same situation, but unlike women their share hasn’t climbed to its level from 1940, the highest year on record. (Comparable data on living arrangements are not available from before then.) Back in 1940, 36.2% of young women lived with their parents or relatives. That number dropped over the next couple of decades as marriage rates increased and women began joining the workforce in larger numbers, becoming financially able to live on their own.Young adults were most likely to live independently of family around 1960, when just 24% stayed in the nest. But that figure modestly increased from 1960 to 2000 and then sharply increased after that, especially with the onset of the Great Recession in 2008. The labor market recovery since then has not reversed the trend – in fact, it’s become even more pronounced.

Million Student March aims to fight for free college tuition and cancellation of student debt - On a recent Tuesday at the City College of New York in Manhattan, a handful of students, activists and professors sat in a small circle casually planning a revolution. Surrounded by other students typing on their laptops in a basement lounge a few escalator rides down from street level, the group’s conversation flowed easily from the mundane -- how many fliers each could hand out in 15 minutes -- to their lofty goals: The cancellation of all student debt, free tuition at public colleges and universities, and getting campus workers a minimum wage of $15 an hour. “We expect this to be a long struggle,” . The City College faction is one of about 100 on campuses across the country planning to take to the streets on Nov. 12 to call attention to the growth in student debt, cost of higher education and depressed wages, particularly for campus employees. The effort, dubbed the Million Student March, got its start earlier this year when a handful of activists across the country decided it was time to create a grass-roots campaign surrounding the issues many politicians, consumer advocates and even economists have talked about, but struggled to change. The protest is the latest front in the fight against the pressure student debt is increasingly placing on Americans, particularly young people. Presidential candidates have offered their own proposals for curbing the problem; Sen. Bernie Sanders (I-Vt.) earlier this year proposed a march of 1 million students in Washington, D.C. earlier this year. Legal advocates are working through the court system to make it easier to discharge student loans in bankruptcy. And then there are more grass roots efforts, like the Corinthian Debt Strike, a group of more than 100 former students of the now-defunct Corinthian Colleges who have vowed not to pay off their student loans, arguing they were taken out under fraudulent circumstances.

Making the case for free public college education for all: a back of the envelope analysis of the Million Student March -- Yesterday, was the Million Student March.  For those not familiar, the Million Student March is a grassroots group of students who demand 3 things:

  1. Tuition-Free Public College
  2. Cancellation of All Student Debt
  3. A $15 Minimum Wage for All Campus Workers

Sounds GREAT!  Now let's take a look at the numbers to help these socially active students representing the future leaders of this great country make their case. According to the National Center for Education Statistics, in 2015, 20.2 million students attend college in the U.S. According to this randomly chosen website, 73% of these students attend public colleges and universities.  To be conservative let's say that the percentage is 60% and that this number is not likely to grow if we make public college education free. So we only have to pay for 12.12 million students per year to go to public college for free.  Going back to the National Center for Education Statistics, the average cost of tuition, fees, room and board in 2013-2014 was $15,640.   So to be conservative, we'll say that it only costs an average of $10,000 per year to send a student to college.   Doing some light math, the conservative cost of demand #1 is only $121,200,000,000 per year (for those who don't like to count zeros, that's only $121.2 Billion per)  For comparison, $121.2B is 'only' 13.5% of the total taxes collected from individuals in the U.S. in 2010 ($899B).  Now that demand #1 is out of the way, what about demand #2? According to the NY Times, total college debt is only $1,200,000,000,000 (That's $1.2 Trillion).  According to The Institute for Student Access and Success, only 1/6 of student loan totals in 2014 were from private sources with the rest coming from public sources.  Since public monies have already been spent and no one will really miss them if they are wiped off the books, we are going to eliminate 5/6 of the loans from our calculations and focus instead on the 1/6th from private lenders. Because private lenders are benevolent and once their eyes are opened to their own benevolence we will assume that the government will be able to convince these lenders to waive their interest or any penalties for early repayment and we simply have to use tax payer monies to repay the principal on these loans. After all of this convincing, we are only left with covering $200,000,000,000 ($200 Billion) in loans from private lenders from taxes. 

For Profit College, Student Loan Default, and the Economic Impact of Student Loans -- The University of Phoenix has been placed on probation by the Department of Defense preventing the university from recruiting on military bases. The probation comes after the Federal Trade Commission and the California Attorney General’s investigation into the University of Phoenix recruiting methods, its high costs, and the resulting poor student performance.  This is not the first time Phoenix-U has been in trouble. In 2013 the University of Phoenix was threatened with probation by the accreditation board for a lack of “‘autonomy’ from its corporate parent -– a development that prevented the university from achieving its ‘mission and successful operation.’” In other words, the for-profit university #1 priority by its owners was to turn a profit at the expense of teaching, retaining, and graduating its students. This is precisely what I had alluded to previously on higher rates of defaults.  An interesting analysis by the NY Fed suggests students with lower amounts of student loan debt are more likely to default than those students with higher amounts. This is a new take on student loan debt and associated default as it was always thought the higher the debt the greater risk of default. Student Loan Debt has increased as more attend college, costs to attain an undergraduate degree have increased, even higher costs are sustained for Masters and Doctorate degrees, and students have been staying in school longer. Coming out of college the study finds amongst students loan debt is distributed rather evenly over time with one third being held by those in the 20s, one third held by those in the thirties, and one third held by those forty years of age and older. A large percentage of those borrowers or ~39% of them have loans of less than $10,000 and it is the holders of debt who have been defaulting at a higher percentage. The study goes on to break it down as to why they might be defaulting more frequently than tose with higher amounts of debt.

Chicago pension payments will lag despite legal outcomes: Moody's - Chicago's contributions to its four retirement systems will be too skimpy to curb unfunded pension liability growth in the next 10 years regardless of how state lawmakers address the problem and how the court system rules, Moody's Investors Service said on Tuesday. The third-biggest U.S. city has been mired in a financial crisis largely fueled by its $20 billion unfunded pension liability. Moody's, which dropped Chicago to the "junk" level of Ba1 with a negative outlook in May, laid out four scenarios facing Chicago based on the fiscal 2016 budget it passed last month. That spending plan for the fiscal year beginning on Jan. 1 includes a record $543 million, phased-in property tax increase dedicated to public safety worker pensions. Mayor Rahm Emanuel linked the size of the tax hike to an Illinois bill reducing the city's contribution to its police and firefighter retirement systems initially by $220 million. Senate bill 777 passed the House and Senate, but is on hold due to an ongoing budget battle between Democratic lawmakers who control the legislature and the Republican governor, who has been critical of that measure. If the bill fails to become law, the city would remain subject to a 2010 state law that mandates an immediate $550 million increase in contributions, leaving the property tax hike initially $220 million short.

CalPERS Changes Executive Bonus Procedure After We Alert Them of Violations, but Still Falls Well Short of CalSTRS on Transparency -- Yves Smith - In late September, we wrote the members of CalPERS’ board* and cc’d the general counsel to alert them to the fact that the manner in which they had awarded bonuses and salary increases to CalPERS executives fell short of the requirements of the Bagley-Keene Open Meeting Act of 2004. We’ve embedded the letter sent to the chairman of the board at the end of the post.  As the letter described, CalPERS had consistently awarded salary increases and bonuses to the CEO, the CIO, and other top executives in closed session, meaning out of the eyes of the public. A 2004 guidance issued by the state attorney general stated, “…, we do not think that discussion of employee compensation may be conducted in closed session.” Note that the underlying review of performance is exempt from the public disclosure requirement, but not the decision on pay amounts.  CalPERS got the message. See this segment from the October 21 board meeting: Note, however, that the board did not approve all of the salary and bonus awards that we flagged as problematic. They did read out and approve the 2014-2105 bonuses and 2015-2016 salary increases for the CEO Anne Stausboll and Chief Investment Offices Ted Eliopoulos. But they did not include other bonus and salary awards that previous years have had been on the agenda as discussion items in closed session, such as for the general counsel, chief actuary. Here is the agenda listing for first time the bonus and compensation awards were up for discussion, in September 2015

A Hedge Fund Sales Pitch Casts a Spell on Public Pensions - Gretchen Morgenson -- It has been just over a year since the California Public Employees’ Retirement System said it would wind down its $4 billion portfolio of hedge fund holdings. High costs and complexity made the vehicles “no longer warranted,” Calpers said at the time. Given Calpers’s leadership in the public pension arena, some thought other pension managers and institutional investors would follow suit. But that does not appear to be happening, even during this, a trying year for hedge fund performance. The question is, why not?   Christopher B. Tobe, a pension consultant and former trustee for the Kentucky Retirement Systems, said most public pension funds seemed to be sticking with hedge funds, known as alternative investments, in spite of mediocre returns. “I’m seeing huge increases in alternatives among public pension funds,” he said in an interview. “Nobody seems to care about performance.” For the first nine months of this year, that performance has underwhelmed; hedge funds, which hold $324 billion in public pension money, eked out a net 0.18 percent gain, according to Preqin, a data analysis firm. That’s certainly better than the 2.6 percent loss recorded during the period by the Standard & Poor’s 500-stock index, but meager hedge fund returns like these are nobody’s idea of great.Besides contending that hedge funds provide outsize returns, their supporters say the funds have another big selling point: Their returns are not correlated to the stock market. That means they move independently of the market when it goes up and down.But research shows that hedge funds are becoming more and more correlated to the overall stock market. They are less likely, it turns out, to perform as a hedge against a balanced portfolio’s other holdings.

Lawmaker pens book to warns of public pension crisis: – A state representative has authored a book to call attention to Pennsylvania’s mounting public pension problem. State Representative John McGinnis (R-Blair) said he wrote his book, “Future Forsaken,” during the ongoing budget impasse. “I got the idea that we could have a very bad budget deal put together where pensions once again are shortchanged, so I put together an accelerated program of writing a book and got it done, basically in about three months,” McGinnis told ABC 27 News. McGinnis has a PhD in finance from Penn State University and he’s a former associate professor of finance at Penn State Altoona. He’s also a certified financial planner. “I’m trying to inform the public – even though this is an arcane subject, I think the book is readable for the average person – to help them understand what’s coming Pennsylvania’s way if we don’t immediately start addressing the unfunded liability of SERS and PSERS.” The state’s two largest public pension systems, the State Employees’ Retirement System and the Public School Employees’ Retirement System, have an unfunded liability of more than $53 billion, according to a state budget report in March. McGinnis says it’s more than that. “An economist measuring liabilities properly will tell you it’s $125 billion, or almost $10,000 per person in the state,” he said. “Not just your worker or household, every person in the state has a $10,000 debt on their head, which means that a family of four, if they leave the state, will get $40,000 in debt forgiveness. A family of four moving into the state will get $40,000 in debt for a service they never received,” McGinnis added. “The migration is going to be bad for Pennsylvania’s future.”

Democrats Undermine Efforts to Protect Retirement Savers - Forty-seven House Democrats are threatening to derail the Obama administration’s effort to protect Americans from retirement advisers who put their own interest in earning commissions above their clients’ need for expert advice. Last week, the lawmakers wrote to Labor Secretary Thomas Perez, who leads the effort, asking for a delay in the rule-making process to allow for more public comment. The request is disingenuous. The Labor Department has already held a long comment period on its proposed rules, including four days of public hearings. The next step is to review the comments and then issue final rules. The Democrats’ request, if granted, would interrupt this process and very likely make it impossible to finalize the rules before the end of 2016, leaving the next administration to grapple with them anew (if a Democrat wins) or ditch them (if a Republican wins).  Worse, the request could be harmful even if it is denied. After final rules are issued, they will almost surely be challenged in court by opponents in the financial industry, who would most likely cite a refusal to allow more comment as evidence that they were not given enough time to weigh in. The request is also duplicitous. Most of the signatories had voted earlier against a Republican bill to stop the rule-making, which allowed them to cast themselves as champions of the rules. But asking for a delay could achieve the same obstructionist goal. The rules, proposed in April, would require financial advisers to act in a client’s best interest when giving advice and selling investments for retirement accounts. That would be a big improvement over current practice, which lets many advisers steer clients into high-priced products and strategies, even when comparable and cheaper alternatives are available.

"Gas All Boomers" Or At Least Tax And Cut Their Benefits More Says WaPo: No, nobody in today's Washington Post Outlook section devoted to the boomers said that first line, although it has become a commonplace on such sites as Economics Job Market Rumors where anonymous and frustrated millennials very frequently and fervently spout that opening line to the point that it lost whatever ironic humor it had some time ago. But then irony is a Gen-X thing, not a millennial or boomer thing. However, taxing them more and cutting their benefits is certainly called for by new economics reporter (and Gen Xer) James Tankersley, in an astoundingly bad article full of so much nonsense one does not know where to start. He claims that because of their huge numbers, none of this will happen, even though the latest budget deal has in fact cut benefits for them (really for everybody not already receiving them, but with front end boomers the most likely to have been counting on those now cut benefits in the near term, see my post on this here). I shall quote one paragraph, which summarizes most of his complaints: "Boomers soaked up a lot of economic opportunities without bothering to preserve much for the generations to come.  They burned a lot of cheap fossil fuels, filled the atmosphere with beat-trapping gases and will probably never pay the costs of averting catastrophic climate change or helping their grandchildren adapt to a warmer world.  The took control of Washington at the turn of the millennium, and they used it to rack up a lot of federal debt, even before the Great Recession hit."

Colorado will vote next year on single-payer health care system — and insurers are already freaking out - First legalized marijuana, now universal health care?  As reported by the Denver Post, Colorado is now poised to consider the possibility of expanding its health coverage in a way never before seen in the United States via a single-payer insurance system — thanks to a successful campaign run by ColoradoCareYES.  The grassroots group presented 158,831 signatures sponsoring a proposed overhaul of the pre-existing health care system to the state earlier this year. This Monday, it was confirmed that they had obtained enough valid signatures to suppass the 90,000 threshold needed for the measure to be placed on the ballot, according to Secretary of State Wayne Williams.  “Colorado deserves a better option, and now they can vote on one,” said Senator Irene Aguilar (D-Denver) in a statement released by ColoradoCareYES. “Health care costs continue to rise every year, hurting Coloradans’ chances to get ahead. It’s time we get the insurance industry out of the driver’s seat and put families in charge of their health care.”

Companies continue chipping away at health insurance benefits: Companies’ health care costs in 2015 rose at the lowest rate in at least 20 years, a report out Thursday shows, but workers' share of costs continue to skyrocket. The average health care rate increase for mid-sized and large companies was 3.2% this year, the lowest since the consulting firm Aon started tracking it in 1996. Despite this, the average amount workers have to contribute toward their health care is up more than 134% over the past decade and that trend will accelerate. "Our clients say, 'I can’t keep paying more and more of these ever-rising health costs,' " Employees on average contributed $2,490 toward premiums and another $2,208 in out-of-pocket costs, such as copayments, coinsurance and deductibles in 2015, the report shows. The amount of employees’ premium and out-of-pocket costs combined was just $2,001 in 2005. Increases in deductibles and other out-of-pocket costs stem in large part from the looming “Cadillac tax” that takes effect in 2018, experts at Aon and consulting firm Towers Watson say. This tax — which some members of Congress want to kill — penalizes companies for having especially generous cost sharing beginning in January 2018. High deductible plans are the easiest way to avoid the tax. "No question change is afoot and the excise tax is a catalyst for change," says Randall Abbott, a senior strategist in consulting firm Towers Watson’s health and group benefits practice. Although some critics say companies are going farther and moving faster than they need to in cutting health benefits ahead of the tax, Dolezal says companies couldn't realistically wait and make drastic changes in cost sharing just for 2018. Employers are instead raising cost sharing and helping workers learn how to shop for health care.

Health-Care Costs Are About to Start Pushing Core Inflation Higher  "Assuming that the policy-related influences roll off as we expect and that the underlying rate of health inflation rises by the same rate as our predicted path (i.e., it starts from the lower than predicted level but rises by the same amount), we expect that the PCE price index for health services should return to around 1.5 percent year-on-year growth by [the second quarter of] 2016 under the base case, raising core PCE inflation by about 0.15 percentage points," [Goldman Sachs economist Alec Phillips] wrote. "If our estimated equation is accurate and prices begin to catch up with rising wages in the sector, health inflation could potentially rise by a bit more."  As of September, the core PCE index has risen 1.3 percent year-over-year, well shy of the Fed's 2-percent target. A major challenge for the U.S. central bank, which has strongly hinted at liftoff for interest rates in December, will be proving that core PCE inflation can rise along with policy rate. According to Goldman's analysis, this key segment looks likely to cooperate in this regard, helping the central bank move closer to meeting its dual mandate.

Obamacare Not as Egalitarian as It Appears - Tyler Cowen - The Affordable Care Act has generated an enormous amount of partisan rancor, but with more access to data, it is worth taking stock of how it has actually been working. We can safely say that the policy is costing less than anticipated, perhaps 20 percent less, according to a Congressional Budget Office estimate, and that it has reduced the number of Americans without insurance. But the numbers also suggest that by some measures, the Affordable Care Act has had only a limited impact on economic inequality. In fact, I view the policy as an object lesson in the complexity of reducing the harmful consequences of inequality in the United States. The act has many parts, but let’s focus on the mandate, a core feature that requires those without insurance to buy it. It was intended to help millions of Americans who did not have health care coverage. Under the program, government subsidies are available for the needy, and there is clear evidence that the poorest people, who receive the largest subsidies, are better off under the health reform law. In that sense, the program has been a success. But whether other individuals subject to the insurance mandate — those who qualify for lower subsidies or for none at all — are also better off is much harder to say, some recent research has found. Of course, this question may seem simple if you consider health care coverage to be an essential component of a good human life, and perhaps of social justice as well.  But there is another way of looking at it, one used in traditional economics, which focuses on how much people are willing to pay as an indication of their real preferences. Using this measure, if everyone covered by the insurance mandate were to buy health insurance as the law dictated, more than half of them would be worse off.

Poll: Americans Want Bold Action to Keep Health Care Costs Down: -- Most Americans now support aggressive regulation to keep health care costs in check -- including price caps on drugs, medical devices and payments to doctors and hospitals, a new HealthDay/Harris Poll has found. Nearly three of every four Americans (73 percent) want price controls placed on manufacturers of drugs and medical devices, the poll revealed. That's up from 64 percent who favored such controls in a 2014 poll. A majority also said they'd favor importing cheaper drugs from other countries and allowing Medicare to negotiate drug prices.  "Most people want to see a lot of different actions taken to contain health care costs, including government price controls of providers, drugs and devices, and two controversial actions which are currently prohibited -- allowing the importation of drugs from other countries and allowing Medicare to negotiate drug prices," said Humphrey Taylor, chairman emeritus of The Harris Poll. Taylor said public opinion likely has been influenced by recent news of Turing Pharmaceuticals, the drug maker that sparked outrage when it tried to hike the cost of the generic anti-infection drug Daraprim by 5,000 percent -- from $13.50 to $750 per pill. On Wednesday, a Senate committee began an investigation into huge drug price hikes by Turing and three other pharmaceutical companies, the Associated Press reported.

A View From the Losing Side of Health Care - Jacqueline Dooley - For the last three hours I've been crunching numbers, trying to figure out how not to pay $600 to $800 a month for a health insurance policy that won't cover any medical expenses until I've paid anywhere from $7000 to $9000 in deductibles. Then, even if the deductible is met, I'd only get partial benefits until I pay an out of pocket maximum ranging from $11,000 to $14,000. I'd reach these totals only from a catastrophic health event - a hospitalization, emergency room visit, or devastating diagnosis. I finally conclude that I have no choice. I'll be paying for the promise of a service that I'm not likely to use in 2016. I'll be responsible for all of physician visits, medications, labs and most tests. I'm in this position because I'm one of the 200,000 people who lost coverage when Health Republic Insurance was forced to close its doors this month.  I've been looking at the silver plans, but out of curiosity I pull up the pricing for the platinum--the best coverage money can buy. I'm almost embarrassed to look at these plans. I know they're not for me, a lowly middle class freelancer. The premiums range from $1200 a month to $1900 without the government subsidy. Even with my subsidy, most of these plans would cost me roughly the same amount as my monthly mortgage.   I close my eyes and imagine not worrying about the cost of a doctor's visit or a prescription. It's not that hard to visualize this because I'm able to do it for my children. They are both covered for $30 per month under Child Health Plus, a NY State subsidized health insurance plan available for all children 19 and under. For $30, all their health needs are met with no copayments, coinsurance or deductibles. No surprises. But this luxury is not in the cards for me. My husband and I are perpetually, perennially destined to be under insured. Before the Exchange, I purchased plans through local business organizations and watched helplessly as my family's deductible climbed higher and higher each year. It was $9000 the year before I switched my children to Child Health Plus, the same year my daughter , then 11, was diagnosed with cancer. In the span of three months, I was responsible for over $20,000 in out of pocket medical costs.

How Many Deaths from Mistakes in US Health Care? - Back in the 1999, the Institute of Medicine (part of the National Academies of Science) estimated in its report To Err is Human that in 1997 at least 44,000 and as many as 98,000 patients died in hospitals as the result of medical errors that could have been prevented. Current estimates are higher, as Thomas R. Krause points out:  "You've seen the astounding numbers: hundreds of thousands of Americans die each year due to medical treatment errors. Indeed, the median credible estimate is 350,000, more than U.S. combat deaths in all of World War II. If you measure the “value of life” the way economists and federal agencies do it – that is, by observing how much individuals voluntarily pay in daily life to reduce the risk of accidental death – those 350,000 lives represent a loss exceeding $3 trillion, or one-sixth of GDP. But when decades pass and little seems to change, even these figures lose their power to shock, and the public is inclined to focus its outrage on apparently more tractable problems."  In case you're one of the vast majority who actually haven't seen those estimates, or at least haven't mentally registered that they exist, here are a couple of the more recent underlying sources. The Agency for Healthcare Research and Quality (part of the US Department of Health and Human Services) published in May 2015 the 2014 National Healthcare Quality and Disparities Report. Here are some good news/bad news statistics from the report: From 2010 to 2013, the overall rate of hospital-acquired conditions declined from 145 to 121 per 1,000 hospital discharges. This decline is estimated to correspond to 1.3 million fewer hospital-acquired conditions, 50,000 fewer inpatient deaths, and $12 billion savings in health care costs. Large declines were observed in rates of adverse drug events, healthcare-associated infections, and pressure ulcers.

Veterans Day: Suicide has caused more American casualties than wars in Iraq and Afghanistan - -- On a day like any other in America, former Navy Master at Arms Daniel Faddis, 28, put a Sig Sauer 9 millimeter pistol to his head and shot himself. Faddis took his own life on June 20, 2012 -- adding his name to the somber roll call of 22 U.S. military veterans who die by suicide every day, more than double the civilian rate. Since that day, some 27,258 of those we honor for their service on this Veterans Day have died by their own hand. One of the most tragic problems afflicting those who served their country is the specter of suicide, often the fallout of post-traumatic stress disorder (PTSD). After more than a year of intense lobbying by veterans groups, Congress this year passed the Clay Hunt Suicide Prevention for American Veterans Act, named for a Marine veteran who took his own life even after working as an advocate for suicide prevention. The law is designed to reduce military and veteran suicides, and improve access to quality mental health care.

To Understand Climbing Death Rates Among Whites, Look To Women Of Childbearing Age - The news that mortality is increasing among middle-aged white Americans spread like wildfire last week (see here and here and here) thanks to a study by Anne Case and Angus Deaton, who recently won the Nobel Prize in Economics.. Unfortunately, there are a couple of pieces of the puzzle that we think the Case and Deaton study missed. By not looking at men and women separately, Case and Deaton failed to see that rising mortality is especially pronounced among women. The authors parenthetically note that “patterns are similar for men and women when analyzed separately,” but several recent studies have shown otherwise. Two studies from the National Academy of Sciences (NAS) and the Institute of Medicine (one of which was directed by the first author of this post) have shown that Americans are slipping behind other high-income countries when it comes to mortality and survival, and that this “US health disadvantage” has been growing particularly among women. Another study by researchers at the University of Wisconsin–Madison shows that in the decade between 1992-96 and 2002-06, female mortality rates increased in 42.8 percent of US counties. Only 3.4 percent of counties, by comparison, saw an increase in male mortality rates. Furthermore, our own analysis of the same data used by Case and Deaton shows that the average increase in age-specific mortality rates for whites age 45-54 was more than three times higher for women than men.  More specifically, between 1999 and 2013, age-specific mortality rates for US white women age 45-54 increased by 26.8 deaths per 100,000 population, while the corresponding increase for men was 7.7 deaths. By lumping women and men together, the study also missed the important point that the increases in mortality are affecting women of reproductive and childrearing ages, a finding that has huge implications for children, families, and communities.. There is simply no mistaking the reality that American women are currently dying much earlier than their counterparts in other advanced nations.

U.S. maternal mortality rate is twice that of Canada: U.N | Reuters: Women are twice as likely to die from causes related to pregnancy or childbirth in the United States than in Canada, a new global survey of maternal mortality published by the United Nations and the World Bank showed on Thursday. The United States was also one of only 13 countries to have worse rates of maternal mortality in 2015 than in 1990 - a group that also includes North Korea, Zimbabwe and Venezuela. The survey, led by the World Health Organization, aims to track progress against the U.N. Millennium Development Goals. It estimated there would be 303,000 maternal deaths globally this year, down from 532,000 in 1990. The U.N. target is to get the global average number of maternal deaths below 70 per 100,000 live births by 2030, with no country averaging worse than 140. The United States and other developed countries are already far ahead of the target, but the U.S. average has slipped from 12 deaths to 14 per 100,000 live births over the past 25 years, while Canada's is where it was in 1990, at seven. Over the same period Belarus has cut its maternal death rate from 33 to four, making it one of the safest places to have a baby, just behind the world leaders - Iceland, Finland, Poland and Greece - where only three mothers die for every 100,000 births.

Antimicrobial resistance: How substandard medicines contribute - Abstract:  The possibility of reverting to the pre-antibiotic era is increasing. With dirty hospitals, poor prescribing practices by physicians, and poor patient adherence to correct antibiotic use, the threat was already real. But now an increase in the production of substandard medicines is probably accelerating antibiotic resistance. The UK government predicts that antimicrobial resistance (AMR) could cost society a fortune within decades. The threat of AMR is increasing because of poor-quality medications, and India is ground zero when it comes to most of the problems. Given that antibiotics are so cheap in India, antibiotic use is, in effect, a substitute for proper sanitation. It is not surprising that new versions of AMR are now emanating from India. My team’s research shows that at least 6 percent of thousands of antimicrobial medicines sampled from 19 emerging nations are substandard. In nearly every nation, poor-quality medicines made in India were found. Of the substandard products we procured, 40 percent were made by legal and government-protected Indian manufacturers. But India is not the only problem case, and a global effort is required to identify sloppy production and prevent these products from being used. Read the PDF.

Why 10 cases of dengue fever in Hawaii are much scarier than the rest -- Hawaiian mosquitoes have been busy it seems. Local health authorities just confirmed 10 new cases of dengue fever, an excruciating disease nicknamed “breakbone fever.” That brings the total to 23 so far this year.  There’s something especially worrisome about these new 10 cases, though: They came from the bites of local mosquitoes. This ups the risk of an epidemic—an ominous prospect for a state that earns nearly a fifth of its GDP from tourism. After the first dengue cases were confirmed in a 2001 epidemic that tore through the island of Maui, the average number of daily visitors fell 30%  (though Sept. 11 likely had an impact too).  News of the virus may have have gone, er, viral. Allie Wesenberg, a star of the video web series Internet Killed Television, had returned to Florida from a Hawaii vacation when she fell ill and was hospitalized. However, it’s not yet certain whether she—or the eight or nine people in their tour group—have dengue: When news of Wesenberg’s illness broke, a state epidemiologist insisted that “we don’t have local dengue in our mosquitoes.” It turns out, though, Hawaii’s mosquitoes most definitely do—which means that the outbreak can get much bigger unless officials and the community either kill the mosquitoes or prevent people from being bitten. Neither is easy. Dengue—which causes searing eye, head and bone pain, and has no cure—spreads when a mosquito sucks the blood of someone who’s already carrying the virus, and then bites another person who hasn’t yet been infected. Most cases occur in Latin America, Asia, and the Caribbean, in densely populated cities where the most notorious dengue-carrying mosquito, Aedes aegypti, thrives.

Officials Secretly Added Cancer-Causing Chemicals to City’s Water Supply -- In 2013 and 2014, the City of Sacramento performed a water treatment experiment at the expense of residents of the city “to save money,” according to a local news investigation.Area residents were never informed about the toxic chemical contamination of their water that resulted from the experiment. “Cancer, miscarriages, and birth defects” are the consequences of consuming those chemicals, but the extent to which Sacramento residents are likely to experience these symptoms is not yet known. City officials allowed the experiment to continue for an entire year despite knowing early on that very process was creating carcinogens. Officials experimented on the water with a new added chemical to aid in removing sediment, silt, and other impurities in the water supply: aluminum chlorohydrate (ACH). It was due to replace the chemical known as ALUM that was regularly used to take the larger particles out of river water to treat it. Both chemicals weigh down the sediment to make it easily removable. However, the addition of ACH to the city’s water supply wound up being ineffective as a treatment so an excessive quantity of chlorine was added to the water, as well. An astonishing failure, the combination of excess chlorine and aluminum chlorohydrate ended up yielding carcinogenic toxins known as “DBPs” — disinfection byproducts. Specifically, these are in the class of chemicals known as THMs, or Trihalomethanes. According to Water Research, THMs are in the same chemical class as chloroform; and, although this water experiment ended about a year ago, the THMs remain in Sacramento’s water supply in levels that exceed EPA regulations. Several readings of THM levels provided to ABC10 exceeded 80 parts per billion, the EPA limit.  According to an ABC10 news report: “Pregnant women and unborn babies, Bowcock said, are especially vulnerable to DBPs. In first trimester pregnancies, there’s a significant rise in miscarriages, and in third trimester there’s evidence of low birth weight,” he said, describing how the DBP-tainted water is even more dangerous when its mists are breathed in while showering or washing dishes.”

Climate change, fracking and household toxins can impact pregnancy -- A lot of people know the common risks pregnant women should avoid: tobacco, alcohol, caffeine and sushi. But at an event hosted by Women for a Healthy Environment at the Hill House Association today, experts shed light on some little-known environmental risks that damage a child's development. . Climate change was among the risks detailed by keynote speaker Marya Zlatnik, an obstetrician and gynecologist. While environmentalists are well aware of the risks to our planet, Zlatnik explained the effects climate change can have on a woman's reproductive health.  According to Zlatnik, preterm birth has been associated with extreme temperatures, a consequence of climate change. . "This is pretty depressing information, and every time I give this talk I see the same not-very-happy faces in the audience. But I would argue there are things we can do to impact."  And while fracking for gas and oil is not as prevalent in Zlatnik's native California, she also detailed the dangers associated with that practice, which has become widespread in Pennsylvania.  There are 13 known suspected carcinogens involved in fracking, along with neurotoxins that can impact development. Researchers have also found an association between proximity to fracking wells and preterm birth and low birth weight.  But beyond these industrial toxins, Zlatnik also detailed toxins women should avoid in their daily lives. Advice included: buying organic, avoiding foods with substantial plastic contact, eating low-mercury fish, washing hands prior to eating, limiting pesticide and solvent use, and getting rid of old foam furniture that might contain flame retardants.  Zlatnik also advised steering clear of some dangers many aren't familiar with, like the carbonless receipts distributed at ATMs and in supermarkets. She also said women should be thoughtful about the body and beauty products they use.

Sickening Images Of China Plagued By "Extremely Hazardous" Record Smog As Winter Heating Season Arrives -- "Today’s haze is pretty severe and choking - when I walked out the door I thought someone’s house was on fire," exclaimed one resident as AFP reports a huge swathe of China is engulfed by acrid smog Monday after levels of dangerous particulates reached around56 times World Health Organization maximums, in what environmental campaigners said were the highest figures ever recorded in the country.  As The Guardian details, Residents of north-eastern China donned gas masks and locked themselves indoors on Sunday after their homes were enveloped by some of the worst levels of smog on record. Levels of PM2.5, a tiny airborne particulate linked to cancer and heart disease, soared in Liaoning province as northern China began burning coal to heat homes at the start of the winter. “The air stings and makes my eyes and throat feel sore when I’m outdoors,” one woman, who had ventured out to buy a face mask, was quoted as saying. “As for what exactly we should do, I don’t know,” she added.

The World’s Most Toxic Air  -- It’s been unseasonably hot in North India this month; but cooler weather brings not relief but stinging eyes and painful breath.Air pollution has become headline news here—one of the snippets that flowed from President Obama’s visit was that breathing the air had cut six hours off his life-expectancy. Soot levels are up to 16 times higher than World Health Organization safety levels, double Beijing’s. Corporations routinely try to reassure their staff by providing air purifiers for their offices.  Delhi came to the edge of unlivable air pollution once before, in the 1990’s. Highly polluting two-cycle three wheeler motor rickshaws were a main villain. A campaign led by the Center for Science and the Environment, capped by a Supreme Court ruling, converted the rickshaws to CNG and the air immediately improved. But three decades of vehicle growth, exacerbated by government subsidies for diesel fuel which drove the auto market towards dirtier diesel models, brought the return of choking air. This time there is no single fix like CNG in the wings.  Not all of Delhi’s problem is the result of poorly controlled industry. The early winter problem is significantly exacerbated by the burning rice straw in the fields after the harvest. And cultural practices matter. When three babies sued to prevent the use of firecrackers to celebrate India’s Diwali festival, because the crackers create enormous clouds of smoke, the courts declined to intervene, referring to well established custom.

Diwali Triggers Delhi's "Severe" Pollution Warning --India's capital Delhi has the dubious distinction of being the world's most polluted city and Diwali fireworks are making it the air pollution even worse. The smog will be particularly dangerous on Nov. 12 and 13, with the concentration of pollution-related particles — PM2.5 and PM10 — projected to increase by 148% and 170% respectively, according to Indian media reports. News headlines said US President Obama's 3 day visit to New Delhi last year cut his life expectancy by 6 hours. Why? Because Delhi has the highest level of the airborne particulate matter, PM2.5 considered most harmful to health, with 153 micrograms per cubic meter, 15 times higher than the 10 micrograms per cubic meter considered safe by the World Health Organization (WHO).Delhi is not alone; Other cities in India claim 13 spots among the top 20 dirties cities in the world. Not far behind  Delhi's 153 micrograms is another Indian city, Patna with 149 micrograms. Pakistani cities of Karachi (117 ug/m3), Peshawar (111 ug/m3) and Rawalpindi (107 ug/m3) also count among the world's most polluted. India's pollution problems are not entirely due to poorly controlled industry and transport. The early winter problems are significantly exacerbated by the burning of the fields by farmers after harvest. With a score of just 3.73 out of 100, India ranks as the worst country for the ill effects of toxic air pollution on human health among 132 nations, according to a report presented at the World Economic Forum 2012. India's neighbors also score poorly for toxic air pollution, but still significantly better than India. For example China scores 19.7, followed by Pakistan (18.76), Nepal (18.01) and Bangladesh (13.66).

Cancer on the Rise in Post-Fukushima Japan — In Fairewinds’ latest update of the ongoing nuclear catastrophe at Fukushima Daiichi, Chief Engineer Arnie Gundersen presents two reports that confirm the direct link of numerous cancers in Japan to the triple meltdown. Based upon data from Japanese medical professionals and utility owner of the meltdown site, Tokyo Electric Power Company (TEPCO), Arnie concludes that heavy radioactive discharges will be the cause of enormous spikes in cancer in Japan. TEPCO’s press release confirms the leukemia diagnosis for a TEPCO worker due to his ongoing exposure during the last four years to radiation from the Fukushima Daiichi triple meltdown. Sadly, during the early months of the Fukushima Daiichi emergency, most TEPCO workers did not wear the required dosimeters required to measure each employee’s exposure to radiation, which has made accurate assessment of the radiation doses received by TEPCO employees impossible. The second report, provided by esteemed Japanese medical professionals, reveals that the incidence of thyroid cancer is approximately 230 times higher than normal in the Fukushima Prefecture. This disturbing number for the people of Japan is solely due to the Fukushima Daiichi disaster and the ongoing radioactivity emanating from the decimated nuclear site. In this video, Arnie recounts his presentation from 2013 at the New York Academy of Medicine where he forecast continuous radiation releases from the Fukushima Daiichi nuclear plant, and also the devastating health effects for the Japanese people, despite the chronically underestimated radiation exposure levels propagated by the International Atomic Energy Agency, and the Japanese government.

The TPP SPS chapter: not a “model for the rest of the world” | Institute for Agriculture and Trade Policy - Key findings:

  • “Trade in products of modern biotechnology” has been located in Chapter 2, “National Treatment and Access for Market Goods,” so that controversies over GMOs or synthetic biology would be judged based on criteria of market access rather than risk assessments of their safety for human health or the environment.
  • Provisions establishing an SPS consultative committee led by trade officials will further weaken and possibly conflict with global standards setting bodies on food and plant safety.
  • Weakness in the U.S. regulatory agencies to provide the “appropriate level of sanitary and phytosanitary protection” required in the Chapter will be exacerbated by the confidentiality requirements that already hobble U.S. scientific peer review of food and agricultural products.

Monsanto Handed ‘Double Whammy’ by Mexican Courts Over Planting GMOs -- Opponents of genetically modified organisms (GMOs) have claimed victory after Mexico’s Supreme Court blocked last week a move that would allow the cultivation of GMO soy in the Mexican states of Campeche and Yucatan. In a separate appeals court decision, a federal judge upheld a 2013 ruling that barred companies such as Monsanto and DuPont/Pioneer from planting or selling their GMO corn within the country’s borders. The court decisions were heralded as a “double whammy” against agribusiness giant Monsanto, according to a celebratory Facebook post from sustainable food advocacy organization GMO Free USA.  According to a report from Mexico News Daily, the ruling on Wednesday favored an injunction filed by Maya beekeepers on the Yucatán peninsula, where honey production and collection is its main industry. “The decision suspends a permit granted to the agrichemical firm Monsanto to farm genetically modified soybeans on over 250,000 hectares in the region and instructs a federal agency it must first consult with indigenous communities before granting any future permits for transgenic soy farming,” the report said.

Half of world’s rare antelope population died within weeks – ‘I’ve seen some pretty grim things, but this takes the biscuit’ (The Guardian) – More than half of the world’s population of an endangered antelope died within two weeks earlier this year, in a phenomenon that scientists are unable to explain.  At least 150,000 adult saiga antelopes were buried during a fortnight in May, but scientists say the actual figure will be significantly higher as many more carcasses were found but not counted as part of the burials. Calves were not counted, but it is thought that hundreds of thousands died too.   Known for their distinctive cylindrical snout, bulging eyes and curled horns as well as their ability to survive dramatic changes in temperature, the animals are one of the most endangered species on the planet. Before the most recent die-off, the estimated population was between 250,000 and 320,000. The die-off has only occurred in the plains of Kazakhstan, where 90% of the global population resides.  The mass mortality defies understanding of how biological systems normally behave, scientists have said. They believe the deaths occurred too quickly to be attributed to a transmissible disease.   There are no wounds or evident trauma that would point to poaching and no obvious signs of malnutrition. Soil and water samples have not revealed any significant presence of toxins or poisoning by radiation, despite claims by Kazakhstan activists that fuel from Russian rockets could be to blame. The most likely culprit is a bacteria called pasteurella already living in the throat of the animals, Prof Richard Kock from the Royal Veterinary College at the University of London told the Guardian.  Although normally dormant, it is likely that an unidentified trigger caused it to change its character and “become nasty”, he said, producing toxins that could attack the antelope’s organ systems and cause death within hours.

Desertification: The people whose land is turning to dust - BBC News: The UN predicts over 50 million people will be forced to leave their homes by 2020 because their land has turned to desert. This is already happening in Senegal, writes Laeila Adjovi. Cattle herder Khalidou Badara took me up a hill in Louga, northern Senegal, to describe to me how his area has changed. "When I was a child, I did not even dare to walk up to here because the vegetation was so dense. "But these past few years, the wind and sand have been taking over. "There are almost no more trees, and the grass does not grow anymore, and so each year, we have to go further and further away to find grazing for our cattle." His life has become more complicated because of desertification. He's not the only one. The UN says land degradation affects 1.5 billion people globally. Desertification is the persistent degradation of dry land ecosystems by human activities and by climate change. It translates into scarcer rains and decreasing soil quality, which leads to less grazing for livestock and lower crop yield. Lost land Each year, UN figures say, 12 million hectares of land are lost. That's land where 20 million tonnes of grain could have been grown. People living off the land feel they have no choice but to migrate.

Yemen Struck by Second Tropical Cyclone: The second tropical cyclone to strike Yemen within about a week left 14 people dead and inflicted extensive damage to the remote Yemini island of Socotra. Cyclone Megh followed nearly the same path as Chapala, which killed 11 the week before. Yemen had never before been hit by even a single cyclone during its recorded history. Cyclone Megh also left dozens injured and caused “widespread destruction of residents' homes and fishermen's equipment and on farms and livestock," the country’s fisheries minister Fahd Kafayen said on social media. The much weaker Cyclone Megh quickly followed Chapala, which also dumped nearly a decade’s worth of average rainfall in just two days.

Massive Space Junk Crashes Into Earth’s Atmosphere -- Today is Friday the 13th, so it’s fitting that a giant chunk of space junk hurtled towards Earth. “An object the size of a car slammed into Earth’s atmosphere early this morning,” Paul Cox, host of Slooh, said. The international organization of robotic telescopes. But don’t go crawling into your doomsday bunker just yet. The object, called WT1190F (or as the Internet is calling it, WTF) was projected to burn up over the Indian Ocean about 62 miles off the coast of Sri Lanka. The International Astronomical Center and the United Arab Emirates Space Agency hosted a team of veteran U.S. and German observers of spacecraft re-entries to take a Gulfstream business jet up into the air to study the piece of space debris and capture some images. They appear to be the only one to have captured images of the object as it made its way through the atmosphere. They posted their images to Twitter and shot this video:  It’s not entirely surprising or uncommon that a space object is re-entering Earth’s atmosphere. “Four million pounds of space junk has survived the trip through Earth’s atmosphere to hit the surface,” Slooh host Paul Cox said. This is just the first time the object has been tracked ahead of time. “Considering the first satellite launched into space occurred less than 60 years, we’ve left a lot of our trash up there,” IFLScience said. “NASA estimates there are around 13,000 pieces of space debris above Earth that are larger than 10 centimeters (3.9 inches) in diameter—some of which are traveling up to 8 kilometers (5 miles) per second.”

US braces for ‘extreme weather event’ from space that could result in $2 trillion in damages: Faced with the prospect of a massive solar flare that could destroy satellites, spacecraft, and vital telecommunications systems, the White House National Science and Technology Council has released plans to protect vital systems from being devastated, reports Business Insider. According to the NOAA Space Weather Prediction Center, the Earth is constantly being bombarded with charged subatomic particles, traveling on solar winds, that can normally be deflected by the planet’s magnetic field. However scientists warn that there is a 12 percent chance of Earth being hit with a mammoth solar storm in the next decade that could wreak over $2 trillion dollars in economic damage. “You can think of the sun as kind of like a volcano,” explained Thomas Berger, director of the National Oceanic and Atmospheric Administration (NOAA) “It’s difficult to predict precisely when it’s going to erupt, but you can see the signs building up.” While scientists admit they can’t stop the solar discharge, a distant early warning system can relay information of the oncoming solar storm at the speed of light, allowing delicate systems to be shut down before being destroyed.

This Is The Way The World Ends -- On November 3, 2015, Scripps Oceanography put out a press release about fish populations off the California coast. The California Current is home to many marine animals, including marine fishes, which are the most diverse vertebrates on Earth and critical to marine ecology.  Two independent long-term time series now reveal strikingly similar trends of wide-ranging declines in fish populations in the California Current. Researchers compared two independently collected data sets from the California Cooperative Oceanic Fisheries Investigations (CalCOFI) and power plant cooling water intakes (PPI) from five sites along the California coastline. The data show that fish abundance from both studies has declined sharply since 1970, with a 72 percent decline in overall larval fish  abundance in the CalCOFI data set and a 78 percent decline in fishes from the PPI sampling. Although there was limited overlap in species between the nearshore PPI samples and the more offshore CalCOFI sampling, the correlation between the two time series was about 0.85. The study was published in Marine Ecology Progress Series.   It is indeed notable that two distinct data sets show a greater than 70% decline in fish populations in the the California Current ecosystem since 1970 (over 45 years). But saying that something is notable doesn't mean anyone will actually notice it. I found four stories reporting on fish declines in Google News. All these reports were local. Only picked up the story nationally (they reprinted the press release). The Orange County Register reported that the warming of the California current was most likely the cause of the fish declines. That is almost certainly correct.

NASA found a way to track ocean currents from space. What they saw is troubling -- There has been growing concern, of late, that one predicted consequence of a changing climate — the slowing of the great “overturning” circulation in the Atlantic Ocean — is already starting to happen. Some scientists have already suggested that the odd cold “blob” pattern on the map above, featuring record cold North Atlantic temperatures on an otherwise quite hot planet, may be attributable to this development. The gigantic circulation, technically termed the Atlantic Meridional Overturning Circulation or AMOC, carries warm water northward even as it also sends cold salty water back south at depth. Thus, changes here can reverberate around the globe — one recent study even found that a full AMOC shutdown could trigger a temporary period of global cooling. Now, in a new paper in Geophysical Research Letters, researchers from NASA’s Jet Propulsion Laboratory and the University of Texas at Austin use a new and sophisticated tool — the “Gravity Recovery and Climate Experiment” satellites, or GRACE — to confirm some pretty odd behavior in the circulation in 2009 and 2010 that has also been linked to a sudden and extreme 4-inch sea-level rise on the East Coast. The new satellite technique, the researchers say, holds great promise to determine if — as feared — the circulation is indeed slowing down. “A lot of the evidence that has been amassed is indirect, and what we’re trying to do is provide a way to really observe the AMOC across all latitudes,” says Felix Landerer, a researcher with NASA’s Jet Propulsion Laboratory who is lead author of the study.

Can Miami Beach Survive Global Warming? -- Gaius Publius: When this excellent piece came out in Rolling Stone — “Goodbye, Miami” — I studied it carefully with an eye to digesting it for people with less time to read it than I had. Looking at the problem in Miami is a gateway drug to looking at the problem in all of south Florida. But there’s an easier way to see both. This article in Vanity Fair, “Can Miami Beach Survive Global Warming?” looks at just Miami Beach, the high-priced, brand-name town built on the sandbar that fronts the city of Miami itself, and it sees all of the same things.  Everything that could go wrong in Miami and south Florida can go wrong in Miami Beach, and will likely go wrong there first. Let’s take a quick look via Vanity Fair. As you read, note the following:

  • That the bedrock on which the region sits is porous and permeable to sea water, unlike Manhattan, which sits on granite and marble.
  • That the cost to shore up just this one city’s water, drainage and sewage system is almost half a billion dollars. That’s for Miami Beach alone, not the whole of Miami.
  • That the distance above sea level of most of the land is negligible.
  • That the wealth of the entire city, including residential property, depends on the perceived value of its seafront property.
  • That the residents are optimistic about surviving global warming.

Multiply that multi-million-dollar cost to shore up the drinking and sewer problem by more than ten to get the cost to keep the drinking water salt-free for south Florida: Construction costs alone will run about $6 billion to desalinate just one-third of the water used for southern Florida.  All of the pieces of the problem are present in just this one microcosm, Miami Beach.

Scientists say Greenland just opened up a major new ‘floodgate’ of ice into the ocean -- As the world prepares for the most important global climate summit yet in Paris later this month, news from Greenland could add urgency to the negotiations. For another major glacier appears to have begun a rapid retreat into a deep underwater basin, a troubling sign previously noticed at Greenland’s Jakobshavn Glacier and also in the Amundsen Sea region of West Antarctica. And in all of these cases, warm ocean waters reaching the deep bases of marine glaciers appears to be a major cause. The new fast-moving glacier is the Zachariae glacier or Zachariæ Isstrøm, located in the far northeastern part of Greenland. In a new paper in Science, Jeremie Mouginot of the University of California-Irvine and his colleagues find that the ocean-based glacier, which contains 0.5 meters or a foot and a half of potential sea level rise, has begun a rapid retreat, especially since 2012. The glacier has lost fully 95 percent of the ice shelf that used to help stabilize it, they say, and now sports a 75 meter high ice cliff extending above the water (the glacier also extends hundreds of additional meters below it). “This is sort of the second major floodgate from Greenland that has opened up,” says Eric Rignot of UC-Irvine and NASA’s Jet Propulsion Laboratory, one of the authors of the study. The first, says Rignot, was the Jakobshavn glacier, Greenland’s “fastest” moving, according to a recent study, which is currently based 1,300 meters below sea level and also retreating into a deep basin. Now, at Zachariae, that seems to be happening again. In combination with its nearby neighbor, Nioghalvfjerdsfjorden glacier, the two glaciers contain a potential 1.1 meter of sea level rise (over 3 feet), so any change here is not good.

Rapidly Melting Glacier Has Enough Mass To Raise Sea Levels By Nearly 2 Feet --A massive glacier in Greenland is on the very verge of collapse, researchers have found. From 1996 to 2010, the edge of the glacier lost 2.2 miles into the ocean. But over just the next five years, it lost another 2.2 miles. The rapidly diminishing ice block, Zachariae Isstrom, has enough mass to raise the level of sea by nearly two feet.  “The destabilization of this marine-based sector will increase sea-level rise from the Greenland Ice Sheet for decades to come” the researchers write in their report, published Thursday in Science.  The depletion of Greenland’s glaciers is due largely to warming ocean waters, the researchers said. According to earlier studies, 90 percent of global warming is taking place in the ocean. Because Greenland’s glaciers extend deep into the ocean, they are particularly exposed to changing temperatures.  “North Greenland glaciers are changing rapidly,” lead author Jeremie Mouginot said in a statement. “The shape and dynamics of Zachariae Isstrom have changed dramatically over the last few years. The glacier is now breaking up and calving high volumes of icebergs into the ocean, which will result in rising sea levels for decades to come.” There are actually two glaciers rapidly depleting in the northeast section of Greenland: the Zachariae Isstrom and Nioghalvfjerdsfjorden. Combined, they represent more than three feet of sea level rise. There are also glaciers melting on the west side of the country. Altogether, the ice sheet of Greenland holds enough water to raise sea levels by 20 feet.

How the Planet Will Change without Arctic Sea Ice - Scientific American: By midcentury, the Arctic coastline and most of the Arctic Ocean will be devoid of sea ice for an additional 60 days each year, with some regions seeing closer to 100 days more of open water, according to a study released this week in the journal Nature Climate Change. The shift toward more sea-ice-free days would affect “all aspects of the Arctic environment,” the authors wrote, including which areas of the region will be open to commercial shipping and therefore natural resource extraction. It could also change aspects of the polar ecosystem and affect the livelihoods of those who live in the region. Arctic sea ice, or frozen ocean water, naturally grows and shrinks with the seasons, but since 1979—when scientists gained the ability to use satellite records to track the natural processes of sea ice—researchers have observed sharp declines in its extent. Although it’s covered in snow most of the year, sea ice is important for moderating the global climate. It helps cool the polar regions in part because sea ice has a bright surface. The National Snow and Ice Data Center (NSIDC) estimates that 80 percent of the sunlight that strikes sea ice is reflected back into space.  The “business as usual” scenario suggests that between 2040 and 2080, most of the historical sea ice ranges in the Arctic will have shifted completely to a longer season free of sea ice courtesy of a changing climate. ““The sea ice not on the water allows the water to interact and erode the coast,” she said. In addition, when the water remains near the coast for longer stretches of time, it can absorb sunlight and warm up, which spells trouble for the coast of Drew Point, made of 50 to 70 percent ice. Sea ice that is farther away also provides more space for a storm to make waves and create wind-driven storm surges.

A controversial NASA study says Antarctica is gaining ice. Here’s why you should be skeptical -- Late last week, a study published by NASA scientists in the Journal of Glaciology made the surprising claim that the gigantic continent of Antarctica is actually gaining ice, rather than losing it, to the tune of 82 gigatons (or billion metric tons) per year from 2003 to 2008.  The study has drawn massive amounts of media attention — and no wonder. It contradicts numerous prior scientific claims, including a 2012 study in Science by a small army of polar scientists, a study from earlier this year in Earth and Planetary Science Letters (which found 92 gigatons of net losses per year) and this 2014 study in Geophysical Research Letters (160 gigatons of net losses per year). It also contradicts assertions by the leading consensus body of climate science, the U.N.’s Intergovernmental Panel on Climate Change, which stated in 2013 that Antarctica is “losing mass” and that this process is accelerating. That statement was itself based on multiple studies showing Antarctic ice loss.  Not only does the new research fly in the face of all of this — if true, it also raises serious questions about our current understanding of sea level rise. If Antarctica is actually gaining ice, that means that a significant percentage of the current rise of the seas, estimated at roughly 3.22 millimeters per year by NASA itself, must be coming from elsewhere. (It takes 360 gigatons of ice to raise seas by 1 millimeter).  No wonder, then, that a number of researchers have been quoted expressing skepticism about the new research, even as climate change doubters have had a field day — adding the study to an argumentative arsenal that previously included misleading claims about growing Antarctic sea ice. So what’s going on here — and what should you make of the new claim that Antarctica isn’t losing ice or raising our seas?

Carbon Levels Rising at ‘Frightening Speed’ As Greenhouse Gases and Global Temperature Hit Record High  --Atmospheric greenhouse gas concentrations hit yet another new record in 2014, “continuing a relentless rise which is fueling climate change and will make the planet more dangerous and inhospitable for future generations,” said the World Meteorological Organization (WMO) in a report released today. The WMO Greenhouse Gas Bulletin found a 36 percent increase in greenhouse gas emissions in the last 25 years and a 43 percent increase from pre-industrial levels. The report also highlighted the “enhanced greenhouse effect” that more water vapor in the atmosphere is having. As the Earth’s surface temperature warms because of record CO2 concentrations, it’s creating a “vicious cycle” where “higher temperatures lead to more atmospheric water vapor,” explains the Guardian, “which in turn traps even more heat.”  Levels of two other major greenhouse gases, methane and nitrous oxide, rose “at the fastest rate for a decade,” reports Reuters. In 2014, methane levels reached 1,833 parts per billion (ppb) and nitrous oxide levels reached 327.1 ppb. “We will soon be living with globally averaged CO2 levels above 400 parts per million as a permanent reality,” said WMO Secretary-General Michel Jarraud. March marked the first time ever that global carbon levels surpassed 400 ppm for an entire month. To avoid catastrophic climate change, scientists have said global concentrations need to be below 350 ppm.

Global warming: World already halfway towards threshold that could result in dangerous climate change, say scientists -- The world is halfway towards the threshold that could result in dangerous climate change, scientists have warned, after revealing that average global temperatures have recorded a rise of one degree Celsius for the first time. Record warm temperatures measured in the first nine months of this year mean that the world has already reached the halfway point towards the arbitrary “threshold” of a 2C increase on pre-industrial levels judged to be potentially dangerous for climate change, the Met Office said. The world is heading towards uncharted territory at “frightening speed” according to the World Meteorological Organisation (WMO).Global average temperatures broke through the 1C barrier as the concentration of man-made greenhouse gases in the atmosphere reached another new record, the climate scientists said. Latest figures on greenhouse gas concentrations show that levels of carbon dioxide, methane and nitrous oxide from industrial, agricultural and domestic activities reached record levels – with global average concentrations of carbon dioxide in spring 2015 crossing the 400 parts per million barrier for the first time.“It means hotter global temperatures, more extreme weather events like heatwaves and floods, melting ice, rising sea levels and increased acidity of the oceans,” “Every year we report a new record in greenhouse gas concentrations. Every year we say that time is running out. We have to act now to slash greenhouse gas emissions if we are to have a chance to keep the increase in temperatures to manageable levels,” Mr Jarraud said.

Greenhouse Gas Concentrations Hit Yet Another Record - The amount of greenhouse gases in the atmosphere reached yet another new record high in 2014, continuing a relentless rise which is fuelling climate change and will make the planet more dangerous and inhospitable for future generations. The World Meteorological Organization’s Greenhouse Gas Bulletin says that between 1990 and 2014 there was a 36% increase in radiative forcing – the warming effect on our climate – because of long-lived greenhouse gases such as carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O) from industrial, agricultural and domestic activities. The WMO report also highlights the interaction and amplification effect between rising levels of CO2 and water vapour, which is itself a major greenhouse gas, albeit short-lived. Warmer air holds more moisture and so increased surface temperatures caused by CO2 would lead to a rise in global water vapour levels, further adding to the enhanced greenhouse effect. Further increases in CO2 concentrations will lead to disproportionately high increases in thermal energy and warming from water vapour. “Every year we report a new record in greenhouse gas concentrations,” said WMO Secretary-General Michel Jarraud. “Every year we say that time is running out. We have to act NOW to slash greenhouse gas emissions if we are to have a chance to keep the increase in temperatures to manageable levels.” Atmospheric concentrations of CO2 – the most important long-lived greenhouse gas – reached 397.7 parts per million (ppm) in 2014. In the Northern hemisphere CO2 concentrations crossed the symbolically significant 400 ppm level in 2014 spring, when CO2 is most abundant. In spring 2015, the global average concentration of CO2 crossed the 400 ppm barrier. “We will soon be living with globally averaged CO2 levels above 400 parts per million as a permanent reality,” Said Mr Jarraud

The Great Climate Change Hoax Has Reached a New Level of Deceit -- The World Bank is warning us that the Great Climate Change Hoax has reached a new level of sophistication and deceit. Grant-fattened scientists will scour the globe, covertly impoverishing millions of people in furtherance of their anti-capitalist, anti-freedom agenda, and to make more money from George Soros and Tom Steyer. Wake up, sheeple!​  As many as 100 million people could slide into extreme poverty because of rising temperatures, which are caused by greenhouse gas emissions, the World Bank report said. The bank's most recent estimate puts the number of people living in extreme poverty this year at 702 million, or 9.6% of the world's population. Climate change has led to crop failures, natural disasters, higher food prices and the spread of waterborne diseases, creating poverty and pushing people at risk into destitution, according to Shock Waves: Managing the Impacts of Climate Change on Poverty, released on Sunday. Efforts to stabilise climate change should incorporate strategies to eradicate poverty, said Stéphane Hallegatte, a senior economist at the World Bank's climate change group and co-author of the report. "The policies, the investments, the financing, all of that should be integrated. Otherwise, we're just less efficient."  Not to be all apocalyptic or anything, but do you know what happens when there are millions of desperate, starving people? Wars happen. Brutal, vicious wars, fought with rocks and clubs and whatever else is at hand. War and hunger feed on each other until there's nothing left to devour. Civilizations break down this way. Those sneaky scientists should stop what they're doing with their scam. Someone might get hurt.

The unbearable lightness of Chinese emissions data --  To get a sense of how hard it is to measure greenhouse gas emissions in China, it pays to visit the Deqingyuan poultry farm on the outskirts of Beijing, where streams of chicken manure are piped from wooden sheds to an industrial gas digester that rises above the ground like a tethered balloon. Turning waste into kilowatts qualifies Deqingyuan for valuable carbon credits under a UN-backed scheme known as the Clean Development Mechanism. The digester turns all that chicken slurry into natural gas, powering a nearby electricity station and supplying fuel to 39 surrounding villages. Yet calculating those emissions requires a 54-page, UN-certified rulebook, a methodology that factors everything from the amount of methane removed from the manure to local temperatures and animal weight to come up with a figure. And that cumbersome process can mean Deqingyuan’s emissions savings vary wildly – sometimes by as much as 20 per cent. “I don’t know how they calculate the figure but there were many researchers from universities who came to assess it,” said Vincent Wei, a marketing manager at Helee Bio-Energy Technology, which built the plant.

Climate Change Poised to Push 100 Million Into ‘Extreme Poverty’ by 2030 -- Adding urgency to the call for bold emissions cuts and a radical rethinking of the global economy, a new report from the World Bank warns that human-caused climate change could push more than 100 million people into extreme poverty within just 15 years. Entitled “Shock Waves: Managing the Impacts of Climate Change on Poverty,” the World Bank’s study differs from previous efforts by looking at the poverty impacts of climate change at the household level, rather than at the level of national economies. Already, global warming is sparking higher agricultural prices; increasing “natural hazards” such as heat waves, droughts and floods; and exacerbating public health issues, the report states. Without “immediate” adoption of mitigation, adaptation and emission-reduction policies, the World Bank cautions that rising greenhouse gases—and temperatures—will continue to ravage vulnerable populations, dragging them further into poverty. The bank’s most recent estimate puts the number of people currently living in extreme poverty at 702 million or 9.6 percent of the world’s population. “Poor people and poor countries are exposed and vulnerable to all types of climate-related shocks—natural disasters that destroy assets and livelihoods; waterborne diseases and pests that become more prevalent during heat waves, floods or droughts; crop failure from reduced rainfall; and spikes in food prices that follow extreme weather events,” it reads. “Climate-related shocks also affect those who are not poor but remain vulnerable and can drag them into poverty—for example, when a flood destroys a micro-enterprise, a drought decimates a herd or contaminated water makes a child sick.”

Americans Largely Unconcerned About Climate Change, Survey Finds: (AP) -- Americans are hot but not too bothered by global warming. Most Americans know the climate is changing, but they say they are just not that worried about it, according to a new poll by The Associated Press-NORC Center for Public Affairs Research. And that is keeping the American public from demanding and getting the changes that are necessary to prevent global warming from reaching a crisis, according to climate and social scientists. As top-level international negotiations to try to limit greenhouse gas emissions start later this month in Paris, the AP-NORC poll taken in mid-October shows about two out of three Americans accept global warming and the vast majority of those say human activities are at least part of the cause. However, fewer than one in four Americans are extremely or very worried about it, according the poll of 1,058 people. About one out of three Americans are moderately worried and the highest percentage of those polled - 38 percent - were not too worried or not at all worried. Despite high profile preaching by Pope Francis, only 36 percent of Americans see global warming as a moral issue and only a quarter of those asked see it as a fairness issue, according to the poll which has a margin of error of plus or minus 3.7 percentage points. "The big deal is that climate has not been a voting issue of the American population,"

Gulf States to be Hoist Early on Climate Change Petard -- According to a study by Jeremy Pal of Loyola et al, large areas of the Persian Gulf may well be uninhabitable by the end of the century. Specifically, the research, published in Nature Climate Change, posits that greenhouse gases will continue to accumulate in the atmosphere at their current pace, sending temperatures to intolerable seasonal highs and increasing the frequency and severity of extreme heat waves. In Kuwait City, Doha, and elsewhere, summer temperatures will frequently reach 140 degrees Fahrenheit; decadal heat waves may top 170 degrees. Although crippling heat may be a problem for another generation, water, and in turn food, security will reshape the region in near future. With its population set to further explode, water stress – the ratio of water use to supply – is expected to double or triple across the Persian Gulf toward 2040. While the human effects are better understood, the effects on the region’s vital oil and gas industries are less well-known. Rising temperatures present little direct threat, though extraction operations may become more time- and cost-intensive. Instead, the uncertainty centers on volatile future demand profiles and the rate at which the broader decarbonization movement takes hold. As such – and considering their high economic reliance on hydrocarbon production – the Gulf States have appeared rather hesitant to commit much, or anything, to renewable energy development, green technologies, or international climate pacts. However, the increasingly negative climate realities – 2 degrees Celsius warming is coming – have dampened the relatively carefree, “damned if we do, not so much if we don’t” attitude surrounding alternative energy. Changes are coming, albeit slowly, and disjointedly.

Shift to Lower-Carbon Energy Is Too Slow, I.E.A. Report Warns - — Even as the world shifts toward lower-carbon forms of energy, the changes are happening too slowly to keep global temperatures from rising to dangerous levels in the coming decades, an international research group warns in a report released on Tuesday.And low oil prices could make the problem worse by slowing the planet’s transition to cleaner and more efficient cars, trucks and aircraft, according to the report, by the International Energy Agency. The group represents nearly 30 countries and aims to promote secure and environmentally sustainable global energy.“Now is not the time to relax,” Fatih Birol, the agency’s executive director, said in  a statement accompanying the report.The group, based in Paris, said in its annual “World Energy Outlook” that Asian countries like India and China could play a big role in determining how successfully the world combats climate change.China now seems on a path of slowing growth in its energy demand, the agency said. But India, where one in five people still lacks access to electricity, is entering an energy boom, the report said. While both countries will have high demand for nuclear and renewable energy, the report said, India could also become the largest source of new demand for oil and for the dirtiest of fossil fuels: coal.

Paris and the Fate of the Earth - The lives of billions of people, for centuries to come, will be at stake when world leaders and government negotiators meet at the United Nations Climate Change Conference in Paris at the end of the month. The fate of an unknown number of endangered species of plants and animals also hangs in the balance. At the “Earth Summit” in Rio de Janeiro in 1992, 189 countries, including the United States, China, India, and all European countries signed on to the UN Framework Convention on Climate Change (UNFCCC), and agreed to stabilize greenhouse-gas emissions “at a low enough level to prevent dangerous anthropogenic interference with the climate system.”  So far, however, no such stabilization has taken place, and without it, climate feedback loops could boost rising temperatures further still. With less Arctic ice to reflect sunlight, the oceans will absorb more warmth. Thawing Siberian permafrost will release vast quantities of methane. As a result, vast areas of our planet, currently home to billions of people, could become uninhabitable. Earlier conferences of the UNFCCC signatories sought to reach legally binding agreements on emission reductions, at least for the industrialized countries that have produced most of the greenhouse gases now in the atmosphere. That strategy faltered – partly owing to US intransigence under President George W. Bush – and was abandoned when the 2009 Copenhagen conference failed to produce a treaty to replace the expiring Kyoto Protocol (which the US never signed). Instead, the Copenhagen Accord merely asked countries for voluntary pledges to cut their emissions by specific amounts. Those pledges have now come in, from 154 countries, including the major emitters, and they fall far short of what is required. To fathom the gap between what the pledges would achieve and what is required, we need to go back to the language that everyone accepted in Rio. The wording was vague in two key respects. First, what would constitute “dangerous anthropogenic interference with the climate system”? And, second, what level of safety is assumed by the term “prevent”?

It’s Pretty Obvious Not Enough Is Being Done Ahead of the Paris Climate Talks -- The good news: The overwhelming majority of the world's economies have laid out plans to cut their carbon emissions ahead of the upcoming climate summit in Paris. The bad news: They're still short of the goal the United Nations has set for holding the line on global warming. But those keeping tabs on the December talks say they're at least a running start toward that target. "We have some substantial reductions that come out of that, and that takes a curve that's been bending and keeps bending it even further," . "But it's not bending it far enough, and what we need to do in Paris is to create a process that keeps moving the momentum forward." More than 150 countries, including the leading sources of carbon dioxide and other fossil-fuel emissions, have submitted plans to cut emissions by 2030. But the proposed cuts are "probably halfway to what we need to achieve," UN Environment Program Executive Director Achim Steiner said Friday. What's been laid out would still drive global average temperatures at least 3 degrees Celsius (5.4 degrees Fahrenheit) over pre-industrial times by 2100— well beyond the 2 C (3.6 F) of warming that scientists warn could produce catastrophic changes, UNEP concluded. The world is nearly halfway to that 2-degree mark already.

Why are oil and gas companies calling for more action on climate change - Bob Dudley, CEO BP - This year many of us have increased our advocacy on this issue. And last month, companies responsible for a fifth of the world’s oil and gas supply in the Oil and Gas Climate Initiative (OGCI) threw their support behind a new global agreement at the forthcoming UN talks in Paris. For oil and gas companies to take such a stance has been described as “unusual” — and even “unprecedented.” However, in fact, in BP we have publicly acknowledged the risk and have been working to address it since the 1990s. So why do companies that produce oil and gas want to see more done to tackle climate change? The first reason is simply that we want the planet to be sustainable in the future. We have the same hopes and fears for our children and grandchildren as anyone else. The second reason for our stance is that, being close to the issue, we have views on the realistic and affordable ways to make the transition to a lower carbon economy. And we can see that oil and gas are part of that transition. With the UN-led conference on climate change in Paris approaching, it’s important that we explain our view. In BP, as we and several other companies made clear in a letter to the UN in June, we believe the best mechanism to drive a shift to a lower carbon future is to put a price on carbon. That can be done via taxes or by cap-and-trade systems. Either can be effective if well-constructed. The benefit of a broad-based, well-designed carbon price is that it encourages improvements in energy efficiency as well as shifts in the fuel mix. In terms of the fuel mix, a carbon price makes all of the lower carbon alternatives more competitive — and in each particular situation the most economical options will emerge. This is vital when the technologies need to be deployed at massive scale and affordability is key.

Saudi Arabia presents climate pledge ahead of Paris summit — Saudi Arabia, whose oil-fueled economy could suffer from global efforts to reduce greenhouse gas emissions, on Tuesday submitted a climate action pledge to the United Nations. Though thin on commitments, the Saudi pledge was symbolically important because the desert kingdom has been seen as reluctant to join the fight against global warming. The pledge, just weeks ahead of a U.N. climate summit in Paris, was mainly focused on efforts to diversify the Saudi economy and study the impact on it by international policies to fight climate change. Saudi Arabia gets about 80-90 percent of its revenue from oil exports. The submission said diversification efforts could help Saudi Arabia avoid 130 million tons of carbon dioxide emissions annually by 2030, but didn’t give a detailed explanation of how to achieve that. “The Saudis may be sending a very first tentative signal that they’re preparing for a post-oil economy, which will clearly be a challenge for them more than any others,”. The submission noted that Saudi Arabia, as a desert and coastal nation, is vulnerable to climate change impacts such as heat waves and rising seas.

Paris climate deal ‘not legally binding’ - John Kerry, US secretary of state, has warned that December’s Paris climate change talks will not deliver a “treaty” that legally requires countries to cut their carbon emissions, exposing international divisions over how to enforce a deal. The EU and other countries have long argued that the accord due to be reached next month should be an “international treaty” with legally binding measures to cut emissions. But in an interview with the Financial Times, Mr Kerry insisted the agreement was “definitively not going to be a treaty”. He said it would contain measures that would drive a “significant amount of investment” towards a low-carbon global economy. But he stressed there were “not going to be legally binding reduction targets like Kyoto”, a reference to the 1997 Kyoto protocol, a UN climate treaty that had targets for cutting emissions that countries ratifying it were legally obliged to meet. Delegates from 195 countries are due to finalise a new global climate accord in Paris that will replace the Kyoto treaty, which failed to stop emissions rising. The US signed but failed to ratify that treaty, largely because it did not cover China, now the world’s largest carbon polluter. The Paris deal is supposed to cover all countries, but Mr Kerry’s comments underline the differences between the US and other nations over how to ensure it is robust enough to shift billions of dollars of investment away from fossil fuels and towards greener energy sources. A European Commission spokeswoman on Wednesday said the commission and many nations “would like the Paris agreement to be in the form of a protocol or a treaty” which would represent “the strongest expression of political will and also for the future it provides predictability and durability”. Privately, EU officials acknowledge the Obama administration is eager for a deal in Paris, but not one containing new, legally binding measures because these would strengthen arguments that the agreement needs approval from a hostile US Senate, which must ratify all treaties.

Are Climate Advocates not Welcome in France for COP21? - The French government is set to reintroduce border controls for a month, over the period of the International Climate Conference in Paris. This exceptional measure is taken “where there is a serious threat to public policy or internal security”. It appears that civil society, which is planning on mass mobilisation for the event, is especially targeted, as a number of delegations from developing countries are having trouble getting visas.  As of 13 November, citizens and civil society organisations committed to climate justice will no longer be welcome in France. National border controls will be reintroduced for the international climate conference to be held in Paris in late November, early December, meaning that, for a month, even EU citizens will be unable to be move freely in and out of France. According to an official document from the French authorities, published by the Council of the European Union, France is planning a “reintroduction of controls at the internal borders with Belgium, Luxembourg, Germany, the Swiss Confederation, Italy and Spain on the occasion of COP 21”. These exceptional measures will begin on 13 November, two weeks before the opening of the conference, and end on 13 December, two days after the event finishes, as illustrated by the document below: [1]

Live Long and Die Out -  If you’re prone to flights of depressive thoughts in the shower (who isn’t?), you’ve perhaps briefly entertained the notion that, since humans are responsible for every environmental catastrophe, maybe the planet would be better off if we all just died. While you might rid yourself of such a bleak thought by making the water scalding and moving on to thinking about something cruel you did in middle school, there is a group of extremist hippies called the Voluntary Human Extinction Movement (VHEMT, pronounced “vehement”) that actively promotes the idea. Their philosophy is simple: Humans should stop breeding, and allow ourselves to go extinct. As their motto puts it, “Live long and die out.” The movement was founded in 1991 by Les U. Knight, a substitute middle school teacher in Portland, OR. After working with the environmental group Zero Population Growth in the early seventies, he became disenchanted with their “stop at two” slogan, which he felt wasn’t drastic enough. He imagined a more effective alternative: stop at zero. The VHEMT, according to Knight, is not a “code of behavior to live by” and “it can’t get into arguments, tell people what to do and think, nor get punched for doing so.” It’s only concern is ceasing all human reproduction, to allow the environment to recover.

All electricity in Austria's largest state now produced from renewables  - Austria’s largest state said Thursday that 100 percent of its electricity is now generated using renewable sources of energy. “We have invested heavily to boost energy efficiency and to expand renewables,” said Erwin Proell, premier of 1.65m-strong Lower Austria.   “Since 2002 we have invested 2.8 billion euros ($3bn) in eco-electricity, from solar parks to renewing (hydroelectric) stations on the Danube,” Proell told a news conference. The state in northeastern Austria now gets 63% of its electricity from hydroelectric power, 26% from wind energy, nine percent from biomass and two percent from solar. In Austria as a whole, which voted against nuclear power in a 1978 referendum, 75% comes from renewables and the rest from fossil fuels. Lower Austria has also created 38,000 “green jobs”, Proell said, which the state aims to increase to 50,000 by 2030.

Britain’s nuclear deal with China is a boon for bankers – and no one else -- At first glance, it seems an almost inexplicable paradox. A right-wing British government has invited companies controlled by the Chinese Communist Party – and in one case, the Chinese military – into the heart of the UK’s strategically vital energy infrastructure. The nuclear deal between Britain and China goes against the advice of the security services, the military and the US government. So to explain this paradox, we must look carefully at another major deal in the British government’s flirtation with President Xi Jinping: the inter-penetration of the two countries' financial services. There would seem to be no possible connection between Chinese companies building and operating nuclear power stations in 2020s Britain and a curious political role created in 1571. But the fact that the Remembrancer, a representative of the City of London Corporation, is allowed to attend and monitor debates in the House of Commons, says much about Britain’s priorities. When considering economic and budgetary policy, the Remembrancer is at hand to ensure that our elected representatives remember that, whatever other interests they might serve, the needs of financial services must be paramount. And the near-invisible hand of the Remembrancer seems recently to have been at work ensuring that Britain’s infrastructure is made accessible to Chinese state-owned companies.

Cuomo Administration Denies Critical Certification at Indian Point Nuclear Power Plant -- Citing numerous environmental and public safety concerns, the New York Department of State (DOS) has filed an objection to Entergy’s request for a Coastal Consistency Determination for the Indian Point nuclear plant. This objection has the potential to block Entergy’s request for a 20-year extension of its operating license for the plant’s Unit 2 and Unit 3 reactors and require the closure of Indian Point as soon as next year.  In its objection, Gov. Andrew Cuomo’s administration has highlighted many concerns over Indian Point, including:

  • The plant’s massive intake of 2.5 billion gallons of water of day for cooling, which heats the nearby river, killing aquatic life.
  • A dubious history of operational accidents including transformer explosions and other component malfunctions.
  • The nuclear power plant’s location near two active seismic faults.
  • Risks of catastrophic events due to flooding and sea-level rise.
  • Indian Point’s location near the nation’s most heavily populated area and its proximity to critical ecological resources and drinking water.
  • Electromagnetic interference with transmission lines and pipelines.
  • Violations of state water quality standards posed by the continued operation of the plant.
  • Risks regarding the storage of on-site nuclear waste in overly dense spent fuel pools; and
  • Radiological leaks from spent fuel pools and other components, which have already resulted in large plumes of groundwater contamination under the site that leach into the Hudson River.

Fossil crisis deepens as Exxon probed on climate cover-up -  New York prosecutors have subpoenaed emails and company documents from America’s oil giant Exxon Mobil in a test case over alleged climate crimes, the most dramatic step to date in an escalating legal assault against the fossil fuel industry. The state is investigating whether the $360bn petroleum group, the world’s biggest traded oil company, withheld information from investors on the financial risks of climate change and conspired to manipulate the public debate on greenhouse gases. It has demanded documents going back forty years, when Exxon’s own scientists first warned that C02 emissions were likely to drive up temperatures and “destroy” agriculture in vulnerable parts of the world. Exxon officials said they received the subpoena on Wednesday from the New York attorney-general, Eric Schneiderman, a Left-leaning crusader with a taste for quixotic cases. “We unequivocally reject allegations that Exxon Mobil suppressed climate change research,” said the company’s spokesman Scott Silvestri.  Exxon said it had worked closely with the US energy department and the UN climate panel (IPCC) over the years, and accused hostile elements in the media of cherry-picking snippets from old documents to paint a false picture.

New York has completely left the reservation on climate change - Make no mistake, Andrew Cuomo is a environmental ideologue. The man paid state workers to fill seats at a climate change event. Seriously, we are talking about a really unreasonable person when we talk about Andrew Cuomo. The most mind-boggling dereliction of duty that Cuomo championed as governor relates to the fracking boom that has taken place across the country, especially in the east. After the EPA’s own report was published, saying that fracking did not pollute the water supply or harm the environment, Cuomo chose to ban it anyway, effectively condemning thousands of New Yorkers to a life of unemployment. Bill De Blasio is no stranger to climate change hysteria either; he has been running around promising to cut emissions by 80 percent, which, you can imagine, is far-fetched, to put it nicely. But wait, there’s more.  Now we are learning that Cuomo’s attorney general, Eric T. Schneiderman, is taking things even further, which is hard to believe is even possible. From the Daily Signal: The New York Times is reporting that Schneiderman has subpoenaed extensive financial records, emails and other documents of Exxon Mobil to investigate whether the company “lied to the public about the risks of climate change or to investors about how such risk might hurt the oil business.”  In addition to ignoring the First Amendment, Schneiderman is apparently unaware that the claim that the world is endangered by a warming climate is a scientific theory, not a proven fact.

Tax The Trash: Why The U.S. Needs To Rethink Waste Management - Let's see what those disparaging America's rate of recycling as "too high" either get completely wrong or fail to understand. You can read recent commentary suggesting that the recycling rate is too high here, here and here. The number one complaint is that it costs more to recycle some categories of waste than to put them into a landfill. What the critics fail to comprehend is that unlike a couple of generations ago when most landfills were owned and run by local governments, today most are run by profit-making enterprises such as Waste Management Inc. and Republic Services Inc. which haul some 80 percent of the nation's refuse.   Since the private waste disposal industry has organized its infrastructure around cheap landfill disposal, it's no wonder that landfilling seems like the most cost-effective option. It follows that if we Americans had built a waste infrastructure with the goal of zero waste as Germany did, our infrastructure would naturally have delivered lower costs for recycling than it does. The Germans landfill about 1 percent of their waste compared to America's 68 percent. Germans recycle about 70 percent of their waste and burn almost all the rest to produce energy. Americans recycle about 25 percent of their waste and burn about 7 percent.. Private landfill operators are responsible for what happens for the first 30 years. After that, taxpayers pick up the bill. But only if officials decide to.  Current landfill technology which lines waste pits will not keep pollutants from leaking out forever. In the long run, whatever goes into landfills will eventually seep out with rainwater or sinks into the soil below once the lining deteriorates.  Finally, landfills are a source of methane, a potent greenhouse gas, produced by rotting organic matter in the waste. When we say that landfilling is cheaper, what we really mean is that landfilling is cheaper for us--not for those who come after us who will have to clean up the mess that keeps on giving.

Renewables to Overtake Coal as World’s Largest Power Source, Says IEA -- The International Energy Agency’s (IEA) latest report found that “in advance of the critical COP21 climate summit in Paris, there’s a clear sign that an energy transition is underway.” The World Energy Outlook 2015 report, published today, found that “renewables contributed almost half of the world’s new power generation capacity in 2014 and have already become the second-largest source of electricity (after coal).” More than 150 countries have submitted climate pledges ahead of the Paris climate talks, and they are “rich in commitments on renewables and energy efficiency,” says the IEA. The report also found renewables are set to become “the leading source of new energy supply from now to 2040.” And renewables will overtake coal as the largest source of electricity generation by the 2030s. The IEA projects “turbulent times” ahead for coal: “Coal has increased its share of the global energy mix from 23 percent in 2000 to 29 percent today, but the momentum behind coal’s surge is ebbing away and the fuel faces a reversal of fortune.” China’s coal use will “plateau at close to today’s levels,” says the IEA, but India’s energy demand will grow to 2.5 times its current rate. It remains to be seen whether India will pursue the coal-heavy track that China followed. Coal demand is set to triple in India and Southeast Asia by 2040, reports the Guardian. At the same time, India is one of many countries aiming to become a so-called “solar superpower,” making a huge commitment to renewables at its first big renewables trade convention earlier this year. And India lays claim to the world’s first airport powered entirely by solar energy.

An Interactive Look At China's Massive Coal Bubble -- China has given the green light to more than 150 coal power plants so far this year despite falling coal consumption, flatlining production and existing overcapacity. According to a new Greenpeace analysis, in the first nine months of 2015 China’s central and provincial governments issued environmental approvals to 155 coal-fired power plants — that’s four per week. The numbers associated with this prospective new fleet of plants are suitably astronomical. Should they all go ahead they would have a capacity of 123GW, more than twice Germany’s entire coal fleet; their carbon emissions would be around 560 million tonnes a year, roughly equal to the annual energy emissions of Brazil; they would produce more particle pollution than all the cars in Beijing, Shanghai, Tianjin and Chongqing put together; and consequently would cause around 6,100 premature deaths a year. But they’re unlikely to be used to their maximum since China has practically no need for the energy they would produce. Coal-fired electricity hasn’t increased for four years, and this year coal plant utilisation fell below 50%. It looks like this trend will continue, with China committing to renewables, gas and nuclear targets for 2020 — together they will cover any increase in electricity demand. What looks to have triggered this phenomenon is Beijing’s decision to decentralise the authority to approve environmental impact assessments on coal projects starting in March of this year. But it’s been a problem years-in-the-making, driven by the Chinese economy’s addiction to debt-fuelled capital spending. Almost 50% of China’s GDP is taken up by capital spending on power plants, factories, real estate and infrastructure. It’s what fuelled the country’s enormous economic growth in recent decades, but diminishing returns have fast become massive losses. Recent research estimated that the equivalent of $11 trillion (more than one year’s GDP) has been spent on projects that generated no or almost no economic value. Since the country’s power tariffs are state controlled, energy producers still receive a good price despite the oversupply. And boy is it a huge oversupply: China’s thermal power capacity has increased by 60GW in the last 12 months whilst coal generation has fallen by more than 2% and capacity utilisation has fallen by 8%.

The G20 spent an average of $452 billion each year in 2013 and 2014 to support fossil fuel production -- Oil Change International and the Overseas Development Institute have just released a report that calculates - for the first time - total subsidies from G20 governments to oil, gas, and coal production.  Our report reveals that the G20 spent an average of $452 billion each year in 2013 and 2014 to support fossil fuel production, including coal mining and coal-fired electricity production, despite pledging to eliminate inefficient fossil fuel subsidies every year since 2009.   You can find the the full Empty Promises report, plus links to the 19 country studies and data sheets, here: And we’ve also written a blog highlighting leaders and laggards.

The U.S. Could Add A Million Jobs By Getting Off Fossil Fuels -- Construction jobs in clean sources of electricity are expected to boom under a low-carbon scenario.  A new report has found that transitioning to a clean energy economy would be an economic boon to the United States, increasing employment, reducing costs to consumers, and benefiting investors.  The report, from NextGen Climate America, showed that investment in efficiency, renewable sources of electricity, and fuel switching — such as moving from fossil fuel-powered cars to electric vehicles — would add a million jobs by 2030, and roughly 2 million jobs by 2050, while increasing GDP by $290 billion and improving household income. The researchers looked at scenarios that would reduce emissions by 80 percent below 1990 levels.  “While addressing climate change is one of our greatest challenges, it is one of our greatest opportunities to build the economy,” Tom Steyer, co-founder of NextGen and billionaire climate activist (and a board member of the Center for American Progress), said on a call with reporters Monday.  The construction industry, in particular, could see a huge bump in jobs — to the tune of 1.2 million more in 2050 than under the business-as-usual scenario. That’s because it will take a lot of people to build the wind farms, install the solar panels, and retrofit the buildings needed to reduce America’s dependence on fossil fuels.

Giant Utilities Try to Kill Solar Power -- One of the main reasons that solar energy is growing so fast  in California is “net metering” … i.e. crediting rooftop solar users for surplus power their systems create, which is fed back into the grid for use by other customers. Currently, rooftop solar owners are credited at the same rate they would pay the utility for electricity. Not only is net metering a huge incentive to buy solar panels, but it is part of a wave of decentralized energy production which could help to solve our protect against terrorism, fascism and destruction of our health, environment and economy. But the giant California utilities – PG&E, Southern California Energy and San Diego Gas & Electric – are determined to kill net metering, because it cuts into the profitability of their centralized energy production business.  The Los Angeles Times notes: For new purchases of rooftop solar, the utility proposals could wipe out the potential savings on power — the main incentive for buying the systems. Lyndon Rive, chief executive of SolarCity, describes a “catastrophic” future for rooftop solar if the California Public Utilities Commission approves the proposals … Utility proposals call for crediting solar users at about half the current rates. Utilities would also charge monthly fees, based on the size of a homeowner’s solar system.

A Texas Utility Offers a Nighttime Special: Free Electricity - — In Texas, wind farms are generating so much energy that some utilities are giving power away. TXU Energy’s free overnight plan, which is coupled with slightly higher daytime rates, is one of dozens that have been offered by more than 50 retail electricity companies in Texas over the last three years with a simple goal: for customers to turn down the dials when wholesale prices are highest and turn them back up when prices are lowest.  It is possible because Texas has more wind power than any other state, accounting for roughly 10 percent of the state’s generation. Alone among the 48 contiguous states, Texas runs its own electricity grid that barely connects to the rest of the country, so the abundance of nightly wind power generated here must be consumed here. Wind blows most strongly at night and the power it produces is inexpensive because of its abundance and federal tax breaks. A shift of power use away from the peak daytime periods means lower wholesale prices, and the possibility of avoiding the costly option of building more power plants.

A look at John Kasich's energy plan - Want to know what’s happening in Ohio government and politics from Columbus to Washington, D.C.? We’ve got you covered. As Gov. John Kasich continues on the campaign Republican presidential nomination trail, Dispatch Washington bureau chief Jack Torry and Washington reporter Jessica Wehrman took a closer look at his energy plan. “John Kasich’s energy plan is aimed at sparking the economy by expanding production, but environmentalists say the Republican presidential candidate’s idea would increase pollution and the carbon emissions blamed for climate change,” Torry writes. “In an economic speech last month in New Hampshire, the Ohio governor outlined an approach likely to resonate with American industry, including abandoning a plan by the Obama administration that would force electrical utility plants to slash their carbon dioxide emissions by 32 percent by 2030.” What the critics say: “John Kasich is a moderate in tone, but not in policy,” said Dan Weiss, senior vice president for campaigns at the League of Conservation Voters in Washington. ” His plan is a big-oil wish list that would increase carbon pollution and other pollution, ignores the biggest environmental threat to Ohio and the rest of the country, and would increase our dependence on oil.” What the campaign says: Scott Milburn, a senior campaign adviser, said, “The energy policy is not a stand-alone idea; nor is the regulatory policy. They are subsets which work together with his overall economic policy.

Kasich energy plan has critics hot - John Kasich’s energy plan is aimed at sparking the economy by expanding production, but environmentalists say the Republican presidential candidate’s idea would increase pollution and the carbon emissions blamed for climate change. In an economic speech last month in New Hampshire, the Ohio governor outlined an approach likely to resonate with American industry, including abandoning a plan by the Obama administration that would force electrical utility plants to slash their carbon dioxide emissions by 32 percent by 2030. In addition, Kasich called for a one-year freeze on new federal nonsafety regulations, including those that affect the environment, while insisting that federal agencies study whether the financial costs of future rules imposed on industries would outweigh the environmental benefits. He backs construction of the Keystone XL pipeline — rejected on Friday by President Barack Obama — that would carry oil from Canadian tar sands to Gulf Coast refineries. And he would press to open up oil and gas exploration on millions of acres of federal land, although he would exclude national parks.

Ballot board splits clean energy plan - A state panel on Tuesday doubled the amount of work that backers of a $14 billion borrowing proposal for green energy projects must do to get on the ballot. The Ohio Ballot Board, by a 3-1 party-line vote, determined that the proposed Ohio Clean Energy Initiative would change two sections of the state constitution, which would require those behind it to gather at least 306,000 signatures twice. This marked the fourth time that the backers have been before the board with a similar proposal. But this time they added a provision that, assuming voters approve the borrowing, would allow them to come back later and fix any errors flagged by a court without having to again gather hundreds of thousands of signatures. “Essentially, what they want to do is prescribe themselves a provision that says I can put a new thing on the ballot to amend the constitution with 1,000 signatures,” said Secretary of State Jon Husted, the board’s Republican chairman. “It’s 305,000 approximately now.”   Potentially, three different questions could appear on the ballot dealing with the same issue if the board decides later that the plan is also affected by a constitutional amendment voters approved just last week. Voters might be asked first to waive the constitution’s new ban on writing special business interests into the constitution before voting on the other two parts of the issue. The committee’s backers could challenge the board’s decision before the Ohio Supreme Court. They could also dust off their last proposal, which lacks the change in the signature requirement. The prior proposal had already been certified by the board as a single ballot question.

Commission dismisses appeal related to injection well -- Athens County Fracking Action Network’s latest attempt to appeal a permit related to a Troy Twp. injection well has been dismissed. In a decision earlier this week, the Ohio Oil & Gas Commission dismissed an appeal filed against a state permit that was issued in connection with K&H Partners’ third injection well in Troy Twp. Earlier, the commission had dismissed an appeal related to K&H Partners’ second injection well in Troy Twp. The Ohio Division of Oil & Gas Resources Management issued a permit on March 18 that allowed K&H Partners to proceed with drilling its third well in the township. ACFAN appealed to the commission, but the state and K&H Partners filed motions to dismiss the appeal — which the commission granted Monday on grounds it does not have jurisdiction to hear the appeal. Although ACFAN argued that the issued permit was an injection well permit over which the commission would have jurisdiction, the commission ruled that it was a drilling permit. Under state law, a drilling permit cannot be appealed to the commission. “The Ohio Supreme Court has held that the Commission lacks jurisdiction over permitting decisions that address drilling permits under O.R.C. 1509.06, and the Commission will not exercise jurisdiction over such decisions,” the commission ruled. ACFAN had argued that the permit was an injection well permit issued under the authority of a different portion of Ohio law.

Forest's neighbors deserve their mineral rights - Since 2011, my private-property rights have been held hostage because we’ve been blocked from developing energy resources under the Wayne National Forest. I’ve fought to free our mineral rights and, in building a grassroots campaign, I came to realize that my neighbors in southeastern Ohio faced the same problem.  That’s why, on behalf of southeastern Ohioans whose land has been held hostage, it’s a welcome relief to see the Bureau of Land Management making progress toward approving shale development in the Wayne National Forest. Since energy companies have the ability to drill from a well on private land more than 2 miles horizontally beneath the surface, prohibiting energy development beneath the Wayne prevents people such as me from realizing the full value of our mineral rights. Mineral development in the Wayne National Forest is nothing new as there are more than 1,200 active oil and gas wells on the surface of the forest. In fact, according to Wayne National Forest officials, “mineral development is an important component of resource management on the WNF.” Four years ago, we had an opportunity to approve energy development in the Wayne, but a small group of radical environmentalists hijacked the debate, halting energy development and trampling our private-property rights. Now we have another opportunity, with hearings in Marietta, Athens and Ironton on Tuesday, Wednesday and Thursday, respectively, for federal officials to listen to the people who approve of energy development in the forest that will restore landowner rights and provide an economic boost for Monroe and Washington counties.

Mahoning supervisors deny zoning change, fearing well pad development - Mahoning Township Supervisors denied a zone change Tuesday, saying they fear it could open the way for a well pad. The request was from Norma W. Hoffmaster, who wants about half of a 62.32 acre parcel on the south side West State Street near Route 551 to be changed from residential to agricultural. Hoffmaster did not attend the hearing but was represented by attorney Alan D. Wenger of Harrington, Hoppe and Mitchell, in Warren Ohio. Wenger said that the total parcel as it exists has three separate zoning classifications including conservation, residential and mixed use highway. Part of the property is currently farmed. He said Hoffmaster wants the zoning to be consistent. He said the property is under lease to an oil and gas company. He told supervisors that there are no current plans for a well pad on the property but said there were talks about a year or two ago about one. The supervisors questioned the reason for a zone change if no well pad is planned. Wenger said there were some tax considerations in changing the zoning to agricultural. But the supervisors ended up unanimously denying the change out of concern for a nearby house bout 300 feet from the east end of the property line along State Street, near Route 551.“In the last few months we have dealt with issues of wells encroaching on residential property,”

Fracking opponents are willing to put money where mouths are: While supporters of the Youngstown anti-fracking charter amendment contend they aren’t looking at a return to the ballot, it would be shocking to not see the proposal in front of voters in 2016. It’s a presidential election year, and the proposal lost by only 2.94 percentage points in this last election. That margin of defeat is according to unofficial but final results during the Nov. 3 election. Frackfree Mahoning Valley backed the anti-fracking Community Bill of Rights in each of its five times on the city ballot. Some anti-fracking supporters recently ridiculously questioned the validity of the November 2014 vote, which lost by 15.4 percentage points, based on a flawed poll – or at least the misreading of that poll. The margins of defeat the three other times this was on the ballot were 8.3 percentage points in May 2014, 9.7 percentage points in November 2013, and 13.7 percentage points in May 2013. As the results of the Nov. 3 vote were significantly closer than the four other efforts, Frackfree is asking and will pay for a hand recount. The proposal lost 6,028 to 5,683 on Nov. 3. The board will include provisional and late-arriving overseas absentee ballots in its official count. The board will certify the results next Friday, but it won’t turn the loss into a victory for Frackfree. So why conduct a recount? “We’re not targeting this board of elections staff, but there are so many voting machine discrepancies,” said Susie Beiersdorfer, a FrackFree member. “We want to make sure everybody’s vote counts.”

State Supreme Court denies driller's request for order saying local zoning can't restrict fracking -- A potentially pivotal case in Ohio’s continuing debate over whether local communities can ban or zone oil and gas drilling activities hit a wall at the Ohio Supreme Court on Tuesday. The high court dismissed without comment a complaint for mandamus (court order) filed by Beck Energy of Ravenna, Ohio, against the Akron suburb of Munroe Falls. The lack of explanation by the Supreme Court, though not at all unusual, makes it difficult to interpret the significance of the decision, though it definitely didn’t favor the oil and gas industry. Beck, the lead plaintiff in a landmark Ohio case involving local oil and gas regulations, Morrison (Munroe Falls) vs. Beck Energy, sought an order from the Ohio Supreme Court stating that Munroe Falls cannot use its zoning ordinance “to prohibit drilling for oil and gas in 99.06 percent of the city’s territory.”The recent debate over Ohio cities and counties’ efforts to ban or regulate oil and gas drilling, fracking and/or waste disposal has mainly involved proposed community bill of rights that assert an innate right of local citizens to pass laws to protect their environment. So far, those efforts haven’t had much luck with Ohio courts, including the highest one, the Supreme Court. The courts have backed up state officials and the oil and gas industry’s contention that only the state, not local government, has the authority to regulate oil and gas. However, Beck Energy’s request for a Supreme Court order involved a different question – whether traditional zoning can dictate where oil and gas activities can go, just as it does with other industrial, commercial and residential activities. When Beck filed the mandamus action in June, it was seen as having the potential to finally sort out that crucial question. The court’s noncommittal decision on Tuesday dampens that expectation, however.

Fairmount Santrol Announces Third-Quarter 2015 Results - -- CHESTERLAND -- Fairmount Santrol today announced results for the third quarter ended September 30, 2015. Third-quarter 2015 revenue totaled $171.0 million, down 54% from $373.5 million for the same period in 2014, and down 23% from $221.3 million in the second quarter of 2015. Overall sales volumes were 2.0 million tons for the quarter, compared with 2.6 million tons in the third quarter of 2014 and 2.2 million tons in the second quarter of 2015. For the third quarter, the Company had a net loss of $46.2 million, or $(0.29) per diluted share, compared with net income of $54.1 million, or $0.32 per diluted share, for the same period a year ago and net income of $14.1 million, or $0.08 per diluted share, in the second quarter of 2015. The Company had a $28.1 million non-cash tax expense in the third quarter. The adjustment is primarily driven by changes to the current and forecasted business levels, the variability of book income (or loss) between quarters, and a proportionately greater impact on taxable income from the statutory percentage depletion allowance. The Company expects to show a cumulative annual tax benefit for the full year 2015.  Total Proppant Solutions volumes for the third quarter of 2015 were 1.5 million tons, down 25% compared with the prior-year period and down 8% compared with the second quarter of 2015. Raw frac sand volumes were 1.3 million tons, down 15% compared with volumes for the same period a year ago and down 6% sequentially. Coated proppant volumes were 0.15 million tons, down 61% from the prior-year period and down 25% versus the second quarter of 2015. During the third quarter, the Company experienced an average decline in selling prices of 8% sequentially across all product lines.

Utica Shale: the best and the worst? - Over the past few weeks, the buzz around the Marcellus Shale has actually been about its deeper neighbor, the Utica, where a handful of companies have drilled record-setting wells for record-high costs. That has been making some people very nervous — not because the dry portion of the Utica underlying southwestern Pennsylvania, eastern Ohio and the West Virginia Panhandle might be too expensive to drill. Instead, it’s because, as some companies predict, it might soon be the least expensive. “If there’s a shoe to drop that makes things worse, it’s the dry Utica working,” said Jim Crockard, CEO of the newly-formed Marcellus startup Lola Energy Operating Co.The glut of natural gas produced from shale wells over the past five years has inundated the market. Each new shale play seemed to outshine the last, with bigger wells and better economics. The price of natural gas futures at the national benchmark, Henry Hub, dipped below $3 per million British thermal units in January and has stayed there, inching closer to $2 in the past few months. Now, here comes the Utica, another giant gas field. The so-called dry portion of the Utica contains methane, the fuel used for heating and cooking. “Wet” portions contain methane as well as other natural gas liquids, including ethane and propane. “If it does work, if you start flooding the market with economic Utica wells,” Mr. Crockard said, the benchmark price of gas will stay at $2 per million British thermal units. More to the point: “It will wipe out all the economic Marcellus wells.”

Magnum Hunter warns of bankruptcy for gas companies  - About a month after Magnum Hunter Resources Corp. said it had hired advisers to help boost the struggling company’s financial position, the oil and gas producer warned that it may be heading toward bankruptcy. It joins other oil and gas companies reeling from the body blows dealt by plummeting commodity prices — many have announced layoffs, suspended drilling in some areas or sold assets. In a filing with the U.S. Securities and Exchange Commission this week, Magnum Hunter said seeking protection under Chapter 11 of the bankruptcy code “may be unavoidable.” Magnum Hunter has operations in the Marcellus Shale in West Virginia and Ohio, and the Utica Shale in southeastern Ohio and western West Virginia. During the first quarter of 2015, the Texas-based company suspended its drilling operations and said it didn’t expect to resume “until our liquidity position has been stabilized.” Meanwhile, the New York Stock Exchange said Tuesday it would begin delisting the common stock of Magnum Hunter due to “abnormally low” price levels. NYSE requires that the average closing price be at least $1 per share over a consecutive 30 trading-day period. As of Nov. 6, its average closing price over the preceding 30 trading-day period was 36 cents per share. Leo Mariani, an analyst for RBC Capital Markets, noted the company had been working on asset sales for months, “but they don’t seem to have anything to show for it.”

Eclipse Resources to Idle Rig Through 1Q2016, Focus on DUCs For Growth - Eclipse Resources Corp. will idle its one-rig drilling program through 1Q2016 as it looks to its inventory of drilled but uncompleted (DUC) wells to maintain production growth while waiting out the pricing downturn. The State College, PA-based exploration and production (E&P) company announced its plans to halt drilling activities during a third quarter earnings call with investors Thursday. “As we look towards the 2016 plan and where commodities currently are, given our inventory of wells that we’ve already paid to drill and still need to complete, it didn’t seem to make a lot of sense to us to go ahead and continue to add to that inventory of DUC wells, when we can go complete wells essentially at half the capital cost of what it costs to drill and complete a new well from scratch,” CEO Benjamin Hulburt said. Hulburt said the company has 20 net DUC wells currently in its inventory. Eclipse will focus on bringing seven wells from its Fuchs/Dietrich pad online through the rest of 2015 and into 1Q2016, he said. Despite idling its drilling program, Eclipse is well-positioned to continue realizing production growth into 2016, Hulburt said, though he cautioned that commodity prices will dictate the company’s capital spending.

Pennsylvanians getting drilled all over again -— Pennsylvania's natural gas industry has fended off higher taxes for yet another year, while a potential deal to end a budget stalemate now in its fifth month would make the state's sales tax the nation's second highest.Gov. Tom Wolf's top priority has been a record increase in education funding, and an agreement by top Republican lawmakers on that issue was enough for the first-term Democrat, his press secretary, Jeff Sheridan, said Tuesday.In a brief statement to reporters, Wolf acknowledged that many details in the proposed budget remain unsettled, and his ambitious hope is to have work on it finished and through the Legislature by Thanksgiving.Some Democrats are restless over the tax trade-off.House Democratic Whip Mike Hanna, D-Clinton, said it may be hard for Democrats to support a deal in which companies like Exxon Mobil Corp. — a major gas-exploration company — will not pay more, but every resident will when they buy everything from a car to an outdoor grill.  So we tax grilling, but not drilling. Is this a great state or what? 

Dartmouth study says fracking benefits extend 100 miles - Akron Beacon Journal - Here’s the link to the study: – Supporters and opponents of fracking have been debating over the degree to which fracking is benefiting the economy versus affecting the health and environment of our communities. In a new National Bureau of Economic Research study, Dartmouth professors focus on the income and employment consequences of fracking. They find that over a third of fracking revenue stays within the regional economy. For the study, researchers analyzed data from oil and natural gas production from 2005 to 2012 and found that within 100 miles of new production, $1 million of extracted oil and gas generates $243,000 in wages, $117,000 in royalties and 2.49 jobs— an economic impact three times larger than within the county of a fracking site. The impact on jobs and income at the state level was approximately five times larger than the county impact.  Within the county, every $1 million generates $66,000 in wage income, $61,000 in royalty payments and 0.78 jobs within the county. Of the $66,000 in wage income, $39,000 are wages to oil and gas industry workers, and $27,000 are wage spillovers to workers in other industries. Over 3,000 counties in the U.S. are evaluated in the study, which includes a focus on the top fuel producing states and counties. The most active producers of oil are: Calif, Colo., Kan., La., N.M., N.D., Ohio, Okla., and Texas; and the most active producers of shale gas are: Colo., La., N.M., Penn., Utah, Texas, W.Va., and Wyo. Unlike other studies to date, which may rely solely on a county-based analysis, the study examines the impact of fracking within 100 miles of new drilling sites, which takes into account workers who commute to a site, and other spillover economic activity experienced by neighboring counties.

Cuomo Gives Thumbs-Down To Off-Shore LNG Terminal - Gov. Andrew M. Cuomo has vetoed a proposed natural gas transfer station off Jones Beach, killing a venture whose projected fuel cost savings had been drowned by fears of fracking, terrorism and environmental damage.In a letter sent Thursday to the federal Maritime Administration, Cuomo wrote of unanswered questions on security on Port Ambrose, potential “catastrophic” damage from a superstorm, disruption to the squid and scallop industry, and a conflict with an offshore wind farm proposed there by the New York Power Authority.“My administration carefully reviewed this project from all angles, and we have determined that the security and economic risks far outweigh any potential benefits,” Cuomo said in a statement. “Superstorm Sandy taught us how quickly things can go from bad to worse when major infrastructure fails — and the potential for disaster with this project during extreme weather or amid other security risks is simply unacceptable.”Port Ambrose also would “hinder the local maritime economy in a way that negatively impacts businesses throughout Long Island, and that is simply unacceptable. This is a common-sense decision, because vetoing this project is in the best interests of New Yorkers.”His decision, to be announced at 12:15 p.m. at the Long Beach Recreation Center, is not entirely unexpected because Cuomo came out last year against the controversial fracking of natural gas upstate and has frequently linked extreme weather to climate change in the wake of Sandy.

US shale oil output will be less resilient than gas - – U.S. natural gas production hit a new record in August, despite the deepening slump in gas prices and a fall in the number of rigs targeting gas formations. The failure of gas production to respond to lower prices and a falling rig count has left many analysts wondering if it heralds the same problem in the oil market – worsening oversupply. The number of rigs drilling for oil has plunged almost two-thirds over the last 12 months, but crude production is unchanged since October 2014 and down by less than 5 percent compared with its peak in April. Like shale gas producers, shale oil drillers have managed to raise output while cutting costs by concentrating on the best-known and most productive formations and areas. They have also standardized and accelerated the drilling process, drilled longer horizontal wells with more fracking stages, and employed more horsepower to fracture larger areas underground from the same hole. But closer examination reveals important differences between the two markets that suggest oil output will be less resilient than gas to lower prices.

Straits of Mackinac pipeline draws concern at UT water talks - Pipelines are gaining more of the public’s attention these days, from President Obama’s rejection of the proposed Keystone XL pipeline to the concerns many Ohio property owners have expressed over how the new era of shale fracking is creating bigger demands to move natural gas through their state. But one of the Great Lakes region’s biggest pipeline battles is over a line that has been used to move oil under the highly sensitive Straits of Mackinac since 1953 with hardly anyone noticing.  Enbridge Line 5 is a 645-mile, 30-inch-diameter pipeline running from Superior, Wis., to Sarnia, Ont.  It’s the five-mile stretch between Michigan’s Upper and Lower Peninsulas that garners the most attention. A spill or rupture there could ruin millions of gallons of fresh water in lakes Michigan and Huron.  “Since the Kalamazoo River spill, pipelines have gotten more and more scrutiny,” Noah Hall, a Wayne State University law professor and the panel’s moderator, said. He said the movement of fossil fuels has become a bigger environmental issue, especially in the industry-heavy Great Lakes region. The Kalamazoo River oil spill occurred in 2010, the same year as BP’s much higher-profile Deepwater Horizon spill in the Gulf of Mexico. The latter was the largest spill in U.S. history; the Kalamazoo River oil spill was the largest to ever affect an inland U.S. river. Enbridge also owns the pipeline that spilled into the Kalamazoo near Marshall, Mich., about a two-hour drive northwest of Toledo.  Though the company was cited by federal regulators for waiting too long to report the Kalamazoo spill, Enbridge said it has “paid special attention to the Straits of Mackinac,” has never had a leak there, and is “working hard” to ensure it never does.

Sanders speaks against Bakken pipeline through Iowa -- Vermont Sen. Bernie Sanders, a Democratic presidential hopeful, has criticized the proposed Bakken crude oil pipeline, which is set to go before the Iowa Utilities Board beginning later this week. “I’m opposed to the construction of the Bakken ‘crude oil’ pipeline because as a nation, our job is to break our addiction to fossil fuels, and not increase our dependence on oil, coal, and other carbon pollution sources,” Sanders said in a statement released Tuesday. Sanders also advocated against the Keystone XL pipeline, which has gained more national attention. Sanders and Sen. Rand Paul, R-Ky., are the only presidential candidates who’ve spoken against the Bakken pipeline, which is being sponsored by the Dallas-based Dakota Access. The 1,100-mile pipeline would cut diagonally through Iowa and carry up to 570,000 barrels a day from North Dakota to a terminal in Illinois. The proposal has generated backlash from a cross section of Iowans, including farmers, environmentalists and property rights advocates, who oppose using eminent domain for the pipeline. Others support the effort, saying it would be a financial boon for the state.

Resistance on the Land: Natural Gas Pipeline Plans Opposed - Carolyn and Ian Reilly and their four children left Florida's sprawl in 2010 to farm 58 acres in rural Virginia, raising beef cattle, chicken and hogs. Then a year ago, they learned a natural gas pipeline would slice through part of their farm and their lives took another dramatic turn.  They've shooed pipeline surveyors from their pastures, made anti-pipeline signs for a protest at the county courthouse and at appearances by the Virginia governor. They've also kept up pressure on local officials. From New England to North Carolina, scattered insurgencies have formed in opposition to a spider web of pipelines up and down the Eastern Seaboard as the nation's energy industry seeks to move pent-up natural gas supplies.Behind the pipeline boom: vast deposits of natural gas being drilled in West Virginia, Pennsylvania and Ohio and ready for shipment to U.S. and international markets.  "Essentially, the takeaway is they're re-plumbing the whole United States," .The battle has emerged as the East Coast version of the environmental and political drama over the Keystone XL Pipeline, which became a line in the sand for environmentalists who argue the time has passed for the world to end reliance on fossil fuels. With President Barack Obama killing that 1,179-mile energy project Friday, the snarl of proposed pipelines carrying natural gas is likely to generate more attention — from proponents and opponents alike.

Obama Administration Approves Pipeline Expansion Set to Feed First Ever Fracked Gas LNG Export Terminal -- Steve Horn -- The Obama Administration has quietly approved expansion of a major pipeline carrying fracked gas destined for the global export market. The Gulf Trace pipeline, owned by The Williams Companies, is set to feed into Cheniere Energy's Sabine Pass LNG export terminal in Louisiana. As first reported by Reuters, LNG tankers loaded with super-chilled liquefied naturalgas obtained via hydraulic fracturing (“fracking”) will set sail for the first time from Sabine Pass in January 2016.  In a statement, Williams said it had received approval for Gulf Trace from the U.S. Federal Energy Regulatory Commission (FERC) and had set a date of the first quarter of 2017 for the project to be in service.  The statement said Gulf Trace was part of $5.1 billion worth of transmission projects targeting the eastern U.S.   Gulf Trace will feed gas obtained from fracking in Pennsylvania's Marcellus Shale basin to Sabine Pass.   Pipeline company giant Energy Transfer Partners (ETP) recently purchased Williams Companies for $32.6 billion. ETP — whose assets include both hotly-contested proposed Dakota Access LLC pipeline and the Trans-Pecos Pipeline — is run byCEO Kelcy Warren, who served as an advisory committee member and donor to former Republican Party presidential candidate Rick Perry. Perry sits on ETP's Board of Directors.  Sabine Pass LNG Terminal owner Cheniere Energy, the first company in the fracking era to receive an export permit from the Obama Administration back in 2012, also has a politically connected Board of Directors. Among its members is Obama's former climate czar, Heather Zichal.   FERC has come under fire of late for rubber-stamping nearly every project proposal landing on its desk.

Florida Legislature's green light to fracking is the wrong signal -- Bravo to the Palm Beach County commissioners who voted last month for a resolution calling for a statewide ban on fracking. And to the dozens of other counties — including Miami-Dade, Broward, St. Lucie, Martin and Monroe — that have similarly declared this controversial method of extracting oil and natural gas off-limits in their own jurisdictions or demanded a statewide prohibition. Too bad that their responsible efforts to protect their communities may be crushed by state officials who seem hellbent on caving to the drilling interests.  The Florida Legislature is advancing a bill that would nullify local efforts to bar fracking or even to regulate it. House Bill 191 would completely preempt local governments from regulating or prohibiting oil or gas exploration. All decisions on exploring, drilling, processing, storing and transporting oil and gas would be up to the state. On Tuesday, the bill sailed through a House subcommittee on a party-line 9-4 vote despite roughly 50 environmentalists on hand to oppose it. In favor were business groups like the Florida Petroleum Council. Brewster Bevis of Associated Industries of Florida asked what proved the pertinent question: “Will this create jobs in Florida? Of course it will.” A similar bill passed the House last spring but died in the Senate. Its backers said prudence demands having regulations in place in case the fracking industry sets its sights on Florida.

Oil tankers queueing in U.S. Gulf seen as symbol of glut -- A traffic jam of oil tankers has emerged along the U.S. Texas coast this month, a snarl that some traders see as the latest sign of an unyielding global supply glut. More than 50 commercial vessels were anchored outside ports in the Houston area at the end of last week, of which 41 were tankers, according to the Houston Pilots, an organization that assists in the navigation of larger vessels in and around port areas. Normally there are between 30 to 40 vessels anchored offshore, of which two-thirds are tankers, according to the pilots. Although the channel has been shut intermittently due to fog or flooding in recent weeks, pilots said those issues were not significant enough to create the backlog. “It’s not because of a lack of pilots or tug boats,” according to JJ Plunkett, a Port Agent with the Houston Pilots. As of Nov. 6, more than 20 million barrels of crude were sitting in vessels anchored outside the U.S. Gulf Coast waiting to discharge, double the volume that typically discharges each week, according to Matt Smith, Director of Commodity Research at ClipperData. “We’re seeing ships idling off the coast of China, Singapore, (the) Arab Gulf, and now the U.S. Gulf. It appears that the glut of supply in the global market is only getting worse,” Smith said. Oil traders in the U.S. cash market pointed to everything from capacity constraints at Gulf Coast storage tanks to a lack of buyers for the imported barrels. While U.S. data show Gulf Coast inventories hit a record 251.7 million barrels just over a week ago, major facilities at Corpus Christi, Houston, the Beaumont-Nederland area, and St. James, Louisiana, were still barely two-thirds full at the end of October, according Genscape data. Several traders said some ships may have arrived without a buyer, which can be hard to find as ample supply and end-of-year taxes push refiners to draw down inventories.

Something Very Strange Is Taking Place Off The Coast Of Galveston -- Having exposed the world yesterday to the 2-mile long line of tankers-full'o'crude heading from Iraq to the US, several weeks after reporting that China has run out of oil storage space we can now confirm that the global crude "in transit" glut is becoming gargantuan and is starting to have adverse consequences on the price of oil.  While the crude oil tanker backlog in Houston reaches an almost unprecedented 39 (with combined capacity of 28.4 million barrels), as The FT reports that from China to the Gulf of Mexico, the growing flotilla of stationary supertankers is evidence that the oil price crash may still have further to run, as more than 100m barrels of crude oil and heavy fuels are being held on ships at sea (as the year-long supply glut fills up available storage on land). The storage problems are so severe in fact, that traders asking ships to go slow, and that is where we see something very strange occurring off the coast near Galveston, TX. (picture)   FT reports that "the amount of oil at sea is at least double the levels of earlier this year and is equivalent to more than a day of global oil supply. The storage glut is unprecedented: Off Indonesia, Malaysia and Singapore, Asia’s main oil hub, around 35m barrels of crude and shipping fuel are being stored on 14 VLCCs.“A lot of the storage off Singapore is fuel oil as the contango is stronger,” said Petromatrix analyst Olivier Jakob. Fuel oil is mainly used in shipping and power generation. Off China, which is on course to overtake the US as the world’s largest crude importer, five heavily laden VLCCs — each capable of carrying more than 2m barrels of oil — are parked near the ports of Qingdao, Dalian and Tianjin. In Europe, a number of smaller tankers are facing short-term delays at Rotterdam and in the North Sea, where output is near a two-year high. In the Mediterranean a VLCC has been parked off Malta since September. On the US Gulf Coast, tankers carrying around 20m barrels of oil are waiting to unload, Reuters reported. Crude inventories on the US Gulf Coast are at record levels. A further 8m barrels of oil are being held off the UAE, while Iran — awaiting the end of sanctions to ramp up exports — has almost 40m barrels of fuel on its fleet of supertankers near the Strait of Hormuz. Much of this is believed to be condensate, a type of ultralight oil.

After White House Rejects Keystone XL, Battle Against Larger Texas Pipeline Intensifies: If a couple of billionaires get their way, a 143-mile-long, 42-inch high pressure natural gas transmission pipeline will be built right through the heart of Texas' starkly beautiful and remote Chihuahuan desert. Plans are currently in the works for the pipeline, which would be larger in diameter than the infamous Keystone XL. Although it has garnered far less media attention than the Keystone XL, this West Texas project has already sparked a massive grassroots resistance movement that has unified ranchers, Tea-Partiers, artists, environmentalists and the vast majority of the residents in this starkly populated corner of the country. Texas billionaire Kelcy Warren, the head of the Dallas pipeline company Energy Transfer Partners (ETP) which now boasts former Texas governor Rick Perry on its board of directors, and Carlos Slim of Mexico, who is reportedly the second-richest person on earth, are the core partners behind the Trans-Pecos pipeline project. The aim of the pipeline is to deliver natural gas from Texas to Mexico, where it is in high demand.Slim and Warren promise that the pipeline will be both safe and environmentally friendly. But Coyne Gibson, who worked for a decade in the oil and gas industry as an electrical and control systems engineer, vehemently disagrees with that claim. "I used to do this kind of work, so I admit to past crimes, so to speak," Gibson told Truthout in Alpine, Texas, where signs of the pipeline's construction are already evident. "I've seen firsthand what this [pipeline] does to the places it touches," he said. "It is horrifically environmentally impactful. The immediate impact is the absolute environmental destruction of every living thing in its path. And that's just to get started."

Legal challenge ties fracking companies in Oklahoma to state's meteoric increase in earthquakes - In a new approach to challenging fracking, the legal group Public Justice and the Sierra Club on Monday jointly filed a "notice of intent to sue" four companies that engage in the practice of hydraulic fracturing in Oklahoma: Sandridge Exploration and Production, New Dominion, Chesapeake Operating and Devon Energy Production Company. The notice contends that the waste fluids the companies inject back into the ground is causing a dramatic increase in seismic activity and gives the companies 90 days to adjust their practices. As the chart below shows, prior to 2009, Oklahoma had experienced a record high 167 earthquakes in 1995; last year 5,000 earthquakes were reported, and an even higher rate is projected for 2015. From the press release: “Since late 2009,” the groups note in their letter, “the rate of magnitude-3 or larger earthquakes in north-central Oklahoma has been nearly 300 times higher than in previous decades.” The letter also notes that “Overlaying the locations of Defendants’ wells onto the places where earthquakes above magnitude 3.5 have been felt shows that earthquakes are occurring in the vicinity of the Defendants’ wells or along fault lines that are close to the wells.” Public Justice executive director Paul Bland explains that the suit represents a completely new approach to using the Resource Conservation and Recovery Act as a way to combat fracking. RCRA has typically been used to prosecute cases where companies dump pollutants into water supplies. But Public Justice has successfully used the law to go after a broader set of environmental issues as it is now doing in Oklahoma. Bland says the group is looking for a “precedent-setting” court ruling that finds “the handling of solid wastes is increasing the number and severity of earthquakes.”

Do Fracking Wastewater Injections Cause Earthquakes -- Legal experts say there are a rising number of lawsuits against the oil and gas industry over earthquakes allegedly linked to fracking operations.  “Sandra Ladra, a resident of Prague, Oklahoma sued New Dominion LLC and Spess Oil Co. alleging that an earthquake triggered by the companies’ disposal of fracking wastewater in wells near her home caused a portion of her chimney to collapse,” the legal intelligence source JD Supra reported. “The decision paves the way for such disputes to be heard by a jury. Several recent reports by academics and regulators purporting to find a link between wastewater injection wells and seismic activity have resulted in the proliferation of similar lawsuits in Oklahoma and in other states like Arkansas where fracking is common,” the report said. Research has linked earthquakes to fracking wastewater injection wells, raising policy and legal questions about the consequences of fracking. According to scientists from the U.S. Geological Survey, the federal scientific agency, "the deep injection of wastewater underground is responsible for the dramatic rise in the number of earthquakes in Colorado and New Mexico since 2001." They published these findings in the Bulletin of the Seismological Society of America last year. And research from University of Colorado scientists concluded that “the massive increase in earthquakes in central Oklahoma is likely being caused by the injection of vast amounts of wastewater from oil and gas operations into underground layers of rock,” according to an announcement from the university. “Under high pressure, fluids can seep into existing faults and pry apart the rocks, allowing them to slip past each other more easily and cause earthquakes."

Recycling Wastewater From Oil And Gas Wells Poses Challenges -- Each year, the oil and gas industry produces more than 800 billion gallons of wastewater. Coupling the massive volumes of wastewater generated over the life of the well and the millions of gallons of water needed to hydraulically fracture each well, it’s easy to see that oil and gas exploration and production is just as much a water issue as it is an energy issue. With growing frequency, this huge volume of oil and gas wastewater – which contains hundreds of chemicals resulting from operations as well as underground water that is usually heavily laden with salt and naturally-occurring pollutants – is being recycled, and some groups are pushing for mandatory recycling policies. Sounds great. After all, recycling is good for the environment, right?On one level, it is great. In drought-stricken parts of the country, water is a scarce resource and beneficially reusing the huge volume of wastewater the oil and gas industry produces could help mitigate impacts on local water sources. In some counties in Texas, for example, over half the water demand in the county is used for oil and gas exploration and production. But recycling this wastewater creates some environmental challenges. And if they are not proactively addressed, we run the risk of trading one environmental problem for a host of new ones.

2014 Colorado oil deaths greater than previously calculated — A new federal database that was developed to more precisely count the number of deaths in the oil and gas industry shows eight workers died in Colorado in 2014. The count by the Fatalities in Oil and Gas Extraction, or FOG, is two more than what was tabulated by the federal Bureau of Labor Statistics for the same year. The discrepancy comes from the different methodology used by the National Institute for Occupational Health in putting together its first FOG findings, which were released in September and included the period between Jan. 1, 2014, and June 30, 2014. “We knew from the Bureau of Labor Statistics data about the basics of what’s killing workers,” Kyla Retzer, an epidemiologist who led the effort to compile the FOG report, said. However, Retzer said they wanted to also find out the type of operations and what equipment was involved in the deaths.

Activists plan protest at BLM's oil-gas auction in Colorado - “Keep it in the Ground” Rally to Target BLM’s Oil and Gas Auction in Colorado.  DENVER—Dozens of people will stage a “Keep it in the Ground” climate rally on Thursday morning outside of the Bureau of Land Management’s oil and gas lease sale in Lakewood, Colo. The Bureau’s “climate auction,” as protesters dubbed it, will allow industry to bid on more than 90,000 acres of publicly owned oil and gas in central and eastern Colorado – which contain upwards of 1 million estimated tons of potential greenhouse gas pollution, and possibly much more. The rally is part of a rapidly growing national movement calling on President Obama to define his climate legacy and ‘keep it in the ground’ by stopping new federal fossil fuel leases on public lands and oceans – a step that would keep up to 450 billion tons of carbon pollution in the ground. Similar “Keep it in the ground” protests are planned for upcoming lease sales in Reno, Nev., Salt Lake City and Washington, D.C.

State considers regulations to reduce oil well emissions - Wyoming regulators are looking at ways to reduce oil well emissions and update the state’s oil and gas regulations. The Casper Star-Tribune reports that the Oil and Gas Conservation Commission on Tuesday unveiled a proposal that would require companies to submit as part of their drilling permits plans to capture natural gas that is flared off from wells, and also would require monthly reports of flaring and venting volumes. The changes leave the threshold for flaring without a permit at the current level of 60,000 cubic feet a day without needing state regulator’s approval. Additional details were unavailable. The commission voted to official open the rule-making process. The proposal will be reviewed by Gov. Matt Mead before moving into a 45-day public comment period.

North Dakota's colleges pitch education to laid-off roustabouts - – North Dakota’s public universities have launched a scholarship program to enroll laid-off oilfield workers in energy classes, contending their best path to a new job is learning mechanical and computer skills. The strategy is designed to raise university enrollment as much as it is to prevent a drain of talent from the second-largest oil-producing state in the country. Hundreds of workers are losing jobs as the number of drilling rigs and hydraulic fracturing crews, the lifeblood of any oilfield, falls along with crude prices. While the state does not tabulate the number of oil-related job cuts, anecdotes abound of laid-off roustabouts opting to leave the Peace Garden State once they get a pink slip. The population of Williston, epicenter of the state’s oil boom, has declined more than 6 percent in the past year. Still, there are more than 200 open oilfield jobs in North Dakota’s four largest oil producing counties, according to state data, including postings for diesel mechanics, well operators and pipeline supervisors. All require advanced training. “Good people are losing jobs, and this is a time for them to go back to school,” said Mark Hagerott, chancellor of the North Dakota University System, who has dubbed the endeavor “Bakken U” after the shale formation underlying most of the western part of the state.

North Dakota natural gas flaring targets challenged by rapid production growth - Increases in North Dakota's crude oil production have resulted in increased associated natural gas production from oil reservoirs, especially in the Bakken region. Because of insufficient infrastructure to collect, gather, and transport this natural gas, about one-fifth of North Dakota's natural gas production is flared rather than marketed. North Dakota's Industrial Commission (NDIC) has established natural gas capture targets in an effort to reduce the amount of flared gas, and they recently issued a revision to the flaring targets in response to faster-than-expected gas production growth in the Bakken region.  Based on the targets established in April 2014, the percentage of flared gas was set to fall to 15% in January 2016 and to remain at that level until 2021. However, on September 24, the NDIC slightly loosened the restrictions in the near term, allowing 22% to be flared through the first quarter of 2016, with the decline to 15% taking place in November 2016. Natural gas is flared rather than vented without combustion for both safety and environmental reasons. Vented, unprocessed natural gas contains hydrocarbons that are heavier than air, such as propane and butane, that can be hazardous if introduced to an ignition source. Also, flaring natural gas produces carbon dioxide, which, while a greenhouse gas, has a lower global warming potential than methane, the chief component of vented (noncombusted) natural gas.  As of August, North Dakota had the second-highest average heat content of natural gas delivered to consumers in the United States, meaning natural gas from the Bakken has higher levels of natural gas liquids (mostly ethane). This high heat content limits additional volumes of ethane that processing plants in the state can leave in processed gas streams. With limited NGPL storage capacity, additional pipeline capacity to move greater NGPL volumes to market is needed for processing plants in North Dakota to avoid reducing throughput volumes, allowing them to keep as much capacity as possible available to reduce volumes of flared natural gas in the future.

Fracking Goes on Trial for Human Rights Violations: As convoys of heavy trucks carry fracking equipment into new oil fields in neighborhoods and wildlands around the world, an alliance of human rights organizations is making plans to put the entire practice of hydraulic fracturing on trial. The court is the Permanent People’s Tribunal, a descendant of the Vietnam War-era International War Crimes Tribunal. The Peoples’ Tribunal is a branch of no government on Earth. It has no power of enforcement. It has no army, no prison, no sheriff. So what’s the point? The point is that it matters to tell the truth in a public place. It matters to affirm universal standards of right and wrong, to clearly say, “There are things that ethical people do not do to one another and to the Earth.” It matters especially when international and national justice systems, even in purported democracies, are seemingly incapable of protecting people and the commons - air, water, fertile soil, stable climate and all the other necessary conditions for the exercise of basic human rights. It is especially important when transnational corporations are allowed to write the laws that regulate their own actions, making their transgressions effectively “legal,” no matter how outrageous.

Portland Bans Fossil Fuel Export -- The City of Portland in Oregon took a stand yesterday against dirty fossil fuels. It passed a resolution—with teeth—against new fossil fuel transportation and storage infrastructure in Portland and on our iconic rivers. Coal, oil and gas companies want to export stunning volumes of dirty fuel through our communities—the City of Portland just made that harder.  Policy resolutions are fine, but Portland’s resolution will make an on-the-ground difference. The city council directs staff to propose changes to the city’s code that will protect Portlanders from dirty fossil fuels. City laws about land use, public health, safety, building, electrical, nuisance and fire can all be updated to prevent fossil fuel exports. In other words, the city council message was: Do something. Write laws that matter.  The Columbia River faces nearly a dozen terminals proposed to ship coal, tar sands oil, Bakken crude and fracked gas overseas. Tesoro, for example, proposes America’s largest oil-by-rail export terminal—42 percent of the capacity of Keystone XL—across the river from Portland. And just downstream, a liquefied natural gas terminal would export more gas each year than the state uses. Building these terminals would ensure the use of fossil fuel infrastructure for decades, while energy giants mine, drill and frack to feed their export terminals.Earlier this year, Portland rejected a propane export terminal by refusing to bend its rules in order to protect the Columbia River. The goal is simple: if the city blocks new fossil fuel export terminals, it also blocks the dangerous trains, pipelines and oil tankers that would serve those terminals.

Obama Should Let Fossil Fuels Lie - The logic is clear. If we don’t extract them, we can’t burn them. Even better, this is a change the president can actually make, without the approval of Congress. With the climate summit meeting in Paris near, and the Keystone decision fresh, the United States can truly take the lead on these fuels by stemming their production, not just their consumption. Most climate debates have focused on cutting the use of fossil fuels. But under President Obama, oil and gas production in the United States has increased substantially. And that increase has been a major bragging point for the administration. “America is No. 1 in oil and gas,” the president boasted in his 2015 State of the Union address. Globally, we will have to use far less of our already proven reserves of oil, gas and coal in the next 35 years if we are to even have a shot at avoiding the most disastrous warming effects. Some say we need to keep a third of the earth’s oil reserves, half its gas and 80 percent of its coal unused. We need to lock up those fuels that would push us past the tipping point. And the most logical place for the United States to start is on our public lands. Most of our fuel-bearing federal lands are either beneath the ocean along our coasts or in the interior West, and are largely controlled by the Bureau of Land Management and other federal agencies. This means the White House has the power to end public-lands extraction of fossil fuels. Mr. Obama has the authority, under federal laws like the Mineral Leasing Act and Federal Land Policy and Management Act, to delay and ultimately stop new leasing of fossil fuels on public lands.But his interior secretary, Sally Jewell, cynically dismissed a recent call by more than 400 groups and scientists asking Mr. Obama to use his authority to keep federal fossil fuels in the ground. Because we continue to use fossil fuels, she argued, we need to keep digging them up.

Shale vs. conventional: Which produces more greenhouse gases? - Oil and gas extracted from tight shale formations such as the Bakken produces greenhouse gas emissions similar to conventional oil fields, according to two studies released by the United States Department of Energy’s Argonne National Laboratory. As reported by The Bakken Magazine, early estimates predicted that shale production might generate up to 20 percent more greenhouse gas emissions than oil produced in conventional oil fields. The research was undertaken in a collaborative effort between the University of California at Davis and Stanford University. The study examined the Eagle Ford Shale in Texas and the Bakken shale in North Dakota. The two separate studies found that once the flaring and venting of natural gas was accounted for, greenhouse gas emissions found in tight oil plays are similar to levels found in conventional operations. Also, the studies determined that the intensity of the emissions stayed consistent throughout the formation’s lifecycle. Adam Brandt, Stanford University professor and lead author of the Bakken study, said, “Drilling and fracturing wells for shale oil is more energy intensive than conventional drilling, but these wells have higher productivity and require less energy to produce and process the crude. Flaring of gas is a key issue in the Bakken, and if flaring were controlled, the Bakken crude would have lower emissions than conventional crude.”

Apache Said to Get Takeover Approach for $18 Billion Company - - Apache Corp., the oil and natural gas company worth more than $18 billion, has received an unsolicited takeover approach, according to people familiar with the matter. The Houston-based company rejected the initial offer and is working with financial adviser Goldman Sachs Group Inc. on defense, said the people, who asked not to be identified because deliberations are private. The potential buyer, who could not immediately be identified, sent a letter to Apache in the past few weeks and it’s unclear whether talks will resume, one of the people said. A spokesman for Apache couldn’t immediately be reached for comment outside of regular business hours. A representative for Goldman Sachs declined to comment. Apache on November 5, 2015, reported a smaller-than-expected adjusted loss and boosted its 2015 production forecast. It’s one of the biggest leaseholders in the Permian Basin in western Texas, the largest U.S. shale play and the only one where oil output has continued to grow even as drillers slash spending and idle rigs. It also explores in Egypt, the Gulf of Mexico, Canada and the Eagle Ford and Woodford shale basins in the U.S. A deal for Apache would be the largest for an independent oil and gas producer in the U.S. this year. Noble Energy Inc. bought Texas shale driller Rosetta Resources Inc. for $3.9 billion, including assumed debt, in an all-stock transaction in July.

Energy Default Alarms Get Louder as Pain Seen Lasting Into 2016 - Eleven months of depressed oil prices are threatening to topple more companies in the energy industry. Four firms owing a combined $4.8 billion warned this week that they may be at the brink, with Penn Virginia Corp., Paragon Offshore Plc, Magnum Hunter Resources Corp. and Emerald Oil Inc. saying their auditors have expressed doubts that they can continue as going concerns. Falling oil prices are squeezing access to credit, they said. And everyone from Morgan Stanley to Goldman Sachs Group Inc. is predicting that energy prices won’t rebound anytime soon. The industry is bracing for a wave of failures as investors that were stung by bets on an improving market earlier this year try to stay away from the sector. Barclays Plc analysts say that will cause the default rate among speculative-grade companies to double in the next year. Marathon Asset Management is predicting default rates among high-yield energy companies will balloon to as high as 25 percent cumulatively in the next two to three years if oil remains below $60 a barrel.“No one is putting up new capital here,” said Bruce Richards, co-founder of Marathon, which manages $12.5 billion of assets. “It’s been eerily silent in the whole high-yield energy sector, including oil, gas, services and coal.”

Distressed Eagle Ford, Bakken asset sales seen soon - Anadarko CEO – Financial distress is soon expected to trigger long-awaited sales of oil and gas properties in North Dakota’s Bakken and Texas’ Eagle Ford basin, the chief executive of Anadarko Petroleum Corp said on Tuesday. A prolonged downturn in crude oil prices has generated lots of chatter that companies laboring under heavy debt that operate shale fields with high break-even costs will have to sell assets to generate much-needed cash. As low crude oil prices linger for more than a year, distress is intensifying and may finally bring some of those properties to market. “We’ve not really seen good distressed assets make their way into the market,” CEO Al Walker told investors at Bank of America Merrill Lynch’s Global Energy Conference. “For companies that have positions in the Bakken, they probably will start to see that sooner than others.” Distressed Eagle Ford asset sales are also likely in the near-term, said the CEO of the Houston-based company that has shale wells in Eagle Ford. Still, Anadarko is most interested in adding assets in areas where it already had access to pipelines and other infrastructure needed to bring oil to gas to market like Colorado’s DJ Basin and West Texas’ Delaware Basin, said Walker. Pioneer Natural Resources Co CEO Scott Sheffield said at another conference on Tuesday that he believed the Permian Basin “is the only place long-term to grow oil in this country.”

Encana swings to loss on $1-billion charge; to hike Permian basin spending - Canadian oil and natural gas producer Encana Corp reported a quarterly loss on Thursday but reported an increase in oil production and said it is speeding up spending in the Permian basin in Texas. Encana plans to spend an extra $150-million in the Permian shale field in the current quarter that was originally earmarked for 2016. The company expects total capital spending of $2.2-billion this year, the upper end of its earlier forecast. Even so, Encana is continuing to clamp down on costs as the oil price slump drags on. “I’m very confident our efficiencies will be even better next year than this year. We’ll build off the operating performance we’ve achieved,” said chief executive Doug Suttles. Encana has cut its work force by 40 per cent since the end of 2012 and Permian horizontal drilling and completion costs are down about $2-million per well this year. It has been restructuring its portfolio to diversify production away from low-value natural gas towards oil and expects asset divestitures to total $2.8-billion in 2015. In August, Encana sold its Haynesville natural gas assets in northern Louisiana for $850-million and said in October it would sell its Denver Julesburg basin oil and gas assets in Colorado for $900-million. The Calgary-based company has booked impairment charges of $3.62-billion so far this year, including $1.07-billion in the third quarter, to write down the value of assets amid a prolonged slump in global crude prices.

BP says oil majors have axed 80 projects this year | Reuters: Oil majors have cancelled a total of 80 projects across the globe this year because of low oil prices and cut capital expenditures by as much as $22 billion (15 billion pounds), BP's head of exploration and production Lamar Mckay said on Tuesday.

Train derailment spilled thousands of gallons of ethanol — Crews are working to clear a freight train derailment in western Wisconsin that spilled thousands of gallons of ethanol. BNSF Railway said crews continued Sunday to transfer ethanol from the derailed cars and get the cars back on the tracks. The train derailed Saturday about two miles north of Alma, a town along the Mississippi River. Some of the 25 derailed cars were empty auto racks and tanker cars. BNSF says railroad crews stopped the leaks from five tanker cars and placed containment booms along the shoreline. One tanker released an estimated 18,000 gallons of ethanol, and the other four released an estimated 5 to 500 gallons each. No one was hurt. BNSF expects the tracks to return to service Monday morning.

Crews cleaning up after train derails in Watertown, spilling crude oil --The Federal Railroad Administration has sent in six staff members to investigate the cause of Sunday’s train derailment in Watertown, which resulted in a spill of crude oil and evacuation of 35 homes. But as of Monday morning, authorities were not sure what caused the 110-car Canadian Pacific train to derail around 2 p.m., nor could they say when local residents might return to their homes. Officials said they plan to meet again at 6 p.m. to discuss progress on the cleanup and investigation and to determine whether it is safe for residents to return. No injuries or fires resulted from the derailment. A total of 13 cars derailed, though a spokesman for Canadian Pacific said only one car was punctured, spilling less than 1,000 gallons of crude oil. CP reported Sunday night that all of the spilled crude oil was contained and siphoned off. None reached waterways. There was damage to the other derailed cars and to the tracks. The railroad company expressed regret for the accident and the inconvenience to residents. Spilled crude oil will be hauled away and disposed. In addition, the company will develop a soil remediation plan to handle any contaminated soil.

Another Buffett-Owned Oil Tanker Train Derails In Wisconsin, One Day After Obama Kills Keystone XL Pipeline - It must be somewhat ironic for the U.S. progressive moment that a day after Obama officially slammed the seal shut on Transcanada's Keystone XL pipeline after a seven year "review" (and days after the company itself withdrew its application, something which the admin ignored just so it could have the final say on the mater), moments ago an oil tanker train derailed north of Alma, Wisconsin along the Mississippi River 80 miles south of Minneapolis, with at least 32 cars off the tracks. The train belongs to BNSF - a company owned by Warren Buffett, and best known being directly involved in most of the recent oil train accidents. As such, this is the latest accident involving a "safe" Warren Buffett-owned train carrying toxic commodities, in a year where this "safe" Buffett-endorsed medium of transportation has already seen a record number of accidents.  As an reference point, here is a smattering of comparable headlines from just this year:

And here is the latest one. According to Fox9, the Buffalo County sheriff's office says 32 cars derailed north of Alma around 8:50 am prompting several road closures and a voluntary evacuation of the affected area, according to the Buffalo County sheriff's office. There are no reports of fire, smoke or injuries, BNSF Railway  told the Associated Press.

Third Freight Train Derails (Second Owned By Buffett) Days After Obama Kills Keystone Pipeline -- On Saturday, we noted with great irony, that just a day after Obama - with great pomp and even more preaching - killed the Keystone XL pipeline, that a freight train with 32 cards, belonging to Warren Buffett's BNSF, had derailed north of Alma, Wisconsin prompting several road closures and a voluntary evacuation of the affected area. Then on Sunday, barely 24 hours later, in another Wisconsin derailment incident, a train, this time with 100-car, carrying crude oil, derailed near the intersection of S. Montgomery St. and West St. in Watertown on Sunday afternoon. The Mayor said the derailment happened around 2:00 p.m. While this train did not belong to BNSF but to Canadian Pacific Railroad instead, that was hardly comforting to the people.  The spokesperson said 13 cars tipped over, one of which was punctured and oil.  And then, moments ago in what we initially thought was a joke, KCRG reported that close to two dozen train cars derailed after a crash Monday morning. Lt. Brett Grimshaw of the Des Moines County Sheriff’s Office said the crash happened a little after 8 a.m. when a coal train hit a road grader that had been backed up onto the tracks.  And before you ask, yes, this train, too, belongs to BNSF, which in turn belongs to Warren Buffett,  BNSF railroad spokesman Andy Williams said two locomotives and 21 of the 135 cars being pulled derailed near mile marker 249 of Highway 34, which is between Danville and New London close to the Henry County line.  The grader was backed up onto the rails while doing repairs on Highway 34 and didn’t see the train coming, Grimshaw said. The grader’s operator was thrown about 40 feet by the impact of the crash and was checked by paramedics.

Three Trains Derail Just Days After Buffett's BNSF Beats Back Railroad Regulations -- There's this... Last week, under pressure from companies including Buffett’s BNSF Railway Co, which has spent more money lobbying Congress this year than any other railroad, U.S. legislators passed, and President Obama signed, a law that delays the so-called positive train control mandate for at least three years, with the possibility of an additional two-year delay.– From the Reuters article: Buffett’s BNSF Helped Lead Fight to Delay Train Safety Technology.  And then there's this... A freight train derailed near Alma in western Wisconsin, spilling thousands of gallons of ethanol. BNSF Railway said crews continued Sunday to transfer ethanol from the derailed cars and get the cars back on the tracks.  BNSF said railroad crews stopped the leaks from five tanker cars and placed containment booms along the shoreline. One tanker released an estimated 18,000 gallons of ethanol, and the other four released an estimated 5 to 500 gallons each. We learn from ABC News: A Canadian Pacific Railway train derailed Sunday, spilling less than 1,000 gallons of crude oil and prompting evacuations in Wisconsin, the second day in a row a freight train derailed in the state. Thirteen cars of an eastbound CP train went off the tracks around 2 p.m. in Watertown, in the southeastern part of the state, the railroad said. One tank car was punctured and leaked oil. And then, this morning... BNSF Coal cars derailed in freight train crash near Danville, Iowa

Wisconsin lawmakers introduce rail safety bill in wake of two derailments -- Wisconsin lawmakers have introduced new rail safety legislation after a weekend during which two trains derailed about 200 miles apart in the state, spilling oil and chemicals. Rep. Jill Billings, D-La Crosse, announced Tuesday that she is circulating a bill that would fund more state rail inspectors and training for first responders while requiring railroads to submit emergency prevention and response plans detailing how they would handle incidents like the derailment of a BNSF freight train Saturday morning that spilled up to 20,000 gallons of ethanol in Mississippi River backwaters near Alma. “Derailments are becoming all too common,” Billings said while standing with about two dozen local rail safety advocates in front of BNSF tracks that were recently upgraded through the city of La Crosse to eliminate a bottleneck in the railroad’s network. A Canadian Pacific train carrying crude oil left the tracks Sunday in Watertown, Wis., spilling hundreds of gallons and prompting an evacuation in the southern Wisconsin city. The law would also establish response timelines for such disasters. Billings said the legislation is modeled after a Minnesota law enacted last year.

25 Million Americans at Risk From Oil Train Traffic in Their Communities  --Waterkeeper Alliance, ForestEthics, Riverkeeper and a national network of Waterkeeper organizations released a new investigative report yesterday, DEADLY CROSSING: Neglected Bridges & Exploding Oil Trains, exploring the condition of our nation’s rail infrastructure and how it is being stressed by oil train traffic. From July to September 2015, Waterkeepers from across the country documented potential deficiencies of 250 railway bridges in 15 states along known and potential routes of explosive oil trains, capturing the state of this often neglected infrastructure in their communities. The Waterkeepers identified areas of serious concern on 114 bridges, nearly half of those observed. Photos and video footage of the bridges inspected show signs of significant stress and decay, such as rotted, cracked or crumbling foundations and loose or broken beams. Waterkeepers were also present when crude oil trains passed and observed flexing, slumping and vibrations that crumbled concrete. “Waterkeepers boarded their patrol boats to uncover what is happening to the structural integrity of our nation’s railway bridges, a responsibility our federal government has shirked,” said Marc Yaggi, executive director of Waterkeeper Alliance. “People deserve to know the state of this infrastructure and the risks oil trains pose as they rumble through our communities.”This effort was initiated out of concern for the threat posed by the 5,000 percent increase in oil train traffic since 2008. Oil train traffic increases both the strain in rail infrastructure, as well as the likelihood of a rail bridge defect leading to an oil train derailment, spill, explosion and fire.

Feds reject call for tougher fire-resistance for crude oil tank cars -  Federal officials have rejected a call to toughen the fire-resistance of railroad tank cars that carry highly flammable crude oil, hundreds of which pass through the Chicago area each day. The U.S. Department of Transportation is standing by its decision issued last spring that new and retrofitted tank cars be required to withstand being engulfed in a pool of burning liquid for 100 minutes without exploding. Critics say slightly more than an hour and a half is too little time for police, firefighters and other first responders to react to the fiery derailment of a train hauling crude oil or ethanol. Response time is of critical importance in the Chicago area, the nation’s railroad hub. Scores of trains pass through each week hauling highly flammable crude oil from North Dakota’s Bakken shale fields to refineries, generally on the East Coast. When a BNSF train hauling 103 cars of crude oil derailed near Galena on March 5, witnesses said it took about only an hour for tank cars to explode, sending fire balls hundreds of feet into the sky. The explosions were so dangerous that firefighters couldn’t get close enough to extinguish the flames, officials said. The Association of American Railroads had urged the U.S. to reconsider its decision, issued in May. The association sought adoption of a tougher standard of thermal protection — up to 800 minutes, more than 13 hours — to give responders adequate time to react to an incident.

Keystone XL would have helped N.D. move some of its oil -  The rejection of Keystone XL is a setback for North Dakota’s oil industry, even though falling oil prices and the drop in Bakken drilling and oil production have lessened the immediate need for it. “It is a good time to say ‘No, we don’t want a pipeline’ when you really don’t need it,”  . TransCanada’s proposed 1,200-mile crude oil pipeline from Alberta through Montana and South Dakota to Nebraska would have carried mostly Canadian oil sands crude. The takeaway capacity of a planned Bakken leg was 100,000 barrels per day, just under 10 percent of North Dakota’s current production. But North Dakota officials believe that more Bakken pipelines still will be needed to carry future oil volumes. “We will be talking to TransCanada and to others to understand how that need can be met,” Justin Kringstad, director of the North Dakota Pipeline Authority, said in an interview. Both Canadian and North Dakota oil producers are hurting because of persistent low crude oil prices. On Friday, North Dakota reported just 64 active drilling rigs, a 71 percent drop from the peak in May 2012. North Dakota’s production fell 1.7 percent in August in the latest decline since peaking last December.   Kringstad said Keystone XL was one of four proposed pipelines intended to boost the state’s pipeline capacity. Nearly half of that state’s crude oil is shipped by rail, much of it on long oil trains that pass through Minnesota cities, including Minneapolis and St. Paul.

Without Keystone, industry must find new paths for oil — Following the Obama administration’s rejection of the Keystone XL pipeline, the oil industry faces the tricky task of making sure the crude oil targeted for the pipeline still gets where it needs to go. The pipeline, first proposed by TransCanada Corp. in 2008, was projected to carry 800,000 barrels a day of crude from Canada and North Dakota down to Nebraska, where existing pipelines would bring it to refineries on the Gulf Coast. Keystone XL was expected to come online toward the end of this decade. Until then a combination of existing pipelines and railroads was expected to be enough to handle anticipated production. Now the question becomes whether there will be enough pipeline capacity to move the oil and keep costs from getting too expensive. Skip York, vice president of integrated energy at consultancy Wood Mackenzie, said the oil industry “didn’t need Keystone today,” but will need the capacity in the future. President Barack Obama’s decision means shipping the oil will require “a more expensive form of transportation than it would have with Keystone XL,” he said. At the moment, the biggest impediment to the flow of oil is low prices. Oil has averaged about $50 this year, making many projects in the Canadian oil sands uneconomical. According to Wood Mackenzie, projects totaling about 485,000 barrels a day have been delayed this year. Canadian oil producers still expect production to rise to 5.3 million barrels a day in 2030, up from 3.7 million barrels a day in 2014, even after lowering their forecast to take into effect the impact of lower prices. The U.S. imports more crude oil from Canada than from any other country, about 3.4 million barrels a day as of August, according to the U.S. Energy Information Administration.

Keystone XL Wasn’t About Jobs Or The Climate — It Was All Politics -- During Keystone XL’s seven-year review process, the pipeline’s political significance ballooned far beyond its measurable consequences. In partisan narratives, it was often framed as a fight pitting jobs against the climate and energy security against environmental concerns. In reality, the pipeline stood to make little difference in any of these arenas. On Friday, President Obama announced that he was rejecting TransCanada’s request to build the 1,179-mile Keystone XL pipeline. Obama’s rationale essentially came down to this: There’s not much in it for us. “The pipeline would not make a meaningful long-term contribution to our economy,” Obama said. “Shipping dirtier crude oil into our country would not increase America’s energy security.” Proponents of Keystone XL, who include most of the Republican Party and all of its presidential candidates, said the pipeline would create jobs — about 42,000 of them, according to a State Department report on the pipeline’s environmental impacts published in January. But most of those jobs would have been temporary and related to the pipeline’s construction. Once the pipeline was built, according to the State Department report, the number of jobs created would fall to just 50. The overall economic benefits of the pipeline were slim, as well. Although some counties with project facilities could have seen revenues from property taxes rise 10 percent or more, the construction itself projected to add just $3.4 billion, or 0.02 percent, to the gross domestic product. With gasoline prices near multiyear lows, in part because of the increased U.S. supplies obtained by fracking, the pipeline would have made little difference for most American consumers.  In the end, it comes down to money. The oil sands will be extracted if and when it’s economically viable to do so. Obama’s rejection of Keystone XL gives him a badge to showcase his environmental credentials going into the U.N. climate talks at the end of this month.

The Keystone Victory - Dave Cohen - Last Friday Barack Obama followed the recommendation of the State Department that the Keystone XL pipeline would not "serve the national interest of the United States," and thus he rejected it. I didn't think that would happen, so Obama's decision came as a mild surprise.   And now a curious thing is happening. Environmental activists are celebrating, certainly, but victory in this case simply highlights the fact that Obama's rejection of the pipeline will have only a trivial (if any) effect on humanity's climate change problem. Whoops! And so Dave Roberts, who is perhaps the most thoughtful climate change journalist working today, felt compelled to write a long defense of the Keystone campaign. Roberts' defense is convoluted, but I am not going to review it because it is also silly.  The same invisible elephant—the inevitable consequences of global economic growth—is still taking up a lot of space in the room, and humans continue to tip-toe around it. Roberts alludes to the not-so-hidden agenda which drove the protests at the end of his article. That's what the Keystone campaign was, what all supply-side campaigns are: sand in the gears.  The question is what effect will it have on fossil fuel investors to realize that any new supply-side proposal risks being met with a loud and furious grassroots movement that has hundreds of thousands of people on its mailing lists and a few high-profile victories under its belt? Sand in the gears? Of what? Some mythical machine which runs the world?  Roberts' colleague Brad Plumer wrote about the worldwide rise in coal-fired capacity in July, 2015. Let's talk about India. India is building coal plants because they need access to low-cost electricity to help light up homes, offer an alternative to indoor wood-burning, power heavy industry, and lift people out of poverty. If we believe Wild Bill and Dave Roberts, then every time India proposes a coal-fired plant, that proposal will be "met with a loud and furious grassroots movement that has hundreds of thousands of people on its mailing lists and a few high-profile victories under its belt."

How the Keystone XL Decision is Neither “Irrelevant” Nor “Just Symbolic” - The rejection of Keystone XL today marks a turning point for energy decisions: in future, policymakers will be under pressure to consider climate impacts of any new policies and infrastructure.  But it is not only setting a bar for future energy decisions: the climate impact of stopping this pipeline is real. Last week we released analysis finding that the existing pipelines out of Alberta are already 89% full: if no more are built, tar sands production cannot grow.  Just hours after we published, Shell cancelled its 80,000-barrel per day Carmon Creek tar sands project, which was already half-built. The sole reason it gave was “the lack of infrastructure to move Canadian crude oil to global commodity markets”. Keystone XL was one of five proposed new tar sands pipelines. We now see a real prospect that all of them will be stopped:

  • Since the Canadian election result last month, Enbridge’s proposed Northern Gateway – opposed by Justin Trudeau’s Liberal Party – is now generally considered dead.
  • Kinder Morgan’s Trans Mountain Expansion, also proposed to the British Columbia coast, faces increasing opposition and legal challenges from First Nations, the public and large municipalities, and extensive criticism of failings of the NEB approval process has led to a running series of delays
  • A set of expansions to the Enbridge Mainline system have recently been delayed following objections from landowners, indigenous groups and local regulators, as public opposition intensifies. The Alberta Clipper expansion, part of that system, is awaiting a State Department decision, and the company’s attempt to circumvent with a routing trick is currently being considered by federal courts following a legal challenge.
  • The Energy East pipeline – having already been delayed by two years, this week abandoned its search for a second port terminal, putting the project’s economics on the line, and further reinforcing the Quebec Government’s view that the project offers the province no economic advantage to offset the spill risk; last month, a survey of Montreal residents found 96% against it.

Venezuela #1 Beneficiary Of Blocked Keystone XL -- Bloomberg -- Back on November 5, 2015, I selected a few countries to see where the US was getting its imported oil. Venezuela stood out; while imports have been decreasing overall, US imports from Venezuela have been increasing. See data at the link which will also provide links to official government sites. I have talked about this before. US refiners along the Gulf Coast need heavy oil to off-set the glut of light oil. US refiners along the Gulf Coast invested $6 billion to optimize their operations for heavy oil from Canada before the Bakken shale revolution. Refiners scrambled to figure out what to do. It turns out a blend of heavy oil and light oil works (though not as good as what the refiners had expected if using only heavy oil from Canada). Now we have a Bloomberg story that says the same thing -- regular readers of the blog and RBN Energy were already well aware of this. From the Bloomberg story: President Barack Obama’s rejection of TransCanada Corp.’s proposed Keystone XL pipeline could give Venezuela’s ailing economy a lifeline.    With the world’s largest oil reserves, the South American country produces heavy crude that’s similar in consistency to the one coming from Canada’s oil sands, and its economy relies largely on shipping it to the same U.S. Gulf Coast refineries that Keystone XL was meant to supply.  “The number one beneficiary of all this will be Venezuela and other suppliers of heavy oil that ship to the Gulf Coast by tanker,” IHS Energy Inc. Vice President Jim Burkhard said by e-mail.

Oil Supply Picture Has Changed Since Keystone Was Proposed - — When the Obama administration began considering the Keystone XL pipeline seven years ago, oil production in the United States was falling and most analysts thought it would never recover.  Canada, and its expanding oil sands industry, seemed like the perfect solution. But so much has changed in the oil patch since then that many energy experts say the Keystone pipeline, which the Obama administration rejected on Friday, matters far less than it once did. Domestic production has nearly doubled and has flooded the market with so much crude oil that prices have plummeted. Refineries along the Gulf Coast still need the heavy crude Canada produces, but they are finding new ways to obtain it, and storage facilities are filled to the brim. “Keystone XL is not nearly as important as it seemed to be a few years ago,”  In just the past three years, two million barrels of new crude pipeline capacity has been built around the Gulf of Mexico region, and more pipelines are on the way, capable of transporting Canadian crude along with domestic oil.  Rail connections from Canada, built to move oil in part because of the Keystone delays, have multiplied. And with crude prices expected to stay relatively low for years, the expansion of Canadian oil sands production has slowed. South of the border, Mexican officials are putting in place a change in the Constitution to allow foreign oil companies to invest in their fields, opening the possibility of a rebound in Mexican production over the next decade. Even without the Keystone XL, total American imports of Canadian crude — from oil sands as well as more conventional varieties — have increased to 3.8 million barrels a day from 2.5 million barrels a day since 2008 while imports from OPEC countries have plummeted.

Editorial: Keystone XL fight over, but look now to Canada for next possible pipeline - President Obama’s decision on Friday to reject the proposed Keystone XL pipeline reorients the oil spigot, from north-south to east-west. It’s the law of unintended consequences, and the ripple effect may be felt as far West as the Salish Sea. As The Seattle Times reports, oil from the Alberta tar sands is intended for maritime export, and two proposed Canadian pipelines could make tanker trips along the Strait of Juan de Fuca a near daily event. The Westridge Marine Terminal in Burnaby, B.C., where Alberta crude is exported to Asia and California, sees five oil tankers a month. If Kinder Morgan’s Trans Mountain Pipeline Expansion Project is approved and pumping by 2019, that tanker number would spike to 34 a month. Obama’s Keystone XL move, predicated on an invigorated anti-carbon agenda, forces Canada’s hand. Now, the onus is on its newly minted Prime Minister, Justin Trudeau, and whether his professed concerns about energy diversification and climate change are more than rhetorical. A new surge of Canadian crude would compel the state Department of Ecology to double-down its watchdogging of shared waters, with Washington’s oil-spill contingency plans vastly superior to Canada’s. British Columbia, with its provincial capital of Victoria still dumping 34 million gallons a day of raw sewage into the Salish Sea, will, in the very least, need to update its oil-spill resources. In addition to the Kinder Morgan pipeline, there is the proposed $6.5 billion Enbridge Northern Gateway Pipeline, which would deliver Alberta oil to the port at Kitimat, B.C. Enbridge is vehemently opposed by Canada’s First Nations as well as by Trudeau. The project is freighted with environmental dangers and deserves a quick death. But the Kinder Morgan pipeline might be tough to stop, unless Trudeau is willing to cash in a chunk of his political capital.

Whistleblowers Think They Know Why Canadian Pipelines Are Exploding -- On a cold night in Otterburne, Manitoba, near the Canada-US border, a giant fireball erupted from a TransCanada pipeline carrying natural gas, ejecting debris 100 meters from the site and blasting a crater as long as two city buses.  . It took 12 hours for the blaze to burn out, and in the meantime, five nearby homes were evacuated and the highway was closed to traffic. As is the case across much of North America, the pipeline ran through a sparsely populated area, with the nearest town holding 120 residents. No injuries were reported. But that hasn't stopped two whistleblowers who worked at TransCanada from worrying that a dangerous explosion could one day happen in someone's backyard.The Otterburne fireball was one of 74 reported fires and explosions — 9 explosions and 65 fires — at TransCanada-owned facilities in Canada since 2008. TransCanada, the same company that wants to build the Keystone XL and Energy East pipelines, has tallied more than 300 "reportable incidents," including ruptures, leaks, fires, explosions, serious injuries, and one death, at its facilities since 2008 — a number that far outstrips any other Canadian pipeline company in that time period. The federal regulator, the National Energy Board (NEB), told VICE News the numbers are higher for TransCanada because they own almost 60 percent of the pipeline in Canada. For those two former TransCanada workers, though, those numbers are a reflection of rampant safety problems they say they witnessed when they worked at the company, including poor inspection practices, cracks in pipelines, and inexperienced workers. Both were let go after they repeatedly complained to the company about those issues. They say they were never told why they were fired. They reported their concerns to the NEB and also shared their allegations with VICE News.

Canada's Oil Producers Brace for Latest Test: Higher Carbon Taxes —Canadian oil producers, pummeled by the prolonged slump in oil prices and a string of political setbacks, now face another challenge: higher carbon taxes.  The nation’s oil-sands developers have been hit particularly hard by lower oil prices, because they are among the most expensive oil plays in the world. Already facing a corporate tax hike and the possibility of higher royalty payments in Alberta—the province richest in oil sands—the industry was dealt another blow by the Obama administration’s rejection last week of the Keystone XL pipeline, which was designed to transport oil-sands output to Gulf Coast refineries.  All major oil-sands operators in recent weeks posted losses or steep declines in profit for the most-recent quarter, as shrinking revenue outpaced cost cuts. Some global giants are rethinking future development. Late last month Royal Dutch Shell shelved an 80,000-barrel-a-day project, following similar moves by Total of France and Norway's Statoil.  Now, ahead of a United Nations climate-change conference in Paris starting Nov. 30, oil companies await the details of moves—including possible new taxes on carbon—pledged by new governments in Ottawa and Alberta to rein in greenhouse-gas emissions, making the oil sands a global test case for climate policy. “Canada’s years of being a less-than-enthusiastic actor on the climate-change file are behind us,” Prime Minister Justin Trudeau, who took office last week, said at a news conference on Oct. 20, the day after his Liberal Party won national elections. Mr. Trudeau promised to start working on a framework for regulating greenhouse-gas emissions within 90 days of the Paris summit.

Five whoppers British Columbians are being sold on LNG | British Columbians have heard many "too good to be true" claims about the benefits the province will receive by launching a liquefied natural gas (LNG) export industry. Let's take a look:

  • 100,000 jobs! The B.C. government has repeatedly claimed LNG will create 100,000 jobs in B.C. However, if Petronas' Pacific NorthWest LNG becomes a reality, it would create only 200-300 permanent jobs. The smaller Woodfibre LNG facility, proposed near Squamish, would create only 100 permanent jobs.
  • Debt-free B.C. (aka $100 billion Prosperity Fund)! This claim is based on a fantasy world where (a) B.C. launches a massive LNG industry that is equivalent to one-third of all current world LNG exports; (b) those exports fetch top dollar in Asia; and (c) B.C. puts in place a tax and royalty regime that captures a fair share of those gains.
  • Over 150 years of gas supply! - While there may be this much gas in the ground, most of it will never be profitable to extract. Typically no more than 10-20 per cent of what is called "in-place resources" can be recovered from shale gas deposits.
  • Water impacts will be minimal Today's intensive horizontal drilling and hydraulic fracturing ("fracking") practices bear no resemblance to the traditional natural gas industry. . Once used in fracking operations, water is so contaminated it must be kept in tailings ponds.
  • LNG will reduce global greenhouse gas emissions. While this is plausible, there is no guarantee this substitution would actually take place. In other potential markets like Japan, LNG could displace nuclear power, thereby adding substantially to GHG emissions.

TransCanada selected to build $500-million Tuxpan Tula gas pipeline in Mexico - Mexico’s federal power company Comision Federal de Electricidad (CFE) has let a contract to TransCanada Corp. to build, own, and operate the Tuxpan Tula pipeline in Mexico. The company will invest $500 million in the project, whereby construction is supported by a 25-year natural gas transportation service contract between the entities. The 36-in. pipeline, expected to be in service in fourth-quarter 2017, will be 250-km long and have contracted capacity of 886 MMcfd. It will originate in Tuxpan, Veracruz, and extend through the Puebla and Hidalgo states, supplying natural gas to CFE combined-cycle power generating facilities in each of those jurisdictions as well as to the central and western regions of Mexico. The pipeline will serve new power generation facilities as well as those currently operating with fuel oil that will be converted to use gas as their base fuel, the company says. Construction is expected to start in 2016.  TransCanada also owns and operates the Tamazunchale and Guadalajara pipeline systems (OGJ Online, Feb. 24, 2012); and is completing construction of the Topolobampo and Mazatlan pipelines (OGJ Online, Nov. 2, 2012; Nov. 6, 2012). By 2018, with Tuxpan-Tula, TransCanada will have five major pipeline systems, with $3 billion invested in Mexico. The company adds it “will continue to pursue additional opportunities for new energy infrastructure projects in Mexico going forward.”

TransCanada’s Next Move After KXL: Flood Mexico with Fracked Gas with State Department Help - , the owner of the recently-nixed northern leg of the Keystone XLtar sands pipeline, has won a bid from Mexico's government to build a 155-mile pipeline carrying gas from hydraulic fracturing (“fracking”) in the United States to Mexico's electricity grid.  The company has benefited from Mexico's energy sector privatization promoted by the U.S. State Department, the same agency that denied a permit to the U.S.-Canada border-crossing Keystone XL. TransCanada said in a press release that construction on the $500 million line will begin in 2016 and it will be called the Tuxpan-Tula Pipeline.  This is not the first pipeline system TransCanada will oversee in Mexico. The company already owns four other systems, with two operational and two under construction. But it is the first pipeline the company will own during Mexico's energy sector privatization era, a policy in place due to constitutional amendments passed in 2013.“By 2018, with the Tuxpan-Tula Pipeline, TransCanada will have five major pipeline systems, with approximately US$3 billion invested in Mexico,” TransCanada stated in a press release. Tuxpan-Tula connects to a series of pipelines originating in Nueces, Texas and eventually crossing the U.S.-Mexico border via the Sur de Texas–Tuxpan gas pipeline, a $3.1 billion project slated to cross underwater through the Gulf of Mexico. The set of pipelines will move gas obtained from fracking in Texas' Eagle Ford Shale to Mexico's electricity grid. The lines are part of a broader package of 12 gas pipelines and infrastructure projects worth $10 billion planned by the Mexican government, which, if all built, will total more than 3,100 miles of pipelines.  Though the Mexican government publicly denied the U.S. had any involvement in helping to usher in privatization of Mexico's energy sector, as first revealed by DeSmog, it appears the State Department has tracked gas pipeline developments in Mexico closely.

Argentina Pulling Ahead In The Race To Be The World’s Next Shale Hotspot - Billions of dollars are riding on the race for international shale production -- and the competition has been coming down to Australia and Argentina the last several months. And Argentina just got a big boost. The country's state-run oil and gas firm YPF told local press late last week that it is making substantial progress on unconventional production. With the company noting that its output from shale leaped 7 percent during the third quarter -- equating to a rise of 2,900 barrels of oil equivalent per day, to a total output of 46,200 boe/d from unconventional sources. That's an encouraging performance and it looks like the coming months could bring even more good news for Argentina's emerging shale industry. YPF said it has just completed two wells targeting a completely new shale field called La Ribera -- a step out from the company's existing projects in the Vaca Muerta play of Argentina's western region. If successful, the La Ribera play could add substantially to output and reserves already coming from YPF's established unconventional fields which include joint ventures with major international players such as Chevron and Petronas. YPF also noted that another of its shale joint ventures -- with natural gas end-user Dow Chemical -- is also set for a significant rise in output. With production from this play expected to top 1 million cubic meters per day (35.3 MMcf/d) by the end of 2015.

Fears for Sherwood Forest from fracking - Anti-fracking campaigners fear Sherwood Forest will be damaged by plans to frack for shale gas around it – despite a double U-turn by ministers which will supposedly protect important countryside sites. The result of a consultation held in the summer to allow fracking to take place in nine licensed areas around Sherwood Forest is still to be published by the Department for Energy and Climate Change. The Government had been set to do a U-turn on plans that would have banned fracking in protected wildlife areas and drinking water protection zones.However, a new consultation was launched last week, with the Government now “seeking to ensure surface activities associated with hydraulic fracturing will not occur in specified protected areas”. This new law could, however, mean fracking could still take place under these protected areas, with the surface drilling occurring outside of their boundaries. Greg Hewitt, a member of campaign group Frack Free Nottinghamshire, said Sherwood Forest could still be affected by many of the problems associated with fracking. He said: “People say it’s not on the surface so it’s all okay. “Our main concerns are that fracking can affect the surface and the drinking water supply and the effect it will have on wildlife.

Fracking warning for South West - WA FARMERS and landowners risk losing land to petroleum companies if minerals or oil exists under their soil. A new land access agreement between farmers, landowners and petroleum companies was released last week by the Australian Petroleum Production and Exploration Association.The document is a guide to enable petroleum companies and landowners to negotiate compensation if petroleum activities occur on their land.Release of the land access agreement was welcomed by the WA minister for mining and petroleum and came after the state government announced the South West was unsuitable for fracking.However, a warning issued by Greens Senator Rachel Sierwert indicated otherwise when she confirmed oil and gas companies were still seeking permits to frack in the South West.Ms Sierwert said fracking and drilling in the area would potentially spoil land and put people’s health, the environment and agriculture at risk.“A landscape dotted with fracking wells [presents] a significant risk of contamination and disruption of groundwater systems,” she said.

Is The Political Climate Shifting Against The Oil And Gas Industry? - Oil and gas companies have had a tough time over the past year trying to weather the storm of falling oil prices. But the political and financial winds are moving in the wrong direction for the industry, raising more “above ground” problems at a time that they can ill-afford it.  Drilling oil and gas wells requires a lot of money. For companies that have seen their revenues vanish because of collapsing oil prices, access to credit is obviously critically important. But U.S. financial regulators are growing concerned about a pile of energy debt that is deteriorating in quality. A report from the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Federal Reserve singled out the oil and gas sector when it concluded that credit risk was rising across the United States. For example, there is at least $34.2 billion in loans in the banking sector that have a credit rating suggesting they are “substandard,” “doubtful,” or “loss.” That figure is up from just $6.9 billion in 2014. Put another way, about 12 percent of all loans to oil and gas companies are rated “substandard” or worse. Low oil prices are undermining the ability of some companies to pay back their debt.  However, increased oversight from banking regulators could force banks to take corrective measures, which could mean reducing their exposure to high-risk energy debt. Such a development does not bode well for oil and gas drillers. Tighter credit conditions – which could also be impacted by a pending rate increase by the Federal Reserve in December – will make drilling more expensive.  In the political arena, things are not any better, with last week being a particularly rough one for the energy sector. First, the attorney general in New York announced an investigation into ExxonMobil, for what it sees as evidence that the company lied about the dangers of climate change. The probe comes on the heels of reports from InsideClimate News that the oil major’s own scientists knew about the threat of climate change decades ago.  Finally, President Obama rejected the Keystone XL pipeline on November 6, which will only come as news to readers living under a rock. The immediate reaction is to look at the effect on oil markets; analysis that has been beaten to death over the past seven years. Still, as of the fourth quarter of 2015, there’s good reason to think that the rejection hurts oil sands producers because of limited pipeline capacity. Even Keystone XL’s proponents agree.

US Shale Producers See Big Budget Cuts for 2016  (Reuters) – U.S. shale oil producers, having slashed fat from 2015 budgets after a 50-percent drop in crude prices, risk cutting to the bone next year as they pare spending further and get ready for a prolonged downturn. Top shale companies including Devon Energy Corp, Continental Resources Inc and Marathon Oil Corp this week released preliminary 2016 plans for capital spending that may fall by double digits. The cuts, following reductions of 30 percent to 40 percent by many in the industry this year, would leave budgets at a fraction of levels seen during the height of the shale boom that lasted to mid-2014. Lower costs and improved productivity would allow them to hold shale oil production largely flat. While he did not provide a specific figure, Doug Lawler, the Chief Executive Officer of Chesapeake Energy Corp, said 2016 spending would be "cut in a meaningful way" at the Oklahoma-based company. Moody's expects capital spending cuts of at least 10 percent to 15 percent in 2016. Devon said it expects to spend $2 billion to $2.5 billion on exploration and production next year, down from about $4 billion this year. Marathon Oil is cutting about $1 billion from its projections. Oasis Petroleum Inc, which produces oil in North Dakota, said it expects to spend $350 million in 2016 on drilling and completion of new wells, roughly $200 million below what it plans to spend for those services this year. About half of the spending reduction is due to lower well costs, with the Houston-based company pushing down well costs 30 percent so far this year, and the other half coming from vendor cost cuts, Oasis executives said. Continental Resources, North Dakota's second-largest oil producer, said it will need to spend $1.5 billion to $1.6 billion next year to maintain output of roughly 200,000 barrels of oil equivalent per day. That would be less than half the roughly $3.4 billion the company expects to spend this year.

U.S. shale oil output to fall for 8th month in December: EIA -- U.S. shale production is expected to fall for an eighth consecutive month in December, according to a forecast on Monday from the U.S. Energy Information Administration (EIA). Total output is set to decline 118,000 barrels per day (bpd) in December, the biggest monthly decline on record, to 4.95 million bpd, the least since Sept. 2014, according to EIA data going back to 2007. Oil production from the Eagle Ford play in South Texas was expected to fall 78,000 bpd to 1.28 million bpd. Bakken oil output in North Dakota was expected to slide 27,000 bpd to 1.11 million bpd. Oil production from the Permian Basin of West Texas, which continues to buck the trend, was projected to rise 11,000 bpd to 2.02 million bpd. U.S. natural gas production, meanwhile, was expected to fall for a sixth month in a row. Total output was set to decline almost 0.4 billion cubic feet per day, the biggest monthly decline since March 2013, to 44.3 bcfd in December, the lowest level since February, according to the EIA data. The biggest decline was expected to be in the Marcellus region in Pennsylvania and West Virginia, down 0.2 bcfd to a forecast 15.7 bcfd in December. That would be the first year-on-year decline in the Marcellus region, the nation’s biggest shale gas play, since at least 2008, around the time of the start of the shale boom.

US oil production from shale may drop by 118,000 b/d in December: EIA -- Crude oil production from US shale plays is forecast to drop in December by 118,000 b/d to 4.94 million b/d, the biggest monthly fall since May, the US Energy Information Administration said Monday. By contrast, the projected aggregate decline in production from the US' seven major shale plays has always been below 100,000 b/d in the previous eight months, EIA said in its latest monthly Drilling Productivity Report. The agency predicted last April that the US' multi-year surge in crude output that has contributed to a global excess of barrels on the market in the past year and a half would begin to reverse the following month. The region likely to show the largest reduction in December is the Eagle Ford Shale in South Texas -- 78,000 b/d, for total production there of 1.278 million b/d, EIA said. That compares with a loss of 71,000 b/d forecast for November. In addition, production in the Bakken Shale of North Dakota and Montana is forecast to fall by 27,000 b/d in December to 1.110 million b/d, compared to a projection of 23,000 b/d this month. And in the Niobara Shale of Colorado and Wyoming, oil production should fall by 22,000 b/d in December to 356,000 b/d. For November, a 20,000 b/d drop was predicted. API data said to show weekly crude supplies up 6.3 million barrels - The American Petroleum Institute reported that crude supplies jumped by 6.3 million barrels for the week ended Nov. 6, according to sources late Tuesday. A Platts survey of analysts forecasted an increase of 500,000 barrels. Following the data, December crude CLZ5, -1.20% was at $43.63 a barrel in electronic trading, down from the $44.21 settlement on Nymex. . The more closely watched EIA report is due Thursday, a day late because of Wednesday's Veterans Day holiday.

EIA: US shale oil output to plunge 118,000 b/d in December - Crude oil production in December from seven major US shale plays is expected to drop 118,000 b/d to 4.95 million b/d, according to the US Energy Information Administration’s latest Drilling Productivity Report (DPR). The agency projected a 93,000-b/d decline for November (OGJ Online, Oct. 13, 2015). The DPR focuses on the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian, and Utica, which altogether accounted for 95% of US oil production increases and all US natural gas production increases during 2011-13. The Eagle Ford has represented a bulk of the projected oil output losses since EIA began anticipating monthly declines from US shale during the spring. For December, EIA expects Eagle Ford production to fall 78,000 b/d to 1.28 million b/d. The Bakken is projected to drop 27,000 b/d to 1.11 million b/d, and the Niobrara is projected to fall 22,000 b/d to 356,000 b/d. Continued growth is seen in the Permian, which is projected to rise 11,000 b/d to 2.02 million b/d.  New-well oil production/rig across the seven plays is expected to increase by a rig-weighted average of 7 b/d in December to 473 b/d. The Niobrara is again seen leading the way with an 18-b/d jump to 652, while the Utica is seen rising 11 b/d to 269. December natural gas production from the seven plays is projected to drop 394 MMcfd to 44.29 bcfd, EIA says. The bulk of that decline is again expected to come in the Marcellus, which is seen losing 229 MMcfd to 15.66 bcfd. Substantial losses are also projected for the Eagle Ford, down 160 MMcfd to 6.53 bcfd; and Niobrara, down 61 MMcfd to 4.18 bcfd. The Utica is expected to increase 66 MMcfd to 3.13 bcfd.

STEO: Annual non-OPEC oil production to decline in 2016 - Oil & Gas Journal -- Oil supplies from countries outside the Organization of Petroleum Exporting Countries is forecast to decline by 300,000 b/d in 2016, after an increase of 1.1 million b/d in 2015, according to the most recent Short-Term Energy Outlook from the US Energy Information Administration. This would be the first annual decline in non-OPEC production since 2008, EIA said. In last month’s STEO, non-OPEC production was forecast to increase 100,000 b/d in 2016. “The shift in expectation from non-OPEC production growth to declines in 2016 is mostly because of lower expected growth in Canada and larger expected declines in US onshore production,” EIA said. Production growth in Canada is expected to average 100,000 b/d in both 2015 and 2016—levels that are 100,000 b/d and 200,000 b/d, respectively, lower than in last month’s forecast. “The reduction in forecast growth in Canada reflects persistently low oil prices resulting in announced delays or cancellations of projects previously scheduled to come online during the forecast period, including Shell’s October announcement canceling the 80,000 b/d Camron Creek project,” EIA said (OGJ Online, Oct. 28, 2015). OPEC crude oil production is forecast to rise 900,000 b/d in 2015, led by production increases in Iraq, and to increase 200,000 b/d in 2016, with Iran forecast to increase production once international sanctions targeting its oil sector are suspended. EIA estimates that OPEC crude oil production averaged 30.1 million b/d in 2014. In this month’s STEO, EIA expects global oil consumption to rise 1.4 million b/d in both 2015 and 2016, compared with a growth of 1.2 million b/d in 2014. Consumption in countries outside the Organization for Economic Cooperation and Development increased 1.4 million b/d in 2014 and is projected to rise 800,000 b/d in 2015 and 1.2 million b/d in 2016.

Energy Tweets -- November 11, 2015; Saudi Oil Production Dropping

    Platts survey of oil industry officials/analysts estimates Saudi Oct crude oil output at 10.1 mil b/d, 3rd straight month volumes down; see re-posted post below the break.
    OPEC Oct crude oil output drops 120,000 b/d to 31.08 mil b/d, led by Saudi & Iraq falls, Platts survey of industry officials/analysts shows
    Annual non-OPEC oil production to fall in 2016 for first time since 2008, EIAgov STEO says.
    EIA sees US crude oil output losses continuing through Sept 2016, when it avg 8.5MM b/d
    EIA estimates total US crude oil production has dropped 500K b/d since April, averaging 9.1MM b/d in October, 2016
    Midwest US gasoline differentials continued to plummet Tuesday amid an abundance of supply
    US refiners continue to enjoy golden period. Strong gasoline margins more than offset disappointing cracks on diesel

API data said to show weekly crude supplies up 6.3 million barrels - The American Petroleum Institute reported that crude supplies jumped by 6.3 million barrels for the week ended Nov. 6, according to sources late Tuesday. A Platts survey of analysts forecasted an increase of 500,000 barrels. Following the data, December crude CLZ5, -1.20% was at $43.63 a barrel in electronic trading, down from the $44.21 settlement on Nymex. . The more closely watched EIA report is due Thursday, a day late because of Wednesday's Veterans Day holiday.

WTI Tumbles To $43 Handle After API Confirms Huge Inventory Build -- API reported a huge 6.3 million barrel inventory build (notably larger than expected) extending the series of build to seven weeks. Even more worrying was the massive 2.5 million barrel build at Cushing. WTI immediately dropped 35c, breaking back to a $43 handle after-hours.

Crude Turmoils After DOE Confirms Surprise Inventory Build & Production Increase -- With the crude market on tenterhooks since API reported a huge surge in inventories (especially at Cushing), DOE reported a considerable 4.2mm barrel build (less than API's 6.3mm) but way above analyst expectations of a modest draw (7th week in a row). Cushing saw a very significant 2.24mm barrel build (API 2.5mm). Crude Production also rose near 3mo highs, putting further pressure on crude prices which are whipsawing wildly on this data...The imports breakdown:

  • U.S. imports of Canadian crude 3.02m b/d for wk ending Nov. 6 vs 2.77m b/d previous wk, according to preliminary EIA data.
  • Saudi Arabia 1.11m vs 865k
  • Venezuela 944k vs 595k
  • Mexico 637k vs 688k
  • Iraq 401k vs 521k
  • Colombia 264k vs 176k
  • Ecuador 133k vs 263k
  • Angola 79k vs 209k
  • Nigeria 47k vs 18k
  • Total U.S. imports of crude at 7.38m vs 6.94m

As total U.S. crude oil imports fall, Canada’s import supply share rises - Today in Energy - U.S. Energy Information Administration (EIA): Although overall U.S. crude oil imports have been declining since 2005, crude oil imports from Canada have been increasing. As of August, Canada provided 45% of all crude oil imports to the United States, almost three times as much as all Persian Gulf countries combined. The United States has been the primary destination for Canada's crude oil exports since the early 2000s. Based on data through the first half of this year from Canada's National Energy Board, 99% of Canada's crude oil exports were sent to the United States. More than half of these volumes went to petroleum refineries in the Midwest (Petroleum Administration for Defense District, PADD 2). Import data from the U.S. Department of Commerce specify the nearest port of entry but not the mode of transit used to import this crude oil. Based on entry port data and pipeline locations, it is reasonable to expect that most of these imports came through pipeline systems such as Enbridge Mainline, Kinder Morgan Trans Mountain, Spectra Express, and TransCanada Keystone. A smaller portion, about 3%, was transported by rail. Within the United States, the regional destination of crude oil sent by rail is different from other modes of shipping crude oil. While about 65% of Canadian crude oil imports by pipeline and other modes not including rail are shipped to refineries in the U.S. Midwest (PADD 2), imports from Canada by rail go primarily to Gulf Coast (PADD 3) and East Coast (PADD 1) refineries.

Oil Tanker Traffic Jam Off Texas Is Viewed as Sign of Oversupply - A traffic jam of oil tankers, with more than 20 million barrels of crude, has emerged along the Texas coast this month, a snarl that some traders see as the latest sign of an unyielding global supply glut.More than 50 commercial vessels were anchored outside ports in the Houston area at the end of last week, of which 41 were tankers, according to Houston Pilots, an organization that assists in navigation of larger vessels. Normally, there are 30 to 40 vessels, of which two-thirds are tankers, according to the group.Although the channel has been shut intermittently in recent weeks because of fog or flooding, oil traders pointed to everything from capacity constraints to a lack of buyers.“It appears that the glut of supply in the global market is only getting worse,” said Matt Smith, director of commodity research at ClipperData. Several traders said some ships might have arrived without a buyer, which can be hard to find as ample supply and end-of-year taxes push refiners to draw down inventories.

Brent oil hits lowest since late August; dollar dips - Brent crude oil prices hit their lowest since late August on Wednesday on worries about growing U.S. stockpiles, while the U.S. dollar took a breather from recent gains. U.S. stocks ended a choppy session lower, with the drop in oil weighing on energy shares. European shares ended up 0.7 percent. Copper prices ended higher after nearing a six-year low on mixed Chinese data, which showed growth in the world's second-biggest economy was still in low gear. Worries that U.S. crude inventories are building pressured oil prices. American Petroleum Institute data showed U.S. crude stockpiles jumped last week in a seventh week of builds. The build was also above forecasts by analysts in a Reuters poll. The U.S. Energy Information Administration issues official inventory data on Thursday. Brent fell $1.63 to settle at $45.81 a barrel, while U.S. crude dropped $1.28 to settle at $42.93. "You can talk all you want about oil demand being better next year and beyond, but right now we have a heck of a glut on our hands that I think has to be priced in some more,"

Oil drops below $42 as U.S. supplies climb a 7th straight week - Oil prices settled at their lowest level since late August on Thursday, as the U.S. government reported a seventh consecutive weekly increase in crude supplies. Analysts are mostly downbeat about the outlook for oil prices, given ongoing worries about a glut of crude supplies. December West Texas Intermediate crude dropped $1.18, or 2.8%, to settle at $41.75 a barrel on the New York Mercantile Exchange, for its lowest settlement since Aug. 26. December Brent crude on London’s ICE Futures exchange gave up $1.75, or 3.8%, to $44.06 a barrel. The December contract for Brent crude expires Friday. “In a season where declines in [crude] inventory are more common, builds of any degree are negative,” said John Macaluso, vice president of institutional sales at Tyche Capital Advisors. The U.S. Energy Information Administration on Thursday reported an increase of 4.2 million barrels in crude supplies for the week ended Nov. 6. That was less than the 6.3-million-barrel rise reported by the American Petroleum Institute on Tuesday but far more than the 1.1-million-barrel increase expected by analysts polled by The Wall Street Journal. Companies are required to report data to the EIA, while reporting to the API is voluntary.

Oil slumps 4 percent, nears new six-year low as glut persists | Reuters: Oil prices tumbled almost 4 percent on Thursday, accelerating a slump that threatens to test new six-and-a-half year lows, with traders unnerved by a persistent rise in U.S. stockpiles and a downbeat forecast for next year. Benchmark Brent crude fell below $45 a barrel for the first time since August, its sixth decline of a seven-day losing streak of more than $6 a barrel, or 12 percent, in a slump that will vex traders who thought the year's lows had already passed. The latest decline was triggered by data showing that U.S. stockpiles were still rising rapidly toward the record highs reached in April, despite slowing U.S. shale production. Weekly U.S. data showed stocks rose by 4.2 million barrels, four times above market expectations.   In its monthly report, OPEC said its output dropped in October but at current levels it could still produce a daily surplus above 500,000 barrels by 2016. Brent futures settled down $1.75, or 3.8 percent, at $44.06 a barrel. The tumble of the past week has left Brent less than $2 away from its August lows and a new 6-1/2 year bottom. U.S. crude futures finished down $1.18, or 2.8 percent, at $41.75. Its low in August was $37.75. "We're going to have a lot of oil on our hands with the builds we're seeing, talk of rising tanker storage and the yawning discount between prompt and forward oil," 

Rising crude imports point to record US inventories ahead - Fuel Fix: IEA has completed the trilogy of key monthly oil reports. It is very much in keeping with what we heard from OPEC on the inventory front, drawing attention to the ‘3 billion barrel cushion‘ of stockpiles across the world. The agency remains the most bullish on demand versus OPEC and EIA this year, seeing demand growth of 1.8 million barrels per day. Next year it sees it slowing to 1.2 mn bpd (OPEC sees +1.25 mn bpd). But from a supply perspective, IEA highlights how the current supply glut has spread to distillates, as rising demand for gasoline from the US and China has spurred on higher refining runs, causing ‘ballooned‘ distillate inventories. The agency’s view on OPEC production diverged from the cartel’s for last month, seeing production holding up at 31.76 mn bpd. While it mirrored OPEC’s view that production from Iraq and Kuwait dropped (along with a rise in Libyan production), IEA said supply losses were also offset by rising Saudi and Nigerian production. IEA also sees non-OPEC supply losses next year, dropping 600,000 bpd. After yesterday’s sizable crude stock build from the weekly US inventory report, attention shifts to the surpassing of the record level of 490 million barrels, achieved earlier in the year.  As we exit refinery maintenance season, we should be seeing crude demand picking up once more and inventory builds leveling off, likely dropping into the year-end (in a Gulf-Coast-ad-valorem-tax-kind-of-way). But as this week’s 4.2 million barrel build illustrates in the face of rising refining, the US remains awash with crude. This is either due to ongoing strong production or ongoing strength in imports – or both.

"Oil Bears May Not Hibernate" As Inventories Swell To Record 3 Billion Barrels - In true stop-running algo common sense, WTI crude jumped overnight, back above $42 briefly. However, a double whammy of warnings from IEA (of a "massive cushion" of 3 billion barrels worldwide) and the highest volume of supertankers for this time of year since 2013 has sent crude sliding back below $42. As Bloomberg reports, Oil stockpiles have swollen to a record of almost 3 billion barrels because of strong production in OPEC and elsewhere, potentially deepening the rout in prices, according to the International Energy Agency. This “massive cushion has inflated” on record supplies from Iraq, Russia and Saudi Arabia, even as world fuel demand grows at the fastest pace in five years, the agency said. Still, the IEA predicts that supplies outside the Organization of Petroleum Exporting Countries will decline next year by the most since 1992 as low crude prices take their toll on the U.S. shale oil industry. “Brimming crude oil stocks” offer “an unprecedented buffer against geopolitical shocks or unexpected supply disruptions,” the Paris-based agency said in its monthly market report. With supplies of winter fuels also plentiful, “oil-market bears may choose not to hibernate.” Total oil inventories in developed nations increased by 13.8 million barrels to about 3 billion in September, a month when they typically decline,according to the agency.

WTI Crude Tumbles To $40 Handle, Fastest Plunge Since December 2014 - Having fallen for 7 of the last 8 days, WTI Crude just traded with a $40 handle for the first time since August 27th. Oil is now down over 14% in the last 8 days, the fastest collapse since December 2014... This is the fastest 8 day drop since Dec 2014... As we explained previously, here's why... Charts: Bloomberg

U.S. oil drillers add rigs for first week in 11: Baker Hughes | Reuters: U.S. energy firms this week added oil rigs for the first week in 11, data showed on Friday, despite continued weak crude prices. Drillers added 2 oil rigs in the week ended Nov. 13, bringing the total rig count up to 574, oil services company Baker Hughes Inc said in its closely followed report. That total is about a third of the 1,578 oil rigs operating in same week a year ago. Over the prior 10 weeks, drillers cut 103 oil rigs. The additions this week showed that at least some drillers were willing to start drilling again even with U.S. oil prices trading in the $40s a barrel in hopes of higher prices in the future. U.S. oil futures averaged $43 a barrel so far this week, down from $46 last week. Crude futures were on track for their biggest weekly loss in more than two months as swelling stocks weighed on the market. [O/R] In the minutes after Baker Hughes released the report, U.S. crude prices dipped about 20 cents to around $40.50 a barrel. Energy traders noted the rate of weekly oil rig reductions over the past two months, about 10 on average, was much lower than the 19 rigs cut on average over the past year or so since the number of rigs peaked at 1,609 in October 2014, due in part to expectations of slightly higher prices in the future. Higher prices encourage drillers to add rigs. The most recent time crude prices were much higher than now was in May and June, when U.S. futures averaged $60 a barrel. In response to those higher prices, drillers added 47 rigs over the summer.

U.S. oil rig count ticks up after 10 weeks of declines - Fuel Fix: The number of rigs in the U.S. actively drilling for oil increased slightly for the first time since August, but ever-decreasing oil prices are expected to push the count back down again. The American oil rig count ticked up by two to 574 for the week, although the number of rigs seeking natural gas dropped by six down to 193 rigs, according to weekly data released by oil field services firm Baker Hughes. “It’s purely illusory,” said Bill Herbert, an analyst at Simmons & Company International in Houston. “I think the holiday season is going to be exceedingly grim.” Herbert predicts the oil rig count will bottom out around late December, tread water in the first half of 2016 and then begin to recover later next year. “Given where oil prices are, there’s just not really any incentive to press forward,” he said. In September, the natural gas rig count dipped below 200 for the first time in decades. The last time the U.S. oil rig count fell below 570 was in June 2010. The oil rig count had declined for 10 straight weeks until Friday. Oil field operators have pulled back about 65 percent of the rigs that were operating at the peak of the U.S. oil boom in October 2014, when oil rigs totaled 1,609. In Texas, the total rig count dropped by two from last week down to 338 rigs. Texas accounts for nearly 45 percent of the nation’s oil and gas rigs. The Eagle Ford shale gained one rig and West Texas’ Permian Basin lost three, although the Permian still has 229 operating rigs. Oklahoma gained two rigs and its count jumped to 85. The report of the small rig count change came after the price of benchmark U.S. oil dipped throughout the week, ending Friday trading down $1.01 at $40.74 a barrel. The oil price sank below $40 a barrel for a few days in August.

Unsold oil stuck on tankers threatens world market gridlock -– As land storage sites worldwide reach brimming point due to a supply glut, tens of millions of barrels of oil are sitting on tankers looking for homes – threatening logistical paralysis. The International Energy Agency on Friday said stored oil has hit 3 billion barrels. Traders say the excess of crude is leaving tankers queuing at major ports worldwide, lengthening waiting times to days, weeks and even months. The lack of space to unload oil is tying up the tankers needed to keep oil moving, and wells running. The bottlenecks could force oil suppliers into quick, cut-priced sales just to free space, adding more pressure to oil prices already close to six-year lows. The cost to hire a supertanker – each capable of carrying 2 million barrels of oil – recently hit its highest level since 2008 at over $100,000 a day last month and currently remains at over $70,000 a day. “We’re alarmed,” . “There are growing indicators that it’s getting harder to digest this crude.” In the U.S. Gulf, more than 50 commercial vessels were anchored outside ports near Houston at the end of last week, of which 41 were tankers. Trade sources said there were seven aframax tankers – each capable of carrying up to 700,000 barrels of oil – sitting outside Rotterdam waiting to unload. There was also nearly 15 million barrels of unsold West African crude oil either loaded on tankers or waiting to be loaded in the next two weeks. Shipping and port sources, pointing to full onshore storage, said up to 20 supertankers were held up in Iraq’s Basrah terminal, with vessels experiencing loading delays of up to 12 days.

OilPrice Intelligence Report: Inventory News Puts A Chill On The Oil Markets: The latest clues from global oil markets indicate that prices could remain subdued in the near-term. In its monthly report, OPEC’s output dipped a bit as export problems in Iraq cut into shipments. Iraq’s exports fell from 4.2 million barrels per day (mb/d) to a little over 4 mb/d. Collectively, the group produced 31.38 mb/d in October, falling by 256,000 barrels per day compared to September. Despite the hiccup, OPEC reported that oil supplies from around the world are still exceeding demand. In fact, in a worrying sign, OPEC says that global storage levels are topping off. In OECD countries, crude oil storage hit 2,942 million barrels, which is 210 million barrels above the five-year average. With storage tanks filling up, oil is increasingly being diverted to tanker storage at sea. The Financial Times reported that oil tanker storage has hit 100 million barrels, a rather glaring indication that supplies are exceeding demand and, so much so, that onshore storage space is starting to run down. In short, global oil production continues to exceed demand, even though U.S. shale production continues to decline. For a rather pointed illustration of the problem, see the graph below from OPEC.The news put a chill on oil markets, killing off the notion that a rebound was beginning to form after weeks of oil trading at stable levels in the mid$40s per barrel. This week saw a renewed downturn as rising inventories and persistently elevated production feeds the perception that “lower for longer” is here to stay. At the same time, oil production in the United States is still declining. The EIA expects U.S. shale basins to lose 118,000 barrels per day in production in December, and once again the largest declines (78,000 barrels per day) will come from the Eagle Ford. The Permian Basin could post a small uptick in production as it emerges as one of the few places where production is still profitable. In its latest forecast, the EIA projects WTI to average just $51.31 per barrel in 2016. Hard times for E&P companies could continue a while longer.

Oil majors see low prices persisting for months ahead - The global oil glut is likely to take longer than expected to clear and may depress oil prices for many more months if not years despite steep investment cuts and project cancellations around the world, executives from oil majors said on Tuesday. The views from the top ranks of Exxon Mobil, BP and Total were given at an industry conference in Abu Dhabi as key officials from the Organization of the Petroleum Exporting Countries (OPEC) said they expect better prices in 2016. The discord in views comes as most global majors are slashing their budgets and investments with the aim to be able to generate cashflows with prices as low as $60 per barrel. And while major producing nations are also reducing spending, they are often facing much tougher choices to keep governments popular. “I’m not sure we will exit from low prices before many months,” Total’s chief executive Patrick Pouyanne told the conference. Oil prices more than halved in the past 18 months because of a global oil glut which arose on the back of a U.S. shale oil boom and a decision by OPEC not to cut output to fight for market share with higher cost producers. BP’s and Exxon Mobil’s heads of exploration and production Lamar Mckey and Jack Williams both said low oil prices would stay for a while and BP’s head of the Middle East Michael Townshend said the group saw oil fluctuating around $60 per barrel for the next 3 years.

LNG Glut Set To Worsen Considerably Over Next 3 Years -- LNG supplies are set to boom over the next 3 years. The IEA’s 2015 World Energy Outlook expects LNG export capacity to grow rapidly in the short-term, with major new sources of supply coming mostly from Australia and the United States. Indeed, this first wave of new LNG capacity is already under construction and many projects are nearing completion. Australia is expected to nearly quadruple its LNG export capacity between 2014 and 2018, as it adds 58 million tonnes per annum (mtpa) of LNG export capacity. The U.S. is expected to see its first shipment leave its shores in the first quarter of 2016 when Cheniere Energy’s Sabine Pass facility comes online. By 2020, the U.S. could add 44 mtpa, which could be enough to make it the third largest exporter behind just Qatar and Australia. But the next phase of expansion is less certain. LNG prices have collapsed, in part because of the plummeting value of crude oil. But also because demand is not turning out to be quite as strong as previously anticipated. Take Japan, for instance. Tokyo Electric Power (Tepco), a utility and a major purchaser of LNG in Japan, has actually begun importing less LNG on the spot market and for short-term contracts, with imports down by a third for the period of April to September. The problem of soft LNG demand will grow worse as Japan slowly returns to nuclear power, a trend that has already begun.

EIA's November Short-Term Outlook -- November 10, 2015

  • Winter Fuels: High natural gas inventories and expected warmer weather will lead to lower natural gas prices this winter, which could reduce the heating expenditures for households that heat primarily with natural gas by an average 13% compared to last year.
  • Crude Oil: Total oil production from non-OPEC countries is expected to decline next year for the first time since 2008, because of lower oil output from the United States.
  • Gasoline/Refined Products: U.S. gasoline demand this year is on track to be the highest since record levels were set in 2007, due in large part to low pump prices and more people working.
  • Natural Gas: U.S. natural gas inventories could reach 4 trillion cubic feet for the first time ever in November, especially if above-normal temperatures reduce home heating demand.
  • Electricity:  Milder weather is expected this winter in most of the eastern United States, including the southern states, which will reduce the demand for electric heat and lead to an expected 1.6% decline in retail sales of electricity to the residential sector this winter. While natural gas prices are expected to rise next year, power plants are not expected to switch back to coal as a generating fuel because gas prices will still be low compared to recent years.
  • Renewables: Total utility-scale solar power generating capacity in the United States is expected to more than double between the end of 2014 and the end of next year.  U.S. wind power generating capacity is expected to increase by 14% next year.

Oil price to rise only gradually to $80 by 2020 - IEA (Reuters) -  Oil is unlikely to return to $80 a barrel before the end of the decade, despite unprecedented declines in investment, as yearly demand growth struggles to top 1 million barrels per day, the International Energy Agency said on Tuesday. In its World Energy Outlook, the IEA said it anticipates demand growth under its central scenario will rise annually by some 900,000 barrels per day to 2020, gradually reaching demand of 103.5 million bpd by 2040. The drop in oil to around $50 a barrel this year has triggered steep cutbacks in production of U.S. shale oil, one of the major contributors to the oversupply that has stripped 50 percent off the price in the last 12 months. “Our expectation is to see prices gradually rising to $80 around 2020,” Fatih Birol, the executive director of the IEA, told Reuters ahead of the release of the report. “We estimate this year investments in oil will decline more than 20 percent. But, perhaps even more importantly, this decline will continue next year as well.” “In the last 25 years, we have never seen two consecutive years where the investments are declining and this may well have implications for the oil market in the years to come.” Oil companies have grappled with the downturn and a “lower for longer” price outlook by slashing spending, cutting thousands of jobs and delaying around $200 billion in mega-projects around the world. The IEA estimates investment has already fallen by 20 percent this year.

OilPrice Intelligence Report: IEA Bearish On Oil, Bullish On Gas, Fatalistic On Coal: The International Energy Agency released its annual World Energy Outlook (WEO), a highly anticipated report that lays down benchmarks on supply, demand, and prices for the next few decades. Obviously a lot has happened since November 2014 when the IEA released its last WEO, but the IEA flags a few very critical trends that are emerging: A phase out of fossil fuel subsidies in many parts of the world because of low oil prices; signs of a decoupling between economic growth and carbon emissions; China’s suddenly reduced role as a driver of energy demand as it transitions to a less energy-intensive model of growth; India taking the baton from China as the most important source of energy demand; the return of Iran to oil markets; and of course, a look at oil prices. The IEA predicts that the oil market “rebalances at $80/bbl in 2020, with further increases in price thereafter.” At the same time, the Paris-based energy agency says that a prolonged period of low oil prices cannot be ruled out. In this more pessimistic scenario, the IEA sees oil prices hovering around $50 per barrel through the remainder of this decade, while only gradually moving up to $85 per barrel through 2040. A dark outlook indeed, but investors should not take these long-term figures too seriously as these projections are notoriously inaccurate. The IEA also sees rough waters for coal markets ahead. After predicting strong growth for coal as recently as last year, the IEA declares a “reversal of fortune” for coal. Plummeting prices and a glut of supply have done little to stoke demand, and there appears to be little prospect for improvement. Over the past decade coal captured 45 percent of the increase in global energy demand, but that share falls to just 10 percent through 2040. Moreover, while faring much better than coal, the IEA sees large growth opportunities for natural gas, but also several big question marks. The largest market for natural gas will be in the Middle East and Asia, but it also faces competition from renewables and energy efficiency. Plus, LNG export terminals must reduce costs in order to thrive.

IEA Offers No Hope For An Oil-Price Recovery - The International Energy Agency (IEA) November report offers no hope for an oil-price recovery any time soon. Over-supply and weak demand for oil will dominate through 2016.  The world has a 1.6 million barrel per day oil production surplus (supply minus demand) as the oil glut enters its 8th consecutive quarter (Figure 1).  The supply surplus is 710,000 barrels per day lower than it was in the 2nd quarter of 2015 but is higher than any other quarter since the oil-price collapse began. In fact, it is higher than any other quarterly surplus in the past decade (Figure 2).  The oil demand forecast for 2015 is the only hopeful part of the IEA report with demand growth estimated at 1.8 million barrels per day compared to 2014 (Figure 3).  The current market turmoil has created a once in a generation opportunity for savvy energy investors. Whilst the mainstream media prints scare stories of oil prices falling through the floor smart investors are setting up their next winning oil plays.  There are two important qualifications, however, to this good news. First, the comparison is positive only compared to 2014, the worst year for demand growth since the Financial Collapse in 2008. Second, demand growth of 1.8 million barrels per day includes IEA’s estimate for the 4th quarter of 2015.  The really bad news, however, is that demand growth for 2016 will fall to 1.2 million barrels per day. This, of course, is also a forecast and is in comparison to the estimated 1.8 million barrels per day for 2015. If 2015 demand growth remains at 1.5 million barrels per day, the 2016 forecast will be flat with 2015.

IEA World Energy Outlook: New Hope For Civilization -- The big news overnight was the release of the 2015 International Energy Agency (IEA) World Energy Outlook. It went green, big time. Here is the summary: World energy demand grows in all WEO scenarios, but government policies play a powerful role in dictating the pace of the growth and the degree to which greenhouse-gas emissions follow the same path. In the New Policies Scenario (the central scenario), energy demand grows by nearly one-third between 2013 and 2040, with all of the net growth coming from non-OECD countries and OECD demand ending 3% lower. The links between global economic growth, energy demand and energy-related emissions weaken: some markets (such as China) undergo structural change in their economies, others reach a saturation point in demand for energy services, and all adopt more energy efficient technologies. As the largest source of global GHG emissions, the energy sector must be central to efforts to tackle climate change but, despite signs that a low-carbon transition is underway, energy-related CO2 emissions are projected to be 16% higher by 2040. The single largest energy demand growth story of recent decades is near its end; coal use in China reaches a plateau, close to today’s levels, as the country’s economy rebalances and industrial coal demand falls. The largest oil consumer – the United States – experiences one of the world’s largest reductions in demand from 2013 to 2040 (along with the European Union), declining by around 4 million barrels per day (mb/d), and returning to levels last observed in the 1960s. Broad-based growth in global natural gas demand (up 47%) is led by China and the Middle East. By 2040, oil and coal collectively relinquish 9% of the global energy mix, with renewables growing by five percentage points and gas and nuclear each growing by two.

Oil Stuck Below $80? No Way, or Global Collapse Is Coming - The International Energy Agency has released its yearly energy report, including their projections on oil prices. As usual, their predictions are laughable. For the rest of the decade, they do not see oil prices rising above $80 a barrel. In their low-price oil scenario, they don't see oil prices rising above $80 until 2020. They ought to predict a global economic meltdown to go along with it. The consequences of that kind of extended low oil price that the IEA predicts would not only bankrupt every oil company in the world, but also several sovereign nations. You could almost guarantee a global depression as a result. Before explaining why the IEA must be wrong in these projections, let's remind people of their last few forecasts. In 2013, they expected we'd be at $110 a barrel today -- a far cry from the current $45 oil price. And here is where the IEA must certainly be wrong -- another five years of low oil prices would fully decimate the necessary capital expenditures required to develop new oil sources, collapsing supply. We can already see some of the effects of lowered spending here in the U.S. But with prices that low for that long, not only would U.S. suppliers entirely run dry, but countries like Venezuela, Nigeria, Iraq and even Russia would be unable to continue to support their economies. Sovereign debt in these countries would collapse, credit would run dry and unemployment would be rampant. Even in countries with cheaper break-even prices, oil production would rapidly slow as well.

The Oil Wars Heat Up: Russia, Iraq Steal Saudi Market Share While Oman Blasts OPEC As "Irresponsible" -- Last week, in the wake of S&P’s downgrade of Saudi Arabia and an IMF report which suggests that a number of Mid-East producers will be broke in five years if oil prices remain where they are today, we brought you, i) an in-depth look at Riyadh’s financial situation, and ii) a glimpse at where exporters stand in terms of breakeven prices and budget deficits.  We encourage you to review the full account of the Saudis' situation as Deutsche Bank does a nice job of illustrating what is becoming an exceptionally tenuous scenario, but we think it’s worth reposting the following two graphics here as they serve to underscore the deepening fiscal crisis:  As for who's hurting the worst, here's Deutsche's graphic on deficits in the world of "lower for longer": Note that Oman is among those stinging from the dramatic decline in prices. Well on Monday, the country's oil minister Mohammed Bin Hamad Al Rumhy lashed out at OPEC for - and yes we're going to use this analogy again - Plaxico'ing itself. Here's WSJ with moreDiscontent with the Organization of the Petroleum Exporting Countries spilled into the open Monday, when Oman’s oil minister called current oil production levels “irresponsible” and blamed the group for low oil prices. “This is a commodity that if you have one million barrels a day extra in the market, you just destroy the market,” said Mohammed Bin Hamad Al Rumhy, whose country produces oil but isn’t a member of OPEC. “We are hurting, we are feeling the pain and we’re taking it like a God-driven crisis. Sorry I don’t buy this, I think we’ve created it ourselves.”

Did "Someone" Try To Attack Russia's Go-To Gas Pipeline With An Underwater Drone? -- When last we visited the Nord Stream pipeline story we noted that the prospect of doubling the line’s capacity in conjunction with Western O&G companies was effectively allowing Moscow to adopt a hardline approach in talks with Ankara.  Turkish autocrat President Recep Tayyip Erdogan is keen on seeing Syria’s Bashar al-Assad pushed aside and, as everyone who doesn’t live in a cave knows, Russia and Iran are keen on preserving the Assad government. This makes for a rather awkward scenario. Ankara and Moscow have established deep trade ties and when Russian jets venture into Turkish airspace whilst attempting to bomb some of the very same militants Turkey has supported, the relationship becomes strained. That goes double when Turkey shoots down Russian drones.  Now obviously, there are very real questions about whether Erdogan can support Ankara’s assertion that Turkey can survive without Russian gas. The idea that either Russia or Turkey would jeopardize the Turkish Stream based on differences of opinion about the President of Syria is to a certain extent absurd (although what happens to that President may shape the future of energy transports from the Mid-East to Europe), but whatever the case, the Nord Stream has become key for the Russians.   Well, in what certainly may be a coincidence but in what also looks remarkably suspicious given the current geopolitcal circumstances, an underwater drone "rigged with explosives" (to quote RT) was spotted near the Nord Stream by Sweden. Here's more:   An unmanned military underwater vehicle rigged with explosives was spotted on the seabed in the vicinity of the Nord Stream gas pipeline in the Baltics on Friday, Swedish media report. The device is expected to be disarmed on November 9. An abandoned expendable remotely-operated mine clearance underwater vehicle allegedly with explosives onboard has been detected in multinational waters of the Baltic Sea by the Swedish Navy, Svenska Daglabet reports.

Petrobras cancels oil strike talks, union vows escalation – Brazil’s state-controlled oil producer Petroleo Brasileiro SA canceled talks with union leaders that were planned for Tuesday and aimed at settling a strike that is now in its ninth day. Members of oil union FUP have been on strike at Petrobras, as the company is known, since Nov. 1 in the biggest labor action against it in 20 years. After the cancellation, FUP, the country’s largest oil workers federation, vowed to raise pressure on Petrobras. “This is the moment to intensify,” FUP said in a statement late Tuesday, adding that the walkout was beginning to reduce output from refineries as well as crude oil and natural gas output. The union wants Petrobras to reverse plans to reduce capital spending and force it to cancel asset sales designed to lower the company’s $130 billion debt, the largest of any oil company in the world. In a statement, Petrobras said it is working on “proposals” that could be presented to workers, without giving a timetable. While the initial union salary request was for an 18 percent raise and Petrobras’ initial offer was 8.1 percent, the unions said salary is not the principal aim of the strike. Once a new date for talks is set, workers will be informed, the statement added. In the past Petrobras officials have said it could resist major production cuts from a strike for about 10 days.

Gulf States to lose $275bn in oil exports this year – IMF's Lagarde - The crude exporting countries of the Gulf Cooperation Council (GCC) are expected to lose $275 billion in revenue this year due to falling oil prices, according to the International Monetary Fund (IMF) chief Christine Lagarde. “At the moment, a large share of fiscal and export revenues in the GCC come from oil. With oil prices having declined sharply since mid-2014, export revenues are expected to be nearly $275 billion lower in 2015 than in 2014,” she said, speaking at a meeting in Qatar with the finance ministers and central bank governors of the GCC. "The fiscal and current account balances in the region are deteriorating sharply, with the fiscal balance projected by the IMF to be a deficit of 12.7 percent of GDP in 2015,” she added. The GCC is comprised of Bahrain, Kuwait, Oman, Saudi Arabia, Qatar, and the United Arab Emirates. With Gulf state economies largely dependent on oil exports; global benchmark Brent has fallen in price from $115 a barrel in June 2014 to currently below $50 per barrel. “Growth is also expected to slow, with IMF projection suggesting 3.2 percent in 2015 and 2.7 percent in 2016, compared to 3.4 percent in 2014,” Lagarde added.

The Biggest Threat To Oil Prices: 2-Mile Long Stretch Of Iraq Oil Tankers Headed For The U.S. - After some initial excitement, November has seen crude oil prices collapse back towards cycle lows amid demand doubts (e.g. China exports, China Industrial Production) and supply concerns (e.g. inventories soaring). However, an even bigger problem looms that few are talking about. As Iraq - the fastest-growing member of OPEC - has unleashed a two-mile long, 3 million metric ton barrage of 19 million barrel excess supply directly to US ports in November. Crude prices are already falling... But OPEC has another trick up its sleeve to crush US Shale oil producers. As Bloomberg reports, Iraq, the fastest-growing producer within the 12-nation group, loaded as many as 10 tankers in the past several weeks to deliver crude to U.S. ports in November, ship-tracking and charters compiled by Bloomberg show. Assuming they arrive as scheduled, the 19 million barrels being hauled would mark the biggest monthly influx from Iraq since June 2012, according to Energy Information Administration figures. The cargoes show how competition for sales among members of the Organization of Petroleum Exporting Countries is spilling out into global markets, intensifying competition with U.S. producers whose own output has retreated since summer. For tanker owners, it means rates for their ships are headed for the best quarter in seven years, fueled partly by the surge in one of the industry’s longest trade routes. Worst still, they are slashing prices... Iraq, pumping the most since at least 1962 amid competition among OPEC nations to find buyers, is discounting prices to woo customers.  The Middle East country sells its crude at premiums or discounts to global benchmarks, competing for buyers with suppliers such as Saudi Arabia, the world’s biggest exporter. Iraq sold its Heavy grade at a discount of $5.85 a barrel to the appropriate benchmark for November, the biggest discount since it split the grade from Iraqi Light in May. Saudi Arabia sold at $1.25 below benchmark for November, cutting by a further 20 cents in December.

Saudi Arabia will not stop pumping to boost oil prices -- Saudi Arabia is determined to stick to its policy of pumping enough oil to protect its global market share, despite the financial pain inflicted on the kingdom’s economy. Officials have told the Financial Times that the world’s largest exporter will produce enough oil to meet customer demand, indicating that the kingdom is in no mood to change tack ahead of the December 4 meeting in Vienna of the producers’ cartel Opec. “The only thing to do now is to let the market do its job,” said Khalid al-Falih, chairman of the state-owned Saudi Arabian Oil Company (Saudi Aramco). “There have been no conversations here that say we should cut production now that we’ve seen the pain.” Saudi Arabia rocked oil markets last November when Opec decided against production cuts, making clear that the kingdom was abandoning its policy of reducing supplies to stabilise the price. Since then, the oil price has collapsed from a high of $115 a barrel last year to $50 a barrel. Global oil companies, which have put hundreds of billions of dollars of investment on hold as a result of low prices, will be disappointed by the Kingdom’s stance. The effect on business sentiment has sparked domestic criticism of the market share policy engineered by Ali al-Naimi, the oil minister, and agreed by both the late King Abdullah and the current King Salman, who was crown prince last year and ascended the throne in January. Officials in Riyadh say their policy will be vindicated in one to two years when revived demand swallows the global oil glut and prices begin to recover. They argue that in the past, Opec output cuts raised prices to levels where more expensive production, such as shale and deep-sea oil, could flourish. Moving ahead, Opec — led by Saudi Arabia — plans to pump as much as it can towards meeting global oil demand, leaving higher-cost producers to make up the remainder.

Saudis sees non-OPEC oil supply drop accelerating after 2016 - Oil production from non-OPEC suppliers is expected to drop in 2016, after three years of positive growth, Saudi Arabia's Vice Minister of Petroleum and Mineral Resources Abdulaziz bin Salman al-Saud said Monday, adding that the rate of fall in output from those suppliers would accelerate after 2016. "Beyond 2016, the fall in non-OPEC supply is likely to accelerate, as the cancellation and postponement of projects will start feeding into future supplies, and the impact of previous record investments on oil output starts to fade," Abdulaziz told the 6th Asian Ministerial Energy Roundtable in Doha.Despite the global macroeconomic uncertainty, oil demand continues to grow at a robust pace and is set to increase by 1.5 million b/d in 2015, the strongest growth seen in the past few years, he said. "This is in contrast to the early 1980s when global oil consumption fell between 1980 and 1984 by more than 2.3 million b/d," he said. Explaining why the current oil market scenario was different from the one in the 1980s, Abdulaziz said in 1985, global oil consumption stood at just over 59 million b/d and the available spare capacity was at a historical level of over 10 million b/d, and a ratio of spare capacity to global oil demand was about 17%. But in contrast, oil consumption in 2015 is estimated to reach 94 million b/d, while usable spare capacity, mainly held in Saudi Arabia, is estimated at 2 million b/d, meaning the ratio of spare capacity to oil consumption of about 2%.

Saudi Vice Oil Minister Sees Price Surge After Cutbacks -- The scale of the global oil and gas industry’s spending cuts are making another surge in energy prices possible by diminishing future supply, Saudi Vice Minister of Petroleum & Mineral Resources Prince Abdulaziz bin Salman said. Investments have been cut by $200 billion this year and will drop another 3 percent to 8 percent next year, marking the first time since the mid 1980s that industry cut the spending for two consecutive years, Prince Abdulaziz said in a copy of his speech for delivery to energy ministers in Doha Monday. Nearly 5 million barrels a day of projects have been deferred or canceled, he said in the remarks. Just like high oil prices can’t last, a prolonged period of low prices is “also unsustainable, as it will induce large investment cuts and reduce the resilience of the oil industry, undermining the future security of supply and setting the scene for another sharp price rise,” the prince said in the remarks. “As a responsible and reliable producer with long-term horizon, the kingdom is committed to continue to invest in its oil and gas sector, despite the drop in the oil price.” Oil prices have declined 42 percent in the past year as Saudi Arabia led the Organization of Petroleum Exporting Countries in maintaining production in the face of a global glut rather than make way for booming U.S. output. Supply from outside the 12-member group will start to decline next year and the drop will accelerate after that, according to his speech. Oil demand is expected to be 94 million barrels a day this year, rising 1.5 percent from last year, with about 2 million barrels a day of spare capacity, mainly held in Saudi Arabia, the prince said in the prepared remarks. Growth in Asia’s demand may slow “by efforts to efficiency enhancement and oil substitution,” he said.

A Saudi fracking boom could be a tectonic shift - Great attention has focused on the North American energy boom, driven by fracking and horizontal drilling, and for good reason: It has yielded far more energy than most people expected and has altered energy security by adding more than four million barrels of oil a day to global markets since 2008. But what about Saudi Arabia? We rarely think of the Saudis as in need of new energy technologies, or as pursuing unconventional shale energy. After all, their country holds enormous conventional energy sources. But the House of Saud has launched its own fracking boom, and it could well be the next big thing in global energy. Saudi efforts are more advanced in shale gas than in oil, but both are in motion. In 2011, several years after the U.S. boom was in full swing, Saudi Aramco launched its own unconventional gas program in the northern region (or Empty Quarter, as it is also known). Two years later, Saudi Aramco was ready to commit new shale gas production to a 1,000-megawatt power plant. Ali al-Naimi, Saudi Minister of Petroleum and Mineral Resources, estimated that the kingdom possesses about 600 trillion cubic feet of shale gas reserves, which would place Saudi Arabia fifth in the world in total unconventional reserves. That would be amazing. Saudi Aramco, in its 2014 annual report, spoke of its unconventional gas program as “continuing to gain momentum,” and Mr. al-Naimi added that “the kingdom has made promising shale gas discoveries and acquired the technologies to produce it at a reasonable price.” Notably, in early 2015, Saudi Aramco raised the amount earmarked for its own boom from an original $3-billion (U.S.) to $10-billion.

Venezuela says 'informal' OPEC chat planned before December meeting -  Oil ministers of OPEC nations will hold “candid, informal” talks on Dec. 3, a day before the group’s formally scheduled meeting in Vienna, Venezuela’s oil minister said on Wednesday, adding the idea was suggested by Saudi Arabia. “It’s an informal meeting where we’re going to speak in a very frank way about the market situation, and we’re going to speak frankly about production levels in each country,” Venezuelan Oil Minister Eulogio del Pino told Reuters in a phone interview. Price-hawk Venezuela has been pushing for OPEC action to boost prices. OPEC kingpin Saudi Arabia, however, has rebuffed those calls and is instead focused on defending market share. The informal meeting will be held at the suggestion of Saudi Arabia’s oil minister Ali al-Naimi, del Pino said. “After our calls for the need for OPEC to do something, he himself proposed that we could meet a day before the OPEC meeting to talk, in a candid, informal way, about the situation, what we’re going to do with volumes, what we’re going to do with prices,” added del Pino, who met with Naimi earlier on Wednesday.

How OPEC Just Crushed Oil With One Chart - Just when you thought it couldn't get any worse - amid supply gluts, production surges, market share scrambles, and demand disappointment - it does. OPEC this morning confirmed not only no change in the already weak global demand picture but the current oil inventrory surplus is the largest in at least a decade. This has driven WTI prices down close to a $41 handle this morning (from over $48 a week ago) as simply put, there's too much oil and OPEC's grand strategy for solving this imbalance - pray for a colder winter... Crude is down 7 of the last 9 days... As Bloomberg reports, OPEC's new statement does not bode well for the short- or medium-term future... Surplus oil inventories at highest level in at least a decade on increased global production, OPEC says in Monthly Oil Market report. Stockpiles in developed economies 210m bbl higher than their 5-yr avg Compares w/ 180m bbl overhang in 1Q 2009, which is only other occasion in past 10 yrs when inventory surplus has surpassed 150m bbl Excess supply may be pared in coming mos on slowing non-OPEC supply,rising demand for winter fuels ... Non-OPEC supply to contract next yr for 1st time since 2007; down 130k b/d to 57.11m b/d OPEC keeps 2015, 2016 fcasts for global oil demand unch. And so here, in one simple chart, is why this will not end well... There's too much oil!! Supply and demand growth so far in 2015...

OPEC ready to make needed investments to respond to future needs: secretary general - OPEC Secretary General Abdullah al-Badri said that despite uncertainties, OPEC members were ready to make the necessary investments to respond to the world’s future energy needs. Badri also said that a wave of project cancellations and deferrals in the industry was a “clear demonstration that wide price fluctuations have a detrimental effect on investments and can sow the seeds of future instability”, in a statement on the International Energy Forum’s website. The secretary general said he saw Asia oil demand rising to almost 46 million barrels per day by 2040, an increase of nearly 16 million barrels per day from 2015. Oil-related investment requirements between now and 2040 are estimated at about $10 trillion, he said.

OPEC Challenges Shale Afresh as Iraq Crude Floods U.S. Market - OPEC’s latest challenge to U.S. shale oil producers would be about two miles long, lined end to end, and weigh almost 3 million metric tons. It’s due to reach American ports this month. Iraq, the fastest-growing producer within the 12-nation group, loaded as many as 10 tankers in the past several weeks to deliver crude to U.S. ports in November, ship-tracking and charters compiled by Bloomberg show. Assuming they arrive as scheduled, the 19 million barrels being hauled would mark the biggest monthly influx from Iraq since June 2012, according to Energy Information Administration figures. The cargoes show how competition for sales among members of the Organization of Petroleum Exporting Countries is spilling out into global markets, intensifying competition with U.S. producers whose own output has retreated since summer. For tanker owners, it means rates for their ships are headed for the best quarter in seven years, fueled partly by the surge in one of the industry’s longest trade routes. November crude imports from Iraq will be highest in over three years “In the longer term, we expect the U.S. to have to increase imports next year by some 500,000 barrels to 800,000 barrels a day year on year,” Steve Iraq, pumping the most since at least 1962 amid competition among OPEC nations to find buyers, is discounting prices to woo customers. The U.S. may increasingly become one of them after its own output dropped by as much as 500,000 barrels a day since June. An increase in trade between the two would boost tanker owners. Deliveries take at least 57 percent longer than for those to Asia, the most popular destination. The tanker industry’s biggest ships earned an average of almost $76,500 a day so far in the fourth quarter, which would be the highest since mid-2008 if maintained through year-end, according to data from Clarkson Plc, the world’s biggest shipbroker.

Iraq oil overtakes Saudi in Europe as OPEC battles rage on – IEA -- A market share battle between Russia and OPEC oil producers in Europe is intensifying as Iraq has overtaken Saudi Arabia as the second largest seller there and Iran has already lined up buyers for its crude for when sanctions are lifted. The International Energy Agency cited market sources on Friday as saying Tehran would be able to sell at least an extra 400,000 barrels per day (bpd) to buyers in Asia and Europe when the sanctions are lifted. Customers would include refiners in Italy, Greece and Spain who prefer to use Iranian crude as their baseload feedstock. “For this reason, producers are likely to grow still more competitive on pricing,” the IEA said. Russia has gained market share from OPEC in many Asian markets thanks to a pipeline to the Pacific and China. The shift opened opportunities for rivals in the European markets, traditionally dominated by Russia, and Saudi Arabia has this year sold crude to Polish and Swedish refiners “While the headlines focus on Russia and Saudi Arabia jostling for position on the continent, it is Iraq that has stolen a march on its regional rivals,” the IEA said.

UAE pressing ahead with oil expansion, betting on price recovery – United Arab Emirates, one of the wealthiest Gulf states, is pushing ahead with large new energy projects, betting an oil price recovery will start as early as next year as demand begins to absorb the global glut. “These are times of some hesitancy, times of pain for some … But pain is not new … We will pass it stronger,” energy minister Suhail Al Mazrouei told the UAE’s biggest annual oil show in Abu Dhabi. “That (oil price drop) didn’t change the vision of the UAE … We are not canceling projects,” he added. Oil prices crashed after Saudi Arabia and Gulf allies the UAE, Kuwait and Qatar enforced a decision by the Organisation of Petroleum Exporting Countries (OPEC) to fight for market share with rival producers, abandoning a decade-old policy of cutting output to prop up prices. Prices have more than halved over the past 18 months, and OPEC itself sees the current oil glut persisting well into next year, prompting even the wealthiest OPEC members, like Saudi Arabia, to revise some field development plans. Low prices have also slowed some non-oil projects in the UAE, including the opening of a huge new Louvre museum, while others such as the Abu Dhabi film festival have been canceled. But officials insist that projects in key sectors such as energy, defense and infrastructure continue as planned. On the energy side, the country is pushing ahead with a plan to raise its oil production capacity to 3.5 million barrels per day from the current 3 million within the next two to three years, the head of the national company ADNOC Abdullah Nasser al-Suwaidi said. The UAE is currently producing 2.9 million bpd.

Energy Pipeline: Iran nuclear deal weighs heavy on minds at oil, gas conference— The Iran nuclear deal weighed heavy on oil industry minds in late August as they discussed global and domestic energy policy at the Colorado Convention Center. The 100-page agreement, which would lift sanctions against the country, allowing the country back into the world energy market, and supposedly limit its nuclear powers. It is a deal that’s drawn the ire of many policy makers, and many in the energy industry, and is seeing major opposition in Congress. Speakers attending the Colorado Oil and Gas Associations annual Rocky Mountain Energy Summit, discussed the Iran deal at length, including Colorado’s Sens. Cory Gardner, R-Colo., and Michael Bennet, D-Colo. The two were expected to talk about Colorado’s increased leadership in bipartisan energy leadership but the conversation veered early into the controversial Iran nuclear deal, domestic energy policies and allowing the U.S. to export crude across the globe, bucking decades of energy policy of hording American oil. Many in the oil and gas industry are paying close attention to the Iran Nuclear deal, mostly because it will open up a historic oil and gas field in Iran that some say could put 500,000 to eventually 1 million barrels of oil per day on the market. In a world market that is fueled by an oversupply, mainly in part to the United States’ expanded production in recent years, that’s a scary proposition — especially in an environment where that oversupply has led to decreased prices. In the week of the conference, oil closed under $40 a barrel for the first time in six years.

Oil majors press Iran for sweeter oil terms post-sanctions  – Iran will have to offer lucrative contracts terms to draw back international oil companies at a time when the oil industry is more focused on profitability as it gears up for a longer period of low oil prices, executives said on Tuesday. Iran said in September it had approved a draft of international oil and gas contracts to attract foreign investors and oil buyers once international sanctions are lifted but has not provided details so far. The OPEC member will announce new oil and gas contracts at conferences in Tehran and London on Nov. 21-22 and Feb. 22-24 respectively. “It is not only questions of resources or opportunities, it is a question of profits,” Total’s chief executive Patrick Pouyanne told a conference in Abu Dhabi, capital of the United Arab Emirates. “We will be well positioned to look at opportunities in gas, oil, petrochemicals and marketing. But all that is subject to good contractual conditions, so we will see.”

Making The World A More Dangerous Place - Chris Martenson - Without any doubt, the Middle East has been a very long-simmering region of violent religious and tribal enmity.  In that regard, perhaps today is no different than 1,000 years ago. But given the importance of the remaining oil in the Middle East to the next 20 years of global economic health, the violence and chaos seen there recently is hugely important to the entire world. But it’s also equally without doubt that the US and NATO are inflaming the situation by provoking conflicts and supplying military weapons and training to various extremist groups -- therefore deserving much of the blame for the current tensions, despair and mayhem happening in Iraq, Syria, Yemen, and Libya.  Forget anything you might read about “brutal dictators” that need to go or the importance of “democracy” to the region. That's dumbed-down pablum for the masses and has literally nothing to do with the motivations of the (clinically insane) external power brokers actually driving the events on the ground and crafting the narrative that is faithfully scribed and re-told by the media. In fact, disturbingly often, the scribed narrative is exactly opposite of the truth. If a wider war breaks out between the US/NATO and either Russia and/or China, then massive systemic shocks will result to the economy, oil prices, and the global financial system.

Russia's Rosneft Offers Japan Chance to Join East Siberia, Far East Project -  Rigzone: (Reuters) - Russia's Rosneft, the world's top listed oil producer by output, has offered Japanese companies a chance to join projects in Russia's East Siberia and Far East, Chief Executive Igor Sechin said on Friday. There is a huge potential for cooperation between the two countries, he said, in offering Japanese firms the opportunity to participate in the Verkhnechonskoye, Srednebotuobinskoye, Tagulskoye and Russkoye projects, as well as in other developments already in operation or yet to be launched. "We proposed to our Japanese partners deals with total reserves of six billion barrels and with a resource base of 100 billion barrels," Sechin told an industry symposium in Tokyo. "We would like to work with Japan." Sechin said that with the introduction of improved technology from the Japanese partners, Rosneft has ample room to expand its oil and natural gas output. Japanese exploration companies had huge write-down over the last three years because of investments in hard-to-recover hydrocarbons in the United States and Canada, and unsuccessful projects in the North Sea among others, Sechin said. Instead, he has asked them to invest in Russian projects, whose profitability is well above the global average, Sechin said, although he did not name any of the companies contacted.

China's Oct crude oil imports rise 9.4% on year to 6.23 million b/d - Oil - China's crude oil imports rose 9.4% on year to 26.35 million mt in October, or 6.23 million b/d, preliminary data released by the General Administration of Customs Sunday showed. The October imports were 8.8% lower from September's 6.829 million b/d. China's crude imports in the first 10 months rose 8.9% on year to 274.97 million mt, averaging 6.63 million b/d, down slightly from a rise of 9.2% seen for the year-ago period. China skipped crude exports in October as it had done in October 2014.Total crude exports of 2.29 million mt over January-October were 536.5% higher than the year-ago period. In the first 10 months of the year, net crude imports reached 272.68 million mt, averaging 6.57 million b/d, up 8.1% on year. China exported 3.28 million mt of oil products in October, down 7.6% from the six-year high of 3.55 million mt in September, but still the second highest level since December 2009. Exports were last seen any higher in December 2009 at 3.77 million mt, tracing back customs data till 2005. Exports were also up 4.5% from 3.14 million mt exported in October 2014. Oil product imports fell 11% on year to 2.03 million mt in October, down 24.8% from September.

China power output falls for second month in Oct - stats bureau (Reuters) - China's power output fell for a second month in a row in October, slipping 3.2 percent on a year ago to 445.4 billion kilowatt-hours (kWh), data showed on Wednesday, reflecting a slowdown in industrial demand. Slowing economic growth has hurt demand in downstream industries like steel, with power generation in the first 10 months of the year easing 0.1 percent to 4.651 trillion kWh, according to data from the National Bureau of Statistics. October's decline followed a 3.1 percent drop in September. Stagnant demand has allowed grid firms to reduce the amount of power taken from thermal power plants, which account for about 75 percent of China's generating capacity, as the country tries to ease its dependence on fossil fuels. Thermal power production, predominantly fueled by coal, fell 6.6 percent on a year earlier to 310.7 billion kWh in October. Output was down 2.6 percent for the first 10 months to 3.466 trillion kWh. Hydropower output rose 2.1 percent in October to 99.5 billion kWh, and was up 3.4 percent over the first 10 months at 847.4 billion kWh. Despite a supply glut, China has given environmental approval for the construction of another 155 coal-fired power plants in the first three quarters of this year, according to research from environmental group Greenpeace.

Copper Sinks to Six-Year Low as Chinese Demand Slumps - Copper prices skidded to a six-year low and mining shares tumbled on Monday after China's import data showed declining demand from the world's top buyer of the industrial metal. China's imports of copper and copper products for the first 10 months of 2015 fell 4.2%, to 3.82 millions tons, from the year-earlier period, the country's General Administration of Customs said Monday. Imports are on track for their first year-on-year drop since 2013. "This is further evidence of that slowing in China and that their demand for copper is going to continue to decline," said Paul Nolte, a portfolio manager with Kingsview Asset Management in Chicago. "Obviously, declining demand is going to keep the pressure on copper prices." China accounts for about 40% of global copper demand and the import data highlighted long-running concerns that the country's economic slowdown would translate into lower copper imports. Recent reports showed that Chinese factory activity continues to contract and construction starts lag behind last year's pace. Monday's fall in copper prices rattled the mining sector, which has been battered by a prolonged slump in prices of metals and other commodities. The S&P Metals and Mining Select Index, which tracks the share prices of 30 companies, fell 1% on Monday, bringing year-to-date losses to 46%. Shares of Glencore PLC, one of the world's largest copper producers, declined 5.3%. Copper's selloff has been particularly painful for Glencore, which got 20% of its operating income from copper production in the first half of 2015.

Forget Oil, Base Metals Collapse 50% From 2011 Highs - Bloomberg's global commodities index is testing fresh 16 year lows but this is often excused on the basis that it includes crude oil weakness - which will mean-revert higher any day now. Perhaps the bigger, even louder warning signal is directly from the basest of base industrial metals... which are now down 50% from their 2011 "reflate the world" highs. The index - based on copper, aluminum, zinc, nickel, lead, and tin - is not flashing 'recovery is coming' headlines...

Economist Saul Eslake says the mining boom may be the last ever -- The final commodities boom in "human history" may have just finished, according to prominent economist Saul Eslake. In a gloomy opening to the International Mining and Resources Conference in Melbourne on Tuesday, Mr Eslake said the downturn in mineral commodity prices had probably not reached its nadir, and there was little prospect of the recent China boom being repeated in the future. While the mining industry often touts the future growth potential from urbanisation and development in nations like Indonesia, Vietnam, Pakistan and African giants like Nigeria, Mr Eslake said those nations could not match the population impact of China's recent rise."The countries that are still to develop are much smaller than China and India are, they are not, in most cases, starting from as far back on the development curve as China was in 1979 or India was in 1991, and most of them are much more self sufficient in commodities than China or India ever were," he said. "So it could well be, in my view, that the commodities boom Australia has just experienced in the last 12 or so years is the last of its kind in human history unless unforeseen technological developments ordain otherwise." Mr Eslake said the gloomy outlook meant Australia had to diversify its economy, and he said recent free trade agreements would help but would not alone fix the problem.

China's industrial production falls to six-month low - Telegraph: Growth in China's industrial production, a measure of output at factories, workshops and mines, fell to a six-month low in October, suggesting sustained weakness in the world's second-largest economy. Industrial output increased 5.6pc last month from a year ago, the country's National Bureau of Statistics (NBS) said, the lowest reading since March's identical figure and edging down from a 5.7pc rise in September. It was also below the median forecast of a 5.8pc increase in a survey of economists by Bloomberg News.  The figures come as the world worries about growth in China, a leading engine of global expansion.  Authorities are trying to transform the country's growth model to a slower but more sustainable one driven by consumption rather than infrastructure investment, but the transition to the "new normal" is proving bumpy.  "The marginal fall in October's industrial production growth showed support from the rapid development of new industries was still insufficient while traditional industries were having deep corrections," the NBS said in a statement.  "The industrial economy is still facing downward pressures looking forward."  Overcapacity in manufacturing, a slowdown in the country's property market and mounting local government debt are among the factors that have weighed on growth.

China October economic activity shows downward pressures persist | Reuters: China's factory output growth hit a 7-month low in October while investment expansion slipped to its weakest pace since 2000, signs that further government policy support may be needed to shore up slowing demand in the world's second biggest economy. The one bright spot in tepid October data released Wednesday was an improvement in retail sales, which appear to be keeping the growth rate of the world's second-largest economy from sliding. Chinese leaders have embarked on the most aggressive policy easing since the 2008/09 global financial crisis, but the October numbers highlight persistent headwinds from weak global demand, a cooling domestic property sector and excess factory capacity. "Fiscal policy is likely to become more expansionary next year," said Lin Hu, an economist at Guosen Securities in Beijing. "There will be more interest rate and RRR (reserve requirement ratio) cuts and we cannot rule out the possibility of such cuts within the year." Factory output grew slower-than-expected at an annual 5.6 percent in October, the weakest in seven months, National Bureau of Statistics data showed. That was below a Reuters forecast of 5.8 percent and down on September's 5.7 percent. Fixed asset investment rose 10.2 percent in the first 10 months, in line with expectations but the weakest pace since 2000 and easing from a 10.3 percent gain in the January-

China Retail Sales Up 11% In Highest Rise This Year: Chinese households shrugged off fears of a slowing economy as October retail sales in the country reportedly rose 11 percent -- its fastest expansion this year and a shade above expectations. The data released Wednesday by the National Bureau of Statistics, China, said the expansion was helped by strong sales of mobile phones, building supplies and household products. Analysts polled by Reuters had expected a growth in October retail sales to stay flat at September’s growth rate of 10.9 percent. Once dubbed “the world's factory floor” China's services and retail businesses bucked the trend of tepid industrial data released Wednesday, further highlighting a shift in the country’s economy to a consumer-led model. Consumption accounted for 60 percent of the country’s gross domestic product in the first half of 2015 -- up 5.7 percent from the first six months of 2014. In October, electronic goods, office supplies and furniture sales saw the most growth even as sales of petroleum & petroleum products declined by 7.1 percent.Wednesday’s data reflected the two-speed nature of the economy as Beijing tries to encourage growth based on consumer spending instead of heavy industries, the Associated Press (AP) said.

Shoppers Blew $1 Billion in the First Eight Minutes of the World’s Biggest Online Shopping Spree - Chinese online-retail company Alibaba Group reported record sales over the course of 12 hours on Wednesday as people across China logged on to commemorate Singles Day, an event described as the largest online-shopping event in the world. The BBC reported that $1 billion in sales came in the first eight minutes of the day, and that sales exceeded last year’s total $9.3 billion in just half the time. What began in the early 1990s as an annual celebration of China’s bachelors is now synonymous with retail therapy in the world’s most populous country. In 2009, Alibaba used its online store TMall to reinvent the day as China’s answer to Black Friday or Cyber Monday — the days flanking the weekend after Thanksgiving, when stores across the U.S. and other Western countries use hefty discounts to lure massive waves of shoppers. Following their lead, Alibaba and other online retailers now enjoy hundreds of millions of Chinese customers every year on Nov. 11. The typical Chinese consumer will spend $277 per person, a figure that climbs about 22% every year, Bloomberg reported. Last year, Singles Day became the world’s most profitable sales holiday, Forbes reported. In the U.S., sales during last year’s Thanksgiving frenzy were greater, at $50.9 billion — but that sum was taken over the four-day long weekend, in comparison to the single day of the Chinese event. Black Friday spending was also down 11% from the year before. The nearest U.S. equivalent to Singles Day is Cyber Monday, with sales of $1.35 billion, according to the BBC, which cited data from analytics firm ComScore.

Child genius claims in China driving baby formula demand and hurting Australia's supply: Marketing claims that formula can turn a baby into a child prodigy in China are driving the huge demand that has led to Australian stock being wiped from shelves and flogged on the grey market, an infant feeding academic says. As outrage grows over the shortage, Woolworths has clamped down on bulk purchases, with head office re-issuing an eight-tin per transaction policy on Wednesday, despite being hit with multiple petitions to lower it to four. Dr Karleen Gribble from Western Sydney University said a key reason why Chinese parents were willing to splash $100 for a tin of Bellamy's Organic and A2 Platinum, five times the price in Australia, was because they had succumbed to unethical marketing claims.  "Formula marketers have tapped into this desire to falsely claim their products enhance brain development and health. Child prodigies and sports stars abound in marketing campaigns, and hospitals are recruited to promote formula brands to new mothers in hospitals," she said.

Grasp the reality of China’s rise -- Larry Summers -- In the years ahead, China is likely to account for between one-third and one-half of growth in global incomes, trade and commodity demand, and its significance will only increase... I returned last week from a trip to China with the dispiriting conclusion that the world lacks shared understandings regarding goals for the evolution of the Chinese economy.  The first issue is whether it is the objective of the United States and the global community to see China succeed economically..., or whether it is our objective to contain and weaken China economically so that it has less capacity to mount global threats. This is seen in Beijing as a live question... The world cannot expect economic cooperation from Beijing if its objective is to inhibit Chinese economic performance. ... None of this is to say the United States does not have valid concerns..  Second,... the reforms that are necessary if China is to grow sustainably and strongly over the next decade ... will surely take a toll on growth in the short run. This ... will reduce demand for imports from the rest of the world and raise China’s trade surplus. ... The world is likely to be well-served by recognizing that its deepest interests lie in China pursuing ... reform, even at the expense of modest reductions in China’s contribution to global demand ... and possibly more exchange rate depreciation than we would prefer. ... Finally, the United States’ failure to provide the necessary congressional approval to allow China’s voting power in the International Monetary Fund to rise above that of Belgium’s suggests a troubling indifference to global reality.  Today the perils of the future have much to do with China’s rise and with the worlds of commerce and economics. Let us hope that we find the wisdom to manage them well.

China Posts Lowest Business Sentiment on Record as Deflationary Pressures Rise  -- Markit reports China Posts Lowest Business Sentiment On Record. Data only dates to November of 2009, so that makes sentiment worst since the recovery.  However, sentiment is so low, I it's possible sentiment is worse that any time in the past 20 or even 30 years, had it only been measured. Let's take a look at the report.  The latest Markit Business Outlook Survey signalled the weakest level of optimism amongst Chinese companies since data collection began late-2009. This was highlighted by a net balance of just +17% of firms expecting business activity to rise over the next year, down from a previous low of +23% in June. Average input prices faced by Chinese businesses are expected to rise only slightly over the coming year. A net balance of just +3% of firms forecast higher input costs in October, down from +9% in June, to signal the weakest inflation expectations in the series history. At the sector level, manufacturers anticipate a fall in cost burdens (net balance of -6%). This is the first time deflation has been forecast in the sector since mid-2012. In contrast, service sector companies expect input costs to increase over the next year, though October’s net balance of +14% is the lowest for a year.

China's PPI Drops 44th Month, Chinese Trade Slumps on Waning Demand, Deflationary Pressures -- China's CPI is up a modest 1.3 percent year over year but Producer Prices Fall for 44th MonthChina's consumer inflation moderated again in October, while producer prices declined for the 44th straight month, as falling commodity prices and weak demand add to deflationary pressure. The producer price index (PPI) fell 5.9 percent in October from a year earlier, identical with the decline in September, and slightly more than economists' forecasts of a 5.8 percent drop. The Wall Street Journal reports China’s Inflation Slows in OctoberChina’s consumer inflation dipped further last month due to lower food prices, adding to what economists say are signs of slack demand and slowing in the world’s second-largest economy. China’s consumer-price index rose 1.3% in October last month from a year earlier, according to the government’s statistics bureau. The pace was slower than the 1.6% year-over-year rise in September and a tick down from the median 1.4% gain forecast by 11 economists in a survey by The Wall Street Journal. Prices of goods at the factory gate fell 5.9% in October from a year earlier, matching September’s decline.  “It’s quite clear, China is facing deflationary pressure,”  “The issue is how to revive growth that’s been below target, while restructuring the economy to reduce overcapacity.”

Too big to fail Chinese banks face $400 billion capital call (Reuters) - China's four biggest lenders may have to raise up to $400 billion in new capital to conform with onerous new post-crisis capital rules a global regulator said on Monday they would have to fall into line with. The announcement by international banking watchdog the Financial Stability Board (FSB) represents a coup for Western banks, who had complained that a proposed exemption for emerging market institutions would give China's state lenders an unfair competitive advantage as they continue to expand overseas. The decision could also put pressure on Chinese banks to begin paring back lending at a time when the government is pushing them to prop up growth amid a broader slowdown. The FSB outlined its final rules for ending "too big to fail" banks on Monday, a key pledge made by the G20 after governments spent more than $1.5 trillion rescuing financial firms during the 2008 financial crisis. The reforms require the world's systemically important 30 banks, known as GSIBs, to issue a buffer of capital that can be written down to raise funds if the bank goes bust. This layer of Total Loss Absorbing Capital, or TLAC, is largely comprised of bonds and comes on top of banks' core Basel capital requirements. China has four GSIBs, Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China , and China Construction Bank which was added to the GSIB list only last week.

OECD sees China growth slowing to 6.5 pct in 2016, 6.2 pct in '17 | Reuters: China's economic growth is likely to slow to 6.5 percent next year and cool further to 6.2 percent in 2017, the OECD said, suggesting that policy makers will have their work cut out as the Asian giant adjusts to lower growth from its recent frenetic pace. In its bi-annual economic outlook report released on Monday, the Organisation for Economic Co-operation and Development cautioned that Beijing's fiscal stimulus is not sustainable over the longer run as it risks crowding out much needed private investment. "Additional fiscal stimulus would prop up short-term growth at the cost of increasing imbalances and crowding out private investment," the report said. The OECD, which expects China's economy to grow 6.8 percent this year, also noted that real borrowing costs have continued to rise amid persistent declines in factory gate prices, which is squeezing firms' profits and increasing their debt burdens. The world's second-largest economy grew 6.9 percent in the third quarter from a year earlier, the weakest pace since the global financial crisis, hurt partly by cooling investment and prompting the central bank to cut interest rates for the sixth time in nearly a year.

China loses its top voice at the World Bank - For all but three of the past 18 years the World Bank’s senior management has had a common theme. Serving high in the ranks alongside its US-appointed president — currently Jim Yong Kim — has been a Chinese official, acting as a vital link to Beijing’s leadership and a voice for a country whose influence is rising within the institution. With the departure at the end of this year of its top World Bank official, however, China risks losing that seat at the bank’s top table, introducing another potential irritant into an increasingly sensitive relationship between Beijing and both the bank and its sister organisation, the International Monetary Fund. Jin-Yong Cai, a US-educated economist and former Goldman Sachs banker, is stepping down from the leadership of the International Finance Corporation, the bank’s private sector arm, a year before his four-year term expires. The bank portrays this as the result of normal turnover. The consummate deal maker, insiders say, has for years expressed a desire to return to the more freewheeling private sector. The politics of Mr Cai’s exit are complicated by the fact that it comes amid rumblings among some shareholders about him being too close to Beijing and having pushed to do too many projects with Chinese companies, some of which have proved controversial. A $300m equity investment in the Postal Savings Bank of China was approved by the bank’s board in June, but nine of its 25 voting members including the US, Japan and major European shareholders abstained in protest. But analysts say his departure — and replacement by a European, Frenchman Philippe Le Houérou — is only likely to add to Beijing’s frustration. Europe and the US have had a longstanding hold on the Bretton Woods institutions and China feels it does not get the representation it deserves both as a shareholder and within the institutions’ staff and management.

I.M.F. Officials Back Inclusion of Renminbi in Fund’s Currency - International Monetary Fund staff members recommended Friday that China’s renminbi be included in the fund’s benchmark basket of currencies, a big step forward for the country’s long campaign to turn its currency into one of the pillars of international finance.Christine Lagarde, the managing director of the I.M.F., said that the fund’s executive board would decide on Nov. 30 whether to add the renminbi to the fund’s unit of accounting, which would clear the way for central banks to hold more of it in their reserves.Ms. Lagarde said that she personally supported the renminbi’s inclusion, and noted that the staff’s report on Friday showed that the Chinese government had addressed all of the remaining issues that the staff had identified in July.China’s leadership has turned the renminbi’s inclusion in the I.M.F.’s unit of financial measurement, known as special drawing rights, into one of the highest priorities for its next five-year plan, which starts on Jan. 1. If the I.M.F. board approves the renminbi’s inclusion — and the support of the fund’s staff and managing director makes that much more likely — then the renminbi could join the special drawing rights as soon as Sept. 30.The dollar, the euro, the Japanese yen and the British pound are the four reserve currencies already used to calculate the value of special drawing rights.

Chinese Yuan Should Be an IMF Reserve Currency, Christine Lagarde Says - WSJ: China’s yuan should be included in the elite basket of currencies that comprise the International Monetary Fund’s lending reserves, the head of the IMF said Friday, paving the way for the board to approve the move later this month. Winning IMF reserve-currency status for the yuan would mark a milestone in China’s efforts to establish the country as a global economic power. The move should help the country flex its financial muscle around the world and boost demand by central banks and investors to hold assets denominated in the currency. IMF Managing Director Christine Lagarde endorsed the move after a staff report said Beijing had addressed all remaining operational hurdles detailed in an initial assessment earlier this year. The fund’s staff determined the yuan met both its criteria for reserve-currency status, saying it is both “’widely used’ for international transactions and ‘widely traded’ in the principal foreign exchange markets.” In a statement, China’s central bank said the assessment by the IMF staff is an endorsement of China’s economic development and reform efforts. The People’s Bank of China also said China will continue to overhaul its financial system and open its markets in an orderly way. Economists said the fund’s criteria were vague enough to give the staff wide leeway in determining a currency’s fitness for inclusion, making the decision largely a political one by the IMF’s most powerful member countries. The lending institution’s most powerful members, including the U.S., have already signaled they would back Being’s bid. As a result, the staff’s support green-lights approval by the IMF board at a Nov. 30 meeting.

China apparent steel consumption falls 5.7 percent from January-October: CISA | Reuters: Apparent steel consumption in China, the world's biggest producer and consumer, fell 5.7 percent to 590.47 million tonnes in the first 10 months of the year, the China Iron and Steel Association (CISA) said on Friday. The figure was disclosed by CISA vice-secretary general Wang Yingsheng at a conference. China's massive steel industry has been hit by weakening demand and a huge 400 million tonne per annum capacity surplus that has sapped prices. Producers have relied on export markets to offset the decline in domestic demand, but crude steel output still declined 2.2 percent in the first 10 months of the year, according to official data.

Trade Slumps on Waning Demand - China’s trade with the rest of the world fell sharply in October from a year earlier, with imports of raw materials particularly hard hit as slowing Chinese investment feeds through into weaker demand in the world’s biggest trader of goods.  Chinese imports fell 18.8 per cent in October from the same month a year earlier, a slight improvement from the 20.4 per cent year-on-year fall in September. Sharply lower prices of oil and other commodities also helped scythe the bill.   Exports declined 6.9 per cent in October from a year earlier, deteriorating from the 3.7 per cent fall the previous month as weak global demand and higher Chinese costs led to slumping shipments of the cheap Chinese goods that have flowed to the world in the last decade. At the start of the year, the ruling Communist party set a target of 6 per cent growth in trade for this year but total trade has now fallen by just over 8 per cent in the first ten months of 2015 compared with the same period a year earlier. In the first 10 months of the year, Chinese exports to the US were up 5.2 per cent from the same period in 2014, while exports to countries in Asean were up 3.7 per cent, according to Chinese customs figures. Exports to the EU, Japan and Hong Kong — which serves as a transit point for exports to many other parts of the world — fell by 4.1 per cent, 9.5 per cent and 12.2 per cent respectively.

China October Exports Fall 3.6%; Imports Fall 16% China’s exports declined for a fourth straight month in October, adding to signs of mounting headwinds facing the world’s second-largest economy. Overseas shipments dropped 3.6 percent in October in yuan terms, the customs administration said Sunday, compared with a 1.1 percent decline in September. Imports fell for a 12th straight month, declining 16 percent in yuan terms, after a 17.7 percent decrease the prior month. The trade surplus was 393.2 billion yuan ($61.9 billion). “Chinese exports continue to face structural headwinds due to weak demand in key markets” such as the European Union and Japan,  . "Exports have also been impacted by the more recent growth slowdown in emerging markets, which had become fast-growing markets for Chinese exports in recent years.” The report signals that the People’s Bank of China is still struggling against economic headwinds even after cutting the main interest rate six times in the last year, most recently in October, and a surprise devaluation of the currency in August. The economy grew 6.9 percent in the three months through September from a year earlier, the slowest quarterly expansion since the first three months of 2009, and full-year output is on pace for the weakest growth in a quarter century. Exports to Japan slumped 9 percent in the first 10 months of the year from a year earlier, while those to European Union declined 3.7 percent, according to the statement. Shipments to Hong Kong dropped 11.7 percent during the same period. China’s exports to the U.S., its largest trading partner, jumped 5.8 percent in the first 10 months from a year earlier, while those to the Association of Southeast Asian Nations increased 4.2 percent. Shipments to India rose 8.9 percent. Imports from all 10 of the major trade partners listed by the customs administration declined in the first ten months. Australia’s imports plunged 25.7 percent.

Global Trade, Demand Continues To Dry Up As China's Exports Miss For Fourth Straight Month -- When China moved to devalue the yuan on August 11, there was some debate about whether the PBoC was acting to promote renminbi internationalization (thus bolstering Beijing’s IMF SDR bid) or simply attempting to play catch up in the global currency wars. When you’re the engine of global growth and trade and you’re an export-driven economy, just about the last predicament you want you find yourself in is a situation where your REER is appreciating by double-digits because you’re pegged to a surging currency (yes, that's right, sometimes a better "REER" is a bad thing). Add in the fact that your trading partners are engaged in a global currency war and you have yourself a decidedly untenable scenario.  So, China fired what was perhaps the loudest shot across the bow to date in the ongoing worldwide FX melee and indeed, quite a few analysts and commentators think we haven’t seen anything yet. The ubiquitous of “people familiar with the matter” think Beijing may be targeting a 20% devaluation by the time it’s all said and done.  Still, trillions in DM QE has failed to revive aggregate demand and indeed, lackluster global trade seems to be the new normal, and the weakness appears to be structural and endemic rather than cyclical and transitory. China’s hard landing is both a cause and a symptom of this and given that, it’s not clear that a deval of any size will be enough to jumpstart the Chinese growth engine. Throw in the fact that declining purchasing power (for a citizenry that's already rattled thanks to social tension and an absurdly volatile stock market) invariably leads to import contraction and one might reasonably suspect that trade data out of China will disappoint for the foreseeable future even if the whole “let’s pray for terrible-er-er imports so the current account doesn’t look too bad” helps the optics. Sure enough, we got the latest data out of China on Sunday and the numbers confirmed that i) the deval isn’t a cure-all, and ii) global growth and trade are collapsing.

China warns WTO its cheap exports will soon be harder to resist | Reuters: China has served notice to World Trade Organization members including the European Union and United States that complaints about its cheap exports will need to meet a higher standard from December 2016, a Beijing envoy said at a WTO meeting. Ever since it joined the WTO in 2001, China has frequently attracted complaints that its exports are being "dumped", or sold at unfairly cheap prices on foreign markets. Under world trade rules, importing countries can slap punitive tariffs on goods that are suspected of being dumped. Normally such claims are based on a comparison with domestic prices in the exporting country. But the terms of China's membership stated that -- because it was not a "market economy" -- other countries did not need to use China's domestic prices to justify their accusations of Chinese dumping, but could use other arguments. China's representative at a WTO meeting on Tuesday said the practice was "outdated, unfair and discriminatory" and under its membership terms, it would automatically be treated as a "market economy" after 15 years, which meant Dec. 11, 2016. All WTO members would have to stop using their own calculations from that date, said the Chinese envoy, whose name was not given by a WTO official who spoke to reporters about the meeting.

Trump Was Right About TPP Benefiting China -- David Dayen -- Donald Trump lambasted the Trans-Pacific Partnership at Tuesday night’s Republican presidential debate, contending that China would use it to “take advantage of everyone” — generating snickers from journalists and a withering refutation from Rand Paul, who said “we might want to point out that China is not part of this deal.”  The TPP does indeed allow China and other non-members to reap benefits from the deal without having to abide by any of its terms. Here’s how it works: TPP and other free trade deals allow signatories to exchange goods without tariffs. But we live in a complicated world, with source materials derived from one country often traveling through a supply chain to another and completed in a third before moving to a retail market. To cope with this, TPP adds a “rule of origin” chapter to determine whether an amalgamated good qualifies for tariff-free status. This is particularly important in Southeast Asian nations like Vietnam or Malaysia, which get a significant amount of production materials from China. TPP says that all materials that go into a good, outside of a de minimis 10 percent, must derive from TPP countries. However, there are numerous exceptions and exemptions, along with a confusing set of calculations to determine eligibility. Through these cracks in the agreement, as Trump alluded, China can deliver goods to TPP countries without tariffs. Each product has a specific rule of origin that sets the level of non-TPP material that can be incorporated in a good. The chapter designating which products require which percentages only lists numbers instead of product names, which have to be converted using the international Harmonized Schedule of tariffs.. While the final calculations must follow basic accounting principles, they will be by definition inexact, so even more than 60 percent of a good, in reality, could come out of a non-TPP member like China.

Arctic shipping prospects get boost from Chinese shipper, Korea-Iceland partnership - The extent of Arctic sea ice this October was the sixth-lowest on record, according to a National Snow and Ice Data Center release last week — in a year in which the overall seasonal low reached its fourth-lowest extent on record in September. Figures such as those have fueled renewed interest in Arctic shipping, which has grown steadily in recent years, until last year, when it suffered a sharp one-year decline. Figures for 2015 aren’t yet available, but the Arctic will likely see an increase in the number of ships operating in the region. It also brings word from China’s largest shipping company, Cosco, that it will launch regularly scheduled shipping services along Russia’s Northern Sea Route. South Korea and Iceland are among the nations eyeing such a route. Presidents of both countries agreed at a meeting Monday in Korea to establish an Arctic Ocean shipping route together, the Korea Times reports. According to the Korea Herald, such a route between Korea and Europe could be available year-round by 2030, and would shave sailing time for Korean cargo vessels by about 10 days.

Indonesia Invokes International Tribunal in South China Sea Dispute - WSJ: Indonesia could take China to an international tribunal if Beijing’s South China Sea territorial claims, which include Indonesia’s resource-rich Natuna islands, aren’t resolved through dialogue, Jakarta’s chief security minister said Wednesday. Luhut Pandjaitan, a former general now in charge of Indonesia’s coordinating ministry of political, legal and security affairs, said in a public forum that Indonesia’s small Natuna islands on the southern edge of the South China Sea could be affected by China’s maritime claims. The sprawling archipelago nation lies mostly to the south of the South China Sea, but the Natunas lie within the “nine-dash” line that China has used on maps, based on historical claims, to assert territorial rights to nearly the entire sea, bringing it into dispute with other claimants, chiefly Malaysia, Vietnam, the Philippines and Brunei. Mr. Pandjaitan, one of the most influential members of Indonesian President Joko Widodo’s government, said China’s line lacks a legal basis but it could affect the Natunas, an area rich in oil and gas. “We would like to see a solution on this in the near future [through] dialogue,’’ Mr. Pandjaitan said. He didn't give a deadline. Otherwise, Jakarta could take the case to an international tribunal, he said, a measure that is already being undertaken by the Philippines and has angered Beijing. “This is, I think, the best solution instead of power projections,” said Mr. Pandjaitan.

Japan summer bonuses fall the most since global financial crisis - Japanese summer bonuses fell the most since the global financial crisis even as monthly pay rose for a third straight month in September, government data showed on Monday, underlining concerns about tepid wages and private consumption. Real wages, adjusted for inflation, rose 0.5 per cent year-on-year in September, up three months in a row, as nominal wages outpaced tame inflation, the labour ministry data showed. Policymakers are putting pressure on Japanese firms to use their record cash piles to boost wages and capital expenditure in a bid to generate private sector-led growth and accelerate inflation to the central bank's ambitious 2 per cent target. Summer bonuses paid during the June-August period came to 356,791 yen ($2,897.68) on average, down 2.8 per cent from the same period last year, the biggest drop since 2009. Labour ministry officials attributed the decline in summer bonuses to the change in data sampling adopted in January, the retirement of well-paid elder workers, and a rise in part-timers who now account for 30 per cent of wage earners.

Japan’s national debt to exceed 1,000tr yen: – The Japanese government’s debt is expected to reach just over 1,167 trillion yen ($9.469 trillion) in the 2015 fiscal year, according to data released by Japan’s finance ministry on Tuesday. This translates to about 8.3 million yen per Japanese citizen. The ministry said overall public debt is likely to reach the projected amount despite a reduction of almost 3 trillion yen during the June to September period. The 2015 fiscal year in Japan lasts from April 1 this year to March 31, 2016. The ministry data comes as Prime Minister Shinzo Abe’s administration has pushed back plans for additional sales tax hikes to 2017. In 2014, the government raised taxes by 3 percentage points to 8 percent.

Japan business mood dips as economy seen in recession - - Confidence among Japanese manufacturers fell in November for a third straight month to levels unseen in about 2-1/2 years, a Reuters poll showed on Wednesday, reflecting fears that a China-led slowdown in overseas demand may have pushed the economy into recession. The service sector mood also soured as sectors such as retail took a hit from weakness in private consumption, which accounts for about 60 percent of the economy, underscoring just how tepid economic recovery is in the absence of a growth engine. The monthly Reuters Tankan, which closely tracks the Bank of Japan's tankan quarterly survey, showed both manufacturers' and service-sector sentiment is seen largely steady over the next three months, reflecting uncertainty about the outlook. The poor poll results will be followed by government data out on Monday, which is expected to show the economy slipped back into recession through September due to a drop in capital spending in the face of weak foreign and domestic demand. "The possibility is high that Japan has fallen into a recession. The economy will likely return to growth in the current quarter but any rebound won't be strong,"

Japan machinery orders point to tepid rebound from feared recession | Reuters: Japan's core machinery orders rose in September for the first time in four months, but companies forecast only modest gains in orders in October-December, a sign the economy's recovery from an expected recession could be slow. Core machinery orders, a leading indicator of capital expenditure, rose 7.5 percent in September versus the median estimate for a 3.3 percent increase, and followed a 5.7 percent decline in the previous month. However, companies forecast orders will rise 2.9 percent in October-December, which is a small rebound from a 10.0 percent decline in July-September. A separate Reuters survey also showed companies do not expect growth to pick up until next year. Many policymakers are counting on gains in business investment to create new jobs, increase productivity and drive growth, so the machinery orders data suggest the government still faces an urgent task in convincing companies to invest. "Companies are taking a very cautious stance toward capital expenditure," Core machinery orders, which exclude those for ships and power generators, rose in September due to gains in orders for equipment used in construction, chemicals and public transport sectors, Cabinet Office data showed on Thursday.

Learning from Japan: It's Hard to End a Deflation —  Several central banks are having trouble creating inflation.   As has been the case for some time, Japan is blazing the trail into the monetary and fiscal unknown. Today’s Bank of Japan’s (BoJ) leadership is far more determined to promote price stability than its predecessors over the past two decades. But the deflationary hole that Japan is climbing out of is so deep that the BoJ may need some help. Unfortunately for them, the government’s fiscal position is among the worst in the OECD. Consequently, while the central bank seeks to stimulate the economy and hit a 2% inflation target, households and businesses reasonably anticipate a long period of fiscal consolidation. From its inception in early 2013, Abenomics had three arrows: monetary, fiscal and structural. Since Haruhiko Kuroda succeeded Masaaki Shirakawa as the Governor in March of that year, the BoJ’s balance sheet has more than doubled from ¥165 trillion (33% of today’s ¥500 trillion GDP) to ¥366 trillion (73% of GDP). And, the central bank remains committed to purchasing ¥80 trillion per year (16% of GDP) of Japanese Government bonds (JGBs), in line with its“Quantitative and Qualitative Easing Policy” (QQE) begun in October 2014.

Bank of India sinks to Q2 loss as bad debts jump -- Bank of India, the nation's third biggest state-run lender, sank to a quarterly net loss as bad loans spiked, forecasting difficult months ahead while it tightens efforts to claw back debt. The bank, which had been expected to report a modest profit, instead on Monday reported a 11.26 billion rupee ($169.6 million) net loss for the second quarter to the end of September. Much of the damage was caused by what it termed "spillover" provisions, which should have been accounted for in the last fiscal year. "We'll definitely have a challenging time over the next 2 to 3 quarters," said Melwyn Rego, who took over as the bank's chief executive in August. Rego is one of a group of new bosses appointed to India's largest state-run banks. Investors have been looking for signs that India's state banks are getting to grips with their worst bad debt burden in a decade. But while there have been signs of improvement in some banks' second quarter earnings -- including at the country's largest lender State Bank of India -- others point to a more uneven recovery. "With the improving macroeconomic scenario and the fact that we have taken already a large portion of the hit, I do not see any major risks coming up,"

Indian companies struggle to escape debt burden as profit slows | Reuters: Core profit growth at India's top companies has slowed down sharply from last year's levels, hampering efforts to cut debt in one of Asia's most leveraged corporate sectors and dampening the private investment needed to spur sluggish economic growth. With a majority of Indian companies already reporting financial results for the quarter to end-September, 53 top firms have shown collective 9.4 percent growth in core profit, the slowest since January-March 2013, according to Thomson Reuters data. That compared with average quarterly profit growth of 16.9 percent in the previous financial year that ended in March, the data showed. Slowing profit growth will weigh on spending by the companies, which, analysts say, are already utilising the majority of their operating profit to service interest costs. Debt for India's 963 companies covered by Thomson Reuters StarMine reached more than $640 billion, or more than 40 percent of India's gross domestic product. Disappointment over earnings has helped send Indian shares down for two consecutive weeks now and pushed the broader market into negative territory for the year, with the main index down about 5 percent. "The ability to service debt, as measured by interest coverage, is continuing to deteriorate,"

Inflation likely climbed in Oct, Sept factory output growth slowed | Reuters: Inflation in India probably edged up in October as food prices climbed while weak demand is expected to have hurt factory output growth the month before, a Reuters poll found. India's price rises have been fairly muted this year, giving the Reserve Bank of India room to ease policy aggressively, amid wider concerns about a global slowdown. Consumer prices are expected to have risen 4.82 percent in October from a year earlier, faster than September's 4.41 percent increase but still below the RBI's January 2016 target of 6 percent, leaving some room for further interest rate cuts. "We are seeing a general disinflationary trend in the economy," said Bhupesh Bameta, economist at Quant Capital. "Part of that will be offset by pulse prices. Overall we are seeing some uptick, but not a very significant one. "If the disinflationary trend remains intact then by the next policy meeting there will be a chance of a rate cut."

Rising food prices to hit rural India in 2016 (Reuters) - India's villages face a sharp spike in food prices in 2016, as a second year of drought drives up the cost of ingredients such as sugar and milk, and poor transport infrastructure stops falling global prices from reaching rural areas. India's first back-to-back drought in three decades also complicates government spending calculations as Prime Minister Narendra Modi tries to prune a subsidy regime that has long propped up the rural economy, and he can ill afford to alienate rural voters after a bruising weekend electoral defeat in the northeastern sate of Bihar. It is bad news for the central bank, too, which faces a conundrum achieving its 4 percent inflation target for the medium term as levels diverge in town and country, and infrastructure development would take years to fix it. India's overall retail inflation eased to 4.41 percent in September, helped by falling commodity prices, but rural inflation was at 5.05 percent, mostly due to food prices. That, some analysts argue, could worsen, despite the dampening effect of lower wages and sluggish growth in the agricultural sector. "The impact of this year's drought will cut supplies of sugar, milk and vegetables, which the market hasn't factored in yet fully,"

A toxic brew of ballooning Asian household debt - Asian household debt levels have surged thanks to monetary stimulus programmes designed to buttress economies from the worst of the 2007-2008 financial crisis. Now that bill is coming due and it is leaving policy makers with a difficult question; how to cut debt levels and grow the economy? Its a question to which there may be no easy answer. As US and European central bankers have discovered, a painful deleveraging process involving slow or negative growth as loans are paid down and debts written off, is often the only way. “Slowing growth and slowing inflation and a big stock of creates a very toxic cocktail,” said Rob Waldner, chief strategist and head of global macro at US fund manager Invesco and who is underweight emerging markets. Emerging market household debt as a percentage of gross domestic product has risen from 110 per cent in 2007 to 155 per cent last year, Invesco data shows, with domestic credit expanding between 40 and 50 per cent in China and South Korea. By comparison, over the same time frame, household debt has fallen in the US, and is now holding steady in Japan and the Eurozone.Boosted by easier access to credit cards and consumer loans, consumer debt as a share of personal disposable income in now higher in Singapore, South Korean and Malaysia than it was in the US before the financial crisis,

GE to Supply 1,000 Locomotives to Indian Railways - GE announced today it will invest $200 million to develop and supply Indian Railways with 1,000 diesel locomotives. The company received a Letter of Award from the Ministry of Railways for a locomotive supply and maintenance contract, worth approximately $2.6 billion over 11 years. The deal advances the Make in India initiative and reinforces Indias position as a global manufacturing destination. The largest deal in GEs 100-year history in India, the company will build a diesel locomotive manufacturing facility in Marhowra district in the Indian state of Bihar, as well as maintenance sheds at Bhatinda in Punjab and Gandhidham in Gujarat. This effort is a major boost to Indias railway modernization efforts, and will provide skill development opportunities for local talent. This infrastructure project is further evidence of Indias position as a growth engine for Asia, said GE Chairman and CEO Jeff Immelt. It is a major advancement and milestone for India and for GE, and a symbol of our commitment and support of the Make in India initiative. Last year, the Government of India allowed 100 percent Foreign Direct Investment (FDI) in the railway sector. The Marhowra diesel locomotive project marks one of the first major instances of FDI in enhancing Indias rail locomotive capacity.

India Reports Weaker Industrial Production, Rise in Inflation - India's industrial output growth slowed to its weakest rate in four months in September while inflation accelerated to its highest level in as many months in October, an indication of the challenges facing policy makers looking to boost growth in Asia's third-largest economy. Industrial production, a measure of output in the manufacturing, mining and utilities sectors, rose 3.6% from a year earlier in September, government data showed Thursday. That fell short of the 5.0% increase predicted by economists polled by The Wall Street Journal, and was much weaker than the 6.3% rise in August. The result could strengthen calls for India's central bank to cut rates again before the end of the year, but with inflation ticking up for the third straight month, policy makers in New Delhi are likely to take a cautious stance, following a bigger-than-expected half-percentage-point cut in late September. Output weakened across many sectors. Manufacturing, which has a 75% weight in industrial production, grew 2.6%, following August's 6.6% increase. Mining growth also slowed to 3.0% from 4.2%. However, electricity production bucked the trend, rising 11.4% in September, stronger than the 5.6% increase in August. Separate data showed consumer price inflation accelerated to 5.0% from a year earlier in October due to costlier food. That was higher than the 4.8% increase predicted by economists. A 14% shortfall in rainfall during India's June to September monsoon season is expected to hurt farm output and drive up food prices. The Reserve Bank of India predicts inflation will accelerate to 5.8% by January.

What An Industrial Depression Looks Like: Photos From An Australian Heavy-Machinery Auction -- Two weeks ago, when looking at the latest Caterpillar retail sales data... ... we said that "If Caterpillar's Data Is Right, This Is A Global Industrial Depression." Today we get visual evidence of this, courtesy of an Australian heavy industrial equipment auction where machines such as a Caterpillar 992C wheel loader, which normally costs $2.9 million, can now be bought for just $15,000, a 95% discount! As Australia's ABC reports, now that the commodity bubble has burst for good, auctioneers are hard at work selling tens of millions of dollars of suddenly useless coal mining machinery for just a fraction of its original market value. The reason is known: the severe downturn in the Australian resources sector (courtesy of China's whose commodity imports are declining with every passing month) has led to a massive oversupply of equipment, and much of it is unsuitable for use in any other industry. This means unwanted excavators, trucks and sundry heavy machinery will end up as scrap, if not sold at auction. ABC's reporter visited just one such auction in New South Wales, which was owned by Big Rim, a mining services contractor which also collapsed after the miners it serviced also closed. What he saw was stunning: "We had 20 trucks in the Hunter Valley recently that 18 months ago were probably worth $600,000 each. We've just cut 'em up, returned about $40,000."  And this is what an industrial depression looks like in numbers:

  • Was: $2.9m | Now: $15,000: Caterpillar 992C wheel loader
  • Was: $1.4m | Now: $50,000: Hitachi EX1200 hydraulic excavator
  • Was: $2.7m | Now: $46,000: Caterpillar D11N crawler tractor

Reports: Rioters take over Australia′s Christmas Island detention center - Fences were torn down and fires broke out at Australia's Christmas Island detention center early Monday. Following the death of an asylum seeker at the facility, rioters allegedly took control of the compound as security guards fled. Canberra said it was not aware of injuries on the remote Indian Ocean territory, but that it could "confirm a disturbance at Christmas Island Immigration Detention Center," according to a statement. "The department and its service providers are working together to resolve the situation," the statement continued, without elaborating further. One detainee told Radio New Zealand (RNZ) that the catalyst for the riot was the discovery on Sunday of the body of an Iranian Kurdish asylum seeker, identified by the Australian media as Fazel Chegeni. "We're sick of it. We see it all the time: people trying to hurt themselves, kill themselves," the detainee told RNZ. He asked to remain anonymous, but spoke with a New Zealand accent. RNZ also reported that the rioters had armed themselves with bats and poles to resist attempts by guards to retake the compound.

The end of the latest deflation scare - Gavyn Davies The latest and, so far, the most severe scare about global deflation started with the oil price collapse in mid 2014, and reached its peak with the sharp drop in global industrial production in mid 2015, swiftly followed by the Chinese devaluation episode in August. Fears of an imminent slide towards a global industrial recession haunted the markets, and both expected inflation and bond yields in the advanced economies approached all-time lows. But, just when everything seemed so bleak, the flow of economic information changed direction. Global industrial production rallied, and China stabilised its currency. On Friday, the US jobs and wages data were much stronger than expected. Inflation data in the advanced economies have passed their low points for this cycle, and the rise in headline 12-month inflation in the next three months could surprise the markets. This certainly does not mean that the repeated warnings of the inflationistas will suddenly be proved right. It may not even mean that long-run deflationary pressures in the global economy have been fully overcome: global growth rates are still below trend, and spare capacity is rising in the emerging world. But the peak of the latest, commodity-induced deflation scare is in the past. There are several reasons for believing that inflation expectations will shift away from deflation in the coming months:

  • 1. Global industrial production has started to rebound
  • 2. Inflation rates in the advanced economies have stopped falling
  • 3. Inflation expectations in the markets have started to rise again
  • 4. China devaluation risk has abated for now

A Step Forward for Sovereign Debt - Stiglitz and Guzman - Every advanced country has a bankruptcy law, but there is no equivalent framework for sovereign borrowers. That legal vacuum matters, because, as we now see in Greece and Puerto Rico, it can suck the life out of economies.  In September, the United Nations took a big step toward filling the void, approving a set of principles for sovereign-debt restructuring. The nine precepts – namely, a sovereign’s right to initiate a debt restructuring, sovereign immunity, equitable treatment of creditors, (super) majority restructuring, transparency, impartiality, legitimacy, sustainability, and good faith in negotiations – form the rudiments of an effective international rule of law.   The overwhelming support for these principles, with 136 UN members voting in favor and only six against (led by the United States), shows the extent of global consensus on the need to resolve debt crises in a timely manner. But the next step – an international treaty establishing a global bankruptcy regime to which all countries are bound – may prove more difficult. Recent events underscore the enormous risks posed by the lack of a framework for sovereign debt restructuring. Puerto Rico’s debt crisis cannot be resolved.  In the case of Argentina, another US court allowed a small minority of so-called vulture funds to jeopardize a restructuring process to which 92.4% of the country’s creditors had agreed. Similarly, in Greece, the absence of an international legal framework was an important reason why its creditors – the troika of the European Commission, the European Central Bank, and the International Monetary Fund – could impose policies that inflicted enormous harm. But some powerful actors would stop well short of establishing an international legal framework. The International Capital Market Association (ICMA), supported by the IMF and the US Treasury, suggests changing the language of debt contracts. The cornerstone of such proposals is the implementation of better collective action clauses (CACs), which would make restructuring proposals approved by a supermajority of creditors binding on all others.

OECD cuts world growth forecast -- A dramatic slowdown in world trade, prompted by shifts in China and other emerging markets, risks weighing down the global recovery, the Organisation for Economic Co-operation and Development has said. The Paris-based group of mainly developed economies cut its growth forecasts, predicting the world economy will expand by 2.9 per cent this year and by 3.3 per cent in 2016. This compares with earlier projections of 3 per cent and 3.6 per cent respectively. The downward revisions, in the OECD’s twice-yearly Economic Outlook, come only weeks after the International Monetary Fund said the world economy would grow at the slowest pace since the crisis. Fears over the state of the Chinese economy have jolted markets since the summer, prompting the Bank of England to delay a much-anticipated rise in interest rates. The US Federal Reserve has also held off increasing borrowing costs for the first time since the crisis but economists now increasingly expect it to do so at its meeting next month. “Global growth prospects have clouded this year,” the OECD said. It added that many countries might need to reassess monetary and fiscal policy because of increasing signs that underlying growth would not be as strong as expected. In particular, OECD economists emphasised the “dramatic slowdown in global trade growth”, which is expected to be just 2 per cent this year, compared with 3.4 per cent in 2014 and far more in the early years of the decade. Trade has generally increased at such meagre rates only when growth has also disappointed.

OECD cuts global growth forecasts amid 'deep concern' over slowdown - BBC News: A "deeply concerning" slowdown in trade, particularly with China, will lead to lower global economic growth this year, says the Organisation for Economic Co-operation and Development. Global GDP is now expected to grow by 2.9%, down from 3% forecast in September, but will hit 3.3% in 2016. The OECD said trade had dropped to levels perilously close to those "associated with global recession". Worldwide trade growth is forecast at 2% this year, down from 3.4% in 2014. Catherine Mann, the OECD chief economist, said: "This is deeply concerning. Robust trade and global growth go hand in hand." Calling world trade a "bellwether for global output", she said sluggishness in Europe had now been replaced by weak growth in emerging markets. China, the world's largest trader of goods, seemed to be "at the heart of this" as its economic slowdown had hit other Asian economies and commodity exporters, she said. The OECD has repeatedly cut its 2015 global growth outlook from the 3.7% it initially forecast last November.

World flirts with global recession as trade growth slows, warns OECD - The Organisation for Economic Co-operation and Development (OECD) has urged George Osborne to rethink cuts that will disproportionately hit the poor, as it trimmed its world growth forecasts and warned that trade was slowing to a pace usually associated with a global recession.  As the Chancellor prepares to present his Autumn Statement and Comprehensive Spending Review later this month, the OECD welcomed Mr Osborne's decision to smooth out the pace of austerity across the next five years with a "commendable reduction in the downward pressure on public services".  Mr Osborne is currently scrambling to find new ways to save £4.4bn after the House of Lords rejected legislation to slash working tax credits. On Monday, he announced that four government departments including the Treasury had agreed 8pc annual spending cuts until the end of the decade.  However, the OECD called on MPs to ensure the distribution and pace of cuts to benefits and government departments were balanced. "The authorities should continue to review the distributional effects of budgetary adjustments to ensure growth is inclusive," it said in its latest economic outlook. "The growth rates of global trade observed so far in 2015 have, in the past, been associated with global recession." Catherine Mann It came as the Paris-based think-tank trimmed its forecast for global growth to 2.9pc this year. This represents the slowest pace of expansion since 2009 and is down from its previous projection of 3pc. Growth in 2016 is expected to rise to 3.3pc, although this is weaker than the 3.6pc growth the OECD predicted just two months ago. Trade growth was expected to reach just 2pc this year, with China's slowdown "at the heart" of subdued forecasts.

Rand's Record Fall Adds Pressure on South Africa's Central Bank -- South Africa’s rand plunged to a record against the dollar on Tuesday, increasing pressure on the central bank to raise borrowing costs at a policy meeting next week. The currency weakened as much as 0.6 percent to 14.3827 per dollar, before erasing the decline to gain 0.1 percent to 14.2835 by 5:25 p.m. in Johannesburg, paring its slump this year to 19 percent. Yields on benchmark government rand bonds due December 2026 fell 2 basis points to 8.59 percent. Reserve Bank Governor Lesetja Kganyago left the benchmark repurchase rate at 6 percent in September after the MPC raised borrowing costs by a total of 1 percentage point since last January and may do so again on Nov. 19 as the rand’s decline risks boosting inflation. Forward-rate agreements, used to speculate on interest rates, are predicting a more than 55 percent chance of a quarter percentage-point increase in the policy rate to 6.25 percent. “We’re going to be at the mercy of the dollar if they don’t do anything next week,” Ion de Vleeschauwer, chief dealer at Bidvest Bank in Johannesburg, said by phone. “And 25 basis points won’t do much for the rand. If they are going to do something they need to act aggressively and do 50 basis points.”

Jump in emerging market household debt raises red flags- IIF -- An estimated $6.2 trillion jump in emerging market household debt should stir regulators into action, given the red flags raised by rising problem loans and slowing economic growth, the Institute of International Finance said in a report. The IIF estimated that combined global household debt was now more than 44 trillion and that $6.2 trillion of a $7.7 trillion rise in the amount since 2007 - prior to the global financial crisis - was in emerging markets. That equated to a rise in those regions of more than 120 percent to around $3,000 per adult, according to latest data. These increases in the context of slowing growth in emerging economies and combined with a sharp rise in corporate debt, has contributed to an increase in the level of problem loans in many EM banks, most notably in Asia, the IIF said. "With slow growth and deflation risk stalking the global economy, the relatively high level of debt in these countries could become a burden," the report said. "As such, these situations need to be monitored closely (by authorities and regulators) and addressed."

Emerging markets face debt boom just as growth slows down - Emerging market debt has boomed in the past decade and shows little sign of slowing down – even as the world economy is slowing as China’s long boom appears to be stuttering. Corporate debt in emerging markets stands at $23.7 trillion, according to the Institute of International Finance (IIF), five-times higher than a decade ago. In relative terms, that is up from 57pc of GDP at the end of 2005 to 89pc now. As a result, overall debts in emerging markets now stand at 195pc of GDP.The rise has been driven largely entirely by corporate debt – government debt has barely budged in relative terms from 41pc of GDP at the end of 2005 to 42pc now, while financial sector debt is up from 25pc to 31pc and household debt has risen from 19pc to 32pc. In cash terms, household debts have tripled in the 18 emerging markets included in the study. The emerging market boom is manly taking place in Asia, where non-financial firms’ debt has jumped from 82pc of GDP to 125pc in a decade. Latin American corporate debts are up from 19pc of GDP to 35pc, while the Middle East and North Africa is up from 28pc to 38pc. The figures are in stark contrast to the rich world, where corporate debt has risen more slowly from 80pc of GDP to 90pc, and it is government debt that really soared, rocketing from 69pc to 101pc.

Developing Market Debt Hits $58.6Tn on Bailout Mania | Phil Davis: Here's another thing we can pretend doesn't matter. Emerging-market debt has grown $28Tn since 2009, according to the Institute of International Finance, which on Monday introduced a database tracking 18 developing markets. Global debt has soared $50Tn during the period to surpass a total of $240Tn, or 320% of global gross domestic product, in early 2015. That's right, the Planet Earth is now more than 3 TIMES it's annual gross salary on debt! Non-financial corporate sector debt in emerging markets has risen $13Tn since 2009, increasing more than five-fold over the past decade to surpass $23.7Tn in the first quarter of 2015. The advance has been most concentrated in emerging Asia, where it rose to 125% of GDP. As noted in the chart above, OVER 100% of the GDP growth since 2007 has simply been more debt: more stimulus, more bailouts, more ZIRP policies by our Central Banksters - all masking NEGATIVE real economic growth.Take China... please.   Today we got a NEGATIVE 5.9% reading in their PPI Report with CPI up just 1.3% - clearly in a deflationary state yet The State continues to claim the economy is growing at a 6.9% annual pace.  That is totally and completely B*LLSH*T and shame on you for putting up with it! 

Why the Mighty BRIC Nations Have Finally Broken -- Turns out, emerging economies aren't all they're cracked up to  The BRICS–those once hot emerging markets including Brazil, Russia, India, and China–have been beleaguered for some time. Brazil and Russia are in full blown recessions, China is trying to stave off a big slow down, and India, while still of interest to global investors, is struggling to put through the economic reforms that would help it reach its full potential. No wonder then, that Goldman Sachs, whose former chief economist Jim O’Neill coined the term BRIC to encompass the world’s emerging market darlings, has quietly closed down its BRIC fund, which had lost 88% of its asset value since 2010, and folded the BRIC investments into its larger emerging market funds.The BRICs, it seems, are finally broken.So what does this tell us about the emerging market story as a whole? For starters, the end of the BRIC era really isn’t a surprise. Ruchir Sharma, the head of emerging markets for Morgan Stanley Investment Management, really called it in his 2012 book, Breakout Nations. As he put it then, the slowdown of the BRICS shouldn’t be a surprise because it is hard to sustain rapid growth for more than a decade. The unusual circumstances of the last decade made it look easy: coming off the crisis-ridden 1990s and fueled by a global flood of easy money, the emerging markets took off in a mass upward swing that made virtually every economy a winner. By 2007, when only three countries in the world suffered negative growth, recessions had all but disappeared from the international scene. But now, there is a lot less foreign money flowing into emerging markets. The global economy is returning to its normal state of churn, with many laggards and just a few winners rising in unexpected places. The implications of this shift are striking, because economic momentum is power, and thus the flow of money to rising stars will reshape the global balance of power.”

Analysts Forecast Inflation Near Ten Percent in Brazil in 2015 -- Financial analysts have increased once again inflation forecasts for this year and next. According to the latest Focus Survey, released by the Central Bank, Brazil’s IPCA (Consumer Price Index) will close 2015 at 9.99 percent this year and 6.47 percent at the end of 2016.  This is the eight consecutive time analysts have increased their forecast for 2015 and the fourteenth consecutive week the 2016 forecast has gone up. Next year’s forecast puts inflation very near to breaking through the government’s IPCA target ceiling of 6.5 percent. According to Central Bank officials inflation should only return to the center of the target, 4.5 percent, in 2017. Previously the return of inflation to the center of the target was expected already next year.  With the increase of inflation, analysts also predict further deterioration of the country’s economic growth. According to the survey Brazil’s economy should now retract by 3.10 percent this year. The previous forecast had been of a decline in GDP of 3.05 percent. Forecasts for next year are also deteriorating, from a retraction of 1.51 percent to 1.9 percent. One of the actions taken by the government to bring inflation down was to increase the country’s benchmark interest rate (Selic). The Selic rate which at the beginning of 2015 was at 11.75 percent per year has been increased five consecutive times this year, holding now steady since September at 14.25 percent per year.  Analysts forecast that it will remain at this level until the end of 2015, and for the end of 2016 the forecast is for a slight reduction, to 13.25 percent. The last meeting of the year by the Monetary Policy Council (COPOM), entity which decides the Selic rate, is scheduled for November 24 and 25.

Brazil's GDP Seen Contracting 3.10% in 2015, 1.90% in 2016 - Central Bank Survey - Economists in Brazil lowered their forecasts for the country's economic performance this year and next year, according to the weekly survey by the Central Bank of Brazil. Gross domestic product will shrink 3.10% this year, according to the median estimate of 100 economists. Last week the estimate was for a contraction of 3.05%. It was the 17th consecutive decline. The median forecast for 2016 was for GDP to shrink 1.90%, compared with 1.51% last week, the fifth decline in a row. The median estimate for inflation for 2015 rose to 9.99% from 9.91% last week, and for 2016 the forecast rose to 6.47% fm 6.29%. The forecast for the central bank's benchmark Selic interest rate at the end of this year was unchanged at 14.25%, where it stands today. The economists forecast a Selic rate of 13.25% for the end of 2016, up from 13% last week. The minutes from the central bank's most recent monetary policy meeting, published two weeks ago, indicated the central bank has abandoned its goal of getting 12-month inflation down to its target of 4.5% by the end of next year. In the 12 months through October, Brazil's consumer price index reached 9.93%.

Obama's Trade Deal Will Bankrupt Canada's Farming Industry "Overnight", Expert Says - Earlier this month, in “Forget China: This Extremely "Developed" Country Just Suffered Its Biggest Money Outflow Ever,” we took a close look at Canada, where slumping crude prices are beginning to take a serious toll. As we noted, citing BofAML, Canada’s basic balance - a combination of the capital and the current account: a measure of national accounts that spans everything from trade to financial-market flows - swung from a surplus of 4.2% of GDP to a deficit of 7.9% in the 12 months ending in June. That’s the fastest one-year deterioration among 10 major developed nations. Citing Sharma's data Bloomberg wrote that "money is flooding out of Canada at the fastest pace in the developed world as the nation’s decade-long oil boom comes to an end and little else looks ready to take the industry’s place as an economic driver." In fact, based on the chart below, the outflow is the fastest on record. Well now, on the heels of the Obama administration's rejection of the "dangerous" Keystone Pipeline (which comes as oil tankers continue to derail across the country), some critics say The White House's controversial new trade deal could end up costing beleaguered Canada massive job along with the "overnight" collapse of their agriculture industry.

Official Release of TPP Text Confirms Massive Loss to Canadian Public Domain - The New Zealand government posted the official Trans Pacific Partnership text today after years secret negotiations and occasional leaks of the text. It is an enormous deal with dozens of side letters between countries – Canada alone has eight side letters on intellectual property with seven TPP countries – that will require considerable study. From a copyright perspective, the TPP IP chapter leaked soon after the deal was concluded and the chapter looks largely consistent with that document. There is a notable change involving the Internet provider and host takedown rules, however. I earlier blogged that the chapter included a takedown provision not found in Canadian law that would have required blocking content based on being made aware of a court order finding infringement. I noted that the provision would have allowed decisions from other countries to effectively overrule Canadian law. The released text has been amended to limit the provision to domestic court rulings ensuring that only Canadian court rulings would apply. This is a positive change that better reflects current law. It does point to the danger of negotiating in secret, where potential concerns go unaddressed without the opportunity for expert review. Given the size of the deal, it seems likely that there will be many more instances of poorly drafted provisions that raise unintended consequences.

EU Commission TTIP proposal attacked by MEPs and campaigners -- The European Commission has formally presented its proposed reforms on the controversial investment protection and dispute resolution for the Transatlantic Trade and Investment Partnership (TTIP). The 'more transparent' investment court system will replace the so-called investor state dispute settlement (ISDS) mechanism. It aims to safeguard the right to regulate and create a court-like system with an appeal mechanism based on clearly defined rules, with qualified judges and transparent proceedings. European trade Commissioner Cecilia Malmström said, "Today marks the end of a long internal process in the EU to develop a modern approach on investment protection and dispute resolution for TTIP and beyond."The Commission's announcement has come in from criticism from some MEPs and anti-TTIP campaigners. The reforms are alleged to be superficial, with the ICS retaining many of the features of the old ISDS system. Jude Kirton-Darling, Labour's European Parliament spokesperson on TTIP and CETA (Canada-EU Comprehensive Economic Trade Agreement), said, "We must of course wait to see full details of the proposals, but if the ICS is merely ISDS-lite, it is clearly not something we will be happy with. "Labour MEPs have led opposition to ISDS in the European Parliament - in July, we voted against the Parliament's resolution on TTIP because the text did not fully exclude ISDS. "We have also been making the case to the UK government, the Commission and US negotiators that having any form of ISDS in TTIP is not a good idea."

Catalonia Lawmakers Approve Resolution for Secession Process From Spain - WSJ: Regional lawmakers in Catalonia approved a resolution to move toward independence from Spain, saying they would no longer be bound by the central government’s edicts and setting up a test of wills with the prime minister. The proposal to begin a “democratic disconnection” from Spanish institutions passed 72-63 in the Catalan parliament on Monday after a two-hour debate. Spanish Prime Minister Mariano Rajoy, who has said Catalonia’s separatist push represents the country’s major challenge ahead of Dec. 20 national elections, pledged to use all of the authority of his office to stop it. “I understand the anxiety that many Catalans can feel, but to all of them I say you can rest easy,” Mr. Rajoy said. “Catalonia isn’t separating from anywhere, nor will there be any rupture.” Mr. Rajoy said his government would petition Spain’s Constitutional Court this week to have the resolution declared void. Legal experts say the court would almost certainly bar Catalonia from taking any steps to put it into effect. That could result in a political standoff, as the resolution singles out the Constitutional Court—which has blocked the wealthy industrial region’s previous attempts to gain more autonomy—as being “delegitimized and without authority.”

Russian car sales plunge 39% in October as market decline worsens: (Reuters) -- New-car sales in Russia fell 39 percent in October, increasing the pace of decline during the country's economic slump. Sales dropped to 129,958 last month after a 29 percent drop in September, the Association of European Businesses (AEB) in Russia said on Tuesday. The pace of the market decline picked up speed in October following a brief softening in August-September, said Joerg Schreiber, chairman of the AEB automobile manufacturers committee. The suspension of the government scrappage and trade-in program is affecting retail demand "in an unfavorable manner," he said in a statement. There was no evidence of the Volkswagen Group's emissions cheating scandal having any immediate impact on its sales in Russia. Sales at VW Group, which includes the VW, Audi, Skoda and Seat brands, were down 31 percent last month but the group's market share rose to 10.9 percent compared with a 9.7 percent share in October 2014..

Putin's daughter, a young billionaire and the president's friends: Since Vladimir Putin began cementing his grip on Russia in the 1990s, many of his friends have grown famously rich. Not so the president himself, say his supporters, who insist Putin is above the money grab that has marked his reign. His public financial disclosures depict a man of modest means. In April, Putin declared an income for 2014 of 7.65 million roubles ($119,000). He listed the ownership of two modest apartments and a share in a car parking garage. His daughter Katerina is doing considerably better, supported by some of the Russian president’s wealthy friends, a Reuters examination shows. After unconfirmed media speculation about Katerina’s identity, a senior Russian figure told Reuters that she uses the surname Tikhonova. Andrey Akimov, deputy chairman of Russian lender Gazprombank, said he had met Katerina when she was little and more recently, and that Tikhonova was Putin’s daughter. Reuters has also learned that earlier this year Katerina, 29, described herself as the “spouse” of Kirill Shamalov, son of Nikolai Shamalov, a longtime friend of the president. Shamalov senior is a shareholder in Bank Rossiya, which U.S. officials have described as the personal bank of the Russian elite.

The European Union Will Now Explicitly Label Israeli Settlement Goods -- The European Union (EU) today approved new guidelines for labeling products from Israeli settlements on occupied land, a move Brussels says is technical but Israel branded "discriminatory" and damaging to peace efforts with the Palestinians. Drawn up over three years by the EU executive, the European Commission, the guidelines mean Israeli producers must explicitly label farm goods and cosmetics that come from settlements when they are sold in the EU. Israeli officials were briefed ahead of the decision and some suggested it was anti-Semitic. "This is a technical measure, not a political one," one commission source who declined to be named said on Tuesday. "The occupied territory is not part of the sovereign state of Israel, so goods cannot be sold as 'Made in Israel.'" The EU does not recognize Israel's occupation of the West Bank, Gaza, East Jerusalem, and the Golan Heights, lands it captured in the 1967 Middle East war. It says the labeling policy aims to distinguish between goods made inside the internationally accepted borders of Israel and those outside. Britain, Belgium, and Denmark already affix labels to Israeli goods, differentiating between those from Israel and those, particularly fruits and vegetables, that come from the Jordan Valley in the occupied West Bank. Now all 28 EU member states would have to apply labels.

Finland To House Refugees In Shipping Containers -- First the good news: with a cold winter about to slam Europe where thousand of refugees make their way north every day, and where many of these migrants have been scrambling to find any form of lodging ahead of the first snow, Finland has decided to generously provide much needed housing facilities. The bad news: said facilities are empty shipping containers and tents. Neither has heating. According to Reuters Finland, like Germany, has seen an acceleration in the influx of migrants this month, following a modest slow down last month, the interior ministry said on Tuesday. As a result, the Nordic nation "is preparing to house asylum seekers in tents and shipping containers." The country took in just over 7,000 refugees in October - about 3,800 fewer than in September - but just last week more than 2,000 asylum seekers arrived. It expects 30,000-35,000 migrants to arrive this year, mostly from Iraq, compared with just 3,600 in 2014. "Even with new centers being opened, the reception capacity will not be sufficient, and authorities are preparing for the use of tent and container accommodation," the ministry said in a statement. Afghanis were the biggest single group in those who arrived last week, according to ministry figures. Finland recently stopped processing asylum claims from Afghanis out of security concerns, but has narrowed asylum criteria for Iraqis and Somalis based on its assessment that the security situation has improved in both countries.

Sweden, Slovenia Tighten Their Borders to Curb Migrant Tide - WSJ: Sweden and Slovenia moved to tighten control of their borders, in a bid to alleviate the tension caused by migrants making their way through Europe’s southwest to its more affluent north. Sweden, one of the top destinations for asylum seekers from war-torn parts of the Middle East and other regions, said late Wednesday that it would introduce temporary border controls in an effort to reduce the record influx. Earlier in the day, Slovenian officials said they had started to build a razor-wire fence on its border with Croatia to better manage the thousands of people crossing daily into the tiny country on their northbound journey. The Swedish border checks—which are planned to last an initial 10 days, beginning Thursday—mark an about-face to the country’s long-standing open-arms policy toward the arriving migrants. The decision signaled its government was prepared to undercut the principle of passport-free travel enshrined in Europe’s Schengen Agreement to help it cope with the human tide. “More refugees are reaching Sweden than ever before,” Swedish Interior Minister Anders Ygeman told a news conference. “Migration offers opportunities for Sweden, but also big challenges.”

Europe’s Leaders Struggle to Save Floundering Migrant Policy.  With up to 6,000 people pouring into Greece each day, EU leaders will rake over what has gone wrong with the bloc’s response and how to cut a deal with Turkey, which has become the main stopping-off point for people trying to enter Europe.  The much-vaunted plan to contain asylum-seekers in Italy and Greece before distributing 160,000 across the bloc has been sluggish. Despite months of planning, only 147 have been relocated since it was approved in September.  The scheme was the subject of bitter political argument between Germany, which backed it, and its eastern neighbours, who opposed it. Now it is being hindered by everything from the reluctance of national capitals to provide the places, IT failures on the ground and even asylum-seekers’ point-blank refusal to take part. (Last week’s flight to Luxembourg was the second attempt after a previous group turned down transit to the Grand Duchy). As chancellor Angela Merkel comes under pressure from within her own party, Germany is banking on a deal with Turkey to stem the flow of migrants from the Middle East. Berlin, along with the European Commission, has led overtures to Ankara, bearing promises ranging from €3bn in aid to Schengen visas for Turkish citizens.  with winter approaching, Mr Asselborn [Jean Asselborn, migration minister for Luxembourg, current holder of the EU’s rotating presidency] seemed to grasp the need to make progress, both for the EU’s overburdened member states and the thousands of migrants on the road. “We don’t just want a symbolic start, we want to get it off the ground properly,” he said of the relocation scheme. “We cannot have a situation where we have a critical humanitarian situation at our borders. We cannot let people die in the cold in the Balkans.”

Yes, it is war - The headline of Le parisien saddens me: cette fois, c’est la guerre. It saddens me because it implies that France has not been at war. While, in fact, you cannot bomb territories and your foreign minister cannot keep saying we are at war with DAECH or ISIS without being at war. This is what war looks like.  You can be for the war or against the war, but it has been war for a while, indisputably. As so often , the wars have been  fought according to the old presumption of colonial war: the front is over there in the distance. But this simply isn’t true any more.   Drone some Yemen wedding, bomb Isis, but don’t think that the forces who’ve been armed to the max by the worldwide flow of arms – none of which are of Middle eastern manufacture - are powerless to respond on your home territory.  This isn’t about moral equivalency, it is simply about the way wars are fought.  The irresponsibility of populations who finance huge war machines and let their presidents play with them, play with military forces that are not longer even drafted, leads to an indifference that will blow up in our faces as we dine at a café.  I truly, naively believe that if populations connected to the elites that have monopolized and made foreign policy irresponsive to the popular will – if, in fact, the popular will was sending its sons and daughters into the military, and sacrificing their lifestyles to war – there would be less hobby wars.  Wars that are the hobby of this or that engaged group.   This time is, really, only the successor of a long time in which war has been going on. So wealthy is France, or any of the developed countries, that wars have become things waged in the peripheral vision. But this is the path that leads to an uncontrollable influx of armed men from those distant theaters, or trained there, into the major metropoles to kill as many people as possible.

Greece and Creditors at Loggerheads Again; Troika Wants More Foreclosures -- Yves Smith - European creditors want to extract more blood from a stone, in this case Greece.  Greece and its lenders are again at odds over the latest “bailout” funds, which is €2 billion that was scheduled to be approved for release by the famed Eurobgroup (remember them? That’s all the Eurozone finance ministers) on Monday.   But a precondition for getting more dough was that Greece show enough “progress,” as in either have implemented or have committed to a sufficiently large number of “reforms”. “Reform” is Eurocrat-speak for austerian blood-letting. The creditors see Greece as coming up short. As we’ve pointed out repeatedly in our coverage of Greece, the lenders are hell-bent on seeing Greece remake its economy in ways that are guaranteed to make their loans fail, or perhaps more accurately, produce even greater losses than if they allowed for more investment and spending, rather than insist on punitively high budget surpluses and other destructive measures.  Here are the big issues where the two sides remain far apart:

    • Foreclosures. As part of the banking system bailout, the Troika wants more writeoffs of bad loans. They insist on a related measure, of lowering the value of homes that are subject to foreclosure from €200,000 to €120,000
    • Increasing the VAT on private schools to 23%. I’m a bit mystified by Syriza fighting this measure if “private schools” are academies for the wealthy. But if the Greek Orthodox Church operates primary and secondary schools, as the Catholic Church does in the US, it could affect a much larger number of students at much lower levels of family income. Input from informed readers appreciated. Mind you, Syriza is proposing to find the funds to cover up this income loss elsewhere, but apparently have yet to satisfy the lenders on this point.

Greece fails at first bail-out hurdle as new creditor stalemate beckons -- Greece has failed in its attempt to secure the first release of cash under its €87bn bail-out package, as creditor powers deemed the country had failed to make enough progress on passing key reforms  Athens' anti-austerity government will not receive a €2.15bn as scheduled this week, raising fears the country's new rescue programme is stalling at the first hurdle.  The government of prime minister Alexis Tsipras has been locked in a duel with creditors over two key issues: a new insolvency law for home confiscations, and revamping the way the country's banks are run.  Eurozone finance ministers, meeting in Brussels on Monday, warned the stumbling blocks could also threaten the process of rehabilitating Greece's battered financial system.  Jeroen Dijsselbloem, president of the eurogroup, said there would be no disbursement until Athens had fulfilled all of its mandated "prior actions".  The Dutch finance minister called on the left-wing Syriza government to implement laws overhauling the governance of the banking sector, as the "key priority" before any creditor money can be used to plug a €14.4bn black hole in the financial system.

Recapitalising Greek banks: The damage - Economist -- BANKS have been at the centre of Greece’s economic and financial misfortunes this year, as the radical-left Syriza party won an election and then became embroiled in a bitter struggle with the country’s international creditors. Deposits drained out of them on fears that the country would leave the euro and revert to the drachma, inflicting huge losses on depositors. Banks’ woes multiplied when the European Central Bank (ECB) refused to provide them with further liquidity, forcing the government to close them for three weeks during the summer and to impose capital controls. In the end, Greece managed to secure a third bail-out and stay in the euro. But the injuries the banks had sustained along the way seemed ruinous. As a result, the €86 billion ($94 billion) bail-out from the European Stability Mechanism (ESM), the euro zone’s rescue fund, included a buffer of up to €25 billion, or 14% of GDP, to rebuild the banks. The exact amount would be specified once the supervisors had combed through their books. The ECB, which has directly supervised big banks in the euro zone for the past year, was to examine the four main Greek banks—Alpha, Eurobank, National Bank of Greece (NBG) and Piraeus. Greece’s central bank was to review Attica, a smaller lender.  

Greek finance minister says debt deal should include long grace periods | Reuters: Greek Finance Minister Euclid Tsakalotos said on Tuesday that any agreement on Greek debt relief should include grace periods of 15-20 years that would encourage long-term investment. "It is absolutely vital that we get a clear runway so that people understand that investors can invest for seven, eight, nine years," Tsakalotos said in a lecture at the London School of Economics. "If there is good will, there are tons of ways to deal with the problem," he said.

More misery ahead for Greeks as economy set to shrink again - Any Greeks hoping their days of economic pain are over following the latest bailout agreement with international lenders should look to the dire projections from Europe's three main institutional forecasters for a reality check. The European Commission, the OECD and the EBRD all say Greece is heading into recession again this year and next, sinking back into the mire after last year's positive reading ended a six-year depression. The light at the end of the tunnel, all three say, may be some growth returning during next year - but it is highly dependent on economic and banking reform. There will be arguments about why Greece remains in such a state - from accusations in Athens that lender-imposed austerity has crushed the life out of the economy to gripes from Brussels that Prime Minister Alexis Tsipras's leftists wasted what improvements had been achieved. The two sides are again at loggerheads - albeit possibly temporarily - over reforms and bailout cash, with the added complexity that Tsipras does not want to see indebted Greeks lose their homes while the country is providing food and housing for thousands of asylum-seekers.

Greece says it is close to deal with lenders over bad bank loans -- Greece said on Wednesday it was close to a deal with international lenders on regulating non-performing loans, a thorny issue which has delayed a disbursement of aid under its latest multi-billion euro bailout. "On Monday all issues will be finalised ... and at the Euro Working Group there will be a decision to release the installment and the funds for the banks," Government Spokeswoman Olga Gerovasili told state broadcaster ERT, referring to deputy finance ministers of the euro zone. A two billion euro cash disbursement and 10 billion euros to recapitalize four systemic banks was delayed this week amid disagreement over the level of protection homeowners should have from foreclosures for non-payment of debts. Athens insists resolving the issue should not result in thousands of Greeks at risk of losing their homes. At present, mortgage holders can apply for foreclosure protection if the value of their home is 300,000 euros; the Greek government is now discussing protection based on a home valuation of between 180,000 and 200,000 euros, buffered by a series of income-based criteria.

Tsipras’ party calls on people to join anti-austerity general strike, Nov 12/2015 ( +strike schedule): It is not only the workers and trade unions of the public and private sectors that have urged people to join the general 24-hour strike on Thursday, November 12 2015. It is also left-wing SYRIZA the party of Prime Minister Alexis Tsipras that urged Greeks to go on the streets and protest against the “extreme neoliberal policies” imposed by the country’s creditors. In a statement uploaded on official website of SYRIZA, the Department of Labor Policy describes the austerity measures demanded by creditors as “theater of the absurd,” and the the “people’s struggle against the anti-social, extreme neoliberal policies continue even more dynamically. We assert our fundamental rights at work, the effective restoration of collective labor agreements, maintaining the social and redeeming character of insurance, the protection of the first residence [from the foreclosures], decent wages and pensions, health and education for all.” SYRIZA’s strike support triggered a strong and certainly funny reaction with Greeks wondering whether PM Tsipras will be on strike tomorrow, whether he will join the protest rally, whether “after the strike the government will submit a confidence motion against the government” or if “members of Syriza will occupy the Prime Minister’s office.” Ok, Tsipras may be still in Malta for the EU Summit for the Refugee Crisis, but Greeks will be in Greece and they plan to stage protest rallies in several cities across the country.

The Disaster of Greek Austerity -- For six years now Greece has lived under unprecedented austerity policies demanded by its lenders and accepted by a succession of governments. The social and political reality created by austerity was sharply shown by two events that occurred on the same day in October.  First, a report on poverty and social exclusion in Greece was released by Eurostat, the European statistical service, indicating that, in 2014, 22.1% of the population lived in conditions of poverty, 21.5% were severely materially deprived, while 17.2% lived in families with very low work intensity. Altogether, 36% of the population faced one or more of these terrible conditions. The percentage was 7.9% higher than in 2008.  Second, the Greek parliament approved a new piece of legislation imposing further austerity measures as demanded by its creditors – primarily the EU and the IMF – to meet the terms of Greece’s recent, third, bailout agreement. The new package involves cutting 14.32bn euros of public spending, while raising 14.09bn euros in taxes over the next five years. The measures will affect primarily private-owned businesses, homeowners and employees close to retirement.  Austerity policies were first adopted in 2010 as a “solution” to the economic crisis that burst out in 2009-10. Severe cuts in public spending, deep reductions in wages and pensions, enormous tax increases, and a stripping back of labor protections have sought – presumably – to stabilize the economy and gain the confidence of financial markets. In practice the measures have plunged the Greek economy into a prolonged recession that has had the disastrous social implications outlined by Eurostat. Unfortunately, the current Greek government, formed by the left-wing SYRIZA party, appears determined to keep the country on the same path.

Portugal on collision course with EU as centre-Right government falls after 11 days - Telegraph: Portugal's centre-right government has collapsed after 11 days after Left-wing forces bought down prime minister Pedro Passos Coelho, putting the country on a collision course with the EU. In a vote of no confidence held on Tuesday, the country's parliament voted by 123 to votes to 107 to bring down the minority government and force Mr Passos Coelho's resignation. • Portugal's constitutional crisis threatens all of Europe's democracies The collapse was widely expected after the country's three main left opposition forces - the moderate Socialists, Communists and radical Left Bloc - agreed a historic coalition in a bid to form an alternative government last week.  Mr Passos Coelho's minority government is the shortest lived regime in the country's post-war history. His ruling party was asked to continue in office after elections on October 5, where the conservative coalition came first but lost its parliamentary majority.  Portugal's Leftist anti-austerity forces have vowed to reverse key economic policies of the previous government, setting Lisbon up for a battle with the EU only a year after it exited a €78bn bail-out programme.

Portugal’s leftists likely to oust new government in austerity vote - A leftist alliance in Portugal’s new parliament is expected to oust the minority conservative government on Tuesday, raising pressure on the president to appoint a Socialist prime minister at odds with the eurozone’s prevailing policies of austerity. A vote rejecting Prime Minister Pedro Passos Coelho’s governing program, 11 days into his second term, would follow four years of sharp spending cuts and tax increases imposed to meet the demands of the country’s bailout lenders. While the economy is growing again, it shrank sharply between 2011 and 2013. A loss for Passos Coelho would bring an automatic end to his government. President Aníbal Cavaco Silva had asked him to remain in office after his center-right coalition finished first in the Oct. 4 parliamentary election but lost its majority to an array of leftist parties. Although the president could reappoint him as a caretaker prime minister until new elections, the vote would strengthen a bid by the Socialist Party to govern instead. The mainstream Socialists are joined in opposition by the Left Bloc, the Communists and the Greens — three far-left parties that oppose Portugal’s membership in the North Atlantic Treaty Organization and are willing to abandon Europe’s common currency. Those parties have been fierce opponents of the Socialists and the conservatives during the four decades they have alternated in power. But after the October election, the far-left parties reached an agreement to support a minority government led by the Socialist leader, Antonio Costa.

Catalan parliament votes to secede from Spain by 2017 - - The regional parliament of northeastern Catalonia has approved a plan to set up road map for independence from Spain by 2017, in defiance of the central government. All 72 separatist lawmakers -- the majority in the northeastern region's parliament -- voted for a resolution aimed at creating an independent republic by 2017. The proposal was tabled by pro-secession lawmakers from the "Together for Yes" alliance and the extreme left-wing Popular Unity Candidacy (CUP). The groups together obtained a parliamentary majority in regional elections in September. Parties favouring independence from Spain won a majority of seats in the Catalan regional election in September. The Spanish constitution does not allow any region to break away, however, and the centre-right government of Spanish premier Mariano Rajoy, facing a general election in December, has said it will immediately seek to block the resolution in the courts.

Catalonia vows to continue secession process despite Spanish court's orders - The Catalan government vowed on Wednesday to move forward with its secession process, defying orders from Spain’s top court and raising the stakes in the showdown playing out between the regional government and Madrid. Earlier in the day, Spain’s constitutional court suspended the Catalan law that set out a path to independence, warning lawmakers in the region that they could face criminal charges if they defy the ruling. The Catalan government responded swiftly, saying that the Catalan legislation was still in effect. “The political will of the government of Catalonia is to go ahead with the content of the resolution approved Monday by the Catalan parliament,” Neus Munté, vice president of the Catalan government, told reporters. Munté pointed to the debate and vote that had preceded the passing of the Catalan legislation. “We are fulfilling and will continue to fulfil the mandate of a sovereign parliament,” she said. In a special meeting on Wednesday, the court unanimously agreed to hear the central government’s challenge, filed hours earlier. The decision means the Catalan legislation will be suspended for up to five months while judges hear arguments and reach a decision.

The Growing Intergenerational Divide in Europe -- During seven years of economic crisis, the intergenerational income and wealth divide has increased in many European Union countries. This paper reviews the pension reforms implemented by several countries and it provides policy recommendations to address the intergenerational divide. Highlights:

  • During the economic and financial crisis, the divide between young and old in the European Union increased in terms of economic well-being and allocation of resources by governments. As youth unemployment and youth poverty rates increased, government spending shifted away from education, families and children towards pensioners.
  • To address the sustainability of pension systems, some countries implemented pension reforms. We analysed changes to benefit ratios, meaning the ratio of the income of pensioners to the income of the active working population, and found that reforms often favoured current over future pensioners, increasing the intergenerational divide.
  • We recommend reforms in three areas to address the intergenerational divide: improving European macroeconomic management, restoring fairness in government spending so the young are not disadvantaged, and pension reforms that share the burden fairly between generations.

The euro was pointless  -- It’s easy to forget now, but the single currency wasn’t created purely as a political project. Many economists in the 1980s and 1990s thought monetary union would encourage cross-border investment and trade by eliminating the risk premiums associated with the supposedly destabilising devaluations of the past. The net effect would be converging living standards, dampened business cycles, slower inflation, and faster productivity growth for everyone — the benign Germanisation of Europe. This was a laudable goal, but unfortunately it’s not how things worked out. The policy mistakes that exacerbated the eurozone crisis, while deeply destructive, can’t be blamed. A stimulating conference recently hosted by the Centre for European Reform made it clear to us the euro had already failed to meet the expectations of its architects before the crisis. Sharing currencies was unnecessary for economic convergence, if not actively harmful.

France runs out of cash until end of the year -  From midnight on Monday until the end of the year France will have to use borrowed money after spending all of the €390 billion it raised through taxes, a new survey showed on Monday From Tuesday until the end of the year - a full 53 days - France will have to survive on credit. In other words the country has blown the €390 billion in tax receipts earned this year and will now have to add to the two trillion euros of debt on its credit cards, with this year's spending set to hit €460 billion. That’s the conclusion drawn by survey from the liberal think tank the Molinari Institute that looked at the 28 member states of the EU and calculated the day when each one has spent all their tax receipts. For France 2015 will be the 35th consecutive year it has run an imbalanced budget According to the institute “France is one of the rare countries, along with Belgium, the Netherlands, Poland and Slovakia, to build up debts in all three areas of the administration – central state, local authorities and social security.” The study includes a chart which shows the date when each country has spent its incomings and while France is November 9th, it is not far ahead of Britain which runs out of money on November 11th. Ireland will go into debt on November 23th, while Italy hits the red two days earlier. Sweden will still have some money in its pockets until December 15th, while Germany and Denmark will actually have some cash left over at the end of the year.

Dismal German factory data drops copper price - Copper moved back into a bear market with a sharp decline on Thursday with year to date losses now topping 20%. On Thursday in New York trade December copper gave up 3.1% hitting a day low of $2.2505 a pound ($4,960 a tonne). In August copper fell to a six year low of $4,888 a tonne. The red metal's latest leg down is blamed on worse-than-expected manufacturing data from Germany, the world's third largest exporter. Shipments from the country are dominated by vehicles, machinery, electrical equipment and chemicals. The Wall Street Journal reports manufacturing orders in the third quarter were down 2.8% from the prior three months despite a slight rise in domestic demand. What shook copper traders was numbers showing orders from outside the eurozone slumping 8.6% as a slowdown in China and recessions in other key emerging markets hurt demand:The release of top consumer China’s commodity-friendly five-year plan and a stronger-than-expected reading of Chinese manufacturing activity have not been able to lift sentiment among copper miners despite predictions of a market deficit next year as disruptions, project delays and production cuts in key producing regions keep a lid on supply growth.

Euro zone production falls more than expected in September - Euro zone industrial production shrunk by more than expected in September compared to August, mainly due to a sharp fall in the output of consumer goods, but it was still higher than a year earlier, the European Union's statistics office data showed. Eurostat said output in the 19 countries sharing the euro fell 0.3 percent month-on-month in September for a 1.7 percent year-on-year rise. Economists polled by Reuters had expected a 0.1 percent monthly decline and a 1.3 percent annual rise. Production of durable consumer goods fell the most month-on-month, declining by 3.9 percent, the data showed. Output of non-durable consumer goods, such as food or toiletries, also declined by 1 percent, signaling broader weakness of demand from households. The production of capital goods, used in investment, also fell 0.3 percent on the month. But compared to September 2014, the production of consumer goods, both durable and non durable, was clearly higher at 2.6 and 2.1 percent respectively and the output of capital goods was also up by 2.2 percent.

Eurozone Economy Slows as Exports Weaken - WSJ: The eurozone economy slowed in the three months to September as exports to large developing economies weakened, a development that makes it more likely the European Central Bank will expand its stimulus programs in December. The slowdown was led by Germany, the currency area’s exporting powerhouse, while Italian economic growth also eased. There were fresh contractions in Greece, Finland and Estonia, while Portugal’s economy stagnated. By contrast, France’s economy returned to growth, having stagnated in the previous quarter, a performance that was welcomed by Finance Minister Michel Sapin as indicating “that in 2015 we have exited the period of weak growth that France had been in since the end of 2011.” The European Union’s statistics agency Friday said gross domestic product in the 19 countries that share the euro was 0.3% higher than in the three months to June, and 1.6% higher than in the third quarter of 2014. The quarter-to-quarter growth rate was down from 0.4% in the second quarter, and translates into an annualized growth rate of 1.2%, the weakest since the third quarter of last year. The slowdown underlines the tepid nature of the eurozone’s economic recovery, which began in mid-2013 but has now eased for the second straight quarter. Weak growth has left the economy still 0.5% smaller than it was at its largest in the first three months of 2008, while the U.S. and the U.K. long ago exceeded their precrisis peaks.

Exclusive: ECB rate setters converge on December deposit rate cut -- A consensus is forming at the European Central Bank to take the interest rate it charges banks to park money deeper into negative territory in December, four governing council members said, a move that could weaken the euro and push up inflation. Some argue that a deposit rate cut should even be larger than the 0.1 percent reduction currently expected in financial markets, the policymakers said. They are keen to exhaust the conventional and more direct monetary policy tool as they also consider amending the 60-billion-euro asset purchase program, a far more contentious issue that they have yet to agree on. The ECB last month raised the prospect of more monetary easing at its Dec. 3 meeting to combat ultra-low inflation, which is at risk of undershooting the target of nearly 2 percent as far ahead as 2017 due to low commodity prices and weak growth. A rate cut aims to discourage banks from parking money at the central bank and start lending to generate growth. It can also weaken the currency as cash leaves the euro area in search of higher returns, boosting inflation as imports become more expensive. The euro fell by as much as half a cent in response to the Reuters story and money market rates dipped.

ECB to consider QE boost, deposit rate cut to hit target - Visco -- The European Central Bank will consider a cut to its deposit rate and changes to its asset purchase programme to achieve its inflation target, ECB governing council member Ignazio Visco said on Wednesday. "The appropriate degree of monetary accommodation has to be maintained to fulfill our mandate," Visco said in remarks prepared for a speech to be delivered in London. "This may imply, as it has been stated, a change in the size, composition and duration of the APP (Asset Purchase Programme). The possibility to once again lower the interest rate on the deposit facility will also be assessed." He added the introduction of negative interest rates in the region has been smooth and other countries seem not to have experienced difficulties in pushing rates further into negative territory.

Slower-than-expected euro zone growth likely to seal more ECB stimulus - Euro zone economic growth was slower than expected in the third quarter, preliminary data showed on Friday, increasing market expectations that the European Central Bank will step up its monetary stimulus to the economy next month. The European Union's statistics office Eurostat said the gross domestic product of the 19 countries sharing the euro expanded 0.3 percent quarter-on-quarter for a 1.6 percent year-on-year increase in the July-September period. Economists polled by Reuters had expected a 0.4 percent quarterly rise and a 1.7 percent annual increase. "This outcome is also lower than the ECB’s staff projections, which would add to the already strong case for the ECB to step up monetary stimulus in December," said Nick Kounis, head of macro and financial markets research at ABN AMRO bank. "If the ECB needed a final push to be decisive, this is it," he said. He expected the ECB to step up the pace of it government bond-buying program by 20 billion euros per month to 80 billion, signal that such purchases would go on beyond September 2016, and expand the eligible universe of assets. Reuters reported this week that the ECB was considering regional and municipal bonds as an option. "We also expect a 10 basis point reduction in the ECB’s deposit rate," Kounis said.

ECB faces three suits over QE in German court -  The European Central Bank’s (ECB) 1.1 trillion-euro (US$1.2 trillion) asset-purchase programme is the target of three lawsuits pending in Germany’s top constitutional court that challenge the country’s role in the policy, a tribunal spokesman said. The first suit was filed in May, the second in September and the third in October, according to Michael Allmendinger, a spokesman for the Federal Constitutional Court in Karlsruhe. The September action was brought by Bernd Lucke, the head of political party Alfa, said Allmendinger. He declined to disclose the other plaintiffs as they haven’t made their cases public. “The suits are directed against the ECB plan and target the German parliament and government for failing to stop it,” said Allmendinger. No hearing has yet been scheduled, he said. The cases are separate from another bid attacking the ECB’s 2012 Outright Monetary Transactions (OMT) programme in the German court. That action was curtailed when the European Union’s highest tribunal in June largely approved the OMT programme. The German judges still have to make a final ruling in that ligitation.

The ECB Should Stop QE Before Draghi Causes A "Financial Crisis", German "Wise Men" Warn --Back in July, Germany’s economic “wise men” took a look at bailout “success” and “failures” and came to a rather disconcerting conclusion. Here’s what the Council of Economic Experts said in their report: A permanently uncooperative member state should not be able to threaten the existence of the euro. In view of this, the Council of Economic Experts recommends that the withdrawal of a member state from the currency union must be possible as an utterly last resort. Anyway, one thing we know about Germany is that officials have a low tolerance for anything that even looks like irresponsible fiscal policy or other types of shenanigans that could, in the end, create crises which is why no one was surprised to see Wolfgang Schaeuble give a number speeches over the past several months in which in incorrigible finance minister derided money printing and ZIRP. Well don’t look now, but the same Council of Economic Experts is out with their latest annual report and they are not happy with ECB QE and contend that the further expansion of the central bank’s balance sheet could risk sparking a new financial crisis. Here’s more:Another important debate centres on the current low interest rate environment in the euro area. In January 2015, the European Central Bank (ECB) further eased its already very accommodating monetary policy by introducing a new sovereign bond-buying programme. Recently, it put forth the possibility of further easing. Core inflation has, however, stood near 1 % for months, and has recently risen slightly. Simple interest rate rules, such as the Taylor Rule or a rule that explains past ECB interest rate decisions quite well, suggest that monetary policy should be tightened given the current economic outlook.

Negative Interest Rates the New Normal Next Time Economies Slump -- The report from once-uncharted monetary territory: there’s little to be scared of.  Now that Sweden and Switzerland have shown that negative benchmark interest rates don’t necessarily result in flights to cash, asset bubbles or banking strains, the global giants of central banking may be more willing to embrace sub-zero borrowing costs the next time their economies slide. “There’s a very real chance unorthodoxy becomes the new orthodoxy,” said Alan Ruskin, global head of Group-of-10 currency strategy at Deutsche Bank AG in New York. While financial markets are focused on the Federal Reserve’s looming rate increase, policy makers and economists are already changing their attitude toward negative rates. European Central Bank President Mario Draghi is open to reducing the rate he charges banks to leave money in his coffers overnight further into negative territory. Bank of England Governor Mark Carney has also revised his thinking to say the U.K. benchmark could fall below 0.5 percent if needed having previously worried deeper cuts would roil money markets. Meantime, Fed Chair Janet Yellen said last week that “if circumstances were to change” then “potentially anything, including negative interest rates, would be on the table.” One of her policy-setting colleagues has already advocated them for next year.

Europe responds to Cameron's EU reform proposals | Open Europe: Following Prime Minister David Cameron’s speech earlier today, which set out his reform and renegotiation demands ahead of the EU referendum, we have done a quick round-up of reactions from across Europe. Altogether the various reactions below seem to confirm our assessment of member states’ positions towards the different areas of the UK’s EU reform proposals, which we summarized in the ‘heat-map’ above. Broadly states are open to the process (some more enthusiastic than others), while there are some concerns on specific parts of the package – EU migrants access to benefits in particular. German Chancellor Angela Merkel said via DPA that “there are difficult and less difficult points” on the David Cameron’s list of EU reform proposals. She stressed that she is “reasonably confident” that a compromise can be found, saying that “Germany will do its part as much as it is possible within EU rules.” The latter comment seems to be a thinly veiled reference towards the most contested area of EU reform – limiting EU migrants’ access to UK benefits – and whether this can be done within current EU rules.

David Cameron 'prepared to use £475m of UK aid budget: David Cameron is willing to commit almost half a billion of the UK's aid budget over the next five years in an effort to stop the flow of migrants and refugees to Europe. The Prime Minister is prepared to offer £275 million over the next two years to Turkey to help it cope with the scale of the refugee crisis it faces. The money comes on top of £200 million pledged to 2020 to help African countries address some of the problems which have driven many migrants out of their home countries. The extra support on offer for Turkey will be set out as European Union leaders gather for a meeting after the conclusion of a major international summit on the migrant crisis in Malta. A Number 10 source said: "We are sat in the western Mediterranean which was the focus at the start of the crisis but in recent months the focus has been on the eastern and the route from Turkey to Greece where you see a lot more of the numbers of Syrian refugees as opposed to the route where we are sat today, which is more illegal migration. "We remain really concerned about that route and the support that we should be providing to countries in the region." Setting out the scale of the challenge facing the Ankara government, the source said Turkish coastguards had picked up 63,000 migrants this year. The source added: "They have got two million refugees, it has cost them almost seven billion euro to date and we think there is much more the EU can be doing there, alongside the work we have been doing in Jordan and Lebanon.

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